-----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, Rctj9CWkYrXVbLXW7ezzu0TuwW+hLqs/qqQC53vOl/8IXQSB8FNwMEp6SRfqQEYA 0N7rEoB7KWb6LHI0Xiomrg== 0000820626-96-000025.txt : 19961115 0000820626-96-000025.hdr.sgml : 19961115 ACCESSION NUMBER: 0000820626-96-000025 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961113 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-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09759 FILM NUMBER: 96660849 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-Q 1 FOR QUARTER ENDED 09/30/96 - --------------------------------------------------------------------- ------------------------------------------------------------------ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------- FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 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 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 . ------ ------ APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date: 92,487,536 shares, excluding 5,545,884 treasury shares as of November 5, 1996. ------------------------------------------------------------------ - ---------------------------------------------------------------------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements. The accompanying interim condensed consolidated financial statements of IMC Global Inc. (the Company) do not include all disclosures normally provided in annual financial statements. These financial statements, which should be read in conjunction with the consolidated financial statements contained in the Company's 1996 Annual Report to Stockholders, are unaudited but include all adjustments which the Company's management considers necessary for a fair presentation. These adjustments consist of normal recurring accruals except as discussed in the following Notes to Condensed Consolidated Financial Statements. Certain 1995 amounts have been reclassified to conform to the 1996 presentation. Interim results are not necessarily indicative of the results expected for the fiscal year. CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (In millions except per share amounts) Three months ended September 30, 1996 1995 - ----------------------------------------------------------------- Net sales $603.6 $599.4 Cost of goods sold 448.1 450.7 ------ ------ Gross margins 155.5 148.7 Selling, general and administrative expenses 56.4 46.0 ------ ------ Operating earnings 99.1 102.7 Other (income) and expense, net (2.6) (4.6) Interest expense 15.1 16.8 ------ ------ Earnings before minority interest 86.6 90.5 Minority interest 41.6 38.8 ------ ------ Earnings before taxes 45.0 51.7 Provision for income taxes 16.4 19.6 ------ ------ Earnings before extraordinary item 28.6 32.1 Extraordinary loss - debt retirement (7.5) ------ ------ Net earnings $ 21.1 $ 32.1 ====== ====== Earnings per share: Earnings before extraordinary item $ .31 $ .35 Extraordinary loss - debt retirement (.08) ------ ------ Net earnings $ .23 $ .35 ------ ------ Weighted average number of shares and equivalent shares outstanding 93.6 92.2 (See Notes to Condensed Consolidated Financial Statements on Page 5) CONDENSED CONSOLIDATED BALANCE SHEET (Dollars in millions except per share amounts) September 30, June 30, Assets 1996 1996 - ------------------------------------------------------------------ Current assets: Cash and cash equivalents $ 54.5 $ 9.6 Receivables, net 224.4 350.2 Inventories 514.4 476.7 Deferred income taxes 58.6 61.4 Other current assets 24.1 20.3 -------- -------- Total current assets 876.0 918.2 Property, plant and equipment 4,171.2 4,123.6 Accumulated depreciation and depletion (1,821.8) (1,772.3) -------- -------- Net property, plant and equipment 2,349.4 2,351.3 Other assets 160.9 167.3 -------- -------- Total assets $3,386.3 $3,436.8 ======== ======== Liabilities and Stockholders' Equity - ----------------------------------------------------------------- Current liabilities: Accounts payable $ 179.0 $ 193.5 Accrued liabilities 125.1 145.1 Short-term debt and current maturities of long-term debt 24.6 27.8 -------- -------- Total current liabilities 328.7 366.4 Long-term debt, less current maturities 717.8 736.7 Deferred income taxes 316.6 315.7 Other noncurrent liabilities 355.1 352.0 Minority interest 494.2 509.7 Stockholders' equity: Common stock, $1 par value, authorized 250,000,000 shares; issued 98,024,029 shares and 97,863,784 shares at September 30 and June 30, respectively 98.0 97.9 Capital in excess of par value 824.9 821.7 Retained earnings 372.7 359.1 Treasury stock, at cost, 5,545,884 shares (107.3) (107.3) Foreign currency translation adjustment (14.4) (15.1) -------- -------- Total stockholders' equity 1,173.9 1,156.3 -------- -------- Total liabilities and stockholders' equity $3,386.3 $3,436.8 ======== ======== (See Notes to Condensed Consolidated Financial Statements on Page 5) CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (In millions) Three months ended September 30, 1996 1995 - ------------------------------------------------------------------ Cash Flows from Operating Activities - ------------------------------------ Net earnings $ 21.1 $ 32.1 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation, depletion and amortization 42.2 39.8 Minority interest 41.0 38.3 Deferred income taxes 3.7 (4.1) Other non-cash charges and credits, net 17.7 (5.8) Changes in: Receivables 125.8 (2.5) Inventories (37.7) (23.2) Other current assets (3.8) 4.4 Accounts payable (14.5) (58.1) Accrued liabilities (20.0) 4.9 ------ ------ Net cash provided by operating activities 175.5 25.8 ------ ------ Cash Flows from Investing Activities - ------------------------------------ Capital expenditures (44.0) (37.8) Sales of property, plant and equipment .3 ------ ------ Net cash used in investing activities (44.0) (37.5) ------ ------ Net cash provided (used) before financing activities 131.5 (11.7) Cash Flows from Financing Activities - ------------------------------------ Joint venture cash distributions to FRP (60.3) (51.7) Payments of long-term debt (139.4) Proceeds from issuance of long-term debt 120.5 4.7 Changes in short-term debt, net (3.2) 65.9 Stock options exercised 3.3 6.7 Cash dividends paid (7.5) (7.1) Other 10.0 ------ ------ Net cash (used in) provided by financing activities (86.6) 28.5 ------ ------ Net increase in cash and cash equivalents 44.9 16.8 Cash and cash equivalents - beginning of period 9.6 203.7 ------ ------ Cash and cash equivalents - end of period $ 54.5 $220.5 ====== ====== Supplemental cash flow disclosures: Interest paid $ 17.1 $ 10.4 Income taxes paid, net of refunds $ 12.2 $ 15.5 (See Notes to Condensed Consolidated Financial Statements on Page 5) CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (In millions except per share amounts) Three months ended September 30, 1996 1995 - ------------------------------------------------------------------ Common stock: Balance at June 30 $ 97.9 $ 96.4 Stock options exercised .1 .3 -------- -------- Balance at September 30 98.0 96.7 Capital in excess of par value: Balance at June 30 821.7 782.6 Stock options exercised 3.2 6.3 -------- -------- Balance at September 30 824.9 788.9 Retained earnings: Balance at June 30 359.1 246.1 Net earnings 21.1 32.1 Dividends ($.08 per share) (7.5) (7.1) -------- -------- Balance at September 30 372.7 271.1 Treasury stock: Balance at June 30 and September 30 (107.3) (107.4) Foreign currency translation adjustment: Balance at June 30 (15.1) (9.9) Foreign currency translation adjustment .7 4.7 -------- -------- Balance at September 30 (14.4) (5.2) -------- -------- Total stockholders' equity $1,173.9 $1,044.1 ======== ======== (See Notes to Condensed Consolidated Financial Statements on Page 5) NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Vigoro Merger ------------- On March 1, 1996, the Company completed the merger with The Vigoro Corporation (Vigoro) which resulted in Vigoro becoming a subsidiary of the Company (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 tax-free 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 prior to the Merger to include the accounts and operations of Vigoro. 2. Acquisitions ------------ 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 Company. The acquisition was accounted for under the purchase method of accounting. Operating results of Feed Ingredients (net of minority interest) have been included in the Company's Condensed Consolidated Statement of Earnings since the respective date of acquisition. 3. Extraordinary Loss - Debt Retirement ------------------------------------- On September 5, 1996, the Company completed a tender offer to purchase portions of its high-cost senior notes. In connection with the purchase of such notes, the Company recorded an extraordinary charge, net of taxes, of $7.5 million for redemption premium incurred and write-off of previously deferred finance charges associated with such notes. The tendered notes were financed at lower interest rates under the Company's credit facility. 4. Earnings Per Share ------------------ Earnings per share were based on the weighted average number of shares and equivalent shares outstanding. Fully diluted earnings per share were not significantly different from primary earnings per share and, accordingly, are not presented. Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations. This Quarterly Report on Form 10-Q contains certain forward-looking statements concerning the Company's operations, economic performance and financial condition. Such statements are subject to various risks and uncertainties which could cause results to differ materially from those currently anticipated. Results of Operations - --------------------- Three months ended September 30, 1996 vs. three months ended September 30, 1995 - ---------------------------------------------------------------------- OVERVIEW Net sales for the first quarter ended September 30, 1996 were $603.6 million and gross margins were $155.5 million while net earnings, before an extraordinary charge, were $28.6 million, or $0.31 per share. An extraordinary charge of $7.5 million, or $0.08 per share, related to the early extinguishment of debt, reduced net earnings to $21.1 million, or $0.23 per share. Net sales for the first quarter ended September 30, 1995 were $599.4 million while gross margins were $148.7 million. Net earnings for the prior year first quarter were $32.1 million, or $0.35 per share. Net sales for the first quarter increased one percent over the prior year first quarter while gross margins increased five percent as compared to the same period one year ago. These increases reflected the mixed operating results of the Company's three largest business units and the impact of various non-operating factors discussed below. IMC-AGRICO CROP NUTRIENTS OPERATIONS IMC-Agrico Crop Nutrients net sales for the first quarter decreased 10 percent to $391.2 million compared to $433.7 million one year ago. This decrease was primarily the result of lower international shipments of concentrated phosphates to China, India and Japan, which unfavorably impacted net sales by $48.5 million. In addition, management's efforts to phase out phosphate rock export sales resulted in a $14.4 million decrease in revenues. These sales volume decreases were partially offset by higher average sales realizations for diammonium phosphate (DAP), which favorably impacted net sales by $18.3 million. Gross margins remained relatively flat totaling $97.5 million for the quarter compared to $98.0 million last year, despite the sales decrease noted above, mainly as a result of product mix. IMC KALIUM OPERATIONS IMC Kalium net sales increased 11 percent to $109.9 million in the current quarter from $99.4 million in the prior year first quarter. This increase was driven largely by increased demand as higher domestic and export volumes favorably impacted net sales by $12.0 million. In addition, higher export sales realizations increased net sales by $2.0 million. Partially offsetting these increases were lower domestic sales realizations which negatively impacted net sales by $4.0 million. Despite improved sales, gross margins decreased 15 percent to $32.3 million for the quarter from $38.1 million one year ago. In addition to the price and volume impacts discussed above, margins were further impacted by increased production costs associated with a prolonged summer shutdown at IMC Kalium's Canadian mines. This shutdown was undertaken to reduce high inventory levels which resulted from wet spring weather in the midwestern United States. IMC AGRIBUSINESS OPERATIONS IMC AgriBusiness net sales increased 12 percent to $106.0 million in the first quarter as compared to $94.9 million for the same prior year period. Factors contributing to this increase were increased chemical sales volume due to late planting and chemical application caused by wet weather in the spring of 1996, which favorably impacted net sales by $4.5 million, as well as increased ammonia and nitrogen solutions volumes which favorably impacted net sales by an additional $4.5 million. Gross margins increased 53 percent from $12.9 million in the first quarter one year ago to $19.7 million in the current quarter. Improved gross margins were the result of higher sales volume described above, which in turn served to increase chemical rebates, generating additional margins. OTHER The remaining increases in first quarter net sales and margins were primarily the result of the Feed Ingredients acquisition in October 1995. The following table summarizes the Company's sales of crop nutrient products and average selling prices for the three months ended September 30: 1996 1995 ------- ------- Sales volumes (in thousands of short tons) (a): IMC-Agrico Crop Nutrients 1,804 2,045 IMC Kalium 1,750 1,549 Average price per ton (b): DAP $181.31 $173.98 Potash $ 63.33 $ 64.78 (a) Sales volumes include tons sold captively. IMC-Agrico Crop Nutrients volumes represent dry product tons, primarily DAP. (b) Average prices represent sales made FOB mine/plant. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses increased $10.4 million to $56.4 million for the first quarter compared to $46.0 million one year ago primarily due to acquisition of the Feed Ingredients, Agri-Supply and Madison Feed businesses as well as increased operating expenses associated with higher sales volumes at IMC AgriBusiness. INTEREST EXPENSE Interest expense totaled $15.1 million in the current quarter, down $1.7 million or 10 percent from the same period last year when interest expense totaled $16.8 million. The decrease in interest expense was a direct result of lower credit line and short-term borrowings as compared to the prior year first quarter and the refinancing of high-cost, long-term indebtedness in September 1996 at lower interest rates. INCOME TAXES The effective tax rate for the first quarter was 36.4 percent, compared to an effective tax rate of 37.9 percent one year ago. The effective rate decreased as a result of merger-related benefits at the state and local level, along with tax planning in other areas. EXTRAORDINARY LOSS - DEBT RETIREMENT See Note 3, "Extraordinary Loss - Debt Retirement," of Notes to Condensed Consolidated Financial Statements. Capital Resources and Liquidity - ------------------------------- LIQUIDITY AND OPERATING CASH FLOW Cash and cash equivalents as of September 30, 1996 were $54.5 million as compared to $9.6 million at June 30, 1996. Net cash inflows of $175.5 million generated from operating activities were used to fund capital expenditures of $44.0 million, distributions to Freeport-McMoRan Resource Partners, Limited Partnership (FRP) of $60.3 million and common stock dividend payments of $7.5 million. 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 September 30, 1996 was 2.7:1 versus 2.5:1 at June 30, 1996. Debt to total capitalization improved to 38.7 percent from 39.8 percent at June 30, 1996. Net cash provided by operating activities totaled $175.5 million for the first quarter versus $25.8 million for the same period a year ago. The increase in operating cash was primarily the result of a decrease in working capital levels, largely related to the reduction of receivables from an unusually high level at June 30, 1996. Net cash used in investing activities, for capital expenditures, for the quarter ended September 30, 1996 and 1995 was $44.0 million and $37.8 million, respectively. Net cash used in financing activities for the current quarter was $86.6 million while cash provided by financing activities was $28.5 million for the same period one year ago. Net debt payments for the first quarter were $22.1 million while net proceeds from issuances of debt were $70.6 million for the same period last year. The current quarter results reflect the Company's purchase of a portion of its high-cost, long-term indebtedness as part of an ongoing effort to reduce interest costs. Additionally, as a result of improved earnings generated by IMC-Agrico, distributions to FRP increased to $60.3 million during the quarter compared to $51.7 million for the same period one year ago. Dividends paid during the three month period ended September 30, 1996 and 1995 were $7.5 million and $7.1 million, respectively. CAPITAL EXPENDITURES The Company estimates that its capital expenditures for fiscal 1997 will total approximately $270.0 million. The Company expects to finance these expenditures primarily from operations. Pursuant to the IMC-Agrico Partnership Agreement (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. 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. On November 5, 1996, the Company and its subsidiaries had borrowed $158.0 million under the revolving credit facility and $50.0 million under the long-term credit facility. Additionally, $33.7 million was drawn under the Credit Facility as letters of credit principally to support industrial revenue bonds and other debt and credit risk guarantees. IMC-Agrico has an agreement with a group of banks to provide it with a $45.0 million unsecured revolving credit facility (Initial Facility) until February 1997 (on October 30, 1996, the Initial Facility was reduced from $75.0 million). On November 5, 1996, there were no outstanding borrowings 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 30, 1996, one of the additional unsecured revolving credit facilities was increased by $5.0 million which increased the borrowing level under the additional credit facilities to $80.0 million. On November 5, 1996, $32.0 million was outstanding under these additional facilities. The Credit Facility contains 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. The Credit Facility also contains 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 September 30, 1996, IMC-Agrico had sold $59.4 million of such receivable interests. On September 5, 1996, the Company completed a tender offer to purchase portions of its high-cost senior notes. See Note 3, "Extraordinary Loss - Debt Retirement," of Notes to Condensed Consolidated Financial Statements. On October 30, 1996, the Company announced it will call for redemption on November 15, 1996 all of its outstanding 6.25 percent convertible subordinated notes due 2001. As of September 30, 1996 approximately $114.9 million of such notes were outstanding. Part II. OTHER INFORMATION Item 1. Legal Proceedings. In the ordinary course of its business, the Company is and will from time to time be involved in routine litigation. Item 4. Submission of Matters to a Vote of Security Holders. (a) The 1996 Annual Meeting of Stockholders was held October 17, 1996. (b) Not applicable. (c) The following matters were voted upon at the 1996 Annual Meeting of Stockholders: 1.Election of Directors The following directors were elected at the 1996 Annual Meeting of Stockholders: Term expiring in 1998 Billie B. Turner Term expiring in 1999 Robert E. Fowler, Jr. " " " " Harold H. MacKay " " " " David B. Mathis " " " " Richard L. Thomas The following directors continue in office: Raymond E. Bentele Wendell F. Bueche Rod F. Dammeyer Dr. James M. Davidson Thomas H. Roberts, Jr. Joseph P. Sullivan Dr. Clayton K. Yeutter 2.Approval of the 1996 Long-Term Incentive Plan The adoption of the 1996 Long-Term Incentive Plan to provide long-term incentives to executive officers and key employees of the Company was ratified by the affirmative vote of holders of an aggregate of 78,790,915 shares of common stock. Holders of 1,115,125 shares of common stock voted against adoption. Holders of 3,341,698 shares of common stock abstained from voting. 3.Approval of an amendment to the 1988 Stock Option and Award Plan The adoption of the amendment to the Company's 1988 Stock Option and Award Plan to limit the aggregate number of shares of common stock that may be subject to options granted in any fiscal year to any employee to 500,000 shares was ratified by the affirmative vote of holders of an aggregate of 78,716,193 shares of common stock. Holders of 1,187,045 shares of common stock voted against adoption. Holders of 3,344,500 shares of common stock abstained from voting. 4.Approval of Appointment of Independent Auditors. The appointment of Ernst & Young LLP, independent accountants, as auditors of the Registrant for the fiscal year ending June 30, 1997, was ratified by the affirmative vote of holders of an aggregate of 83,188,578 shares of common stock. Holders of 18,179 shares of common stock voted against the appointment. Holders of 40,981 shares of common stock abstained from voting. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. Exhibit No. Description ---------- ---------------------------------------------- 10.77 1996 Long-Term Incentive Plan 11.3 Fully diluted earnings per share computation for the three months ended September 30, 1996 27 Financial Data Schedule (b) No Reports on Form 8-K were filed during the quarter. * * * * * * * * * * * * * * * * SIGNATURES Pursuant to the requirements 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. /s/ Anne M. Scavone ---------------------------------- Anne M. Scavone Corporate Controller (on behalf of the Registrant and as Chief Accounting Officer) Date: November 13, 1996 EX-10.77 2 1996 LONG-TERM INCENTIVE PLAN IMC GLOBAL INC. 1996 LONG-TERM INCENTIVE PLAN I. Introduction 1.1 Purpose. The 1996 Long-Term Incentive Plan (the "Plan") of IMC Global Inc. (the "Company") is intended to operate in conjunction with the IMC Global Inc. 1988 Stock Option and Award Plan to provide long- term incentives to officers and other key employees of the Company and its subsidiaries and thereby advance the interests of the Company by attracting and retaining officers and other key employees and motivating such persons to act in the long-term best interests of the Company's stockholders. 1.2 Certain Definitions. "Board" shall mean the Board of Directors of the Company. "Business Unit" shall mean a subsidiary, division, joint venture or other unit of the Company's business which is designated as such by the Committee. "Change in Control" shall have the meaning set forth in Section 3.6(b). "Code" shall mean the Internal Revenue Code of 1986, as amended. "Committee" shall mean the Committee designated by the Board, consisting of two or more members of the Board, each of whom shall be (i) a "Non-Employee Director" within the meaning of Rule 16b-3 under the Exchange Act and (ii) an "outside director" within the meaning of Section 162(m) of the Code, subject to any transition rules applicable to the definition of outside director. "Common Stock" shall mean the common stock, $1.00 par value, of the Company. "Company" has the meaning specified in Section 1.1. "Economic Profit" shall have the meaning specified in Section 2.2(b). "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Fair Market Value" shall mean the mean between the highest and lowest prices at which the Common Stock is traded on the date on which such value is being determined, as reflected on the consolidated tape of New York Stock Exchange issues, or if such date is not a trading day, on the first trading day preceding such date. If there are no such sales of Common Stock on the date on which such value is being determined (or on the first trading day preceding such date, if applicable) the mean between the bid and the asked prices as reflected on the consolidated tape of New York Stock Exchange issues at the close of the market on such date shall be deemed to be the fair market value of the Common Stock. "Incumbent Board" shall have the meaning set forth in Section 3.6(b)(2) hereof. "Performance Award" shall mean a right, contingent upon the attainment of specified Performance Measures within a specified Performance Period, to receive payment in cash or in shares of Common Stock of a specified amount. "Performance Measures" shall mean the criteria and objectives, established by the Committee, which shall be satisfied or met during the applicable Performance Period as a condition to the holder's receipt of the payment with respect to a Performance Award. Such criteria and objectives shall be based on the Economic Profit of a Business Unit and/or of the Company as a whole. If the Committee desires that compensation payable pursuant to any award subject to Performance Measures be "qualified performance-based compensation" within the meaning of Section 162(m) of the Code, the Performance Measures (i) shall be established by the Committee no later than 90 days after the beginning of the Performance Period (or such other time designated by the Internal Revenue Service) and (ii) shall satisfy all other applicable requirements imposed under Treasury Regulations promulgated under Section 162(m) of the Code, including the requirement that such Performance Measures be stated in terms of an objective formula or standard. "Performance Period" shall mean the period determined under Section 2.2(c)during which the Performance Measures applicable to a Performance Award shall be measured. "Subsidiary" shall have the meaning set forth in Section 1.4. "Tax Date" shall have the meaning set forth in Section 3.4. 1.3 Administration. This Plan shall be administered by the Committee. The Committee shall, subject to the terms of this Plan, select eligible persons for participation in this Plan and determine the form, amount and timing of each award to such persons, the time and conditions of payment of the award and all other terms and conditions of the award. The Committee may, in its sole discretion and for any reason at any time, subject to the requirements imposed under Section 162(m) of the Code and regulations promulgated thereunder in the case of an award intended to be qualified performance-based compensation, take action such that all or a portion of the Performance Period applicable to any outstanding Performance Award shall lapse, and the Performance Measures applicable to any outstanding Performance Award shall be deemed to be satisfied at the maximum or any other level. The Committee shall, subject to the terms of this Plan, interpret this Plan and the application thereof, establish rules and regulations it deems necessary or desirable for the administration of this Plan and may impose, incidental to the grant of an award, conditions with respect to the award, such as limiting competitive employment or other activities. All such interpretations, rules, regulations and conditions shall be final, binding and conclusive. The Committee may delegate some or all of its power and authority hereunder to the Chief Executive Officer (the "CEO") or such other executive officer of the Company as the Committee deems appropriate; provided, however, that the Committee may not delegate its power and authority with regard to (i) the grant of an award to any person who is a "covered employee" within the meaning of Section 162(m) of the Code or who, in the Committee's judgment, is likely to be a covered employee at any time during the period an award hereunder to such employee would be outstanding or (ii) the selection for participation in this Plan of an officer or other person subject to Section 16 of the Exchange Act or decisions concerning the timing or amount of an award to such an officer or other person. A majority of the Committee shall constitute a quorum. The acts of the Committee shall be either (i) acts of a majority of the members of the Committee present at any meeting at which a quorum is present or (ii) acts approved in writing by all of the members of the Committee without a meeting. 1.4 Eligibility. Participants in this Plan shall consist of such officers and other key employees of the Company, and its subsidiaries (individually a "Subsidiary" and collectively the "Subsidiaries"), including IMC-Agrico MP, Inc., as the Committee in its sole discretion may select from time to time. For purposes of this Plan, references to employment by the Company shall also mean employment by a Subsidiary. The Committee's selection of a person to participate in this Plan at any time shall not require the Committee to select such person to participate in this Plan at any other time. II. Performance Awards 2.1 Performance Awards. The Committee may, in its discretion, grant Performance Awards to such eligible persons as may be selected by the Committee. 2.2 Terms of Performance Awards. Performance Awards shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable. (a) Amount of Performance Award. The amount of a Performance Award shall be determined by the Committee; provided, however, that the maximum amount that may be paid to any individual under any Performance Award for any Performance Period shall not exceed $3,000,000, adjusted for increases in the Consumer Price Index between July 1, 1996 and the beginning of the Performance Period. (b) Performance Measures. The Performance Measures applicable to a Performance Award shall be determined by the Committee based upon the achievement during the applicable Performance Period of the Economic Profit goals established by the Committee for the Business Unit in which the holder of the Performance Award is employed and/or for the Company as a whole. Economic Profit means "After-Tax Cash Flow" (defined below) divided by "Capital Employed" (defined below). "After-Tax Cash Flow" means earnings before interest, taxes, depreciation, depletion and amortization ("EBITDA") less cash taxes (i.e. provision for income taxes excluding deferred taxes). "Capital Employed" means working capital (excluding cash, current and deferred tax assets and liabilities and short-term debt) plus gross fixed assets (before accumulated depreciation and depletion and excluding joint venture step-up) and other assets (before accumulated amortization of goodwill). Capital Employed will be calculated based on beginning of month (or quarter) balances resulting in a 12-month (or 4-quarter) average for the year. (c) Performance Periods. In general, a Performance Period shall be a period consisting of three consecutive fiscal years of the Company. The first and second Performance Periods, however, shall consist of one and two fiscal years of the Company, respectively, beginning with the fiscal year of the Company beginning July 1, 1996. (d) Settlement of Performance Awards. A Performance Award may be settled in shares of Common Stock by means of a restricted stock award under the terms of the IMC Global Inc. 1988 Stock Option and Award Plan or cash or a combination thereof, as determined by the Committee. Prior to the settlement of a Performance Award in shares of Common Stock, the holder of such award shall have no rights as a stockholder of the Company with respect to the shares of Common Stock subject to such award and shall have rights as a stockholder of the Company in accordance with Section 3.8. 2.3 Termination of Employment or Service. All of the terms relating to the satisfaction of Performance Measures and the termination of the Performance Period relating to a Performance Award, or any cancellation or forfeiture of such Performance Award upon a termination of employment with the Company of the holder of such Performance Award, whether by reason of disability, retirement, death or other termination, shall be determined by the Committee and communicated to the recipient of a Performance Award at the time the Performance Award is granted. III. General 3.1 Effective Date and Term of Plan. This Plan shall be submitted to the stockholders of the Company for approval and, if approved by the affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy at the 1996 annual meeting of stockholders of the Company, shall become effective on the date of such approval. This Plan shall terminate ten years after its effective date, unless terminated earlier by the Board. Termination of this Plan shall not affect the terms or conditions of any award granted prior to termination. 3.2 Amendments. The Board may amend this Plan as it shall deem advisable, subject to any requirement of stockholder approval required by applicable law, rule or regulation, including Section 162(m) and Section 422 of the Code; provided, however, that no amendment shall be made without stockholder approval if such amendment would extend the term of this Plan. No amendment may impair the rights of a holder of an outstanding award without the consent of such holder. 3.3 Non-Transferability of Awards. No award shall be transferable other than by will, the laws of descent and distribution or pursuant to beneficiary designation procedures approved by the Company. Each award may be settled during the holder's lifetime only by the holder or the holder's legal representative or similar person. No award may be sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of any such award, such award and all rights thereunder shall immediately become null and void. 3.4 Tax Withholding. The Company shall have the right to require, prior to the issuance or delivery of any shares of Common Stock or the payment of any cash pursuant to an award made hereunder, payment by the holder of such award of any Federal, state, local or other taxes which may be required to be withheld or paid in connection with such award. The Committee may determine that (i) the Company shall withhold whole shares of Common Stock which would otherwise be delivered to a holder, having an aggregate Fair Market Value determined as of the date the obligation to withhold or pay taxes arises in connection with an award (the "Tax Date"), or withhold an amount of cash which would otherwise be payable to a holder, in the amount necessary to satisfy any such obligation or (ii) the holder may satisfy any such obligation by any of the following means: (A) a cash payment to the Company, (B) authorizing the Company to withhold whole shares of Common Stock which would otherwise be delivered having an aggregate Fair Market Value, determined as of the Tax Date, or withhold an amount of cash which would otherwise be payable to a holder, equal to the amount necessary to satisfy any such obligation, (C) any combination of (A) and (B), in each case to the extent set forth in the Agreement relating to the award; provided, however, that the Company shall have sole discretion to disapprove of an election pursuant to any of clauses (B) and (C) and that in the case of a holder who is subject to Section 16 of the Exchange Act, the Company may require that the method of satisfying such an obligation be in compliance with Section 16 and the rules and regulations thereunder. Any fraction of a share of Common Stock which would be required to satisfy such an obligation shall be disregarded and the remaining amount due shall be paid in cash by the holder. 3.5 Adjustment. In the event of any recapitalization, reorganization, merger, consolidation, combination, exchange of shares, liquidation, spin-off or other similar change in capitalization or event, or any distribution to holders of Common Stock other than a regular cash dividend, the number and class of securities available for the payment of Performance Awards under this Plan shall be appropriately adjusted by the Committee. The decision of the Committee regarding any such adjustment shall be final, binding and conclusive. If any such adjustment would result in a fractional security being available under this Plan, such fractional security shall be disregarded. 3.6 Change in Control. (a) (1) Notwithstanding any provision in this Plan, in the event of a Change in Control, the Committee may, but shall not be required to, make such adjustments to outstanding awards hereunder as it deems appropriate, including, without limitation, causing the Performance Period applicable to any outstanding Performance Award to lapse, causing the Performance Measures applicable to any outstanding Performance Award to be deemed to be satisfied at the minimum, target or maximum level, or electing that each outstanding award shall be surrendered to the Company by the holder thereof, and that each such award shall immediately be canceled by the Company, and that the holder shall receive, within a specified period of time from the occurrence of the Change in Control, a cash payment from the Company in an amount equal to the amount payable with respect to such Performance Award if the applicable Performance Measures were satisfied at the maximum level. (b) "Change in Control" shall mean: (1) the acquisition by any individual, entity or group (a "Person"), including any "person" within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act, of 15% or more of either (i) the then outstanding shares of common stock of the Company (the "Outstanding Common Stock") or (ii) the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors (the "Outstanding Voting Securities"); excluding, however, the following: (A) any acquisition directly from the Company (excluding any acquisition resulting from the exercise of an exercise, conversion or exchange privilege unless the security being so exercised, converted or exchanged was acquired directly from the Company), (B) any acquisition by the Company, (C) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (D) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (3) of this Section 3.6(b); (2) individuals who, as of the date this Plan is approved by the Board of Directors constitute the Board of Directors (the "Incumbent Board") cease for any reason to constitute at least a majority of such Board; provided that any individual who becomes a director of the Company subsequent to the date this Plan is approved by the Board of Directors whose election, or nomination for election by the Company's stockholders, was approved by the vote of at least a majority of the directors then comprising the Incumbent Board shall be deemed a member of the Incumbent Board; and provided further, that any individual who was initially elected as a director of the Company as a result of an actual or threatened election contest, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act, or any other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board shall not be deemed a member of the Incumbent Board; (3) approval by the stockholders of the Company of a reorganization, merger or consolidation of the Company or sale or other disposition of all or substantially all of the assets of the Company (a "Corporate Transaction"); excluding, however, a Corporate Transaction pursuant to which (i) all or substantially all of the individuals or entities who are the beneficial owners, respectively, of the Outstanding Common Stock and the Outstanding Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 60% of, respectively, the outstanding shares of common stock, and the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or indirectly) in substantially the same proportions relative to each other as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Common Stock and the Outstanding Voting Securities, as the case may be, (ii) no Person (other than: the Company; any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; the corporation resulting from such Corporate Transaction; and any Person which beneficially owned, immediately prior to such Corporate Transaction, directly or indirectly, 25% or more of the Outstanding Common Stock or the Outstanding Voting Securities, as the case may be) will beneficially own, directly or indirectly, 25% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors and (iii) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction; or (4) the consummation of a plan of complete liquidation or dissolution of the Company. 3.7 No Right of Participation or Employment. No person shall have any right to participate in this Plan. Neither this Plan nor any award made hereunder shall confer upon any person any right to continued employment by the Company, any Subsidiary or any affiliate of the Company or affect in any manner the right of the Company, any Subsidiary or any affiliate of the Company to terminate the employment of any person at any time without liability hereunder. 3.8 Rights as Stockholder. No person shall have any right as a stockholder of the Company with respect to any shares of Common Stock or other equity security of the Company which is subject to an award hereunder unless and until such person becomes a stockholder of record with respect to such shares of Common Stock or equity security. 3.9 Governing Law. This Plan, each award hereunder, and all determinations made and actions taken pursuant thereto, to the extent not otherwise governed by the Code or the laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without giving effect to principles of conflicts of laws. 3.10 Foreign Employees. Without amending this Plan, the Committee may grant awards to eligible persons who are foreign nationals on such terms and conditions different from those specified in this Plan as may in the judgment of the Committee be necessary or desirable to foster and promote achievement of the purposes of this Plan and, in furtherance of such purposes the Committee may make such modifications, amendments, procedures, subplans and the like as may be necessary or advisable to comply with provisions of laws in other countries or jurisdictions in which the Company or its Subsidiaries operates or has employees. EX-11.3 3 EARNINGS PER SHARE EXHIBIT 11.3 EARNINGS (LOSS) PER SHARE FULLY DILUTED COMPUTATION FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 (IN MILLIONS EXCEPT SHARE AND PER SHARE AMOUNTS) At September 30, ----------------------- 1996 1995 ---------- ---------- Basis for computation of fully diluted earnings per share: Earnings before extraordinary item, as reported $ 28.6 $ 32.1 Add interest charges on convertible debt 1.8 1.8 Less provision for taxes (.7) (.7) ---------- ---------- Earnings before extraordinary item, as adjusted 29.7 33.2 Extraordinary loss - debt retirement 7.5 ---------- ---------- Net earnings applicable to common stock $ 22.2 $ 33.2 ========== ========== Number of shares: Weighted average shares outstanding 93,629,449 92,220,755 Conversion of convertible subordinated notes into common stock 3,619,783 3,622,040 ---------- ---------- Total common and common equivalent shares assuming full dilution 97,249,232 95,842,795 ========== ========== Fully diluted earnings per share: Earnings before cumulative effect of accounting change and extraordinary item $ .31 $ .35 Extraordinary loss - debt retirement (.08) ---------- ---------- Net earnings $ .23 $ .35 ========== ========== 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 (loss) per share would exclude the conversion of convertible securities which would have an antidilutive effect on earnings (loss) per share for each period. EX-27.2 4 FINANCIAL DATA SCHEDULE
5 1000 3-MOS JUN-30-1996 SEP-30-1996 1,600 52,900 232,100 7,700 514,400 876,000 4,171,200 1,821,800 3,386,300 328,700 717,800 98,000 0 0 1,075,900 3,386,300 603,600 603,600 448,100 504,500 39,000 0 15,100 45,000 16,400 28,600 0 7,500 0 21,100 .23 .23
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