x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2011 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to . |
Delaware | 20-1380758 | |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |
259 Prospect Plains Road Cranbury, New Jersey | 08512 | |
(Address of Principal Executive Offices) | (Zip Code) |
Large Accelerated Filer | o | Accelerated Filer | x | |
Non-accelerated filer | o | Smaller reporting company | o |
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Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
ITEM 1. | FINANCIAL STATEMENTS |
June 30, 2011 | December 31, 2010 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 79,712 | $ | 63,706 | |||
Accounts receivable - trade | 82,365 | 74,691 | |||||
Inventories | 147,884 | 123,182 | |||||
Other current assets | 67,739 | 75,898 | |||||
Total current assets | 377,700 | 337,477 | |||||
Property, plant and equipment, net | 188,611 | 191,625 | |||||
Goodwill | 51,706 | 51,706 | |||||
Intangibles and other assets, net | 44,267 | 46,082 | |||||
Total assets | $ | 662,284 | $ | 626,890 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Current portion of long-term debt | $ | 4,000 | $ | 4,000 | |||
Accounts payable, trade and other | 44,110 | 38,095 | |||||
Other current liabilities | 77,623 | 84,239 | |||||
Total current liabilities | 125,733 | 126,334 | |||||
Long-term debt | 138,000 | 145,000 | |||||
Other long-term liabilities | 28,501 | 24,840 | |||||
Total liabilities | 292,234 | 296,174 | |||||
Commitments and contingencies (note 12) | |||||||
Stockholders’ equity: | |||||||
Common stock, par value $.001 per share; authorized 100,000,000; issued 21,766,411 and 21,463,934; outstanding 21,765,889 and 21,463,934 shares | 22 | 21 | |||||
Paid-in capital | 109,947 | 106,032 | |||||
Common stock held in treasury, at cost | (17 | ) | — | ||||
Retained earnings | 263,345 | 227,752 | |||||
Accumulated other comprehensive loss | (3,247 | ) | (3,089 | ) | |||
Total stockholders’ equity | 370,050 | 330,716 | |||||
Total liabilities and stockholders’ equity | $ | 662,284 | $ | 626,890 |
Three months ended | Six months ended | ||||||||||||||
June 30, 2011 | June 30, 2010 | June 30, 2011 | June 30, 2010 | ||||||||||||
Net sales | $ | 201,627 | $ | 184,032 | $ | 399,225 | $ | 353,039 | |||||||
Cost of goods sold | 152,463 | 136,971 | 292,732 | 269,272 | |||||||||||
Gross profit | 49,164 | 47,061 | 106,493 | 83,767 | |||||||||||
Operating expenses: | |||||||||||||||
Selling, general and administrative | 15,795 | 13,771 | 31,611 | 28,291 | |||||||||||
Research & development expenses | 752 | 614 | 1,443 | 1,177 | |||||||||||
Total operating expenses | 16,547 | 14,385 | 33,054 | 29,468 | |||||||||||
Operating income | 32,617 | 32,676 | 73,439 | 54,299 | |||||||||||
Interest expense, net | 1,282 | 5,278 | 2,585 | 11,105 | |||||||||||
Foreign exchange (gain) loss | (152 | ) | 711 | 558 | 481 | ||||||||||
Income before income taxes | 31,487 | 26,687 | 70,296 | 42,713 | |||||||||||
Provision for income taxes | 10,741 | 9,064 | 23,581 | 14,740 | |||||||||||
Net income | $ | 20,746 | $ | 17,623 | $ | 46,715 | $ | 27,973 | |||||||
Per share data (see Note 2): | |||||||||||||||
Income per Common share: | |||||||||||||||
Basic | $ | 0.95 | $ | 0.82 | $ | 2.15 | $ | 1.31 | |||||||
Diluted | $ | 0.92 | $ | 0.79 | $ | 2.06 | $ | 1.26 | |||||||
Weighted average common shares outstanding: | |||||||||||||||
Basic | 21,732,093 | 21,415,978 | 21,733,653 | 21,397,491 | |||||||||||
Diluted | 22,645,132 | 22,321,234 | 22,628,828 | 22,264,771 | |||||||||||
Dividends paid per share of common stock | $ | 0.25 | $ | 0.17 | $ | 0.42 | $ | 0.34 | |||||||
Dividends declared per share of common stock | $ | 0.25 | $ | 0.17 | $ | 0.50 | $ | 0.34 |
Six months ended | Six months ended | ||||||
June 30, 2011 | June 30, 2010 | ||||||
Cash flows from operating activities | |||||||
Net income | $ | 46,715 | $ | 27,973 | |||
Adjustments to reconcile net income to net cash provided from operating activities: | |||||||
Depreciation and amortization | 20,917 | 24,914 | |||||
Amortization of deferred financing charges | 312 | 1,414 | |||||
Deferred income tax provision | 4,136 | 899 | |||||
Deferred profit sharing | (566 | ) | (414 | ) | |||
Share-based compensation | 4,028 | 1,916 | |||||
Changes in assets and liabilities: | |||||||
Decrease in restricted cash | — | 1,749 | |||||
Increase in accounts receivable | (7,674 | ) | (22,462 | ) | |||
Increase in inventories | (24,702 | ) | (1,558 | ) | |||
Decrease (increase) in other current assets | 8,159 | (6,008 | ) | ||||
Increase in accounts payable | 6,015 | 1,749 | |||||
Decrease in other current liabilities | (8,410 | ) | (17,849 | ) | |||
Changes in other long-term assets and liabilities | (3,105 | ) | 250 | ||||
Net cash provided from operating activities | 45,825 | 12,573 | |||||
Cash flows from investing activities: | |||||||
Capital expenditures | (16,698 | ) | (15,308 | ) | |||
Net cash used for investing activities | (16,698 | ) | (15,308 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from exercise of stock options | 484 | 173 | |||||
Long-term debt repayments | (7,000 | ) | (56,000 | ) | |||
Excess tax benefits from exercise of stock options | 2,487 | 533 | |||||
Common stock repurchases | (17 | ) | — | ||||
Dividends paid | (9,075 | ) | (7,273 | ) | |||
Net cash used for financing activities | (13,121 | ) | (62,567 | ) | |||
Net change in cash | 16,006 | (65,302 | ) | ||||
Cash and cash equivalents at beginning of period | 63,706 | 132,451 | |||||
Cash and cash equivalents at end of period | $ | 79,712 | $ | 67,149 |
Number of Common Shares | Common Stock | Treasury Stock | Retained Earnings | Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Total Stockholders’ Equity | ||||||||||||||||||||
Balance, January 1, 2010 | 21,334 | $ | 21 | $ | — | $ | 197,541 | $ | 100,066 | $ | (2,250 | ) | $ | 295,378 | ||||||||||||
Net income | 45,155 | 45,155 | ||||||||||||||||||||||||
Change in interest rate swaps, net of tax | 223 | 223 | ||||||||||||||||||||||||
Change in pension and post-retirement plans, net of tax | (1,062 | ) | (1,062 | ) | ||||||||||||||||||||||
Other comprehensive income, net of tax | 44,316 | |||||||||||||||||||||||||
Proceeds from stock award exercises and issuances | 119 | 236 | 236 | |||||||||||||||||||||||
Issuance of annual retainer stock to external Board of Directors | 11 | — | ||||||||||||||||||||||||
Share-based compensation | 5,090 | 5,090 | ||||||||||||||||||||||||
Excess tax benefits from exercise of stock options | 640 | 640 | ||||||||||||||||||||||||
Dividends declared | (14,944 | ) | (14,944 | ) | ||||||||||||||||||||||
Balance, December 31, 2010 | 21,464 | $ | 21 | $ | — | $ | 227,752 | $ | 106,032 | $ | (3,089 | ) | $ | 330,716 | ||||||||||||
Net income | 46,715 | 46,715 | ||||||||||||||||||||||||
Change in interest rate swaps, net of tax | (587 | ) | (587 | ) | ||||||||||||||||||||||
Change in pension and post-retirement plans, net of tax | 429 | 429 | ||||||||||||||||||||||||
Other comprehensive income, net of tax | 46,557 | |||||||||||||||||||||||||
Proceeds from stock award exercises and issuances | 296 | 1 | (2,600 | ) | (2,599 | ) | ||||||||||||||||||||
Issuance of annual retainer stock to external Board of Directors | 7 | — | ||||||||||||||||||||||||
Share-based compensation | 4,028 | 4,028 | ||||||||||||||||||||||||
Excess tax benefits from exercise of stock options | 2,487 | 2,487 | ||||||||||||||||||||||||
Common stock repurchases | (1 | ) | (17 | ) | (17 | ) | ||||||||||||||||||||
Dividends declared | (11,122 | ) | (11,122 | ) | ||||||||||||||||||||||
Balance, June 30, 2011 | 21,766 | $ | 22 | $ | (17 | ) | $ | 263,345 | $ | 109,947 | $ | (3,247 | ) | $ | 370,050 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2011 | June 30, 2010 | June 30, 2011 | June 30, 2010 | |||||||||||||
Net income | 20,746 | 17,623 | 46,715 | 27,973 | ||||||||||||
Less: earnings attributable to unvested shares | — | (5 | ) | — | (8 | ) | ||||||||||
Net income available to common shareholders | $ | 20,746 | $ | 17,618 | $ | 46,715 | $ | 27,965 | ||||||||
Weighted average number of common and potential common shares outstanding: | ||||||||||||||||
Basic number of common shares outstanding | 21,732,093 | 21,415,978 | 21,733,653 | 21,397,491 | ||||||||||||
Dilutive effect of stock equivalents | 913,039 | 905,256 | 895,175 | 867,280 | ||||||||||||
Diluted number of weighted average common shares outstanding | 22,645,132 | 22,321,234 | 22,628,828 | 22,264,771 | ||||||||||||
Earnings per common share: | ||||||||||||||||
Income per common share—Basic | $ | 0.95 | $ | 0.82 | $ | 2.15 | $ | 1.31 | ||||||||
Income per common share—Diluted | $ | 0.92 | $ | 0.79 | $ | 2.06 | $ | 1.26 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2011 | June 30, 2010 | June 30, 2011 | June 30, 2010 | |||||||||||||
Dividends declared—per share | $ | 0.25 | $ | 0.17 | $ | 0.50 | $ | 0.34 | ||||||||
Dividends declared—aggregate | 5,443 | 3,641 | 10,868 | 7,281 | ||||||||||||
Dividends paid—per share | 0.25 | 0.17 | 0.42 | 0.34 | ||||||||||||
Dividends paid—aggregate | 5,426 | 3,640 | 9,075 | 7,273 |
• | Stock options, which entitle the holder to purchase, after the end of a vesting term, a specified number of shares of the Company’s common stock at an exercise price per share set equal to the market price of the Company’s common stock on the date of grant. |
• | Performance share awards which entitle the holder to receive, at the end of a vesting term, a number of shares of the Company's common stock, within a range of shares from zero to a specified maximum (generally 200%), calculated using a combination of performance indicators as defined solely by reference to the Company's own activities. Dividends will accrue over the vesting period and are paid on performance share awards when fully vested and distributed. |
• | Annual stock retainer grants, which entitle independent members of the Board of Directors to receive a number of shares of the Company’s common stock equal to a fixed retainer value. |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, 2011 | June 30, 2010 | June 30, 2011 | June 30, 2010 | ||||||||||||
Stock options | $ | 806 | $ | 424 | $ | 1,237 | $ | 635 | |||||||
Restricted stock | — | 20 | 6 | 24 | |||||||||||
Performance share awards | 949 | 751 | 2,785 | 1,257 | |||||||||||
Total share-based compensation expense | 1,755 | $ | 1,195 | 4,028 | 1,916 |
Non-qualified stock options | |||
Expected volatility | 54.43 | % | |
Dividend yield | 2.28 | % | |
Risk-free interest rate | 2.3 | % | |
Expected term | 6 years | ||
Weighted average grant date fair value of stock options | $ | 17.14 |
June 30, 2011 | December 31, 2010 | ||||||
Finished products | $ | 94,780 | $ | 82,961 | |||
Raw materials | 44,579 | 32,844 | |||||
Spare parts | 8,525 | 7,377 | |||||
$ | 147,884 | $ | 123,182 |
June 30, 2011 | December 31, 2010 | ||||||
Vendor inventory deposits (prepaid) | $ | 9,592 | $ | 8,560 | |||
Rhodia indemnity receivable for CNA water tax claims (see note 12) | 21,336 | 20,177 | |||||
Prepaid income taxes | 13,231 | 14,002 | |||||
Creditable taxes (value added taxes) | 12,723 | 15,868 | |||||
Deferred income taxes | 7,782 | 7,782 | |||||
Other prepaids | 1,794 | 2,832 | |||||
Other | 1,281 | 6,677 | |||||
$ | 67,739 | $ | 75,898 |
Useful life (years) | June 30, 2011 | December 31, 2010 | |||||||
Developed technology and application patents, net of accumulated amortization of $13,002 for 2011 and $12,057 for 2010 | 10-20 | $ | 23,598 | $ | 24,543 | ||||
Customer relationships, net of accumulated amortization of $5,383 for 2011 and $4,909 for 2010 | 5-15 | 5,947 | 6,421 | ||||||
Tradenames and license agreements, net of accumulated amortization of $4,021 for 2011 and $3,815 for 2010 | 5-20 | 5,339 | 5,545 | ||||||
Capitalized software, net of accumulated amortization of $2,715 for 2011 and $2,642 for 2010 | 3-5 | 255 | 323 | ||||||
Non-compete agreement, net of accumulated amortization of $504 for 2011 and $441 for 2010 | 5 | 126 | 189 | ||||||
Total Intangibles | $ | 35,265 | $ | 37,021 | |||||
Deferred financing costs, net of accumulated amortization of $541 for 2011 and $229 for 2010 | $ | 2,287 | $ | 2,599 | |||||
Deferred income taxes | 3,216 | 3,421 | |||||||
Other assets | 3,499 | 3,041 | |||||||
Total other assets | $ | 9,002 | $ | 9,061 | |||||
$ | 44,267 | $ | 46,082 |
June 30, 2011 | December 31, 2010 | ||||||
CNA water tax claims (see Note 12) | $ | 41,805 | $ | 41,573 | |||
Taxes | 6,762 | 7,761 | |||||
Payroll related | 10,402 | 15,787 | |||||
Dividends payable | 5,442 | 3,648 | |||||
Benefits and pensions | 5,142 | 6,070 | |||||
Freight and rebates | 2,651 | 4,107 | |||||
Other | 5,419 | 5,293 | |||||
$ | 77,623 | $ | 84,239 |
June 30, 2011 | December 31, 2010 | ||||||
Term loan due 2015 | $ | 97,000 | $ | 99,000 | |||
Revolver borrowings under the credit facility | 45,000 | 50,000 | |||||
$ | 142,000 | $ | 149,000 | ||||
Less current portion | 4,000 | 4,000 | |||||
$ | 138,000 | $ | 145,000 |
Three months ended | Six months ended | ||||||||||||||
June 30, 2011 | June 30, 2010 | June 30, 2011 | June 30, 2010 | ||||||||||||
Interest expense | $ | 1,451 | 4,579 | $ | 2,997 | 10,266 | |||||||||
Deferred financing cost | 154 | 983 | 312 | 1,414 | |||||||||||
Interest income | (115 | ) | (18 | ) | (305 | ) | (144 | ) | |||||||
Less: amount capitalized for capital projects | (208 | ) | (266 | ) | (419 | ) | (431 | ) | |||||||
Total interest expense, net | $ | 1,282 | $ | 5,278 | $ | 2,585 | $ | 11,105 |
June 30, 2011 | December 31, 2010 | ||||||
Deferred income taxes | $ | 14,805 | $ | 10,989 | |||
Post employment liabilities | 10,149 | 10,141 | |||||
Environmental liabilities | 1,100 | 1,100 | |||||
Other liabilities | 2,447 | 2,610 | |||||
$ | 28,501 | $ | 24,840 |
2011 | |||||||||||
Pension benefits | Other benefits | Total | |||||||||
Service cost | $ | — | $ | 72 | $ | 72 | |||||
Interest cost | 28 | 37 | 65 | ||||||||
Expected return on assets | (18 | ) | — | (18 | ) | ||||||
Amortization of prior service cost | — | 32 | 32 | ||||||||
Amortization of unrecognized (gains)/losses | — | (15 | ) | (15 | ) | ||||||
Net periodic benefit expense | $ | 10 | $ | 126 | $ | 136 |
2010 | |||||||||||
Pension benefits | Other benefits | Total | |||||||||
Service cost | $ | — | $ | 90 | $ | 90 | |||||
Interest cost | 28 | 46 | 74 | ||||||||
Expected return on assets | (21 | ) | — | (21 | ) | ||||||
Amortization of prior service cost | — | 66 | 66 | ||||||||
Amortization of unrecognized (gains)/losses | (1 | ) | (20 | ) | (21 | ) | |||||
Net periodic benefit expense | $ | 6 | $ | 182 | $ | 188 |
2011 | |||||||||||
Pension benefits | Other benefits | Total | |||||||||
Service cost | $ | — | $ | 147 | $ | 147 | |||||
Interest cost | 56 | 74 | 130 | ||||||||
Expected return on assets | (36 | ) | — | (36 | ) | ||||||
Amortization of prior service cost | — | 67 | 67 | ||||||||
Amortization of unrecognized (gains)/losses | — | (31 | ) | (31 | ) | ||||||
Net periodic benefit expense | $ | 20 | $ | 257 | $ | 277 | |||||
2010 | |||||||||||
Pension benefits | Other benefits | Total | |||||||||
Service cost | $ | — | $ | 180 | $ | 180 | |||||
Interest cost | 55 | 92 | 147 | ||||||||
Expected return on assets | (42 | ) | — | (42 | ) | ||||||
Amortization of prior service cost | — | 131 | 131 | ||||||||
Amortization of unrecognized (gains)/losses | (2 | ) | (39 | ) | (41 | ) | |||||
Net periodic benefit expense | $ | 11 | $ | 364 | $ | 375 | |||||
2011 | |||||||||||
Pension benefits | Other benefits | Total | |||||||||
Service cost | $ | 72 | $ | 17 | $ | 89 | |||||
Interest cost | 147 | 24 | 171 | ||||||||
Expected return on assets | (247 | ) | — | (247 | ) | ||||||
Amortization of transition obligation | — | 8 | 8 | ||||||||
Amortization of prior service cost | 27 | — | 27 | ||||||||
Amortization of unrecognized (gains)/losses | 43 | 10 | 53 | ||||||||
Exchange rate changes | 20 | 5 | 25 | ||||||||
Net periodic benefit expense | $ | 62 | $ | 64 | $ | 126 |
2010 | |||||||||||
Pension benefits | Other benefits | Total | |||||||||
Service cost | $ | 53 | $ | 14 | $ | 67 | |||||
Interest cost | 138 | 22 | 160 | ||||||||
Expected return on assets | (219 | ) | — | (219 | ) | ||||||
Amortization of transition obligation | — | — | — | ||||||||
Amortization of prior service cost | 21 | 3 | 24 | ||||||||
Amortization of unrecognized (gains)/losses | 28 | 10 | 38 | ||||||||
Exchange rate changes | 74 | (16 | ) | 58 | |||||||
Net periodic benefit expense | $ | 95 | $ | 33 | $ | 128 |
2011 | |||||||||||
Pension benefits | Other benefits | Total | |||||||||
Service cost | $ | 142 | $ | 34 | $ | 176 | |||||
Interest cost | 291 | 48 | 339 | ||||||||
Expected return on assets | (488 | ) | — | (488 | ) | ||||||
Amortization of transition obligation | — | 16 | 16 | ||||||||
Amortization of prior service cost | 54 | — | 54 | ||||||||
Amortization of unrecognized (gains)/losses | 84 | 20 | 104 | ||||||||
Exchange rate changes | 186 | (25 | ) | 161 | |||||||
Net periodic benefit expense | $ | 269 | $ | 93 | $ | 362 |
2010 | |||||||||||
Pension benefits | Other benefits | Total | |||||||||
Service cost | $ | 105 | $ | 27 | $ | 132 | |||||
Interest cost | 271 | 43 | 314 | ||||||||
Expected return on assets | (431 | ) | — | (431 | ) | ||||||
Amortization of transition obligation | — | — | — | ||||||||
Amortization of prior service cost | 46 | 10 | 56 | ||||||||
Amortization of unrecognized (gains)/losses | 51 | 15 | 66 | ||||||||
Exchange rate changes | (5 | ) | (1 | ) | (6 | ) | |||||
Net periodic benefit expense | $ | 37 | $ | 94 | $ | 131 |
For the three months ended June 30, 2011 | Specialty Phosphates US & Canada | Specialty Phosphates Mexico | GTSP & Other | Eliminations | Total | |||||||||||||||
Sales | $ | 132,068 | $ | 38,531 | $ | 31,028 | $ | — | $ | 201,627 | ||||||||||
Intersegment sales | 340 | 9,254 | 125 | (9,719 | ) | — | ||||||||||||||
Total sales | 132,408 | 47,785 | 31,153 | (9,719 | ) | 201,627 | ||||||||||||||
Operating income | $ | 26,460 | $ | 1,262 | $ | 4,895 | $ | — | $ | 32,617 | ||||||||||
Depreciation and amortization expense | $ | 5,199 | $ | 3,981 | $ | 1,543 | $ | — | $ | 10,723 | ||||||||||
For the three months ended June 30, 2010 | Specialty Phosphates US & Canada | Specialty Phosphates Mexico | GTSP & Other | Eliminations | Total | |||||||||||||||
Sales | $ | 123,086 | $ | 39,298 | $ | 21,648 | $ | — | $ | 184,032 | ||||||||||
Intersegment sales | 372 | 12,854 | 45 | (13,271 | ) | — | ||||||||||||||
Total sales | 123,458 | 52,152 | 21,693 | (13,271 | ) | 184,032 | ||||||||||||||
Operating income | $ | 26,757 | $ | 4,011 | $ | 1,908 | $ | — | $ | 32,676 | ||||||||||
Depreciation and amortization expense | $ | 7,060 | $ | 3,957 | $ | 1,243 | $ | — | $ | 12,260 |
For the six months ended June 30, 2011 | Specialty Phosphates US & Canada | Specialty Phosphates Mexico | GTSP & Other | Eliminations | Total | |||||||||||||||
Sales | $ | 262,412 | $ | 84,033 | $ | 52,780 | $ | — | $ | 399,225 | ||||||||||
Intersegment sales | 772 | 20,681 | 180 | (21,633 | ) | — | ||||||||||||||
Total sales | 263,184 | 104,714 | 52,960 | (21,633 | ) | 399,225 | ||||||||||||||
Operating income (a) | $ | 56,282 | $ | 5,215 | $ | 11,942 | $ | — | $ | 73,439 | ||||||||||
Depreciation and amortization expense | $ | 10,033 | $ | 7,905 | $ | 2,979 | $ | — | $ | 20,917 | ||||||||||
For the six months ended June 30, 2010 | Specialty Phosphates US & Canada | Specialty Phosphates Mexico | GTSP & Other | Eliminations | Total | |||||||||||||||
Sales | $ | 246,444 | $ | 72,497 | $ | 34,098 | $ | — | $ | 353,039 | ||||||||||
Intersegment sales | 1,568 | 22,037 | 92 | (23,697 | ) | — | ||||||||||||||
Total sales | 248,012 | 94,534 | 34,190 | (23,697 | ) | 353,039 | ||||||||||||||
Operating income | $ | 46,816 | $ | 5,438 | $ | 2,045 | $ | — | $ | 54,299 | ||||||||||
Depreciation and amortization expense | $ | 14,485 | $ | 7,854 | $ | 2,575 | $ | — | $ | 24,914 |
ITEM 2. | MANAGEMENT’S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF OPERATIONS |
Three months ended | Three months ended | |||||||||||
June 30, 2011 | June 30, 2010 | |||||||||||
Amount | % | Amount | % | |||||||||
Net sales | $ | 201.6 | 100.0 | $ | 184.0 | 100.0 | ||||||
Cost of goods sold | 152.5 | 75.6 | 136.9 | 74.4 | ||||||||
Gross profit | 49.1 | 24.4 | 47.1 | 25.6 | ||||||||
Operating expenses: | ||||||||||||
Selling, general and administrative | 15.8 | 7.8 | 13.8 | 7.5 | ||||||||
Research & development expenses | 0.7 | 0.3 | 0.6 | 0.3 | ||||||||
Operating income | 32.6 | 16.2 | 32.7 | 17.8 | ||||||||
Interest expense, net | 1.3 | 0.6 | 5.3 | 2.9 | ||||||||
Foreign exchange loss (gain), net | (0.2 | ) | (0.1 | ) | 0.7 | 0.4 | ||||||
Provision for income taxes | 10.7 | 5.3 | 9.1 | 4.9 | ||||||||
Net income | $ | 20.8 | 10.3 | $ | 17.6 | 9.6 | ||||||
Six months ended | Six months ended | |||||||||||
June 30, 2011 | June 30, 2010 | |||||||||||
Amount | % | Amount | % | |||||||||
Net sales | $ | 399.2 | 100.0 | $ | 353.0 | 100.0 | ||||||
Cost of goods sold | 292.7 | 73.3 | 269.2 | 76.3 | ||||||||
Gross profit | 106.5 | 26.7 | 83.8 | 23.7 | ||||||||
Operating expenses: | ||||||||||||
Selling, general and administrative | 31.6 | 7.9 | 28.3 | 8.0 | ||||||||
Research & development expenses | 1.4 | 0.4 | 1.2 | 0.3 | ||||||||
Operating income | 73.5 | 18.4 | 54.3 | 15.4 | ||||||||
Interest expense, net | 2.6 | 0.7 | 11.1 | 3.1 | ||||||||
Foreign exchange loss (gain), net | 0.6 | 0.2 | 0.5 | 0.1 | ||||||||
Provision for income taxes | 23.6 | 5.9 | 14.7 | 4.2 | ||||||||
Net income | $ | 46.7 | 11.7 | $ | 28.0 | 7.9 |
Price | Volume/Mix | Total | ||||||
Specialty Phosphates US & Canada | 4.5 | % | 2.8 | % | 7.3 | % | ||
Specialty Phosphates Mexico | 11.9 | % | (13.9 | )% | (2.0 | )% | ||
Total Specialty Phosphates | 6.3 | % | (1.2 | )% | 5.1 | % | ||
GTSP & Other | 39.5 | % | 3.8 | % | 43.3 | % | ||
Total | 10.2 | % | (0.6 | )% | 9.6 | % |
Price | Volume/Mix | Total | ||||||
Specialty Ingredients | 5.5 | % | 3.3 | % | 8.8 | % | ||
Food & Technical Grade PPA | 4.8 | % | 0.5 | % | 5.3 | % | ||
STPP & Detergent Grade PPA | 12.1 | % | (25.7 | )% | (13.6 | )% |
Price | Volume/Mix | Total | ||||||
Specialty Phosphates US & Canada | 4.9 | % | 1.6 | % | 6.5 | % | ||
Specialty Phosphates Mexico | 10.4 | % | 5.5 | % | 15.9 | % | ||
Total Specialty Phosphates | 6.2 | % | 2.4 | % | 8.6 | % | ||
GTSP & Other | 43.3 | % | 11.5 | % | 54.8 | % | ||
Total | 9.8 | % | 3.3 | % | 13.1 | % |
Price | Volume/Mix | Total | ||||||
Specialty Ingredients | 4.8 | % | 4.0 | % | 8.8 | % | ||
Food & Technical Grade PPA | 6.4 | % | 9.5 | % | 15.9 | % | ||
STPP & Detergent Grade PPA | 12.6 | % | (13.9 | )% | (1.3 | )% |
Three months ended | Three months ended | |||||||||
June 30, 2011 | June 30, 2010 | Net Sales % Change | ||||||||
Segment Net Sales | ||||||||||
Specialty Phosphates US & Canada | $ | 132,068 | $ | 123,086 | 7.3 | % | ||||
Specialty Phosphates Mexico | 38,531 | 39,298 | (2.0 | )% | ||||||
Total Specialty Phosphates | $ | 170,599 | $ | 162,384 | 5.1 | % | ||||
GTSP & Other | 31,028 | 21,648 | 43.3 | % | ||||||
Total | $ | 201,627 | $ | 184,032 | 9.6 | % | ||||
Segment Operating Income | ||||||||||
Specialty Phosphates US & Canada | $ | 26,460 | $ | 26,757 | ||||||
Specialty Phosphates Mexico | 1,262 | 4,011 | ||||||||
Total Specialty Phosphates | $ | 27,722 | $ | 30,768 | ||||||
GTSP & Other | 4,895 | 1,908 | ||||||||
Total | $ | 32,617 | $ | 32,676 | ||||||
Segment Operating Income % of net sales | ||||||||||
Specialty Phosphates US & Canada | 20.0 | % | 21.7 | % | ||||||
Specialty Phosphates Mexico | 3.3 | % | 10.2 | % | ||||||
Total Specialty Phosphates | 16.2 | % | 18.9 | % | ||||||
GTSP & Other | 15.8 | % | 8.8 | % | ||||||
Total | 16.2 | % | 17.8 | % | ||||||
Depreciation and amortization expense | ||||||||||
Specialty Phosphates US & Canada | $ | 5,199 | $ | 7,060 | ||||||
Specialty Phosphates Mexico | 3,981 | 3,957 | ||||||||
Total Specialty Phosphates | $ | 9,180 | $ | 11,017 | ||||||
GTSP & Other | 1,543 | 1,243 | ||||||||
Total | $ | 10,723 | $ | 12,260 |
Six months ended | Six months ended | |||||||||
June 30, 2011 | June 30, 2010 | Net Sales % Change | ||||||||
Segment Net Sales | ||||||||||
Specialty Phosphates US & Canada | $ | 262,412 | $ | 246,444 | 6.5 | % | ||||
Specialty Phosphates Mexico | 84,033 | 72,497 | 15.9 | % | ||||||
Total Specialty Phosphates | $ | 346,445 | $ | 318,941 | 8.6 | % | ||||
GTSP & Other | 52,780 | 34,098 | 54.8 | % | ||||||
Total | $ | 399,225 | $ | 353,039 | 13.1 | % | ||||
Segment Operating Income | ||||||||||
Specialty Phosphates US & Canada | $ | 56,282 | $ | 46,816 | ||||||
Specialty Phosphates Mexico | 5,215 | 5,438 | ||||||||
Total Specialty Phosphates | $ | 61,497 | $ | 52,254 | ||||||
GTSP & Other (a) | 11,942 | 2,045 | ||||||||
Total | $ | 73,439 | $ | 54,299 | ||||||
Segment Operating Income % of net sales | ||||||||||
Specialty Phosphates US & Canada | 21.4 | % | 19.0 | % | ||||||
Specialty Phosphates Mexico | 6.2 | % | 7.5 | % | ||||||
Total Specialty Phosphates | 17.8 | % | 16.4 | % | ||||||
GTSP & Other (a) | 22.6 | % | 6.0 | % | ||||||
Total | 18.4 | % | 15.4 | % | ||||||
Depreciation and amortization expense | ||||||||||
Specialty Phosphates US & Canada | $ | 10,033 | $ | 14,485 | ||||||
Specialty Phosphates Mexico | 7,905 | 7,854 | ||||||||
Total Specialty Phosphates | $ | 17,938 | $ | 22,339 | ||||||
GTSP & Other | 2,979 | 2,575 | ||||||||
Total | $ | 20,917 | $ | 24,914 |
Six months ended | Six months ended | ||||||
June 30, 2011 | June 30, 2010 | ||||||
Operating Activities | $ | 45.8 | $ | 12.6 | |||
Investing Activities | (16.7 | ) | (15.3 | ) | |||
Financing Activities | (13.1 | ) | (62.6 | ) |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 1. | LEGAL PROCEEDINGS |
ITEM 1A. | RISK FACTORS |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
ITEM 4. | (REMOVED AND RESERVED) |
ITEM 5. | OTHER INFORMATION |
ITEM 6. | EXHIBITS |
Exhibit No. | Description | |
31.1 | Certification of Principal Executive Officer dated August 2, 2011 pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2 | Certification of Principal Financial Officer dated August 2, 2011 pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
32.1* | Certification of Principal Executive Officer dated August 2, 2011 pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
32.2* | Certification of Principal Financial Officer dated August 2, 2011 pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
* | Not to be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liability of that section, nor deemed to be incorporated by reference into any filing under that Act or the Securities Act of 1933. |
INNOPHOS HOLDINGS, INC. | |
/s/ Randolph Gress | |
By: | Randolph Gress |
Its: | Chief Executive Officer and Director |
(Principal Executive Officer) | |
Dated: | August 2, 2011 |
INNOPHOS HOLDINGS, INC. | |
/s/ Neil I. Salmon | |
By: | Neil I. Salmon |
Its: | Vice President and Chief Financial Officer |
(Principal Financial Officer) | |
Dated: | August 2, 2011 |
Exhibit No. | Description | |
31.1 | Certification of Principal Executive Officer dated August 2, 2011 pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2 | Certification of Principal Financial Officer dated August 2, 2011 pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
32.1 | Certification of Principal Executive Officer dated August 2, 2011 pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
32.2 | Certification of Principal Financial Officer dated August 2, 2011 pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
1. | I have reviewed this Quarterly Report on Form 10-Q of Innophos Holdings, Inc. (“the registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Dated: | August 2, 2011 | By: | /S/ RANDOLPH GRESS | |
Randolph Gress | ||||
Chief Executive Officer and Director | ||||
(Principal Executive Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Innophos Holdings, Inc. (“the registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Dated: | August 2, 2011 | By: | /S/ NEIL I. SALMON | |
Neil I. Salmon | ||||
Vice President and Chief Financial Officer | ||||
(Principal Financial Officer) |
1. | the accompanying Quarterly Report on Form 10-Q for the period ended June 30, 2011 (the “Report”), fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and |
2. | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Innophos Holdings, Inc. at the dates and for the periods indicated. |
/S/ RANDOLPH GRESS |
Randolph Gress |
Chief Executive Officer and Director |
(Principal Executive Officer) |
1. | the accompanying Quarterly Report on Form 10-Q for the period ended June 30, 2011 (the “Report”), fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and |
2. | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Innophos Holdings, Inc. at the dates and for the periods indicated. |
/s/ NEIL I. SALMON |
Neil I. Salmon |
Vice President and Chief Financial Officer |
(Principal Executive Officer) |
Condensed Consolidated Balance Sheets (Parenthetical) (USD $)
|
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Balance Sheet Parenthetical [Abstract] | Â | Â |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 21,766,411 | 21,463,934 |
Common Stock, Shares, Outstanding | 21,765,889 | 21,463,934 |
Condensed Consolidated Statement of Operations (USD $)
In Thousands, except Share data |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Net sales | $ 201,627 | $ 184,032 | $ 399,225 | $ 353,039 |
Cost of goods sold | 152,463 | 136,971 | 292,732 | 269,272 |
Gross profit | 49,164 | 47,061 | 106,493 | 83,767 |
Operating expenses: | Â | Â | Â | Â |
Selling, general and administrative | 15,795 | 13,771 | 31,611 | 28,291 |
Research & development expenses | 752 | 614 | 1,443 | 1,177 |
Total operating expenses | 16,547 | 14,385 | 33,054 | 29,468 |
Operating income | 32,617 | 32,676 | 73,439 | 54,299 |
Interest expense, net | 1,282 | 5,278 | 2,585 | 11,105 |
Foreign exchange loss (gain) | (152) | 711 | 558 | 481 |
Income before income taxes | 31,487 | 26,687 | 70,296 | 42,713 |
Provision for income taxes | 10,741 | 9,064 | 23,581 | 14,740 |
Net income | $ 20,746 | $ 17,623 | $ 46,715 | $ 27,973 |
Income per Common share: | Â | Â | Â | Â |
Basic | $ 0.95 | $ 0.82 | $ 2.15 | $ 1.31 |
Diluted | $ 0.92 | $ 0.79 | $ 2.06 | $ 1.26 |
Weighted average common shares outstanding: | Â | Â | Â | Â |
Basic | 21,732,093 | 21,415,978 | 21,733,653 | 21,397,491 |
Diluted | 22,645,132 | 22,321,234 | 22,628,828 | 22,264,771 |
Dividends paid per share of common stock | $ 0.25 | $ 0.17 | $ 0.42 | $ 0.34 |
Dividends declared per share of common stock | $ 0.25 | $ 0.17 | $ 0.5 | $ 0.34 |
Document and Entity Information
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Document and Entity Information [Abstract] | Â |
Entity Registrant Name | Innophos Holdings, Inc. |
Trading Symbol | IPHS |
Entity Central Index Key | 0001364099 |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Accelerated Filer |
Document Type | 10-Q |
Document Period End Date | Jun. 30, 2011 |
Document Fiscal Year Focus | 2011 |
Document Fiscal Period Focus | Q2 |
Amendment Flag | false |
Common stock, shares outstanding | 21,765,889 |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
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Other Current Assets:
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Other Current Assets [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Text Block] | 6. Other Current Assets: Other current assets consist of the following:
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Income Taxes:
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Income Tax Expense (Benefit) [Abstract] | Â |
Income Tax Disclosure [Text Block] | Income Taxes: The effective income tax rate on income before taxes was approximately 34% for the six months ended June 30, 2011 compared to approximately 35% for the comparable period in 2010. The variance in the effective tax rate is due to the reversal of the 2005 Mexican CNA water claims accrual (see note 12, Mexican CNA Water Tax Claims) being recorded as a discrete item for tax provision purposes and a result of increased earnings before tax in lower tax jurisdictions combined with a change in tax rates for our operations in multiple tax jurisdictions. Currently, the Company is under examination by certain foreign jurisdictions for its income tax returns for the years 2004 through 2008. Recently, our subsidiary, Innophos Fosfatados, was assessed approximately $7.7 million for the 2004 tax year by the Mexican Tax Authorities. On July 20, 2011, the Company filed a response to the Mexican tax authorities for the above tax matter disputing the full assessment. The Company believes that its tax position is more likely than not to be sustained and has not recorded a charge for this tax matter. Other than the Innophos Fosfatados assessment , as of June 30, 2011, no significant adjustments have been proposed to the Company's tax positions and the Company currently does not anticipate any adjustments that would result in a material change to its financial position during the next twelve months. Net income taxes paid were $16,175 and $23,319 for the six months ended June 30, 2011 and June 30, 2010, respectively. |
Earnings Per Share:
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Earnings Per Share [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Text Block] | Earnings Per Share: The Company accounts for earnings per share in accordance with ASC 260 and related guidance, which requires two calculations of earnings per share (EPS) to be disclosed: basic EPS and diluted EPS. Under ASC Subtopic 260-10-45, as of January 1, 2009 unvested awards of share-based payments with rights to receive dividends or dividend equivalents, such as our restricted stock, are considered participating securities for purposes of calculating EPS. Under the two-class method, a portion of net income is allocated to these participating securities and therefore is excluded from the calculation of EPS allocated to common stock, as shown in the table below. The numerator for basic and diluted earnings per share is net earnings attributable to shareholders reduced by dividends attributable to unvested shares. The denominator for basic earnings per share is the weighted average number of common stock outstanding during the period. The denominator for diluted earnings per share is weighted average shares outstanding adjusted for the effect of dilutive outstanding stock options, performance share awards and restricted stock awards. Total outstanding stock options, performance share awards and unvested restricted stock not included in the calculation of diluted earnings per share as the effect would be anti-dilutive are 377,329 and 627,642 for the three months ended June 30, 2011 and June 30, 2010, respectively and 395,193 and 665,618 for the six months ended June 30, 2011 and June 30, 2010, respectively. The following is a reconciliation of the basic number of common shares outstanding to the diluted number of common and common stock equivalent shares outstanding:
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Other Current Liabilities:
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Jun. 30, 2011
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Other Current Liabilities [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Payable and Accrued Liabilities Disclosure [Text Block] | Other Current Liabilities: Other current liabilities consist of the following:
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Pension:
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Pension [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension and Other Postretirement Benefits Disclosure [Text Block] | Pension: Net periodic benefit expense for the United States plans for the three months ended June 30, 2011:
Net periodic benefit expense for the United States plans for the three months ended June 30, 2010:
Net periodic benefit expense for the United States plans for the six months ended June 30, 2011:
Net periodic benefit expense for the United States plans for the six months ended June 30, 2010:
We made our entire cash contributions of $2.9 million for our U.S. defined contribution plan during the first quarter of 2011 for the plan year 2010. The U.S. defined benefit cash contributions will be, at a minimum, approximately $0.2 million for 2011. Net periodic benefit expense for the Canadian plans for the three months ended June 30, 2011:
Net periodic benefit expense for the Canadian plans for the three months ended June 30, 2010:
Net periodic benefit expense for the Canadian plans for the six months ended June 30, 2011:
Net periodic benefit expense for the Canadian plans for the six months ended June 30, 2010:
We made cash contributions to our Canadian defined benefit plan of $0.4 million during the six months ended June 30, 2011. We expect to make additional cash contributions to our Canadian defined benefit plans of $0.5 million during the remainder of 2011. |
Debt and Interest:
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Debt and Interest [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term Debt [Text Block] | Debt and Interest: Short-term borrowings and long-term debt consist of the following:
The Company's credit facility includes a term loan and a revolving line of credit of up to $125.0 million, including a $20.0 million letter of credit sub-facility, all maturing on August 26, 2015. As of June 30, 2011, $97.0 million was outstanding under the Term Loan and $45.0 million was outstanding under the revolving line of credit with total availability at $78.7 million, taking into account $1.3 million in face amount of letters of credit issued under the sub-facility. The Company maintains an interest rate swap with a notional amount that corresponds directly with our Term Loan and has a fixed rate of 1.994% plus the applicable margin on the debt expiring in August 2015. The Company has the right to cancel the swap with no fee on September 28, 2012 and anytime thereafter. The fair value of this interest rate swap is a liability of approximately $0.6 million as of June 30, 2011 and is a component of other comprehensive loss. As of June 30, 2011, the Company was in full compliance with all debt covenant requirements. Total interest cash payments by the Company for all indebtedness for the six months ended June 30, 2011 and June 30, 2010 was $3,012 and $11,359, respectively. Interest expense, net consists of the following:
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Intangibles and Other Assets, net:
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Intangibles and Other Assets, net [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangibles and Other Assets [Text Block] | Intangibles and Other Assets, net: Intangibles and other assets consist of the following:
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Dividends:
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Dividends [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends [Text Block] | Dividends: The following is the dividend activity for the three and six months ended June 30, 2011 and June 30, 2010:
We are a holding company that does not conduct any business operations of our own. As a result, we are dependent upon cash dividends, distributions and other transfers from our subsidiaries, most directly Innophos, Inc., our primary operating subsidiary, and Innophos Investments Holdings, Inc., its parent, to make dividend payments on our Common Stock. |
Share-Based Compensation:
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Share-based Compensation [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | Share-Based Compensation: Our compensation programs include share-based payments. The primary share-based awards and their general terms and conditions currently in effect are as follows:
The following table summarizes the components of share-based compensation expense, all of which has been classified as selling, general and administrative expense:
The fair value of the options granted during 2011 was determined using the Black-Scholes option-pricing model. The assumptions used in the Black-Scholes option-pricing model were as follows:
In connection with the vesting of the performance share awards issued in 2007 and 2008, the Company issued 208,630 shares of common stock, net of certain tax withholdings, to certain employees as required under the terms of the plan. There were 95,920 non-qualified options granted at an exercise price of $39.67 per share to certain employees on March 18, 2011 with a fair value of $17.14 per common share, or $1.6 million in the aggregate which reflects forfeiture assumptions. These awards are classified as equity awards and vest equally through March 18, 2014. The compensation expense is amortized on a straight-line basis over the requisite vesting period and accelerated for those employees that are retirement eligible during the vesting period. For these grants, the Company had chosen a blended volatility which consists of 50% historical volatility average of a peer group and 50% historical volatility of Innophos. The expected term for the stock options is based on the simplified method since the Company has limited data on the exercises of stock options. These stock options qualify as “plain vanilla” stock options in accordance with SAB 110. The dividend yield is the expected annual dividend payments divided by the average stock price from the announced increase in the dividend up to the date of grant. The risk-free interest rates are derived from the U.S. Treasury securities in effect on the date of grant whose maturity period equals the options expected term. The Company applies an expected forfeiture rate to stock-based compensation expense. The estimate of the forfeiture rate is based primarily upon historical experience of employee turnover. As actual forfeitures become known, stock-based compensation expense is adjusted accordingly. There were 50,970 performance share awards granted, assuming achieving targeted contribution margin and return on invested capital growth, on March 18, 2011 with a fair value of $39.67 per common share, or $1.9 million in the aggregate which considers forfeiture assumptions. The expected term for the performance share awards is a 3 year cliff vesting. Declared dividend equivalents will accrue on the performance share awards and will vest over the same period. The compensation expense is amortized on a straight-line basis over the requisite vesting period and accelerated for those employees that are retirement eligible during the vesting period. In May 2011 the six external members of the Board of Directors were each granted 1,144 shares of the Company's common stock with an aggregated fair value of $0.3 million which immediately vested as part of their director fees. |
Commitments and Contingencies
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Commitments and Contingencies [Abstract] | Â |
Commitments And Contingencies Disclosure [Text Block] | Commitments and Contingencies Environmental The Company's operations are subject to extensive and changing federal and state environmental laws and regulations. The Company's manufacturing sites have an extended history of industrial use, and soil and groundwater contamination have or may have occurred in the past and might occur or be discovered in the future. Environmental efforts are difficult to assess for numerous reasons, including the discovery of new remedial sites, discovery of new information and scarcity of reliable information pertaining to certain sites, improvements in technology, changes in environmental laws and regulations, numerous possible remedial techniques and solutions, difficulty in assessing the involvement of and the financial capability of other potentially responsible parties and the extended time periods over which remediation occurs. Other than the items listed below, the Company is not aware of material environmental liabilities which are probable and estimable. As the Company's environmental contingencies are more clearly determined, it is reasonably possible that amounts may need to be accrued. However, management does not believe, based on current information, that environmental remediation requirements will have a material impact on the Company's results of operations, financial position or cash flows. Future environmental spending is probable at our site in Nashville, TN, the eastern portion of which had been used historically as a landfill, and a western parcel previously acquired from a third party, which reportedly had housed, but no longer does, a fertilizer and pesticide manufacturing facility. We have an estimated liability with a range of $0.9-$1.2 million. The remedial action plan has yet to be finalized, and as such, the Company has recorded a liability, which represents the Company's best estimate, of $1.1 million as of June 30, 2011. Litigation 2008 RCRA Civil Enforcement - Geismar, Louisiana plant Following several inspections by EPA at our Geismar, LA purified phosphoric acid, or PPA, plant and related submissions we made to support claimed exemptions from the federal Resource, Conservation and Recovery Act, or RCRA, in March 2008, EPA referred our case to the Department of Justice, or DOJ, for civil enforcement. Although no citations were ever issued or formal proceedings instituted, the agencies claim we violate RCRA by failing to manage two materials appropriately, which DOJ/EPA allege are hazardous wastes. Those materials are: (i) Filter Material from an enclosed intermediate filtration step to further process green phosphoric acid we receive as raw material via pipeline from the adjacent site operated by an affiliate of Potash Corporation of Saskatchewan, or PCS; and (ii) Raffinate, a co-product we provide to PCS under a long-term contract we have with PCS. Since referral of the case to DOJ, we and PCS have engaged in periodic discussions with DOJ/EPA and the Louisiana Department of Environmental Quality (LDEQ), collectively the Government Parties, in order to resolve the matter. In addition to asserting that the two materials in question are not hazardous wastes, we have also sought to demonstrate that both the nature and character of the materials as well as their use, handling and disposition were detailed in a solid waste permit amendment application filed in 1989 by PCS's predecessor, when our plant was first constructed, and approved by the Louisiana Department of Environmental Quality under the state RCRA program. In the course of discussions with the Government Parties, the DOJ/EPA has required that we undertake as an interim measure the construction of a new filter unit that would replace the existing closed system and allow the removal and separate handling of the Filter Material. We built that unit, which is ready for commissioning and operation once appropriate agreements are reached with the Government Parties. We and PCS also have initiated joint efforts to explore possible technical solutions to remaining government concerns, including Raffinate treatment. To date, treatment techniques for Raffinate have not yet been fully evaluated from a technological or cost standpoint. The companies have proposed to DOJ/EPA a schedule for such evaluation, and although the government has not formally approved the schedule, the companies are continuing with it. Based upon work so far, there appears to be at least one technically viable approach, but costs of a full scale operation, as well as full evaluation of the ability to return the treated stream to PCS and other technologies, are not known at this time. Even though the companies have begun substantial technical work in an attempt to develop a feasible approach to address DOJ/EPA's concerns, we cannot guarantee that our technical efforts will be successful, whether either party would be willing to implement solutions at what cost allocation or, depending on those factors and the Government Parties' position, whether this matter will be settled with the Government Parties and/or between the companies, or will require litigation. Should litigation become necessary to defend our operations at Geismar as compliant with environmental laws and regulations or with PCS as to cost responsibility, no assurance can be given as to its outcome. Based upon advice of our environmental counsel, we have determined that the risk of an effort by the Government Parties to shut down our Geismar plant or PCS's Geismar plant from which we obtain the green acid raw material is remote. In addition, we have concluded that the contingent liability arising from compliance costs for this matter as discussed above is neither remote nor probable, but is reasonably possible but not reasonably estimable. Mexican CNA Water Tax Claims On October 6, 2010 the Mexican Supreme Court upheld claims by the Mexican Comision National del Agua, or CNA, for higher water duties payable by our Mexican subsidiary, Innophos Fosfatados S.A. de C.V, or Fosfatados, relating to water usage at our Coatzacoalcos, Veracruz, Mexico plant. The claims are for the period 1999 through 2002 and total approximately $26.9 million (at current exchange rates), including basic charges of $7.8 million and $19.1 million for interest, inflation and penalties. As a result of favorably concluded litigation in New York state courts against Rhodia, S.A. and affiliates, or the New York Litigation, concerning their indemnification obligation for CNA claims as “Taxes” under the agreement by which we purchased our business from those parties, Innophos is fully indemnified against the CNA, as well as any like claims pertaining to periods prior to the closing date of purchase, August 13, 2004, in the event those liabilities are incurred. On July 19, 2011, Fosfatados filed a challenge to new resolutions adopted by CNA in June 2011 in connection with the 1999-2002 claims, which sought to correct miscalculations of surcharges noted by the courts in prior appeals of the case. Fosfatados is challenging the validity of the resolutions, statute of limitations as well as defective service. As a result of the Mexican Supreme Court determination and indemnification obligation, Innophos recorded a liability (charged to cost of goods sold) of $26.9 million (including estimated inflation, interest and penalties) and a corresponding benefit for the Rhodia indemnity receivable of $21.3 million, and an income tax benefit of $5.6 million, resulting in no net charge to Innophos for the 1999-2002 CNA claims, most of which was recorded in the third quarter of 2010. Probable Post-2002 Claims. Now that the 1999-2002 CNA claims have been sustained, Innophos believes it is likely the CNA will seek to claim similar higher duties, fees and other charges for fresh water extraction and usage from 2006 on into the future (2003, 2004 and 2005 are believed to be beyond the statute of limitations), or the Post-2002 Fresh Water Claims. In late June 2010, Fosfatados received a CNA notice of audit and request for documents concerning fresh water usage for the period 2005-2009. In July 2011, Fosfatados received an audit observation notice indicating CNA's position that additional duties for those years appear to be payable. Although not included in our court judgments in the New York Litigation against Rhodia, we believe Rhodia is required to indemnify us fully for post-closing “losses” caused by breaches of covenants set forth in the agreement, which could cover the remainder of the Post-2002 Fresh Water Claims exposure and additional resulting losses. Rhodia has contested indemnification responsibility for those breaches, but its motion for partial summary judgment to dismiss our claims was denied by the New York trial court in January 2009. It is now likely that the New York Litigation will proceed to trial and involve further motions to resolve remaining issues. Upon receipt of the June 2010 CNA notice, we renewed our claim for indemnification and defense support from Rhodia, which was declined. As a result, Fosfatados is defending the matter with its own choice of counsel. Based upon review of the Post-2002 Fresh Water Claims, the advice of counsel, and the facts and applicable law in the context of the recent Mexican Supreme Court decision, management concluded that liability for those claims had become probable. Accordingly, Innophos has an accrued liability of $14.9 million as of June 30, 2011 including estimated inflation, interest and penalties. The Company recorded the reversal of the 2005 pre-tax charges of $3.6 million in the first quarter of 2011 as a result of the expiration of the statute of limitations. In addition, the Company recorded pre-tax charges (including inflation, interest and penalties) of $3.9 million in the first half of 2011. In summary, as of June 30, 2011 the Company has recorded a Rhodia indemnity receivable of $21.3 million, a CNA liability of $41.8 million and a tax benefit of $8.8 million related to the CNA Fresh Water Claims. The Company estimates that annual pre-tax expenses for increased inflation, interest and penalties will be approximately $2.0 to $3.0 million (at current exchange rates). Other Legal Matters In March 2008, Sudamfos S.A., or Sudamfos, an Argentine phosphate producer, filed a request for arbitration before the ICC International Court of Arbitration, Paris, France, or ICC, of a commercial dispute with Mexicana. Sudamfos claimed Mexicana agreed to sell Sudamfos certain quantities of phosphoric acid for delivery in 2007 and 2008, and sought an order requiring Mexicana to sell approximately 12,500 metric tons during 2008 in accordance with the claimed agreement. Subsequently, Sudamfos withdrew the request for arbitration. In October 2008, Mexicana filed a lawsuit in Mexico against Sudamfos to collect approximately $1.2 million representing the contract price for prior deliveries of acid that Sudamfos had refused to pay. In October 2009, Sudamfos answered the suit and counterclaimed for $3.0 million based upon the agreement alleged in the arbitration request to sell additional acid, which agreement Mexicana denies. In June 2010, the trial court ruled in favor of Mexicana's claim and denied Sudamfos' counterclaim. In July 2010, Sudamfos appealed that ruling. Since that time, the appeals process has continued with Sudamfos seeking, and thus far being denied, leeway to conduct additional discovery on its rejected counterclaim. If the current appeal process concludes with its indicated favorable result to Mexicana, we do not know if Sudamfos will attempt to contest the case further. Management has determined that the outstanding receivable is fully collectible, and that the contingent liability from the Sudamfos counterclaim is remote, and therefore no accrual is required. In addition, we are party to legal proceedings and contractual disputes that arise in the ordinary course of our business. Except as to the matters specifically discussed, management does not believe that these matters represent probable liabilities. However, these matters cannot be predicted with certainty and an unfavorable resolution of one or more of them could have a material adverse effect on our business, results of operations, financial condition, and/or cash flows. |
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