-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, W1fRONQ++xNYS8arNmqenH9A+9eUVwsuV6c2FfcXuY893lnIkwePpcwF3QiJhiwd SVeBuyNvWs7nC3NSqen3xQ== 0000820626-96-000021.txt : 19960930 0000820626-96-000021.hdr.sgml : 19960930 ACCESSION NUMBER: 0000820626-96-000021 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 16 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960927 SROS: CSX SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: IMC GLOBAL INC CENTRAL INDEX KEY: 0000820626 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE CHEMICALS [2870] IRS NUMBER: 363492467 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09759 FILM NUMBER: 96636089 BUSINESS ADDRESS: STREET 1: 2100 SANDERS RD CITY: NORTHBROOK STATE: IL ZIP: 60062 BUSINESS PHONE: 8472729200 MAIL ADDRESS: STREET 1: ONE NELSON C WHITE PKWY CITY: MUNDELEIN STATE: IL ZIP: 60060 FORMER COMPANY: FORMER CONFORMED NAME: IMC FERTILIZER GROUP INC DATE OF NAME CHANGE: 19920703 10-K 1 FOR YEAR ENDED 06/30/96 - ----------------------------------------------------------------------- ------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------- FORM 10-K X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF ----- THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) For the fiscal year ended June 30, 1996 Commission file number 1-9759 IMC GLOBAL INC. (Exact name of registrant as specified in its charter) Delaware 36-3492467 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2100 Sanders Road Northbrook, Illinois 60062 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (847) 272-9200 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class on which registered ------------------- --------------------- Common Stock, par value $1 per share New York Stock Exchange Preferred Share Purchase Rights Chicago Stock Exchange Securities registered pursuant to Section 12(g) of the Act: NONE Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X . No . ----- ----- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] Aggregate market value of the voting stock held by non-affiliates of the registrant: $3,601,843,400 as of August 30, 1996. Market value is based on the August 30, 1996 closing price of Registrant's Common Stock as reported on the New York Stock Exchange Composite Transactions for such date. APPLICABLE ONLY TO CORPORATE REGISTRANTS: Indicate the number of shares outstanding of each of the registrant's classes of common stock: 92,419,558 shares, excluding 5,545,884 treasury shares as of August 30, 1996. DOCUMENTS INCORPORATED BY REFERENCE, IN PART: Information required by Items 6, 7 and 8 of Part II is incorporated by reference to the sections of the Registrant's 1996 Annual Report to Stockholders described in such Items. Information required by Items 10, 11, 12 and 13 of Part III is incorporated by reference to the sections of the Registrant's definitive proxy statement for the Annual Meeting of Stockholders to be held on October 17, 1996 described in such Items. ------------------------------------------------------------------- - ----------------------------------------------------------------------- 1996 FORM 10-K CONTENTS Item Page - ------------------------------------------------------------------- Part I: 1. Business 1 Company Profile 1 Business Unit Information 2 Factors Affecting Demand 10 Other Matters 10 2. Properties 13 3. Legal Proceedings 13 4. Submission of Matters to a Vote of Security Holders 15 Executive Officers of the Registrant 15 Part II: 5. Market for the Registrant's Common Stock and Related Stockholder Matters 16 6. Selected Financial Data 16 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 16 8. Financial Statements and Supplementary Data 16 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 17 Part III: 10. Directors and Executive Officers of the Registrant 17 11. Executive Compensation 17 12. Security Ownership of Certain Beneficial Owners and Management 17 13. Certain Relationships and Related Transactions 17 Part IV: 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 17 Signatures 28 - ------------------------------------------------------------------ PART I. Item 1. Business. COMPANY PROFILE IMC Global Inc. (the Company) is one of the world's leading producers of crop nutrients for the international agricultural community and is one of the foremost distributors in the United States of crop nutrients and related products through its retail and wholesale distribution networks. The Company mines, processes and distributes potash in the United States and Canada and is a joint venture partner in IMC-Agrico Company (IMC-Agrico), a leading producer, marketer and distributor of phosphate crop nutrients and animal feed ingredients. The Company believes that it is one of the most efficient North American producers of concentrated phosphates and potash. The Company's retail distribution network, which extends principally to corn and soybean farmers in the eastern midwest and to cotton, peanut and vegetable farmers in the southeastern United States, is one of the preeminent distributors of crop nutrients and related products. The Company also manufactures nitrogen-based and other high-value crop nutrients which are marketed on a dealer basis, principally in the midwestern and southeastern United States. In addition, the Company sells specialty lawn and garden, turf and nursery products on a national basis and ice-melter products in the midwest and eastern snowbelt states. Phosphorus, contained in phosphate rock, potassium, contained in potash, and nitrogen constitute the three major nutrients required for plant growth. Phosphorus plays a key role in the photosynthesis process. Potassium is an important regulator of plants' physiological functions. Nitrogen is an essential element for most organic compounds and plants. These elements are naturally present in the soil but need to be replaced through the use of crop nutrients as crops exhaust them. Currently, no viable crop nutrient substitutes exist to promote the development and maintenance of high-yield crops. The Company's business strategy focuses on maintaining and growing its leading position as a crop nutrient producer and supplier through extensive customer service, efficient distribution and transportation and supplying products worldwide at competitive prices by taking advantage of economies of scale and state-of-the-art technology to reduce costs. The Company intends to continue to expand its product distribution and marketing throughout the world through export associations and its international sales force. On March 1, 1996, the Company completed a merger (Merger) with The Vigoro Corporation (Vigoro), which resulted in Vigoro becoming a subsidiary of the Company. The Merger enables the Company to, among other things, broaden its business mix and reduce the relative importance of generally more price-volatile phosphate-based crop nutrients to the Company's consolidated results. In addition, the Merger has expanded the Company's potash customer base to include industrial customers, whereas shipments of potash were previously made primarily to agricultural users. Vigoro also has a significant retail distribution network, giving it direct contact with farmers, the principal consumers of crop nutrient products. Prior to the Merger, a limited amount of products were sold directly to farmers. Following the Merger, the Company restructured its operations into five business units corresponding to its major product lines as follows: IMC-Agrico Crop Nutrients (phosphates), IMC Kalium (potash), IMC AgriBusiness (retail distribution), IMC-Agrico Feed Ingredients (animal feed) and IMC Vigoro (specialty products). On July 1, 1993, IMC Global Operations Inc., a wholly-owned subsidiary of the Company, and Freeport-McMoRan Resource Partners, Limited Partnership (FRP) entered into a joint venture partnership in which both companies contributed their respective phosphate businesses, including the mining and sale of phosphate rock and the production, distribution and sale of concentrated phosphates, uranium oxide and related products, to IMC-Agrico, a Delaware general partnership. The Company has a 56.5 percent interest in IMC-Agrico over the term of the partnership. IMC-Agrico is governed by a Policy Committee, which has equal representation from the Company and FRP, and is operated by the Company. In October 1995, IMC-Agrico acquired the animal feed operations of Mallinckrodt Group Inc. All information in this Annual Report on Form 10-K has been adjusted to give effect to the Merger. This Annual Report on Form 10-K contains certain forward-looking statements concerning, among other things, the effects of the Merger, various trends relating to the Company's economic performance and the financial condition of the Company. Such statements are subject to various risks and uncertainties which could cause the Company's actual results to differ materially from those currently anticipated. BUSINESS UNIT INFORMATION The amounts and relative proportions of net sales and operating earnings contributed by the business units of the Company have varied from year to year and may continue to do so in the future as a result of changing business, economic and competitive conditions as well as technical developments. The following business unit discussion should be read in conjunction with the information contained under the heading "Management's Discussion and Analysis of Results of Operations and Financial Condition" in the Company's 1996 Annual Report to Stockholders which is incorporated herein by reference. IMC-Agrico Crop Nutrients Net sales for the IMC-Agrico Crop Nutrients business unit were $1,747.8 million, $1,559.0 million and $1,131.0 million for the years ended June 30, 1996, 1995 and 1994, respectively. IMC-Agrico is a leading United States miner of phosphate rock with 25 million tons of annual capacity. IMC-Agrico's central Florida phosphate mining operations and plants produce phosphate rock, which is one of the primary raw materials used in the production of concentrated phosphates. IMC-Agrico is also the leading United States producer of concentrated phosphates with an annual capacity of approximately four million tons of phosphoric acid (P2O5 equivalent). P2O5 is an industry term indicating a product's phosphate content measured chemically in units of phosphorous pentoxide. IMC-Agrico's concentrated phosphate products are marketed worldwide to crop nutrient manufacturers, distributors and retailers. IMC-Agrico's concentrated phosphate production facilities are located in central Florida and Louisiana. Its annual capacity represents approximately 32 percent of total U. S. concentrated phosphate production capacity and 11 percent of world capacity. The Florida concentrated phosphate facilities consist of three plants: New Wales, Nichols and South Pierce. The New Wales complex is the largest concentrated phosphate plant in the world with an estimated annual capacity of nearly 1.8 million tons of phosphoric acid (P2O5equivalent). New Wales primarily produces four forms of concentrated phosphates: diammonium (DAP) and monoammonium (MAP) phosphate, granular triple superphosphate (GTSP) and merchant grade phosphoric acid. The Nichols facility manufactures phosphoric acid and DAP and the South Pierce plant produces phosphoric acid and GTSP. The Louisiana concentrated phosphate facilities consist of three plants: Uncle Sam, Faustina and Taft. The Uncle Sam plant produces phosphoric acid which is then shipped to the Faustina and Taft plants where it is used to produce DAP and granular MAP. The Faustina plant manufactures DAP, granular MAP, urea and ammonia. The Taft facility manufactures only DAP. Concentrated phosphate operations are managed to balance IMC-Agrico's output with customer needs. Currently, the Nichols complex is temporarily idled pending improvement of market conditions. Phosphate rock, sulphur and ammonia are the three principal raw materials used in the production of concentrated phosphates. Phosphate Rock IMC-Agrico's phosphate mining operations and beneficiation plants are located in central Florida. IMC-Agrico extracts phosphate ore through surface mining after removal of a 10 to 50 foot layer of sandy overburden and then processes the ore at one of its six currently operating beneficiation plants (one additional plant has been idle since 1986) where the ore goes through washing, screening, sizing and flotation procedures designed to separate it from sands, clays and other foreign materials. IMC-Agrico's rock production volume for the years ended June 30, 1996, 1995 and 1994 totaled 23.7 million, 24.4 million and 18.1 million tons, respectively. Although IMC-Agrico sells phosphate rock to other crop nutrient manufacturers and distributors throughout the world, it primarily uses phosphate rock internally in the production of concentrated phosphates. Tons used captively, primarily in the manufacture of concentrated phosphates, totaled 14.7 million, 14.3 million and 12.4 million for the years ended June 30, 1996, 1995 and 1994, respectively, representing 62 percent, 59 percent and 69 percent, respectively, of total tons produced. Product shipments to customers totaled 7.6 million, 10.7 million and 8.8 million for the years ended June 30, 1996, 1995 and 1994, respectively. IMC-Agrico estimates its proven reserves to be 404 million tons of phosphate rock as of June 30, 1996. These reserves are controlled by IMC-Agrico through ownership, long-term lease, royalty or purchase option agreements. Reserve grades range from 58.0 percent to 78.0 percent bone phosphate of lime (BPL), with an average grade of 66.5 percent BPL. BPL is the standard industry term used to grade phosphate rock. The phosphate rock mined by IMC-Agrico in the last three years averaged 66.5 percent BPL, which is typical for phosphate rock mined in Florida during this period. The Company estimates its proven reserves based upon the performance of exploration drilling and technical and economic analyses to determine that reserves so classified can be economically mined at market prices estimated to prevail during the next five years. IMC-Agrico also owns or controls phosphate rock resources south of its current operations in central Florida (South Florida Resources). Resources are mineralized deposits which are believed to be economically recoverable at market prices estimated to prevail within the next five years, but for which additional prospect data and/or analyses, including further geological work, drilling and economic and mining feasibility studies, are required before they can be classified as proven reserves. Based upon its preliminary analysis of these resources, IMC-Agrico believes that these mineralized deposits differ in physical and chemical characteristics from those historically mined by IMC-Agrico but are similar to reserves being mined in the southern part of its current operations. The South Florida Resources contain estimated recoverable phosphate rock of approximately 330 million tons with an average grade of approximately 66.0 percent BPL. Some of these resources are located in what may be classified as unmineable wetland areas under standards set forth in current state and federal dredge and fill regulations. Sulphur The Company owns a 25 percent interest in a joint venture which began mining sulphur reserves at Main Pass 299 (Main Pass) offshore Louisiana in April 1992. In fiscal 1996, FRP, the joint venture operator, produced 2.1 million long tons of sulphur. Using a hot-water injection process, Main Pass is one of the most thermally efficient sulphur mines in the industry. The Company and FRP have an agreement to supply virtually all of IMC-Agrico's sulphur requirements. FRP supplies its portion of the requirements through its sulphur division, and the Company supplies its portion of the requirements through its share of Main Pass production and purchases from FRP and third parties. Ammonia IMC-Agrico's ammonia needs are supplied by its Faustina ammonia production facility and by domestic suppliers, primarily under long- term contracts. Production from the Faustina plant, which has an estimated annual capacity of 560,000 tons of anhydrous ammonia, is primarily used internally to produce DAP and urea. Sales and Marketing IMC-Agrico sells its concentrated phosphates to crop nutrient manufacturers, distributors and retailers in the spot market and under long-term contracts. The Company also uses concentrated phosphates internally for the production of animal feed ingredients (see IMC-Agrico Feed Ingredients), high-value crop nutrients (see IMC AgriBusiness) and consumer lawn and garden as well as professional turf and nursery products (see IMC Vigoro). Virtually all of IMC-Agrico's export sales of phosphate crop nutrients are marketed through the Phosphate Chemicals Export Association, a Webb-Pomerene Act organization. Outside of the United States, the countries which account for the largest amount of IMC-Agrico's sales of concentrated phosphates include China, India, Japan and Australia. The table below shows IMC-Agrico Crop Nutrients' shipments in thousands of tons of P2O5equivalent: 1996 1995 1994 ------------- ------------- ------------- Tons % Tons % Tons % -------------------------------------------- Domestic Customers 1,383 34% 1,319 33% 1,449 42% Captive, to other business units 487 12 504 13 440 13 ----- --- ----- --- ----- --- 1,870 46 1,823 46 1,889 55 Export 2,187 54 2,138 54 1,564 45 ----- --- ----- --- ----- --- Total shipments 4,057 100% 3,961 100% 3,453 100% ===== === ===== === ===== === Other IMC-Agrico Crop Nutrients also manufactures and markets uranium oxide. Phosphate rock is the source of uranium oxide, with the uranium content varying from deposit to deposit. Uranium oxide production facilities are located in Louisiana and Florida. In Louisiana, IMC-Agrico owns and operates uranium oxide recovery and processing facilities which are located adjacent to its Uncle Sam and Faustina concentrated phosphate plants. In 1996, these facilities recovered 1.0 million pounds of uranium oxide from phosphoric acid produced at these facilities. IMC-Agrico also owns uranium oxide recovery and processing facilities in central Florida, one located adjacent to its New Wales concentrated phosphate plant and one located adjacent to a concentrated phosphate plant owned and operated by a subsidiary of CF Industries (CF). The New Wales and CF facilities are temporarily idled. It is expected that New Wales production will resume in early calendar year 1997, so long as uranium market prices continue to warrant resumption of operations. Competition IMC-Agrico operates in a highly competitive global market. Among the competitors in the global phosphate crop nutrient market are domestic and foreign companies, as well as foreign government-supported producers. Phosphate crop nutrient producers compete primarily based on price, and to a lesser extent based on product quality and innovation. IMC Kalium Net sales for the IMC Kalium business unit were $455.6 million, $472.0 million and $354.7 million for the years ended June 30, 1996, 1995 and 1994, respectively. IMC Kalium mines, processes and distributes potash in the United States and Canada. The Company's products are marketed worldwide to crop nutrient manufacturers, distributors and retailers and are also used internally in the manufacture of mixed crop nutrients and, to a lesser extent, animal feed ingredients (see IMC AgriBusiness and IMC-Agrico Feed Ingredients). IMC Kalium's potash products are also used by IMC Vigoro for consumer and professional lawn and garden products as well as ice-melter. The Company also sells white potash to customers for industrial use. IMC Kalium operates four potash mines in Canada and two potash mines in the United States. In addition to the Company, there are eight North American producers -- five in the United States and three in Canada. With a total capacity of approximately nine million product tons per year, the Company is one of the leading private enterprise potash producers in the world. In 1996, these operations accounted for approximately 13 percent of world capacity. The term "potash" applies generally to the common salts of potassium. Since the amount of potassium in these salts varies, the industry has established a common standard of measurement by defining a product's potassium content in terms of equivalent percentages of potassium oxide (K2O). A K2O equivalent of 60 percent is the customary minimum standard for muriate of potash products. Canadian Operations The Company's four potash mines in Canada are located in the province of Saskatchewan, Canada. Two potash mines are interconnected at Esterhazy, one is located at Belle Plaine and one is located at Colonsay. The combined annual capacity of these four mines is approximately eight million tons. Esterhazy and Colonsay utilize shaft mining while Belle Plaine utilizes solution mining technology. Potash shaft mining takes place underground at depths of over 3,000 feet where continuous mining machines cut out the ore face and move jagged chunks of salt to conveyor belts. The ore is then crushed and moved to storage bins where it awaits hoisting to refineries above ground. In contrast, the Company's solution mining process involves heated water which is pumped through a "cluster" to dissolve the potash in the ore bed. A cluster consists of a series of boreholes drilled into the potash ore by a portable, all-weather electric drilling rig. A separate distribution center at each cluster controls the brine flow. The solution containing dissolved potash is pumped to a refinery where sodium chloride, a by-product of this process, is separated from the potash through the use of computer-controlled evaporation and crystallization techniques. Concurrently, solution is pumped into a 130-acre cooling pond where additional crystallization occurs and the resulting product is recovered at a low cost via a floating dredge. Refined potash is dewatered, dried and sized. The Canadian operations produce 26 different potash products, many through patented processes, including industrial grade products. Potash Corporation of Saskatchewan Inc. (PCS) controls several potash-producing properties in the province, including a property which consists of reserves located in the vicinity of the Company's Esterhazy mines. Under a long-term contract with PCS, the Company is obligated to mine and refine these reserves for a fee plus a pro rata share of production costs. The specified quantities of potash to be produced for PCS may, at the option of PCS, amount to an annual maximum of approximately one-fourth of the tons produced by Esterhazy, but no more than approximately 1.1 million tons. The current contract extends through June 30, 2001 and is renewable at the option of PCS for five additional five-year periods. The Company presently controls the rights to mine 207,644 acres of potash-bearing land in Saskatchewan. This land, of which 52,208 acres have already been mined or abandoned, contains over 1.4 billion tons of potash mineralization (calculated after estimated extraction losses) at an average grade of 24.5 percent K2O. This ore is sufficient to support current operations for more than a century and will yield more than 500 million tons of finished product with a K2O content of approximately 61.0 percent. IMC Kalium's mineral rights in Saskatchewan consist of 113,954 acres owned in fee, 70,613 acres leased from the province of Saskatchewan and 23,077 acres leased from other parties. All leases are renewable by the Company for successive terms of 21 years. Royalties, established by regulation of the province of Saskatchewan, amounted to approximately $2.4 million and $2.8 million in 1996 and 1995, respectively. In August 1995, the Company was chosen by the Minister of State for Mines and Energy for the Canadian province of New Brunswick to explore potash deposits near the town of Sussex. The Company has agreed to enter into a three-year agreement under which it will perform a geological reassessment of the property and feasibility study to determine whether to develop the potash deposits. Since December 1985, the Company has experienced an inflow of water into one of its two interconnected potash mines at Esterhazy. As a result, the Company has incurred additional costs to control the flooding. The Company has significantly reduced the water inflow since the initial discovery and has been able to meet all sales obligations and requirements from production at the mines. Despite the relative success of such measures, there can be no assurance that the amounts required for remedial efforts in future years will not increase or that inflows or remediation costs will not increase to a level which would cause the Company to change its mining process or to abandon the mines. The long-term outlook of the water inflow has caused the Company to consider alternatives to its current mining operations at Esterhazy. Any solution to the water inflow situation at the mines may result in substantial capital expenditures and/or charges to operations. Like other potash producers' shaft mines, the Company's Colonsay mine is also subject to the risks of inflow of water as a result of its shaft mining operations. The Saskatchewan potash mining industry generally has been unable to secure insurance to cover other risks associated with underground operations. Therefore, the Company's underground mine operations are not presently insured against, and are not insurable against, business interruption or risk from catastrophic perils, including collapse, floods and other water inflow. In January 1988, the U. S. Department of Commerce (Commerce) signed an agreement with all of the potash producers in Canada, suspending an investigation by Commerce to determine whether Canadian potash was, or was likely to be, sold in the United States at less than "fair value." The agreement stipulated that each such producer's minimum price for potash sold in the United States, compared with its potash prices in Canada, would be based upon a formula to assure that such product was sold in the United States at a price no less than "fair value." In January 1993, this agreement was extended by Commerce for an indefinite period. United States Operations The Company's two U. S. potash mines are located in Carlsbad, New Mexico, and Hersey, Michigan. The Carlsbad mine has an annual production capacity of over one million tons of finished product. The ore mined is of three types: (1) sylvinite, a mixture of potassium chloride and sodium chloride, the same as the ore mined in Saskatchewan; (2) langbeinite, a double sulphate of potassium and magnesium; and (3) a mixed ore, containing both potassium chloride and langbeinite. Continuous and conventional shaft mining methods are utilized for ore extraction at Carlsbad. In the continuous mining sections, drum type mining machines are used to cut sylvinite ore from the face. Mining heights are as low as four feet. In the conventional areas, a wide ore face is undercut and holes drilled to accept explosive charges. Ore from both continuous and conventional sections is loaded onto conveyors and transported to storage areas where it is hoisted above ground for further processing at the refinery. Three types of potash are produced at the Carlsbad refinery: muriate of potash, which is the primary source of potassium for the crop nutrient industry; a double sulphate of potash magnesia, marketed under the brand name Sul-Po-Mag(registered trademark), containing significant amounts of sulphur, potassium and magnesium, with low levels of chlorine; and sulphate of potash, supplying sulphur and a high concentration of potassium with low levels of chlorine. IMC Kalium believes it is the larger of the two U. S. producers of double sulphate of potash magnesia and the largest of several U. S. producers of sulphate of potash. At Carlsbad, the Company mines and refines potash from 43,239 acres of reserves which the Company controls under long-term leases. These reserves contain an estimated total of 155 million tons of potash mineralization (calculated after estimated extraction losses) in four mining beds evaluated at thicknesses ranging from five to 12 feet. At average refinery rates, these ore reserves are estimated to be sufficient to yield 11.1 million tons of concentrate from sylvinite with an average grade of 60 percent K2O and 27.6 million tons of langbeinite concentrate with an average grade of approximately 22 percent K2O. At current rates of production, the Company's reserves of sylvinite and langbeinite are estimated to be sufficient to support operations for more than 22 years. Since October 1989, the Company has mined a small amount of potash at Hersey, Michigan, using solution mining technology. The objective of this pilot plant was to test the feasibility of solution mining in the Hersey area and to test new technologies which could be applied to improve efficiencies at both the Belle Plaine and Hersey facilities. In June 1995, the Company announced its intention to invest approximately $43.0 million over the following two years to continue the planned development of the Hersey mine. Under the program, the plant's current annual potash production of approximately 50,000 tons would be increased to approximately 160,000 tons by April 1997. In addition, to enhance the potash recovery process, the mine would also begin producing roughly 300,000 tons of salt each year. The Company believes that this project is an important step forward in its strategy to increase potash sales and earnings in multiple markets. Through June 1996, $18.1 million has been expended on this development project, and $25.5 million of expenditures are expected in the next year. Sales and Marketing Potash is sold throughout the world, with the Company's largest amount of sales outside of the United States made in China, Japan, Malaysia, Korea, Australia, New Zealand and Latin America. Potash is also used internally in the manufacture of high-value crop nutrients, and by IMC Vigoro as a major ingredient in its ice-melter product as well as one of the primary nutrients in the consumer lawn and garden and professional turf and nursery products. The Company's exports from Canada, except to the United States, are made through Canpotex Limited, an export association of Saskatchewan potash producers. Exports from Carlsbad are sold through the Sulfate of Potash Magnesia Association, formed by the Company under the Webb-Pomerene Act. In 1996, 84 percent of the potash produced by the Company was sold as crop nutrients, while 16 percent was sold for non-agricultural uses. The table below shows IMC Kalium's shipments of potash in thousands of tons: 1996 1995 1994 ------------- ------------- ------------- Tons % Tons % Tons % -------------------------------------------- Domestic (includes Canada) Wholesale 4,112 57% 4,014 55% 3,487 61% Captive, to other business units 1,244 17 1,058 14 833 15 ----- --- ----- --- ----- --- 5,356 74 5,072 69 4,320 76 Export 1,864 26 2,281 31 1,351 24 ----- --- ----- --- ----- --- Total shipments 7,220 100% 7,353 100% 5,671 100% ===== === ===== === ===== === IMC Kalium has contractual commitments from outside customers for the shipment of potash amounting to approximately 1.8 million tons in fiscal 1997. Competition Potash is a commodity available from many sources, and the market is highly competitive. The Company competes with numerous other global potash producers, some of which may have greater production capacity than the Company. The Company, through its participation in Canpotex, competes outside of North America with various independent potash producers and consortia and other export organizations, including state- owned organizations. The Company's principal methods of competition, with respect to the sale of potash, are offering consistent, high- quality products and superior service, as well as developing new industrial and consumer uses for potash. IMC AgriBusiness Net sales for the IMC AgriBusiness business unit were $802.9 million, $760.8 million and $664.2 million for the years ended June 30, 1996, 1995 and 1994, respectively. Retail Operations The Company believes it is one of the largest retail fertilizer distributors in the United States. It operates a network of approximately 250 FARMARKET(registererd trademark)s, each of which carries a broad array of the Company's crop nutrients and related products. Substantially all of the FARMARKETs are located in the eastern midwest and southeastern regions of the United States, and are generally located in rural areas, primarily serving farmers located within a 15-20 mile radius. The FARMARKETs are clustered near and are partially supplied by the Company's production plants and terminals, many of which are located on major rivers and have storage facilities for liquid or dry crop nutrient materials. Each FARMARKET custom and bulk-blends crop nutrients to meet the needs of individual farmers for the specific crops grown in their areas. Pesticides, herbicides and seed are also purchased by the Company and sold through its FARMARKETs. One of the most successful FARMARKET programs is the Balanced Fertility Program which is designed to improve crop production through increased yields per acre. Key elements of this program include soil testing and programs to correct soil deficiencies. FARMARKETs also offer farmers the option of having the Company's employees apply crop nutrient and crop protection chemicals, saving time, labor costs and the cost of investment in specialized equipment required for such applications. FARMARKETs are generally staffed by a manager, one or two salespeople and hourly employees, some of whom are seasonal employees. The Company extensively trains its full-time FARMARKET employees in crop nutrient application and agronomics, business management and environmental compliance. This training is deemed to be essential to customer service. The majority of the Company's salaried FARMARKET employees have obtained certification from the Certified Crop Advisors Program as Certified Crop Advisors. Approximately 15 percent of the Company's FARMARKETs are owned and operated by independent dealers who purchase the Company's products on consignment. Blending and storage are performed at the dealer's place of business and the dealer is paid a commission determined by a sliding scale based on the volume and profit margin of the products sold. The Company recommends prices, approves credit extended by these dealers, owns the FARMARKET's working capital and often owns its blending equipment. FARMARKET sales, as well as wholesale sales discussed below, are largely concentrated in the spring planting season. Weather has a significant impact on the timing and length of the planting season and therefore can have a significant effect on crop-nutrient prices. Other Operations The Company sells agricultural crop nutrient products on a wholesale basis to independent dealers and distributors including those that perform services similar to those offered by FARMARKETs. These products are sold under the brand names Rainbow(registered trademark) and Super Rainbow(registered trademark) in the southeastern region of the United States and under various brand names in the midwestern region of the United States. IMC AgriBusiness operates several granulation plants throughout the United States which are used by both the retail and wholesale operations. In addition, the business unit operates numerous smaller facilities, which are used for bulk-blending and/or warehousing in connection with its retail and wholesale operations. Products The Company produces a broad range of nitrogen-based crop nutrients and related products including anhydrous ammonia, ammonium nitrate solutions, liquid urea, urea prills and other nitrogen-based solutions. These products are sold alone or mixed with phosphates, potash, micronutrients, non-liquid ammonium nitrate and other materials to produce a variety of bulk-blend fertilizers in either dry or liquid form. Most, if not all, of the potash and phosphate raw materials used by IMC AgriBusiness are supplied by the Company's IMC Kalium and IMC- Agrico Crop Nutrients business units, respectively. Certain of these products are marketed under the CERTIFIED HARVEST KING(trademark) brand. Liquid and dry products are blended according to the specific needs of the farmer. In addition to the standard urea prill, the Company produces a urea prill containing dicyandiamide (DCD) which gives the urea slow-release nitrogen characteristics. The Company also mixes DCD with nitrogen solutions. Products containing DCD, marketed by the Company under the name N TECH SR(trademark), provide farmers with a more efficient and environmentally-sensitive nitrogen source. The slow release DCD increases absorption of nitrogen by crops, thereby reducing the amount of nitrogen released into the environment. The Company has a year-to-year renewable purchase agreement with the world's largest producer of DCD. The Company also produces nitric acid, aqua ammonia and refrigerant- grade ammonia. Nitric acid is sold in various formulations to a wide variety of industrial users for use in metal platings, coatings and water treatment. The Company also produces food-grade carbon dioxide as a by-product of its ammonia production process. Food-grade carbon dioxide is used in carbonated beverages and as a refrigerant in food processing. Competition The marketing of crop nutrients to farmers on a national basis is highly fragmented, with success of individual retail outlets correlated to their market shares within a 15-20 mile radius of such outlets. Since crop nutrients are a basic commodity, the principal means of differentiating competing products is by offering personal services and agronomically efficient products which allow maximum yields while being sensitive to environmental concerns. The Company's FARMARKETs were developed to enhance the personal service concept and thereby differentiate the Company's products from those of competitors. Most of the Company's FARMARKETs have a substantial share of their respective local markets. The Company believes its nitrogen-based crop nutrients and related products are well positioned in both the retail and wholesale agricultural market sectors and in the industrial market sector. The Company's principal competitors in the agricultural crop nutrients market include cooperatives, which have the largest market share in a majority of the locations served by the Company, national producers, major grain companies and independent distributors and brokers. IMC-Agrico Feed Ingredients In October 1995, IMC-Agrico acquired the animal feed ingredients business of Mallinckrodt Group Inc. This business is one of the world's foremost producers and marketers of phosphate-based animal feed ingredients with an annual capacity in excess of 700,000 tons, supplying poultry and livestock feed ingredients to markets in North America, Latin America and Asia. In 1996, since acquisition, IMC-Agrico Feed Ingredients produced 486,000 tons of animal feed ingredients. The principal production facilities of IMC-Agrico Feed Ingredients are located adjacent to IMC-Agrico's concentrated phosphate complex at New Wales in central Florida. IMC-Agrico Feed Ingredients also markets potassium-based feed products produced at the Company's potash facilities. The Company has a strong brand position in the $1 billion global market with products such as Biofos(registered trademark), Dynafos(registered trademark), Multifos(registered trademark), Dyna-K(registered trademark) and Dynamate(registered trademark). IMC Vigoro Through its IMC Vigoro business unit, the Company sells specialty crop nutrient products consisting of lawn and garden and turf and nursery products. The lawn and garden products are sold throughout the United States primarily to major national retail chains under private label and Vigoro brands, and the turf and nursery products are sold to golf courses, nurseries, landscape contractors and institutions directly and through independent distributors. IMC Vigoro also sells environmentally-sensitive potassium-based ice-melter products under various brands throughout the midwest and eastern snowbelt states. FACTORS AFFECTING DEMAND The Company's results of operations historically have reflected the effects of several external factors which are beyond the Company's control and have in the past produced significant downward and upward swings in the Company's operating results. The Company's revenues, approximately 71 percent of which have come from North American sales over the past five years, are highly dependent upon conditions in the North American agriculture industry and can be affected by crop failure, changes in agricultural production practices, government policies and weather. Furthermore, because of the high percentage of its revenues coming from North American sales, the Company's crop nutrients business is seasonal to the extent U. S. farmers and agricultural enterprises purchase more crop nutrient products during the spring and fall. Approximately 29 percent of the Company's revenues has come from sales outside North America over the past five years. The Company's foreign operations and investments and any future international expansion by the Company are subject to numerous risks, including fluctuations in foreign currency exchange rates and controls, expropriation and other economic, political and regulatory policies of local governments and laws and policies of the United States and Canada affecting foreign trade and investment. Due to economic and political factors, customer needs can change dramatically from year to year. See also Note 20 - Operations by Geographic Area of Notes to Consolidated Financial Statements, incorporated herein by reference, for additional information. In 1996, sales of concentrated phosphates and potash to China accounted for approximately 17 percent of the Company's net sales. No single customer or group of affiliated customers accounted for more than ten percent of the Company's net sales. OTHER MATTERS Environmental Matters General In the normal course of its business, the Company mines phosphate and potash, manufactures and blends crop nutrients, and blends crop nutrients with pesticide products. These operations are subject to federal, state, provincial and local environmental, health and safety laws in the United States and Canada, including laws related to air and water quality; management of hazardous and solid wastes; management and handling of raw materials and products; and land reclamation. The Company has expended, and anticipates that it will continue to expend, substantial resources, both financial and managerial, to comply with environmental regulations, permitting and reclamation requirements, and health and safety standards. Additionally, although the Company believes that its operations generally satisfy environmental standards, there can be no assurance that costs, penalties or liabilities will not be incurred. The Company does not believe that its expenditures for environmental, health or safety compliance have had a material adverse effect on its operations or financial condition. For fiscal year 1996, environmental capital expenditures totaled approximately $21.2 million and were primarily related to air emissions permitting and control, ground and surface water protection, wastewater treatment and control and solid waste management. Additional expenditures for land reclamation activities totaled $19.2 million. For fiscal year 1997, the Company expects environmental capital expenditures to be approximately $46.0 million and expenditures for land reclamation activities to be approximately $24.0 million. Environmental capital is expected to increase in 1997 as a result of phosphogypsum stack and settling area expansion projects as well as spending for air emissions control. No assurance can be given that greater environmental expenditures will not be required for fiscal year 1997 or that environmental expenditures in future years will not increase. Environmental, health and safety laws and regulations in the United States and Canada have changed substantially and rapidly in recent years, and the Company anticipates that these changes will continue. It is the Company's policy to comply with all applicable environmental, health and safety laws and regulations. It is difficult to estimate future compliance costs, however, if implementing regulations have not yet been finalized or are subject to varying and conflicting interpretations. Nevertheless, because new environmental standards generally are more restrictive than current requirements, the costs of complying with such regulations will likely increase. Permitting The Company holds numerous environmental and other permits authorizing operations at each of its facilities. A decision by a government agency to deny an application for a new or renewed permit, or to revoke or substantially modify an existing permit, could have a material adverse effect on the Company's ability to continue operations at the affected facility. Expansion of Company operations also is predicated upon securing the necessary environmental and other permits. Air Quality The 1990 Amendments to the Clean Air Act require certain sources to increase controls on emissions of conventional and hazardous air pollutants. During 1996, several of the Company's facilities have applied for, or will apply for, such operating permits. In addition, by the year 2000 the United States Environmental Protection Agency is expected to promulgate control standards for hazardous air pollutants applicable to certain of the Company's operations. Capital expenditures, which could be significant, might be necessary to meet the regulatory or permit requirements. Because the operating permits have not been issued and the regulatory requirements have not been finalized, the Company cannot estimate the extent of these expenditures. Process Safety Management and Risk Management Planning Several of the Company's facilities are subject to Process Safety Management (PSM) standards under the Occupational Safety and Health Act and to the recently promulgated Risk Management Planning (RMP) requirements under the Clean Air Act. PSM standards require covered facilities with processes that handle certain chemicals to implement written safety management plans, procedures and employee training. RMP rules require covered facilities to establish plans for preventing and responding to accidental releases. Under RMP, facilities also must release to the public information about regulated processes and release prevention programs, the potential for accidental releases and the facility's "worst case" release scenarios and their potential effects on nearby populations. The Company continues to implement the required programs and prepare for compliance with the new RMP rule. As compliance efforts proceed, the anticipated costs to complete these planning processes could be substantial. Management of Residual Materials Phosphate and potash mining and processing produce tailings or other residual materials that must be managed. Phosphate residuals, consisting primarily of phosphogypsum, typically are stored in phosphogypsum stack systems. Potash producers generally store tailings, which contain primarily salt, iron and clay, in surface disposal sites. The Company has incurred and will continue to incur significant costs to manage its phosphate and potash residual materials in accordance with environmental laws, regulations and permit requirements. To address concerns about potash tailings management, the Saskatchewan Department of Environmental and Resource Management (the Department) published regulations in 1994 requiring all potash mine operators: (i) to submit facility decommissioning and reclamation plans for approval; and (ii) to provide assurances that the plans will be carried out. The decommissioning and reclamation plans and related assurances cover all facilities at a mine, including surface disposal sites for potash tailings. The Company has filed or will file its decommissioning plans during calendar 1996. Implementation of the plans probably will be deferred until an affected facility is closed, which the Company does not anticipate in the foreseeable future. Until all of the decommissioning plans have been prepared and approved, the Company, like all members of the Saskatchewan potash industry, is unable to predict with certainty the financial impact of the regulations on the Company. With regard to phosphate processing, Florida law may require IMC- Agrico to close one or more of its unlined phosphogypsum stacks and/or associated cooling ponds after March 25, 2001, if the stack system is demonstrated to cause a violation of Florida's water quality standards. IMC-Agrico has already filed an application with Florida's Department of Environmental Protection to close the unlined gypsum stack at its New Wales facility in central Florida. Closure activities would begin on July 1, 1998 and would cost approximately $2.5 million, net of recorded accruals, for construction activities over a period of five years. IMC-Agrico cannot predict at this time whether Florida will require closure of any of its stack systems. The costs of such closure could be significant. IMC-Agrico continues to address elevated sulfate levels in groundwater at its New Wales facility. In 1992, elevated sulfate levels were detected in groundwater beneath the cooling pond. In response, the Central Florida Regional Planning Council required IMC-Agrico to plug former recharge wells (believed to be the source of the elevated sulfate levels) and either to show, by September 1997, that groundwater sulfate levels have returned to acceptable levels or to line or relocate the cooling pond. Recent monitoring data has evidenced a downward trend in the sulfate levels. If the downward trend continues, IMC-Agrico likely will meet the 1997 deadline. If sulfate levels do not reach acceptable levels, IMC-Agrico will request an extension of the 1997 deadline. The estimated cost to line or relocate the cooling pond could be in the range of $50.0 million. Remedial Activities The historical use and handling of regulated chemical substances and crop nutrient products in the normal course of the Company's business has resulted in contamination at facilities presently or previously owned or operated by the Company. The Company has also purchased facilities that were contaminated by previous owners through their use and handling of regulated chemical substances. Spills or other unintended releases of regulated substances have occurred in the past, and potentially could occur in the future, possibly requiring the Company to undertake or fund cleanup efforts. The Company cannot estimate the level of expenditures that may be required in the future to clean up contamination from the handling of regulated chemical substances or crop nutrients. At some locations, the Company has agreed, pursuant to consent orders with the appropriate governmental agencies, to undertake certain investigations (which currently are in progress) to determine whether remedial action may be required to address contamination. The cost of any remedial actions that ultimately may be required at these sites currently cannot be determined. The Company believes that it is entitled to at least partial indemnification for a portion of the costs that may be expended by the Company to remedy environmental issues at certain facilities and operations pursuant to indemnification agreements. These agreements address issues that resulted from activities occurring prior to the Company's acquisition of facilities from parties including PPG Industries, Inc., Kaiser Aluminum & Chemical Corporation, Beatrice Companies, Inc., Estech, Inc. and certain private parties. The Company has already received and anticipates receiving amounts pursuant to the indemnification agreements for certain of its expenses incurred to date. Superfund The Comprehensive Environmental Response Compensation Liability Act (CERCLA), also known as "Superfund," imposes liability without regard to fault or to the legality of a party's conduct on certain categories of persons that are considered to have contributed to the release of "hazardous substances" into the environment. Currently, the Company is involved in or concluding involvement at a number of Superfund sites. With one possible exception, discussed below, at none of these sites alone, nor in the aggregate, is the Company's liability currently expected to be material. As more information is obtained regarding the sites and the potentially responsible parties (PRPs) involved, this expectation may change. IMC-Agrico is one of 70 PRPs participating in investigation of the Petroleum Products Site in Florida. To date, the PRP group has spent approximately $2.7 million to address waste oil remaining on site and expects to spend up to an additional $3.3 million on these activities. Remedial cost estimates to clean up on-site soils and structures range from $2.0 million to $40.0 million. Cost estimates have not yet been developed for groundwater remediation. IMC-Agrico tentatively has been placed 27th on the list of 70 members within the PRP group. The group also has identified approximately 1,000 additional PRPs. Because investigation of the site is incomplete and the required remedy has not been selected, a reliable estimate of cleanup costs, and IMC-Agrico's contribution to those costs, cannot be made at this time. Employees The Company had approximately 9,200 employees at June 30, 1996. The work force consisted of 3,614 salaried, 5,523 hourly and 63 temporary or part-time employees. Labor Relations The Company has 18 collective bargaining agreements with eight international unions or their affiliated local chapters. Nine agreements covering 40 percent of the hourly work force were negotiated during calendar 1995, and three agreements covering two percent of the hourly work force have been negotiated to date in calendar 1996. Resulting wage and benefit increases were consistent with competitive industry and community standards. One agreement covering less than one percent of the hourly work force will expire during the remainder of calendar 1996. The Company has not experienced a significant work stoppage in recent years and considers its employee relations to be good. Item 2. Properties. Information regarding the plant and properties of the Company is included in Item 1, "Business." Item 3. Legal Proceedings. ENVIRONMENTAL PROCEEDINGS Information regarding environmental proceedings is included in Item 1, "Business-Other Matters." Sterlington Litigation Angus Chemical Company (Angus) and the Company are involved in various litigation arising out of a May 1991 explosion at a nitroparaffins plant located in Sterlington, Louisiana. Angus wants the Company to assume responsibility for a class action lawsuit currently pending in Louisiana against the Company, Angus, and other defendants for injuries arising out of the explosion, and to reimburse Angus for amounts that Angus has paid for settled claims in connection with the Sterlington explosion. With respect to the settled demands, Angus, in pleadings filed in Louisiana and Texas, states that it is seeking approximately $9.5 million, plus interest, fees, and costs. In addition, Angus is seeking direct payment from the Company's insurers, X.L. Insurance Company, Ltd. (XL) and A.C.E. Insurance Company, Ltd. (ACE) for certain damages in an action pending in Louisiana state court. Angus has not specified how much it is seeking from the Company's insurers. Angus may be asserting claims against XL for the difference between the limits of the XL policy of $75.0 million and the $45.7 million that XL has paid to the Company under the policy. In addition, Angus may be asserting claims against ACE for the difference between the limit of the ACE policy of $100.0 million and the $15.0 million that ACE previously paid to the Company. The Company may have obligations to indemnify certain of the insurers if Angus is successful in this case. The Company is unable to estimate the magnitude of its exposure at this time. The Company continues to vigorously litigate each of the matters arising out of the Sterlington explosion. A jury trial is scheduled to commence in March 1997 in Texas state court with respect to Angus' and the Company's claims for contribution and indemnity for the settled demands. Discovery is still not complete with respect to the lawsuits scheduled for trial in March 1997, and all of the other lawsuits are in early stages. In addition, Angus has filed an action in federal court in Louisiana seeking reimbursement for amounts allegedly expended to remediate certain environmental sites at the Sterlington plant. In its pleadings filed with the Louisiana federal court, Angus states that it is seeking approximately $1.8 million for amounts expended, plus interest, fees, costs and reimbursement for any future expenses. The Company is unable to estimate the magnitude of its exposure at this time. Potash Antitrust Litigation A number of class action suits have been filed in United States federal courts, two California state courts and an Illinois state court against most of the North American potash producers, including the Company. The complaints essentially allege that the North American potash producers acted together to fix the price of potash sold in the United States. The complaints do not specify the amount of damages sought by the plaintiffs. All of the complaints seek treble damages and attorneys' fees and ask that the court find the defendants jointly and severally liable. Suits filed in federal courts in Minnesota, Illinois and Virginia have been consolidated in Minnesota. All of the claims in these suits are asserted on behalf of a purported group of direct purchasers of potash in the United States, which class has been certified by the court. Discovery is now concluded in the case. The federal magistrate overseeing the case has formally recommended dismissal of the suit by summary judgment. In addition to the direct purchaser actions filed in the United States District Courts, two complaints have been filed in California state courts on behalf of indirect purchasers residing in California. The Company has answered both of the California complaints and has denied all material allegations. These cases are still in a preliminary stage and no discovery has been conducted. The case filed in Illinois state court has been dismissed for failure to state a claim. Plaintiffs have appealed the dismissal. The Company is not able to estimate the amount of damages that could ultimately be sought in the civil suits. Based upon available information, management of the Company believes that the Company has not acted in concert with others to fix prices in violation of the United States antitrust laws or any other laws. There can be no assurance, however, that these cases will ultimately be decided in a manner favorable to the Company. In connection with the Company's Colonsay mine, affiliates of Noranda Inc. (Noranda), from whom the Company purchased the mine in January 1995, are also named as defendants in the civil suits. The Company did not agree to assume any liabilities of Noranda or such affiliates with respect to operations at Colonsay prior to the closing of the purchase which may arise out of such antitrust litigation, and the Company is entitled to be indemnified by Noranda against such liabilities should they arise. The Antitrust Division of the United States Department of Justice had been conducting a grand jury investigation into allegations similar to those made in the civil actions. In June 1996, the Company was advised that the investigation was concluded and a spokesperson for the Antitrust Division has stated that no action will be taken. FTC Phosphate Operations Inquiry The Company was notified on October 2, 1995 by the Federal Trade Commission (FTC) that the FTC is conducting an investigation to determine whether manufacturers of concentrated phosphates may have violated Section 5 of the Federal Trade Commission Act, as amended, by agreeing to restrict output or raise prices. The FTC has requested that the Company provide certain information and documents regarding the Company's phosphate operations. The Company has submitted responsive information and documents to the FTC. The FTC has stated that neither its request for information and documents nor the fact it has commenced an investigation should be construed as indicating that a violation has occurred or is occurring. Other In the ordinary course of its business, the Company is involved in routine litigation. Item 4. Submission of Matters to a Vote of Security Holders. There were no matters submitted to a vote of security holders, through the solicitation of proxies or otherwise, during the three months ended June 30, 1996. EXECUTIVE OFFICERS OF THE REGISTRANT The ages and five-year employment history of the Company's executive officers at August 30, 1996 were as follows: Wendell F. Bueche Age 65. Chairman and Chief Executive Officer of the Company; President of the Company from 1993 until 1994; joined the Company in 1993; retired from full time employment from 1989 until 1993; member of the Board of Directors of the Company since 1991. Robert E. Fowler, Jr. Age 60. President and Chief Operating Officer of the Company; joined the Company in March 1996; President of The Vigoro Corporation from July 1993 through February 1996; Chief Executive Officer of The Vigoro Corporation from September 1994 through February 1996; also served as Chief Operating Officer of The Vigoro Corporation; President and Chief Executive Officer of BCC Industrial Services from June 1991 to June 1993; member of the Board of Directors of the Company since 1996. C. Steven Hoffman Age 47. Senior Vice President of the Company; Senior Vice President, Marketing from 1993 until 1994; Senior Vice President, Sales from 1992 until 1993; Senior Vice President, Wholesale Marketing from 1990 until 1992; joined the Company in 1974. B. Russell Lockridge Age 46. Senior Vice President, Human Resources of the Company; joined the Company in July 1996; Corporate Director, Executive Compensation and Development at FMC Corporation from 1983 to 1996. Anne M. Scavone Age 33. Controller of the Company; joined the Company in April 1993; Director, Joint Venture Finances from April 1995 to April 1996; Joint Venture Financial Coordinator from April 1993 to April 1995; Manager, Ernst & Young from July 1990 to April 1993. Brian J. Smith Age 52. Executive Vice President, Chief Financial Officer and Treasurer of the Company; joined the Company in February 1996; Executive Vice President and Chief Financial Officer at W. R. Grace & Co. from 1989 to 1995. Marschall I. Smith Age 51. Senior Vice President and General Counsel of the Company; joined the Company in 1993; Senior Vice President and General Counsel of American Medical International from 1992 until 1993; Associate General Counsel of Baxter International from 1980 to 1992. All of the Company's executive officers are elected annually, with the terms of the officers listed above to expire in October 1996. No "family relationships," as that term is defined in Item 401(d) of Regulation S-K, exist among any of the listed officers. PART II. Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters. COMMON STOCK PRICES AND DIVIDENDS Quarter ------------------------------------- Fiscal 1996 First Second Third Fourth - ---------------------------------------------------------------------- Dividends per common share $ 0.05 0.08 0.08 0.08 Common stock prices: High $33.313 40.875 43.250 39.875 Low $27.000 30.313 33.625 32.250 Quarter ------------------------------------- Fiscal 1995 First Second Third Fourth - ---------------------------------------------------------------------- Dividends per common share - $0.05 0.05 0.05 Common stock prices: High $22.313 22.375 26.250 27.313 Low $17.063 18.125 20.625 22.250 The Company's common stock is traded on the New York and Chicago Stock Exchanges under the symbol IGL. As of August 30, 1996, the Company had 92,419,558 shares of common stock outstanding, excluding 5,545,884 treasury shares. Common stock prices are from the composite tape for New York Stock Exchange issues as reported in The Wall Street Journal. Data in the table above have been restated to reflect a 2-for- 1 stock split, effected in the form of a 100 percent stock dividend distributed on November 30, 1995. As of August 30, 1996, the number of registered holders of common stock as reported by the Company's registrar was 479. However, an indeterminable number of shareholders beneficially own shares of the Company's common stock through investment funds and brokers. For the year ended June 30, 1996, the Company paid $35.5 million of cash dividends. The Company's debt instruments contain provisions which limit the Company's ability to pay dividends on its common stock. See "Management's Discussion and Analysis of Results of Operations and Financial Condition - Capital Resources and Liquidity" incorporated herein by reference. Item 6. Selected Financial Data. The information for the years 1992 through 1996 contained under the heading "Five Year Comparison" appearing on page 72 of the Company's 1996 Annual Report to Stockholders is incorporated herein by reference. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. The information contained under the heading "Management's Discussion and Analysis of Results of Operations and Financial Condition" appearing on pages 34 through 47 of the Company's 1996 Annual Report to Stockholders is incorporated herein by reference. Item 8. Financial Statements and Supplementary Data. The Company's Consolidated Financial Statements and Notes thereto appearing on pages 50 through 71 of the Company's 1996 Annual Report to Stockholders, together with the report thereon of Ernst & Young LLP dated July 31, 1996, appearing on page 48 of such Annual Report and the information contained under the heading "Quarterly Results (unaudited)" appearing on page 73 of such Annual Report, are incorporated herein by reference. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. Not applicable. PART III. Item 10. Directors and Executive Officers of the Registrant. The information contained under the headings "The Annual Meeting-- Election of Directors" and "Beneficial Ownership of Common Stock-- Section 16(a) Beneficial Ownership Reporting Compliance" included in the Company's definitive Proxy Statement for the 1996 Annual Meeting of Stockholders and the information contained under the heading "Executive Officers" in Part I hereof is incorporated herein by reference. Item 11. Executive Compensation. The information under the heading "Executive Compensation" included in the Company's definitive Proxy Statement for the 1996 Annual Meeting of Stockholders is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management. The information under the heading "Beneficial Ownership of Common Stock" included in the Company's definitive Proxy Statement for the 1996 Annual Meeting of Stockholders is incorporated herein by reference. The Company knows of no contractual arrangements which may, at a subsequent date, result in a change in control of the Company. Item 13. Certain Relationships and Related Transactions. The information under the headings "Executive Compensation" and "Transactions with Principal Stockholders, Directors and Executive Officers" included in the Company's definitive Proxy Statement for the 1996 Annual Meeting of Stockholders is incorporated herein by reference. PART IV. Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8- K. (a) (1)The financial statements and other financial data of IMC Global, listed below and included in the Company's 1996 Annual Report to Stockholders, are incorporated herein by reference: Report of Independent Auditors. Consolidated Statement of Earnings - Years ended June 30, 1996, June 30, 1995 and June 30, 1994. Consolidated Balance Sheet - At June 30, 1996 and June 30, 1995. Consolidated Statement of Cash Flows - Years ended June 30, 1996, June 30, 1995 and June 30, 1994. Consolidated Statement of Changes in Stockholders' Equity - Years ended June 30, 1996, June 30, 1995 and June 30, 1994. Notes to Consolidated Financial Statements. (a)(2) All schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted. (a)(3) The exhibits listed in the following index have previously been filed with the Securities and Exchange Commission or are being filed as part of this report. Filed with Exhibit Incorporated Herein Electronic No. Description By Reference to Submission - -------------------------------------------------------------------- 3.1 Restated Certificate of Company's Report on Incorporation, as amended Form 8-K dated November 1, 1994 3.2 By-Laws, amended as of July Company's Report on 2, 1991, and as currently in Form 8-K dated July effect 2, 1991 3.3 Rights Agreement dated June Company's Report on 21, 1989, amended as of Form 8-A/A dated August 17, 1995, with The September 7, 1995. First National Bank of Chicago (including the Shareholder Rights Plan). Filed with Exhibit Incorporated Herein Electronic No. Description By Reference to Submission - -------------------------------------------------------------------- 3.4 Certificate of Amendment to Exhibit 3.2 to the Restated Certificate of Company's Incorporation, dated October Registration 23, 1995 Statement on Form 8- A/A-1 dated January 12, 1996 3.6 By-Laws, amended as of March Exhibit 4.4 to the 4, 1996, and as currently in Company's Post- effect Effective Amendment No. 1 on Form S-8 to Form S-4 (No. 333-0439) 4.1 Indenture dated as of Exhibit 4.4 to the December 1, 1991 between the Company's Form SE Registrant and The Bank of filed on December New York, as Trustee, 3, 1991 relating to $100,000,000 aggregate principal amount of 9.45% Senior Debentures due 2011 4.2 Form of Senior Debentures Exhibit 4.5 to the due 2011 Company's Form SE filed on December 3, 1991 4.3 Indenture dated as of Exhibit 4.6 to the December 1, 1991 between the Company's Form SE Registrant and The Bank of filed on December New York, as Trustee, 3, 1991 relating to $115,000,000 aggregate principal amount of 6 1/4% Convertible Subordinated Notes due 2001 4.4 Form of Convertible Exhibit 4.7 to the Subordinated Notes due 2001 Company's Form SE filed on December 3, 1991 4.5 Supplemental Indenture, Exhibit 4.5 to the dated as of June 29, 1993, Company's between the Registrant and Registration The Bank of New York, as Statement on Form S- Trustee, relating to the 4, (No. 33-49795) Senior Debentures Filed with Exhibit Incorporated Herein Electronic No. Description By Reference to Submission - -------------------------------------------------------------------- 4.6 Supplemental Indenture, Exhibit 4.6 to the dated as of June 29, 1993, Company's between the Registrant and Registration The Bank of New York, as Statement on Form S- Trustee, relating to the 4, (No. 33-49795) Convertible Subordinated Notes 4.7 Indenture, dated as of June Exhibit 4.7 to the 15, 1993, between IMC Global Company's Inc. and NationsBank of Registration Georgia, National Statement on Form S- Association, as Trustee 4, (No. 33-49795) 4.8 First Supplemental Exhibit 4.1 to the Indenture, dated as of Company's Report on October 13, 1993, between Form 8-K dated IMC Global Inc. and October 12, 1993 NationsBank of Georgia, National Association, as Trustee 4.9 First Supplemental Indenture, dated as of September 5, 1996, between IMC Global Inc. and The Bank Of New York, as successor trustee to NationsBank of Georgia, which amends and supplements the Indenture dated as of June 15, 1993, between IMC Global Inc. and the trustee relating to the issuance of 10 1/8% Senior Notes due 2001 and 10 1/8 % Series B Senior Notes Due 2001 X Filed with Exhibit Incorporated Herein Electronic No. Description By Reference to Submission - -------------------------------------------------------------------- 4.10 Second Supplemental Indenture, dated as of September 3, 1996, between IMC Global Inc. and The Bank Of New York, as successor trustee to NationsBank of Georgia, which amends and supplements the Indenture dated as of October 1, 1993, between IMC Global Inc. and the trustee and the Supplemental Indenture dated as of October 1, 1993 between IMC Global Inc. and the trustee, relating to the issuance of a series of Senior Debt Securities known as the 9 1/4% Senior Notes due 2000. X 10.1 Intercorporate Agreement Exhibit 10.1 to the dated as of July 1, 1987, by Company's and between Mallinckrodt and Registration IMC Global Operations Inc. Statement on Form S- with Exhibits, including the 1, (Amendment No. Restated Certificate of 2) Incorporation of IMC Global (No. 33-17091) Inc., as amended; By-Laws of IMC Global Inc.; Preliminary Agreement for K-2 Advances; Registration Rights Agreement; Services Agreement; Management Services Agreement; Agreement regarding Pollution Control and Industrial Revenue Bonds; License Agreement; office lease and sublease; management agreements; supply agreements; and transportation service agreements 10.2 Supply agreements (Included Exhibit 10.1 to the in Exhibit 10.1) Company's Registration Statement on Form S- 1, (No. 33-17091) Filed with Exhibit Incorporated Herein Electronic No. Description By Reference to Submission - -------------------------------------------------------------------- 10.3 Agreement dated June 27, Exhibit 10.6 to the 1985, supplementing, Company's amending and continuing Registration Potash Resource Payment Statement on Form S- Agreement dated October 15, 1, (Amendment No. 1979, between Mallinckrodt 2) and the Province of (No. 33-22914) Saskatchewan 10.4 Mining and Processing Exhibit 10.7 to the Agreement dated January 31, Company's 1978, between Potash Registration Corporation of Saskatchewan Statement on Form S- Inc. and International 1, (No. 33-17091) Minerals & Chemical (Canada) Global Limited 10.5 * Management Incentive Exhibit 10.5 to the Compensation Program, as 1995 Annual Report amended through July 1, on Form 10-K 1995, and as currently in effect 10.6 * 1991 Long-Term Performance Exhibit 10.7 to the Incentive Plan, as amended Company's through July 2, 1991, and as Registration currently in effect Statement on Form S- 1 (No. 33-17091) 10.7 * 1988 Stock Option & Award Exhibit 10.7 to the Plan, as amended through Company's July 2, 1991, and as Registration currently in effect Statement on Form S- 1 (No. 33-17091) 10.8 * 1994 Stock Option Plan for Exhibit 4(a) to the Non-Employee Directors Company's Registration Statement on Form S- 8 (No. 33-56911) 10.9 * Retirement Plan for Salaried Exhibit 10.9 to the Employees, as amended 1995 Annual Report through November 1, 1994, on Form 10-K and as currently in effect Filed with Exhibit Incorporated Herein Electronic No. Description By Reference to Submission - -------------------------------------------------------------------- 10.10* Supplemental Benefit Plan Exhibit 10.12 to the Company's Registration Statement on Form S- 1 (No. 33-17091) 10.11* Supplemental Executive Exhibit 10.7 to the Retirement Plan, as amended Company's through June 30, 1992, and Registration as currently in effect Statement on Form S- 1 (No. 33-17091) 10.12* Investment Plan for Salaried Exhibit 10.12 to Employees, as amended the 1995 Annual through July 1, 1994, and as Report on Form 10-K currently in effect 10.13 Suspension Agreement Exhibit 10.17 to concerning Potassium the Company's Chloride from Canada among Registration the U.S. Department of Statement on Form S- Commerce and the signatory 1 purchasers/exporters of (No. 33-17091) potassium chloride from Canada dated January 7, 1988 10.14 Settlement Agreement dated Exhibit 10.18 to as of November 3, 1987, by the Company's and among the Board of Registration Trustees of the Internal Statement on Form S- Improvement Trust Fund of 1 the State of Florida, the (No. 33-17091) Department of Natural Resources of the State of Florida and Mallinckrodt 10.15* Management Compensation and Exhibit 10.17 to Benefit Assurance Program, the Company's as amended through June 30, Registration 1992, and as currently in Statement on Form S- effect 1 (No. 33-17091) 10.16* Corporate Staff Employee Exhibit 10.32 to Severance & Benefit the 1989 Annual Assurance Policy Report on Form 10-K Filed with Exhibit Incorporated Herein Electronic No. Description By Reference to Submission - -------------------------------------------------------------------- 10.17* Form of Trust Agreement with Exhibit 10.33 to Wachovia Bank & Trust Co., the 1992 Annual N.A., as amended through Report on Form 10-K August 15, 1991 10.18* Form of Contingent Exhibit 10.18 to Employment Agreement dated the 1995 Annual September 1, 1995, with Report on Form 10-K Officers of Corporation 10.19* Directors Retirement Service Exhibit 10.36 to Plan the 1989 Annual Report on Form 10-K 10.20* Form of "Gross Up" Agreement Exhibit 10.20 to dated September 1, 1995, the 1995 Annual with Officers of Report on Form 10-K Corporation, as amended 10.21 Sulphur Joint Operating Exhibit 10.40 to Agreement dated as of May 1, the 1990 Annual 1988, among Freeport-McMoRan Report on Form 10-K Resource Partners, IMC Global Operations Inc. and Felmont Oil Corporation 10.22 Oil/Gas Operating Agreement Exhibit 10.41 to dated as of June 5, 1990, the 1990 Annual among Freeport-McMoRan Report on Form 10-K Resource Partners, IMC Global Operations Inc. and Felmont Oil Corporation 10.23 Agreement in Principle dated Exhibit 10.43 to September 7, 1990, with the 1990 Annual Mallinckrodt Report on Form 10-K 10.24 Agreement dated as of Exhibit 10.44 to September 12, 1990, with the 1990 Annual Mallinckrodt Report on Form 10-K 10.25 Memorandum of Agreement as Exhibit 10.51 to of December 21, 1990, the 1991 Annual amending Mining and Report on Form 10-K Processing Agreement of January 31, 1978, between Potash Corporation of Saskatchewan Inc. and International Minerals & Chemical (Canada) Global Limited Filed with Exhibit Incorporated Herein Electronic No. Description By Reference to Submission - -------------------------------------------------------------------- 10.26 Division of Proceeds Exhibit 10.52 to Agreement dated December 21, the 1991 Annual 1990, between Potash Report on Form 10-K Corporation of Saskatchewan Inc. and International Minerals & Chemical (Canada) Global Limited 10.27 Directors' Retirement Exhibit 10.54 to Services Plan Effective July the 1992 Annual 1, 1989 Report on Form 10-K 10.28 Contribution Agreement dated Exhibit 10.55 to April 5, 1993 between the Company's March Freeport-McMoRan Resource 31, 1993 Form 10- Partners, Limited Q/A (Amendment No. Partnership and IMC Global 1) filed on May 19, Operations Inc. 1993 10.29 Form of Partnership Exhibit 10.29 to Agreement, dated as of July the 1995 Annual 1, 1993, as further amended Report on Form 10-K and restated as of May 26, 1995, between IMC-Agrico GP Company, Agrico L.P. and IMC- Agrico MP Inc., including definitions 10.30 Form of Parent Agreement, Exhibit 10.30 to dated as of July 1, 1993, as the 1995 Annual further amended and restated Report on Form 10-K as of May 26, 1995, between IMC Global Operations Inc., Freeport-McMoRan Resource partners, Limited Partnership, Freeport- McMoRan Inc. and IMC-Agrico Company 10.31 Amendment, Waiver and Exhibit 10.31 to Consent, dated May 26, 1995, the 1995 Annual among IMC Global Inc., IMC Report on Form 10-K Global Operations Inc., IMC- Agrico GP Company, IMC- Agrico MP, Inc., IMC-Agrico Company, Freeport-McMoRan Inc., Freeport-McMoRan Resource Partners, Limited Partnership, and Agrico, Limited Partnership Filed with Exhibit Incorporated Herein Electronic No. Description By Reference to Submission - -------------------------------------------------------------------- 10.32 Agreement and Plan of Exhibit 10.32 to Complete Liquidation and the 1995 Annual Dissolution, dated May 26, Report on Form 10-K 1995, among IMC Global Operations Inc., IMC-Agrico GP Company, and IMC-Agrico MP, Inc. 10.33 Sterlington Settlement Exhibit 10.58 to Agreement between IMC Global the Company's March Inc., Angus Chemical Company 31, 1993 Form and Industrial Risk Insurers 10-Q/A (Amendment dated April 1, 1993 No. 1) filed on May 19, 1993 10.34 First Amendment to Exhibit 10.59 to Contribution Agreement, the Company's dated as of July 1, 1993, Report on Form 8-K between Freeport-McMoRan dated July 16, 1993 Resource Partners, Limited Partnership and IMC Global Operations Inc. 10.35 Credit Agreement, dated as Exhibit 10.63 to of June 29, 1993, between the Company's IMC Global Operations Inc., Registration IMC Global Inc. and the Statement on Form S- Banks Listed Therein 4, (No. 33-49795) 10.36 Loan Agreement, dated as of Exhibit 10.64 to December 1, 1991, between the Company's IMC Global Operations Inc. Registration and the Polk County Statement on Form S- Industrial Development 4, (No. 33-49795) Authority (Florida) 10.37 Amended and Restated Exhibit 10.65 to Unconditional Guaranty, the Company's dated as of December 1, 1991 Registration of IMC Global Inc. with Statement on Form S- respect to Polk County 4, (No. 33-49795) Industrial Development Authority (Florida) Industrial Development Revenue Bonds (IMC Global Operations Inc. Project) 1991 Tax-Exempt Series A and 1992 Tax-Exempt Series A Filed with Exhibit Incorporated Herein Electronic No. Description By Reference to Submission - -------------------------------------------------------------------- 10.38 Supplemental Loan Agreement, Exhibit 10.66 to dated as of January 1, 1992, the Company's between IMC Global Registration Operations Inc. and the Polk Statement on Form S- County Industrial 4, (No. 33-49795) Development Authority (Florida) 10.39 Second Supplemental Loan Exhibit 10.67 to Agreement, dated as of June the Company's 30, 1993, between IMC Global Registration Operations Inc. and the Polk Statement on Form S- County Industrial 4, (No. 33-49795) Development Authority (Florida) 10.40 Amendment to Guaranty, dated Exhibit 10.68 to June 30, 1993, with respect the Company's to Polk County Industrial Registration Development Authority Statement on Form S- (Florida) Industrial 4, (No. 33-49795) Development Revenue Bonds (IMC Global Operations Inc. Project) 1991 Tax-Exempt Series A and 1992 Tax-Exempt Series A 10.41 Indenture of Trust, dated as Exhibit 10.69 to of December 1, 1991, between the Company's Polk County Industrial Registration Development Authority (the Statement on Form S- "Authority") and The Bank of 4, (No. 33-49795) New York, as Trustee (the "IRB Trustee") relating to the Industrial Development Revenue Bonds (IMC Global Operations Inc. Project) 1991 Tax-Exempt Series A (the "Series 1991 Bonds") 10.42 Supplemental Indenture of Exhibit 10.70 to Trust, dated as of January the Company's 1, 1992, between the Registration Authority and the IRB Statement on Form S- Trustee, relating to the 4, (No. 33-49795) Industrial Development Revenue Bonds (IMC Global Operations Inc. Project) 1992 Tax-Exempt Series A (the "Series 1992 Bonds") Filed with Exhibit Incorporated Herein Electronic No. Description By Reference to Submission - -------------------------------------------------------------------- 10.43 Second Supplemental Exhibit 10.71 to Indenture of Trust, dated as the Company's of June 30, 1993, between Registration the Authority and the IRB Statement on Form S- Trustee, relating to the 4, (No. 33-49795) Series 1991 Bonds and the Series 1992 Bonds 10.44 Amendment Number 2 to Exhibit 10.44 to Investment Plan for Salaried the Company's Employees effective March 1, Registration 1988 and restated effective Statement on Form S- January 1, 1992 4, (No. 33-49795) 10.45* First Amendment, dated July Exhibit 10.45 to 2, 1991, to form of the Company's Contingent Employment Registration Agreement with Officers of Statement on Form S- Corporation 4, (No. 33-49795) 10.46* Amendment, dated July 2, Exhibit 10.46 to 1991, to Form of "Gross Up" the Company's Agreement with Officers of Registration Corporation Statement on Form S- 4, (No. 33-49795) 10.47* Employment Agreement, dated Exhibit 10.47 to April 15, 1993, between The Company's Wendell F. Bueche and IMC Registration Global Inc. Statement on Form S- 4, (No. 33-49795) 10.48* Consulting Agreement, dated Exhibit 10.48 to July 19, 1993, between the Company's Wendell F. Bueche and IMC Registration Global Inc. Statement on Form S- 4, (No. 33-49795) 10.49* Amendment and Extension Exhibit 10.49 to Agreement, dated as of June the 1995 Annual 15, 1995, to Employment Report on Form 10-K Agreement dated as of April 15, 1993 and Consulting Agreement dated as of July 19, 1993, between Wendell F. Bueche and IMC Global Inc. Filed with Exhibit Incorporated Herein Electronic No. Description By Reference to Submission - -------------------------------------------------------------------- 10.50* Consulting Agreement, dated Exhibit 10.49 to March 1, 1993, between the Company's Billie B. Turner and IMC Registration Global Inc. Statement on Form S- 4, (No. 33-49795) 10.51 Amendment No. 1 and Waiver Exhibit 10.51 to No. 1, dated as of June 30, the 1993 Annual 1993, to Credit Agreement Report on Form 10-K dated as of June 29, 1993 among IMC Global Operations Inc., IMC Global Inc. and the Banks Listed Therein 10.52 Amendment No. 2, Waiver No. Exhibit 10.52 to 2 and Consent No. 1, dated the 1993 Annual as of September 3, 1993, to Report on Form 10-K Credit Agreement dated as of June 29, 1993 among IMC Global Operations Inc., IMC Global Inc. and the Banks Listed Therein 10.53 Amendment No. 1, dated as of Exhibit 10.53 to June 24, 1994 to Credit the 1995 Annual Agreement, dated as of Report on Form 10-K February 9, 1994 between IMC- Agrico Company, NationsBank of Georgia and the Banks Listed Therein 10.54 Amendment No. 2, dated as of Exhibit 10.54 to February 24, 1995 to Credit the 1995 Annual Agreement, dated as of Report on Form 10-K February 9, 1994 between IMC- Agrico Company, NationsBank of Georgia and the Banks Listed Therein 10.55 Credit Agreement, dated as Exhibit 99.1 to the of February 9, 1994, between Company's IMC-Agrico Company, Registration NationsBank of Georgia, and Statement on Form S- the Banks Listed Therein 3, (Amendment No. 1) (No. 33-52377) Filed with Exhibit Incorporated Herein Electronic No. Description By Reference to Submission - -------------------------------------------------------------------- 10.56 Amendment No. 3, dated as of Exhibit 10.52 to December 30, 1993, to Credit the 1994 Annual Agreement dated as of June Report on Form 10-K 29, 1993 among IMC Global Operations Inc., IMC Global Inc. and the Banks Listed Therein 10.57 Amendment No. 4, dated as of Exhibit 10.53 to March 10, 1994, to Credit the 1994 Annual Agreement dated as of June Report on Form 10-K 29, 1993 among IMC Global Operations Inc., IMC Global Inc. and the Banks Listed Therein 10.58 Amendment No. 5, dated as of Exhibit 10.54 to June 30, 1994, to Credit the 1994 Annual Agreement dated as of June Report on Form 10-K 29, 1993 among IMC Global Operations Inc., IMC Global Inc. and the Banks Listed Therein 10.59 Amendment No. 6, dated as of Exhibit 10.55 to November 30, 1994, to Credit the Company's Agreement dated as of June December 31, 1994 29, 1993 among IMC Global Form 10-Q filed Operations Inc., IMC Global February 13, 1995 Inc. and the Banks Listed Therein 10.60 Transfer and Administration Exhibit 10.60 to Agreement, dated as of the 1995 Annual October 31, 1994, between Report of Form 10-K Enterprise Funding Corporation and IMC-Agrico Company 10.61 Amended and Restated Credit Exhibit 10.61 to Agreement, dated as of July the 1995 Annual 31, 1995, between IMC Global Report on Form 10-K Operations Inc., IMC Global Inc. and the Banks Listed Therein Filed with Exhibit Incorporated Herein Electronic No. Description By Reference to Submission - -------------------------------------------------------------------- 10.62 Amendment No. 1 to Transfer Exhibit 10.62 to and Administration the Company's Agreement, dated as of December 31, 1995 October 30, 1995, between Form 10-Q Enterprise Funding Corporation and IMC-Agrico Company 10.63 Agreement Under the Parent Exhibit 10.63 to Agreement, dated as of the Company's January 23, 1996, among IMC December 31, 1995 Global Inc., IMC Global Form 10-Q Operations Inc., Freeport- McMoRan Resource Partners Limited Partnership, Freeport-McMoRan Inc. and IMC-Agrico Company, a Delaware general partnership 10.64 Amendment and Agreement Exhibit 10.64 to Under the Partnership the Company's Agreement, dated as of December 31, 1995 January 23, 1996, by and Form 10-Q among IMC-Agrico GP Company, Agrico, Limited Partnership, IMC-Agrico MP, Inc., IMC Global Operations Inc. and IMC-Agrico Company 10.65 Credit Agreement, dated as Exhibit 10.65 to of February 28, 1996, among the Company's IMC Global Inc., IMC Global Report on Form 8-K Operations Inc., dated March 15, International Minerals & 1996 Chemical (Canada) Global Limited, Kalium Canada Ltd., Central Canada Potash, Inc. and the Banks Listed Therein 10.66 Second Amended and Restated Exhibit 10.66 to Note Purchase Agreement, the Company's dated as of February 28, Report on Form 8-K 1996, to the Amended and dated March 15, Restated Note Purchase and 1996 Private Shelf Agreement dated as of December 22, 1994, among IMC Global Inc., The Vigoro Corporation and The Prudential Insurance Company of America Filed with Exhibit Incorporated Herein Electronic No. Description By Reference to Submission - -------------------------------------------------------------------- 10.67 Second Amended and Restated Exhibit 10.67 to Note Purchase Agreement, the Company's dated as of February 28, Report on Form 8-K 1996, to the Amended and dated March 15, Restated Note Purchase and 1996 Private Shelf Agreement dated as of December 22, 1994, between Kalium Canada, Ltd. and The Prudential Insurance Company of America 10.68 Fourth Amendment and Waiver Exhibit 10.68 to Agreement dated as of May the Company's March 14, 1996 to the Credit 31, 1996 Form 10-Q Agreement, by and among IMC-Agrico Company, a Delaware general partnership, the Banks identified therein, and NationsBank, N.A. (successor in interest to NationsBank, N.A. and NationsBank of North Carolina, N.A., as Agent) 10.69 Agreement and Plan of Merger Exhibit 99.2 to the dated as of November 13, Company's September 1995 among IMC Global Inc., 30, 1995 Form 10-Q Bull Merger Company and The Vigoro Corporation 10.70 Registration Rights Exhibit 99.6 to the Agreement dated as of March Company's March 1, 1996 among IMC Global 31,1996 Form 10-Q Inc. and certain former stockholders of The Vigoro Corporation 10.71* Non-competition Agreement dated as of March 1, 1996 between IMC Global Inc., IMC Global Operations Inc. and C. Steven Hoffman X 10.72* Non-competition Agreement dated as of February 29, 1996 between IMC Global Inc. and Robert E. Fowler, Jr. X Filed with Exhibit Incorporated Herein Electronic No. Description By Reference to Submission - -------------------------------------------------------------------- 10.73 Transition Bonus Agreement dated as of March 1, 1996 between IMC Global Inc., IMC X Global Operations Inc. and Marschall I. Smith 10.74 The Vigoro Corporation Severance Plan, as amended X 10.75* The IMC Global Inc. Severance Plan X 10.76* Letter Agreement dated March 5, 1996, between the Company and Brian J. Smith X 11.1 Fully diluted earnings (loss) per share for the years ended June 30, 1996, 1995 and 1994 X 13 The portions of the Company's 1996 Annual Report to Stockholders which are specifically incorporated by reference. X 13.1 Report of Arthur Andersen LLP X 21.1 Subsidiaries of the Registrant X 23.1 Consent of Ernst & Young LLP X 23.2 Consent of Arthur Andersen LLP X 27.1 Financial Data Schedule X * Denotes management contract or compensatory plan. (b) REPORTS ON FORM 8-K There were no reports on Form 8-K filed by the Company during the last quarter of fiscal 1996. (c) EXHIBITS See exhibit index listed at Item 14(a)(3) hereof. (d) Financial statements and schedules and summarized financial information of 50 percent or less owned persons are omitted as none of such persons are individually or in the aggregate significant under the tests specified in Regulation S-X under Article 3.09 of general instructions to the financial statements. SIGNATURES Pursuant to the requirements of 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. IMC GLOBAL INC. (Registrant) /s/ Wendell F. Bueche Wendell F. Bueche Chairman and Chief Executive Officer Date: September 27, 1996 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated: Signature Title Date /s/ Wendell F. Bueche Chairman and Chief September 27, 1996 Wendell F. Bueche executive officer (principal executive officer) and Director /s/ Robert E. Fowler, Jr. President (principal September 27, 1996 Robert E. Fowler, Jr. operating officer) and Director /s/ Brian J. Smith Chief Financial Officer September 27, 1996 Brian J. Smith (principal financial officer) /s/ Anne M. Scavone Controller (principal September 27 , 1996 Anne M. Scavone accounting officer) /s/ Raymond F. Bentele Director September 27, 1996 Raymond F. Bentele /s/ Frank W. Considine Director September 27, 1996 Frank W. Considine /s/ Rod F. Dammeyer Director September 27, 1996 Rod F. Dammeyer /s/ Dr. James M. Davidson Director September 27, 1996 Dr. James M. Davidson /s/ Richard A. Lenon Director September 27, 1996 Richard A. Lenon /s/ Harold H. MacKay Director September 27, 1996 Harold H. MacKay /s/ David B. Mathis Director September 27, 1996 David B. Mathis /s/ Thomas H. Roberts, Jr. Director September 27, 1996 Thomas H. Roberts, Jr. /s/ Joseph P. Sullivan Director September 27, 1996 Joseph P. Sullivan /s/ Richard L. Thomas Director September 27, 1996 Richard L. Thomas /s/ Billie B. Turner Director September 27, 1996 Billie B. Turner /s/ Clayton K. Yeutter Director September 27, 1996 Clayton K. Yeutter EX-4.9 2 FIRST SUPPLEMENTAL INDENTURE EXHIBIT 4.9 THIS FIRST SUPPLEMENTAL INDENTURE, dated as of September 5, 1996, between IMC GLOBAL INC., formerly known as IMC Fertilizer Group, Inc., a Delaware corporation (hereinafter called the "Company"), having its principal executive offices at 2100 Sanders Road, Northbrook, IL 60062, and THE BANK OF NEW YORK, a corporation duly organized and existing under the laws of the United States of America, as successor trustee to NationsBank of Georgia (the "Trustee"), amends and supplements the Indenture providing for the issuance of Senior Debt Securities in series, dated as of June 15, 1993, between the Company and the Trustee (the "Original Indenture") and to the extent inconsistent therewith, supersedes the Original Indenture. RECITALS WHEREAS, the Company and the Trustee entered into the Original Indenture to provide for the issuance of 10 1/8% Senior Notes due 2001 and 10 1/8% Series B Senior Notes Due 2001 (collectively, the "10 1/8% Notes"); and WHEREAS, holders of more than a majority of the outstanding principal amount of the 10 1/8% Notes have consented to the execution by the Company and the Trustee of this First Supplemental Indenture pursuant to which certain covenants in the Original Indenture shall be deleted and certain other provisions shall be amended; and WHEREAS, Section 9.2 of the Original Indenture provides that the Company and the Trustee may enter into one or more Supplemental Indentures to amend the Original Indenture with the written consent of the holders of a majority of the principal amount of the then outstanding securities of such series. NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES AND OF THE MUTUAL COVENANTS CONTAINED HEREIN, THE PARTIES AGREE AS FOLLOWS: SECTION 1. Definitions, References. Unless otherwise specifically defined herein, each term used herein which is defined in the Original Indenture shall have the meaning assigned to such term in the Original Indenture. Except as amended and supplanted hereby, all of the terms of the Original Indenture shall remain in full force and effect and are hereby confirmed in all respects. Each reference to "hereof," "hereunder," "herein," and "hereby" and each other similar reference, and each reference to "this Agreement" and each other similar reference, contained in the Original Indenture shall from and after the date hereof refer to the Original Indenture as amended by this First Supplemental Indenture. SECTION 2. Amendment to Article Four of the Original Indenture. Sections 4.3, 4.4, 4.5, 4.6, 4.7, 4.9, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.17, and 4.18 of the Original Indenture are hereby deleted in their entirety. SECTION 3. Amendment to Article Five of the Original Indenture. Section 5.1 of the Original Indenture is hereby deleted in its entirety. SECTION 4. Amendment to Article Six of the Original Indenture. Section 6.1 of the Original Indenture is hereby amended by deleting paragraphs (c),(d), (e), and (f) in their entirety. Paragraphs (g) and (h) of Section 6.1 of the Original Indenture are hereby redesignated paragraphs (c) and (d). SECTION 5. Ratification of Provisions of Original Indenture. All provisions of the Original Indenture not specifically herein supplemented or modified are hereby ratified and reaffirmed by the Company and the Trustee. SECTION 6. Applicability of First Supplemental Indenture. The covenants and agreements set forth in this First Supplemental Indenture shall, unless otherwise determined by the Company and set forth in an amendment to the Original Indenture, be applicable solely to the 10 1/8% Notes. SECTION 7. Counterparts. This First Supplemental Indenture may be executed in counterparts by the parties hereto. SECTION 8. Section Headings. The Section headings in this First Supplemental Indenture are inserted for convenience only and shall not be part of this instrument. SECTION 9. Governing Law. This First Supplemental Indenture shall be governed by and construed in accordance with the laws of the State of New York. SECTION 10. Entire Agreement. This First Supplemental Indenture and the Original Indenture as amended hereby constitute the entire agreement and understanding between the parties hereto and supersede any and all prior agreements and understandings relating to the subject matter hereof. * * * * IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all of the day and year first above written. IMC GLOBAL INC. By: M. I. Smith ----------------------------- Title: Senior Vice President and General Counsel Attest: Rose Marie Williams ------------------------- Title: Corporate Secretary THE BANK OF NEW YORK By: ----------------------------- Title: Attest: ------------------------- Title: EX-4.10 3 SECOND SUPPLEMENTAL INDENTURE EXHIBIT 4.10 THIS SECOND SUPPLEMENTAL INDENTURE, dated as of September 3, 1996, between IMC GLOBAL INC., formerly known as IMC Fertilizer Group, Inc., a Delaware corporation (hereinafter called the "Company"), having its principal executive offices at 2100 Sanders Road, Northbrook, IL 60062, and THE BANK OF NEW YORK, a corporation duly organized and existing under the laws of the United States of America, as successor trustee to NationsBank of Georgia (hereinafter called the "Trustee"), amends and supplements the Indenture providing for the issuance of Senior Debt Securities in Series, dated as of October 1, 1993, between the Company and the Trustee (the "Original Indenture") and the Supplemental Indenture dated as of October 1, 1993 between the Company and the Trustee (the "First Supplemental Indenture"), and to the extent inconsistent therewith, supersedes the Original Indenture and the First Supplemental Indenture. RECITALS WHEREAS, the Company and the Trustee entered into the Original Indenture to provide for the issuance of the Company's Senior Debt Securities in series; and WHEREAS, the Company and the Trustee entered into the First Supplemental Indenture which provided for the issuance of a series of Senior Debt Securities pursuant to the Original Indenture known as the 9 1/4% Senior Notes due 2000 (the "Notes"); and WHEREAS, holders of more than a majority of the aggregate outstanding principal amount of the Notes have consented to the execution by the Company and the Trustee of a supplemental indenture pursuant to which certain covenants in the Original Indenture and First Supplemental Indenture shall be deleted and certain other provisions thereof shall be amended; and WHEREAS, Section 9.2 of the Original Indenture provides that the Company and the Trustee may enter into one or more Supplemental Indentures to amend the Original Indenture with the written consent of the holders of a majority of the principal amount of the then outstanding securities of such series. NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES AND OF THE MUTUAL COVENANTS CONTAINED HEREIN, THE PARTIES AGREE AS FOLLOWS: SECTION 1. Definitions, References. Unless otherwise specifically defined herein, each term used herein which is defined in the Original Indenture or the First Supplemental Indenture shall have the meaning assigned to such term in the Original Indenture or the First Supplemental Indenture, as applicable. Except as amended and supplanted hereby, all of the terms of the Original Indenture and the First Supplemental Indenture shall remain in full force and effect and are hereby confirmed in all respects. Each reference to "hereof," "hereunder," "herein," and "hereby" and each other similar reference, and each reference to "this Agreement" and each other similar reference, contained in the Original Indenture or the First Supplemental Indenture shall from and after the date hereof refer to the Original Indenture as amended by the First Supplemental Indenture and this Second Supplemental Indenture. SECTION 2. Amendment to Article Four of the Original Indenture. Sections 4.4, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10, 4.11, and 4.12 of the Original Indenture are hereby deleted in their entirety. SECTION 3. Amendment to Article Five of the Original Indenture. Section 5.1 of the Original Indenture is hereby deleted in its entirety. SECTION 4. Amendment to Article Six of the Original Indenture. Section 6.1 of the Original Indenture is hereby amended by deleting paragraphs (c), (d), (e), and (f) in their entirety. Paragraphs (g) and (h) of Section 6.1 of the Original Indenture are hereby redesignated paragraphs (c) and (d). SECTION 5. Amendment to Article Two of the First Supplemental Indenture. Sections 2.1, 2.2, 2.3, 2.4, 2.5, 2.6, and 2.7 of the First Supplemental Indenture are hereby deleted in their entirety. SECTION 6. Amendment to Article Three of the First Supplemental Indenture. Section 3.1 of the First Supplemental Indenture is hereby deleted in its entirety. SECTION 7. Ratification of Provisions of Original Indenture and First Supplemental Indenture. All provisions of the Original Indenture and the First Supplemental Indenture not specifically herein supplemented or modified are hereby ratified and reaffirmed by the Company and the Trustee. SECTION 8. Applicability of Second Supplemental Indenture. The covenants and agreements set forth in this Second Supplemental Indenture shall, unless otherwise determined by the Company and set forth in an amendment hereto, be applicable solely to the Notes. SECTION 9. Counterparts. This Second Supplemental Indenture may be executed in counterparts by the parties hereto. SECTION 10. Section Headings. The Section headings in this Second Supplement Indenture are inserted for convenience only and shall not be part of this instrument. SECTION 11. Governing Law. This Second Supplemental Indenture shall be governed by and construed in accordance with the laws of the State of New York. SECTION 12. Entire Agreement. This Second Supplemental Indenture, the First Supplemental Indenture, and the Original Indenture as amended hereby constitute the entire agreement and understanding between the parties hereto and supersede any and all prior agreements and understandings relating to the subject matter hereof. * * * * IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all of the day and year first above written. IMC GLOBAL INC. By: M. I. Smith ----------------------------- Title: Senior Vice President and General Counsel Attest: Rose Marie Williams ------------------------- Title: Corporate Secretary THE BANK OF NEW YORK By: ----------------------------- Title: Attest: ------------------------- Title: EX-10.71 4 NON-COMPETITION AGREEMENT EXHIBIT 10.71 NON-COMPETITION AGREEMENT This Agreement made as of the lst day of March, 1996, between IMC GLOBAL INC., a Delaware Corporation ("Company"), IMC Global Operations Inc. and C. Steven Hoffman ("Employee"). WHEREAS, the Company and The Vigoro Corporation, a Delaware corporation, ('Vigoro") on the date stated above, have completed a transaction whereby Vigoro has become a wholly-owned subsidiary of the Company; and WHEREAS, the Company desires to have the use of and access to and to protect valuable confidential information relating to the businesses of the Controlled Group in Employee's possession and other confidential information which Employee may acquire during employment by any Employer; and WHEREAS, the Company has concluded that it is therefore in the best interest of the Company to provide incentives for Employee to continue to be employed in the Controlled Group and to secure Employee's agreement to limitations on Employee's future business activities in order to protect the Controlled Group from injury that would occur if the confidential information became available to and could be used by a competitor of any member of the Controlled Group; NOW, THEREFORE, for valuable consideration which the parties acknowledge and in consideration of the mutual covenants and agreements contained herein, the Employee and the Company agree as follows: 1. Definitions. Each term defined herein shall be given its defined meaning wherever used in this Agreement, unless the context requires otherwise. "Vigoro" means Vigoro and its Subsidiaries, as they may exist from time to time, during Employee's employment with Vigoro or with the Company or its affiliates in the Controlled Group. "Cause" means (i) the engaging by the Employee in willful and intentional conduct which has caused demonstrable and serious injury to the Company, monetary or otherwise; (ii) conviction of, or plea of nolo contendere by, the Employee for any felony; (iii) criminal conviction of, or plea of nolo contendere by, the Employee for any other offense involving dishonesty, breach of trust or moral turpitude; (iv) a breach of fiduciary duty by the Employee involving personal profit; or (v) willful refusal by the Employee to perform his duties, or responsibilities (unless significantly changed without the Employee's consent), or gross negligence by the Employee in the performance of such duties; provided, however, that the Employee shall have 30 days, or such longer period as the Company may determine to be appropriate, after written notice by the Company, to cure any conduct or act, if curable, alleged in such notice to provide grounds for termination of the Employee's employment for Cause. "Controlled Group" means the Company and all affiliates of the Company determined under Sections 414(b),(c),(m) and (o) of the Internal Revenue Code of 1986, as amended. "Effective Date" means the date first set forth above. "Employer" means the Company and any Subsidiary or other member of the Controlled Group which employs Employee on or after the Effective Date. "Good Reason" for termination of employment by an Employee shall mean any of the following: (a) the failure by the Employer to (i) maintain the Employee's Base Salary at an annual rate equal to the rate in effect immediately prior to the Effective Date, or as may be increased from time to time by the Employer in accordance with regular practices of the Company thereafter with respect to employees with comparable duties; provided, however, that Good Reason shall not exist as the result of any decrease in Base Salary if such decrease is incident to a general reduction applied to all senior corporate officers and other key employees of all members of the Controlled Group on a proportionate and nondiscriminatory basis; (ii) provide for continued participation on a comparable basis by the Employee in an annual bonus plan maintained by the Company or its Subsidiaries in which employees with comparable duties participate; (iii) provide for participation in stock option and other equity incentive plans or programs maintained by the Company or its Subsidiaries or any other member of the Controlled Group from time to time in which employees with comparable duties participate; (iv) provide for participation in all Company or Subsidiary sponsored group or executive medical, dental, life, disability, retirement, profit- sharing, thrift, nonqualified and deferred compensation, and other plans maintained by the Company or its, Subsidiaries to the same extent as employees with comparable duties participate; (v) provide vacation and perquisites substantially equivalent to those provided by the Company or Subsidiaries to employees with comparable duties; or (vi) obtain the express unconditional assumption of this Agreement as required by Section 9; or (b) any Employer changes the Employee's primary employment location to a location that is more than 50 miles from the primary location of such Employee's employment as in effect immediately prior to the Effective Date; provided, however, that the relocation of Employee on a nondiscriminatory basis for bona fide business reasons shall not constitute Good Reason hereunder; or (c) a significant adverse change, without the Employee's written consent, in working conditions or status, including but not limited to (i) a significant adverse change in the nature or scope of the Employee's authority, powers, functions, duties or responsibilities; provided, however, a change in the Company's status such that it no longer has any equity securities registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended, or that it is a subsidiary of another entity and directly results in changes in the nature or scope of the Employee's authority, powers, functions,, duties or responsibilities shall not in and of itself constitute Good Reason hereunder, or (ii) a reduction in the level of support services, staff, secretarial and other assistance, office space and accouterments available to a level below that reasonably necessary for the performance of such duties. "Non-Competition Period" shall commence on the date Employee's employment is terminated and continue for a period of (a) Three years, if a Severance Event occurs on or before the first anniversary of the Effective Date; (b) Two years, if a Severance Event occurs after the first anniversary of the Effective Date and on or before the second anniversary thereof; and (c) One year, if a Severance Event occurs after the second anniversary of the Effective Date and on or before the third anniversary thereof or if Employee's employment is terminated for a reason other than a Severance Event. "Severance Event" shall be deemed to have occurred if, and only if, as of or after the Effective Date, but prior to the expiration of the Severance Period, termination of Employee's employment with the Company occurs, and such termination is: (a) Employer-initiated for reasons other than Cause; (b) Employee-initiated within ninety (90) days after the Employee first has or should have knowledge that Good Reason exists. "Severance Period" means a period of three (3) years from and after the Effective Date. "Subsidiary" means any corporation of which the securities having a majority of the ordinary voting power in electing the board of directors are, at the time of such determination, owned by the Company or another Subsidiary. 2. Proprietary Rights. (a) Employee acknowledges that each Employer and other members of the Controlled Group has exclusive ownership of all information useful in its business (including its dealings with suppliers, customers and other third parties, whether or not a true "trade secret"), which at the time or times concerned is not generally known to persons outside of the Controlled Group engaged in businesses similar to those conducted by such entities, and which has been or is from time to time disclosed to, discovered by, or otherwise known by Employee as a consequence of his employment by the Employer (including Information conceived, discovered or developed by Employee during his employment) (collectively, "Confidential Information"). Confidential Information includes, but is not limited to the following especially sensitive types of information: (i) The identity, purchase and payment patterns of, and special relations with, customers; (ii) The identity, net prices and credit terms of, and special relations with, the suppliers; (iii) Inventory selection and management techniques; (iv) Product development and marketing plans; and (v) Finances except to the extent publicly disclosed. (b) The term "Proprietary Materials" shall mean all business records, documents, drawings, writings, software, programs and other tangible things which were or are created or received by or for the Employer and other members of the Controlled Group in furtherance of its business, including, but not limited to, those which contain Confidential Information. For example, Proprietary Materials include, but are not limited to, the following especially sensitive types of materials: applications software, the data bases of Confidential Information maintained in connection with such software, and printouts generated from such data base,; market studies and strategic plans; customer, supplier and employee lists; contracts and correspondence with customers and suppliers; documents evidencing transactions with customers and suppliers, sales calls reports, appointment books, calendars, expense statements and the like, reflecting conversations with any company, customer or supplier; architectural and engineering plans; and purchasing, sales and policy manuals. Proprietary Materials also include, but are not limited to, any such things which are created by Employee or with Employee's assistance and all notes, memoranda and the like prepared using the Proprietary Materials and/or Confidential Information. (c) While some of the information contained in Proprietary Materials may have been known to Employee prior to employment with an Employer, or may now or in the future be in the public domain, Employee acknowledges that the compilation of that information contained in the Proprietary Materials has or will cost the Employer and other members of the Controlled Group a great effort and expense, and affords persons to whom Proprietary Materials are disclosed, including Employee, a competitive advantage over persons who do not know the information or have the compilation of the Proprietary Materials. Employee further acknowledges that Confidential Information and Proprietary Materials include commercially valuable trade secrets and automatically become the Company's exclusive property when they are conceived, created or received. 3. Confidentiality Duties. Employee shall, except as may be required by law, while an employee of the Company and thereafter for the longest time permitted by applicable law. (a) Comply with all instructions of the Company and the Employer (whether oral or written) for preserving the confidentiality of Confidential Information and Proprietary Materials. (b) Use Confidential Information and Proprietary Materials only at places designated by the Company or the Employer, in furtherance of businesses of the Employer and other members of the Controlled Group, and pursuant to directions of the Company or the Employer. (c) Exercise appropriate care to advise other employees of the Company and the Employer (and, as appropriate, subcontractors) of the sensitive nature of Confidential Information and Proprietary Materials prior to their disclosure, and to disclose the same only on a need-to-know basis. (d) Not copy all or any part of Proprietary Materials, except as the Company or the Employer directs. (e) Not sell, give, loan or otherwise transfer any copy of all or any part of Proprietary Materials to any person who is not an employee of or otherwise engaged to provide services to the Company or the Employer, except as the Company directs. (f) Not publish, lecture on or otherwise disclose to any person who is not an employee of the Company, except as the Company or the Employer directs, all or any part of Confidential Information or Proprietary Materials. (g) Not use all or any part of any Confidential Information or Proprietary Materials for the benefit of any third party without the Company's written consent. Upon the termination of employment for whatever reason, Employee (or in the event of death, Employee's personal representative) shall promptly surrender to the Company the original and all copies of Proprietary Materials (including all notes, memoranda and the like concerning or derived therefrom), whether prepared by Employee or others, which are then in Employee's possession or control. Records of payments made by the Company or any Employer to of for the benefit of Employee, Employee's copy of this Agreement and other such things, lawfully possessed by Employee which relate solely to taxes payable by Employee, employee benefits due to Employee or the terms of Employee's employment with the Company or any Employer, shall not be deemed Proprietary Materials for purposes of this Section 3. 4. Non-Competition. (a) During Employee's employment with the Company, or any other members of the Controlled Group, Employee shall not, in any way, directly or indirectly, manage, operate, control (or participate in any of the foregoing), accept employment or a consulting position with or otherwise advise or assist or be connected with or directly or indirectly own or have any other interest in or right with respect to (other than through ownership of not more than 5% of the outstanding shares of a corporation's stock which is listed on a national securities exchange) any enterprise (other than for the company or any other member of the Controlled Group) which competes with Company or its affiliates in the Controlled Group. (b) During the Non-Competition Period, Employee shall not render employment or consulting services to any business (except to the company or any member of its Controlled group) within a location within 50 miles of the company facility at which Employee was employed at the time of the Severance Event in a capacity in which Employee will directly supervise a business which is directly competitive with the business which Employee supervised during the six-month period preceding the Severance Event. (c) Employee recognizes that the foregoing limitations are reasonable and properly required for the adequate protection of the business of the Company, the Employers and the members of the Controlled Group. If any such limitations are deemed to be unreasonable by a court having jurisdiction of the matter and parties, Employee hereby agrees and submits to the reduction of any such limitations to such territory or time as to such court shall appear reasonable. (d) Employee agrees that the remedy at law for any breach of the provisions of Sections 2 or 3 or this Section 4 shall be inadequate and that the Company and any Employer shall be entitled to injunctive relief in addition to any other remedies it may have. 5. Severance Payments (a) If Employee's employment is terminated because of a Severance Event, the Employer shall pay the Employee: (i) If the Severance Event occurs on or before the first anniversary of the Effective Date, $764,000, in thirty-six (36) monthly installments; (ii) If the Severance Event occurs after the first anniversary of the Effective Date and on or before the second anniversary, $382,000, in twenty-four (24) monthly installments; and (iii) If the Severance Event occurs after the second anniversary of the Effective Date and on or before the third anniversary, $191,000, in twelve (12) monthly installments. In each case the first installment shall be due on the first day of the month following the month in which the Severance Event occurs and subsequent installments shall be due on the first day of each succeeding month until all installments have been paid. (b) The Company has assessed the reasonableness of the Severance Payments provided for herein and believes that the amounts provided are both reasonable in the light of the benefits secured for the Company by this Agreement and related to the business of the Company. 6. Obligation of Employer. The Company agrees to cause Employee's Employer at the time of the Severance Event to make all payments required hereunder to be made to Employee, and agrees that the liability for making such payments and providing such benefits shall be the sole and exclusive obligation of such Employer, provided, however, that the foregoing notwithstanding, in the event that such benefits are not so paid by the Employer, then such benefits shall be paid or caused to be paid by the Company. 7. Enforcement. In the event the Company or the Employer shall fail to pay to an Employee or successor any amounts due under this Plan or under any of the plans, programs or arrangements referred to herein as they come due, the Company and the Subsidiaries shall pay interest on such amounts at the prime rate of interest as from time to time published in The Wall Street Journal (Midwest Edition) until paid. 8. Non-assignment. Except as may be required by applicable law, the payments which may become due to Employee shall not at any time be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution, or levy of any kind, either voluntary or involuntary, including any such liability which is for alimony or other payments for the support of a spouse or former spouse, or for any other relative of the Employee, prior to actually being received by Employee; and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or otherwise dispose of any right to benefits payable hereunder shall be void. 9. Assumption. This Agreement shall inure to the benefit of, and be binding upon, the successors and assignees of the Company and each Employer. The Company and each Employer shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all the business or assets of the Company or any Employer, expressly and unconditionally to assume and agree to perform the Company's obligations or such Employer's obligations under this Agreement. 10. Enforcement. The provisions of this Agreement shall be regarded as divisible, and if any of the provision or any part of the Agreement is declared invalid or unenforceable by a court of competent jurisdiction, the validity and enforceability of the remainder of the provisions or parts of the Agreement and the applicability thereof shall not be affected. 11. Amendment. This Agreement may not be amended or modified at any time except by written instruction executed by the Company and the Employee. 12. Withholding. The Employer shall be entitled to withhold from amounts to be paid to the Employee hereunder any federal, state or local withholding or other taxes or charges which it is from time to time required to withhold. The Company shall be entitled to rely on an opinion of counsel if any question as to the amount or requirement of any such withholding shall arise. 13. Governing Law: Arbitration. This Agreement and the rights and obligations hereunder shall be governed by and construed in accordance with the laws of the State of Illinois. Any dispute arising out of this Agreement shall be determined by arbitration under the commercial arbitration rules of the American Arbitration Association then in effect and judgment upon any award pursuant to such arbitration may be enforced in any court having jurisdiction thereof. The place of arbitration shall be in the city with population of 100,000 or more nearest to the Employee's place of employment immediately prior to the Severance Event or in the nearest state or provincial capital if it is closer to such place of employment than is such city. 14. Notice. Notices given pursuant to this Agreement shall be in writing and shall be deemed given when received and if mailed, shall be mailed by registered or certified mail, return receipt requested, addressee only, postage prepaid, if to the Employer to IMC Global Inc., or if to the Employee, at the address set forth below the Employee's signature line of this Agreement, or to such other address as to the party to be notified shall have given to the other. 15. No waiver. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by the other party shall be deemed a waiver of similar or dissimilar provision or condition at the same time or any prior or subsequent time. 16. Certain Rules of Construction. No party shall be considered as being responsible for the drafting of this Agreement for the purpose of applying any rule construing ambiguities against the drafter or otherwise. No draft of this Agreement shall be taken into account in construing this Agreement. The headings in this Agreement are for reference only and shall not affect the meaning or interpretation of any provision of this Agreement. IN WITNESS WHEREOF, the parties have executed this agreement as the day and year first written above. EMPLOYER IMC GLOBAL INC. IMC Global Operations Inc. By: /s/ James D. Speir By: A. C. Miller Name: James D. Speir Name: A. C. Miller Title: President and Title: Senior Vice President, Chief Operating Human Resources Officer Attest: /s/ Lila Fredenberg Attest: /s/ Lila Fredenberg Name: Lila Fredenberg Name: Lila Fredenberg Title: Asst. Secretary Title: Asst. Secretary /s/ C. Steven Hoffman 12 Exmoor Lane [Employee] C. Steven Hoffman Lincolnshire, IL 60069 [Address] EX-10.72 5 NON-COMPETITION AGREEMENT EXHIBIT 10.72 NON-COMPETITION AGREEMENT This Agreement made February 29, 1996, between IMC Global Inc., a Delaware corporation ("Company") and Robert E. Fowler, Jr. ("Employee"). WHEREAS, the Company and The Vigoro Corporation, a Delaware corporation, ("Vigoro") expect to complete a transaction on March 1, 1996 whereby Vigoro will become a wholly-owned subsidiary of the Company; and WHEREAS, the Company desires to have the use of and access to and to protect valuable confidential information relating to the businesses of the Controlled Group in Employee's possession and other confidential information which Employee may acquire during employment by any Employer; and WHEREAS, the Company has concluded that it is therefore in the best interest of the Company to provide incentives for Employee to become employed in the Controlled Group and to secure Employee's agreement to limitations on Employee's future business activities in order to protect the Controlled Group from injury that would occur if the confidential information became available to and could be used by a competitor of any member of the Controlled Group; NOW, THEREFORE, for valuable consideration which the parties acknowledge and in consideration of the mutual covenants and agreements contained herein, the Employee and the Company agree as follows: 1. Definitions. Each term defined herein shall be given its defined meaning wherever used in this Agreement, unless the context requires otherwise. "Vigoro" means Vigoro and its Subsidiaries, as they may exist from time to time, during Employee's employment with Vigoro or with the Company or its affiliates in the Controlled Group. "Cause" means (i) the engaging by the Employee in willful and intentional conduct which has caused demonstrable and serious injury to the Company, monetary or otherwise; (ii) conviction of, or plea of nolo contendere by, the Employee for any felony; (iii) criminal conviction of, or plea of nolo contendere by, the Employee for any other offense involving dishonesty, breach of trust or moral turpitude; (iv) a breach of fiduciary duty by the Employee involving personal profit; or (v) willful refusal by the Employee to perform his duties or responsibilities (unless significantly changed without the Employee's consent), or gross negligence by the Employee in the performance of such duties; provided, however, that the Employee shall have 30 days, or such longer period as the Company may determine to be appropriate, after written notice by the Company, to cure any conduct or act, if curable, alleged in such notice to provide grounds for termination of the Employee's employment for Cause. "Controlled Group" means the Company and all affiliates of the Company determined under Sections 414(b),(c),(m) and (o) of the Internal Revenue Code of 1986, as amended. "Effective Date" means the date first set forth above. "Employer" means the Company and Subsidiary or other member of the Controlled Group which employs Employee on or after the Effective Date. "Good Reason" for termination of employment by an Employee shall mean any of the following: (a) the failure by the Employer to (i) maintain the Employee's Base Salary at an annual rate equal to the rate in effect immediately prior to the Effective Date, or as may be increased from time to time by the Employer in accordance with regular practices of the Company thereafter with respect to employees with comparable duties; provided, however, that Good Reason shall not exist as the result of any decrease in Base Salary if such decrease is incident to a general reduction applied to all senior corporate officers and other key employees of all members of the Controlled Group on a proportionate and nondiscriminatory basis; (ii) provide for continued participation on a comparable basis by the Employee in an annual bonus plan maintained by the Company or its Subsidiaries in which employees with comparable duties participate; (iii) provide for participation in stock option and other equity incentive plans or programs maintained by the Company or its Subsidiaries or any other member of the Controlled Group from time to time in which employees with comparable duties participate; (iv) provide for participation in all Company or Subsidiary sponsored group or executive medical, dental, life, disability, retirement, profit- sharing, thrift, nonqualified and deferred compensation, and other plans maintained by the Company or its Subsidiaries to the same extent as employees with comparable duties participate; (v) provide vacation and perquisites substantially equivalent to those provided by the Company or Subsidiaries to employees with comparable duties; or (vi) obtain the express unconditional assumption of this Agreement as required by Section 9; or (b) any Employer changes the Employee's primary employment location to a location that is more than 50 miles from 225 North Michigan Avenue, Chicago, Illinois; provided, however, that the relocation of Employee on a nondiscriminatory basis for bona fide business reasons shall not constitute Good Reason hereunder; or (c) a significant adverse change, without the Employee's written consent, in working conditions or status, including but not limited to (i) a significant adverse change in the nature or scope of the Employee's authority, powers, functions, duties or responsibilities; provided, however, a change in the Company's status such that it no longer has any equity securities registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended, or that it is a subsidiary of another entity and directly results in changes in the nature or scope of the Employee's authority, powers, functions, duties or responsibilities shall not in and of itself constitute Good Reason hereunder, or (ii) a reduction in the level of support services, staff, secretarial and other assistance, office space and accouterments available to a level below that reasonably necessary for the performance of such duties. "Non-Competition Period" shall commence on the date Employee's employment is terminated after the Effective Date and continue for a period of (a) Three years, if a Severance Event Occurs on or before the first anniversary of the Effective Date; (b) Two years, if a Severance Event occurs after the first anniversary of the Effective Date and on or before the second anniversary thereof; and (c) One year, if a Severance Event occurs after the second anniversary of the Effective Date and on or before the third anniversary thereof or if Employee's employment is terminated for a reason other than a Severance Event. (d) If Employee is not hired by the Company within thirty (30) days after the completion of the transaction whereby Vigoro has become a wholly-owned subsidiary of the Company, the "Non- Competition Period" shall commence on the Effective Date and continue for a period of three years. "Severance Event" shall be deemed to have occurred if, and only if, as of or after the Effective Date, but prior to the expiration of the Severance Period, termination of Employee's employment with the Company occurs, and such termination is: (a) Employer-initiated for reasons other than Cause; (b) Employee-initiated within ninety (90) days after the Employee first has or should have knowledge that Good Reason exists; or (c) Employee-initiated on or after Employee has attained age sixty (60). "Severance Period" means a period of three (3) years from and after the Effective Date. "Subsidiary" means any corporation of which the securities having a majority of the ordinary voting power in electing the board of directors are, at the time of such determination, owned by the Company or another Subsidiary. 2. Proprietary Rights. (a) Employee acknowledges that each employer and other members of the Controlled Group has exclusive ownership of all information useful in its business (including its dealings with suppliers, customers and other third parties, whether or not a true "trade secret"), which at the time or times concerned is not generally known to persons outside of the Controlled Group engaged in businesses similar to those conducted by such entities, and which has been or is from time to time disclosed to, discovered by, or otherwise known by Employee as a consequence of his employment by the Employer (including information conceived, discovered or developed by Employee during his employment) (collectively, "Confidential Information"). Confidential Information includes, but is not limited to the following especially sensitive types of information: (i) The identity, purchase and payment patterns of, and special relations with, customers; (ii) The identity, net prices and credit terms of, and special relations with, the suppliers; (iii)Inventory selection and management techniques; (iv) Product development and marketing plans; and (v) Finances except to the extent publicly disclosed. (b) The term "Proprietary Materials" shall mean all business records, documents, drawings, writings, software, programs and other tangible things which were or are created or received by or for the Employer and other members of the Controlled Group in furtherance of its business, including, but not limited to, those which contain Confidential Information. For example, Proprietary Materials include, but are not limited to, the following especially sensitive types of materials: applications software, the data bases of Confidential Information maintained in connection with such software, and printouts generated from such data bases; market studies and strategic plans; customer, supplier and employee lists; contracts and correspondence with customers and suppliers; documents evidencing transactions with customers and suppliers, sales calls reports, appointment books, calendars, expense statements and the like, reflecting conversations with any company, customer or supplier; architectural and engineering plans; and purchasing, sales and policy manuals. Propriety Materials also include, but are not limited to, any such things which are created by Employee or with Employee's assistance and all notes, memoranda and the like prepared using the Proprietary Materials and/or Confidential Information. (c) While some of the information contained in Proprietary Materials may have been known to Employee prior to employment with an Employer, or may now or in the future be in the public domain, Employee acknowledges that the compilation of that information contained in the Proprietary Materials has or will cost the Employer and other members of the Controlled Group a great effort and expense, and affords persons to whom Proprietary Materials are disclosed, including Employee, a competitive advantage over persons who do not know the information or have the compilation of the Proprietary Materials. Employee further acknowledges that Confidential Information and Proprietary Materials include commercially valuable trade secrets and automatically become the Company's exclusive property when they are conceived, created or received. 3. Confidentiality Duties. Employee shall, except as may be required by law, while an employee of the Company and thereafter for the longest time permitted by applicable law. (a) Comply with all instructions of the Company and the Employer (whether oral or written) for preserving the confidentiality of Confidential Information and Proprietary Materials. (b) Use Confidential Information and Proprietary Materials only at places designated by the Company or the Employer, in furtherance of businesses of the Employer and other members of the Controlled Group, and pursuant to directions of the Company or the Employer. (c) Exercise appropriate care to advise other employees of the Company and the Employer (and, as appropriate, subcontractors) of the sensitive nature of Confidential Information and Proprietary Materials prior to their disclosure, and to disclose the same only on a need-to-know basis. (d) Not copy all or any part of Proprietary Materials, except as the Company or the Employer directs. (e) Not sell, give, loan or otherwise transfer any copy of all or any part of Proprietary Materials to any person who is not an employee of or otherwise engaged to provide services to the Company or the Employer, except as the Company directs. (f) Not publish, lecture on or otherwise employee of the Company, except as the Company or the Employer directs, all or any part of Confidential Information or Proprietary Materials. (g) Not use all or any part of any Confidential Information or Proprietary Materials for the benefit of any third party without the Company's written consent. Upon the termination of employment for whatever reason, Employee (or in the event of death, Employee's personal representative) shall promptly surrender to the Company the original and all copies of Proprietary Materials (including all notes, memoranda and the like concerning or derived therefrom), whether prepared by Employee or others, which are then in Employee's possession or control. Records of payments made by the Company or any Employer to or for the benefit of Employee, Employee's copy of this Agreement and other such things, lawfully possessed by Employee which relate solely to taxes payable by Employee, employee benefits due to Employee or the terms of Employee's employment with the Company or any Employer, shall not be deemed Proprietary Materials for purposes of this Section 3. 4. Non-Competition. (a) During Employee's employment with the Company, or any other members of the Controlled Group, Employee shall not, in any way, directly or indirectly, manage, operate, control (or participate in any of the foregoing), accept employment or a consulting position with or otherwise advise or assist or be connected with or directly or indirectly own or have any other interest in or right with respect to (other than through ownership of more than 5% of the outstanding shares of a corporation's stock which is listed on a national securities exchange) any enterprise (other than for the Company or any other member of the Controlled Group) which competes with Company or its affiliates in the Controlled Group. (b) During the Non-competition Period, Employee shall not render employment or consulting services to any business enterprise in North America (except to the Company or any member of its Controlled Group) in a capacity in which Employee will directly supervise a business which is directly competitive with the business which Employee supervised during the one year period preceding the Severance Event. (c) Employee recognizes that the foregoing limitation are reasonable and properly required for the adequate protection of the business of the Company, the Employers and the members of the Controlled Group. If any such limitation are deemed to be unreasonable by a court having jurisdiction of the matter and parties, Employee hereby agrees and submits to the reduction of any such limitations to such territory or time as to such court shall appear reasonable. (d) Employee agrees that the remedy at law for any breach of the provisions of Sections 2 or 3 or this Section 4 shall be inadequate and that the Company and any Employer shall be entitled to injunctive relief in addition to any other remedies it may have. 5. Payments (a) If Employee's employment is terminated because of a Severance Event, the Employer shall pay the Employee: (i) If the Severance Event occurs on or before the first anniversary of the Effective Date, $2,370,000, in thirty-six (36) monthly installments; (ii) If the Severance Event occurs after the first anniversary of the Effective Date and on or before the second anniversary, $1,580,000, in twenty-four (24) monthly installments; and (iii) If the Severance Event occurs after the second anniversary of the Effective Date and on or before the third anniversary, $790,000, in twelve (12) monthly installments. In each case the first installment shall be due or the first day of the month following the month in which the Severance Event occurs and subsequent installments shall be due on the first day of each succeeding month until all installments have been paid. (b) The Company has assessed the reasonableness of the payments provided for herein and believes that the amounts provided are both reasonable in the light of the benefits secured for the Company by this Agreement and related to the business of the Company. (c) In the event that Employee is not hired by the Company within thirty (30) days after the completion of the transaction whereby Vigoro has become a wholly-owned subsidiary of the Company ("the Transaction"), the Company shall pay the Employee the amount provided in Section 5(a)(i) in installments as provided therein. The first installment shall be due on the first day of the first month beginning more than thirty (30) days following the completion of the Transaction and subsequent installments shall be due on the first day of each succeeding month until all installments have been paid. 6. Obligation of Employer. The Company agrees to cause Employee's Employer at the time of the Severance Event to make all payments required hereunder to be made to Employee, and agrees that the liability for making such payments and providing such benefits shall be the sole and exclusive obligation of such Employer, provided, however, that the foregoing notwithstanding, in the event that such benefits are not so paid by the Employer and in the case of payments made pursuant to Section 5(c), such payments shall be paid or caused to be paid by the Company. 7. Enforcement. In the event the Company or the Employer shall fail to pay to an Employee or successor any amounts due under this Plan or under any of the plans, programs or arrangements referred to herein as they come due, the Company and the Subsidiaries shall pay interest on such amount at the prime rate of interest as from time to time published in The Wall Street Journal ("Midwest Edition) until paid. 8. Non-assignment. Except as may be required by applicable law, the payments which may become due to Employee shall not at any time be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution, or levy of any kind, either voluntary or involuntary, including any such liability which is for alimony or other payments for the support of a spouse or former spouse, or for any other relative of the Employee, prior to actually being received by Employee; and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or otherwise dispose of any right to benefits payable hereunder shall be void. 9. Assumption. This Agreement shall inure to the benefit of, and be binding upon, the successors and assignees of the Company and each Employer. The Company and each Employer shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all the business or assets of the Company or any Employer, expressly and unconditionally to assume and agree to perform the Company's obligations of such Employer's obligations under this Agreement. 10. Enforcement. The provisions of this Agreement shall be regarded as divisible, and if any of the provision or any part of the Agreement is declared invalid or unenforceable by a court of competent jurisdiction, the validity and enforceability of the remainder of the provisions or parts of the Agreement and the applicability thereof shall not be affected. 11. Amendment. This Agreement may not be amended or modified at anytime except by written instrument executed by the Company and the Employee. 12. Withholding. The Employer shall be entitled to withhold from amounts to be paid to the Employee hereunder any federal, state or local withholding or other taxes or charges which it is from time to time required to withhold. The Company shall be entitled to rely on an opinion of counsel if any question as to the amount or requirement of any such withholding shall arise. 13. Governing Law: Arbitration. It is Agreement and the rights and obligations hereunder shall be governed by and construed in accordance with the laws of the State of Illinois. Any dispute arising out of this Agreement shall be determined by arbitration under the commercial arbitration rules of the American Arbitration Association then in effect and judgment upon any award pursuant to such arbitration may be enforced in any court having jurisdiction thereof. The place of arbitration shall be in the city with population of 100,000 or more nearest to the Employee's place of employment immediately prior to the Severance Event, or in the nearest state or provincial capital if it is closer to such place of employment than is such city; provided that, in the case of payments claimed to be due under Section 5(c), the place of arbitration shall be in Chicago, Illinois. 14. Notice. Notices given pursuant to this Agreement shall be in writing and shall be deemed given when received and if mailed, shall be mailed by registered or certified mail, return receipt requested, addressee only, postage prepaid, if to the Employer to IMC Global Inc., 2100 Sanders Road, Northbrook, Illinois 60062, Attention Marshall I. Smith, Senior Vice President and General Counsel, or if to the Employee, at the address set forth below the Employee's signature line of this Agreement, or to such other address as to the party to be notified shall have given to the other. 15. No waiver. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by the other party shall be deemed a waiver of similar or dissimilar provision or condition at the same time or any prior or subsequent time. 16. Certain Rules of Construction. No party shall be considered as being responsible for the drafting of this Agreement for the purpose of applying any rule construing ambiguities against the drafter or otherwise. No draft of this Agreement shall be taken into account in construing this Agreement. The headings in this Agreement are for reference only and shall not affect the meaning or interpretation of any provision of this Agreement. IN WITNESS WHEREOF, the parties have executed this agreement as the day and year first written above. /s/ Robert E. Fowler, Jr. IMC GLOBAL INC. Robert E. Fowler, Jr. Address: By: /s/ Marschall I. Smith 1242 N. Lake Shore Drive, Name: Marschall I. Smith Apt. 28 Title: Senior Vice Chicago, Illinois 60610 President and General Counsel Attest: /s/ Thomas S. Finke Name: Thomas S. Finke Title: Attorney-in-Fact EX-10.73 6 TRANSITION BONUS AGREEMENT EXHIBIT 10.73 TRANSITION BONUS AGREEMENT This Agreement made as of the lst day of March, 1996, between IMC Global Inc., a Delaware corporation ("Parent"), and IMC Global Operations Inc., a Delaware corporation, and Marschall I. Smith ("Employee"). WHEREAS, on the date hereof, Parent and The Vigoro Corporation, a Delaware corporation, have completed a merger whereby The Vigoro Corporation, a Delaware corporation, has become a wholly- owned subsidiary of Parent; WHEREAS, on the date hereof, Employer is, directly or indirectly, a whollyowned subsidiary or an Affiliate; WHEREAS, it is in the best interest of Parent and the Employer that Employee continue to concentrate on the conduct of the business of the Parent, Employer and members of the Controlled Group, and perform all duties in their best interests and be encouraged to maintain the employment relationship with the Employer at least for such time as will allow an orderly transition following such merger; WHEREAS, Parent, the Employer and Employee desire to provide appropriate incentives for the Employee to continue to perform the Employee's duties and responsibilities with respect to Employer, thereby promoting the stability of the business of the Employer both before and after the occurrence of the merger. NOW, THEREFORE, for valuable consideration, which the parties hereby acknowledge, Parent, Employer and Employee agree that upon the effective date of the merger ("Effective Date"): 1. Definitions. The following terms shall have the respective meanings set forth below wherever used in this Agreement and capitalized, unless the context requires otherwise. a. "Base Salary" means Employee's annualized base salary determined as of the Transition Bonus Event, or if greater, as of the Effective Date. b. "Board" means the Board of Directors of the Parent, as constituted from time to time. c. "Bonus Base" with respect to the Employee, means the sum of the following: (i) the highest annual bonus (annualized if the Employee was employed for less than a complete bonus year) earned by the Employee for one of the three consecutive complete bonus years ending immediately preceding the Transition Bonus Event; provided, however, that for purposes of this paragraph (i) the bonus for the last six (6) months of calendar year 1995 multiplied by two (2) shall be treated as an annual bonus, for a complete bonus year if such amount is larger than the annual bonus for the complete bonus year ending June 30, 1995; and (ii) the number obtained by dividing all long-term bonuses or other incentives (other than any annual bonus or stock option, contingent stock unit or restricted stock award) earned by the Employee for the most recent complete bonus period ended before the Transition Bonus event by the number of years (including fractions of years if appropriate) included in such bonus periods; provided, however, that if either the terms of any such bonus or incentive plan or agreement or the Employer's practice of granting awards would permit the Employee to be included concurrently in two or more long-term performance periods, appropriate adjustments shall be made to the number obtained pursuant to this paragraph (ii), it being the intent of this definition to determine the amount of bonus that the Employee would earn, under optimal conditions of individual, divisional and Employer performance, financial or otherwise, during a complete year of service to the Employer. d. "Cause" for termination by Employer of the Employee's employment shall mean (i) the engaging by the Employee in willful and intentional conduct which has caused demonstrable and serious injury to the Employer, Parent, Affiliate, Subsidiary or any member of Parent's Controlled Group monetary or otherwise; (ii) conviction of, or plea of nolo contedere by, the Employee for any felony; (iii) criminal conviction of, or plea of nolo contendere by, the Employee for any other offense involving dishonesty, breach of trust or moral turpitude; (iv) a breach of fiduciary duty by the Employee involving personal profit; or (v) willful refusal by the Employee to perform the Employee's duties or responsibilities (unless significantly changed without the Employee's consent), or gross negligence by the Employee in the performance of such duties; provided, however, that the Employee shall have 30 days, or such longer period as the Employer may determine to be appropriate, after written notice by the Employer to cure any conduct or act, if curable, alleged in such notice to provide grounds for termination of the Employee's employment for Cause. e. "Code" means the Internal Revenue Code of 1986, as amended. f. "Controlled Group" means Parent and all subsidiaries and affiliates of Parent determined under Sections 414(b),(c),(m) and (o) of the Code. g. "Disability" means the inability of Employee, by reason of physical or mental illness or injury (regardless of whether such illness or injury is jobrelated), to perform the Employee's duties on a full-time basis, under circumstances in which the Employee is eligible to receive benefits under any long-term disability plan or arrangement of Company or any Employer, or would have been so eligible but for a determination made by the Employee not to participate in such plan or arrangement. h. "Employer" means the Parent and any Subsidiary or other member of the Controlled Group which employs the Employee on or after the effective Date. i. "Good Reason" for termination of employment by the Employee shall mean any of the following: (i.) the failure by Employer to (1) maintain the Employee's Base Salary at an annual rate equal to the rate in effect immediately prior to the Effective Date, or as may be increased from time to time by the Employer in accordance with regular practices of Parent thereafter with respect to employees with comparable duties; provided, however, that Good Reason shall not exist as the result of any decrease in Base Salary if such decrease is incident to a general reduction applied to all senior corporate officers and other key employees of all members of the Controlled Group on a proportionate and nondiscriminatory basis; (2) provide for continued participation on a comparable basis by the Employee in an annual bonus plan maintained by the Parent or Controlled Group in which employees of the Employer with comparable duties participate; (3) provide for participation in stock option and other equity incentive plans or programs maintained by Parent, any member of the Controlled Group from time to time in which employees with comparable duties participate; (4) provide for participation in all Parent or Controlled Group sponsored group or executive medical, dental, life, disability, retirement, profit-sharing, thrift, nonqualified and deferred compensation, and other plans maintained by the Parent or Controlled Group, in which employees of the Employer with comparable duties and pay participate; (5) provide vacation and perquisites substantially equivalent to those provided by the Parent or Controlled Group to the same extent as employees of the Employer with comparable duties; or (6) obtain the express unconditional assumption of this Agreement as required by Section 10; or (ii.) any Employer changes the Employee's primary employment location to a location that is more than 50 miles from the primary location of such Employee's employment as in effect immediately prior to the Effective Date; provided, however, that the relocation of the Employee on a nondiscriminatory basis for bona fide business reasons Shall not constitute Good Reason hereunder; or. (iii.) a significant adverse change, without the Employee's written consent in working conditions or status, including but not limited to (1) a significant adverse change in the nature or scope of the Employee's authority, powers, functions, duties or responsibilities; provided, however, a change in Parent status such that it no longer has any equity securities registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended, or that it is the subsidiary of another entity and directly results in changes in the nature and scope of the Employee's authority, powers, functions, duties or responsibilities shall not in and of itself constitute Good Reason hereunder; or (2) a reduction in the level of support services, staff, secretarial and other assistance, office space and accouterments available to a level below that reasonably necessary for the performance of such duties. j. "Severance Plan" means The Vigoro Corporation Severance Plan or the IMC Global Inc. Severance Plan, depending upon which of such plans provides severance benefits to the Employee. k. "Subsidiary" means any corporation of which the securities having a majority of the ordinary voting power in electing the board of directors are, at the time of such determination, owned by Parent or another Subsidiary. 1. "Transition Benefits" means the benefits provided pursuant to Section 5. m. "Transition Bonus" means one hundred fifty percent (150%) of the sum of the Base Salary and Bonus Base. n. "Transition Bonus Event" shall be deemed to have occurred if: (i.) on or after the Effective Date, but prior to the expiration of the Transition Period, the termination of an Eligible Employee's employment with the Employer occurs, and such termination is: (1) Employer-initiated for reasons other than Cause; or (2) Employee initiated within ninety (90) days after the Employee first has or should have knowledge that Good Reason exists; or (ii.) the Employer fails to make an offer of continued employment with compensation, authority and status at least equivalent to the compensation, authority and status of the Employee immediately prior to the Effective Date. o. "Transition Benefits Period" means a period of one (1) year from and after the Effective Date. 2. Transition Bonus. The Employee shall be entitled to the Transition Bonus if a Transition Bonus Event occurs with respect to the Employee during the Transition Period, the requirements of Section 3 are satisfied and none of the exclusions listed in Section 4 apply. 3. Requirements for Transition Bonus. The Employee will not be entitled to a Transition Bonus unless: a. the Employee's employment with all Employers is terminated in circumstances that constitute a Transition Bonus Event; and b. the Employee executes a release of claims and an employment-related covenant substantially in the form, in the manner and within the time required as set forth in the Severance Plan. 4. Transition Bonus Exclusions. Notwithstanding the foregoing, the Employee shall not be entitled to a Transition Bonus if: a. the Employee leaves employment voluntarily, by resignation (other than in circumstances that constitute a Transition Bonus Event); or b. the employment of the Employee is terminated as a result of the Employee's death or Disability. 5. Payment of Transition Benefits. The Transition Benefits provided by this Agreement shall consist of the payment of the Transition Bonus of the Employee determined at the time of the Transition Bonus Event in (18) eighteen equal monthly installments. The amount of each payment shall be one eighteenth of the Transition Bonus, and payment shall begin on the last day of the month in which the Employee has executed and delivered the release of claims required by Section 3.b, any applicable period for revocation thereof has expired and the Employee has executed and delivered the employment-related covenant required by Section 3.b. Such monthly payments shall continue until the Employee (or the Employee's beneficiary) has received such eighteen monthly installments. At the option of Parent, the present value of the Transition Benefits, determined pursuant to Section 280G(d)(4) of the Code, may be paid in a single lump sum on the date on which the first installment would otherwise be required to be paid. The Employee shall not be required to mitigate the amount of such payments by securing other employment or otherwise, nor shall such payments be reduced by reason of the Employee's securing other employment or for any other reason. Transition Benefits shall not be paid, and if commenced, shall terminate if Employee breaches any of the covenants relating to employment executed pursuant to the Severance Plan. Transition Benefits shall not reduce or affect any payment under any noncompete or employment agreement or severance plan or arrangement, including, but not limited to, any severance payment under Severance Plan, except that Transition Benefits shall be offset by the amount or value of any benefits paid or provided to the Employee pursuant to any employment severance or similar agreement between Parent and Employee on account of the employees' termination of employment after a Change in Control of Parent, as defined in Parent's 1995 Proxy Statement. Each qualified or nonqualified retirement or other plan benefits for which the Employee may be eligible shall be governed by specific conditions set forth in the applicable plan. 6. No Guarantee of Employment. Nothing contained in the Agreement shall be construed as giving or conferring an Employee the right to continued employment, or as a limitation on the right of an Employer to terminate the employment of Employee, with or without cause. Nor shall anything contained in the Agreement affect the eligibility requirements under any plans maintained by an Employer, nor give Employee a right to coverage under any plan. 7. Non-alienation of Assets and Benefits. Except as may be required by applicable law, the benefits payable under this Agreement shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution, or levy of any kind, either voluntary or involuntary, including any such liability which is for alimony or other payments for the support of a spouse or former spouse, or for any other relative of the Employee, prior to actually being received by the person entitled to the benefit under the terms of the Agreement; and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or otherwise dispose of any right to benefits payable hereunder shall be void. 8. Funding. Transition Benefits shall be paid out of the general assets of the Employer, and the status of Employee shall be that of a general unsecured creditor. None of Parent, the Company or any other Employer shall be required to fund or otherwise provide for the payment of benefits in any manner. 9. Obligation of Employer. The Parent shall cause Employee's Employer at the time of the Transition Bonus Event to make all payments required hereunder to be made to the Employee and agrees that the liability for making such payments and providing such benefits shall be the joint obligation of the Parent and the Employer. In the event that such benefits are not so paid by the Employer, then such benefits shall be paid or caused to be paid by the Parent. 10. Successors. This Agreement shall inure to the benefit of, and be binding upon, the successors and assignees of the Parent and the Employer. The Parent and the Employer shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all the business or assets of the Parent or the Employer, expressly and unconditionally to assume and agree to perform the Parent's or the Employer's obligations under this Agreement. 11. Withholding. The Employer shall be entitled to withhold from amounts to be paid to the Employee under this Agreement any federal, state or local withholding, employment or other taxes or charges which it is from time to time required to withhold. The Employer shall be entitled to rely on an opinion of counsel if any question as to the amount or requirement of any such withholding shall arise. 12. Arbitration. Either of the Parent, or any Employer, and the Employee or any successor, shall have the right and option to have any controversy or claim arising out of or relating to this Agreement, or the breach thereof, settled exclusively by arbitration, conducted before an arbitrator in accordance with the commercial arbitration rules of the American Arbitration Association then in effect. Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. The place of arbitration shall be in the city with population of 100,000 or more nearest to the Employee's place of employment immediately prior to the Transition Bonus, Event or in the nearest state or provincial capital if it is closer to such place of employment than is such city. 13. Legal Fees. If a dispute arises with respect to the enforcement of the Employee's rights under the Agreement or if any legal or arbitration proceeding shall be brought to enforce or interpret any provision contained herein, or to recover damages for breach hereof, the party that has substantially prevailed in the dispute shall recover from the other party any reasonable attorneys' fees and necessary costs and disbursement incurred as a result of such dispute, legal or arbitration proceeding. 14. Enforcement. In the event Parent, or any Employer shall fail to pay to Employee or successor any amounts due under this Agreement as they come due, the Parent and Employer shall pay interest on such amounts at the prime rate of interest as from time to time published in The Wall Street Journal (Midwest Edition) until paid. 15. Notice. The Parent or Employer and the Employee or the Employee's successor shall provide written notice ("initial notice") at least fifteen (15) business days prior to the commencement of any action under this Agreement, which initial notice shall indicate whether such party is invoking arbitration pursuant to Section 12 above. If such party is not electing to invoke arbitration, then the other party may by written notice within ten (10) business days following receipt of the initial notice elect to invoke arbitration pursuant to said Section 12. 16. Applicable Law. This Agreement shall be construed in accordance with the laws of the State of Illinois (other than Illinois law applying conflicts of law rules). IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the day and year first above written. IMC GLOBAL INC. EMPLOYEE Parent By: /s/ A. C. Miller /s/ Marschall I. Smith Its: Senior Vice President, Human Resources IMC Global Operations Inc. Employer By: /s/ J. D. Speir Its: President and Chief Operating Officer EX-10.74 7 THE VIGORO CORPORATION SEVERANCE PLAN, AS AMENDED EXHIBIT 10.74 THE VIGORO CORPORATION SEVERANCE PLAN ARTICLE I GENERAL 1.1 Purpose. The Company believes that it is in the best interests of its stockholders to retain well-qualified key executive personnel to assure itself of continuity of management. Accordingly, the Board has considered and has determined it to be in the best interests of the Company and its stockholders to create and maintain The Vigoro Corporation Severance Plan to provide Eligible Employees with economic security through the provision of income and other benefits in the event of a termination of employment, thus enabling such Eligible Employees to serve the Company's best interests. 1.2 Effective Date. The Plan shall become effective on November 13, 1995. 1.3 Definitions. Each term defined herein shall be given its defined meaning wherever used in this Plan, unless the context requires otherwise. "Base Compensation" means the sum of the Base Salary and Bonus Base. "Base Salary" means the Employee's annualized base salary determined as of the Severance Event, or if greater, as of the Effective Date. "Benefits Period" means a period that begins on the date of the Severance Event and ends one (1) year thereafter. "Board" means the Board of Directors of the Company, as constituted from time to time. "Bonus Base", with respect to an Employee, means the sum of the following: (a) the highest annual bonus (annualized if the Employee was employed for less than the complete bonus year) earned by the Employee for the three consecutive complete bonus years ending immediately preceding the Severance Event; provided, however, that for purposes of this paragraph (a), the bonus for the last six (6) months of 1995 multiplied by two (2) shall be treated as an annual bonus for a complete bonus year if such amount is larger than the annual bonus for the complete bonus year ending June 30, 1995; and (b) the number obtained by dividing all long-term bonus or other incentives (other than any annual bonus or stock option or restricted stock award), including but not limited to the 1994 Shareholder Value Plan of the Company earned by the Employee for the most recent complete bonus period completed ended before the Severance Event by the number of years (including fractions of years if appropriate) included in such bonus periods; provided, however, that if either the terms of any such bonus or incentive plan or agreement or the Company's practice of granting awards would permit the Employee to be included concurrently in two or more long-term performance periods, appropriate adjustments shall be made to the number obtained pursuant to this paragraph (b), it being the intent of this definition to determine the amount of bonus that the Employee would earn, under optimal conditions of individual, divisional and Company performance, financial or otherwise, during a complete year of service to the Company. "Cause" for termination by the Company of an Employee's employment shall be limited to (i) the engaging by the Employee in willful and intentional conduct which has caused demonstrable and serious injury to the Company, monetary or otherwise; (ii) conviction of, or plea of nolo contendere by, the Employee for any felony; (iii) criminal conviction of, or plea of nolo contendere by, the Employee for any other offense involving dishonesty, breach of trust or moral turpitude; (iv) a breach of fiduciary duty by the Employee involving personal profit; or (v) willful refusal by the Employee to perform his duties or responsibilities (unless significantly changed without the Employee's consent), or gross negligence by the Employee in the performance of such duties; provided, however, that the Employee shall have 30 days, or such longer period as the Company may determine to be appropriate, after written notice by the Company, to cure any conduct or act, if curable, alleged in such notice to provide grounds for termination of the Employee's employment for Cause. "Code" means the Internal Revenue Code of 1986, as amended. "Company" means The Vigoro Corporation, a Delaware corporation, and any successor thereto as described in Section 6.3. "Controlled Group" means the Company and all affiliates of the Company determined under Sections 414(b), (c), (m) and (o) of the Code. "Disability" means the inability of the Employee, by reason of physical or mental illness or injury (regardless of whether such illness or injury is job-related), to perform his duties on a full-time basis, under circumstances in which the Employee is eligible to receive benefits under any long-term disability plan or arrangement of the Company or any Employer, or would have been so eligible but for a determination made by the Employee not to participate in such plan or arrangement. "Effective Date" means November 13, 1995. "Eligible Employee" means an Employee who has satisfied all of the conditions of eligibility set forth in Section 2.1, is not excluded pursuant to Section 2.2 and is listed in Appendix A attached hereto. "Employee" means an individual who provides services to the Company or any Subsidiary as an employee for remuneration. "Employer" means the Company and any Subsidiary or other member of the Controlled Group which employs an Employee on or after the Effective Date. "Good Reason" for termination of employment by an Employee shall mean any of the following: (a) the failure by the Employer to (i) maintain the Employee's Base Salary at an annual rate equal to the rate in effect immediately prior to the Effective Date, or as may be increased from time to time by the Employer in accordance with regular practices of the Company thereafter with respect to employees with comparable duties; provided, however, that Good Reason shall not exist as the result of any decrease in Base Salary if such decrease is incident to a general reduction applied to all senior corporate officers and other key employees of all members of the Controlled Group on a proportionate and nondiscriminatory basis; (ii) provide for continued participation on a comparable basis by the Employee in an annual bonus plan maintained by the Company or its Subsidiaries in which employees with comparable duties participate; (iii) provide for participation in stock option and other equity incentive plans or programs maintained by the Company or its Subsidiaries or any other member of the Controlled Group from time to time in which employees with comparable duties participate; (iv) provide for participation in all Company or Subsidiary sponsored group or executive medical, dental, life, disability, retirement, profit- sharing, thrift, nonqualified and deferred compensation, and other plans maintained by the Company or its Subsidiaries to the same extent as employees with comparable duties participate; (v) provide vacation and perquisites substantially equivalent to those provided by the Company or Subsidiaries to employees with comparable duties; or (vi) obtain the express unconditional assumption of this Plan as required by Section 6.3; or (b) any Employer changes the Employee's primary employment location to a location that is more than 50 miles from the primary location of such Employee's employment as in effect immediately prior to the Effective Date; provided, however, that the relocation of an Employee on a nondiscriminatory basis for bona fide business reasons shall not constitute Good Reason hereunder; or (c) a significant adverse change, without the Employee's written consent, in working conditions or status, including but not limited to (i) a significant adverse change in the nature or scope of the Employee's authority, powers, functions, duties or responsibilities; provided, however, a change in the Company's status such that it no longer has any equity securities registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended, or that it is a subsidiary of another entity and directly results in changes in the nature or scope of the Employee's authority, powers, functions, duties or responsibilities shall not in and of itself constitute Good Reason hereunder; or (ii) a reduction in the level of support services, staff, secretarial and other assistance, office space and accoutrements available to a level below that reasonably necessary for the performance of such duties. "Plan Administrator" means the Company or such other person or entity designated to administer the Plan and be the named fiduciary thereof, whether or not the Plan Administrator is an individual who would be an Eligible Employee upon the occurrence of a Severance Event. The Plan Administrator shall interpret the Plan in good faith and in a reasonable manner. "Plan" means The Vigoro Corporation Severance Plan. "Severance Benefits" means the benefits provided pursuant to Section 2.3. "Severance Event" shall be deemed to have occurred if, and only if, as of or after the Effective Date, but prior to the expiration of the Severance Period, the termination of an Eligible Employee's employment with the Employer occurs, and such termination is: (a) Employer-initiated for reasons other than Cause; (b) Employee-initiated within ninety (90) days after the Employee first has or should have knowledge that Good Reason exists; or (c) Employee-initiated on or after Employee has attained age sixty (60). "Severance Period" means a period of three (3) years from and after the Effective Date. "Subsidiary" means any corporation of which the securities having a majority of the ordinary voting power in electing the board of directors are, at the time of such determination, owned by the Company or another Subsidiary. ARTICLE II ELIGIBILITY AND BENEFITS 2.1 Eligibility. Except as provided in Section 2.2 and subject to all other exclusions contained in this Plan, an Employee shall be an Eligible Employee entitled to receive Severance Benefits and to benefits pursuant to Sections 2.3 and 2.4(b) and (c), if and only if: (a) his employment with all Employers is terminated in circumstances that constitute a Severance Event; (b) within sixty (60) days after the Employee has received a release of claims for execution, he executes and delivers such release of claims as set forth in Appendix B; and (c) within sixty (60) days after the Employee has received an employment- related covenant for execution, he executes and delivers such employment-related covenant as set forth in Appendix C. The Employee may deliver the release of claims and the employment-related covenant either by hand delivery or United States mail postage prepaid to either the Employee's normal place of employment or such other company location as directed by the Employer. Delivery of the executed release of claims and employment-related covenant shall be deemed to have been accomplished, if hand delivered, on the day delivered, and if mailed, on the date mailed. The Employer shall deliver the form of release of claims and employment-related covenant together with a prominent explanation concerning the sixty (60) day requirement contained in this Section 2.1 and its significance. 2.2 Eligibility Exclusions. Notwithstanding the foregoing, an Employee shall not be an Eligible Employee hereunder if: (a) The Employee leaves employment voluntarily, by resignation (other than in circumstances that constitute a Severance Event); or (b) The employment of the Employee is terminated as a result of his death or Disability. 2.3 Severance Benefits. The Severance Benefits provided by this Plan shall consist of the payment of the Base Compensation of the Eligible Employee determined at the time of the Severance Event in twelve (12) equal monthly installments. The amount of each payment shall be one-twelfth of such Base Compensation, and payment shall begin on the last day of the month in which the Eligible Employee has executed and delivered the release of claims required by Section 2.1(b), any applicable period for revocation thereof has expired and the Eligible Employee has executed and delivered the employment-related covenant required by Section 2.1(c). Such monthly payments shall continue until the Eligible Employee (or his beneficiary) has received twelve monthly installments. Severance Benefits shall be subject to all applicable federal and state deductions and withholding. At the option of the Company, the present value of the Severance Benefits, determined pursuant to Section 280G(d)(4) of the Code, may be paid in a single lump sum on the date on which the first installment would otherwise be required to be paid. The Eligible Employee shall not be required to mitigate the amount of such payments by securing other employment or otherwise, nor shall such payments be reduced by reason of the Eligible Employee's securing other employment or for any other reason. Severance Benefits shall not be paid, and if commenced, shall terminate if the Employee breaches any of the covenants relating to employment executed pursuant to Section 2.1(c) or breaches any other noncompete covenant in any agreement entered into with an Employer. The Severance Benefits shall be paid in lieu of any severance pay due to the Eligible Employee pursuant to any other severance payment plan of the Company, but shall not be reduced by or affect the payment of any payment under any non-compete agreement or any payment under any other severance or employment agreement, including, but not limited to, any Transition Bonus Agreement. 2.4 Other Benefits. (a) Salary and Vacation. Any earned but unpaid salary and any earned but unused vacation for which an Employee is eligible at the time of the Severance Event or other termination of employment will be paid in a lump sum at the time of the Severance Event. (b) Bonus. Eligible Employees shall also receive a pro rata bonus or other incentive compensation payment with respect to the annual and/or other bonus or incentive compensation period in which the Severance Event occurred, based upon the target or other incentive payout made to employees with comparable duties and the number of full and partial months completed in such period by the Eligible Employee. Such payment, if any, shall be made at such time as the bonus or incentive payouts are made under the bonus or incentive plan or other arrangement applicable to the Eligible Employee. (c) Benefits Continuation. The Company shall maintain in full force and effect for the continued benefit of the Eligible Employee (and, to the extent applicable, his dependents), the medical, dental, life and disability benefits referred to in paragraph (a)(iv) in the definition of Good Reason in Section 1.3, to which he would have been entitled under such employee benefit plans, programs and arrangements maintained by the Employer if he had remained actively employed until the expiration of the Benefits Period or, if earlier, until the date on which the Employee has obtained new employment and thereby becomes eligible for comparable benefits. If any such continuation is not possible under the terms or provisions of such plans, programs or arrangements, the Company shall arrange to provide benefits to the Eligible Employee (and, if applicable, dependents) substantially similar to those required to be provided to such persons pursuant to this Section 2.4(c). (d) General Limitations. Except as provided in Section 2.3, the Severance Benefits and other benefits referred to in Section 2.1 and available to Eligible Employees are limited to the provisions herein and are in lieu of any other severance or similar benefits arising out of the termination of the Employee's employment. All qualified or non-qualified retirement or other plan benefits for which the Eligible Employee may be eligible shall be governed by the specific conditions set forth in the applicable plan. ARTICLE III CLAIMS 3.1 Claims Procedure (a) Any Employee who believes that he is entitled to a benefit under the Plan in an amount greater than he has received may file a claim for such benefit by writing to the Plan Administrator. (b) Every claim which is properly filed shall be answered in writing by the Plan Administrator within ninety (90) days (or one hundred eighty (180) days if special circumstances require an extension of time for processing the claim) of receipt stating whether the claim is granted or denied. If the claim is denied, the claimant shall be provided specific reasons for denial; specific reference to the pertinent Plan provisions on which the denial is based; a description of any information necessary for the claimant to perfect a claim including an explanation of why such information is necessary; and an explanation of the Plan's claim appeal procedure including steps to be taken to submit the claim for review. (c) Within sixty (60) days after notice that a claim is denied, the claimant may file a written appeal with the Plan Administrator which shall include any comments, statements or documents the claimant may wish to provide. Notice of the decision on appeal shall be sent to the claimant within sixty (60) days of its receipt (or one hundred twenty (120) days if special circumstances require an extension of time for processing the appeal). In the event the claim is denied upon appeal, the notice shall set forth the reasons for denial written in a manner calculated to be understood by the claimant and specific reference to the pertinent provisions of the Plan on which the denial is based. Any reasonable request from a claimant for documents or information relevant to his claim prior to his filing an appeal shall also be allowed. (d) If notice of the denial of the claim or appeal is not furnished in the time limits set forth above, the claim or appeal shall be deemed denied. ARTICLEIV LIMITATIONS AND LIABILITIES 4.1 No Guarantee of Employment. Nothing contained in the Plan shall be construed as an agreement of employment, or as giving or conferring on any Employee the right to continued employment, or as a limitation on the right of an Employer to terminate the employment of an Employee, with or without cause. Nor shall anything contained in the Plan affect the eligibility requirements under any other plans maintained by an Employer, nor give any Employee a right to coverage under any other plan. 4.2 Non-alienation of Assets and Benefits. Except as may be required by applicable law, the benefits payable under the Plan shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution, or levy of any kind, either voluntary or involuntary, including any such liability which is for alimony or other payments for the support of a spouse or former spouse, or for any other relative of the Employee, prior to actually being received by the person entitled to the benefit under the terms of the Plan; and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or otherwise dispose of any right to benefits payable hereunder shall be void. 4.3 Indemnification. The Company and each Employer shall, to the extent permitted by its Certificate of Incorporation and Bylaws, and by the laws of the State in which it is incorporated, indemnify the Plan Administrator, and any employee, officer or director of an Employer, against any and all liabilities arising by reason of any act or omission made in good faith pursuant to the provisions of the Plan, including expenses reasonably incurred in the defense of any claim relating thereto. ARTICLE V FUNDING 5.1 Funding. Benefits shall be paid out of the general assets of the Company or applicable Employer and the status of an Eligible Employee shall be that of a general unsecured creditor. Neither the Company nor any other Employer shall be required to establish a fund for the payment of benefits or otherwise provide for the payment of benefits prior to benefit becoming payable in any manner. ARTICLE VI EMPLOYERS AND SUCCESSORS 6.1 Obligation of Employers. Each Employer agrees to make all payments required hereunder to be made to Eligible Employees of such Employer, and agrees that the liability for making such payments and providing such benefits shall be the sole and exclusive obligation of such Employer; provided, however, that the foregoing notwithstanding, in the event that such benefits are not so paid by the Employer, then such benefits shall be paid or caused to be paid by the Company. 6.2 Cooperation by Each Employer. To enable the Plan Administrator to perform its functions, an Employer shall supply full and timely information to the Plan Administrator on all matters relating to Base Compensation of all Employees and cause for termination of employment, and any other pertinent facts or information as the Plan Administrator, in its sole discretion, may require. 6.3 Successors. This Plan shall inure to the benefit of, and be binding upon, the successors and assignees of the Company and each Employer. The Company and each Employer shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all the business or assets of the Company or any Employer, expressly and unconditionally to assume and agree to perform the Company's or such Employer's obligations under this Plan. ARTICLE VII AMENDMENT AND TERMINATION 7.1 General. The Company reserves the right to amend or terminate the Plan at any time, prospectively or retroactively, and for any reason; provided, however, that on and after the Effective Date, any such amendment or termination which adversely affects any Employee shall not be effective unless such Employee has consented thereto in writing. 7.2 Amendments. Any and all amendments shall be made in writing and shall be approved by resolution of the Board, or by an instrument duly executed by the person or persons designated by it to carry out its duties or powers under the terms of this Plan. ARTICLE VIII MISCELLANEOUS PROVISIONS 8.1 Withholding. The Employer shall be entitled to withhold from amounts to be paid to the Executive under this Plan any federal, state or local withholding or other taxes or charges which it is from time to time required to withhold. The Employer shall be entitled to rely on an opinion of counsel if any question as to the amount or requirement of any such withholding shall arise. 8.2 Applicable Law. This Plan shall be construed in accordance with federal law under the Employee Retirement Income Security Act of 1974, as amended; provided, that nothing in this Section 8.2 shall be construed as placing any restriction upon the right of an Employer acting pursuant to the Plan to take any action or to incur any liability which it is authorized to take or incur under its Certificate of Incorporation or Bylaws, or under the laws of the State in which it is incorporated, except to the extent that the same are preempted by applicable federal law. 8.3 Exclusive Benefit of Participants. This Plan is for the exclusive benefit of Eligible Employees and their beneficiaries. 8.4 Indemnification. All rights to indemnification which an Employee may now or hereafter have under the charter or bylaws of the Company or any Subsidiary, under any insurance contract maintained by the Company or any Subsidiary, or any agreement between an Employee and the Company or any Subsidiary, shall continue in full force and effect and the same shall not be altered or diminished by this Plan or the receipt by an Eligible Employee of Severance Benefits hereunder. 8.5 Enforcement. In the event the Company or any Subsidiary shall fail to pay to an Employee or successor any amounts due under this Plan or under any of the plans, programs or arrangements referred to herein as they come due, the Company and the Subsidiaries shall pay interest on such amounts at the prime rate of interest as from time to time published in The Wall Street Journal (Midwest Edition) until paid. 8.6 Arbitration. Each of the Company or any Subsidiary, and the Employee or any successor, shall have the right and option to have any controversy or claim arising out of or relating to this Plan or the plans, programs or arrangements referred to herein, or the breach thereof, settled exclusively by arbitration, conducted before an arbitrator in accordance with the commercial arbitration rules of the American Arbitration Association then in effect. Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. The place of arbitration shall be in the city with population of 100,000 or more nearest to the Employee's place of employment immediately prior to the Severance Event or in the nearest state or provincial capital if it is closer to such place of employment than is such city. 8.7 Legal Fees. If a dispute arises with respect to the enforcement of the Employee's rights under the Plan or if any legal or arbitration proceeding shall be brought to enforce or interpret any provision contained herein, or to recover damages for breach hereof, the party that has substantially prevailed in the dispute shall recover from the other party any reasonable attorneys' fees and necessary costs and disbursements incurred as a result of such dispute, legal or arbitration proceeding. 8.8 Notice. Each of the Company or a Subsidiary and the Employee or successor shall provide written notice ("initial notice") at least fifteen (15) business days prior to the commencement of any action under this Plan or any plan, program or arrangement referred to herein, which initial notice shall indicate whether such party is invoking arbitration pursuant to Section 8.6 above. If such party is not electing to invoke arbitration, then the other party may by written notice within ten (10) business days following receipt of the initial notice elect to invoke arbitration pursuant to said Section 8.6. 8.9 Agent for Service of Process. The Plan Administrator shall be the agent for service of process. Appendix A LIST OF ELIGIBLE EMPLOYEES Albert Allen Jo Ann Doherty William Bahl James Bausch Thomas Bell Paul Collins Jay Ferguson Robert E. Fowler, Jr. Lawrence Fuller Ronald Gagne Elmar Goldsmith Kenneth Holbrook Glenn Holler John Huber Kelly Jordan Karen N. Latham Colin MacKay Carolyn Merritt James Patterson Ronald G. Register Bobby Rehberg Joseph Rocco Larry Shoemake Robert Turner Robert van Patten Dale Ward Brian Warren Rose Marie Williams Appendix B RELEASE AND SEVERANCE AGREEMENT THIS RELEASE AND SEVERANCE AGREEMENT is made and entered into this day of , by and among The Vigoro Corporation, a Delaware corporation (the "Company") and (the "Employee"). The Employee's employment with the Company terminated ; and the Employee has voluntarily agreed to the terms of this Release and Severance Agreement in exchange for Severance Benefits under The Vigoro Corporation Severance Plan (the "Plan") to which the Employee otherwise would not be entitled. NOW THEREFORE, in consideration of the Severance Benefits provided under the Plan, the Employee, on behalf of the Employee and the Employee's spouse, heirs, executors, administrators, children, and assigns, does hereby fully release and discharge the Company, its officers, directors, employees, agents, subsidiaries and divisions, benefit plans and their administrators, fiduciaries and insurers, successors, and assigns from any and all claims or demands for wages, back pay, front pay, attorneys' fees and other sums of money, insurance, benefits, contracts, controversies, agreements, promises, damages, costs, actions or causes of action and liabilities of any kind or character whatsoever, whether known or unknown, from the beginning of time to the date of these presents, relating to the Employee's employment or termination of employment by the Company, including but not limited to any claims, actions or causes of action arising under the statutory, common law or other rules, orders or regulations of the United States or any State or political subdivision thereof, including the Age Discrimination in Employment Act and the Older Workers Benefit Protection Act. The Employee acknowledges that the Employee's obligations pursuant to applicable policies of the Company, copies of which have been provided to the Employee, and under applicable law relating to the use or disclosure of confidential information, shall continue to apply to the Employee. This Release and Severance Agreement supersedes any and all other agreements between the Employee and the Company except agreements relating to proprietary or confidential information belonging to the Company, and any other agreements, promises or representations relating to severance pay or other terms and conditions of employment are null and void. This release does not affect the Employee's right to any benefits to which the Employee may be entitled pursuant to any noncompete agreement or any other written agreement to which the Employer is a party, under any employee benefit plan sponsored by the Company, including but not limited to the Plan and the plans referred to therein and rights any former Employee may have with respect to any stock option plan of the Company. The Employee and the Company acknowledge that it is their mutual interest that the Age Discrimination in Employment Act waiver contained herein fully complies with the Older Workers Benefit Protection Act. Accordingly, the Employee acknowledges and agrees that: (a) The Severance Benefits exceed the nature and scope of that to which the Employee would otherwise have been legally entitled to receive; (b) The execution of this Agreement, including the Age Discrimination in Employment Act waiver herein, is the Employee's knowing and voluntary act; (c) The Employee has been advised by the Company to consult with the Employee's personal attorney regarding the terms of this Agreement, including the aforementioned waiver; (d) The Employee has had at least [forty-five (45) or twenty- one (21)] calendar days within which to consider this Agreement; (e) The Employee has the right to revoke this Agreement in full within (7) calendar days of execution, and none of the terms and provisions of this Agreement shall become effective or be enforceable until such revocation period has expired; [(f) The Employee has been informed in writing of (i) the eligibility factors under the Plan, (ii) the group of employees, including the job title and age of each, eligible to receive Severance Benefits, (iii) the ages of all individuals in the same job classification or organizational unit who are not eligible to receive Severance Benefits, and (iv) any time limit applicable to the Plan;] (g) The Employee has read and fully understands the terms of this Agreement; and (h) Nothing contained in this Agreement purports to release any of the Employee's rights or claims under the Age Discrimination in Employment Act that may arise after the date of execution. IN WITNESS WHEREOF, the parties have executed this Agreement on the date indicated above. THE VIGORO CORPORATION, EMPLOYEE for itself and its Subsidiaries By: Its: Appendix C COVENANTS RELATING TO EMPLOYMENT THIS AGREEMENT is made and entered into this day of , , by and between The Vigoro Corporation, a Delaware corporation (the "Company") and (the "Employee"). WHEREAS, the Employee's employment with the Company terminated on , , and the Employee has agreed to the terms of this Agreement in exchange for Severance Benefits under The Vigoro Corporation Severance Plan (the "Plan") to which the Employee otherwise would not be entitled. NOW, THEREFORE, in consideration of the premises, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows: Defined Terms. All capitalized terms not otherwise defined herein shall have the meanings assigned to such terms in the Plan. Severance Benefit Entitlement. The Company acknowledges and agrees that, subject to compliance with the provisions of subparagraphs (b) and (c) of Section 2.1 of the Plan and upon the expiration of the seven-day period for revocation of the release of claims required by Section 2.1(b) of the Plan, the Employee has met all of the requirements for the receipt of Severance Benefits pursuant to Section 2.3 of the Plan and the Company will pay and provide for such Severance Benefits and all other benefits required by the Plan. Covenant of Employee. The Employee agrees that, for a period of one year from and after the Severance Event, the Employee will not, directly or indirectly, as a sole proprietor, member of a partnership, or stockholder, investor, officer or director of a corporation, or as an employee, agent, associate of or consultant to any individual, partnership, joint venture, association, trust, corporation or other entity (including a "group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) solicit any employee of the Company or a Subsidiary to terminate the Employee's employment or hire, retain, employ or otherwise engage the services of any such employee. Confidential Information. The Employee shall hold in confidence and not directly or indirectly disclose, use, copy or make lists of any confidential information or proprietary data of the Company, except to the extent authorized in writing by the Board or required by any court or administrative agency. Confidential information shall not include any information known generally to the public (except to the extent that the Employee was responsible for causing such information to be known to the public, without the consent of the Board, in violation of this Section 4) or any information of a type not otherwise considered confidential by persons engaged in the same business or a business similar to that of the Company. All records, files, documents and materials or copies thereof, relating to the Company's business which the Employee shall have prepared, or used, or come into contact with, shall be and remain the sole property of the Company and shall be promptly returned to the Company. Remedies. In the event of a breach or threatened breach by the Employee of this Agreement, the Company shall be entitled to an injunction or such other equitable relief as a court may determine to prevent such a breach or threatened breach. No provision of this Agreement shall be construed as prohibiting the Company from pursuing any other remedies for such breach or threatened breach. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the day and year first above written. THE VIGORO CORPORATION, EMPLOYEE for itself and its Subsidiaries By: Its: EX-10.75 8 THE IMC GLOBAL INC. SEVERANCE PLAN EXHIBIT 10.75 THE IMC GLOBAL INC. SEVERANCE PLAN ARTICLE I GENERAL 1.1 Purpose. The Company believes that it is in the best interests of its stockholders to retain well-qualified key executive personnel to assure itself of continuity of management. Accordingly, the Board has considered and has determined it to be in the best interests of the Company and its stockholders to create and maintain The IMC Global Inc. Severance Plan to provide Eligible Employees with economic security through the provision of income and other benefits in the event of a termination of employment, thus enabling such Eligible Employees to serve the Company's best interests. 1.2 Effective Date. The Plan shall become effective on December 21, 1995. 1.3 Definitions. Each term defined herein shall be given its defined meaning wherever used in this Plan, unless the context requires otherwise. "Affiliate" means IMC-Agrico MP, Inc. "Base Compensation" means the sum of the Base Salary and Bonus Base. "Base Salary" means the Employee's annualized base salary determined as of the Severance event, or if greater, as of the Effective Date. "Benefits Period" means a period that begins on the date of the Severance event and ends one (1) year thereafter. "Board" means the Board of Directors of the Company, as constituted from time to time. "Bonus Base", with respect to an Employee, means: The highest annual bonus (annualized if the Employee was employed for less than the complete year) earned by the Employee for the three consecutive complete bonus years ending immediately preceding the Severance Event. "Cause" for termination by the Company of an Employee's employment shall be limited to (i) the engaging by the Employee in willful and intentional conduct which has caused demonstrable and serious injury to the Company, monetary or otherwise; (ii) conviction of, or plea of nolo contendere by, the Employee for any felony; (iii) criminal conviction of, or plea of nolo contendere by the Employee for any other offense involving dishonesty, breach of trust or moral turpitude; (iv) a breach of fiduciary duty by the Employee involving personal profit; or (v) willful refusal by the Employee to perform his duties or responsibilities, (unless significantly changed without the Employee's consent), or gross negligence by the Employee in the performance of such duties; provided, however, that the Employee shall have 30 days, or such longer period as the Company may determine to be appropriate, after written notice by the Company, to cure any conduct or act, if curable, alleged in such notice to provide grounds for termination of the Employee's employment for Cause. "Code" means the Internal Revenue Code of 1986, as amended. "Company" means IMC Global Inc., a Delaware corporation, and successor thereto as described in Section 6.3. "Controlled Group" means the Company and all affiliates of the Company determined under Sections 414(b),(c),(m) and (o) of the Code. "Disability" means the inability of the Employee, by reason of physical or mental illness or injury (regardless of whether such illness or injury is job-related), to perform his duties, on a full- time basis, under circumstances in which the Employee is eligible to receive benefits under any long-term disability plan or arrangement of the Company of any Employer, or would have been so eligible but for a determination made by the Employee not to participate in such plan or arrangement, as determined by the Plan Administrator. "Effective Date" means December 21, 1995. "Eligible Employee" means an Employee who has satisfied all of the conditions of eligibility set forth in Section 2.1 is not excluded pursuant to Section 2.2 and is listed in Appendix A attached hereto. "Employee" means an individual who provides services to the Company or any Subsidiary or any Affiliate as an employee for remuneration. "Employer" means the Company and any Subsidiary or other member of the Controlled group or any Affiliate hereof which employs an Employee on or after the Effective Date. "Good Reason" for termination of employment by an Employee shall mean any of the following: (a) the failure by the Employer to (i) maintain the Employee's Base Salary at an annual rate equal to the rate in effect immediately prior to the Effective Date, or as may be increased thereafter from time to time by the Employer in accordance with regular practices of the Company thereafter with respect to employees with comparable duties, provided, however, that Good Reason shall not exist as the result of any decrease in Base Salary if such decrease is incident to a general reduction applied to all senior corporate officers and other key employees of all members of any Controlled Group of which the Company is a member or any Affiliate on a proportionate and nondiscriminatory basis; (ii) provide for continued participation on a comparable basis by the Employee in an annual bonus plan maintained by the Company or its Subsidiaries or Affiliates in which employees with comparable duties participate; (iii) provide for participation in stock option and other equity incentive plans or programs maintained by the Company or its Subsidiaries or any other member of the Controlled Group or any Affiliate from time to time in which employees with comparable duties participate; (iv) provide for participation in all Company or Subsidiary or Affiliate sponsored group or executive medical, dental, life, disability, retirement, profit-sharing, thrift, nonqualified and deferred compensation, and other plans maintained by the Company or its Subsidiaries or its Affiliates to the same extent as employees with comparable duties participate; (v) provide vacation and perquisites substantially equivalent to those provided by the Company or Subsidiaries or Affiliate to employees with comparable duties, or (vi) obtain the express unconditional assumption of this Plan as required by Section 6.3; or (b) any Employer changes the Employee's primary employment location to a location that is more than 50 miles from the primary location of such Employee's employment as in effect immediately prior to the Effective Date; provided, however, that the relocation of an Employee on a nondiscriminatory basis for bona fide business reasons shall not constitute Good Reason hereunder; or (c) a significant adverse change, without the Employee's written consent, in working conditions or status, including but not limited to (i) a significant adverse change in the nature or scope of the Employee's authority, powers, functions, duties or responsibilities; provided, however, a change in the Company's status such that it no longer has any equity securities registered under Section 1(b) or 12(g) of the Securities Exchange Act of 1934, as amended, or that it is a subsidiary of another entity and directly results in changes in the nature or scope of the Employee's authority, powers, functions, duties or responsibilities shall not in and of itself constitute Good Reason hereunder; or (ii) a reduction in the level of support services, staff, secretarial and other assistance, office space and accouterments available to a level below that reasonably necessary for the performance of such duties. "Plan Administrator" means the Company or such other person or entity designated to administer the Plan and be the named fiduciary thereof, whether or not the Plan Administrator is an individual who would be an Eligible Employee upon the occurrence of a Severance Event. "Plan" means The IMC Global Inc. Severance Plan. "Severance Benefits" means the benefits provided pursuant to Section 2.3. "Severance Event" shall be deemed to have occurred if, and only if, as of or after the Effective Date, but prior to the expiration of the Severance Period, the termination of an Eligible Employee's employment with the Employer occurs, and such termination is: (a) Employer-initiated for reasons other than Cause; (b) Employee-initiated within ninety (90) days after Good Reason shall first exist. "Severance Period" means a period that begins on the Effective Date and ends three (3) years thereafter. "Subsidiary" means any corporation of which the securities having a majority of the ordinary voting power in electing the board of directors are, at the time of such determination, owned by the Company or another Subsidiary. ARTICLE II ELIGIBILITY AND BENEFITS 2.1 Eligibility. Except as provided in Section 2.2 and subject to all other exclusions contained in this Plan, an Employee shall be an Eligible Employee entitled to receive Severance benefits and to benefits pursuant to Section 2.3 and 2.4(b) and (c), if and only if: (a) his employment with all Employers is terminated in circumstances that constitute a Severance event; (b) within 45 days, (or such other period as may be prescribed by applicable law) after the Severance Event he executes and delivers to the Company a release of claims as set forth in Appendix B; and (c) within the period prescribed in (b) above he executes and delivers to the Company an employment related covenant as set forth in Appendix C. 2.2. Eligibility Exclusions. Notwithstanding the foregoing, an Employee shall not be an Eligible Employee hereunder if: (a) The Employee leaves employment voluntarily, either by resignation (other than in circumstances that constitute a Severance Event) or retirement; (b) The Employee is on or commences a leave of absence or other interruption of employment which does not constitute a termination of employment, provided that this exclusion will not apply if the Employee otherwise incurs a Severance Event; (c) Except as provided in paragraph (b) of the definition of Good Reason in Section 1.3, the Employee is transferred to another facility or location of the Company or Subsidiary or Affiliate at the same or another position with comparable compensation and declines to accept such position; (d) The employment of the Employee is terminated as result of the sale of assets or stock of an Employer, and the Employee is offered the same or another position with the successor in interest with comparable compensation (which, for this purpose, must include coverage under a plan which provides Severance Benefits upon a Severance Event comparable to that to which the Employee would have been entitled under this Plan had such sale of assets or stock not occurred; or (e) The employment of the Employee is terminated as a result of his death or Disability. 2.3. Severance Benefits: The Severance Benefits, provided by this Plan shall consist of the payment of the Base compensation of the eligible Employee determined at the time of the Severance event in twelve (12) equal monthly installments. The amount of each payment shall be one-twelfth of such Base Compensation, and payment shall begin on the last day of the month in which the Eligible Employee has executed the release of claims required by Section 2.1(b), any applicable period for revocation thereof has expired and the Eligible Employee has executed the employment-related covenant required by Section 2.1(c). Such monthly payments shall continue until the Eligible Employee (or his beneficiary) has received twelve monthly installments. Severance Benefits shall be subject to all applicable federal and state deductions and withholding. At the option of the Company, the present value of the Severance Benefits, determined pursuant to Section 280G(d)(4) of the Code, may be paid in a single lump sum on the date on which the first installment would otherwise be required to be paid. The Eligible Employee shall not be required to mitigate the amount of such payments by securing other employment or otherwise, nor shall such payments be reduced by reason of the Eligible Employee securing other employment or for any other reason. Severance Benefits shall not be paid, and if commenced, shall terminate with respect to any Employee who breaches any of the covenants relating to employment executed pursuant to Section 2.1(c) or breaches any other noncompete covenant in any agreement entered into with the Company. The Severance benefits shall be paid in lieu of any severance pay due to the Eligible Employee pursuant to any other severance payment plan of the Company, but shall not be reduced by or affect the payment of any payment under any non-compete agreement or any payment under any other severance or employment agreement, including but not limited to, any Transition Bonus Agreement. 2.4 Other Benefits. (a) Salary and Vacation. Any earned but unpaid salary and any earned but unused vacation for which an Employee is eligible at the time of the Severance Event or other termination of employment will be paid in a lump sum at the time of the Severance Event. (b) Bonus. Eligible Employees shall also receive a pro rata bonus with respect to the annual and/or other bonus or incentive compensation period in which the Severance Event occurred, based upon the target payout made to employees with comparable duties and the number of full and partial months completed in such period by the Eligible Employee. Such payment, if any, shall be made at such time as the bonus payout is made under the bonus plan to the Eligible Employee. (c) Benefits Continuation. The Company shall maintain in full force and effect for the continued benefit of the Eligible Employee (and, to the extent applicable, his dependents), the medical, dental, life and disability benefits referred to in paragraph (a)(iv) in the definition of Good Reason in Section 1.3, to which he would have been entitled under such employee benefit plans, programs and arrangements maintained by the Employer if he had remained actively employed until the expiration of the Benefits Period or, if earlier, until the date on which the Employee has obtained new employment and thereby becomes eligible for comparable benefits. If any such continuation is not possible under the terms or provisions of such plans, programs or arrangements, the Company shall arrange to provide benefits to the Eligible Employee (and, if applicable, dependents) substantially similar to those required to be provided to such persons pursuant to this Section 2.4(c). (d) General Limitations. Except as provided in Section 2.3, the Severance Benefits and other benefits referred to in Section 2.1 and available to Eligible Employees are limited to the provisions herein and are in lieu of any other severance or similar benefits arising out of the termination of the Employee's employment. All qualified or non-qualified retirement or other plan benefits for which the Eligible Employee may be eligible shall be governed by the specific conditions set forth in the applicable plan. ARTICLE III ADMINISTRATION AND CLAIMS 3.1 Administration. (a) The Plan Administration shall be the "administrator" of the plan within the meaning of such term as used in ERISA. (b) The Plan Administrator shall have the duty and authority to interpret and construe the Plan in regard to all questions of eligibility and the status and rights of persons under the Plan. 3.2. Claims Procedure. (a) Any Employee who believes that he is entitled to a benefit under the Plan in an amount greater than he has received may file a claim for such benefit by writing to the Plan Administrator. (b) Every claim which is properly filed shall be answered in writing by the Plan Administrator within ninety (90) days (or one hundred eighty (180) days if special circumstances require an extension of time for processing the claim) of receipt stating whether the claim is granted or denied. If the claim is denied, the claimant shall be provided specific reasons for denial; specific reference to the pertinent Plan provisions on which the denial is based; a description of any information necessary for the claimant to perfect a claim including an explanation of why such information is necessary; and an explanation of the Plan's claim appeal procedure including steps to be taken to submit the claim for review. (c) within sixty (60) days after notice that a claim is denied, the claimant may file a written appeal with the Plan Administrator which shall include any comments, statements or documents the claimant may wish to provide. Notice of the decision on appeal shall be sent to the claimant within sixty (60) days of its receipt (or one hundred twenty (120) days if special circumstances require an extension of time for processing the appeal). In the event the claim is denied upon appeal, the notice shall set forth the reasons for denial written in a manner calculated to be understood by the claimant and specific reference to the pertinent provisions of the Plan on which the denial is based. Any reasonable request from a claimant for documents or information relevant to his claim prior to his filing an appeal shall also be allowed. (d) If notice of denial of the claim or appeal is not furnished in the time limits set forth above, the claim or appeal shall be deemed denied. ARTICLE IV LIMITATIONS AND LIABILITIES 4.1 No Guarantee of Employment. Nothing contained in the Plan shall be construed as an agreement of employment, or as giving or conferring on any Employee the right to continued employment, or as a limitation on the right of an Employer to terminate the employment of an Employee, with or without cause. Nor shall anything contained in the Plan affect the eligibility requirements under any other plans maintained by an Employer, nor give any Employee a right to coverage under any other plan. 4.2 Non-alienation of Assets and Benefits. Except as may be required by applicable law, the benefits payable under the Plan shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution, or levy of any kind, either voluntary or involuntary, including any such liability which is for alimony or other payments for the support of a spouse or former spouse, or for any other relative of the Employee, prior to actually being received by the person entitled to the benefit under the terms of the Plan; and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or otherwise dispose of any right to benefits, payable hereunder shall be void. 4.3 Indemnification. The Company and each Employer shall, to the extent permitted by its Certificate of Incorporation and Bylaws, and by the laws of the State in which it is incorporated, indemnify the Plan Administrator, and any employee, officer or director of an Employer, against any and all liabilities arising by reason of any act or omission made in good faith pursuant to the provisions of the Plan, including expenses reasonably incurred in the defense of any claim relating thereto. ARTICLE V FUNDING 5.1 Fund. Benefits shall be paid out of the general assets of the Company or applicable Employer, and the status of an Eligible Employee shall be that of a general unsecured creditor. Neither the Company nor any other employer shall be required to establish a fund for the payment of benefits or otherwise provide for the payment of benefits prior to benefit becoming payable in any manner. ARTICLE VI EMPLOYERS AND SUCCESSORS 6.1 Obligation of Employers. Each Employer agrees to make all payments required hereunder to be made on behalf of Eligible Employees of such Employer, and agrees that the liability for making such payments and providing such benefits shall be the sole and exclusive obligation of such Employer; provided, however, that the foregoing notwithstanding, in the event that such benefits are not so paid by the Employer, then such benefits shall be paid or caused to be paid by the Company. 6.2 Cooperation by Each Employer. To enable the Plan Administrator to perform its functions, an Employer shall supply full and timely information to the Plan Administrator on all matters relating to Base Compensation of all Employees and cause for termination of employment, and any other pertinent facts or information as the Plan Administrator, in its sole discretion, may require. 6.3 Successors. This Plan shall inure to the benefit of, and be binding upon, the successors and assignees of the Company and each Employer. The Company and each Employer shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all the business or assets of the Company or any Employer, expressly and unconditionally to assume and agree to perform the Company's or such Employer's obligations under this Plan. ARTICLE VII AMENDMENT AND TERMINATION 7.1 General. This Plan Shall terminate and be of no further force and effect at the end of the day on which the Severance Period ends. The Company reserves the right to amend or terminate the Plan at any time, prospectively or retroactively, and for any reason; provided, however, that on and after the Effective Date, any such amendment or termination which adversely affects any Employee shall not be effective unless such Employee has consented thereto in writing. 7.2 Amendments. Any and all amendments shall be made in writing and shall be approved by resolution of the Board; or by an instrument duly executed by the person or persons designated by it to carry out its duties or powers under the terms of this Plan. ARTICLE VIII MISCELLANEOUS PROVISIONS 8.1 Withholding. The Employer shall be entitled to withhold from amounts to be paid to the Executive under this Plan any federal, state or local withholding or other taxes or charges which it is from time to time required to withhold. The Employer shall be entitled to rely on an opinion of counsel if any question as to the amount or requirement of any such withholding shall arise. 8.2 Applicable Law. This Plan shall be construed in accordance with federal law under the Employee Retirement Income Security Act of 1974, as amended; provided, that nothing in this Section 8.2 shall be construed as placing any restriction upon the right of an Employer acting pursuant to the Plan to take any action or to incur any liability which it is authorized to take or incur under its Certificate of Incorporation or Bylaws, or under the laws of the State in which it is incorporated, except to the extent that the same are preempted by applicable federal law. 8.3 Exclusive Benefit of Participants. This Plan is for the exclusive benefit of Eligible Employees and their beneficiaries. 8.4 Indemnification. All rights to indemnification which an Employee may now or hereafter have under the Charter or bylaws of the Company or any Subsidiary or Affiliate under any insurance contract maintained by the Company or any Subsidiary or Affiliate or any agreement between an Employer and the Company or any Subsidiary or Affiliate, shall continue in full force and effect and the same shall not be altered or diminished by this Plan or the receipt by an Eligible Employee of Severance Benefits hereunder. 8.5 Enforcement. In the event the Company or any Subsidiary or Affiliate shall fail to pay to an Employee or successor any amounts due under this Plan or under any of the plans, programs or arrangements referred to herein as they come due, the Company and the Subsidiary or Affiliate shall pay interest on such amounts at the prime rate of interest as from time to time published in The Wall Street Journal (Midwest Edition) until paid. 8.6 Arbitration. Each of the Company or any Subsidiary or Affiliate, and the Employee or any successor, shall have the right and option to have any controversy or claim arising out of or relating to this Plan or the plans, programs or arrangements referred to herein, or the breach thereof, settled exclusively by arbitration, conducted before an arbitrator in accordance with the commercial arbitration rules of the American Arbitration Association then in effect. Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Any such arbitration shall be held in Chicago, Illinois. 8.7 Legal Fees. If a dispute arises with respect to the enforcement of the Employee's rights under the Plan or if any legal or arbitration proceeding shall be brought to enforce or interpret any provision contained herein, or to recover damages for breach hereof, the party that has substantially prevailed in the dispute shall recover from the other party any reasonable attorneys' fees and necessary costs and disbursements incurred as a result of such dispute, legal or arbitration proceeding. 8.8 Notice. Each of the Company or Subsidiary or Affiliate and the Employee or successor shall provide written notice ("initial notice") at least fifteen (15) business days prior to the commencement of any action under this Plan or any plan, program or arrangement referred to herein, which initial notice shall indicate whether such party is invoking arbitration pursuant to Section 8.6 above. If such party is not electing to invoke arbitration, then the other party may by written notice within ten (10) business days following receipt of the initial notice elect to invoke arbitration pursuant to said Section 8.6. 8.9 Agent for Service of Process. The Plan Administrator shall be the agent for service of process. IN WITNESS WHEREOF, IMC Global Inc. has caused this plan to be executed by its duly authorized officer and its corporate seal to be affixed as of December 28, 1995. IMC GLOBAL INC. (corporate seal) By_____________________________________ Its ____________________________________ Attest: ________________________ Assistant Secretary RELEASE AND SEVERANCE AGREEMENT THIS RELEASE AND SEVERANCE AGREEMENT is made and entered into this day of ______________, _______________ by and among ___________________ (IMC Global Inc. or IMC-Agrico MP, Inc.), a Delaware corporation by and on behalf of its subsidiaries and affiliates (the "Company") and (the "Employee"). The Employee's employment with the Company terminated ________; and the Employee has voluntarily agreed to the terms of this Release and Severance Agreement in exchange for Severance benefits under the IMC Global Inc. Severance Plan (the "Plan"') to which the Employee otherwise would not be entitled. NOW THEREFORE, in consideration of the Severance Benefits provided under the Plan, the Employee, on behalf of the Employee and the Employee's spouse, heirs, executors, administrators, children, and assigns, does hereby fully release and discharge the Company, its officers, directors, employees, agents, subsidiaries, affiliates and divisions, benefit plans and their administrators, fiduciaries and insurers, successors, and assigns from any and all claims or demands for wages, back pay, front pay, attorneys' fees and other sums of money, insurance, benefits, contracts, controversies, agreements, promises, damages, costs, actions or causes of action and liabilities of any kind or character whatsoever, whether known or unknown, from the beginning of time to the date of these presents, relating to the Employee's employment or termination of employment by the Company, including but not limited to any claims, actions or causes of action arising under the statutory, common law or other rules, orders or regulations of the United States or any State or political subdivision thereof, including the Age Discrimination in Employment Act and the Older Workers Benefit Protection Act. The Employee acknowledges that the Employee's obligations pursuant to applicable policies of the Company, copies of which have been provided to the Employee, and under applicable law relating to the use or disclosure of confidential information, shall continue to apply to the Employee. This Release and Severance Agreement supersedes any and all other agreements between the Employee and the Company except agreements relating to proprietary or confidential information belonging to the Company, and any other agreements, promises or representations relating to severance pay or other terms and conditions of employment are null and void. This release does not affect the Employee's right to any benefits to which the Employee may be entitled pursuant to any noncompete agreement or any other written agreement to which the Employer is a party, under any employee benefit plan sponsored by the Company, including but not limited to the Plan and the plans referred to therein and rights any former Employee may have with respect to any stock option plan of the Company. The Employee and the Company acknowledge that it is their mutual interest that the Age Discrimination in Employment Act waiver contained herein fully complies with the Older Workers Benefit Protection Act. Accordingly, the Employee acknowledges and agrees that: (a) The Severance Benefits exceed the nature and scope of that to which the Employee would otherwise have been legally entitled to receive; (b) The execution of this Agreement, including the Age Discrimination in Employment Act waiver herein, is the Employee's knowing and voluntary act; (c) The Employee has been advised by the Company to consult with the Employee's personal attorney regarding the terms of this Agreement, including the aforementioned waiver; (d) The Employee has had at least twenty-one (21) calendar days within which to consider this Agreement; (e) The Employee has the right to revoke this Agreement in full within (7) calendar days of execution, and none of the terms and provisions of this Agreement shall become effective or be enforceable until such revocation period has expired. (f) The Employee has been informed in writing of (i) the eligibility factors under the Plan, (ii) the group of employees, including the job title and age of each, eligible to receive Severance benefits, (iii) the ages of all individuals in the same job classification or organizational unit who are not eligible to receive Severance Benefits, and (iv) any time limit applicable to the Plan; (g) The employee has read and fully understands the terms of this Agreement; and (h) Nothing contained in this Agreement purports to release any of the Employee's rights or claims under the Age Discrimination in Employment Act that may arise after the date of execution. IMC Global Inc. EMPLOYEE or IMC-Agrico MP, Inc. for itself, its Subsidiaries and Affiliates By:_________________________________ Its:_________________________________ COVENANTS RELATING TO EMPLOYMENT THIS AGREEMENT is made and entered into this _____ day of ______________________, by and between ______________ (IMC Global Inc.) or (IMC-Agrico MP, Inc.), a Delaware corporation (the "Company") by and on behalf of its subsidiaries and affiliates and (the "Employee"). WHEREAS, the Employee's employment with the Company terminated on _______________________________, _____ and the Employee has agreed to the terms of this Agreement in exchange for Severance Benefits under the IMC Global Inc. Severance Plan (the "Plan") to which the Employee otherwise would not be entitled. NOW, THEREFORE, in consideration of the premises, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto intending to be legally bound, hereby agree as follows: 1. Defined Terms, All capitalized terms not otherwise defined herein shall have the meanings assigned to such terms in the Plan. 2. Severance Benefit Entitlement. The Company acknowledges and agrees that, subject to compliance with the provisions of subparagraphs (b) and (c) of Section 2.1 of the Plan and upon the expiration of the seven-day period for revocation of the release of claims required by Section 2.1(b) of the Plan, the Employee has met all of the requirements for the receipt of Severance Benefits pursuant to Section 2.3 of the Plan and the Company will pay and provide for such Severance Benefits and all other benefits required by the Plan. 3. Covenant of Employee. The Employee agrees that, for a period of one year from and after the Severance Event, the Employee will not, directly or indirectly, as a sole proprietor, member of a partnership, or stockholder, investor, officer or director of a corporation, or as an employee, agent, associate of or consultant in any individual, partnership, joint venture, association, trust, corporation or other entity (including a "group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) solicit any employee of the Company or a Subsidiary or Affiliate to terminate the Employee's employment or hire, retain, employ or otherwise engage the services of any such employee. 4. Confidential Information. The Employee shall hold in confidence and not directly or indirectly disclose, use, copy or make lists of any confidential information or proprietary data of the Company, except to the extent authorized in writing by the Board or required by any court or administrative agency. Confidential information shall not include any information known generally to the public (except to the extent that the Employee was responsible for causing such information to be known to the public, without the consent of the Board, in violation of this Section 4) or any information of a type not otherwise considered confidential by persons engaged in the same business or a business similar to that of the Company. All records, files, documents and materials or copies thereof, relating to the Company's business which the Employee shall have prepared, or used, or come into contact with, shall be and remain the sole property of the Company and shall be promptly returned to the Company. 5. Remedies. In the event of a breach or threatened breach by the Employee of this Agreement, the Company shall be entitled to an injunction or such other equitable relief as a court may determine to prevent such a breach or threatened breach. No provision of this Agreement shall be construed as prohibiting the Company from pursuing any other remedies for such breach or threatened breach. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the day and year first above written. ____________________________________ EMPLOYEE for itself and its Subsidiaries and _ ________________________ Affiliates By:_________________________________ Its:_________________________________ APPENDIX A LIST OF ELIGIBLE EMPLOYEES James D. Speir Robert C. Brauneker Marschall I. Smith Robert M. Felsenthal Allen C. Miller C. Steven Hoffman Brian S. Turner Peter Hong Julian F. Kopchynski Eric A. Beaumont Martin G. Reading Donald R. Hood Walter E. Thayer Vernon D. Willhoit Keith M. Wagner Larry D. Graham Kermit E. McCormack John A. Brafford Edward M. Newberg Lee F. Thurner Gregory D. Loughrie Larry E. Akeson Richard R. Roch Don R. McCombs Hermann H. Wittje Lila D. Fredenburg Roy C. Hahnfeld Louis Spillone, Jr. EX-10.76 9 AGREEMENT BETWEEN THE COMPANY & BRIAN J. SMITH EXHIBIT 10.76 September 11, 1996 Mr. Brian J. Smith c/o IMC Global Inc. 2100 Sanders Road Northbrook, IL 60062 Dear Brian: This Letter Agreement between IMC Global Inc., a Delaware corporation (the "Company"), and you as Executive Vice President and Chief Financial Officer of the Company, is effective as of the 1st day of March, 1996. This Letter Agreement provides you with the assurance that in the event that your employment is terminated, as defined below, not later than February 28, 1999, you will be entitled to receive the sum of two times your annualized salary as of the termination date and two times the highest annual bonus (annualized if you are employed for less than a complete bonus year) earned by you for one of the two consecutive complete bonus years ending immediately preceding the termination. Payments shall be made semi-monthly or in a lump sum, at the option of the Company. "Termination of Employment" shall mean termination, prior to February 28, 1999 of your employment with the Company for any reason other than death, disability (as described below), cause (as described below), or voluntary resignation (as described below): (a) The term "disability" means physical or mental incapacity qualifying you for long-term disability under the Company's long-term disability plan. (b) The term "cause" means (i) your willful and continued failure substantially to perform your duties with the Company (other than any failure due to physical or mental incapacity) after a demand for substantial performance is delivered to you by the Board of Directors which specifically identifies the manner in which the Board believes you have not substantially performed your duties or (ii) willful misconduct materially and demonstrably injurious to the Company. No act or failure to act by you shall be considered "willful" unless done or omitted to be done by you not in good faith and without reasonable belief that your action or omission was in the best interest of the Company. You shall not be deemed to have been terminated for cause for purposes of this Agreement unless and until there shall have been delivered to you a copy of a resolution, duly adopted by a vote of three- quarters of the entire Board of Directors of the Company at a meeting of the Board. (c) Your resignation shall be deemed "voluntary" if it is for any reason other than your resignation is requested by the Company other than for cause. In exchange for the severance arrangement contained herein, you agree that you will not divulge, either before or after February 28, 1999, or appropriate to your own use, or the use of others any secret or confidential information pertaining to the Company or any of its subsidiaries obtained during your employment with the Company. This Agreement shall be binding upon and inure to the benefit of the Company, its successors or assigns, by operation of law or otherwise, including without limitation any corporation or other entity which shall succeed (whether direct or indirect by purchase, merger, consolidation, or otherwise) to all or substantially all of the business and/or assets of the Company. Except to the extent required to be governed by the law of the State of Delaware because the Company is incorporated under the laws of that state, the validity, interpretation, and enforcement of this agreement shall be governed by the law of the State of Illinois. Very truly yours, Agreed and Accepted _________________________ Brian J. smith Date: EX-11.1 10 FULLY DILUTED EARNINGS PER SHARE Exhibit 11.1 EARNINGS (LOSS) PER SHARE FULLY DILUTED COMPUTATION FOR THE YEARS ENDED JUNE 30, 1996, 1995 and 1994 (IN MILLIONS EXCEPT SHARE AND PER SHARE AMOUNTS) At June 30, ------------------------------------- 1996 1995 1994 ---- ---- ---- Basis for computation of fully diluted earnings per share: Earnings before extraordinary item and cumulative effect of accounting change, as reported $ 144.3 $ 193.3 $ 44.4 Add interest charges on convertible debt 7.2 7.2 7.2 Less provision for taxes (2.8) (2.8) (2.8) ---------- ---------- ---------- Earnings before extraordinary item and cumulative effect of accounting change, as adjusted 148.7 197.7 48.8 Extraordinary loss - debt retirement (6.5) (25.2) Cumulative effect of accounting change (5.9) ---------- ---------- ---------- Net earnings applicable to common stock $ 148.7 $ 185.3 $ 23.6 ========== ========== ========== Number of shares: Weighted average shares outstanding 92,796,630 91,486,778 82,303,383 Conversion of convertible subordinated notes into common stock 3,621,012 3,622,048 3,622,048 ---------- ---------- ---------- Total common and common equivalent shares assuming full dilution 96,417,642 95,108,826 85,925,431 ========== ========== ========== Fully diluted earnings per share: Earnings before extraordinary item and cumulative effect of accounting change $ 1.54 $ 2.08 $ .57 Extraordinary loss - debt retirement (.07) (.29) Cumulative effect of accounting change (.06) ---------- ---------- ---------- Net earnings $ 1.54 $ 1.95 $ .27 ========== ========== ========== This calculation is submitted in accordance with Regulation S-K item 601(b)(11). However, under APB Opinion No. 15, calculation of fully diluted earnings per share would exclude the conversion of convertible securities which would have an antidilutive effect on earnings per share for each period. EX-13 11 PORTIONS OF IMC GLOBAL INC.'S 1996 ANNUAL REPORT EXHIBIT 13 Management's Discussion and Analysis of Results of Operations and Finacial Condition RESULTS OF OPERATIONS IMC Global Inc. is one of the world's leading producers and marketers of phosphate crop nutrients (IMC-Agrico Crop Nutrients) and animal feed ingredients (IMC-Agrico Feed Ingredients) through its IMC-Agrico joint venture with Freeport-McMoRan Resource Partners, Limited Partnership (FRP). The Company is also a world leading producer and marketer of potash crop nutrients and industrial grade potash through various operations in the United States and Canada (collectively IMC Kalium). In addition, IMC is one of the nationOs leading distributors of crop nutrients, including nitrogen, and related products, through its FARMARKET (registered trademark) and Rainbow (registered trademark) distribution networks (collectively IMC AgriBusiness). The Company also manufactures and distributes consumer lawn and garden products; produces and markets professional products for turf, nursery and horticulture markets; and produces and distributes potassium-based ice melter products (collectively IMC Vigoro). The Company also produces sulphur and oil and gas through other joint venture operations. The Company's fiscal year ends June 30 and all yearly references herein refer to fiscal years unless otherwise noted. Shares and per share amounts have been restated to reflect a 2-for-1 stock split, effected in the form of a 100 percent stock dividend distributed on November 30, 1995. Merger The Company completed its merger with The Vigoro Corporation (Vigoro) on March 1, 1996 (the Merger), which resulted in Vigoro becoming a subsidiary of the Company. In connection with the Merger, the Company issued approximately 32.4 million shares of common stock in exchange for all of the outstanding common stock of Vigoro. The Merger has been accounted for as a pooling of interests. Accordingly, the Company's results of operations for all periods presented reflect the Merger. The following comparisons assume that the Merger had occurred on July 1, 1993.The Merger is expected to result in total cost reductions of $120.0 million over the next three years. Acquisitions The Company's results of operations have been impacted by several acquisitions consummated during 1994, 1995 and 1996: During 1994, the Company acquired several retail and wholesale businesses operated under various corporations (collectively Mid-Ohio). In January 1995, the Company acquired substantially all of the assets of the Central Canada Potash division (CCP) of Noranda, Inc. (Noranda) for $121.1 million, plus $16.2 million for working capital. In October 1995, the Company acquired the animal feed ingredients business (Feed Ingredients) of Mallinckrodt Group Inc. and subsequently contributed the business to IMC-Agrico. The Company's portion of the purchase price was $67.5 million. In addition, during 1996 the Company completed several smaller acquisitions, including the operations of several retail distribution operations (Agri-Supply) and seed operations (Madison Seed). These acquisitions were accounted for under the purchase method of accounting, and accordingly, results of operations for the acquired companies have been included in the Company's results of operations from their respective dates of acquisition. 1996 COMPARED TO 1995 Overview Net sales for 1996 were $2,981.0 million. Gross margins, before special one-time charges, for 1996 were $777.2 million and net earnings, before special one-time charges, were $213.9 million, or $2.31 per share. Special one-time charges of $69.6 million, or $0.75 per share, reduced earnings for 1996 to $144.3 million, or $1.56 per share. These charges, totaling $98.6 million before tax benefits, covered costs related to the Merger, as well as costs associated with, among other things, a corporate restructuring, other asset valuations and environmental issues. The special one-time charges of $98.6 million consisted primarily of the following: (i) $20.2 million primarily for consulting, legal and accounting services in connection with the Merger, (ii) $23.1 million as a result of the Company's adoption of a plan, immediately following the Merger, to restructure its business operations into a decentralized organizational structure with five stand-alone business units (consisting of $10.6 million for severance and related benefits from staff reductions, $6.5 million for lease terminations resulting from office consolidations and $6.0 million for other related actions), and (iii) $58.3 million ($55.3 million net of minority interest) as a result of the Company's detailed review of its accounting records and valuation of various assets and liabilities, in connection with the restructuring plan identified in (ii) above. The $58.3 million was comprised of $26.3 million of charges to cost of goods sold, primarily related to the write-off of certain idle plant facilities and other obsolete assets, $2.4 million of charges to general and administrative expenses for the write-off of miscellaneous assets, $16.6 million of charges to other operating income and expense to reduce certain long-term assets to net realizable value and other provisions, and $13.0 million of charges to minority interest for the transfer of 0.85 percent of IMC-Agrico Distributable Cash (as defined in the Partnership Agreement) from the Company to FRP. (See Note 4, "Merger and Restructuring Charges," of Notes to Consolidated Financial Statements for further detail.) Net sales for 1995 were $2,736.1 million and gross margins were $690.0 million while net earnings, before extraordinary charges and the cumulative effect of an accounting change, for 1995 were $193.3 million, or $2.12 per share. A charge of $5.9 million, or $0.06 per share, for the cumulative effect on prior years of a change in accounting for postemployment benefits resulting from the adoption of Statement of Financial Accounting Standards (SFAS) No. 112 , "Employers' Accounting for Postemployment Benefits," on July 1, 1994 and an extraordinary charge of $6.5 million, or $0.07 per share, related to the early extinguishment of debt reduced net earnings to $180.9 million, or $1.99 per share. Net sales for 1996 increased 9 percent over 1995 and gross margins, before special one-time charges, for 1996 increased 13 percent as compared to 1995. Net earnings, before special one-time charges, in 1996 increased 11 percent as compared to 1995. These increases reflected improved operating results from the Company's three largest business units and the net impact of various other operating and non- operating factors discussed below. IMC-Agrico Crop Nutrients Operations IMC-Agrico Crop Nutrients net sales in 1996 increased 12 percent to $1,747.8 million as compared to $1,559.0 million for 1995. This increase was primarily the result of higher concentrated phosphate prices in 1996, favorably impacting sales by $185.0 million, primarily due to higher world demand. During 1996, the company successfully negotiated a first-ever calendar year concentrated phosphate sales contract with China. Increased concentrated phosphate sales volumes primarily as a result of strong sales to India, Australia, Japan, New Zealand, Pakistan and Brazil were partially offset by lower phosphate rock shipments. The decrease in rock shipments reflected managementOs efforts to begin phasing out phosphate rock export sales during 1996. Gross margins, before special one-time charges of $6.9 million, increased $101.3 million, or 30 percent, to $436.7 million for 1996 as compared to $335.4 million in 1995. This increase was primarily due to the higher sales realizations for concentrated phosphates discussed above, as well as improvements in phosphate rock sales prices. The favorable impact of price improvements, however, was partially offset by higher phosphate rock production costs, due in large part to higher electricity and maintenance costs, as well as higher fuel costs. Concentrated phosphate operations are managed to balance output with customer needs. In May 1996, the Nichols complex in central Florida was temporarily idled pending improvement of market conditions. IMC Kalium Operations IMC Kalium net sales decreased four percent to $455.6 million in 1996 from $472.0 million in 1995. This decrease was primarily a result of lower potash export sales volumes, impacting net sales $27.0 million, due to reduced sales to China, the largest potash export customer, and lower average domestic potash sales prices, impacting revenues $13.1 million, due to excess producer inventories. These decreases were partially offset by the impact of higher potash export sales prices as well as increased domestic shipments, collectively improving net sales $23.7 million. Results for 1996 reflected the impact of the inclusion of a full year of net sales for CCP. Gross margins, before special one-time charges of $7.9 million, decreased $48.7 million, or 24 percent, to $155.7 million for 1996 as compared to $204.4 million in 1995. This decrease reflected the impact of lower export sales volumes and lower domestic sales prices discussed above. The decrease in domestic prices reflected the intense pressure to lower inventory levels that had risen due to unusually wet spring weather in the midwestern United States. These adverse conditions ultimately necessitated a reduction in potash production to balance output with market requirements. Accordingly, the Company temporarily reduced potash output at four of its six mines by accelerating maintenance schedules and summer vacation shutdowns, beginning in early June 1996 and concluding in mid-August 1996. IMC AgriBusiness Operations IMC AgriBusiness net sales increased six percent to $802.9 million in 1996 as compared to $760.8 million in 1995. The increase in net sales reflected the impact of a four percent increase in average sales prices, which favorably impacted revenues by $27.7 million. The increase in sales realizations was the result of improved pricing on select products as well as a change in the mix of products sold. Increased sales volumes, which favorably impacted 1996 net sales by $14.4 million, were primarily the result of the inclusion of sales from the Agri-Supply and Madison Seed operations which were acquired during 1996. Gross margins, before special one-time charges of $5.5 million, increased $11.7 million, or nine percent, to $146.5 million for 1996 as compared to $134.8 million in 1995. The increase in gross margins was primarily the result of increases in sales prices and sales volumes due to factors discussed above. These increases were partially offset by the impact of higher purchased product and raw material costs. Other The remaining increases in sales and margins were primarily the result of the Feed Ingredients acquisition in October 1995. Selling, General and Administrative Expenses Selling, general and administrative expenses increased $27.4 million to $223.4 million in 1996 as compared to $196.0 million in 1995 primarily due to higher expenses associated with: (i) the inclusion of a full year of operations of CCP which was acquired during 1995; (ii) a partial year of operations of the businesses acquired through the Feed Ingredients, Agri-Supply and Madison Seed acquisitions in 1996; and, (iii) the impact of one-time restructuring charges in 1996. (See Note 4, "Merger and Restructuring Charges," of Notes to Consolidated Financial Statements for further detail.) Merger and Restructuring Charges See Note 4, "Merger and Restructuring Charges," of Notes to Consolidated Financial Statements for further detail. Other Operating Income and Expense, Net Other operating income and expense, net in 1996 was $4.1 million, a $5.0 million decrease as compared to $9.1 million in 1995. Results for 1996 included gains on the sale of investments, properties and by- products of $17.6 million offset by merger and restructuring charges of $16.6 million. (See Note 4, "Merger and Restructuring Charges," of Notes to Consolidated Financial Statements for further detail.) In 1995, other operating income and expense, net included a gain of $5.0 million from the sale of land in Florida. Both 1996 and 1995 included approximately $3.0 million of amortization of a deferred gain resulting from the formation of IMC-Agrico. (See Note 6, "Joint Venture Partnership," of Notes to Consolidated Financial Statements for further detail.) Interest Charges Interest charges in 1996 were $64.8 million, $5.4 million lower than 1995 interest charges of $70.2 million as the Company reduced a portion of its high-cost, long-term indebtedness during the prior fiscal year. Partially offsetting this decrease were interest charges resulting from long-term debt increases used to fund the acquisition of CCP and other acquisitions during 1995. Income Taxes The effective tax rate for 1996, before benefits of the special one- time charge, was 36.5 percent, compared to an effective tax rate for 1995 of 37.4 percent. The effective rate decreased in 1996 as a result of post-merger planning and restructuring efforts. The effective rate for 1996, including the special one-time charge, was 39.5 percent. 1995 COMPARED TO 1994 Overview Net sales for 1995 were $2,736.1 million and gross margins were $690.0 million. Net earnings for 1995 were $193.3 million, or $2.12 per share, before a charge of $5.9 million, or $0.06 per share, for the cumulative effect on prior years of a change in accounting for postemployment benefits resulting from the adoption of SFAS No. 112 on July 1, 1994 and an extraordinary charge of $6.5 million, or $0.07 per share, related to the early extinguishment of debt. After these items, net earnings were $180.9 million, or $1.99 per share. Net sales for 1994 were $2,125.3 million and gross margins were $382.7 million while net earnings, before an extraordinary charge, were $44.4 million, or $0.54 per share. For 1994, operating results included an extraordinary charge of $25.2 million, or $0.31 per share, related to the early extinguishment of debt. Net earnings for 1994, after this item, were $19.2 million, or $0.23 per share. Net sales in 1995 increased 29 percent over 1994 levels and gross margins in 1995 increased 80 percent as compared to results in 1994. Net earnings before the extraordinary charge and the cumulative effect of an accounting change in 1995 increased substantially to $193.3 million, compared to $44.4 million before an extraordinary charge in 1994. These increases reflected improved operating results from the Company's three largest business units and the net impact of various other operating and non-operating factors discussed below. IMC-Agrico Crop Nutrients Operations IMC-Agrico Crop Nutrients 1995 net sales were $1,559.0 million compared to $1,131.0 million in 1994. This 38 percent increase was the result of strong concentrated phosphate demand and record purchases of concentrated phosphates by China. Average concentrated phosphate sales realizations in 1995, as a result of increased world demand, improved 20 percent over 1994 levels and shipping volume, largely due to increased purchases by China, increased 18 percent over 1994. These positive conditions favorably impacted revenues by $375.1 million. Domestic sales volumes in 1995 for concentrated phosphates were slightly lower, which was attributed to abnormally wet weather conditions in the spring, which delayed field work and planting and, as a result, decreased concentrated phosphate shipments. However, record purchases by China in 1995 resulted in a 38 percent increase in export volume as compared to 1994. The increase in export volume contributed to increased demand in the marketplace and resulted in higher sales realizations. The balance of the improvement in 1995 net sales reflected the impact of higher phosphate rock shipments primarily due to the addition of a long-term domestic customer supply contract in 1995. Gross margins increased $179.8 million to $335.4 million for 1995 as compared to $155.6 million for 1994. This significant increase was, as discussed above, primarily a result of higher prices stemming from increased world demand and higher sales volume for concentrated phosphates. Partially offsetting these price and volume increases were higher production costs caused by higher raw material costs and, to a lesser degree, remediation costs associated with a sinkhole at IMC-Agrico's New Wales concentrated phosphate production facility in Florida. (See Environmental Matters and Note 7, "Non-Recurring Items," of Notes to Consolidated Financial Statements for a further discussion of the sinkhole.) IMC Kalium Operations IMC Kalium net sales increased $117.3 million or 33 percent to $472.0 million in 1995 as compared to $354.7 million for 1994. This increase was primarily a result of the inclusion of a partial year of CCP shipments and record purchases of potash by China in 1995 which resulted in higher export volume when compared to 1994, favorably impacting net sales by $98.7 million. In addition, potash export sales prices increased approximately 13 percent and domestic prices increased one percent, accounting for additional revenues of $18.6 million, as producer inventory levels were below normal. IMC Kalium gross margins increased $70.4 million, or 53 percent, to $204.4 million in 1995 as compared to $134.0 million for 1994 primarily as a result of higher sales volumes and prices discussed above. Gross margins in 1995 also reflected improvements associated with lower production costs versus 1994, reflecting higher production rates and lower water inflow control spending at the Esterhazy, Saskatchewan potash mine. IMC AgriBusiness Operations IMC AgriBusiness net sales increased 15 percent to $760.8 million in 1995 as compared to $664.2 million in 1994. The increase in net sales reflected the impact of a nine percent increase in sales prices, as well as a six percent increase in sales volume, favorably impacting revenues by $59.3 million and $37.3 million, respectively. The increase in sales prices and volume primarily reflected the impact of tight supplies of nitrogen products in the U.S. due to agricultural demand exceeding capacity. Sales volumes in 1995 reflected the sale of 17 FARMARKETs(registered trademark) in August 1994. Gross margins increased $24.8 million or 23 percent to $134.8 million for 1995 as compared to $110.0 million in 1994. The increase in gross margins reflected the impact of higher sales prices and increased sales volume discussed above. These price and volume increases were partially offset by higher raw material and product costs in 1995. Selling, General and Administrative Expenses Selling, general and administrative expenses increased $30.2 million to $196.0 million in 1995 as compared to $165.8 million in 1994 primarily due to the acquisition of CCP, higher volume-related expenses, higher legal expenses and charges related to shifting the marketing and administrative functions of the Phosphate Chemicals Export Association to its member companies. Other Operating Income and Expense, Net Other operating income and expense, net in 1995 of $9.1 million included $5.0 million from the sale of land in Florida and $3.0 million from the amortization of a deferred gain resulting from the exchange of the Company's phosphate business in 1994 for a 56.5 percent interest in IMC-Agrico. In 1994, other operating income and expense, net of $27.7 million included $16.0 million (including $12.7 million related to finished goods inventory) of such deferred gain amortization as well as a gain of $5.5 million resulting from the sale by IMC-Agrico of a Florida cattle ranch. Interest Earned and Other Non-Operating Income and Expense, Net Interest earned and other non-operating income and expense, net included a charge of $20.3 million related to the write-down of the carrying value of the Company's investment in its oil and gas joint venture in 1994. (See Note 7, "Non-Recurring Items," of Notes to Consolidated Financial Statements for further detail.) Interest Charges Interest charges in 1995 were $70.2 million, $21.0 million lower than 1994 interest charges of $91.2 million as the Company purchased and retired a significant portion of its high-cost, long-term indebtedness throughout the year. Partially offsetting this decrease were interest charges resulting from long-term debt increases used to fund the acquisition of CCP and other acquisitions of the Company in 1995. Income Taxes The effective tax rate for 1995 was 37.4 percent, compared to an effective tax rate for 1994 of 43.9 percent. The effective rate decreased primarily as a result of a deferred tax adjustment resulting from an increase in U.S. corporate income tax rates. CAPITAL RESOURCES AND LIQUIDITY Liquidity and Operating Cash Flow Cash and cash equivalents as of June 30, 1996 were $9.6 million as compared to $203.7 million at June 30, 1995. Cash inflows in 1996 of $342.0 million generated from operating activities partially funded $242.0 million of cash sharing distributions to FRP, $172.7 million of capital expenditures, $93.2 million of long-term debt payments, $74.6 million to purchase Feed Ingredients and other acquisitions and $35.5 million of common stock dividend payments. The Company believes that internally generated cash flow will continue to be its primary source of funds for such purposes. The Company's working capital ratio at June 30, 1996 was 2.5:1 versus 2.1:1 at June 30, 1995. Debt to total capitalization improved to 39.8 percent at June 30, 1996 compared to 45.0 percent one year ago. This decrease was primarily due to a reduction in high-cost, long-term indebtedness. Net cash provided by operating activities was $342.0 million, $554.5 million and $165.5 million in 1996, 1995 and 1994, respectively. These results reflected increased earnings (before special one-time charges in 1996) over the three year period. The decrease in operating cash flow in 1996 primarily reflected the impact of increased working capital levels, largely related to higher receivables and inventories as a result of prolonged wet weather in the spring. Operating cash flow for 1994 included the Sterlington litigation settlement payment of $80.0 million. Net cash used in investing activities was $234.5 million, $242.7 million and $42.7 million in 1996, 1995 and 1994, respectively. Results for 1996 reflected the impact of the Feed Ingredients and Madison Seed acquisitions, as well as higher capital spending, and 1995 results reflected the impact of the acquisition of CCP. (See also Capital Spending.) Net cash used in financing activities was $301.6 million, $283.7 million and $63.5 million for 1996, 1995 and 1994, respectively. Net debt repayments in 1996, 1995 and 1994 were $60.1 million, $33.0 million and $158.3 million, respectively. Results in 1994 reflected the Company's purchase of high-cost, long-term indebtedness in an effort to reduce interest costs. In addition, as a result of improved earnings generated by IMC-Agrico, distributions to FRP increased over the three-year period. Distributions included in net cash used in financing activities were $242.0 million, $228.1 million and $146.8 million for 1996, 1995 and 1994, respectively. Dividends paid for 1996, 1995 and 1994 were $35.5 million, $24.6 million and $14.2 million, respectively. Also, during 1996 the Company received $25.8 million of cash related to the exercise of stock options. In addition, in 1994 the Company issued common stock, providing $255.6 million of cash from financing activities. Capital Spending Capital expenditures for 1996 were $172.7 million, an increase of $57.8 million over 1995 expenditures of $114.9 million due largely to the previously announced expansion at the Hersey, MI potash mine, a full year of capital spending at CCP and purchase and refurbishing of a currently non-operational ammonia plant. The Company estimates that its capital expenditures for 1997 will approximate $250.0 million. The Company expects to finance these expenditures primarily from operations. Capital expenditures are expected to increase in 1997 as a result of phosphogypsum stack and settling area expansion projects as well as purchases of mineral reserves. Pursuant to the Partnership Agreement, IMC-Agrico is required to obtain the approval of the Policy Committee of IMC-Agrico (which consists of two representatives each from the Company and FRP) prior to making capital expenditures for expansion of its business in any fiscal year in excess of $5.0 million (adjusted annually for inflation). In the event that the Policy Committee fails to approve future capital expenditures, IMC-Agrico's ability to expand its business could be adversely affected. (See Environmental Matters for a discussion of environmental capital expenditures.) Financing On February 28, 1996, the Company entered into an unsecured credit facility (Credit Facility) with a group of banks. Under the terms of the Credit Facility, the Company and certain of its subsidiaries may borrow up to $450.0 million under a revolving credit facility which matures on March 1, 1999 and $50.0 million under a long-term credit facility which matures on March 2, 2001. At August 23, 1996, the Company and its subsidiaries had borrowed $7.0 million under the revolving credit facility and $50.0 million under the long-term facility. Additionally, $33.4 million was drawn under the Credit Facility as letters of credit principally to support industrial revenue bonds and other debt and credit risk guarantees. Simultaneously with the execution of the Credit Facility, the Company and one of its subsidiaries assumed, and amended certain terms of, unsecured term loans of Vigoro and one of its subsidiaries. The $120.0 million unsecured term loans (Term Loans) bear interest at rates between 7.37 percent and 7.43 percent and mature at various times between 2000 and 2005. IMC-Agrico also has an agreement with a group of banks to provide it with a $75.0 million unsecured revolving credit facility (Initial Facility) until February 1997. At August 23, 1996, $30.0 million was outstanding under the Initial Facility. In addition, in May 1996 IMC-Agrico entered into two additional unsecured revolving credit facilities under which it may borrow up to $75.0 million until February 1997 (collectively with the Initial Facility, IMC-Agrico Working Capital Facility). On August 23, 1996, $25.0 million was borrowed under these additional facilities. The Credit Facility and Term Loans contain provisions which (i) restrict the Company's ability to make capital expenditures and dispose of assets, (ii) limit the payment of dividends or other distributions to stockholders, and (iii) limit the incurrence of additional indebtedness. These debt instruments also contain various financial ratios and covenants. The IMC-Agrico Working Capital Facility also contains various financial ratios and covenants, places limitations on indebtedness of IMC-Agrico and restricts the ability of IMC-Agrico to make cash distributions in excess of Distributable Cash (as defined in the Partnership Agreement). In addition, pursuant to the Partnership Agreement, IMC-Agrico is required to obtain the approval of the Policy Committee of IMC-Agrico prior to incurring more than an aggregate of $5.0 million (adjusted annually for inflation) in indebtedness (excluding a total of $125.0 million of indebtedness under the IMC-Agrico Working Capital Facility). Under an agreement with a financial institution, IMC-Agrico may sell, on an ongoing basis, an undivided percentage interest in a designated pool of receivables in an amount not to exceed $65.0 million. At June 30, 1996 IMC-Agrico had sold $59.5 million of such receivable interests. On July 25, 1996, the Company commenced tender offers to purchase all of its outstanding 9.25 percent senior notes due 2000, 10.125 percent senior notes due 2001 and 10.75 percent senior notes due 2003 (collectively, Senior Notes). At July 25, 1996 the principal amount of the Senior Notes was $176.3 million. The purchase of the Senior Notes will be financed with lower cost borrowings at floating rates under the Company's Credit Facility. The Company expects to record an extraordinary loss of approximately $12.0 million, net of taxes, in the first quarter of 1997 if all of the Senior Notes are purchased. Joint Venture Partnership On July 1, 1993, the Company and FRP contributed their respective phosphate businesses, including the mining and sale of phosphate rock and the production, distribution and sale of concentrated phosphates, uranium oxide and related products, to a joint venture partnership in return for a 56.5 percent and 43.5 percent economic interest, respectively, in IMC-Agrico, over the term of the partnership. IMC-Agrico is governed by the Policy Committee and is being operated by an affiliate of the Company. The Partnership Agreement contains a cash sharing arrangement under which Distributable Cash, as defined in the agreement, was shared at a ratio of 46.9 percent and 53.1 percent in 1996 (until March 1, 1996) to the Company and FRP, respectively.On January 23, 1996, the Company and FRP entered into certain amendments to the Partnership Agreement in part to reflect possible changes in the nature of the business of the Company resulting from the Merger. These amendments provide for (i) a shift of 0.85 percent of Distributable Cash interest of IMC-Agrico from the Company to FRP beginning March 1, 1996, (ii) changes to certain IMC-Agrico governance procedures, including the establishment of a new office of President for IMC- Agrico, who is appointed by the Company subject to the approval of the Policy Committee, and a related clarification of management and reporting responsibilities, (iii) the modification of certain product pricing and sourcing provisions with respect to transactions between IMC-Agrico and affiliates of the Company, including the FARMARKET(registered trademark) distribution network, and (iv) the establishment of criteria under which certain acquisitions by the Company's Rainbow(registered trademark) or FARMARKET networks would not be required to be offered to IMC-Agrico. For 1996, the total amount of Distributable Cash generated by IMC-Agrico was $465.3 million, of which $248.0 million was distributed to FRP, including $57.7 million distributed in August 1996. Distributable Cash sharing percentages will be adjusted until July 1, 1997, when the sharing ratios will be fixed at 58.5 percent and 41.5 percent to the Company and FRP, respectively. Derivatives The Company periodically enters into DAP futures contracts and options to purchase natural gas to manage its exposure to price fluctuations. The Company also has periodically entered into forward exchange contracts to hedge the effect of Canadian dollar exchange rate changes. Net hedging gains and losses are recognized as part of the transactions hedged and were not material during 1996. The Company monitors its market risk on an ongoing basis and currently considers such risk to be minimal. Contingencies Sterlington Litigation Angus Chemical Company (Angus) and the Company are involved in various litigation arising out of a May 1991 explosion at a nitroparaffins plant located in Sterlington, Louisiana. Angus wants the Company to assume responsibility for a class action lawsuit currently pending in Louisiana against the Company, Angus, and other defendants for injuries arising out of the explosion, and to reimburse Angus for amounts that Angus has paid for settled claims in connection with the Sterlington explosion. With respect to the settled demands, Angus, in pleadings filed in Louisiana and Texas, states that it is seeking approximately $9.5 million, plus interest, fees, and costs. In addition, Angus is seeking direct payment from the Company's insurers, X.L. Insurance Company, Ltd. (XL) and A.C.E. Insurance Company, Ltd. (ACE) for certain damages in an action pending in Louisiana state court. Angus has not specified how much it is seeking from the Company's insurers. Angus may be asserting claims against XL for the difference between the limits of the XL policy of $75.0 million and the $45.7 million that XL has paid to the Company under the policy. In addition, Angus may be asserting claims against ACE for the difference between the limit of the ACE policy of $100.0 million and the $15.0 million that ACE previously paid to the Company. The Company may have obligations to indemnify certain of the insurers if Angus is successful in this case. The Company is unable to estimate the magnitude of its exposure at this time. The Company continues to vigorously litigate each of the matters arising out of the Sterlington explosion. A jury trial is scheduled to commence in October 1996 in Texas state court with respect to Angus' and the Company's claims for contribution and indemnity for the settled demands. Discovery is still not complete with respect to the lawsuits scheduled for trial in October 1996, and all of the other lawsuits are in early stages. In addition, Angus has filed an action in federal court in Louisiana seeking reimbursement for amounts allegedly expended to remediate certain environmental sites at the Sterlington plant. In its pleadings filed with the Louisiana federal court, Angus states that it is seeking approximately $1.8 million for amounts expended, plus interest, fees, costs and reimbursement for any future expenses. The Company is unable to estimate the magnitude of its exposure at this time. Potash Antitrust Litigation A number of class action suits have been filed in United States federal courts, two California state courts and an Illinois state court against most of the North American potash producers, including the Company. The complaints essentially allege that the North American potash producers acted together to fix the price of potash sold in the United States. The complaints do not specify the amount of damages sought by the plaintiffs. All of the complaints seek treble damages and attorneys' fees and ask that the court find the defendants jointly and severally liable. Suits filed in federal courts in Minnesota, Illinois and Virginia have been consolidated in Minnesota. All of the claims in these suits are asserted on behalf of a purported group of direct purchasers of potash in the United States, which class has been certified by the court. Discovery is now concluded in the case and defendantsO motions for summary judgment have been filed. In addition to the direct purchaser actions filed in the United States District Courts, two complaints have been filed in California state courts on behalf of indirect purchasers residing in California. The Company has answered both of the California complaints and has denied all material allegations. These cases are still in a preliminary stage and no discovery has been conducted. The case filed in Illinois state court has been dismissed for failure to state a claim. Plaintiffs have appealed the dismissal. The Company is not able to estimate the amount of damages that could ultimately be sought in the civil suits. Based upon available information, management of the Company believes that the Company has not acted in concert with others to fix prices in violation of the United States antitrust laws or any other laws. There can be no assurance, however, that these cases will ultimately be decided in a manner favorable to the Company. In connection with the Company's Colonsay mine, affiliates of Noranda, from whom the Company purchased the mine in January 1995, are also named as defendants in the civil suits. The Company did not agree to assume any liabilities of Noranda or such affiliates with respect to operations at Colonsay prior to the closing of the purchase which may arise out of such antitrust litigation, and the Company is entitled to be indemnified by Noranda against such liabilities should they arise. The Antitrust Division of the United States Department of Justice had been conducting a grand jury investigation into allegations similar to those made in the civil actions. The Company was advised that the investigation was concluded and a spokesperson for the Antitrust Division has stated that no action will be taken. FTC Phosphate Operations Inquiry The Company was notified on October 2, 1995 by the Federal Trade Commission (FTC) that the FTC is conducting an investigation to determine whether manufacturers of concentrated phosphates may have violated Section 5 of the Federal Trade Commission Act, as amended, by agreeing to restrict output or raise prices. The FTC has requested that the Company provide certain information and documents regarding the Company's phosphate operations. The Company has submitted responsive information and documents to the FTC. The FTC has stated that neither its request for information and documents nor the fact it has commenced an investigation should be construed as indicating that a violation has occurred or is occurring. Other Since December 1985, the Company has experienced an inflow of water into one of its two interconnected potash mines at Esterhazy. As a result, the Company has incurred additional costs to control the flooding. The Company has significantly reduced the water inflow since the initial discovery and has been able to meet all sales obligations and requirements from production at the mines. Despite the relative success of such measures, there can be no assurance that the amounts required for remedial efforts in future years will not increase or that inflow or remediation costs will not increase to a level which would cause the Company to change its mining process or abandon the mines. The long-term outlook of the water inflow has caused the Company to consider alternatives to its current mining operations at Esterhazy. Any solution to the water inflow situation at the mines may result in substantial capital expenditures and/or charges to operations. Like other potash producers' shaft mines, the Company's Colonsay mine is also subject to the risks of inflow of water as a result of its shaft mining operations. The Saskatchewan potash mining industry generally has been unable to secure insurance to cover other risks associated with underground operations. Therefore, the Company's underground mine operations are not presently insured against, and are not insurable against, business interruption or risk from catastrophic perils, including collapse, floods and other water inflow. The Company does not consider the impact of inflation to be significant in the business in which it operates. ENVIRONMENTAL MATTERS General In the normal course of its business, the Company mines phosphate and potash, manufactures and blends crop nutrients, and blends crop nutrients with pesticide products. These operations are subject to federal, state, provincial and local environmental, health and safety laws in the United States and Canada, including laws related to air and water quality; management of hazardous and solid wastes; management and handling of raw materials and products; and land reclamation. The Company has expended, and anticipates that it will continue to expend, substantial resources, both financial and managerial, to comply with environmental regulations, permitting and reclamation requirements, and health and safety standards. Additionally, although the Company believes that its operations generally satisfy environmental standards, there can be no assurance that costs, penalties or liabilities will not be incurred. The Company does not believe that its expenditures for environmental, health or safety compliance have had a material adverse effect on its operations or financial condition. For fiscal year 1996, environmental capital expenditures totaled approximately $21.2 million, and were primarily related to air emissions permitting and control, ground and surface water protection, wastewater treatment and control, and solid waste management. Additional expenditures for land reclamation activities totaled $19.2 million. For fiscal year 1997, the Company expects environmental capital expenditures to be approximately $46.0 million and expenditures for land reclamation activities to be approximately $24.0 million. Environmental capital is expected to increase in 1997 as a result of phosphogypsum stack and settling area expansion projects as well as spending for air emissions control. No assurance can be given that greater environmental expenditures will not be required for fiscal year 1997, or that environmental expenditures in future years will not increase. Environmental, health and safety laws and regulations in the United States and Canada have changed substantially and rapidly in recent years, and the Company anticipates that these changes will continue. It is the Company's policy to comply with all applicable environmental, health and safety laws and regulations. It is difficult to estimate future compliance costs, however, if implementing regulations have not yet been finalized or are subject to varying and conflicting interpretations. Nevertheless, because new environmental standards generally are more restrictive than current requirements, the costs of complying with such regulations will likely increase. Permitting The Company holds numerous environmental and other permits authorizing operations at each of its facilities. A decision by a government agency to deny an application for a new or renewed permit, or to revoke or substantially modify an existing permit, could have a material adverse effect on the Company's ability to continue operations at the affected facility. Expansion of Company operations also is predicated upon securing the necessary environmental and other permits. Air Quality The 1990 Amendments to the Clean Air Act require certain sources to increase controls on emissions of conventional and hazardous air pollutants. During 1996, several of the Company's facilities have applied for, or will apply for, such operating permits. In addition, by the year 2000 the United States Environmental Protection Agency is expected to promulgate control standards for hazardous air pollutants applicable to certain of the Company's operations. Capital expenditures, which could be significant, might be necessary to meet the regulatory or permit requirements. Because the operating permits have not been issued and the regulatory requirements have not been finalized, the Company cannot estimate the extent of these expenditures. Process Safety Management and Risk Management Planning Several of the Company's facilities handle certain chemicals above the regulatory threshold. These facilities are subject to Process Safety Management (PSM) standards under the Occupational Safety and Health Act and to the recently promulgated Risk Management Planning (RMP) requirements under the Clean Air Act. PSM standards require covered facilities with processes that handle certain chemicals to implement written safety management plans, procedures and employee training. RMP rules require covered facilities to establish plans for preventing and responding to accidental releases. Under RMP, facilities also must release to the public information about regulated processes and release prevention programs, the potential for accidental releases and the facility's "worst case" release scenarios and their potential effects on nearby populations. The Company continues to implement the required programs and prepare for compliance with the new RMP rule. As compliance efforts proceed, the anticipated costs to complete these planning processes could be substantial. Management of Residual Materials Phosphate and potash mining and processing produce tailings or other residual materials that must be managed. Phosphate residuals, consisting primarily of phosphogypsum, typically are stored in phosphogypsum stack systems. Potash producers generally store tailings, which contain primarily salt, iron and clay, in surface disposal sites. The Company has incurred and will continue to incur significant costs to manage its phosphate and potash residual materials in accordance with environmental laws, regulations and permit requirements. To address concerns about potash tailings management, the Saskatchewan Department of Environmental and Resource Management (the Department) published regulations in 1994 requiring all potash mine operators: (i) to submit facility decommissioning and reclamation plans for approval; and (ii) to provide assurances that the plans will be carried out. The decommissioning and reclamation plans and related assurances cover all facilities at a mine, including surface disposal sites for potash tailings. The Company has filed or will file its decommissioning plans during calendar 1996. Implementation of the plans probably will be deferred until an affected facility is closed, which the Company does not anticipate in the foreseeable future. Until all of the decommissioning plans have been prepared, the Company, like all members of the Saskatchewan potash industry, is unable to predict with certainty the financial impact of the regulation on the Company. With regard to phosphate processing, Florida law may require IMC-Agrico to close one or more of its unlined phosphogypsum stacks and/or associated cooling ponds after March 25, 2001, if the stack system is demonstrated to cause a violation of FloridaOs water quality standards. IMC-Agrico has already filed an application with FloridaOs Department of Environmental Protection to close the unlined gypsum stack at its New Wales facility in central Florida. Closure activities would begin on July 1, 1998 and would cost approximately $2.5 million, net of recorded accruals, for construction activities over a period of five years. IMC-Agrico cannot predict at this time whether Florida will require closure of any of its stack systems. The costs of such closure could be significant. IMC-Agrico continues to address elevated sulfate levels in groundwater at its New Wales facility. In 1992, elevated sulfate levels were detected in groundwater beneath the cooling pond. In response, the Central Florida Regional Planning Council required IMC-Agrico to plug former recharge wells (believed to be the source of the elevated sulfate levels) and either to show, by September 1997, that groundwater sulfate levels have returned to acceptable levels or to line or relocate the cooling pond. Recent monitoring data has evidenced a downward trend in the sulfate levels. If the downward trend continues, IMC-Agrico likely will meet the 1997 deadline. If sulfate levels do not reach acceptable levels, IMC-Agrico will request an extension of the 1997 deadline. The estimated cost to line or relocate the cooling pond would be between $35.0 million and $68.0 million. Remedial Activities The historical use and handling of regulated chemical substances and crop nutrient products in the normal course of the Company's business has resulted in contamination at facilities presently or previously owned or operated by the Company. The Company has also purchased facilities that were contaminated by previous owners through their use and handling of regulated chemical substances. Spills or other unintended releases of regulated substances have occurred in the past, and potentially could occur in the future, possibly requiring the Company to undertake or fund cleanup efforts. The Company cannot estimate the level of expenditures that may be required in the future to clean up contamination from the handling of regulated chemical substances or crop nutrients. At some locations, the Company has agreed, pursuant to consent orders with the appropriate governmental agencies, to undertake certain investigations (which currently are in progress) to determine whether remedial action may be required to address contamination. The cost of any remedial actions that ultimately may be required at these sites currently cannot be determined. The Company believes that it is entitled to at least partial indemnification for a portion of the costs that may be expended by the Company to remedy environmental issues at certain facilities and operations pursuant to indemnification agreements. These agreements address issues that resulted from activities occurring prior to the Company's acquisition of facilities from parties including: PPG Industries, Inc., Kaiser Aluminum & Chemical Corporation, Beatrice Companies, Inc., Estech, Inc., and certain private parties. The Company has already received and anticipates receiving amounts pursuant to the indemnification agreements for certain of its expenses incurred to date. Superfund The Comprehensive Environmental Response Compensation Liability Act (CERCLA), also known as "Superfund," imposes liability, without regard to fault or to the legality of a party's conduct, on certain categories of persons that are considered to have contributed to the release of "hazardous substances" into the environment. Currently, the Company is involved in or concluding involvement at a number of Superfund sites. With one possible exception, discussed below, at none of these sites alone, nor in the aggregate, is the Company's liability currently expected to be material. As more information is obtained regarding the sites and the potentially responsible parties (PRPs) involved, this expectation may change. IMC-Agrico is one of 70 PRPs participating in investigation of the Petroleum Products Site. To date, the PRP group has spent approximately $2.7 million to address waste oil remaining on site, and expects to spend up to $6.0 million on these activities. Remedial cost estimates to clean up on-site soils and structures range from $2.0 million to $40.0 million. Cost estimates have not yet been developed for groundwater remediation. IMC-Agrico tentatively has been allocated 20,774 gallons of waste oil based on ledger entries, which places IMC-Agrico 27th on the list of 70 members within the PRP group. The group also has identified approximately 1,000 additional PRPs. Because investigation of the site is incomplete and the required remedy has not been selected, a reliable estimate of cleanup costs, and IMC-Agrico's contribution to those costs, cannot be made at this time. To the Board of Directors and Stockholders of IMC Global Inc. We have audited the accompanying consolidated balance sheet of IMC Global Inc. (formed as a result of the consolidation of IMC Global Inc. and The Vigoro Corporation) as of June 30, 1996 and 1995 and the related consolidated statements of earnings, cash flows and changes in stockholders' equity for each of the three years in the period ended June 30, 1996. The consolidated financial statements give retroactive effect to the merger of IMC Global Inc. and The Vigoro Corporation on March 1,1996, which has been accounted for using the pooling of interests method as described in the notes to the consolidated financial statements. These consolidated financial statements are the responsibility of the management of IMC Global Inc. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We did not audit the 1995 and 1994 financial statements of The Vigoro Corporation which statements reflect total assets of 24% and net sales of approximately 34% of the related consolidated financial statement totals as of June 30, 1995 and for the two years then ended. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to data included for The Vigoro Corporation, is based solely on the report of the other auditors. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of other auditors provide a reasonable basis for our opinion. In our opinion, based on our audits and the report of other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of IMC Global Inc. at June 30, 1996 and 1995, and the consolidated results of its operations and its cash flows for each of the three years in the period ended June 30, 1996, after giving retroactive effect to the merger of The Vigoro Corporation, as described in notes to the consolidated financial statements, in conformity with generally accepted accounting principles. As discussed in the notes to consolidated financial statements, the Company changed its method of accounting for postemployment benefits in 1995. Ernst & Young LLP Chicago, Illinois July 31, 1996 CONSOLIDATED STATEMENT OF EARNINGS Years ended June 30, --------------------- (In millions except per share amounts) 1996 1995 1994 - ----------------------------------------------------------------------- Net sales $2,981.0 $2,736.1 $2,125.3 Cost of goods sold 2,230.1 2,046.1 1,742.6 Gross margins 750.9 690.0 382.7 Selling, general and administrative expenses 223.4 196.0 165.8 Merger and restructuring charges 43.3 Other operating (income) and expense, net (4.1) (9.1) (27.7) -------- -------- -------- Operating earnings 488.3 503.1 244.6 Interest earned and other non-operating (income) and expense, net (6.4) (6.3) 18.6 Interest charges 64.8 70.2 91.2 -------- -------- -------- Earnings before minority interest and items noted below 429.9 439.2 134.8 Minority interest 191.5 130.4 55.6 -------- -------- -------- Earnings before items noted below 238.4 308.8 79.2 Provision for income taxes 94.1 115.5 34.8 -------- -------- -------- Earnings before extraordinary item and cumulative effect of accounting change 144.3 193.3 44.4 Extraordinary loss - debt retirement (6.5) (25.2) Cumulative effect on prior years of change in accounting for postemployment benefits (5.9) -------- -------- -------- Net earnings $ 144.3 $ 180.9 $ 19.2 ======== ======== ======== EARNINGS PER SHARE: Earnings before extraordinary item and cumulative effect of accounting change $ 1.56 $ 2.12 $ .54 Extraordinary loss - debt retirement (.07) (.31) Cumulative effect of accounting change (.06) -------- -------- -------- Net earnings $ 1.56 $ 1.99 $ .23 ======== ======== ======== Weighted average number of shares and equivalent shares outstanding 92.7 91.0 82.3 (See Notes to Consolidated Financial Statements) CONSOLIDATED BALANCE SHEET (Dollars in millions except per share amounts) At June 30, ---------------------- ASSETS 1996 1995 - ---------------------------------------------------------------------- CURRENT ASSETS: Cash and cash equivalents $ 9.6 $ 203.7 Receivables, net 350.2 236.5 Inventories Products (principally finished) 375.6 303.6 Operating materials and supplies 101.1 89.3 -------- -------- 476.7 392.9 Deferred income taxes 61.4 79.5 Other current assets 20.3 13.6 -------- -------- Total current assets 918.2 926.2 Property, plant and equipment 4,123.6 3,971.3 Accumulated depreciation and depletion (1,772.3) (1,714.1) -------- -------- Net property, plant and equipment 2,351.3 2,257.2 Other assets 167.3 139.8 -------- -------- Total assets $3,436.8 $3,323.2 LIABILITIES AND STOCKHOLDERS' EQUITY - ---------------------------------------------------------------------- CURRENT LIABILITIES: Accounts payable $ 193.5 $ 197.2 Accrued liabilities 145.1 170.7 Short-term debt and current maturities of long-term debt 27.8 74.1 -------- -------- Total current liabilities 366.4 442.0 Long-term debt, less current maturities 736.7 750.2 Deferred income taxes 315.7 306.2 Other noncurrent liabilities 352.0 306.8 Minority interest 509.7 510.2 STOCKHOLDERS' EQUITY: Common stock, $1 par value, authorized 250,000,000 shares; issued 97,863,784 and 96,408,200 shares in 1996 and 1995, respectively 97.9 96.4 Capital in excess of par value 821.7 782.6 Retained earnings 359.1 246.1 Treasury stock, at cost, 5,545,884 and 5,552,840 shares in 1996 and 1995, respectively (107.3) (107.4) Foreign currency translation adjustment (15.1) (9.9) -------- -------- Total stockholders' equity 1,156.3 1,007.8 -------- -------- Total liabilities and stockholders' equity $3,436.8 $3,323.2 ======== ======== (See Notes to Consolidated Financial Statements) CONSOLIDATED STATEMENT OF CASH FLOWS Years ended June 30, ------------------------------ (In millions) 1996 1995 1994 - ---------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $ 144.3 $ 180.9 $ 19.2 Adjustments to reconcile net earnings to net cash provided by operating activities: Minority interest 179.2 130.4 55.6 Depreciation, depletion and amortization 168.6 166.4 147.1 Merger and restructuring charges 67.3 Deferred income taxes .3 16.9 (4.5) Postemployment employee benefits 9.5 Sterlington litigation settlement (80.0) Other charges and credits, net (3.5) (11.2) (29.3) Changes in: Receivables, net (96.0) 49.3 60.7 Inventories (55.4) (27.7) 92.0 Other current assets (7.2) .3 9.3 Accounts payable (20.2) 14.1 (81.8) Accrued liabilities (35.4) 25.6 (22.8) ------- ------- ------- Net cash provided by operating activities 342.0 554.5 165.5 ------- ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (172.7) (114.9) (76.0) Acquisitions of businesses, net of cash acquired (74.6) (142.4) Sale of investment 11.6 Sales of property, plant and equipment 1.2 14.6 33.3 ------- ------- ------- Net cash used in investing activities (234.5) (242.7) (42.7) ------- ------- ------- Net cash provided before financing activities 107.5 311.8 122.8 ------- ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES Joint venture cash distributions to FRP (242.0) (228.1) (146.8) Payments of long-term debt (93.2) (182.0) (437.2) Proceeds from issuance of long-term debt, net 75.6 131.5 276.0 Changes in short-term debt, net (42.5) 17.5 2.9 Cash dividends paid (35.5) (24.6) (14.2) Stock options exercised 25.8 2.0 .2 Issuances of common stock from treasury 255.6 Other 10.2 ------- ------- ------- Net cash used in financing activities (301.6) (283.7) (63.5) ------- ------- ------- Net change in cash and cash equivalents (194.1) 28.1 59.3 Cash and cash equivalents-beginning of year 203.7 175.6 116.3 ------- ------- ------- Cash and cash equivalents-end of year $ 9.6 $ 203.7 $ 175.6 ======= ======= ======= Supplemental cash flow disclosures: Interest paid $ 67.0 $ 70.6 $ 86.9 Income taxes paid, net of refunds $ 125.3 $ 84.7 $ 12.8 Supplemental schedule of non-cash investing and financing activities: Issuance of common stock for acquisitions $ 14.9 $ 4.5 $ 47.2 (See Notes to Consolidated Financial Statements) CONSOLIDATED STATEMENT OF CHANGES IN STOCHOLDERS' EQUITY Foreign Capital in Currency Common Excess of Retained Treasury Translation (In millions except Stock Par Value Earnings Stock Adjustment per share amounts) - ---------------------------------------------------------------------- Balance at June 30, 1993$ 96.3 $813.1 $ 85.6 $(392.7) -- Net earnings 19.2 Sale of common stock (34.1) 289.7 Dividends ($.15 per share) (14.6) Restricted stock awards .2 1.5 (4.1) Stock options exercised and other (.5) (3.3) ------ ------ ------ ------ ------ Balance at June 30, 1994 96.0 777.2 90.2 (107.1) -- Net earnings 180.9 Dividends ($.26 per share) (25.0) Restricted stock awards .3 Stock options exercised and other .4 5.1 (.3) Foreign currency trans- lation adjustment $ (9.9) ------ ------ ------ ------ ------ Balance at June 30, 1995 96.4 782.6 246.1 (107.4) (9.9) Net earnings 144.3 Dividends ($.33 per share) (31.3) Stock options exercised and other 1.1 24.6 (.1) Issuance of common stock pursuant to acquisitions .4 14.5 .2 Foreign currency trans- lation adjustment (5.2) ------ ------ ------ ------ ------ Balance at June 30, 1996$ 97.9 $821.7 $359.1 $(107.3) $(15.1) ====== ====== ====== ====== ====== (See Notes to Consolidated Financial Statements) 1. BUSINESS OF THE COMPANY IMC Global Inc. (the Company), which operates in a single industry segment, is the parent corporation of several subsidiaries and joint venture operations which together comprise one of the world's leading producers of phosphate and potash crop nutrients as well as animal feed ingredients. The Company mines and processes potash in the United States and Canada and has a 56.5 percent interest in IMC-Agrico Company (IMC-Agrico), the nation's leading producer, marketer and distributor of phosphate crop nutrients and animal feed ingredients. The Company also markets and distributes crop nutrients and related products on a wholesale basis through independent dealers and cooperatives, and on a retail basis through its farm service outlets. In addition, the Company sells potash and certain other products to industrial users in the United States and Canada. Through its interests in other joint ventures, the Company also produces sulphur and oil and natural gas. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The consolidated financial statements include the accounts of the Company and all subsidiaries which are more than 50 percent owned and controlled; the Company proportionately consolidates its 25 percent interest in the sulphur joint venture. All significant intercompany accounts and transactions are eliminated in consolidation. Certain amounts in the consolidated financial statements for periods prior to June 30, 1996 have been reclassified to conform to the current presentation. The Company's fiscal year ends June 30. Use of Estimates Management is required to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents which are reflected at their approximate fair value. The effect of foreign currency exchange rate fluctuations on the total cash and cash equivalents balance was not significant. Concentration of Credit Risk Domestically, the Company sells its products to farmers primarily in the midwestern and southeastern United States. Internationally, the Company's products are sold primarily through one Canadian and three U.S. export associations. In 1996, sales of phosphate crop nutrients to China accounted for approximately 16 percent of the Company's net sales. No single customer accounted for more than 10 percent of the Company's net sales. Inventories Inventories are valued at the lower of cost or market (net realizable value). Cost for substantially all of the Company's inventories is calculated on a cumulative annual average cost basis. Cost for the remaining portion of inventories, primarily for products sold through the Company's retail farm service outlets, is determined using the first-in, first-out method. Property, Plant and Equipment Property (including mineral deposits), plant and equipment are carried at cost. Cost of significant assets includes capitalized interest incurred during the construction and development period. Expenditures for replacements and improvements are capitalized; maintenance and repair expenditures are charged to operations when incurred. Depreciation and depletion expenses for mining and production operations, including mineral interests, are determined using the unit-of-production method based on estimates of recoverable reserves. Other asset classes or groups are depreciated or amortized on a straightDline basis over their estimated useful lives as follows: buildings, 17 to 45 years; machinery and equipment, 3 to 25 years. Goodwill Goodwill, representing the excess of purchase cost over the fair value of net assets of acquired companies, is generally amortized using the straight-line method over periods not exceeding 40 years. At June 30, 1996 and 1995, goodwill, included in other assets in the Consolidated Balance Sheet, totaled $68.1 million and $32.9 million, respectively. Postemployment Benefits The Company provides benefits such as workers' compensation and disabled employee medical care to certain former or inactive employees after employment but before retirement. Effective July 1, 1994, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 112, "Employers' Accounting for Postemployment Benefits," which requires the Company to accrue the cost of providing such postemployment benefits when the event occurs giving rise to the obligation. Stock-Based Compensation Plans In December 1995, the Financial Accounting Standards Board issued SFAS No. 123, "Accounting for Stock-Based Compensation," which establishes a fair value-based method of accounting for stock-based compensation plans. Under SFAS No. 123, the Company has the option of either accounting for its stock-based compensation plans under the fair value method or continuing under the accounting provisions of Accounting Principles Board Opinion No. 25 (APB No. 25). The Company intends to continue accounting for its stock-based compensation plans under the provisions of APB No. 25 and, accordingly, no compensation cost has been charged to operations for options granted. Accrued Environmental Costs The Company's activities include the mining of phosphate and potash, the manufacturing and blending of crop nutrients, and the blending of crop nutrients with pesticide products. These operations are subject to extensive federal, state, provincial and local environmental regulations in the United States and Canada, including laws related to air and water quality; management of hazardous and solid wastes; management and handling of raw materials and products; and the restoration of lands disturbed by mining and production activities. Expenditures that relate to an existing condition caused by past operations of the Company or prior land owners, and which do not contribute to current or future revenue generation, are charged to operations. Liabilities are recorded when environmental remedial efforts are probable and the cost of such efforts can be reasonably estimated. Revisions to current estimates are made when costs of required remedial efforts change. Provincial Resource Taxes The Company's Canadian potash mining operations are subject to certain royalty and production taxes (provincial resource taxes). Accordingly, provincial resource taxes have been included in cost of goods sold in the Consolidated Statement of Earnings. Derivatives The Company periodically enters into DAP futures contracts and options to purchase natural gas to manage its exposure to price fluctuations. In addition, the Company has entered into forward exchange contracts to hedge the effect of Canadian dollar exchange rate changes. Net hedging gains and losses are recognized as a part of the transactions hedged and were not significant in the years ended June 30, 1996, 1995 and 1994. The Company monitors its market risk on an ongoing basis and considers such risk to be minimal. Foreign Currencies Effective July 1, 1994, the functional currency of one of the Company's Canadian subsidiaries was changed to the Canadian dollar and on March 1, 1996, the Company determined the functional currency to be the Canadian dollar for all of its Canadian operations. As of June 30, 1996, the Company's cumulative foreign currency translation adjustment resulted in a reduction of stockholders' equity of $15.1 million, which was offset principally by a decrease to property, plant and equipment, net, and an increase in deferred income taxes. Earnings Per Share All share and per share information appearing in the consolidated financial statements and notes herein give effect to the Company's 2-for-1 stock split effected in the form of a 100 percent stock dividend which was distributed on November 30, 1995. Earnings per share are based on the weighted average number of shares and equivalent shares outstanding. Fully diluted earnings per share are not significantly different from primary earnings per share and, accordingly, are not presented. 3. VIGORO MERGER On March 1, 1996, the Company completed a merger with The Vigoro Corporation (Vigoro) that resulted in Vigoro becoming a subsidiary of the Company (the Merger). Upon consummation of the Merger, the Company issued approximately 32.4 million shares of its common stock in exchange for all of the outstanding shares of Vigoro. The Merger was structured to qualify as a taxDfree reorganization for income tax purposes and was accounted for as a pooling of interests. Accordingly, the Company's financial statements have been restated for all periods to reflect the Merger. Summarized operating results of the Company and Vigoro for the eight months ended February 29, 1996 and the years ended June 30, 1995 and 1994 were as follows: Eight months ended February 29, Years ended June 30, ------------ -------------------- 1996 1995 1994 - ---------------------------------------------------------------------- IMC GLOBAL INC. Net sales $1,413.5 $1,924.0 $1,441.5 Extraordinary item (6.5) (25.2) Accounting change (5.9) Net earnings (loss) 102.8 114.7 (28.8) THE VIGORO CORPORATION Net sales $ 406.5 $ 871.4 $ 719.6 Net earnings 12.7 66.2 48.0 INTERCOMPANY SALES ELIMINATION $ (41.1) $ (59.3) $ (35.8) COMBINED Net sales $1,778.9 $2,736.1 $2,125.3 Extraordinary item (6.5) (25.2) Accounting change (5.9) Net earnings 115.5 180.9 19.2 4. MERGER AND RESTRUCTURING CHARGES In connection with the Merger, the Company recorded charges totaling $20.2 million, primarily for consulting, legal and accounting services. Immediately following the Merger, the Company adopted a plan to restructure its business operations into a decentralized organizational structure with five stand-alone business units. As a result, the Company recorded restructuring charges totaling $23.1 million. The charges consisted of: (i) $10.6 million for severance and related benefits from staff reductions resulting from the termination of approximately 120 employees, primarily middle management personnel; (ii) $6.5 million for lease terminations resulting from office consolidations, and (iii) $6.0 million for other related actions. As of June 30, 1996, the following amounts were paid: (i) $20.2 million for charges relating to the Merger, (ii) $5.7 million relating to the termination of approximately 89 employees (the remaining $4.9 million relating to the other 31 employees is expected to be paid out during fiscal 1997), and (iii) $0.4 million related to other actions. In connection with the restructuring plan, the Company undertook a detailed review of its accounting records and valuation of various assets and liabilities. As a result, the Company recorded charges totaling $58.3 million ($55.3 million net of minority interest) comprised of (i) $26.3 million ($23.3 million net of minority interest) to cost of goods sold of which $17.5 million was primarily related to the write-off of certain idle plant facilities and other obsolete assets, $5.0 million for environmental matters and $3.8 million for other matters; (ii) $2.4 million of general and administrative expenses for the write-off of miscellaneous assets; (iii) $16.6 million to other operating income and expense to reduce certain long-term assets to net realizable value and other provisions, and (iv) $13.0 million to minority interest for the transfer of 0.85 percent of IMC-Agrico Distributable Cash (as defined) interest from the Company to Freeport- McMoRan Resource Partners, Limited Partnership (FRP) pursuant to certain amendments to the IMC-Agrico Partnership Agreement. During the year ended June 30, 1996, $24.0 million of assets were written off. 5. ACQUISITIONS In January 1995, the Company acquired substantially all of the assets of the Central Canada Potash division (CCP) of Noranda, Inc. (Noranda) for $121.1 million, plus $16.2 million for working capital. The Company used proceeds borrowed under a credit facility to finance the purchase price, while using operating cash to acquire the working capital. The CCP potash mine, located in Colonsay, Saskatchewan, utilizes shaft mining technology and has a current annual capacity of 1.5 million tons and estimated recoverable reserves of 120 years at current production levels. In October 1995, the Company acquired the animal feed ingredients business (Feed Ingredients) of Mallinckrodt Group Inc. and subsequently contributed the business to IMC-Agrico. The Company's portion of the purchase price was $67.5 million. The CCP and Feed Ingredients acquisitions were accounted for under the purchase method of accounting. Operating results of CCP and Feed Ingredients (net of minority interest) have been included in the Company's Consolidated Statement of Earnings since the respective dates of acquisition. Pro forma consolidated operating results reflecting these acquisitions would not have been materially different from reported amounts. 6. JOINT VENTURE PARTNERSHIP On July 1, 1993, the Company and FRP entered into a joint venture partnership in which both companies contributed their respective phosphate businesses to create IMC-Agrico, a Delaware general partnership, in return for a 56.5 percent and a 43.5 percent economic interest, respectively, in IMC-Agrico. The activities of IMC-Agrico, which is operated by the Company, include the mining and sale of phosphate rock, and the production, distribution and sale of phosphate crop nutrients, animal feed ingredients, uranium oxide and related products. For financial reporting purposes, the acquisition of 56.5 percent of FRP's phosphate business net assets was accounted for as a purchase and resulted in a deferred gain which is recognized in the Consolidated Statement of Earnings as the related FRP assets are being used in operations, generally over 20 years. Other operating income and expense, net included $3.1 million from the amortization of such gain for the year ended June 30, 1996, $3.0 million in 1995 and $16.0 million (including $12.7 million related to finished goods inventory) in 1994. FRP's 43.5 percent interest in IMC-Agrico has been reported as minority interest in the Company's Consolidated Balance Sheet, and the earnings therefrom have been reported as minority interest in the Company's Consolidated Statement of Earnings. IMC-Agrico makes cash distributions to each partner based on formulas and sharing ratios as defined in the Partnership Agreement. For the year ended June 30, 1996, the total amount of Distributable Cash generated by IMC-Agrico was $465.3 million, of which $248.0 million was distributed to FRP, including $57.7 million distributed in August 1996. On January 23, 1996, the Company and FRP entered into certain amendments to the Partnership Agreement. Effective March 1, 1996, there was a shift of 0.85 percent of Distributable Cash interest of IMC-Agrico from the Company to FRP. 7. NON-RECURRING ITEMS Non-recurring items included the following: Sale of Investments and Land In 1996, the Company realized a gain of $11.6 million from the sale of the Company's 50 percent interest in Chinhae Chemical Company, a producer of crop nutrients located in South Korea. In 1995, a gain of $5.0 million was realized from the sale of land in Florida. In 1994, the Company realized a gain of $7.6 million from the sale of 18 FARMARKETs(registered trademark) and three satellite locations and a gain of $5.5 million ($3.1 million net of minority interest) from IMC-Agrico's sale of a Florida cattle ranch. These amounts were included in other operating income. Remediation In 1995, provisions totaling $10.3 million ($5.8 million net of minority interest) were included in cost of goods sold for remediation costs associated with a sinkhole beneath a phosphogypsum storage stack at IMC-Agrico's New Wales crop nutrient production facility in Florida and for repair and cleanup costs related to earthen dam breaches at IMC- Agrico's Payne Creek and Hopewell phosphate mining facilities in Florida. Revaluation of Carrying Value of Investments In 1994, the Company recorded a charge to non-operating expense of $20.3 million to reduce the carrying value of the Company's investment in its oil and gas joint venture resulting from the low price of crude oil at the time and the resulting effect on estimated future net revenues from proved reserves. Also included in 1994 was a charge to other operating expense of $5.6 million, which consisted principally of a provision to adjust the carrying values of certain investments of the Company's FARMARKETs(registered trademark) in Florida to estimated net realizable values. 8. RECEIVABLES, NET Accounts receivable at June 30 were as follows: 1996 1995 - ----------------------------------------------------------------------- Trade accounts $380.6 $259.9 Non-trade receivables 37.0 33.1 ------ ------ 417.6 293.0 Less: Allowances 7.9 6.5 Receivable interests sold 59.5 50.0 ------ ------ $350.2 $236.5 ====== ====== The carrying value of accounts receivable was equal to the estimated fair value of such assets due to their short maturity. In October 1994, IMC-Agrico entered into a one-year agreement with a financial institution to sell, on an ongoing basis, an undivided percentage interest in a designated pool of receivables, subject to limited recourse provisions, in an amount not to exceed $75.0 million. In October 1995, this agreement was renewed for an additional one-year period and the limit on the designated pool of receivables was reduced to $65.0 million. Related costs, charged to interest earned and other non-operating income and expense, totaled $3.6 million in 1996 and $2.5 million in 1995. The Company's portion of the proceeds from the initial sale of receivable interests ($32.5 million) was used primarily to retire long-term debt. 9. PROPERTY, PLANT AND EQUIPMENT The Company's investment in property, plant and equipment at June 30 is summarized as follows: 1996 1995 - ----------------------------------------------------------------------- Land $ 104.9 $ 96.2 Mineral properties and rights 658.9 656.9 Buildings and leasehold improvements 483.5 459.9 Machinery and equipment 2,755.3 2,668.2 Construction in progress 121.0 90.1 -------- -------- 4,123.6 3,971.3 Accumulated depreciation and depletion 1,772.3 1,714.1 -------- -------- Net property, plant and equipment $2,351.3 $2,257.2 ======== ======== 10. ACCRUED LIABILITIES Accrued liabilities at June 30 were as follows: 1996 1995 - ----------------------------------------------------------------------- Salaries, wages and bonuses $ 38.3 $ 40.4 Taxes other than income taxes 28.1 33.2 Restructuring charges 14.9 Environmental 14.1 15.5 Income taxes 11.8 35.0 Interest 11.7 9.8 Other 26.2 36.8 ------ ------ $145.1 $170.7 ====== ====== 11. FINANCING ARRANGEMENTS Short-term borrowings of $22.7 million and $65.1 million as of June 30, 1996 and 1995, respectively, primarily consisted of revolving credit facilities with various financial institutions and vendor financing arrangements. The weighted-average interest rate on short-term borrowings was 6.3 percent for both 1996 and 1995. Long-term debt at June 30 consisted of the following: 1996 1995 - ----------------------------------------------------------------------- Revolving and long-term credit facilities, variable rates $ 95.4 $131.8 Term loans, maturing through 2005 120.0 90.0 9.25% Senior notes, due 2000 61.6 61.6 10.125% Senior notes, due 2001 60.4 60.4 10.75% Senior notes, due 2003 54.3 54.3 6.25% Convertible subordinated notes, due 2001 114.9 115.0 9.45% Senior debentures, due 2011 100.0 100.0 7.525% Industrial revenue bonds, due 2015 75.0 75.0 7.7% Industrial revenue bonds, due 2022 27.1 26.8 Other debt 33.1 44.3 ------ ------ 741.8 759.2 Less current maturities 5.1 9.0 ------ ------ $736.7 $750.2 ====== ====== On June 30, 1996, the estimated fair value of long-term debt described above was approximately the same as the carrying amount of such debt in the Consolidated Balance Sheet. The fair value was calculated in accordance with the requirements of SFAS No. 107, "Disclosures of Fair Value of Financial Instruments" and was estimated by discounting the future cash flows using rates currently available to the Company for debt instruments with similar terms and remaining maturities. In 1995, the Company purchased $165.0 million principal amount of its 9.25 percent senior notes due 2000, 10.125 percent senior notes due 2001 and 10.75 percent senior notes due 2003 (collectively, Senior Notes) prior to maturity in an effort to reduce higher cost indebtedness. As a result, the Company recorded an extraordinary loss of $6.5 million, net of taxes, for the redemption premium and write-off of previously deferred finance charges. In 1994, the Company recorded an extraordinary loss of $25.2 million, net of taxes, in connection with the purchase of $220.0 million principal amount of its 11.25 percent notes and $78.6 million principal amount of its Senior Notes. On February 28, 1996, the Company entered into an unsecured credit facility (Credit Facility) with a group of banks. Under the terms of the Credit Facility, the Company and certain of its subsidiaries may borrow up to $450.0 million under a revolving credit facility which matures on March 1, 1999 and $50.0 million under a long-term credit facility which matures on March 2, 2001. On June 30, 1996, the Company and its subsidiaries had borrowed $12.0 million under the revolving credit facility and $50.0 million under the long-term facility. Additionally, $35.9 million was drawn under the Credit Facility as letters of credit to support industrial revenue bonds and other debt and credit risk guarantees. Simultaneously with the execution of the Credit Facility, the Company and one of its subsidiaries refinanced certain of its unsecured term loans. The new $120.0 million unsecured term loans (Term Loans) bear interest at rates between 7.37 and 7.43 percent and mature at various times between 2000 and 2005. The Credit Facility, Term Loans and Senior Notes contain provisions which (i) restrict the Company's ability to make capital expenditures and dispose of assets, (ii) limit the payment of dividends or other distributions to stockholders, and (iii) limit the incurrence of additional indebtedness. These debt instruments also contain various financial ratios and covenants. IMC-Agrico has an agreement with a group of banks to provide it with a $75.0 million unsecured revolving credit facility until February 1997 (Initial Facility). In addition, in May 1996 IMC-Agrico entered into two additional unsecured revolving credit facilities under which it may borrow up to $75.0 million until February 1997 (collectively with the Initial Facility, IMC-Agrico Working Capital Facility). Borrowings under the IMC-Agrico Working Capital Facility are unsecured and bear interest at rates based on a base rate or an adjusted Eurodollar rate. At June 30, 1996, $9.7 million was drawn under the letter of credit subfacility. Additionally, at June 30, 1996, $45.4 million was borrowed under the IMC-Agrico Working Capital Facility at interest rates between 5.94 and 6.25 percent. This amount has been classified as long-term debt in the Consolidated Balance Sheet at June 30, 1996 as IMC-Agrico has the intent and ability to refinance this amount on a long-term basis. The IMC-Agrico Working Capital Facility contains various financial ratios and covenants, places limitations on the indebtedness of IMC-Agrico and restricts the ability of IMC-Agrico to make cash distributions in excess of Distributable Cash. In addition, pursuant to the Partnership Agreement, IMC-Agrico is required to obtain the approval of the Policy Committee of IMC-Agrico (which consists of two representatives each from the Company and FRP) prior to incurring more than an aggregate of $5.0 million (adjusted annually for inflation) in indebtedness (excluding a total of $125.0 million of indebtedness under the IMC-Agrico Working Capital Facility). The convertible subordinated notes are exchangeable for approximately 3.6 million shares of the Company's common stock at $31.75 per share. Scheduled maturities for the next five years are as follows: - ----------------------------------------------------------------------- 1997 $ 5.1 1998 13.1 1999 5.2 2000 4.1 2001 190.4 On July 25, 1996, the Company commenced tender offers to purchase all of its outstanding Senior Notes with principal amounts outstanding totaling $176.3 million. The purchase of the Senior Notes will be financed with lower cost borrowings at floating rates under the Company's Credit Facility. The Company expects to record an extraordinary loss of approximately $12.0 million, net of taxes, in the first quarter of 1997 if all of the Senior Notes are purchased. 12. OTHER NONCURRENT LIABILITIES Other noncurrent liabilities at June 30 were as follows: 1996 1995 - ----------------------------------------------------------------------- Employee and retiree benefits $127.2 $122.3 Environmental 102.3 86.8 Deferred gain 40.6 43.7 Restructuring charges 33.4 Other 48.5 54.0 ------ ------ $352.0 $306.8 ====== ====== 13. PENSION PLANS The Company has non-contributory pension plans that cover approximately 78 percent of its employees. Benefits are based on a combination of years of service and compensation levels, depending on the plan. Generally, contributions to the U.S. plans are made to meet minimum funding requirements of the Employee Retirement Income Security Act of 1974 (ERISA), while contributions to Canadian plans are made in accordance with Pension Benefits Acts, instituted by the provinces of Saskatchewan and Ontario. Certain other employees are covered by defined contribution pension plans. Employees in the United States and Canada whose pension benefits exceed Internal Revenue Code and Revenue Canada limitations, respectively, are covered by supplementary non-qualified, unfunded pension plans. The components of net pension expense, computed actuarially, were as follows: 1996 1995 1994 - ----------------------------------------------------------------------- Service cost for benefits earned during the year $10.0 $9.0 $8.9 Interest cost on projected benefit obligation 15.8 14.7 13.1 Return on plan assets (28.8) (11.8) (7.3) Net amortization and deferral 17.5 (.1) (4.4) ----- ----- ----- Net pension expense $14.5 $11.8 $10.3 ----- ----- ----- The plans' assets consist mainly of corporate equity and U.S. government and corporate debt securities, and units of participation in a collective short-term investment fund. In a number of these plans, the plan assets exceed the accumulated benefit obligations (overfunded plans) and in the remainder of the plans, the accumulated benefit obligations exceed the plan assets (underfunded plans). The funded status, based on an April 1 measurement date, of the Company's pension plans and amounts recognized in the Consolidated Balance Sheet as of June 30 were as follows: Overfunded Underfunded Plans Plans ---------------- ---------------- 1996 1995 1996 1995 - -------------------------------------------------- ---------------- Plans' assets at fair value $163.8 $133.0 $ 28.9 $ 26.2 Actuarial present value of projected benefit obligations: Vested benefits 124.2 111.5 34.8 31.4 Non-vested benefits 16.1 .8 3.0 .4 ------ ------ ------ ------ Accumulated benefit obligations 140.3 112.3 37.8 31.8 Projected future salary increases 54.6 37.3 3.8 11.9 ------ ------ ------ ------ Total projected benefit obligations 194.9 149.6 41.6 43.7 ------ ------ ------ ------ Plans' assets less than projected benefit obligations 31.1 16.6 12.7 17.5 Items not yet recognized in earnings: Unrecognized net gain (20.0) (8.2) (2.0) (1.3) Unrecognized transition liability (asset) .9 .9 (.2) (.2) Unrecognized prior service cost (10.4) (7.0) (9.5) (12.3) Additional minimum liability 11.0 7.4 Fourth quarter contributions (.6) (.9) (.5) (.4) ------ ------ ------ ------ Accrued pension liability $ 1.0 $ 1.4 $ 11.5 $ 10.7 ====== ====== ====== ====== Significant actuarial assumptions were as follows: 1996 1995 1994 - ----------------------------------------------------------------------- Discount rate 7.6% 8.2% 8.4% Long-term rate of return on assets 7.0% 7.8% 7.9% Rate of increase in compensation levels 5.2% 5.2% 5.3% The Company also has defined contribution pension and investment plans (Plans) for certain of its employees. Under each of the Plans, participants are permitted to defer a portion of their compensation whereas Company contributions to the Plans are based on a percentage of wages earned by the eligible employees. The Company's contributions to the Plans totaled $9.7 million, $9.7 million and $4.6 million for the years ended June 30, 1996, 1995 and 1994, respectively. 14. POSTRETIREMENT AND POSTEMPLOYMENT BENEFIT PLANS The Company provides certain health care benefit plans for certain retired employees. The plans may be either contributory or non-contributory and contain certain other cost-sharing features such as deductibles and coinsurance. The plans are unfunded. Employees are not vested and such benefits are subject to change. The components of postretirement benefits other than pensions (OPEBS) expense for years ending June 30 were as follows: 1996 1995 1994 - ----------------------------------------------------------------------- Service cost $1.7 $1.5 $1.5 Interest cost 5.3 5.3 5.2 Net amortization and deferral (1.8) (1.5) (1.6) ---- ---- ---- $5.2 $5.3 $5.1 ==== ==== ==== The significant assumptions used in determining OPEBS costs were as follows: 1996 1995 1994 - ----------------------------------------------------------------------- Discount rate 7.5% 8.2% 8.4% Health care trend rate: Under age 65 9.2% (1) 9.8% (1) 10.4% (1) Over age 65 6.0% (2) 6.3% (2) 7.0% (2) (1) Decreasing gradually to 5.5% in 2003 and thereafter. (2) Decreasing gradually to 5.5% in 1999 and thereafter. If the health care trend rate assumptions were increased by 1.0 percent, the accumulated postretirement benefit obligation would increase by 3.7 percent as of June 30, 1996. This would have the effect of a 5.7 percent increase on OPEBS expense in 1996. The components of the Company's OPEBS liability at June 30 were as follows: 1996 1995 - ----------------------------------------------------------------------- Retirees $35.1 $33.1 Actives: Fully eligible 13.0 12.0 Not fully eligible 26.6 24.3 ----- ----- Total 74.7 69.4 Items not yet recognized in earnings: Unrecognized prior service cost 12.1 13.2 Unrecognized net gain 10.5 11.6 ----- ----- Accrued postretirement benefits liability $97.3 $94.2 ===== ===== The Company also provides benefits such as workers' compensation and disability to certain former or inactive employees after employment but before retirement. The plans are unfunded. Employees are not vested and plan benefits are subject to change. Effective July 1, 1994, the Company adopted SFAS No. 112 to account for disability benefits of certain employees. Prior to July 1, 1994, the Company recognized the cost of providing certain of these benefits on a cash basis. SFAS No. 112 requires the cost of providing these benefits be recognized when it becomes probable that such benefits will be paid and when sufficient information exists to make reasonable estimates of the amounts to be paid. Consequently, the Company recognized a $13.3 million liability for postemployment benefits as of July 1, 1994 and recorded a charge of $5.9 million, net of taxes, for the cumulative effect of the Company's unfunded obligation prior to July 1, 1994. The effect of the adoption of SFAS No. 112 on 1995 earnings before the cumulative effect of the accounting change was not material. 15. INCOME TAXES Two of the Company's three potash operations that are subject to Canadian taxes are included in the consolidated United States federal income tax return filed by the Company. Deferred income taxes reflect the net tax effects of temporary differences between the amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax liabilities and assets at June 30 were as follows: 1996 1995 - ----------------------------------------------------------------------- Deferred tax liabilities Property, plant and equipment $437.4 $410.4 Taxes on undistributed foreign earnings 19.6 28.6 Other liabilities 50.0 38.7 ------ ------ Total deferred tax liabilities 507.0 477.7 ------ ------ Deferred tax assets Alternative minimum tax credit carryforwards 82.8 34.4 Postretirement and postemployment benefits 39.6 35.7 Sterlington litigation settlement 31.1 31.5 Foreign tax credit carryforward 27.5 Reclamation and decommissioning accruals 27.4 26.2 Restructuring accruals 25.3 Net operating loss carryforwards 78.2 Other assets 46.5 45.0 Valuation allowance (27.5) ------ ------ Total deferred tax assets 252.7 251.0 ------ ------ Net deferred tax liabilities $254.3 $226.7 ====== ====== At June 30, 1996, the Company had alternative minimum tax credit carryforwards of approximately $82.8 million, which can be carried forward indefinitely. In addition, the Company has a foreign tax credit carryforward of approximately $27.5 million. The foreign tax credit carryforward will expire in 2001 to the extent it is not utilized. The realization of the foreign tax credit carryforward is dependent upon the Company's future foreign earnings and taxes. Due to the uncertainty of its ultimate realization, the Company has established a full valuation allowance against this carryforward benefit. The provision for income taxes consisted of the following: 1996 1995 1994 - ----------------------------------------------------------------------- CURRENT Federal $ 74.0 $ 33.6 $(10.2) State and local 2.8 8.6 4.8 Foreign 14.9 52.9 22.1 ------ ------ ------ 91.7 95.1 16.7 DEFERRED Federal (7.4) 8.1 14.5 State and local 4.4 (.9) (4.2) Foreign 5.4 13.2 7.8 ------ ------ ------ 2.4 20.4 18.1 ------ ------ ------ $ 94.1 $115.5 $ 34.8 ====== ====== ====== The components of earnings before income taxes, extraordinary loss and cumulative effect of accounting change, and the effects of significant adjustments to tax computed at the federal statutory rate were as follows: 1996 1995 1994 - ----------------------------------------------------------------------- Domestic $195.7 $193.6 $ 24.1 Foreign 42.7 115.2 55.1 ------ ------ ------ Earnings before income taxes, extraordinary loss and cumulative effect of accounting change $238.4 $308.8 $ 79.2 ====== ====== ====== Computed tax at the federal statutory rate of 35% $ 83.4 $108.1 $ 27.7 Foreign income and withholding taxes 12.7 19.5 9.2 Percentage depletion in excess of basis (10.4) (18.1) (11.3) Merger expenses not deductible for tax purposes 7.1 State income taxes, net of federal income tax benefit 4.8 4.9 .4 Benefit of foreign sales corporation (4.3) (2.3) .1 Deferred tax adjustment for the effect of changes in U.S. corporate tax rates 4.5 Federal taxes on undistributed foreign earnings 4.4 2.9 Other items (none in excess of 5% of computed tax) .8 (1.0) 1.3 ------ ------ ------ Provision for income taxes $ 94.1 $115.5 $ 34.8 ====== ====== ====== Effective tax rate 39.5% 37.4% 43.9% ====== ====== ====== U.S. income and foreign withholding taxes are provided on the earnings of foreign subsidiaries that are expected to be remitted to the extent that taxes on the distribution of such earnings would not be offset by foreign tax credits. The Company has no present intention of remitting undistributed earnings of foreign subsidiaries aggregating $196.4 million at June 30, 1996 and, accordingly, no deferred tax liability has been established relative to these earnings. If these amounts were not considered permanently reinvested, a deferred tax liability of $41.0 million would have been required. 16. CAPITAL STOCK Changes in the number of shares of common stock issued and in treasury were as follows: 1996 1995 - ----------------------------------------------------------------------- Common stock issued Balance, beginning of year 96,408,200 96,011,235 Common stock issued 442,653 204,293 Stock options exercised 1,009,466 172,992 Conversion of convertible debt 2,265 Award of restricted shares 1,200 19,680 ---------- ---------- Balance, end of year 97,863,784 96,408,200 Treasury common stock Balance, beginning of year 5,552,840 5,540,518 Common stock issued (9,396) Purchases 2,440 12,322 ---------- ---------- Balance, end of year 5,545,884 5,552,840 ---------- ---------- Common stock outstanding, end of year 92,317,900 90,855,360 ========== ========== Pursuant to a Shareholders Rights Plan adopted by the Company in June 1989, a dividend of one preferred stock purchase right (a Right) for each outstanding share of common stock of the Company was issued on July 12, 1989 to shareholders of record on that date. Under certain conditions, each Right may be exercised to purchase one two-hundredth of a share of Junior Participating Preferred Stock, Series C, par value $1 per share, at a price of $75, subject to adjustment. This preferred stock is designed to participate in dividends and vote on essentially equivalent terms with a whole share of common stock. The Rights generally become exercisable apart from the common stock only if a person or group acquires 15 percent or more of the common stock or makes a tender offer for 15 percent or more of the outstanding common stock. Upon the acquisition by a person or group of 15 percent or more of the common stock, each Right will entitle the holder to purchase, at the then-current exercise price of the Right, a number of shares of common stock having a market value at that time of twice the exercise price. The Rights may be redeemed at a price of $.005 per Right under certain circumstances prior to their expiration on June 21, 1999. No event during 1996 made the Rights exercisable. 17. STOCK PLANS The Company has various stock option plans (Stock Plans) under which it may grant nonDqualified stock options, stock appreciation rights (SARs) and restricted stock to officers and key managers of the Company. The Stock Plans, as amended, provide for the issuance of a maximum of 9.2 million shares of common stock of the Company which may be authorized but unissued shares or treasury shares. Under the terms of the Stock Plans, the option price per share may not be less than 100 percent of the fair market value on the date of the grant. Stock options and SARs granted under the Stock Plans extend for 10 years and generally become exercisable either 50 percent one year after the date of the grant and 100 percent two years after the date of the grant, or in oneDthird increments: one-third one year after the date of the grant, two-thirds two years after the date of the grant, and 100 percent three years after the date of the grant. The Company also adopted a long-term incentive plan in fiscal 1994 under which officers and key managers were awarded shares of restricted common stock of the Company along with contingent stock units. Based on performance objectives, these shares and units were intended to vest in whole or in part during and at the end of a threeDyear performance period ending June 30, 1997. On June 30, 1996, the long-term incentive plan was deemed to be fully vested, one year prior to the completion of the performance period, and 141,480 shares of common stock were distributed. Restricted stock is valued on the issuance date, and the related expense is amortized over the vesting period. SARs granted totaled 65,250 shares and 34,450 shares in fiscal 1996 and 1995, respectively. Market prices for the SARs were $38.00 and $23.97 in fiscal 1996 and 1995, respectively. A total of 69,375 shares and 7,600 shares were exercised in fiscal 1996 and 1995, respectively. Stock option activities were as follows: Number of Shares ------------------------------- 1996 1995 - ----------------------------------------------------------------------- Outstanding at July 1 3,592,669 2,547,523 Granted 771,511 1,275,152 Exercised (1,006,866) (168,504) Cancelled (141,422) (61,502) --------- --------- Outstanding at June 30 3,215,892 3,592,669 ========= ========= Exercisable at June 30 1,732,273 1,640,527 ========= ========= Available for future grant at June 30 3,255,342 1,885,431 ========= ========= Restricted stock outstanding at June 30 -- 141,480 ========= ========= PRICE RANGE OF OPTIONS Outstanding at June 30 $11.00 - $39.31 $11.00 - $25.56 Granted during the year $32.43 - $39.31 $17.50 - $24.79 Exercised during the year $11.00 - $32.42 $11.00 - $25.56 Another stock option plan provides for the granting of awards of up to 100,000 shares of common stock to directors of the Company who were directors prior to the Merger and who were not also employees of the Company. Options may be exercised at any time the director holding the option remains a director of the Company and within two years after the director ceases to be a director of the Company. Under the terms of the plan, options granted are exercisable over 10 years beginning with the grant date of the option. Options were granted to purchase 14,000 shares of common stock in 1996 and 1995 at an option price of $29.75 and $19.06 per share, respectively. A total of 2,600 shares and 4,488 shares were exercised in 1996 and 1995, respectively. 18. COMMITMENTS The Company purchases sulphur, natural gas and ammonia from third parties under contracts extending, in some cases, for multiple years. Purchases under these contracts are generally at prevailing market prices. These contracts generally range from one to four years. The Company and FRP have an agreement to supply a portion of the Company's sulphur requirements to IMC-Agrico over the life of the joint venture partnership. Since the term of the sulphur purchase commitment is indeterminable, the dollar value of such commitments has been excluded from the schedule below after the year 2001. The Company leases plants, warehouses, terminals, office facilities, railcars and various types of equipment under operating leases. Lease terms generally range from three to five years, although some leases have longer terms. Summarized below is a schedule of future minimum long-term purchase commitments and minimum lease payments under nonDcancelable operating leases as of June 30, 1996: Purchase Lease Commitments Commitments - ---------------------------------------------------------------------- 1997 $211.9 $ 22.4 1998 157.8 19.4 1999 136.6 15.8 2000 112.7 9.8 2001 112.4 8.6 Subsequent years 10.2 22.4 ------ ------ $741.6 $ 98.4 ====== ====== Rental expense for 1996, 1995 and 1994 amounted to $45.6 million, $39.7 million and $34.9 million, respectively. International Minerals & Chemical (Canada) Global Limited is committed under a service agreement with Potash Corporation of Saskatchewan Inc. (PCS) to produce annually from mineral reserves specified quantities of potash for a fixed fee plus a pro rata share of total production and capital costs at the potash mines located in Esterhazy, Saskatchewan. The agreement extends through June 30, 2001 and is renewable at the option of PCS for five additional five-year periods. Potash produced for PCS may, at PCS's option, amount to an annual maximum of approximately one-fourth of the Esterhazy mines' production capacity. During 1996, production of potash for PCS amounted to 500,000 tons, or 16 percent of the Esterhazy mines' total tons produced. 19. CONTINGENCIES Mining Risks Since December 1985, the Company has experienced an inflow of water into one of its two interconnected potash mines located in Esterhazy, Saskatchewan. In recent years, the trend of the water inflow has stabilized and the Company has successfully reduced the per ton spending required to contain the inflow. However, the long-term outlook of the water inflow has caused the Company to consider alternatives to its current mining operations and studies are under way in this regard. Any solution to the water inflow situation at the mines could result in substantial capital expenditures and/or charges to operations. Sterlington Litigation Angus Chemical Company (Angus) and the Company are involved in various litigation arising out of the May 1991 explosion at a nitroparaffins plant located in Sterlington, Louisiana. Angus wants the Company to assume responsibility for a class action lawsuit currently pending in Louisiana against the Company, Angus, and other defendants for injuries arising out of the explosion, and to reimburse Angus for amounts that Angus has paid for settled claims in connection with the Sterlington explosion. With respect to the settled demands, Angus, in pleadings filed in Louisiana and Texas, states that it is seeking approximately $9.5 million, plus interest, fees and costs. In addition, Angus is seeking direct payment from the Company's insurers, X.L. Insurance Company, Ltd. (XL) and A.C.E. Insurance Company, Ltd. (ACE) for certain damages in an action pending in Louisiana state court. Angus has not specified how much it is seeking from the Company's insurers. Angus may be asserting claims against XL for the difference between the limits of the XL policy of $75.0 million and the $45.7 million that XL has paid to the Company under the policy. In addition, Angus may be asserting claims against ACE for the difference between the limit of the ACE policy of $100.0 million and the $15.0 million that ACE has previously paid to the Company. The Company may have obligations to indemnify certain of the insurers if Angus is successful in this case. The Company is unable to estimate the magnitude of its exposure at this time. The Company continues to vigorously litigate each of the matters arising out of the Sterlington explosion. A jury trial is scheduled to commence in October 1996 in Texas state court with respect to Angus' and the Company's claims for contribution and indemnity for the settled demands. Discovery is still not complete with respect to the lawsuits scheduled for trial in October 1996, and all of the other lawsuits are in early stages. In addition, Angus has filed an action in federal court in Louisiana seeking reimbursement for amounts allegedly expended to remediate certain environmental sites at the Sterlington plant. In its pleadings filed with the Louisiana federal court, Angus states that it is seeking approximately $1.8 million for amounts expended, plus interest, fees, costs and reimbursement for any future expenses. The Company is unable to estimate the magnitude of its exposure at this time. Antitrust Litigation A number of class action suits have been filed in United States federal courts, two California state courts and an Illinois state court against most of the North American potash producers, including the Company. The complaints essentially allege that the North American potash producers acted together to fix the price of potash sold in the United States. The complaints do not specify the amount of damages sought by the plaintiffs. All of the complaints seek treble damages and attorneys' fees and ask that the court find the defendants jointly and severally liable. Suits filed in federal courts in Minnesota, Illinois and Virginia have been consolidated in Minnesota. All of the claims in these suits are asserted on behalf of a purported group of direct purchasers of potash in the United States, which class has been certified by the court. Discovery is now concluded in the case and defendants' motions for summary judgment have been filed. In addition to the direct purchaser actions filed in the United States District Courts, two complaints have been filed in California state courts on behalf of indirect purchasers residing in California. The Company has answered both of the California complaints and has denied all material allegations. These cases are still in a preliminary stage and no discovery has been conducted. The case filed in Illinois state court has been dismissed for failure to state a claim. Plaintiffs have appealed the dismissal. The Company is not able to estimate the amount of damages that could ultimately be sought in the civil suits. Based upon available information, management of the Company believes that the Company has not acted in concert with others to fix prices in violation of the United States antitrust laws or any other laws. There can be no assurance, however, that these cases will ultimately be decided in a manner favorable to the Company. In connection with the Company's Colonsay mine, affiliates of Noranda from whom the Company purchased the mine in January 1995, are also named as defendants in the civil suits. The Company did not agree to assume any liabilities of Noranda or such affiliates with respect to operations at Colonsay prior to the closing of the purchase which may arise out of such antitrust litigation, and the Company is entitled to be indemnified by Noranda against such liabilities should they arise. The Antitrust Division of the United States Department of Justice had been conducting a grand jury investigation into allegations similar to those made in the civil actions. The Company was advised that the investigation was concluded and a spokesperson for the Antitrust Division has stated that no action will be taken. FTC Phosphate Operations Inquiry The Company was notified on October 2, 1995 by the Federal Trade Commission (FTC) that the FTC is conducting an investigation to determine whether manufacturers of concentrated phosphates may have violated Section 5 of the Federal Trade Commission Act, as amended, by agreeing to restrict output or raise prices. The FTC has requested that the Company provide certain information and documents regarding the Company's phosphate operations. The Company has submitted responsive information and documents to the FTC. The FTC has stated that neither its request for information and documents nor the fact it has commenced an investigation should be construed as indicating that a violation has occurred or is occurring. Hoover The Company is a defendant or third party defendant in 36 New Jersey state court lawsuits, in each case in connection with the sale of an agricultural crop nutrient solution to Hoover Treated Wood Products, Inc. and its predecessor (collectively, Hoover) used by Hoover to treat wood. The pending cases are included in a New Jersey court-sponsored mediation program. The Special Master assisting the Court in the mediation effort reports that the claimants in the 36 remaining lawsuits have either settled or committed to a settlement model which should result in a settlement. In May 1993, the Company executed two agreements with Hoover and certain interested parties relating to the Hoover litigation. Under those agreements, the Company paid Hoover $2.0 million, a substantial portion of which was paid by the Company's insurance carriers. In return, Hoover released the Company from all present and future asserted claims arising from the sale and distribution of wood treated by Hoover and agreed to indemnify and hold the Company harmless from all present and future asserted claims arising from the sale and distribution of the wood treated by Hoover and agreed to indemnify and hold the Company harmless from all present and future asserted claims by other parties related to such wood. While the Company cannot assure that Hoover will be able to meet its obligation to indemnify and hold the Company harmless, the Company believes the agreements with Hoover, coupled with the Company's existing insurance coverage and substantial meritorious defenses, should result in the resolution of all pending claims without any material adverse effect on the financial condition or results of operations of the Company. Environmental Matters The historical use and handling of regulated chemical substances and crop nutrient products in the normal course of the Company's business has resulted in contamination at facilities presently or previously owned or operated by the Company. The Company has also purchased facilities that were contaminated by previous owners through their use and handling of regulated chemical substances. Spills or other unintended releases of regulated substances have occurred in the past, and potentially could occur in the future, possibly requiring the Company to undertake or fund cleanup efforts. The Company cannot estimate the level of expenditures that may be required in the future to clean up contamination from the handling of regulated chemical substances or crop nutrients. At some locations, the Company has agreed, pursuant to consent orders with the appropriate governmental agencies, to undertake certain investigations (which currently are in progress) to determine whether remedial action may be required to address contamination. The cost of any remedial actions that ultimately may be required at these sites currently cannot be determined. The Company believes that it is entitled to at least partial indemnification for a portion of the costs that may be expended by the Company to remedy environmental issues at certain facilities and operations pursuant to indemnification agreements. These agreements address issues that resulted from activities occurring prior to the Company's acquisition of facilities from parties including: PPG Industries, Inc., Kaiser Aluminum & Chemical Corporation, Beatrice Companies, Inc., Estech, Inc. and certain private parties. The Company has already received and anticipates receiving amounts pursuant to the indemnification agreements for certain of its expenses incurred to date. The Company also has certain other contingent liabilities with respect to litigation, claims and guarantees of debt obligations to third parties arising in the ordinary course of business. The Company does not believe that any of these contingent liabilities will have a material adverse impact on the Company's financial position. 20. OPERATIONS BY GEOGRAPHIC AREA Financial information relating to the Company's operations in various geographic areas was as follows: Net Sales ----------------------------- 1996 1995 1994 - ----------------------------------------------------------------------- United States $2,910.8 $2,589.0 $2,055.6 Canada 326.9 388.6 244.9 Other 20.9 11.7 1.3 Transfers between geographic areas (principally from Canada) (277.6) (253.2) (176.5) -------- -------- -------- Consolidated $2,981.0 $2,736.1 $2,125.3 ======== ======== ========
Operating Earnings Identifiable Assets ------------------------- --------------------------- 1996 1995 1994 1996 1995 1995 -------- -------- -------- -------- -------- ------- C> United States $ 449.6$ 361.1$ 176.6$2,828.0$2,854.9$2,871.0 Canada 29.0 130.2 59.6 845.7 734.9 434.1 Other 18.9 10.2 (.4) 7.8 8.2 8.1 Eliminations (9.2) 1.6 8.8 (244.7) (274.8)(140.9) ------- ------- ------- ------- ------- ------- Consolidated $ 488.3$ 503.1$ 244.6$3,436.8$3,323.2$3,172.3 ======= ======= ======= ======= ======= =======
Transfers of product between geographic areas were at prices approximating those charged to unaffiliated customers. Net sales from the United States, as shown in the preceding table, included sales to unaffiliated customers in other geographic areas as follows: 1996 1995 1994 - ----------------------------------------------------------------------- Far East $753.5 $643.9 $377.1 Latin America 190.3 121.7 113.0 Europe 10.5 27.1 6.6 ------ ------ ------ $954.3 $792.7 $496.7 ====== ====== ====== Five Year Comparison(1) Years ended June 30, ---------------------------------------- (Dollars in millions except 1996(2) 1995(2) 1994(2) 1993(3) 1992(4) per share amounts) - ----------------------------------------------------------------------- STATEMENT OF OPERATIONS DATA: Net sales $2,981.0$2,736.1 $2,125.3 $1,438.1 $1,621.1 Sterlington litigation settlement, net (169.1) Earnings (loss) before income taxes, extra- ordinary item and cumu- lative effect of accounting changes 238.4 308.8 79.2 (117.0) 202.7 Provision (credit) for income taxes 94.1 115.5 34.8 (39.1) 71.3 ------- ------- ------- ------- ------- Earnings (loss) before extraordinary item and cumulative effect of accounting changes 144.3 193.3 44.4 (77.9) 131.4 Extraordinary loss - debt retirement (6.5) (25.2) (2.0) Cumulative effect of accounting changes (5.9) (47.1) (197.5) Net earnings (loss) $ 144.3$ 180.9 $ 19.2 $ (127.0) $ (66.1) ======= ======= ======= ======= ======= Earnings (loss) per share: Earnings (loss) before extraordinary item and cumulative effect of accounting changes $ 1.56 $ 2.12 $ .54 $ (1.02)$ 1.73 Extraordinary loss - debt retirement (.07) (.31) (.03) Cumulative effect of accounting changes (.06) (.62) (2.60) ------- ------- ------- ------- ------- Net earnings (loss) $ 1.56 $ 1.99 $ .23 $ (1.67) $ (.87) ======= ======= ======= ======= ======= BALANCE SHEET DATA (AT END OF PERIOD): Total assets $3,436.8$3,323.2 $3,172.3 $2,343.3 $2,207.8 Working capital 551.8 484.2 499.3 322.7 192.6 Working capital ratio 2.5:1 2.1:1 2.4:1 1.9:1 1.7:1 Long-term debt, less current maturities $ 736.7$ 750.2 $ 801.6 $ 994.6 $ 740.9 Total debt 764.5 824.3 847.7 1,063.2 782.3 Stockholders' equity 1,156.3 1,007.8 856.3 602.3 760.7 Total capitalization 1,920.8 1,832.1 1,704.0 1,665.5 1,543.0 Debt/total capitalization 39.8% 45.0% 49.7% 63.8% 50.7% OTHER FINANCIAL DATA: Cash provided by operating activities $ 342.0$ 554.5 $ 165.5 $ 73.4 $ 176.8 Capital expenditures 172.7 114.9 76.0 137.1 204.8 Cash dividends paid 35.5 24.6 14.2 30.7 32.8 Dividends per share .33 .26 .15 .32 .37 Book value per share 12.52 11.09 9.46 7.91 10.00 - ----------------------------------------------------------------------- (1) Restated for all periods to reflect the Merger which was accounted for as a pooling of interests. (2) See Notes to Consolidated Financial Statements for a description of acquisitions, non-recurring items and an accounting change. Beginning in 1994, operating results reflect the consolidation of the joint venture partnership formed on July 1, 1993 with FRP. (3) Includes charges of $32.4 million from the settlement of a claim relating to losses arising out of a water inflow at one of the Company's potash mines in Canada and $3.0 million from the settlement of an environmental issue, partially offset by a gain of $8.1 million from the resolution of a contract dispute with a major uranium customer. Also includes charges of $169.1 million, net of insurance recoveries and legal fees, which reflects the settlement of a lawsuit for damages arising out of an explosion at a nitroparaffins plant in Sterlington, Louisiana and $47.1 million for the cumulative effect on prior years of adopting SFAS No. 106, "Employers Accounting for Postretirement Benefits Other Than Pensions," on July 1, 1992. (4) Includes a gain of $34.2 million from the Company's sale of its Sterlington, Louisiana ammonia production facility, a charge of $5.3 million from the temporary shutdown and mothballing of the Company's uranium production facilities and a charge of $197.5 million for the cumulative effect on prior years of adopting SFAS No. 109, "Accounting for Income Taxes," on July 1, 1991. Quarterly Results (unaudited) Quarter -------------------------------- First Second Third Fourth Year - ----------------------------------------------------------------------- FISCAL 1996 Net sales $ 599.4 $ 709.5 $ 717.0 $ 955.1 $2,981.0 Gross margins 148.7 199.5 184.0 218.7 750.9 Earnings before income taxes 51.7 83.2 2.6 100.9 238.4 Net earnings (loss) 32.1 54.1 (8.3) 66.4 144.3 Earnings (loss) per share$ .35 $ .58 $ (.09) $ .71 $ 1.56 - ----------------------------------------------------------------------- FISCAL 1995 Net sales $ 517.2 $ 587.5 $ 729.9 $ 901.5 $2,736.1 Gross margins 107.4 158.4 208.1 216.1 690.0 Earnings before income taxes, extraordinary item and cumulative effect of accounting change 36.9 58.3 96.3 117.3 308.8 Earnings before extraordinary item and cumulative effect of accounting change 24.0 36.5 59.6 73.2 193.3 Net earnings 16.9 34.7 58.9 70.4 180.9 Earnings per share: Earnings before extra- ordinary item and cumu- lative effect of accounting change $ .26 $ .40 $ .66 $ .80 $ 2.12 Net earnings .19 .38 .65 .77 1.99 - ----------------------------------------------------------------------- The quarterly results reflected above give retroactive effect to the Merger discussed in Note 3 of Notes to Consolidated Financial Statements and, accordingly, the amounts have been restated for all periods prior to the acquisition to include the accounts and operations of Vigoro. FISCAL 1996 Second, third and fourth quarter operating results reflected the acquisition of Feed Ingredients in October 1995. Third quarter operating results included an after-tax charge of $69.6 million, or $0.75 per share, from charges related to the Merger, as well as costs associated with, among other things, a corporate restructuring, other asset valuations and environmental issues. FISCAL 1995 First quarter results reflected a charge of $5.9 million, or $0.06 per share, for the cumulative effect on prior years of adopting SFAS No. 112 as discussed in Note 14 of Notes to Consolidated Financial Statements. Third and fourth quarter operating results reflected the acquisition of CCP in January 1995. EX-13.1 12 REPORT OF ARTHUR ANDERSEN LLP Exhibit 13.1 To the Board of Directors and Shareholders of The Vigoro Corporation: We have audited the accompanying consolidated balance sheet of The Vigoro Corporation (a Delaware corporation) and subsidiaries as of June 30, 1995, and the consolidated statements of income, changes in shareholders' equity and cash flows for the years ended June 30, 1995 and 1994. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We did not audit the financial statements of Central Canada Potash, Inc. which statements reflect total assets and net sales of 20 percent and 6 percent, respectively, in 1995 of the consolidated totals. Those statements were audited by other auditors whose report has been furnished to us and our opinion, insofar as it relates to the amounts included for that entity, is based solely on the report of the other auditors. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of other auditors provide a reasonable basis for our opinion. In our opinion, based on our audits and the report of other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of The Vigoro Corporation and subsidiaries as of June 30, 1995, and the results of its operations and cash flows for the years ended June 30, 1995 and 1994 in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Arthur Andersen LLP Chicago, Illinois January 22, 1996 EX-21.1 13 SUBSIDIARIES OF THE REGISTRANT EXHIBIT 21.1 SUBSIDIARIES OF THE REGISTRANT Certain of IMC Global Inc.'s subsidiaries are listed below. These subsidiaries are all included in the Company's consolidated financial statements, and collectively, together with IMC Global Inc., account for more than 90 percent of consolidated net sales, earnings (loss) before income taxes, extraordinary items and cumulative effect of a change in accounting principal, and total assets. Jurisdiction of Percent Incorporation Ownership --------------- ---------- IMC Global Operations Inc. Delaware 100% IMC-Agrico Company Delaware 53.5% IMC Global Potash Holdings Inc. Delaware 100% International Minerals & Chemical (Canada) Global Limited Canada 100% The Vigoro Corporation Delaware 100% IMC AgriBusiness Inc. Delaware 100% KCL Holdings, Inc. Delaware 100% IMC Kalium Ltd. Delaware 100% IMC Central Canada Potash Inc. Delaware 100% VNH, Inc. Delaware 100% IMC Nitrogen Company Delaware 100% IMC Kalium Carlsbad Potash Company Delaware 100% IMC Kalium Canada Ltd. Canada 100% A number of subsidiaries are not shown, but even as a whole they do not constitute a significant subsidiary. EX-23.1 14 CONSENT OF ERNST & YOUNG LLP EXHIBIT 23.1 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the following registration statements and related prospectuses filed by IMC Global Inc. under the Securities Act of 1933 of our report dated July 31, 1996, with respect to the consolidated financial statements of IMC Global Inc. included in this Annual Report (Form 10-K) for the year ended June 30, 1996. Commission File No. -------------------- Form S-8, No. 33-22079 Form S-8, No. 33-22080 Form S-8, No. 33-38423 Form S-8, No. 33-42074 Form S-8, No. 33-56911 Amendment No. 1 to Form S-4, No. 333-00439 Form S-8, No. 333-189 Form S-3, No. 333-04831 ERNST & YOUNG LLP Ernst & Young LLP Chicago, Illinois September 27, 1996 Docket No. 112996 EX-23.2 15 CONSENT OF ARTHUR ANDERSEN LLP EXHIBIT 23.2 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this Form 10-K of our report dated January 22, 1996, included in Registration Statement No. 333-00439 on Form S-4, Registration Statement No. 333-189 on Form S-8 and Registration Statement No. 333-04831 on Form S-3. It should be noted that we have not audited any financial statements of the company subsequent to June 30, 1995 or performed any audit procedures subsequent to the date of our report. ARTHUR ANDERSEN LLP Arthur Andersen LLP Chicago, IL September 27, 1996 EX-27 16 FINANCIAL DATA SCHEDULE
5 1000 YEAR JUN-30-1996 JUN-30-1996 (4,700) 14,300 380,600 3,600 476,700 918,200 4,123,600 1,772,300 3,436,800 366,400 736,700 97,900 0 0 1,058,400 3,436,800 2,981,000 2,997,800 2,230,100 2,509,500 185,100 0 64,800 238,400 94,100 144,300 0 0 0 144,300 1.56 1.54
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