The amount of revenue attributable to the sales by the Cargill Fertilizer Businesses to foreign and domestic markets over the last
three fiscal years and the carrying value of the foreign and domestic assets of the Cargill Fertilizer Businesses is set forth under Note 13 “Segment Information” contained in the Notes to Consolidated Financial Statements beginning on
page F-23 of this prospectus.
Legal Proceedings
In December 2003, the Mulberry and Bartow Phosphate Production facilities in Florida
were inspected by the United States Environmental Protection Agency (USEPA). Since the inspection, USEPA has requested additional information, under RCRA Section 3007, regarding the hazardous waste handling practices at each facility. Both
facilities have provided detailed answers to those requests. Additionally, USEPA has provided an inspection report identifying certain potential violations at the Mulberry facility. USEPA has not provided an inspection report for the Bartow facility
at this time. An official with the Florida Department of Environmental Protection has informally advised the Cargill Fertilizer Businesses that it was likely that USEPA would initiate a regulatory enforcement action against the Cargill Fertilizer
Businesses for certain aspects of the facilities’ hazardous waste handling practices. Typically, these types of actions can result in a required modification of the Cargill Fertilizer Businesses’ waste handling procedures, the imposition
of monetary penalties, or both.
During Hurricane Frances, Mosaic’s
Riverview facility experienced a sudden release of approximately 65 million gallons of partially treated process water from its phosphogypsum stack. This
release, which was caused in part by heavy rain and winds, ultimately flowed into Hillsborough Bay. The Florida Department of Environmental Protection, referred to as
FDEP, has stated that it intends to impose fines through civil enforcement actions for the release. Mosaic intends to assert any defenses that it may have to civil enforcement and to claims for restoration of resources and does not expect these
costs to have a material effect on the business, assets, operations, or financial condition of Mosaic.
During Hurricane Jeanne, the Bartow and Mulberry facilities experienced process water releases. Similarly, excessive rain and loss of electric power to pumps during
Hurricane Jeanne allowed water in the toe ditch at the base of the south phosphogypsum stack at the Mulberry facility to flow onto the adjacent road and to an adjacent low-lying area. An unknown amount of contaminated storm water runoff flowed
toward Skin Sapling Creek but did not enter the creek. FDEP may also seek civil penalties for these releases at Bartow and/or Mulberry. Mosaic intends to assert all available defenses against such enforcement does not currently expect these
penalties to have a material effect on the business, assets, operations, or financial condition of Mosaic.
On September 23, 2004, a Class Action Complaint and Demand for Jury Trial, referred to as the Complaint, was filed against Cargill in the Circuit Court of the
Thirteenth Judicial Circuit for Hillsborough County, Florida. The Complaint, which arises out of the release of process water from the Riverview facility, contains four counts: Chapter 376.313 (
i.e.
, statutory strict liability); common law
strict liability; common law public nuisance; and negligence. The strict liability counts relate to the discharge of pollutants or hazardous substances. Plaintiffs seek class certification and an award of damages, attorneys’ fees and costs on
behalf of a class of unknown size comprising “all fishermen and those persons engaged in the commercial catch and sale of fish, bait, and related products in the Tampa Bay area who lost income and suffered damages because of the pollution,
contamination and discharge of hazardous substances by the defendant Cargill.” On October 18, 2004, Cargill responded to the Complaint by filing a Motion for Summary Judgment or, in the alternative, to Dismiss on the basis that plaintiffs had
improperly named Cargill which neither owned nor operated the subject facility, as a defendant. On the same day, Cargill was served with an Amended Class Complaint and Demand for Jury Trial, referred to as the Amended Complaint, by plaintiffs’
counsel. Mosaic has not currently been named in the lawsuit even though it owns and operates the Riverview facility. It is possible that plaintiffs may eventually name Mosaic in the action or that some neighbors, property owners or civic groups may
pursue litigation against Mosaic if material damage from the Riverview release is found to have occurred to the environment. Mosaic believes that it would have substantial defenses to any such claims and intends to vigorously defend against any
actions that might be filed.
The Cubatao Public Prosecution Office
(Brazil), jointly with OIKOS – UNIÃO DOS DEFENSORES DA TERRA (Defenders of the Earth Union), filed a suit on January 15, 1986 against several companies, including a facility operated by the Cargill Fertilizer Businesses in the Cubatao
valley in Brazil. The plaintiffs sought redress for the companies’ alleged continuous discharge of pollutants into the atmosphere, which they assert would have caused, among other damage, degradation and the perishing of a considerable part of
the vegetation cover in the slopes of the Serra do Mar mountain range. Review of this matter by a court-appointed expert panel is pending with no set deadline.
The State of Paraná Public Prosecution Service has prepared penal charges against Fospar and former directors and employees of Fospar on April 10, 2003,
alleging that they caused pollution by allowing rainwater to discharge solid residues of phosphatic rock from an outdoor storage area through a rainwater drainpipe into a mangrove area, thus causing contamination to an environmentally protected
area. The alleged acts occurred in January 1999, prior to the Cargill Fertilizer Businesses’ acquisition of its interest in Fospar through the Fertiza acquisition which occurred in October 2000. Although it has been named in the charges, Fospar
has not received a citation to date and is therefore not yet an official party to the proceeding. The Cargill Fertilizer Businesses are continuing to evaluate the matter.
On January 30, 2004, a lawsuit was filed in the Court of Chancery for New Castle County in Wilmington, Delaware by
a common stockholder of IMC on behalf of a purported class of all stockholders of IMC. Named as defendants in the complaint are IMC, all members of IMC’s board of directors and Cargill. The plaintiff alleges, among other things, that the
individual defendants breached their fiduciary duties of care and loyalty to IMC’s common stockholders by, among other things, failing to conduct an auction or otherwise checking the market value of IMC before voting to approve the merger and
contribution agreement, and that the merger consideration to be received by the IMC common stockholders is inadequate because, among other things, it is less than the “intrinsic value” of the IMC common stock and it does not offer a
premium to the IMC common stockholders. The lawsuit seeks, among other things, to enjoin or rescind the Cargill transactions or, alternatively, to recover unspecified damages and costs. The defendants have secured an extension of the time to answer
or otherwise plead to the complaint.
On February 24, 2004, a second
lawsuit, similar to the lawsuit described above, was filed in the Court of Chancery for New Castle County in Wilmington, Delaware. On March 17, 2004, the Court of Chancery consolidated these two lawsuits and named the complaint in the lawsuit
described in the previous paragraph as the operative complaint for the consolidated lawsuit.
On August 20, 2004, the parties reached an agreement in principle to settle the class action litigation and subsequently executed definitive settlement documents which have been filed with, and are subject to the approval of,
the Delaware Court of Chancery.
An action was brought against Fospar,
S.A. and the Brazilian Institute for the Environment and Renewable Natural Resources (“IBAMA”) by the Parana Public Prosecution Service in August 1999 seeking to cause Fospar to suspend any work or activities that might result in full or
partial elimination of a mangrove swamp in the area of a proposed maritime terminal and bulk pier. The action also sought to void the existing environmental licenses and authorizations and sought redress of environmental damage. The court initially
granted injunctive relief; however, the injunction was later cancelled. A second action was subsequently brought by the Parana Public Prosecution Service in October 1999 against Fospar and IBAMA seeking to enjoin Fospar from carrying out any work or
activities relating to dredging or intervention in the marine ecosystem that could cause an adverse environmental impact on the estuary, and to void all environmental licenses and authorizations issued for the company in relation to the setup of the
proposed maritime terminal and bulk pier. It also sought redress of environmental damage. No injunctive relief was granted because of the status of the first case filed in August.
Shortly after the cases were filed in 1999, a federal judge ordered an expert environmental investigation relating to both cases. The
results of the investigation were issued in October 2003 and were favorable to Fospar. Fospar, therefore, expected a favorable result in both cases because, in addition to the favorable results of the expert investigation, the injunctive relief had
been cancelled and the maritime terminal and bulk pier had been constructed in compliance with applicable laws, licenses, and authorizations and had commenced operations in February 2001.
In July 2004, the federal court issued a consolidated ruling unfavorable to the defendants, including Fospar, finding that the request
for canceling the licenses and authorizations was partially valid. Fospar and IBAMA were ordered to jointly pay R$22,800 (approximately US$7,600) plus monetary correction of Brazilian currency and 6% interest from the date of the alleged violation.
Additionally, Fospar was ordered to pay two percent of its annual revenues for the five year period of 2000-2004. If upheld, Fospar estimates the liability could range from approximately US$742,000 to US$1,091,000. Fospar is appealing the monetary
aspects of the ruling and the Public Prosecution Service has filed an appeal requesting that the maritime terminal and bulk pier built within the mangrove area be torn down and that the licenses and authorizations previously issued be cancelled.
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