MARKETABLE SECURITIES HELD IN TRUSTS

In August 2016, Mosaic deposited $630 million into two trust funds (together, the “RCRA Trusts”) created to provide additional financial assurance for the estimated costs (“Gypstack Closure Costs”) of closure and long-term care of our Florida and Louisiana phosphogypsum management systems (“Gypstacks”), as described further in Note 13 of our Notes to Consolidated Financial Statements. Our actual Gypstack Closure Costs are generally expected to be paid by us in the normal course of our Phosphate business; however, funds held in each of the RCRA Trusts can be drawn by the applicable governmental authority in the event we cannot perform our closure and long term care obligations. When our estimated Gypstack Closure Costs with respect to the facilities associated with a RCRA Trust are sufficiently lower than the amount on deposit in that RCRA Trust, we have the right to request that the excess funds be released to us. The same is true for the RCRA Trust balance remaining after the completion of our obligations, which will be performed over a period that may not end until three decades or more after a Gypstack has been closed. The investments held by the RCRA Trusts are managed by independent investment managers with discretion to buy, sell, and invest pursuant to the objectives and standards set forth in the related trust agreements. Amounts reserved to be held or held in the RCRA Trusts (including losses or reinvested earnings) are included in other assets on our Condensed Consolidated Balance Sheets.

The RCRA Trusts hold investments, which are restricted from our general use, in marketable debt securities classified as available-for-sale and are carried at fair value. As a result, unrealized gains and losses are included in other comprehensive income until realized, unless it is determined that the carrying value of an investment is impaired on an other-than-temporary basis. There were no other-than-temporary impairment write-downs on available-for-sale securities during the year ended December 31, 2017.

We review the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy. We determine the fair market values of our available-for-sale securities and certain other assets based on the fair value hierarchy described below:

Level 1: Values based on unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities.

Level 2: Values based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, or model-based valuation techniques for which all significant assumptions are observable in the market.

Level 3: Values generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect our own estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

The estimated fair value of the investments in the RCRA Trusts is as of December 31, 2017 and December 31, 2016 are as follows:



	December 31, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Level 1
Cash and cash equivalents	$	1.2	$	—	$	—		$	1.2
Level 2
Corporate debt securities	186.1		0.4		(2.2		)	184.3
Municipal bonds	184.5		0.5		(2.7		)	182.3
U.S. government bonds	261.7		—		(4.4		)	257.3
Total	$	633.5	$	0.9	$	(9.3	)	$	625.1

	December 31, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Level 1
Cash and cash equivalents	$	1.2	$	—	$	—		$	1.2
Level 2
Corporate debt securities	180.2		—		(4.3		)	175.9
Municipal bonds	180.9		—		(6.6		)	174.3
U.S. government bonds	257.4		0.1		(0.3		)	257.2
Total	$	619.7	$	0.1	$	(11.2	)	$	608.6

The following tables show gross unrealized losses and fair values of the RCRA Trusts’ available-for-sale securities that have been in a continuous unrealized loss position deemed to be temporary as of December 31, 2017 and December 31, 2016.



	December 31, 2017					December 31, 2016
	Less than 12 months					Less than 12 months
	Fair Value		Gross Unrealized Losses^(a)			Fair Value		Gross Unrealized Losses^(a)
Corporate debt securities	$	44.3	$	(0.3	)	$	163.7	$	(4.3	)
Municipal bonds	64.5		(0.5		)	162.7		(6.6		)
U.S. government bonds	255.0		(4.4		)	202.3		(0.3		)
Total	$	363.8	$	(5.2	)	$	528.7	$	(11.2	)

	December 31, 2017					December 31, 2016
	Greater than 12 months					Greater than 12 months
	Fair Value		Gross Unrealized Losses^(a)			Fair Value		Gross Unrealized Losses^(a)
Corporate debt securities	$	100.4	$	(1.9	)	$	—	$	—
Municipal bonds	83.3		(2.2		)	—		—
U.S. government bonds	—		—			—		—
Total	$	183.7	$	(4.1	)	$	—	$	—

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(a)	Represents the aggregate of the gross unrealized losses that have been in a continuous unrealized loss position as of December 31, 2017 and December 31, 2016.

The following table summarizes the balance by contractual maturity of the available-for-sale debt securities invested by the RCRA Trusts as of December 31, 2017. Actual maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations before the underlying contracts mature.



	December 31, 2017
Due in one year or less	$	28.4
Due after one year through five years	367.8
Due after five years through ten years	181.0
Due after ten years	46.7
Total debt securities	$	623.9

Realized gains and (losses), which were determined on a specific identification basis, were $4.7 million and $(3.5) million, respectively, for the twelve months ended December 31, 2017 and $0.2 million and $(10.5) million, respectively, for the twelve months ended December 31, 2016.