MOS » Topics » Phosphates

This excerpt taken from the MOS 8-K filed Oct 6, 2009.

Phosphates

Net sales in the Phosphates segment were $814.4 million for the first quarter, a decline from $2.6 billion a year ago. Phosphates’ first quarter gross margin was $111.4 million, or 14% of net sales, compared with $1.0 billion, or 39% of net sales, for the same period a year ago. Operating earnings were $61.2 million, a decline from $950.8 million in the same period last year. The decline


in operating earnings was primarily due to the effects of significantly lower selling prices partially offset by significantly lower raw material costs for sulfur and ammonia. Net unrealized mark-to-market derivative gains were $4.6 million in the first quarter of fiscal 2010 compared with net losses of $74.6 million for the same period a year ago.

The average first quarter DAP selling price, FOB plant, was $276 per tonne, compared to $1,013 a year ago and $345 per tonne in the fourth quarter of fiscal 2009. The market DAP selling price began to decline sharply toward the end of the second quarter of fiscal 2009 before appearing to bottom out in the first quarter of fiscal 2010.

Phosphates sales volumes were comparable with a year ago at 2.1 million tonnes. Mosaic’s phosphate inventory levels were down significantly as of August 31, 2009 due to increased demand and modestly reduced production levels. Phosphates production levels declined 13% to 1.8 million tonnes from year ago levels in response to a build-up of inventories and a decline in demand. Toward the end of the first quarter of fiscal 2010, production was increased to more normal levels due to increased sales orders and demand.

“Phosphate sales volumes are returning to near normal levels,” said Prokopanko. “Gross margin has improved from the fourth quarter of fiscal 2009 and we look for further modest improvement in fiscal 2010.”

This excerpt taken from the MOS 8-K filed Jul 23, 2009.

Phosphates

Net sales in the Phosphates segment were $884.5 million for the fourth quarter, compared with net sales of $2.0 billion a year ago. Phosphates’ fourth quarter gross margin was $32.9 million, or 4% of net sales, compared with gross margin of $851.6 million, or 42% of net sales, for the same period a year ago. The Phosphates segment had operating earnings of $2.3 million compared with operating earnings of $797.4 million in the same period last year. The primary factors impacting results were lower selling prices and a 21% decline in sales volumes, partially offset by lower raw material costs.

The average fourth quarter DAP selling price, FOB plant, was $345 per tonne, which was a $409 per tonne decrease compared with a year ago and a $68 per tonne decrease compared with the third quarter of fiscal 2009.

The Phosphates segment’s total sales volume was 1.9 million tonnes for the fourth quarter compared to 2.4 million tonnes a year ago. Sales volumes picked up in the fourth quarter compared to third quarter levels as customers started restocking depleted inventories.

This excerpt taken from the MOS 8-K filed Apr 7, 2009.

Phosphates

Net sales in the Phosphates segment were $552.4 million for the third quarter, compared with net sales of $1.3 billion a year ago. Phosphates’ third quarter gross margin was a loss of $63.2 million, compared with gross margin of $478.4 million, or 38% of net sales, for the same period a year ago. The Phosphates segment had an operating loss of $123.9 million compared with operating income of $442.7 million in the same period last year. The primary factors impacting results were a 50% decline in sales volumes, higher raw material costs, the effects of significantly lower operating rates on fixed cost absorption, lower selling prices and net unfavorable realized and unrealized derivative activity compared with a year ago.

The average third quarter DAP selling price, FOB plant, was $413 per tonne, which was a $74 per tonne decrease compared with a year ago and a $670 per tonne decrease compared with the second quarter of fiscal 2009. The DAP price momentum of the past several quarters reversed toward the end of the second quarter of fiscal 2009 resulting from the factors noted above.

The Phosphates segment’s total sales volume was 1.1 million tonnes for the third quarter compared to 2.2 million tonnes a year ago. Mosaic reduced third quarter phosphate production in response to a build-up of inventories in crop nutrient distribution channels and a decline in overall

 

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demand. Recently, the Company increased production closer to normal levels due to increased demand and sales orders. Phosphate sales volumes in the fourth quarter of fiscal 2009 are expected to be above third quarter levels, but below the prior year level. With DAP selling prices currently in the mid- $300 per tonne range, fourth quarter gross margin is expected to be positive but will be adversely affected by higher cost raw materials and finished products which are currently in inventory. The Company expects lower cost raw materials to begin benefiting gross margin in the latter half of the fourth quarter with a more favorable impact in first quarter of fiscal 2010.

Net unrealized mark-to-market derivative gains were $2.8 million in the third quarter of fiscal 2009 compared with $25.7 million for the same period a year ago.

This excerpt taken from the MOS 8-K filed Jan 6, 2009.

Phosphates

Net sales in the Phosphates segment were $1.8 billion for the second quarter, compared with net sales of $1.2 billion a year ago. Phosphates’ second quarter gross margin was $298.2 million, or 17.0% of net sales, compared with $397.6 million, or 32.3% of net sales, for the same period a year ago. Operating earnings were $258.8 million compared with $346.8 million in the same period last year. Higher selling prices were more than offset by a combination of factors including a 46% decrease in sales volumes to 1.2 million tonnes, an inventory valuation write-down of $213.2 million, higher raw material costs, and net unrealized mark-to-market derivative losses of $28.1 million. The decline in sales volumes was primarily due to a change in buyer sentiment as a result of the factors previously noted.

The inventory valuation write-down in the second quarter was necessary because the carrying cost of ending phosphate inventories, which included higher sulfur and ammonia costs, exceeded estimates of future phosphate selling prices. Mosaic expects the Phosphate segment’s results to be much weaker at least through the third quarter because of lower selling prices and margins, soft sales volumes, and lower production levels. As previously announced, Mosaic reduced phosphate production by approximately one million tonnes through December 2008 and plans to reduce production by up to an additional one million tonnes through fiscal 2009.

The average second quarter DAP selling price, FOB plant, was $1,083 per tonne, which was a $666 per tonne increase compared with a year ago and a $70 per tonne increase compared with the first quarter of fiscal 2009. The price momentum of the past several quarters reversed toward the end of the second quarter due to factors previously noted and significantly lower prices are expected in upcoming quarters.

This excerpt taken from the MOS 8-K filed Oct 2, 2008.

Phosphates

Net sales in the Phosphates segment were $2.6 billion for the first quarter, more than double net sales of $1.2 billion a year ago. Phosphates’ first quarter gross margin was $1.0 billion, or 38.8% of net sales, compared with $353.5 million, or 29.9% of net sales, for the same period a year ago. Operating earnings were $950.8 million, an increase of $640.6 million compared with $310.2 million in the same period last year. Operating earnings growth in the first quarter of fiscal 2009 was driven by increases in selling prices. These price increases more than offset a 7% decrease in sales volumes to 2.1 million tonnes, higher sulfur and ammonia costs, and net unrealized mark-to-market derivative losses of $74.6 million. The decline in sales volumes was primarily due to North American customer carry-over inventories from this Spring.

The average first quarter DAP selling price, FOB plant, was $1,013 per tonne, which is a $606 per tonne increase compared with a year ago and a $259 per tonne increase compared with the fourth quarter of fiscal 2008. This strong upward price momentum leveled off toward the end of the quarter, causing the average realized price to fall slightly below Mosaic’s guidance range.

This excerpt taken from the MOS 8-K filed Jul 29, 2008.

Phosphates

Net sales in the Phosphates segment were $2.0 billion for the fourth quarter, which more than doubled net sales of $959.7 million a year ago. Phosphates’ fourth quarter gross margin was $851.6 million, or 41.8% of net sales, compared with $266.9 million, or 27.8% of net sales, for the same period a year ago. Operating earnings were $797.4 million compared with $234.3 million for the same period last year. Operating earnings growth in the fourth quarter of fiscal 2008 was driven by significant increases in selling prices and a 5% increase in sales volumes to 2.4 million tonnes. These positive factors were partially offset by higher sulfur and ammonia raw material costs.

The average fourth quarter DAP price, FOB plant, was $754 per tonne, which is a $416 per tonne increase compared with a year ago and a $267 per tonne increase compared with the third quarter of fiscal 2008. Realized prices at the end of the fiscal 2008 fourth quarter were significantly higher than the average for the quarter and continue to rise, as do raw material costs.

This excerpt taken from the MOS 8-K filed Apr 4, 2008.

Phosphates

Net sales in the Phosphates segment were $1.3 billion for the third quarter, an increase of 82% compared to a year ago. Phosphates’ third quarter gross margin was $478.4 million, or 38.0% of net sales, compared with $19.7 million, or 2.9% of net sales, for the same period a year ago. Operating earnings were $442.7 million compared with an operating loss of $11.1 million for the same period last year. The sales, gross margin and operating earnings growth were driven by significant increases in selling prices, supplemented by unrealized mark-to-market gains of $25.7 million on natural gas and certain ocean freight forward contracts (compared with losses of $1.0 million on natural gas derivatives for the third quarter of fiscal 2007) partially offset by higher sulfur and ammonia raw material costs.

The average third quarter DAP price, FOB plant, was $487 per tonne, which is a $241 per tonne increase compared with a year ago and a $70 per tonne increase compared with the second quarter of fiscal 2008. Fertilizer and feed sales in the Phosphates segment (excluding tonnes sold by PhosChem for non-Mosaic customers) were up 6% to 2.2 million tonnes for the third quarter compared to the same period of the prior year.

This excerpt taken from the MOS 8-K filed Jan 10, 2008.

Phosphates

Net sales in the Phosphates segment were $1.2 billion for the second quarter, a 61% increase compared to a year ago. The second quarter gross margin was $397.6 million, or 32.3% of net sales, compared with $35.9 million, or 4.7% of net sales, for the same period a year ago. Operating earnings were $346.8 million compared with $5.1 million for the same period last year. The sales, gross margin and operating earnings increases were primarily due to the significant increase in selling prices partially offset by higher costs for sulfur and ammonia.

The average second quarter DAP price, FOB plant, was $417 per tonne, which is a $174 per tonne increase compared with a year ago and a $10 per tonne increase compared with the first quarter of fiscal 2008. Fertilizer and feed sales in the Phosphates segment were 2.3 million tonnes for the second quarter, comparable with volumes of a year ago. Sales volumes to North American customers increased 70% during the second quarter as this region exhibited strong demand recovery and growth from year ago levels. Sales volumes to international customers declined approximately 25%, principally due to the increased volumes sold in North America.

This excerpt taken from the MOS 8-K filed Jan 9, 2008.

Phosphates

Net sales in the Phosphates segment were $1.2 billion for the second quarter, a 61% increase compared to a year ago. The second quarter gross margin was $397.6 million, or 32.3% of net sales, compared with $35.9 million, or 4.7% of net sales, for the same period a year ago. Operating earnings were $346.8 million compared with $5.1 million for the same period last year. The sales, gross margin and operating earnings increases were primarily due to the significant increase in selling prices partially offset by higher costs for sulfur and ammonia.

The average second quarter DAP price, FOB plant, was $417 per tonne, which is a $174 per tonne increase compared with a year ago and a $10 per tonne increase compared with the first quarter of fiscal 2008. Fertilizer and feed sales in the Phosphates segment were 2.3 million tonnes for the second quarter, comparable with volumes of a year ago. Sales volumes to North American customers increased 70% during the second quarter as this region exhibited strong demand recovery and growth from year ago levels. Sales volumes to international customers declined approximately 25%, principally due to the increased volumes sold in North America.

This excerpt taken from the MOS 8-K filed Oct 9, 2007.

Phosphates

Net sales in the Phosphates business were $1.18 billion for the first quarter, a 50% increase compared to a year ago. The sales increase resulted from higher selling prices. The first quarter gross margin was $353.5 million, or 29.9% of net sales, compared with $109.2 million, or 13.8% of net sales, for the same period a year ago. Operating earnings were $310.2 million compared with $82.9 million for the same period last year. The increase in gross margin was primarily due to the sharp increases in fertilizer prices partially offset by higher costs for ammonia and sulfur; a change in mark-to-market effect from derivatives; and higher mining and concentrates production costs. Phosphates had unrealized mark-to-market losses of $12.9 million for the first quarter of fiscal 2008 which are included in cost of goods sold, compared with gains of $5.1 million for the first quarter of fiscal 2007.

Fertilizer and feed shipments in the Phosphates business were 2.2 million tonnes for the first quarter, about the same as year ago levels. Sales volumes to North America nearly doubled as a result of strong year-on-year market recovery and Mosaic’s plan to grow sales in this region. International sales volumes declined approximately 29%, due principally to the increased volume sold in North America. The average first quarter DAP price, FOB plant, was $407 per tonne, which is a $156 per tonne increase compared with a year ago and a $69 per tonne increase compared with the fourth quarter of fiscal 2007.

This excerpt taken from the MOS 8-K filed Jul 31, 2007.

Phosphates

The Phosphates business’ fertilizer and feed shipments were 2.2 million tonnes for the fourth quarter, down 17% compared to year ago levels. This reduced volume is primarily due to Mosaic’s indefinite closure of two high-cost plants in fiscal 2006. The average fourth quarter diammonium phosphates (DAP) price, FOB plant, was $338 per tonne, a 37% increase compared with the third quarter of fiscal 2007.

The Phosphates business’ net sales were $959.7 million for the fourth quarter, a 19% increase compared to a year ago. The sales increase resulted from higher selling prices partially offset by lower sales volume. The fourth quarter gross margin was $266.9 million, or 27.8% of net sales, compared with $39.9 million, or 5% of net sales, for the same period a year ago. Operating earnings were $234.3 million compared with a loss of $271.1 million for the same period a year ago, which included a pre-tax restructuring charge of $287.6 million. The improvement in gross margin was mainly due to higher selling prices. Gross margins improved as a result of lower mining and conversion costs, as well as lower sulfur costs partially offset by higher ammonia costs. The Phosphates business had unrealized mark-to-market derivative gains of $1.1 million for the fourth quarter of fiscal 2007, compared to losses of $4.0 million for the fourth quarter of fiscal 2006.

This excerpt taken from the MOS 8-K filed Apr 10, 2007.

Phosphates

The Phosphates’ business segment’s fertilizer and feed shipments were 2.1 million tonnes for the third quarter, down 2% compared with year ago levels. North American sales volumes increased by 65%, but were offset by a 24% decline to international markets. The average third quarter diammonium phosphate (DAP) price, FOB plant, was $246 tonne, which was unchanged from a year ago.

Phosphates’ net sales were $690.7 million for the third quarter, a decline of 1% compared to a year ago. The sales decline resulted from the lower sales volumes at the beginning of the quarter, partially offset by higher PhosChem sales for non-Mosaic members. Phosphates’ third quarter gross margin was $19.7 million, or 2.9% of net sales, compared with a loss of $0.7 million, or a negative 0.1% of net sales, for the same period a year ago. Phosphates’ operating loss was $11.1 million in the third quarter compared with a loss of $19.7 million for the same period a year ago. The improvement in gross margin resulted from unrealized mark-to-market effects in derivatives and lower costs for ammonia and sulfur, which were partially offset by higher mining and concentrates production costs. Phosphates had unrealized mark-to-market losses of $1.8 million for the third quarter of fiscal 2007, compared with losses of $34.6 million for the third quarter of fiscal 2006.

This excerpt taken from the MOS 10-K filed Aug 11, 2006.

Phosphates

Phosphates operates in a highly competitive global market. Among the competitors in the global phosphate crop are domestic and foreign companies, as well as foreign government-supported producers in Asia and Morocco. Phosphate producers compete primarily based on price and, to a lesser extent, product quality and innovation. Major integrated producers of feed phosphates and feed grade potassium are located in the United States, Europe and China. Many smaller producers are located in emerging markets around the world. Many of these smaller producers are not manufacturers of phosphoric acid and are required to purchase this raw material on the open market. Competition in this global market is also driven by price, quality and service.

 

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Table of Contents

As the largest miner of phosphate rock in the United States, and the world’s largest producer of concentrated phosphates, we maintain an advantage over some competitors as the scale of operations effectively reduces production costs per unit. We are also vertically integrated to captively supply one of our key raw materials, phosphate rock, to our phosphate production facilities. In addition, we produce another raw material, ammonia, to captively supply our Faustina concentrates facility. With our own sulfur transportation barges and our 50% ownership interest in Gulf Services, we are well-positioned to source an adequate, flexible and cost-effective supply of sulfur, our third key raw material.

With production facilities in both Central Florida near the Port of Tampa and in Louisiana on the Mississippi River, we are logistically positioned to supply both domestic and international customers. In addition, those multiple production points afford us the flexibility to optimally balance supply and demand.

With no captive ammonia production in Florida, we are subject to significant volatility in our purchase price of ammonia from world markets. In addition, we are subject to many environmental laws and regulations in the State of Florida that are often more stringent than those which producers in other states or foreign countries must comply.

This excerpt taken from the MOS 8-K filed Jan 17, 2006.

Phosphates

 

The Phosphates business segment’s fertilizer and feed shipments were 2.6 million tonnes for the second quarter and 5.6 million tonnes year-to-date. The average DAP selling price at Mosaic’s plant sites was $249 per tonne in the second quarter, an increase of $27 compared with the same period a year ago and $9 per tonne higher compared with the first quarter. Mosaic’s Phosphates sales were $752.4 million for the second quarter and $1.6 billion year-to-date.

 

Second quarter gross margins for Phosphates were $67.9 million with operating earnings of $42.1 million. DAP costs increased in the second quarter mainly because of higher ammonia prices and operating costs. Operating costs were negatively affected by production cutbacks, energy costs, hurricane-related supply chain disruptions and water treatment costs. In addition, Phosphates had unrealized non-cash mark-to-market derivative losses of $8.1 million in the second quarter, and the finalization of the fair value of certain assets acquired in the combination of the two companies resulted in additional depreciation charges of $11.2 million in the second quarter.

 

This excerpt taken from the MOS 8-K filed Oct 3, 2005.

Phosphates

 

Mosaic’s Phosphates business segment’s first quarter net sales were $856.5 million. Total fertilizer and feed phosphate shipments were 2.9 million tonnes and the average DAP selling price at Mosaic’s plant sites was $240 per tonne, an increase of $22 compared with the same period a year ago. However, costs per tonne also increased compared with a year ago, mainly because of higher ammonia prices and ongoing water treatment costs. Water treatment costs were approximately $10 million during the quarter, an increase of $10 million compared with the same period last year and $1 million compared with the fourth quarter of fiscal 2005. First quarter gross margins for Phosphates were $136.9 million with operating earnings of $106.9 million. Phosphates had non-cash mark-to-market derivative gains of $35.2 million in the first quarter.

 

These excerpts taken from the MOS 10-K filed Aug 5, 2005.

Phosphates

 

Phosphates’ net sales to external customers were $983.2 million and intersegment net sales were $196.1 million for total segment net sales of $1,179.3 million in fiscal year 2004 compared to $864.4 million in fiscal year 2003. Phosphates’ net sales to external customers represented 41.4% of our total net sales during fiscal year 2004. This increase was primarily due to increased sales volume, primarily related to DAP and monoammonium phosphate, which we refer to as MAP, resulting from the acquisition of the Green Bay, Florida phosphate operations in November 2002. An increase in sales price more than offset increases in raw material costs. Average ammonia prices increased to $255 per metric tonne and sulphur prices increased to $67 per metric tonne for the year ended May 31, 2004 as compared to $177 per metric tonne for ammonia and $62 per metric tonne for sulphur in the prior fiscal year. Phosphate rock costs remained approximately the same in each fiscal year.

 

Phosphates

 

Phosphates operates in a highly competitive global market. Among the competitors in the global phosphate crop are domestic and foreign companies, as well as foreign government-supported producers in Asia and Morocco. Phosphate producers compete primarily based on price and, to a lesser extent, product quality and innovation. Major integrated producers of feed phosphates and feed grade potassium are located in the United States, Europe and China. Many smaller producers are located in emerging markets around the world. Many of these smaller producers are not manufacturers of phosphoric acid and are required to purchase this raw material on the open market. Competition in this global market is also driven by price, quality and service.

 

As the largest miner of phosphate rock in the United States, and the world’s largest producer of concentrated phosphates, we enjoy an advantage over some competitors as the scale of operations effectively reduces production costs per unit. We are also vertically integrated to captively supply one of our key raw materials, phosphate rock, to our phosphate production facilities. In addition, we produce another raw material, ammonia, to captively supply our Faustina concentrates facility. With our own sulphur transportation barges and our 50 percent ownership interest in Gulf Services, we are well-positioned to source an adequate, flexible and cost-effective supply of sulphur, our third key raw material.

 

With production facilities in both Central Florida near the Port of Tampa and in Louisiana on the Mississippi River, we are logistically positioned to supply both domestic and international customers. In addition, those multiple production points afford us the flexibility to optimally balance supply and demand.

 

With no captive ammonia production in Florida, we are subject to significant volatility in our purchase price of ammonia from world markets. In addition, we are subject to many environmental laws and regulations in the state of Florida that are often more stringent than those which producers in other states or foreign countries must comply.

 

This excerpt taken from the MOS 8-K filed Jul 27, 2005.

Phosphates

 

Mosaic’s Phosphates business segment’s fourth quarter net sales were $814 million. Total fertilizer grade and feed phosphate shipments were 3.44 million tonnes and the average DAP selling price at Mosaic’s plant sites was $218 per tonne, an increase of $18, or 9%, compared with a year ago. However, costs also increased compared with a year ago, mainly because of higher ammonia prices and ongoing water treatment costs resulting from last summer’s hurricanes. Fourth quarter gross margins for Phosphates were $97 million with operating earnings of $69 million.

 

For fiscal 2005, the Phosphates business segment reported net sales of $2.3 billion. Gross margins were $163 million and operating earnings were $89 million. For fiscal 2005, pro forma net sales were $3.1 billion and the pro forma operating loss was $5 million. This resulted from a charge of $73 million for the termination of a long-term rock supply contract, merger integration expenses and increased costs due to the active hurricane season in Florida in fiscal 2005.

 

This excerpt taken from the MOS 10-Q filed Apr 12, 2005.

Phosphates

 

Phosphates’ net sales for the nine month period ended February 28, 2005 increased 79 percent to $1,498.7 million compared to $839.5 million in the comparable period of the prior fiscal year largely because of the acquisition of IMC which resulted in a $505.9 million increase to net sales. In addition, higher concentrated phosphate sales prices of $140.9 million and increased sales of ammonia, animal feed products and sulfuric acid of $26.5 million, $12.7 million and $3.1 million, respectively, contributed to the increase. The increase in net sales was partially offset by lower concentrated phosphate sales volumes of $22.0 million and a reduction of sales through the Canadian distribution business of $11.9 million. The increase in concentrated phosphate sales prices was primarily the result of higher international and domestic net sales of DAP of $82.1 million and $14.1 million, respectively, higher international and domestic sales of GMAP of $30.9 million and $5.1 million, respectively, higher international and domestic sales of GTSP of $2.9 million and $1.2 million, respectively, and higher international and domestic sales of MicroEssentials TM of $3.1 million and $1.5 million, respectively. The decrease in concentrated phosphate sales volumes was primarily the result of decreased international DAP shipments to China, India, Argentina, Ethiopia and Mexico, decreased international GTSP sales to Argentina, Brazil and Japan, decreased international GMAP sales to Brazil, Chile and Mexico and decreased MicroEssentials TM shipments to Australia. The volume decrease was partially offset by increased international GMAP shipments to Venezuela, South Africa and Argentina. Average DAP prices increased 25 percent to $198 per short ton in the nine month period ended February 28, 2005 from $158 per short ton in the prior fiscal year comparable period.

 

Gross margins increased to $66.0 million for the nine months ended February 28, 2005 compared to $28.6 million in the comparable period of the prior fiscal year. Margins were favorable as a result of higher concentrated phosphate prices discussed above and the acquisition of IMC which added $27.7 million to gross margins in the period. The IMC acquisition includes the effect of reduced amortization of $6.9 million from the step-down in basis of fixed assets. The increase to gross margin is partially offset by increased operating expenses of $70.8 million, partially related to the 2004 Florida hurricanes which adversely impacted the Company’s Florida operations, increased ammonia costs of $24.5 million and increased plant shutdown and other costs of $35.3 million.

 

This excerpt taken from the MOS 8-K filed Mar 31, 2005.

Phosphates

 

Mosaic’s Phosphates business segment third quarter net sales were $645.7 million. Total concentrated phosphate shipments were 2.7 million tons. The average DAP realization was $201 per ton, an increase of $32, or 19%, compared with a year ago.

 

Third quarter gross margins for Phosphates were $38.7 million. Operating earnings continued to be negatively affected by higher production costs resulting from three hurricanes that hit the company’s Florida operations last summer. In particular, the company is incurring significant costs to treat excess water before it can be released to surrounding watersheds and, to a lesser extent, increased maintenance costs.

 

Mosaic idled its Green Bay plant in January to manage inventories during the winter at a cost of $3.6 million. While the Green Bay plant is now operating, the company will continue to manage plant capacity as necessary to meet seasonal demand swings.

 

 


This excerpt taken from the MOS 10-Q filed Jan 19, 2005.

Phosphates

 

Phosphates’ net sales for the six month period ended November 30, 2004 increased 47 percent to $853.0 million compared to $581.9 million in the comparable period of the prior fiscal year largely because of the acquisition of IMC which resulted in a $158.8 million increase to net sales, higher concentrated phosphate sales prices of $100.8 million and increased sales of MicroEssentialsTM and animal feed products of $23.3 million and $7.8 million, respectively, partially offset by lower concentrated phosphate sales volumes of $33.7 million. The increase in concentrated phosphate sales prices was primarily the result of higher international and domestic net sales of DAP of $53.7 million and $8.7 million, respectively, higher international and domestic sales of GMAP of $32.6 million and $2.4 million, respectively, and higher international and domestic sales of GTSP of $2.6 million and $0.9 million, respectively. The decrease in concentrated phosphate sales volumes was primarily the result of decreased international DAP shipments to China, India, Argentina, Kenya, Mexico and Peru and decreased international GMAP sales to Mexico and Australia partially offset by increased international DAP sales to South Africa, Japan, Brazil, Honduras, Cambodia and Colombia and an increase in international GMAP shipments to Brazil, Argentina, Venezuela, South Africa and Colombia. Average DAP prices increased 26 percent to $195 per short ton in the six month period ended November 30, 2004 from $155 per short ton in the prior fiscal year comparable period.

 

Gross margins increased to $27.3 million for the six months ended November 30, 2004 compared to $11.0 million in the comparable period of the prior fiscal year. Margins were favorable as a result of higher concentrated phosphate prices discussed above and the acquisition of IMC which added $5.0 million to gross margins in the period. The favorable variances were partially offset by higher phosphate operating costs and expenses related to the 2004 hurricanes of $51.8 million and $30.0 million, respectively, as well as higher raw material costs, primarily ammonia and sulphur, of $25.1 million. The $5.0 million increase due to the IMC acquisition is net of the negative effect of purchase accounting adjustments on cost of sales for the period of $6.8 million. These purchase accounting adjustments included the write-off of the fair market value adjustment required related to inventory sold during the period of $10.8 million, partially offset by $4.0 million of reduced amortization from the step-down in basis of fixed assets.

 

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