Exhibit 99
IMC
Global Inc.
100 South
Saunders Road
Lake Forest, Illinois 60045-2561
847.739.1200
FOR IMMEDIATE RELEASE
News
Release
Investor and Media Contact:
Douglas A. Hoadley
847.739.1826
dahoadley@imcglobal.com
IMC GLOBAL REPORTS
SHARP INCREASE IN
2004 SECOND QUARTER EARNINGS
TO 32 CENTS PER DILUTED SHARE
SECOND QUARTER AND RECENT HIGHLIGHTS
-
Highest quarterly earnings from continuing operations per share
since the first quarter of 2000; gross margins of $128.3 million and operating
earnings of $108.2 million both nearly tripled versus the prior year.
-
Revenue increased by 39% driven by higher prices and volumes
across both business segments.
-
Average diammonium phosphate (DAP) price realization of $182 per
short ton increased $24, or 15 percent, and average potash selling price of $88
per short ton improved $14, or 19 percent, versus the prior year. Potash
prices increased $11 per short ton versus first quarter 2004.
-
IMC Potash reported record quarterly results; sales and gross
margins of $343.5 million and $113.4 million increased 44 and 81 percent,
respectively, on continued strong pricing and global demand.
-
IMC PhosFeed gross margins improved $32.5 million to a positive
$19.1 million versus a prior-year loss of $13.4 million.
-
IMC Global and Cargill Crop Nutrition combination, named Mosaic,
is expected to be closed in September of 2004.
LAKE
FOREST, IL, July 27, 2004 - Record potash performance and sharply improved
phosphate results drove IMC Global Inc.'s (NYSE: IGL) earnings from continuing
operations significantly higher to $42.7 million, or 32 cents per diluted share
("per share") for the quarter ended June 30, 2004. Last year's
earnings, which included after tax gains of $48.0 million from two major asset
sales, were $0.19 cents per share from continuing operations.
Net
sales in the second quarter of 2004 increased 39 percent to $748.8 million from
$538.7 million a year ago due to very strong crop nutrient price and volume
improvements.
-1-
2004
second quarter results, reflecting a strong $85 million improvement in gross
margins, were impacted by double-digit increases in phosphate and potash prices
and volumes, including a record quarterly performance for the IMC Potash
business. Average DAP and potash realizations improved $24 per short ton, or
15 percent, and $14 per short ton, or 19 percent, respectively, versus the
prior year. Ammonia costs decreased 3 percent for Florida but increased 4
percent overall including Louisiana, while sulphur costs declined 3 percent
versus the prior year.
Operating
earnings increased $70.3 million in the quarter to $108.2 million, almost
triple prior year operating earnings of $37.9 million, which included a gain of
$16.5 million from the sale of assets last year. Depreciation, depletion and
amortization expenses were $45.6 million compared with $43.1 million.
Also
impacting 2004 second quarter results were a non-cash, pre-tax gain of $11.7
million ($7.1 million after tax), or 5 cents per share, from a weaker Canadian
dollar impact on U.S. dollar denominated receivables, and an after-tax expense
of $1.1 million, or 1 cent per share, for expenses incurred in connection with
the proposed combination of IMC Global and Cargill Crop Nutrition. Diluted
weighted average shares outstanding in this year's second quarter were 134.2
million versus 115.4 million last year as a result of the impact of the Company's
mandatory convertible preferred shares.
2003
second quarter results from continuing operations included a pre-tax gain of
$52.0 million ($48.0 million after tax), or 41 cents per share, from two
transactions with Compass Minerals International, Inc., to whom IMC Global sold
its Salt and Great Salt Lake businesses in November 2001. Partially offsetting
this gain was a non-cash, pre-tax loss from the unfavorable impact of the
stronger Canadian dollar of $28.8 million ($19.6 million after tax), or 17
cents per share.
The
income tax provision on earnings from continuing operations for the second
quarter was $28.1 million, for an effective tax rate of 39.7 percent,
consistent with the first quarter, versus a benefit of $8.1 million, based on
an effective tax rate of 32 percent on the loss before the Compass
transactions, a year ago.
IMC's
potash and phosphate inventories ended the second quarter at historically low
levels. Gross capital expenditures of $36.3 million in the second quarter
compared with $24.9 million a year earlier. The Company anticipates its 2004
capital expenditures to be similar to last year.
The
Company ended the second quarter of 2004 with its main bank revolver undrawn,
except for letters of credit. Total cash and main bank revolver availability
at June 30, 2004 was approximately $177 million, with no significant debt
maturities in 2004 or 2005. The Company has additional borrowing capacity
available through its undrawn Canadian working capital facility.
-2-
For
the first half of 2004, the Company reported earnings from continuing
operations of $54.3 million, or 41 cents per share, compared with a loss from
continuing operations of $9.6 million, or 8 cents per share for 2003. First
half net sales rose 22 percent to $1,333.0 million, while gross margins jumped
by $127.2 million to $207.1 million, compared with $79.9 million in the prior
period.
2004
first half operating earnings and depreciation, depletion and amortization
costs were $170.2 million and $91.1 million, respectively, compared with
operating earnings and D,D&A of $52.3 million and $84.2 million in the
first six months of 2003.
IMC PhosFeed
IMC
PhosFeed's second quarter net sales of $424.2 million increased 33 percent
compared with $318.6 million last year due to higher phosphate shipments and
prices. Total concentrated phosphate shipments of approximately 1.7 million
short tons increased over 30 percent versus the prior year level of
approximately 1.3 million short tons. Export volumes rose 70 percent versus
2003 primarily due to increased sales to China and Brazil as well as other
Latin American and Asian countries; domestic shipments improved 2 percent.
The average price realization for DAP of $182 per short ton in the second
quarter increased $24, or 15 percent, versus the prior year's level of $158 per
short ton. Domestic and international DAP prices improved 14 and 19 percent,
respectively.
Current Tampa
export DAP publication prices average about $223 per metric ton and are at
their highest levels in about 8 years, reflecting tighter global supply and
demand conditions.
Second
quarter gross margins of $19.1 million improved $32.5 million from gross margin
losses of $13.4 million in the second quarter of 2003 due to higher prices.
Changes in raw material costs were not a significant factor and decreased a
combined $2.7 million versus the prior year.
For
the first half of 2004, IMC PhosFeed net sales of $787.5 million increased 16
percent from $677.6 million due to higher selling prices. Gross margins of
$37.5 million improved $65.7 million from a loss of $28.2 million in the first
half of 2003.
Approximately
30 percent of IMC's Louisiana concentrated phosphate output, or approximately 1
million short tons, continued to be idled during the first half of 2004, an
operating rate expected to be maintained until market conditions show
sufficient and sustained improvement.
IMC Potash
Record prices and shipments drove a 44 percent increase in IMC Potash's second
quarter net sales to $343.5 million versus last year's $239.1 million.
Total sales volumes of approximately 3.0 million short tons increased 26 percent
versus approximately 2.4 million a year ago. Domestic and export volumes
rose 26 and 27 percent, respectively, reflecting strong and balanced worldwide
demand. The average selling price, including
-3-
all potash
products, improved 19 percent to a record $88 per short ton compared with $74
per short ton in the prior year, driven by a $17 per short ton, or 23 percent
increase in domestic prices. Export realizations rose as higher prices
began to reach and surpass rising ocean freight rates, which have since
moderated. The Company's average domestic realization for muriate of
potash (MOP) improved $10 per short ton, or 13 percent, from the first quarter
of 2004.
Second
quarter gross margins of $113.4 million ($145.4 million excluding resource
taxes) increased 81 percent from $62.7 million ($79.7 million excluding
provincial levies) due primarily to improved prices. Potash production costs
per ton rose about 6 percent versus prior year primarily because of higher
resource taxes. IMC Potash took only 2 weeks of mine shutdowns in the second
quarter of 2004 compared with 5 weeks in the year-ago second quarter and
production was up 15 percent versus prior year. Second quarter potash ending
inventories were less than half of year ago levels.
Net sales for the
first half of 2004 increased 29 percent to $583.1 million while gross margins
improved 51 percent to $178.6 million ($226.8 million excluding provincial
levies).
Observations and
Outlook
"Our
second quarter performance exceeded expectations and demonstrates the very
strong leverage we have in our low-cost potash and phosphate businesses from
improving prices and volumes," said Douglas A. Pertz, Chairman and Chief
Executive Officer of IMC Global. "The impressive double-digit price and
volume increases in both crop nutrient segments reinforces previous optimism we
have expressed about improving worldwide agricultural and fertilizer
fundamentals, including tighter supply-and-demand and low producer inventory
levels. North American industry DAP/MAP inventories were at 10 year lows at
the end of June and potash inventories were below 1.0 million tons, 40% below
year ago levels.
"There
is little commentary needed for our IMC Potash business which turned in record
results reinforcing our low-cost, industry-leading position," Pertz
noted. "Our potash business is on track for an all-time record year in
2004 with operating earnings in excess of $160 million already through the
first half and without the full impact of price increases that we will benefit
from in the second half. Worldwide demand remains very strong with Canpotex
projecting a record year, worldwide potash mine operating rates are quite high
and inventory levels are low, resulting in selling prices at record levels,
even as ocean freight rates have fallen from peak levels."
"IMC
PhosFeed's strong year-over-year increase, similar to the first quarter, again
reinforces our belief that global phosphate fundamentals are improving,"
Pertz said. "In recent weeks, Tampa export and Central Florida domestic
DAP spot prices have firmed again to near 8-year highs. This has enabled
margin gains to be maintained even as ammonia costs trended higher during the
second quarter."
-4-
He
said the Company remains cautiously optimistic that raw material costs should
be directionally lower in the second half of 2004, primarily driven by lower
sulphur prices. At the same time, phosphate price realizations should
continue to improve over comparable 2003 periods as global supply-and-demand,
along with operating rates, continue to recover.
"Our
leading worldwide positions in phosphate and potash, coupled with the cost
reductions we have achieved in recent years and our excess capacity available
to meet increased demand, should allow IMC to continue to capitalize on
favorable market trends and sustain its improved performance in the second half
of 2004," Pertz said.
IMC Global Proposal on
Phosphate Resource Partners Limited Partnership
On March 19, 2004, IMC Global and Phosphate Resource Partners
Limited Partnership (PLP) (NYSE: PLP) announced the signing of a definitive agreement
to merge PLP into a subsidiary of IMC. Pursuant to the merger, each publicly
traded PLP unit would be converted into the right to receive 0.2 shares of IMC
Global common stock. Alpine Capital and The Anne T. and Robert M. Bass
Foundation (collectively, the largest public holders of PLP units) have agreed
to support such a transaction.
On April 20, 2004, IMC Global filed a Registration Statement
on Form S-4 with the U.S. Securities and Exchange Commission (SEC) containing a
preliminary proxy statement/prospectus regarding the proposed PLP merger. On
June 17, 2004, IMC Global filed an amendment to such Registration Statement.
PLP will not distribute the definitive proxy statement/prospectus regarding the
proposed transaction to the PLP unitholders until the SEC has completed its
review of such Registration Statement and such Registration Statement has been
declared effective by the SEC.
The PLP merger is subject to certain conditions, including
among other things, approval by the partners of PLP, and other conditions which
are customary for transactions of this nature involving publicly traded
companies. Closing is anticipated in September of 2004.
IMC
Global and Cargill Crop Nutrition Combination
IMC
Global and Cargill, Incorporated (Cargill) announced on January 27 the signing
of a definitive agreement to combine IMC Global and Cargill Crop Nutrition to
create a new, publicly traded company.
Under
terms of the definitive agreement, IMC Global common shareholders and Cargill
will own on a pro forma basis 33.5 percent and 66.5 percent, respectively, of
the outstanding common shares of the new company.
In
early April, Global Nutrition Solutions, Inc. (which has been renamed Mosaic)
filed a Registration Statement on Form S-4 with the SEC containing a
preliminary proxy statement/prospectus regarding the proposed transaction
between IMC Global and Cargill Crop Nutrition. On June 17, 2004, Global
Nutrition Solutions, Inc. filed an amendment to such registration statement.
IMC will not distribute the definitive proxy statement/prospectus regarding the
proposed transaction to its common stockholders until the SEC has completed its
review of such Registration Statement and such Registration Statement has been
declared effective by the SEC.
-5-
The
combination is subject to regulatory approval in the U.S. and Canada; the
approval of IMC Global's common shareholders; the completion of the PLP merger;
and satisfaction of other customary closing conditions. Necessary antitrust
or competition processes required in several other jurisdictions, including
China, have been fully satisfied. Closing is anticipated in September of 2004.
With
2003 revenues of $2.2 billion, IMC Global is the world's largest producer and
marketer of concentrated phosphates and potash crop nutrients for the
agricultural industry and a leading global provider of feed ingredients for the
animal nutrition industry. For more information, visit IMC Global's Web site
at
imcglobal.com
.
Cautionary Information
Regarding Forward-Looking Statements
This
press release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements include, but
are not limited to, statements regarding expected quarterly and annual results
for 2004, expectations regarding the phosphate market recovery and potash
market fundamentals, expectations regarding the proposed transactions with PLP
and Cargill Crop Nutrition, and other statements that are not historical facts.
Such statements are based upon the current beliefs and expectations of IMC
Global's management and are subject to significant risks and uncertainties.
Actual results may differ from those set forth in the forward-looking
statements.
The
following factors, among others, could cause actual results to differ from
those set forth in IMC Global's forward-looking statements: increased
competition and its effect on pricing, spending, third-party relationships and
revenues; the risk of new and changing regulation in the U.S. and
internationally; recovery of the phosphate market; DAP and potash pricing,
margins and realizations; the prices of raw materials; and regulatory and
shareholder approvals of pending transactions. Additional factors that could
cause IMC Global's results to differ materially from those described in the
forward-looking statements can be found in the 2003 Annual Report on Form 10-K
of IMC Global filed with the SEC and available at the SEC's Internet site (
http://www.sec.gov
).
Not a Proxy Solicitation for IMC Global and Cargill Crop Nutrition
Combination
This communication is not a solicitation of a proxy
from any security holder of IMC Global or Cargill, Incorporated. Global
Nutrition Solutions, Inc. has filed a Registration Statement on Form S-4 with
the SEC containing a preliminary proxy statement/prospectus regarding the
proposed transaction between IMC Global and Cargill.
Stockholders are urged to read the definitive
proxy statement/prospectus regarding the proposed transaction when it becomes
available, because it will contain important information
.
Stockholders will be able to obtain a free copy of the definitive proxy
statement/prospectus, as well as other filings containing information about
Cargill and IMC Global, without charge, at the SEC's Internet site (http://www.sec.gov).
Copies of the definitive proxy statement/prospectus and the filings with the
SEC that will be incorporated by reference in the definitive proxy
statement/prospectus can also be obtained, without charge, by directing a
request to IMC Global Inc., 100 South Saunders Road, Lake Forest, Illinois
60045-2561, Attention: Douglas A. Hoadley, or by telephone at (847) 739-1200,
email:
dahoadley@imcglobal.com
or to Cargill, Incorporated, 15407
McGinty Road West, MS 25, Wayzata, Minnesota 55391, Attention: Lori Johnson,
or by telephone at (952) 742-6194, email:
lori_johnson@cargill.com
.
The respective
directors and executive officers of Cargill and IMC Global and other persons may
be deemed to be participants in the solicitation of proxies in connection with
the proposed transaction. Information regarding such persons and a
description of their direct and indirect interests, by security holdings or
otherwise, is contained in the preliminary proxy statement/prospectus contained
in the above-referenced Registration Statement on Form S-4 of Global Nutrition
Solutions, Inc. filed with the SEC on April 8, 2004 and amended on June 17,
2004.
-6-
Not a Proxy Solicitation for PLP Merger Proposal
This communication is not a
solicitation of a proxy from any security holder of IMC Global or PLP. IMC
Global has filed a Registration Statement on Form S-4 with the SEC containing a
preliminary proxy statement/prospectus regarding the proposed transaction
between IMC Global and PLP
.
PLP unitholders are urged to read the
definitive
proxy statement/prospectus relating to the proposed
transaction between IMC Global and PLP when it becomes available, because it
will contain important information
. PLP unitholders will be able to obtain
a free copy of the definitive proxy statement/prospectus, as well as other
filings containing information about IMC Global and PLP, at the SEC's Internet
site (
http://www.sec.gov
). Copies of the definitive proxy
statement/prospectus and the filings with the SEC that will be incorporated by
reference in the definitive proxy statement/prospectus can also be obtained,
without charge, by directing a request to IMC Global Inc.,100 South Saunders
Road, Lake Forest, Illinois 60045-2561, Attention: Douglas A. Hoadley, or by
telephone at (847) 739-1200, e-mail:
dahoadley@imcglobal.com
. You may
also obtain documents filed with the SEC by PLP free of charge by requesting
them in writing from Phosphate Resource Partners Limited Partnership, 100 South
Saunders Road, Suite 300, Lake Forest, Illinois 60045-2561, or by telephone,
(847) 739-1200.
IMC
Global, and its respective directors, executive officers and certain members of
management and employees may be deemed to be participants in the solicitation
of proxies in connection with any possible merger transaction. Information
regarding such persons and a description of their direct and indirect
interests, by security holdings or otherwise, is contained in the preliminary
proxy statement/prospectus contained in the above-referenced Registration
Statement on Form S-4 of IMC Global filed with the SEC on April 20, 2004 and
amended on June 17, 2004.
# # #
IMC
Global will conduct its 2004 2
nd
Quarter earnings and cash flow
conference call on Tuesday, July 27 at 12:00 noon Central Time (1 p.m. Eastern
Time). The telephone number is 773.756.4632. A replay of the conference call
will be available through 7 p.m. Eastern Time on Friday, August 6 by calling
203.369.0600. In addition, a Webcast of the conference call, both live and in
replay format, can be accessed by visiting IMC Global's Web site at
imcglobal.com
.
-7-
|
IMC Global Inc.
|
Consolidated Statement of Operations
(in millions except per share
amounts)
(unaudited)
|
|
|
Three months ended
June 30
|
Six months ended
June 30
|
|
|
2004
|
2003
|
2004
|
2003
|
|
Net
sales
|
$ 748.8
|
$ 538.7
|
$ 1,333.0
|
$ 1,090.8
|
|
Cost of goods sold
|
620.5
|
494.9
|
1,125.9
|
1,010.9
|
|
Gross margins
|
128.3
|
43.8
|
207.1
|
79.9
|
|
Selling,
general and administrative expenses
|
20.1
|
22.1
|
36.9
|
40.4
|
|
Gain on sale of operating assets
|
-
|
(16.5)
|
-
|
(16.5)
|
|
Restructuring charges
|
-
|
0.3
|
-
|
3.7
|
|
Operating earnings
|
108.2
|
37.9
|
170.2
|
52.3
|
|
Interest
expense
|
47.3
|
46.0
|
94.4
|
91.9
|
|
Foreign currency transaction
(gain) loss
|
(11.7)
|
28.8
|
(16.3)
|
50.7
|
|
Gain on sale of securities
|
-
|
(35.5)
|
-
|
(35.5)
|
|
Debt refinancing expense
|
-
|
-
|
-
|
2.9
|
|
Other (income) expense, net
|
6.1
|
(4.3)
|
14.9
|
(2.4)
|
|
Earnings
(loss) before minority interest
|
66.5
|
2.9
|
77.2
|
(55.3)
|
|
Minority interest
|
(4.3)
|
(11.1)
|
(12.8)
|
(22.7)
|
|
Earnings
(loss) before taxes
|
70.8
|
14.0
|
90.0
|
(32.6)
|
|
Provision (benefit) for income
taxes
|
28.1
|
(8.1)
|
35.7
|
(23.0)
|
|
Earnings
(loss) from continuing operations
|
42.7
|
22.1
|
54.3
|
(9.6)
|
|
Loss from discontinued
operations
|
-
|
(29.0)
|
(2.4)
|
(29.0)
|
|
Earnings
(loss) before cumulative effect of a change in accounting principle
|
42.7
|
(6.9)
|
51.9
|
(38.6)
|
|
Cumulative effect of a change in
accounting principle
|
-
|
-
|
-
|
(4.9)
|
|
Net
earnings (loss)
|
$ 42.7
|
$ (6.9)
|
$ 51.9
|
$ (43.5)
|
|
Diluted earnings (loss) per
share:
|
|
|
|
|
|
Earnings (loss) from
continuing operations
|
$ 0.32
|
$ 0.19
|
$ 0.41
|
$ (0.08)
|
|
Loss from
discontinued operations
|
-
|
(0.25)
|
(0.02)
|
(0.25)
|
|
Cumulative effect of
a change in accounting principle
|
-
|
-
|
-
|
(0.04)
|
|
Diluted earnings
(loss) per share
|
$ 0.32
|
$ (0.06)
|
$ 0.39
|
$ (0.37)
|
|
Weighted
average number of shares outstanding
|
134.2
|
115.4
|
133.9
|
114.7
|
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