UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
R
QUARTERLY REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For
the quarterly period ended March 31, 2009
or
o
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For
the transition period
from to
Commission
File Number 001-31921
Compass
Minerals International, Inc.
(Exact
name of registrant as specified in its charter)
Delaware
(State
or other jurisdiction of
incorporation
or organization)
|
36-3972986
(I.R.S.
Employer
Identification
Number)
|
9900
West 109th Street
Suite
600
Overland
Park, KS 66210
(913)
344-9200
(Address
of principal executive offices and telephone number)
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:
R
No:
£
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
Yes:
£
No:
£
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or smaller reporting
company. See definitions of “large accelerated filer,” “accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check
one):
Large
accelerated filer
R
|
Accelerated
filer
£
|
Non-accelerated
filer
£
|
Smaller
reporting company
£
|
Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
|
Yes:
£
No:
R
|
The
number of shares outstanding of the registrant’s common stock, $0.01 par value
per share, at April 17, 2009 was 32,574,788 shares.
CO
MPASS MINERALS INTERNATIONAL, INC.
TABLE
OF CONTENTS
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PART
I. FINANCIAL INFORMATION
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Item
1.
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Financial
Statements
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Page
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2
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3
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4
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5
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6
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Item
2.
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14
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Item
3.
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18
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Item
4.
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18
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PART
II. OTHER INFORMATION
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Item
1.
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18
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Item
1A.
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19
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Item
2.
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19
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Item
3.
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19
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Item
4.
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19
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Item
5.
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19
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Item
6.
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19
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20
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PART
I. FINANCIAL INFORMATION
Item
1.
Financial
Statements
CO
MPASS MINERALS INTERNATIONAL, INC.
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CONSOLIDATED
BALANCE SHEETS
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(in
millions, except share data)
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(Unaudited)
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March
31,
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December
31,
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2009
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2008
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ASSETS
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Current
assets:
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Cash
and cash equivalents
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$
|
117.4
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$
|
34.6
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Receivables,
less allowance for doubtful accounts of
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$2.6 in
2009 and $2.5 in 2008
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97.8
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210.4
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Inventories
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135.1
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123.3
|
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Deferred
income taxes, net
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30.0
|
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12.5
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Other
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8.7
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9.7
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Total
current assets
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389.0
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390.5
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Property,
plant and equipment, net
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379.3
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383.1
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Intangible
assets, net
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20.1
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20.4
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Other
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29.5
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28.6
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Total
assets
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$
|
817.9
|
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|
$
|
822.6
|
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LIABILITIES
AND STOCKHOLDERS' EQUITY
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Current
liabilities:
|
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Current
portion of long-term debt
|
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$
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4.1
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$
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4.1
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Accounts
payable
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69.4
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115.4
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Accrued
expenses
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31.6
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41.0
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Accrued
salaries and wages
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13.7
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23.1
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Income
taxes payable
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29.5
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29.8
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Accrued
interest
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3.9
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2.1
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Total
current liabilities
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152.2
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215.5
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Long-term
debt, net of current portion
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481.9
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491.6
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Deferred
income taxes, net
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40.4
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21.6
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Other
noncurrent liabilities
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30.2
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29.4
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Commitments
and contingencies (Note 8)
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Stockholders'
equity:
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Common
stock: $0.01 par value, 200,000,000 authorized
shares;
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35,367,264
issued shares
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0.4
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0.4
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Additional
paid-in capital
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6.0
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2.2
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Treasury
stock, at cost — 2,792,476 shares at March 31, 2009 and
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2,929,654
shares at December 31, 2008
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(5.3
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)
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(5.6
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)
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Retained
earnings
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118.1
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68.3
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Accumulated
other comprehensive loss
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(6.0
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)
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(0.8
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)
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Total
stockholders' equity
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113.2
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64.5
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Total
liabilities and stockholders' equity
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$
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817.9
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$
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822.6
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The
accompanying notes are an integral part of the consolidated financial
statements.
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CO
MPASS MINERALS INTERNATIONAL,
INC.
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CONSOLIDATED
STATEMENTS OF OPERATIONS
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(Unaudited,
in millions, except share data)
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Three
Months Ended
March 31,
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2009
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2008
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Sales
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$
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309.1
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$
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380.0
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Shipping
and handling cost
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91.0
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131.2
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Product
cost
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102.8
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151.8
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Gross
profit
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115.3
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97.0
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Selling,
general and administrative expenses
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20.7
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|
18.9
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Operating
earnings
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94.6
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78.1
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|
Other
(income) expense:
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Interest
expense
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|
7.5
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12.0
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Other,
net
|
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|
(1.1
|
)
|
|
|
(1.9
|
)
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Earnings
before income taxes
|
|
|
88.2
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68.0
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Income
tax expense
|
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26.6
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18.9
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Net
earnings
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$
|
61.6
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$
|
49.1
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Basic
net earnings per common share
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$
|
1.85
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$
|
1.49
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Diluted
net earnings per common share
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$
|
1.85
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$
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1.48
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Weighted
average common shares outstanding (in thousands):
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Basic
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32,493
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32,366
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Diluted
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32,538
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32,442
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Cash
dividends per common share
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$
|
0.355
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$
|
0.335
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The
accompanying notes are an integral part of the consolidated financial
statements.
|
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C
OMPASS MINERALS INTERNATIONAL,
INC.
|
|
CONSOLIDATED
STATEMENT OF STOCKHOLDERS' EQUITY
|
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For
the three months ended March 31, 2009
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(Unaudited,
in millions)
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Accumulated
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Additional
|
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Other
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Common
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Paid
In
|
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|
Treasury
|
|
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Retained
|
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Comprehensive
|
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Stock
|
|
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Capital
|
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Stock
|
|
|
Earnings
|
|
|
Loss
|
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Total
|
|
Balance,
December 31, 2008
|
|
$
|
0.4
|
|
|
$
|
2.2
|
|
|
$
|
(5.6
|
)
|
|
$
|
68.3
|
|
|
$
|
(0.8
|
)
|
|
$
|
64.5
|
|
Dividends
on common stock
|
|
|
|
|
|
|
|
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|
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|
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(11.8
|
)
|
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|
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(11.8
|
)
|
Stock
options exercised
|
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|
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|
3.3
|
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|
0.3
|
|
|
|
|
|
|
|
|
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|
3.6
|
|
Stock-based
compensation
|
|
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|
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|
0.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.5
|
|
Comprehensive
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61.6
|
|
|
|
|
|
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61.6
|
|
Change in unrealized pension costs
|
|
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|
|
|
|
|
|
|
|
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|
|
|
|
|
|
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|
-
|
|
Unrealized loss on cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
Foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5.2
|
)
|
|
|
(5.2
|
)
|
Total
comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56.4
|
|
Balance,
March 31, 2009
|
|
$
|
0.4
|
|
|
$
|
6.0
|
|
|
$
|
(5.3
|
)
|
|
$
|
118.1
|
|
|
$
|
(6.0
|
)
|
|
$
|
113.2
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of the consolidated financial
statements.
|
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|
|
|
|
CO
MPASS MINERALS INTERNATIONAL, INC.
|
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CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
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|
|
|
|
(Unaudited,
in millions)
|
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|
Three
Months Ended
March 31,
|
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|
2009
|
|
|
2008
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
Net earnings
|
|
$
|
61.6
|
|
|
$
|
49.1
|
|
Adjustments to reconcile net earnings to net cash flows provided by
operating activities:
|
|
Depreciation, depletion and amortization
|
|
|
10.2
|
|
|
|
10.7
|
|
Finance fee amortization
|
|
|
0.3
|
|
|
|
0.3
|
|
Accreted interest
|
|
|
-
|
|
|
|
5.1
|
|
Deferred income taxes
|
|
|
1.8
|
|
|
|
(0.3
|
)
|
Other, net
|
|
|
0.9
|
|
|
|
0.9
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
111.0
|
|
|
|
40.7
|
|
Inventories
|
|
|
(12.5
|
)
|
|
|
62.4
|
|
Other assets
|
|
|
(1.2
|
)
|
|
|
1.2
|
|
Accounts payable and accrued expenses
|
|
|
(59.0
|
)
|
|
|
(24.3
|
)
|
Other noncurrent liabilities
|
|
|
(1.1
|
)
|
|
|
(0.3
|
)
|
Net
cash provided by operating activities
|
|
|
112.0
|
|
|
|
145.5
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(9.4
|
)
|
|
|
(8.7
|
)
|
Other, net
|
|
|
(0.1
|
)
|
|
|
0.2
|
|
Net
cash used in investing activities
|
|
|
(9.5
|
)
|
|
|
(8.5
|
)
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
Principal payments on long-term debt
|
|
|
(1.0
|
)
|
|
|
(1.0
|
)
|
Revolver activity
|
|
|
(8.6
|
)
|
|
|
(34.0
|
)
|
Dividends paid
|
|
|
(11.8
|
)
|
|
|
(11.0
|
)
|
Proceeds received from stock option exercises
|
|
|
2.1
|
|
|
|
1.0
|
|
Excess tax benefits from equity compensation awards
|
|
|
1.5
|
|
|
|
1.7
|
|
Other
|
|
|
(0.5
|
)
|
|
|
-
|
|
Net
cash used in financing activities
|
|
|
(18.3
|
)
|
|
|
(43.3
|
)
|
Effect
of exchange rate changes on cash and cash equivalents
|
|
|
(1.4
|
)
|
|
|
(3.0
|
)
|
Net
change in cash and cash equivalents
|
|
|
82.8
|
|
|
|
90.7
|
|
Cash
and cash equivalents, beginning of the year
|
|
|
34.6
|
|
|
|
12.1
|
|
Cash
and cash equivalents, end of period
|
|
$
|
117.4
|
|
|
$
|
102.8
|
|
Supplemental
cash flow information:
|
|
|
|
|
|
|
|
|
Interest paid, net of amounts capitalized
|
|
$
|
5.6
|
|
|
$
|
7.4
|
|
Income taxes paid, net of refunds
|
|
|
23.4
|
|
|
|
9.0
|
|
|
|
The
accompanying notes are an integral part of the consolidated financial
statements.
|
|
CO
MPASS MINERALS INTERNATIONAL, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Accounting
Policies and Basis of Presentation:
Compass
Minerals International, Inc., through its subsidiaries (“CMP”, “Compass
Minerals”, or the “Company”), is a producer and marketer of inorganic mineral
products with manufacturing sites in North America and the United Kingdom. Its
principal products are salt, consisting of sodium chloride and magnesium
chloride, and sulfate of potash (“SOP”), a specialty fertilizer. The
Company provides highway deicing products to customers in North America and the
United Kingdom, and specialty fertilizer to growers worldwide. The
Company also produces and markets consumer deicing and water conditioning
products, ingredients used in consumer and commercial foods, and other
mineral-based products for consumer, agricultural and industrial
applications. Compass Minerals also provides records management
services to businesses located in the U.K.
Compass
Minerals International, Inc. is a holding company with no operations other than
those of its wholly-owned subsidiaries. The consolidated financial
statements include the accounts of Compass Minerals International, Inc. and its
wholly owned subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation.
The
accompanying unaudited consolidated financial statements have been prepared in
accordance with U.S. generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles (GAAP) for
complete financial statements. These unaudited consolidated financial statements
should be read in conjunction with the consolidated financial statements of CMP
for the year ended December 31, 2008 as filed with the Securities and Exchange
Commission in its Annual Report on Form 10-K. In the opinion of management, all
adjustments, consisting of normal recurring accruals considered necessary for a
fair presentation, have been included.
The
Company experiences a substantial amount of seasonality in salt segment sales,
primarily with respect to its deicing products. As a result, sales and operating
income are generally higher in the first and fourth quarters and lower during
the second and third quarters of each year. In particular, sales of
highway and consumer deicing salt and magnesium chloride products vary based on
the severity of the winter conditions in areas where the product is used.
Following industry practice in North America and the U.K., the Company
stockpiles sufficient quantities of deicing salt throughout the second, third
and fourth quarters to meet the estimated requirements for the upcoming winter
season. Production of deicing salt during the first quarter can vary based on
the severity or mildness of the preceding winter season. Due to the
seasonal nature of the deicing product lines, operating results for the interim
periods are not necessarily indicative of the results that may be expected for
the full year.
Recent Accounting Pronouncements
–
In
April 2009, the FASB issued Staff Position SFAS No. 141(R)-1 (“SFAS 141(R)-1”),
“Accounting for Assets Acquired and Liabilities Assumed in a Business
Combination That Arise from Contingencies” which amends and clarifies
FASB Statement No. 141(revised 2007), “Business Combinations,” to address
application issues on initial and subsequent recognition and measurement arising
from contingencies in a business combination. SFAS 141(R)-1 is
effective for assets or liabilities arising from contingencies in business
combinations beginning with the first annual period on or after December 15,
2008. The adoption of SFAS 141(R)-1 did not have an impact on the
Company’s consolidated financial statements.
2. Inventories:
Inventories
consist of the following (in millions):
|
|
March
31,
|
|
|
December
31,
|
|
|
|
2009
|
|
|
2008
|
|
Finished
goods
|
|
$
|
100.0
|
|
|
$
|
94.1
|
|
Raw
materials and supplies
|
|
|
35.1
|
|
|
|
29.2
|
|
Total
inventories
|
|
$
|
135.1
|
|
|
$
|
123.3
|
|
3. Property,
Plant and Equipment, Net:
Property,
plant and equipment, net consists of the following (in millions):
|
|
March
31,
|
|
|
December
31,
|
|
|
|
2009
|
|
|
2008
|
|
Land
and buildings
|
|
$
|
189.7
|
|
|
$
|
190.2
|
|
Machinery
and equipment
|
|
|
381.6
|
|
|
|
381.6
|
|
Furniture
and fixtures
|
|
|
17.8
|
|
|
|
17.7
|
|
Mineral
interests
|
|
|
162.9
|
|
|
|
164.3
|
|
Construction
in progress
|
|
|
39.3
|
|
|
|
36.5
|
|
|
|
|
791.3
|
|
|
|
790.3
|
|
Less
accumulated depreciation and depletion
|
|
|
(412.0
|
)
|
|
|
(407.2
|
)
|
Property,
plant and equipment, net
|
|
$
|
379.3
|
|
|
$
|
383.1
|
|
|
|
|
|
|
|
|
|
|
4. Intangible
Assets, Net:
Intangible
assets consist primarily of purchased rights to produce SOP and customer
relationships and are being amortized over 25 years and 7 years, respectively.
Amortization expense was $0.3 million during the three months ended March 31,
2009 and 2008.
5. Income
Taxes:
Income
tax expense for the three months ended March 31, 2009 was $26.6 million, an
increase of $7.7 million compared to $18.9 million for the first quarter of
2008. The Company’s income tax provision differs from the U.S.
statutory federal income tax rate primarily due to U.S. statutory depletion,
state income taxes (net of federal tax benefit), foreign income tax rate
differentials, foreign mining taxes, interest on uncertain tax positions, and
interest expense recognition differences for book and tax purposes.
At March
31, 2009 and December 31, 2008, the Company had approximately $27.8 million and
$27.9 million, respectively, of gross federal NOLs that expire in various years
through 2028. The Company records valuation allowances for portions of its
deferred tax assets relating to NOLs that it does not believe are more likely
than not to be realized. As of March 31, 2009 and December 31, 2008,
the Company’s valuation allowance was $3.3 million and $3.7 million,
respectively. In the future, if the Company determines, based on the existence
of sufficient evidence, that it should realize more or less of its deferred tax
assets, an adjustment to any existing valuation allowance will be made in the
period such determination is made.
6. Long-term
Debt:
Long-term
debt consists of the following (in millions):
|
|
March
31,
|
|
|
December
31,
|
|
|
|
2009
|
|
|
2008
|
|
12%
Senior Subordinated Discount Notes due 2013
|
|
$
|
89.8
|
|
|
$
|
89.8
|
|
Term
Loan due 2012
|
|
|
271.1
|
|
|
|
271.8
|
|
Incremental
Term Loan due 2012
|
|
|
125.1
|
|
|
|
125.4
|
|
Revolving
Credit Facility due 2010
|
|
|
-
|
|
|
|
8.7
|
|
|
|
|
486.0
|
|
|
|
495.7
|
|
Less
current portion
|
|
|
(4.1
|
)
|
|
|
(4.1
|
)
|
Long-term
debt, net of current portion
|
|
$
|
481.9
|
|
|
$
|
491.6
|
|
7. Pension
Plans:
The
components of net periodic benefit cost for the three-months ended March 31,
2009 and 2008 are as follows (in millions):
|
|
Three
Months Ended
March 31,
|
|
|
|
2009
|
|
|
2008
|
|
Service
cost for benefits earned during the year
|
|
$
|
-
|
|
|
$
|
0.1
|
|
Interest
cost on projected benefit obligation
|
|
|
0.8
|
|
|
|
1.2
|
|
Expected
return on plan assets
|
|
|
(0.8
|
)
|
|
|
(1.3
|
)
|
Net
pension expense
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
During
the first quarter of 2009, the Company made $1.9 million of contributions to its
pension plans.
8. Commitments
and Contingencies:
The
Company is involved in legal and administrative proceedings and claims of
various types from normal Company activities.
The
Company is aware of an aboriginal land claim filed by The Chippewas of Nawash
and The Chippewas of Saugeen (the “Chippewas”) in the Ontario Superior Court
against The Attorney General of Canada and Her Majesty The Queen In Right of
Ontario. The Chippewas claim that a large part of the land under Lake Huron was
never conveyed by treaty and therefore belongs to the Chippewas. The land
claimed includes land under which the Company’s Goderich mine operates and has
mining rights granted to it by the government of Ontario. The Company is not a
party to this court action. Similar claims are pending with respect to other
parts of the Great Lakes by other aboriginal claimants. The Company has been
informed by the Ministry of the Attorney General of Ontario that “Canada takes
the position that the common law does not recognize aboriginal title to the
Great Lakes and its connecting waterways.”
The
Company does not believe that this action will result in a material adverse
financial effect on the Company. Furthermore, while any litigation contains an
element of uncertainty, management presently believes that the outcome of each
such proceeding or claim which is pending or known to be threatened, or all of
them combined, will not have a material adverse effect on the Company’s results
of operations, cash flows or financial position.
9. Operating
Segments:
Segment
information is as follows (in millions):
|
|
Three
Months Ended March 31, 2009
|
|
|
|
Salt
|
|
|
Specialty
Fertilizer
|
|
Corporate
and Other
(a)
|
|
Total
|
|
Sales
to external customers
|
|
$
|
268.8
|
|
|
$
|
38.2
|
|
|
$
|
2.1
|
|
|
$
|
309.1
|
|
Intersegment
sales
|
|
|
0.1
|
|
|
|
1.4
|
|
|
|
(1.5
|
)
|
|
|
-
|
|
Shipping
and handling cost
|
|
|
88.4
|
|
|
|
2.6
|
|
|
|
-
|
|
|
|
91.0
|
|
Operating
earnings (loss)
|
|
|
77.4
|
|
|
|
26.8
|
|
|
|
(9.6
|
)
|
|
|
94.6
|
|
Depreciation,
depletion and amortization
|
|
|
6.8
|
|
|
|
2.3
|
|
|
|
1.1
|
|
|
|
10.2
|
|
Total
assets
|
|
|
567.8
|
|
|
|
181.6
|
|
|
|
68.5
|
|
|
|
817.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended March 31, 2008
|
|
|
|
Salt
|
|
|
Specialty
Fertilizer
|
|
Corportate
and Other
(a)
|
|
Total
|
|
Sales
to external customers
|
|
$
|
329.2
|
|
|
$
|
47.7
|
|
|
$
|
3.1
|
|
|
$
|
380.0
|
|
Intersegment
sales
|
|
|
0.1
|
|
|
|
4.3
|
|
|
|
(4.4
|
)
|
|
|
-
|
|
Shipping
and handling cost
|
|
|
124.3
|
|
|
|
6.9
|
|
|
|
-
|
|
|
|
131.2
|
|
Operating
earnings (loss)
|
|
|
69.5
|
|
|
|
17.1
|
|
|
|
(8.5
|
)
|
|
|
78.1
|
|
Depreciation,
depletion and amortization
|
|
|
7.8
|
|
|
|
2.4
|
|
|
|
0.5
|
|
|
|
10.7
|
|
Total
assets
|
|
|
576.3
|
|
|
|
165.9
|
|
|
|
57.5
|
|
|
|
799.7
|
|
|
(a)
“Corporate and Other” includes corporate entities, the records management
business and eliminations. Corporate assets include deferred
tax assets, deferred financing fees, investments related to the
non-qualified retirement plan, and other assets not allocated to the
operating segments.
|
10. Stockholders’
Equity and Equity Instruments:
On March
10, 2009, the Company granted 133,726 options and 43,611 restricted stock units
to certain key employees under its 2005 Incentive Award Plan. The
Company’s closing stock price on the grant date of $58.99 was used to set the
exercise price for the options and the fair value of the restricted stock units
(“RSUs”). The options vest ratably on each anniversary date over a
four-year service period. Unexercised options expire after seven
years. The RSUs vest on the third anniversary following the grant date. The RSUs
granted entitle the holders to receive non-forfeitable dividends or other
distributions equal to, and at the same time as, those declared on the Company’s
common stock.
To
estimate the fair value of options on the grant date, the Company uses the Black
Scholes option valuation model. Award recipients are grouped
according to expected exercise behavior. Unless better information is available
to estimate the expected term of the options, the estimate is based on
historical exercise experience. The risk-free rate, using U.S. Treasury yield
curves in effect at the time of grant, is selected based on the expected term of
each group. The Company’s historical stock price is used to estimate expected
volatility. The range of estimates and fair values for options
granted during the first quarter of 2009 is included in the table below. The
weighted average grant date fair value of these options was $19.15.
|
|
Range
|
|
Fair
value of options granted
|
|
$
|
18.36
- $19.37
|
|
Exercise
price
|
|
$
|
58.99
|
|
Expected
term (years)
|
|
|
3 -
6
|
|
Expected
volatility
|
|
|
42.47%
- 48.96
|
%
|
Dividend
yield
|
|
|
2.6
|
%
|
Risk-free
rate of return
|
|
|
1.59%
- 2.23
|
%
|
During
the three months ended March 31, 2009, the Company reissued 104,336 shares of
treasury stock related to the exercise of stock options and 10,135 shares
related to the distribution of deferred stock units from the Directors’ Deferred
Compensation Plan. The Company recorded additional tax benefits of
$1.5 million from its equity compensation awards as additional paid-in capital.
During the three months ended March 31, 2009 and 2008, the Company recorded $0.8
million and $0.6 million of compensation expense, respectively,
pursuant
to its stock-based compensation plans. No amounts have been
capitalized. The following table summarizes stock-based compensation activity
during the three months ended March 31, 2009.
|
|
Stock
Options
|
|
|
Restricted
Stock Units
|
|
|
|
Number
of
|
|
|
Weighted-
|
|
|
Number
of
|
|
|
Weighted-
|
|
|
|
Options
|
|
|
Average
|
|
|
RSUs
|
|
|
Average
|
|
|
|
Outstanding
|
|
|
Exercise
price
|
|
Outstanding
|
|
|
Fair
Value
|
|
Outstanding
at December 31, 2008
|
|
|
668,750
|
|
|
$
|
30.66
|
|
|
|
140,693
|
|
|
$
|
35.68
|
|
Granted
|
|
|
133,726
|
|
|
|
58.99
|
|
|
|
43,611
|
|
|
|
58.99
|
|
Released
from restriction
|
|
|
-
|
|
|
|
-
|
|
|
|
(32,400
|
)
|
|
|
25.69
|
|
Exercised
|
|
|
(104,336
|
)
|
|
|
20.04
|
|
|
|
-
|
|
|
|
-
|
|
Outstanding
at March 31, 2009
|
|
|
698,140
|
|
|
$
|
37.67
|
|
|
|
151,904
|
|
|
$
|
44.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Comprehensive
Loss
The
Company’s comprehensive loss is comprised of net earnings, amortization of the
unrealized net pension costs, and the change in the unrealized gain (loss) on
natural gas and interest rate swap cash flow hedges and foreign currency
translation adjustments. The components of and changes in accumulated
other comprehensive loss for the three months ended March 31, 2009 are as
follows (in millions):
|
|
Balance
|
|
|
|
|
|
Balance
|
|
|
|
December
31,
|
|
|
2009
|
|
|
March
31,
|
|
|
|
2008
|
|
|
Change
|
|
|
2009
|
|
Unrealized
net pension costs
|
|
$
|
(3.7
|
)
|
|
$
|
-
|
|
|
$
|
(3.7
|
)
|
Unrealized
loss on cash flow hedges
|
|
|
(10.3
|
)
|
|
|
-
|
|
|
|
(10.3
|
)
|
Cumulative
foreign currency translation adjustment
|
|
|
13.2
|
|
|
|
(5.2
|
)
|
|
|
8.0
|
|
Accumulated
other comprehensive loss
|
|
$
|
(0.8
|
)
|
|
$
|
(5.2
|
)
|
|
$
|
(6.0
|
)
|
With the
exception of the cumulative foreign currency translation adjustment, for which
no tax effect is recorded, the changes in the components of accumulated other
comprehensive loss are reflected net of applicable income taxes.
11. Derivative
Financial Instruments:
The
Company is subject to various types of market risks including interest rate
risk, foreign currency exchange rate transaction and translation risk and
commodity pricing risk. Management may take actions to mitigate the
exposure to these types of risks including entering into forward purchase
contracts and other financial instruments. Currently, the Company
manages a portion of its interest rate risk and commodity pricing risk by using
derivative instruments. The Company does not engage in trading
activities or take any speculative position with any financial instrument
arrangements. The Company has entered into natural gas derivative instruments
and interest rate swap agreements with counterparties it views as creditworthy.
However, management does attempt to mitigate any credit risk by entering into
master netting agreements with these counterparties.
During
the first quarter of 2008, the FASB issued FASB Statement No. 161 – “Disclosures
about Derivative Instruments and Hedging Activities”. This statement
requires holders of derivative instruments to provide qualitative disclosures
about objectives and strategies for using derivatives, quantitative disclosures
about fair value amounts of gains and losses from derivative instruments, and
disclosures about credit-risk-related contingent features in derivative
agreements. The Company adopted this statement effective with the
first quarter of 2009.
Cash
Flow Hedges
As of
March 31, 2009, the Company has entered into natural gas derivative instruments
and interest rate swap agreements. SFAS No. 133 requires that companies record
derivative financial instruments as either assets or liabilities at fair value
in the statement of financial position. Derivatives qualify for
treatment as hedges when there is a high correlation between the change in fair
value of the derivative instrument and the related change in value of the
underlying hedged item. Furthermore, the Company must designate the hedging
instruments based upon the exposure being hedged as a fair value hedge, a cash
flow hedge or a net investment in foreign operations hedge. All
derivative instruments held by the Company as of March 31, 2009 and December 31,
2008 qualified as cash flow hedges. For these qualifying hedges, the effective
portion of the change in fair value is recognized through earnings when the
underlying transaction being hedged affects earnings, allowing a derivative’s
gains and losses to offset related results from the hedged item on the income
statement. For derivative
instruments
that are not accounted for as hedges, or for the ineffective portions of
qualifying hedges, the change in fair value is recorded through earnings in the
period of change. The Company formally documents, designates, and assesses the
effectiveness of transactions that receive hedge accounting initially and on an
on-going basis. Any ineffectiveness related to these hedges was not material for
any of the periods presented.
Natural
gas is used at several of the Company’s salt production facilities and a change
in natural gas prices impacts the Company’s operating margin. As of
March 31, 2009, the Company had entered into natural gas derivative instruments
to hedge a portion of its natural gas purchase requirements through November
2011. The Company’s objective is to reduce the earnings and cash flow
impacts of changes in market prices of natural gas by fixing the purchase price
of up to 90% of its forecasted natural gas usage. The Company may
hedge portions of its natural gas usage up to 36 months in advance of the
physical purchase. As of March 31, 2009 and December 31, 2008, the Company had
agreements in place to hedge natural gas purchases of 5.0 and 4.7 million
British thermal units, respectively.
As of
March 31, 2009, the Company had $396.2 million of Credit Agreement borrowings
which are subject to a floating rate. The Company has $150 million of
interest rate swap agreements in place to hedge the variability of future
interest payments. The notional amount of the swap decreases by $100
million in March 2010 with the final $50 million reduction
occurring in March
2011. As of March 31, 2009, the interest rate swap agreements
effectively fix the weighted
average LIBOR-based portion of its interest
rate on a portion of its debt at 4.77%, thereby reducing the impact of interest
rate changes on future interest cash flows and expense.
As of
March 31, 2009, the Company expects to reclassify from accumulated other
comprehensive loss to earnings during the next twelve months approximately $7.4
million and $5.4 million of net losses on derivative instruments related to the
settlement of its natural gas and interest rate hedges,
respectively.
The
following table presents the fair value of the Company’s hedged items as of
March 31, 2009 (in thousands):
|
Asset
Derivatives
|
|
Liability
Derivatives
|
|
Derivatives
designated as hedging instruments:
|
Balance
Sheet Location
|
|
March
31, 2009
|
|
Balance
Sheet Location
|
|
March
31, 2009
|
|
|
|
|
|
|
|
|
|
|
Interest
rate contracts
|
Other
current assets
|
|
$
|
-
|
|
Accrued
expenses
|
|
$
|
7.7
|
|
Commodity
contracts
(a)
|
Other
current assets
|
|
|
-
|
|
Accrued
expenses
|
|
|
(1.0
|
)
|
Commodity
contracts
(a)
|
Other
current assets
|
|
|
0.7
|
|
Accrued
expenses
|
|
|
10.8
|
|
Total
derviatives designated as hedging instruments
|
|
$
|
0.7
|
|
|
|
$
|
17.5
|
|
(a) The
Company has master netting agreements with its counterparties and accordingly
has netted approximately $1.0 million of its commodity contracts that are in a
receivable position with its contracts in payable positions.
The
following table presents activity related to the Company’s other comprehensive
income (“OCI”) for the three months ended March 31, 2009 (in
thousands):
|
|
|
Three
Months Ended March 31, 2009
|
|
Derivatives
in SFAS 133 Cash Flow Hedging Relationships
|
Location
of Gain (Loss) Reclassified from Accumulated OCI Into Income (Effective
Portion)
|
|
Amount
of Gain (Loss) Recognized in OCI on Derivative (Effective
Portion)
|
|
|
Amount
of Gain (Loss) Reclassified from Accumulated OCI Into Income (Effective
Portion)
|
|
|
|
|
|
|
|
|
|
Interest
rate contracts
|
Interest
expense
|
|
$
|
0.4
|
|
|
$
|
(1.7
|
)
|
Commodity
contracts
|
Cost
of sales
|
|
|
4.9
|
|
|
|
(3.6
|
)
|
Total
|
|
|
$
|
5.3
|
|
|
$
|
(5.3
|
)
|
Risks
not Hedged
In
addition to the United States, the Company conducts its business in Canada and
the United Kingdom. The Company’s operations may, therefore, be subject to
volatility because of currency fluctuations, inflation changes and changes in
political and economic conditions in these countries. Sales and expenses are
frequently denominated in local currencies and the r
esults of
operations may be affected adversely as currency fluctuations affect the
Company’s product prices and operating costs. The Company’s historical results
do not reflect any material foreign currency exchange hedging activity however,
it may engage in hedging activities in the future to reduce the exposure of its
net cash flows to fluctuations in foreign currency exchange rates.
The
Company is subject to increases and decreases in the cost of transporting its
products due to variations in contracted carriers’ cost of fuel, which is
typically diesel fuel. The Company’s historical results do not include hedging
activity related to fuel costs however, it may engage in the future in hedging
activities, including forward contracts, to reduce its exposure to changes in
transportation costs due to changes in the cost of fuel.
12. Fair
Value Measurements:
As
required by FASB Statement No. 157 – “Fair Value Measurements,” the Company’s
financial instruments are measured and reported at their estimated fair
value. Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly
transaction. When available, the Company uses quoted prices in active
markets to determine the fair values for its financial instruments (level one
inputs), or absent quoted market prices, observable market-corroborated inputs
over the term of the financial instruments (level two inputs). The Company does
not have any unobservable inputs that are not corroborated by market inputs
(level three inputs).
The
Company holds trading securities associated with its non-qualified savings plan
which are valued based on readily available quoted market
prices. Additionally, the Company utilizes derivative instruments to
manage its risk of changes in natural gas prices and interest
rates. The fair values of the derivative instruments are determined
using observable yield
curves or
other market-corroborated data matching the terms of the derivatives (level two
inputs). The estimated fair values for each type of instrument
are presented below (in millions).
|
|
March
31,
2009
|
|
|
Level
One
|
|
|
Level
Two
|
|
|
Level
Three
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketable
securities
|
|
$
|
4.1
|
|
|
$
|
4.1
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Derivatives
- natural gas instruments
|
|
|
0.7
|
|
|
|
-
|
|
|
|
0.7
|
|
|
|
-
|
|
Total
Assets
|
|
$
|
4.8
|
|
|
$
|
4.1
|
|
|
$
|
0.7
|
|
|
$
|
-
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
related to non-qualified savings plan
|
|
$
|
(4.1
|
)
|
|
$
|
(4.1
|
)
|
|
$
|
-
|
|
|
$
|
-
|
|
Derivatives
– natural gas instruments
|
|
|
(9.8
|
)
|
|
|
-
|
|
|
|
(9.8
|
)
|
|
|
-
|
|
Derivatives
– interest rate swaps
|
|
|
(7.7
|
)
|
|
|
-
|
|
|
|
(7.7
|
)
|
|
|
-
|
|
Total
Liabilities
|
|
$
|
(21.6
|
)
|
|
$
|
(4.1
|
)
|
|
$
|
(17.5
|
)
|
|
$
|
-
|
|
|
|
December
31, 2008
|
|
|
Level
One
|
|
|
Level
Two
|
|
|
Level
Three
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketable
securities
|
|
$
|
3.7
|
|
|
$
|
3.7
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Total
Assets
|
|
$
|
3.7
|
|
|
$
|
3.7
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
related to non-qualified savings plan
|
|
$
|
(3.7
|
)
|
|
$
|
(3.7
|
)
|
|
$
|
-
|
|
|
$
|
-
|
|
Derivatives
– natural gas instruments
|
|
|
(7.8
|
)
|
|
|
-
|
|
|
|
(7.8
|
)
|
|
|
-
|
|
Derivatives
– interest rate swaps
|
|
|
(8.9
|
)
|
|
|
-
|
|
|
|
(8.9
|
)
|
|
|
-
|
|
Total
Liabilities
|
|
$
|
(20.4
|
)
|
|
$
|
(3.7
|
)
|
|
$
|
(16.7
|
)
|
|
$
|
-
|
|
13. Earnings
per Share:
During
2008, the FASB issued FASB Staff Position EITF 03-6-1, “Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating
Securities” (“FSP 03-6-1”). FSP 03-6-1 addresses whether instruments
granted in share-based payment transactions are participating securities prior
to vesting, and therefore need to be included in the computation of earning per
share under the two-class method per FASB Statement No. 128, “Earnings per
Share.” The two class method requires allocating the Company’s net
earnings to both common shares and participating securities. In
addition, FSP 03-6-1 requires retrospective presentation of prior
periods.
The
Company adopted FSP 03-6-1 in the first quarter of 2009. Prior to the
adoption of FSP 03-6-1, the Company had included participating securities in
both its basic and diluted weighted shares outstanding. The adoption
of FSP 03-6-1 decreased the numerator and the denominator in the weighted and
diluted earnings per share calculation for the first quarter of 2008. However,
there was no impact on previously reported basic or diluted earnings per
share.
The
following table sets forth the computation of basic and diluted earnings per
common share (in millions, except for share data):
|
|
Three months ended March 31,
|
|
|
|
2009
|
|
|
2008
|
|
Numerator:
|
|
|
|
|
|
|
Net earnings
|
|
$
|
61.6
|
|
|
$
|
49.1
|
|
Net earnings allocated to participating securities
(a)
|
|
|
1.3
|
|
|
|
1.0
|
|
Net
earnings available to common shareholders
|
|
$
|
60.3
|
|
|
$
|
48.1
|
|
Denominator
(in thousands):
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding,
|
|
|
|
|
|
|
|
|
shares for basic earnings per share
|
|
|
32,493
|
|
|
|
32,366
|
|
Weighted average stock options outstanding
(b)
|
|
|
45
|
|
|
|
76
|
|
Common
shares for diluted earnings per share
|
|
|
32,538
|
|
|
|
32,442
|
|
Earnings
per common share, basic
|
|
$
|
1.85
|
|
|
$
|
1.49
|
|
Earnings
per common share, diluted
|
|
$
|
1.85
|
|
|
$
|
1.48
|
|
|
(a)
Participating securities include options and RSUs that receive
non-forfeitable dividends.
|
|
(b)
For the calculation of diluted earnings per share, the Company uses the
more dilutive of either the treasury stock method or the two-class method,
to determine the weighted average number of outstanding common
shares. In addition, the Company had 33,000 weighted options
outstanding which were anti-dilutive and therefore not included in the
diluted earnings per share
calculation.
|
Ite
m 2.
Management’s Discussion
and Analysis of Financial Condition and Results of
Operations
All
statements, other than statements of historical fact, contained herein
constitute “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995.
Forward-looking
statements relate to future events or our future financial performance, and
involve known and unknown risks, uncertainties, and other factors that may cause
our actual results, levels of activity, performance or achievements to be
materially different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements. Factors
that could cause actual results to differ materially from those expressed or
implied by the forward-looking statements include, but are not limited to, the
following: general business and economic conditions; uninsured risks and hazards
associated with underground mining operations; governmental policies affecting
the agricultural industry or highway maintenance programs in localities where
the Company or its customers operate; weather conditions; the impact of
competitive products; pressure on prices realized by the Company for its
products; constraints on supplies of raw materials used in manufacturing certain
of the Company’s products and the availability of transportation services;
capacity constraints limiting the production of certain products; the ability to
attract and retain skilled personnel as well as labor relations including
without limitation, the impact of work rules, strikes or other disruptions, wage
and benefit requirements; difficulties or delays in the development, production,
testing and marketing of products; difficulties or delays in receiving required
governmental and regulatory approvals; market acceptance issues, including the
failure of products to generate anticipated sales levels; the effects of and
changes in trade, monetary, environmental and fiscal policies, laws and
regulations; foreign exchange rates and fluctuations in those rates; the costs
and effects of legal proceedings including environmental and administrative
proceedings involving the Company; customer expectations about future potash
market prices and availability and agricultural economics; volatility in credit
and capital markets, including the risk of customer and counterparty defaults
and declining credit availability; and other risk factors reported in
the Company’s Annual Report on Form 10-K filed with the Securities and Exchange
Commission (“SEC”) as updated quarterly on Form 10-Q.
In some
cases, you can identify forward-looking statements by terminology such as “may,”
“will,” “should,” “could,” “expects,” “intends,” “plans,” “anticipates,”
“believes,” “estimates,” “predicts,” “potential,” “continue,” or the negative of
these terms or other comparable terminology. These statements are only
predictions. Actual events or results may differ materially.
Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. We undertake no duty to update any of the forward-looking
statements after the date hereof or to reflect the occurrence of unanticipated
events.
Unless
the context requires otherwise, references in this quarterly report to the
“Company,” “Compass,” “Compass Minerals,” “CMP,” “we,” “us” and “our” refer to
Compass Minerals International, Inc. (“CMI”, the parent holding company) and its
consolidated subsidiaries.
Critical
Accounting Estimates
Preparation
of our consolidated financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues and expenses.
Management believes the most complex and sensitive judgments result primarily
from the need to make estimates about matters that are inherently uncertain.
Management’s Discussion and Analysis and Note 2 to the Consolidated Financial
Statements included in our Annual Report on Form 10-K filed with the SEC on
February 20, 2009, describe the significant accounting estimates and policies
used in preparation of our consolidated financial statements. Actual results in
these areas could differ from management’s estimates.
Results
of Operations
Deicing
products, consisting of deicing salt and magnesium chloride used by highway
deicing and consumer and industrial customers, constitute a significant portion
of the Company’s salt segment sales. Our deicing sales are seasonal
and can fluctuate from year to year depending on the severity of the winter
season weather in our markets. Inventory management practices are
employed to respond to the varying level of demand which impacts our production
volumes, the resulting per ton cost of inventory and ultimately profit margins,
particularly during the non-winter quarters when we build our inventory
levels. During the 2008-2009 winter season, the fourth quarter of
2008 was significantly more severe than normal while the first quarter of 2009
was below normal in our North American markets. By contrast, the 2007
– 2008 winter season in our North American markets was more severe than normal
in both quarters. Our U.K. subsidiary experienced a more severe
winter in the 2008 – 2009 winter season after a year of significantly milder
than normal weather in the 2007 – 2008 winter season.
Our
sulfate of potash (SOP) product is used in the production of specialty
fertilizers for high-value crops and turf. Our domestic sales of SOP
are concentrated in the western and southeastern portions of the United States
where some crops and soil conditions favor the use of SOP as a source of
potassium nutrients. Consequently, weather patterns and field
conditions in these locations can impact the amount of specialty fertilizer
sales volumes. Additionally, the demand for and market price of SOP
is affected by the broader potash market which is influenced by many factors
such as world grain and food supply, changes in consumer diets, general levels
of economic activity and government food, agriculture and energy policies around
the world. Economic factors may impact the amount or type of crop
grown in certain locations, or the type of fertilizer product
used. High-value or chloride-sensitive
crop
yields and quality tend to decline when alternative fertilizers are used.
Beginning late in 2007 and throughout much of 2008, the demand for potassium
nutrients for crops exceeded the available supply which contributed to a
substantial increase in the market price for potash, including
SOP. Demand for these products waned in the fourth quarter of 2008
and that has extended through the first quarter of 2009, as the broad
agricultural industry has dealt with the onset of a global economic slowdown and
reduced credit availability.
Our North
American salt mines and SOP production facility are near either water or rail
transport systems, which reduces our shipping and handling costs when compared
to alternative methods of distribution, although shipping and handling costs
still account for a relatively large portion of the total delivered cost of our
products. The tightening of available transportation services
together with higher fuel costs has increased our shipping and handling costs on
a per ton basis over the last several years. However, declining
oil-based fuel costs beginning late in 2008 and continuing through the first
quarter of 2009 reversed this trend.
Manpower
costs, energy costs, packaging, and certain raw material costs, particularly
potassium chloride (KCl), a deicing and water conditioning agent and feed-stock
used in making a portion of our sulfate of potash fertilizer product, are also
significant. The Company’s production workforce is represented by
labor unions with multi-year collective bargaining agreements. Our
energy costs result from the consumption of electricity with relatively stable,
rate-regulated pricing, and natural gas which can have significant pricing
volatility. We manage the pricing volatility of our natural gas purchases with
natural gas forward contracts up to 36 months in advance of purchases, helping
to reduce the impact of price volatility. We purchase KCl under
long-term supply contracts with annual changes in price based on previous year
changes in the market price for KCl. The market price for KCl has
increased significantly in recent years, causing continued price increases under
our contract. Although we cannot predict future changes in market
prices for KCl, we expect our per ton costs to be moderately higher in
2009.
The
consolidated financial statements have been prepared to present the historical
financial condition and results of operations and cash flows for the Company
which include our salt segment, specialty fertilizer segment, our records
management business and unallocated corporate activities. The results
of operations of the records management business, include sales of $2.1 million
and $3.1 million for the three months ended March 31, 2009 and March 31, 2008,
respectively, and are not material to our consolidated financial statements and
consequently, are not included in the table below. The following
tables and discussion should be read in conjunction with the information
contained in our consolidated financial statements and the accompanying notes
included elsewhere in this quarterly report.
|
|
Three
Months Ended
March 31,
|
|
|
|
2009
|
|
|
2008
|
|
Salt
Sales (in millions)
|
|
|
|
|
|
|
Salt
sales
|
|
$
|
268.8
|
|
|
$
|
329.2
|
|
Less:
salt shipping and handling
|
|
|
88.4
|
|
|
|
124.3
|
|
Salt
product sales
|
|
$
|
180.4
|
|
|
$
|
204.9
|
|
Salt
Sales Volumes (thousands of tons)
|
|
|
|
|
|
|
|
|
Highway
deicing salt
|
|
|
3,729
|
|
|
|
5,138
|
|
Consumer
and industrial salt
|
|
|
630
|
|
|
|
762
|
|
Total
salt tons sold
|
|
|
4,359
|
|
|
|
5,900
|
|
Average
Salt Sales Price (per ton)
|
|
|
|
|
|
|
|
|
Highway
deicing salt
|
|
$
|
46.80
|
|
|
$
|
44.47
|
|
Consumer
and industrial salt
|
|
|
149.58
|
|
|
|
132.24
|
|
Combined
|
|
|
61.66
|
|
|
|
55.80
|
|
|
|
|
|
|
|
|
|
|
Specialty
Fertilizer (SOP) Sales (in millions)
|
|
|
|
|
|
|
|
|
Specialty
fertilizer sales
|
|
$
|
38.2
|
|
|
$
|
47.7
|
|
Less:
SOP shipping and handling
|
|
|
2.6
|
|
|
|
6.9
|
|
Specialty
fertilizer product sales
|
|
$
|
35.6
|
|
|
$
|
40.8
|
|
Specialty
Fertilizer Sales Volumes (thousands of tons)
|
|
|
37
|
|
|
|
123
|
|
Specialty
Fertilizer Average Sales Price (per ton)
|
|
$
|
1,020
|
|
|
$
|
388
|
|
Three
Months Ended March 31, 2009 Compared to Three Months Ended March 31,
2008
Sales
Sales for
the first quarter of 2009 of $309.1 million decreased $70.9 million, or 19%
compared to $380.0 million for the same quarter of 2008. Sales include revenues
from the sale of our products, or “product sales,” revenues from our records
management business, and shipping and handling costs incurred to deliver salt
and specialty fertilizer products to the customer. Shipping and
handling costs were $91.0 million during the first quarter of 2009, a decrease
of $40.2 million or 31% compared to $131.2 million for the same quarter of
2008. The decrease in shipping and handling costs is primarily due to
the lower sales volumes in the first quarter of 2009 when compared to same
period of 2008. In addition, the lower price of fuel and
transportation services in 2009 have decreased our per unit cost of shipping
products to our customers.
Product
sales for the first quarter of 2009 of $216.0 million decreased $29.7 million,
or 12% compared to $245.7 million for the same period in 2008. This
decrease reflects declines in both the salt and specialty fertilizer
segments.
Salt
product sales for the first quarter of 2009 of $180.4 million decreased $24.5
million, or 12% compared to $204.9 million for the same period in
2008. The milder than normal winter weather in our North American
markets during the first quarter of 2009 compared to the more severe weather in
the first quarter of 2008 led to lower sales volumes for highway deicing and
consumer and industrial deicing products. Modestly lower sales
volumes of non-seasonal consumer and industrial products due to recent weakness
in the broader economy also contributed to the sales decline. In the
U.K., we experienced more severe than normal winter weather which resulted in
higher U.K. sales volumes for the first quarter of 2009 when compared to the
same period in 2008. Salt sales volumes in 2009 declined 1.5 million tons from
2008 levels which decreased sales by approximately $37 million. Price
improvements contributed approximately $32 million to product
sales. In addition, the strengthening of the U.S. dollar in the first
quarter of 2009 when compared to the prior year exchange rate for the Canadian
dollar and British pound sterling, negatively impacted product sales by
approximately $19 million.
SOP
product sales during the first quarter of 2009 of $35.6 million decreased $5.2
million, or 13% compared to $40.8 million for the same period in 2008, as sales
volumes declined due to the ongoing effects of the uncertain economy on the
agricultural industry. The lower sales volumes contributed
approximately $28 million to the decline in product sales which was partially
offset by price improvements in the first quarter of 2009 which yielded
approximately $23 million in additional product sales. Although we
have experienced a decline in our sales volumes since the fourth quarter of
2008, we continue to believe the market for fertilizer products over the
long-term has responded to factors which have increased worldwide demand for
crop nutrients, including the need for improved yields in locations with growing
populations and less arable land per capita, and alternative crop
uses. Conditions such as these have affected the agricultural markets
and the demand for all types of potash fertilizer products, including
SOP.
Gross
Profit
Gross
profit for the first quarter of 2009 of $115.3 million increased $18.3 million
or 19% compared to $97.0 million in 2008. As a percent of total
sales, 2009 gross margin increased by 11% to 37%. These improvements
primarily reflect the higher average salt and SOP product sales prices totaling
approximately $55 million, which were partially offset by lower sales volumes as
discussed above totaling approximately $41 million.
Selling,
General and Administrative Expenses
Selling,
general and administrative expenses for the first quarter of 2009 of $20.7
million increased $1.8 million, or 10% compared to $18.9 million for the same
period in 2008. The increase in expense is primarily due to higher
costs for professional services as well as higher costs for consumer and
industrial promotional activities. These increases were partially
offset by lower variable compensation expenses in 2009 when compared to
2008.
Interest
Expense
Interest
expense for the first quarter of 2009 of $7.5 million decreased $4.5 million
compared to $12.0 million for the same period in 2008. This decrease is
primarily due to the early extinguishment of $90 million of the Company’s 12%
Senior Subordinated Discount Notes during 2008 and lower interest rates on our
floating-rate debt.
Other
income, net
Other
income of $1.1 million and $1.9 million in the first quarter of 2009 and 2008,
respectively, primarily consists of foreign currency exchange
gains.
Income
Tax Expense
Income
tax expense for the three months ended March 31, 2009 was $26.6 million
increased $7.7 million compared to $18.9 million for the same quarter of 2008
due to higher taxable income in 2009 when compared to 2008. Our
income tax provision differs from the U.S. statutory federal income tax rate
primarily due to U.S. statutory depletion, state income taxes (net
of
federal tax benefit), foreign income tax rate differentials, foreign mining
taxes, accrued interest and penalties on uncertain tax positions, and interest
expense recognition differences for book and tax purposes.
Liquidity
and Capital Resources
Historically,
we have used cash generated from operations to meet our working capital needs,
to fund capital expenditures, to pay dividends and to repay our debt, including
principal repayments we have voluntarily made early. When we have not been able
to meet our short-term liquidity or capital needs with cash from operations,
whether as a result of the seasonality of our business or other causes, we have
met those needs with borrowings under our revolving credit facility. We expect
to meet the ongoing requirements for debt service, any declared dividends and
capital expenditures from these sources. This, to a certain extent,
is subject to general economic, financial, competitive, legislative, regulatory
and other factors that are beyond our control.
Cash and
cash equivalents of $117.4 million as of March 31, 2009 increased $82.8 million
over December 31, 2008 resulting principally from operating cash flows of $112.0
million generated in the first quarter of 2009. We used a portion of
those cash flows to fund capital expenditures of $9.4 million, to pay dividends
on our common stock of $11.8 million, and to repay the December 31, 2008 balance
of our revolving credit facility of $8.6 million.
As of
March 31, 2009, we had $486.0 million of principal indebtedness including $89.8
million of senior subordinated discount notes and $396.2 million of term loan
borrowings under our senior secured credit agreement. Our senior secured credit
agreement also includes a revolving credit facility which provides borrowing
capacity up to an aggregate amount of $125.0 million. No amounts were
borrowed under our revolving credit facility as of March 31, 2009. We had $9.0
million of outstanding letters of credit as of March 31, 2009 which reduced our
borrowing availability to $116.0 million.
Our 12%
Senior Subordinated Discounts Notes due in 2013 became fully-accreted in May
2008 at an aggregate principal balance of $179.6 million with subsequent
interest accruals to be paid in cash. In 2008, we redeemed $90
million of our 12% Senior Subordinated Discount Notes with cash generated from
operations. We continue to monitor the credit markets and will
evaluate the economics of refinancing that debt. However, we believe
our results of operations and borrowing availability under the revolving credit
agreement will allow us to pay cash interest without materially adversely
affecting our cash flows or financial condition. In addition, we plan
on funding our 2009 capital expenditures primarily from cash on hand at March
31, 2009, cash expected to be generated from operations in 2009 and other
financing arrangements, including leasing transactions.
Our debt
service obligations could, under certain circumstances, materially affect our
financial condition and impair our ability to operate our business or pursue our
business strategies. As a holding company, CMI’s investments in its
operating subsidiaries constitute substantially all of its assets. Consequently,
our subsidiaries conduct all of our consolidated operations and own
substantially all of our operating assets. The principal source of the cash
needed to pay our obligations is the cash generated from our subsidiaries’
operations and their borrowings. Our subsidiaries are not obligated to make
funds available to CMI. Furthermore, we must remain in compliance
with the terms of our senior secured credit facilities, including the total
leverage ratio and interest coverage ratio, in order to make payments on our
Senior Subordinated Discount Notes or pay dividends to our
stockholders. We must also comply with the terms of our indenture
which limit the amount of dividends we can pay to our
stockholders. Although we are in compliance with our debt covenants
as of March 31, 2009, we cannot assure you that we will remain in compliance
with these ratios nor can we assure you that the agreements governing the
current and future indebtedness of our subsidiaries will permit our subsidiaries
to provide us with sufficient dividends, distributions or loans to fund
scheduled interest and principal payments on the Senior Subordinated Discount
Notes when due. If we consummate an acquisition, our debt service requirements
could increase and terms and conditions of our debt could change. Furthermore,
we may need to refinance all or a portion of our indebtedness on or before
maturity, however we cannot assure you that we will be able to refinance any of
our indebtedness on commercially reasonable terms or at all.
For
the Three Months Ended March 31, 2009 and 2008
Net cash
flows provided by operating activities for the three months ended March 31, 2009
were $112.0 million, a decrease of $33.5 million compared to $145.5 million for
the first quarter of 2008. Of these amounts, approximately $38.3
million and $80.0 million for 2009 and 2008, respectively, were generated by net
working capital reductions. These working capital changes are
indicative of the seasonal nature of our deicing products and will vary with the
severity of the winter weather in our markets.
Net cash
flows used by investing activities of $9.5 million and $8.5 million for the
three months ended March 31, 2009 and 2008, respectively, resulted from capital
expenditures of $9.4 million and $8.7 million respectively.
Financing
activities during the 2009 three-month period used $18.3 million of cash flows,
primarily to make $8.6 million of payments to reduce our outstanding debt and
$11.8 million of dividend payments. During 2008, we used $43.3
million in financing activities primarily to repay $34.0 million of borrowings
and pay dividends of $11.0 million.
Recent
Accounting Pronouncements
In April
2009, the FASB issued Staff Position SFAS No. 141(R)-1 (“SFAS 141(R)-1”),
“Accounting for Assets Acquired and Liabilities Assumed in a Business
Combination That Arise from Contingencies” which amends and clarifies FASB
Statement No. 141(revised 2007), “Business Combinations,” to address application
issues on initial and subsequent recognition and measurement arising from
contingencies in a business combination. SFAS 141(R)-1 is effective
for assets or liabilities arising from contingencies in business combinations
beginning with the first annual period on or after December 15,
2008. The adoption of SFAS 141(R)-1 did not have an impact on the
Company’s consolidated financial statements.
Effects
of Currency Fluctuations
In
addition to the United States, we conduct operations in Canada and the United
Kingdom. Therefore, our results of operations are subject to both currency
transaction risk and currency translation risk. We incur currency transaction
risk whenever we or one of our subsidiaries enter into either a purchase or
sales transaction using a currency other than the local currency of the
transacting entity. With respect to currency translation risk, our financial
condition and results of operations are measured and recorded in the relevant
local currency and then translated into U.S. dollars for inclusion in our
historical consolidated financial statements. Exchange rates between these
currencies and the U.S. dollar have fluctuated significantly from time to time
and may do so in the future. The majority of our revenues and costs are
denominated in U.S. dollars, with pounds sterling and Canadian dollars also
being significant. Significant changes in the value of the Canadian dollar or
pound sterling relative to the U.S. dollar could have a material adverse effect
on our financial condition and our ability to meet interest and principal
payments on U.S. dollar denominated debt, including borrowings under our senior
secured credit facilities.
Although
inflation has not had a significant impact on the Company’s operations, our
efforts to recover cost increases due to inflation may be hampered as a result
of the competitive industry in which we operate.
Seasonality
We
experience a substantial amount of seasonality in our sales, primarily with
respect to our deicing products. Consequently, sales and operating
income are generally higher in the first and fourth quarters and lower during
the second and third quarters of each year. In particular, sales of highway and
consumer deicing salt and magnesium chloride products vary based on the severity
of the winter conditions in areas where the product is used. Following industry
practice in North America, we stockpile sufficient quantities of deicing salt in
the second, third and fourth quarters to meet the estimated requirements for the
winter season.
It
em 3.
Quantitative and
Qualitative Disclosures About Market Risk
Our
business is subject to various types of market risks that include, but are not
limited to, interest rate risk, foreign currency exchange rate risk and
commodity pricing risk. Management has taken actions to mitigate our exposure to
commodity pricing and interest rate risk by entering into forward derivative
instruments and interest rate swap agreements, and may take further actions to
mitigate our exposure to
changes in the cost of
transporting our products due to variations in our contracted carriers’ cost of
fuel, which is typically diesel fuel
. However, there can be no
assurance that our hedging activities will eliminate or substantially reduce
these risks. We do not enter into any financial instrument
arrangements for speculative purposes. The Company’s market risk exposure
related to these items has not changed materially since December 31,
2008.
It
em 4.
Controls and
Procedures
Evaluation of Disclosure Controls
and Procedures –
As of the end of the period covered by this report, an
evaluation of the effectiveness of the design and operation of the Company’s
disclosure controls and procedures (as defined in Rule 13a-15(e) under the
Exchange Act) was performed under the supervision and with the participation of
the Company’s management, including the CEO and CFO. Based on that evaluation,
the Company’s CEO and CFO concluded that the Company’s disclosure controls and
procedures were effective as of March 31, 2009 to ensure that information
required to be disclosed in the reports it files and submits under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported
as and when required.
Changes in Internal Control Over
Financial Reporting -
There has been no change in the Company’s internal
control over financial reporting during the most recently completed fiscal
quarter that has materially affected, or is reasonably likely to materially
affect, the Company’s internal control over financial reporting.
PART
II. OTHER INFORMATION
It
em 1.
Legal
Proceedings
The
Company from time to time is involved in various routine legal proceedings.
These primarily involve commercial claims, product liability claims, personal
injury claims and workers’ compensation claims. We cannot predict the outcome of
these lawsuits, legal proceedings and claims with certainty. Nevertheless, we
believe that the outcome of these proceedings, even if determined
adversely, would
not have a material adverse effect on our business, financial condition and
results of operations. There have been no material developments during 2009 with
respect to legal proceedings
.
There
have been no material changes to the risk factors previously discussed in Item
1A of the Company’s Form 10-K for the year ended December 31,
2008.
It
em 2.
Unregistered Sales of
Equity Securities and Use of Proceeds
None.
It
em 3.
Defaults upon Senior
Securities
None.
It
em 4.
Submission of Matters to
a Vote of Security Holders
None.
Ite
m 5.
Other
Information
Not
applicable.
EXHIBIT
INDEX
Exhibit
No.
Description of Exhibit
10.1*
|
Summary
of Non-Employee Director Compensation Program
|
10.2*
|
Form
of 2009 Independent Director Deferred Stock Award
Agreement
|
10.3*
|
Amendment
to Form of Change in Control Severance Agreement
|
10.4*
|
Second
Amendment to the Compass Minerals International, Inc. Directors’ Deferred
Compensation Plan
|
10.5*
|
Second
Amendment to the Compass Minerals International, Inc. Restoration
Plan
|
10.6*
|
Second
Amendment to the Compass Minerals International, Inc. 2005 Incentive Award
Plan
|
10.7*
|
Summary of
Executive Cash Compensation and Award Targets Under the Annual Incentive
Plan
|
31.1*
|
Section
302 Certifications of Angelo C. Brisimitzakis, President and Chief
Executive Officer
|
31.2*
|
Section
302 Certifications of Rodney L. Underdown, Vice President and Chief
Financial Officer
|
32*
|
Certification
Pursuant to 18 U.S.C.§1350 of Angelo C. Brisimitzakis, President and Chief
Executive Officer and Rodney L. Underdown, Vice President and Chief
Financial
Officer
|
* Filed
herewith
Pursuant
to the requirements of Section 13 or 15(d) 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.
COMPASS
MINERALS INTERNATIONAL, INC.
Date:
April 28,
2009
/s/ ANGELO C.
BRISIMITZAKIS
Angelo C.
Brisimitzakis
President and Chief Executive
Officer
Date:
April 28,
2009
/s/ RODNEY L.
UNDERDOWN
Rodney
L. Underdown
Vice President and Chief Financial
Officer
20
Exhibit
10.1
Summary
of Non-Employee Director Compensation Program
Effective
January 1, 2009 the following compensation program applies to non-employee
directors of Compass Minerals:
1)
|
Each
non-employee director will receive an annual cash retainer of $50,000 per
year, which amount may be received either in cash or deferred into the
Directors’ Deferred Compensation Plan at the election of the
director;
|
2)
|
Each
non-employee director will receive an equity award of $60,000 per year,
which amount may be deferred into the Directors’ Deferred Compensation
Plan or taken in shares of stock of the Company. Deferred
amounts are converted into units equivalent to the value of the Company’s
common stock and accumulated deferred fees are distributed in common
stock. Each non-employee member of the Board of Directors is
required to obtain ownership in Company stock (or its equivalent) equal to
five times the annual cash retainer, which amount is to be achieved within
five years of joining the Board, and maintain at least five times the
annual cash retainer in stock ownership (or its equivalent) while on the
Board;
|
3)
|
Additional
annual retainer compensation for the chair of the Audit Committee in the
amount of $15,000 per year and for the chairs of the Compensation,
Nominating/Corporate Governance and Environmental, Health and Safety
Committees in the amount of $7,500 per year;
and
|
4)
|
Additional
annual retainer compensation for the Lead Independent Director in the
amount of $20,000 per year.
|
5)
|
Additional
amounts for Committee chairs and the Lead Independent Director may be
received either in cash or deferred into the Directors’ Deferred
Compensation Plan at the election of the
director.
|
Exhibit
10.2
2009
INDEPENDENT DIRECTOR DEFERRED STOCK AWARD AGREEMENT
Name of
Independent Director:
This
Agreement evidences the grant by Compass Minerals International, Inc., a
Delaware corporation (the “Company”) of Deferred Stock to the above-referenced
“Director” on April 1, 2009; July 1, 2009; October 1, 2009; and January 1, 2010
(each a “Quarterly Grant Date”) pursuant to the Compass Minerals International,
Inc. 2005 Incentive Award Plan, as amended from time to time (the
“Plan”). By accepting the Award, Director agrees to be bound in
accordance with the provisions of the Plan, the terms and conditions of which
are hereby incorporated in this Agreement by reference. Capitalized
terms not defined herein shall have the same meaning as used in the
Plan.
1.
Deferred
Stock
. The number of shares of Deferred Stock subject to this
Agreement shall be determined as of each Quarterly Grant Date and shall be equal
to the ratio of (A) the aggregate value of the Director’s fees for the
applicable calendar quarter to be paid in the form of Deferred Stock pursuant to
Director’s election on Exhibit A attached hereto, to (B) the Fair Market Value
per share of Stock as of such Quarterly Grant Date.
2.
Accounting for Deferred
Stock
. The Company shall maintain a separate bookkeeping
account (the “Deferred Stock Account”) to reflect the shares of Deferred Stock
subject to this Agreement. Such Deferred Stock Account shall be
administered in a manner consistent with the Compass Minerals International,
Inc. Directors’ Deferred Compensation Plan.
3.
Vesting
. The
Deferred Stock shall be 100% vested at all times.
4.
Payment Following
Separation
. At the time Director ceases to be a member of the
Board for any reason, Director shall be entitled to receive payment equal to the
number of shares of Deferred Stock subject to this Agreement. Such
payment shall be made in whole shares of Stock (with cash for fractional shares)
in either (i) a single lump sum or (ii) annual installments over a period of not
less than two years nor more than ten years. Director shall designate
the form of payment on an election form filed with the Secretary of the Company
no later than the close of Director’s taxable year immediately preceding the
taxable year with respect to which this Agreement relates.
5.
Payment Following Change of
Control
. Notwithstanding Section 4 or any other provision of
the Agreement to the contrary, if a Change of Control of the Company occurs
prior to the complete distribution of a Director’s benefit under this Agreement,
then any portion of such benefit that has not theretofore been distributed shall
be distributed in a single lump sum to Director (or, as applicable, his
beneficiary) immediately following the Change of Control.
6.
Payment Upon Death;
Beneficiary Designation
. Director shall have the right to
designate a beneficiary who is to succeed to his or her right to receive
payments hereunder in the event of death. Any designated beneficiary
shall receive payments in the same manner as Director if he or she had
lived. In case of a failure of designation or the death of a
designated beneficiary without a designated successor, Director’s remaining
benefit shall be paid in full to his or her surviving spouse (or if none,
Director’s estate) as soon as administratively practicable following Director’s
death. No designation of beneficiary or change in beneficiary shall
be valid unless it is in writing signed by the Director and filed with the
Secretary of the Company.
7.
Voting and Dividend
Rights
. Director shall have no voting rights with respect to
the Deferred Stock awarded hereunder. Pursuant to Section 8.4 of the
Plan, Director shall be entitled to receive Dividend Equivalents with respect to
the Deferred Stock subject to this Agreement. Such Dividend
Equivalents shall be credited to the Deferred Stock Account as of the
date the Company pays any dividend (whether in cash or in kind) on shares of
Stock in an amount equal to the ratio of (A) the aggregate value of the dividend
that would have been payable on the Deferred Stock held by the Director
immediately prior to such payment date had the shares of Stock represented by
such Deferred Stock been outstanding as of such payment date to (B) the Fair
Market Value per share of Stock as of such date. All deferred stock
issued in 2008 reflecting dividends on deferred stock (whether previously issued
under this Award or otherwise) will be issued under the Plan.
8.
Permitted Transfers
.
The rights under this Agreement may not be assigned, transferred or otherwise
disposed of except by will or the laws of descent and distribution and may be
exercised during the lifetime of Director only by Director. Upon any attempt to
assign, transfer or otherwise dispose of this Agreement, or any right or
privilege conferred hereby, or upon any attempted sale under any execution,
attachment or similar process, this Agreement and the rights and privileges
conferred hereby immediately will become null and void.
9.
Unfunded
Obligation
. This Agreement is designed and shall be
administered at all times as an unfunded arrangement and Director shall be
treated as an unsecured general creditor and shall have no beneficial ownership
of any assets of the Company.
10.
Taxes
. Director
will be solely responsible for any federal, state or other taxes imposed in
connection with the granting of the Deferred Stock or the delivery of shares of
Stock pursuant thereto, and Director authorizes the Company or any Subsidiary to
make any withholding for taxes which the Company or any Subsidiary deems
necessary or proper in connection therewith. Upon recognition of
income by Director with respect to the Award hereunder, the Company shall
withhold taxes pursuant to the terms of the Plan.
11.
Changes in
Circumstances
. It is expressly understood and agreed that
Director assumes all risks incident to any change hereafter in the applicable
laws or regulations or incident to any change in the value of the Deferred Stock
or the shares of Stock issued pursuant thereto after the date
hereof.
12.
Conflict Between Plan and
This Agreement
. In the event of a conflict between this
Agreement and the Plan, the provisions of the Plan shall govern.
13
Notices
. All
notices, claims, certificates, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given and
delivered if personally delivered or if sent by nationally-recognized overnight
courier, by telecopy, or by registered or certified mail, return receipt
requested and postage prepaid, addressed as follows:
If to the
Company, to it at:
Compass
Minerals International, Inc.
9900 West
109th Street
Overland
Park KS 66210
Attn:
Vice President Human Resources
If to
Director, to him or her at the address set forth on the signature page hereto or
to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. Any
such notice or communications shall be deemed to have been received (a) in the
case of personal delivery, on the date of such delivery (or if such date is not
a business day, on the next business day after the date of delivery), (b) in the
case of nationally-recognized overnight courier, on the next business day after
the date sent, (c) the case of telecopy transmission, when received (or if not
sent on a business day, on the next business day after the date sent), and (d)
in the case of mailing, on the third business day following that on which the
piece of mail containing such communication is posted.
14
Governing
Law
. This Agreement shall be governed under the laws of the
State of Delaware without regard to the principles of conflicts of
laws. Each party hereto submits to the exclusive jurisdiction of the
United States District Court for the District of Kansas (Kansas City, Kansas).
Each party hereto irrevocably waives, to the fullest extent permitted by law,
any objections that either party may now or hereafter have to the aforesaid
venue, including without limitation any claim that any such proceeding brought
in either such court has been brought in an inconvenient forum, provided
however, this provision shall not limit the ability of either party to enforce
the other provisions of this paragraph.
15
Severability
. It is
the desire and intent of the parties hereto that the provisions of this
Agreement be enforced to the fullest extent permissible under the laws and
public policies applied in each jurisdiction in which enforcement is
sought. Accordingly, if any particular provision of this Agreement
shall be adjudicated by a court of competent jurisdiction to be invalid,
prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction. Notwithstanding the foregoing,
if such provision could be more narrowly drawn so as not to be invalid,
prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
16
Enforcement
. In
the event the Company or Director institutes litigation to enforce or protect
its rights under this Agreement or the Plan, the party prevailing in any such
litigation shall be paid by the non-prevailing party, in addition to all other
relief, all reasonable attorneys’ fees, out-of-pocket costs and disbursements of
such party relating to such litigation.
17.
Waiver of Jury
Trial
. Each party hereto hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, trial by jury in any suit, action or proceeding arising
hereunder.
18.
Counterparts
. This
Agreement may be executed in one or more counterparts, and each such counterpart
shall be deemed to be an original, but all such counterparts together shall
constitute but one agreement.
[Signature
page to follow]
IN WITNESS WHEREOF
, the
parties hereto have executed this Agreement.
COMPASS
MINERALS INTERNATIONAL, INC.
By:
/s/ Victoria
Heider
Name:
Victoria
Heider, VP of Human
Resources
Date:
DIRECTOR
______________________________
Date
Residence
Address
_______________________________
_______________________________
EXHIBIT
A TO 2009 INDEPENDENT DIRECTOR DEFERRED STOCK AWARD
___________________________________________________________________________________________
Last
Name
First Name
MI
Social
Security Number
_____________________________________________________________________________________________
Mailing
Address City State Zip
Code
_________________________ ____________________________
Telephone
Email
Address
_____________________________________________________________________________________________
Instruction: Elections
must be made on or before December 31 of the year immediately preceding the year
with respect to which the award relates. Any person who first becomes
a Director during a calendar year, and who was not a Director of the Company on
the preceding December 31, may elect, no later than seven days after the
Director’s term begins, to defer payment of all or a specified part of his or
her fees payable for the remainder of such year.
SECTION
1 - DEFERRAL ELECTION
A. Cash
Retainer
I elect
to receive the following portion of my annual cash retainer in the form of
Deferred Stock under the Compass Minerals International, Inc. 2005 Incentive
Award Plan:
_______%
(insert 0%; 25%; 50%; 75%; or 100%)
B. Stock
Retainer
Instruction: In
connection with the minimum shareholder ownership requirements for non-employee
directors, your annual stock retainer will be automatically issued in the form
of Deferred Stock until your total shareholder ownership (or equivalent) equals
or exceeds five times your annual cash retainer. Once you attain the
minimum shareholder ownership threshold, the automatic deferral requirement will
no longer apply, beginning with the first year following the year in which the
minimum threshold is achieved.
I elect
to receive the following portion of my annual cash retainer in the form of
Deferred Stock under the Compass Minerals International, Inc. 2005 Incentive
Award Plan:
_______%
(insert 0%; 25%; 50%; 75%; or 100%)
SECTION
2 – DISTRIBUTION ELECTION
A. Commencement
of Distribution
Except as
otherwise set forth in Section 2C, below, your Deferred Stock benefit will be
paid or benefits will commence as soon as administratively practicable following
the date you resign or otherwise cease being a Director for any
reason.
B. Form
of Distribution
Except as
otherwise set forth in Section 2C, below, I irrevocably elect to receive
distributions of my Deferred Stock benefit in accordance with the following
election (check one):
o
In one lump
sum; or
o
In _______
(insert number) annual installments (not less than 2 or more than
10).
I
understand that the first distribution will be payable as of the date set forth
in Section 2A, above, and that if I elect annual installment payments I will
receive an installment as of each January 1 immediately following the first
distribution until my entire Deferred Stock benefit has been distributed in
full. I also understand that my election under this Section 2B is
irrevocable.
C. Change
in Control
I
understand that, notwithstanding any other provision of this Deferral Election
Form to the contrary, my entire Deferred Stock benefit will be distributed in a
single lump sum immediately following the occurrence of a Change in Control of
the Company.
SECTION
3 - BENEFICIARY DESIGNATION
If you
die before you receive full payment of your Deferred Stock benefit, your
remaining benefit will be paid to your Beneficiary designated in this Section
3. Payment will be made in the same manner as specified under Section
2B.
_____________________________________________________________________________________________
Social
Security
Number Last
Name First
Name MI
_____________________________________________________________________________________________
Mailing
Address City State Zip
Code Telephone
SECTION
4 - SIGNATURE
_____________________________________________________________________________________________
Signature
_____________________________________________________________________________________________
Date
Exhibit 10.3
AMENDMENT
TO CHANGE IN CONTROL SEVERANCE
This
Amendment is made this ___ day of December 2008, by and between Compass Minerals
International, Inc., a Delaware corporation (“Company”), and __________________
(“Executive”).
WHEREAS,
Company and Executive are parties to a Change in Control Severance Agreement
dated _____________________ (the “Agreement”) and the parties now desire to
amend the Agreement to comply with Section 409A of the Internal Revenue Code of
1986, as amended;
NOW,
THEREFORE, for and in consideration of the premises and the mutual covenants and
agreements contained herein, Company and Executive agree that the Agreement is
amended as follows:
A. Section
4(c) is amended by deleting the reference to “2 years” and by inserting “18
months” in lieu thereof.
B. Section
5 is amended by adding the following to end of such Section:
Any
Reimbursement Payment payable pursuant to this paragraph 5 shall be paid by the
Company to Executive no later than the last day of Executive’s taxable year next
following Executive’s taxable year in which he remits the related
taxes.
C. Section
8(b) is amended by adding the following to end of such Section:
Such
reimbursement shall be made on or before the last day of Executive’s taxable
year following the taxable year in which the expense was incurred.
D. A
new Section 18 is added to read as follows:
COMPLIANCE
WITH SECTION 409A OF THE INTERNAL REVENUE CODE. To the
extent applicable and notwithstanding any provision in this Agreement to the
contrary, this Agreement shall be interpreted and administered in accordance
with Section 409A of the Internal Revenue Code and regulations and
other guidance issued thereunder. For purposes of determining whether
any payment made pursuant to the Plan results in a "deferral of compensation"
within the meaning of Treasury Regulation §1.409A-1(b), the Company shall
maximize the exemptions described in such section, as applicable. Any
reference to a “termination of employment” or similar term or phrase shall be
interpreted as a “separation from service” within the meaning of Section 409A
and the regulations issued thereunder. Any expense reimbursements
under this Agreement shall be made by Company on or before the last day of
Executive’s taxable year following the taxable year in which the expense was
incurred. If any deferred compensation payment is payable upon
separation from service and is required to be delayed pursuant to Section
409A(a)(2)(B) because Executive is a “specified employee”, then payment of such
amount shall be delayed for a period of six months and paid in a lump sum on the
first payroll payment date following expiration of such six month
period.
[The
remainder of this page is intentionally left blank]
IN
WITNESS WHEREOF, the parties have executed this Amendment as of the day and year
first written above.
COMPASS
MINERALS INTERNATIONAL, INC.
By:
/s/
Victoria
Heider
Title:
VP of
Human Resources
EXECUTIVE
Exhibit
10.4
SECOND
AMENDMENT TO THE
COMPASS
MINERALS INTERNATIONAL, INC.
DIRECTORS’
DEFERRED COMPENSATION PLAN
This
Amendment is adopted by Compass Minerals International, Inc., a corporation
organized under the laws of the state of Delaware (the “
Company
”).
WHEREAS,
the Company established the Compass Minerals International, Inc. Directors’
Deferred Compensation Plan (the “
Plan
”) effective as
of the October 1, 2004, for the purpose of providing eligible non-employee
directors with an opportunity to defer all or a portion of their fees;
and
WHEREAS,
the original Plan was amended and restated in its entirety effective as of
January 1, 2005 (the “2005 Restatement”) to comply with Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”) and the proposed IRS
regulations and other interim guidance issued thereunder; and
WHEREAS,
the Company now desires to amend the 2005 Restatement to comply with final IRS
regulations issued pursuant to Section 409A of the Code;
NOW,
THEREFORE, the Plan is amended as follows effective as of January 1,
2008:
A. Section
1.4 is amended to read as follows:
Section
1.4
“
Change in Control
”
shall mean a change in ownership or control of the Company effected through any
one of the following events:
(i) A
transaction or series of transactions (other than an offering of Common Stock to
the general public through a registration statement filed with the Securities
and Exchange Commission) whereby any “person” or related “group” of “persons”
(as such terms are used in Sections 13(d) and 14(d)(2) of the Exchange Act
(other than the Company, any of its subsidiaries, an employee benefit plan
maintained by the Company or any of its subsidiaries, or a “person” that, prior
to such transaction, directly or indirectly controls, is controlled by, or is
under common control with, the Company) directly or indirectly acquires
beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act)
of securities of the Company possessing more than 50% of the total combined
voting power of the Company’s securities outstanding immediately after such
acquisition; or
(ii) The
date a majority of the members of the Board is replaced during any 12-month
period by directors whose appointment or election is not endorsed by a majority
of the members of the Board before the date of the appointment or election;
or
(iii) the
consummation by the Company (whether directly involving the Company or
indirectly involving the Company through one or more intermediaries) of (A) a
merger, consolidation, reorganization, or business combination or (B) a sale or
other disposition of all or substantially all of the Company’s assets or (C) the
acquisition of assets or stock of another entity, in each case other than a
transaction:
(x) that
results in the Company’s voting securities outstanding immediately before the
transaction continuing to represent (either by remaining outstanding or by being
converted into voting securities of the Company or the person that, as a result
of the transaction, controls, directly or indirectly, the
Company
or owns, directly or indirectly, all or substantially all of the Company’s
assets or otherwise succeeds to the business of the Company (the Company or such
person, the “Successor Entity”)) directly or indirectly, at least a majority of
the combined voting power of the Successor Entity’s outstanding voting
securities immediately after the transaction, and
(y) after
which no person or group beneficially owns voting securities representing 50% or
more of the combined voting power of the Successor Entity; provided, however,
that no person or group shall be treated for purposes of this subparagraph as
beneficially owning 50% or more of combined voting power of the Successor Entity
solely as a result of the voting power held in the Company before the
consummation of the transaction.
B. Section
2.1 is amended by adding the following new paragraph to the end of said
Section:
Notwithstanding
any provision in the Plan to the contrary, no new Deferred Stock Units shall be
credited to the Account of any Director with respect to any Fees attributable to
Years beginning on or after January 1, 2008. The Plan, however, shall
remain in effect with respect to Deferred Fees attributable to Years ending on
or before December 31, 2007.
C. Section
4.2 is amended to read as follows:
Section
4.2
Each Director shall have the right to designate a
beneficiary who is to succeed to his or her right to receive payments hereunder
in the event of death. Any designated beneficiary shall receive
payments in the same manner as the Director if he or she had
lived. In case of a failure of designation or the death of a
designated beneficiary without a designated successor, the Director’s remaining
benefit shall be paid in full to his or her surviving spouse (or if none, the
Director’s estate) within 30 days following the Director’s death. No
designation of beneficiary or change in beneficiary shall be valid unless it is
in writing signed by the Director and filed with the Secretary of the
Company.
D. A
new Section 5.5 is added to read as follows:
Section
5.5
Notwithstanding any provision in the Plan to the contrary,
pursuant to IRS and Treasury Department transition guidance under Section 409A
of the Code, new payment elections shall be permitted under the Plan through
December 31, 2008, without violating the subsequent deferral and
anti-acceleration rules of Section 409A of the Code. However, any new
election (i) may only apply to amounts that would not otherwise be payable
during the taxable year in which the election is made and (ii) may not cause an
amount to be paid in a taxable year that would not otherwise be payable in such
taxable year.
[Signature
page to follow]
IN
WITNESS WHEREOF, this Amendment is executed this 23
rd
day of
December 2008.
By:
/s/ Victoria Heider
Title:
VP of Human Resources
Exhibit
10.5
AMENDMENT
TWO
COMPASS
MINERALS INTERNATIONAL, INC. RESTORATION PLAN
(AS
AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2005)
WHEREAS,
Compass Minerals International, Inc. (the “Company”) established the Plan,
effective as of January 1, 2002, as an unfunded retirement plan for a select
group of management or highly compensated employees;
WHEREAS,
the Company amended and restated the original Plan effective as of January 1,
2005 (the “2005 Restatement”) to comply with Section 409A of the Internal
Revenue Code and to make certain other changes; and
WHEREAS,
the Company amended the 2005 Restatement by adoption of Amendment One dated
December 15, 2007; and
WHEREAS,
the Company now desires to further amend the 2005 Restatement to (i) comply with
final IRS regulations issued pursuant to Section 409A of the Internal Revenue
Code and (ii) provide participants the opportunity to modify their prior
elections relating to the time and form of payment as permitted by the Section
409A transition guidance;
NOW,
THEREFORE, the 2005 Restatement is amended as follows effective as of January 1,
2008, except as otherwise provided herein:
A. The
definition of “Separation from Service” under Article I is amended to read as
follows:
“Separation from Service”
means the Participant’s separation from service (within the meaning of Code
Section 409A and regulations issued thereunder) for any reason. For
this purpose, a Participant’s employment relationship shall be treated as
continuing intact while he is on military leave, sick leave or other bona fide
leave of absence if the period of such leave does not exceed six months, or if
longer, so long as the Participant retains the right to reemployment under
applicable statue or by contract.
B. The
second sentence under Section 2.1 is amended to read as follows:
If the
Company determines that a Participant no longer qualifies as being a member of a
select group of management or highly compensated employees, the Company shall
have the right to prevent the Participant from making future deferral elections
and receiving Company contributions effective as of the first day of the Plan
Year following the Plan Year in which such determination is made.
C. Section
5.1 is amended to read as follows:
5.1 Time
of Distribution
Payment
of a Participant’s Account shall be made or commence within 30 days following
the date the Participant incurs a Separation from Service. A
Participant shall not be entitled to a distribution of his or her Account prior
to Separation from Service (except as provided in Section 5.6).
Notwithstanding
the foregoing or any provision of this Plan to the contrary, in the case of a
Participant who is a “specified employee” within the meaning of Code Section
409A, payment of such Participant’s Account due to Separation from Service shall
not be made (or commence) before the date which is six (6) months after the date
of his Separation from Service or, if earlier, the date of death of such
Participant.
D. Section
5.3 is amended to read as follows:
5.3 Form
of Distribution
As part
of a Participant’s initial Salary Deferral Election, such Participant shall make
an irrevocable election to receive payment of the total amount of his Account in
one of the following forms:
(a) lump
sum payment; or
(b) 5
year annual installments.
Such
election shall be made on a form supplied by the Company. If a
Participant fails to elect a form of distribution, payment shall be made in the
form of a lump sum payment. To the extent applicable, installment
payments shall be calculated by dividing the Participant’s Account balance
immediately prior to the distribution by the total number of remaining
installments to be made. The initial installment payment shall be
made at the time specified in Section 5.1 and each subsequent installment
payment shall be made on each subsequent anniversary date.
Notwithstanding
the foregoing, each existing Participant shall be offered a one-time opportunity
to modify his or her prior election regarding the form of distributions no later
than December 31, 2005; provided that any change in the form of payment with
respect to a Participant’s Grandfathered Account shall not take effect for at
least twelve (12) months after the date of such election. Therefore,
if a Participant incurs a Separation from Service before the expiration of such
12-month period, the Participant’s Grandfathered Account shall be paid in
accordance with his or her prior election.
E. Section
5.4 is amended to read as follows:
5.4 Distribution
Upon Death
If a
Participant dies before commencing the payment of his Account, the unpaid
Account balance shall be paid to a Participant’s designated Beneficiary. Payment
to such designated Beneficiary shall be paid within 60 days after the
Participant’s death. Distribution shall be made in a lump sum distribution to
the designated Beneficiary. If a valid Beneficiary does not exist,
then a lump sum distribution payment shall be made to the Participant’s
estate.
If a
Participant dies before receiving the total amount of his Account, but has
commenced payments, the remaining balance of the Participant’s Account shall be
paid in a single lump sum to the Participant’s designated Beneficiary within 60
days after the Participant’s death. If a valid Beneficiary does not
exist, then a lump sum distribution payment shall be made to the Participant’s
estate.
F. A
new Section 5.7 is added to read as follows:
5.7 Modification
of Payment Elections
Notwithstanding
any provision in this Plan to the contrary and subject to the sole discretion of
the Committee which may or may not be exercised on a uniform basis among all
Participants, a Participant may elect to modify the timing or form of his
distribution of benefits under the Plan subject to the terms and conditions
established by the Committee. To the extent authorized by the
Committee, any subsequent election shall be made in conformance with Section
409A of the Code and the guidance issued by the Department of the Treasury with
respect to the application of Section 409A. A subsequent election to
delay the timing of distribution or to change the form of distribution shall be
effective only if the following conditions are met:
|
(i)
|
an
election related to a distribution to be made upon a specified time or
pursuant to a fixed schedule may not be made less than twelve (12) months
before the date of the first scheduled
payment,
|
|
(ii)
|
the
election shall not take effect until at least twelve (12) months after the
date on which the election is made,
and
|
|
(iii)
|
except
in the case of elections relating to distributions on account of death or
disability, the additional deferral with respect to which such election is
made is for a period of not less than five (5) years from the date such
payment would otherwise have been
made.
|
Notwithstanding
any provision in the Plan to the contrary, pursuant to IRS and Treasury
Department transition guidance under Section 409A of the Code, new payment
elections shall be permitted under the Plan through December 31, 2008, without
violating the subsequent deferral and anti-acceleration rules of Section 409A of
the Code. However, any new election (a) may only apply to amounts
that would not otherwise be payable during the taxable year in which the
election is made and (b) may not cause an amount to be paid in a taxable year
that would not otherwise be payable in such taxable year.
G. Section
8.2 is amended to read as follows:
8.2 Distribution
of Plan Benefits Upon Termination
Upon the
full termination of the Plan, the Committee shall direct the distribution of the
benefits of the Plan to the Participants in a manner that is consistent with
Section 409A of the Code and the regulations issued thereunder.
[Signature
page to follow]
IN
WITNESS WHEREOF, this Amendment is adopted this 23rd day of December 2008, but
effective as of the date(s) set forth herein.
COMPASS MINERALS INTERNATIONAL,
INC.
By:
/s/ Victoria
Heider
Title:
VP
of Human
Resources
4
Exhibit
10.6
AMENDMENT
TWO
COMPASS
MINERALS INTERNATIONAL, INC. 2005 INCENTIVE AWARD PLAN
WHEREAS,
Compass Minerals International, Inc. (the “Corporation”) maintains the Compass
Minerals International, Inc. 2005 Incentive Award Plan (the “Plan”) for the
purpose of promoting and enhancing the value of the Corporation by linking the
personal interest of its key personnel to those of the stockholders;
and
WHEREAS,
the Corporation now desires to amend the definition of “Change of Control” to
conform with Department of Treasury regulations issued under Section 409A of the
Internal Revenue Code of 1986, as amended;
NOW,
THEREFORE, the definition of “Change of Control” under Section 2.4 is amended
by:
(i) deleting
subparagraph (b) in its entirety and inserting the following in lieu
thereof:
“(b) The
date a majority of the members of the Board is replaced during any 12-month
period by directors whose appointment or election is not endorsed by a majority
of the members of the Board before the date of the appointment or election;
or”
and by
(ii) deleting
subparagraph (d) in its entirety and inserting a period at the end of the
immediately preceding subparagraph (c).
IN WITNESS WHEREOF, this Amendment is
executed this 23
rd
day
December 2008.
Compass
Minerals International, Inc.
By:
/s/
Victoria
Heider
Title:
VP
of Human Resources
Exhibit
10.7
Summary of
Executive Cash Compensation
and
Award Targets Under the Annual Incentive Plan
The following table sets forth the
current base salaries provided for the Company’s CEO, CFO and four most highly
compensated executive officers. Salary increases are determined
annually in March.
Executive
Officers
|
Current
Salary
|
|
|
Angelo
Brisimitzakis
|
$700,000
|
Rodney
Underdown
|
$321,402
|
Ronald
Bryan
|
$263,200
|
Gerald
Bucan
|
$267,750
|
Keith
Clark
|
$312,000
|
David
Goadby
|
£191,073*
|
* Salary
is denominated in pounds, so U.S. dollar equivalent may
vary.
Executive officers are also eligible to
receive a bonus each year under the Company’s Annual Incentive
Plan. The target percentages (based on percentage of salary ) under
this plan for the Company’s CEO, CFO and four most highly compensated executive
officers are as shown in the following table.
Executive
Officers
|
Target
Percentage
|
|
|
Angelo
Brisimitzakis
|
90%
|
Rodney
Underdown
|
50%
|
Ronald
Bryan
|
50%
|
Gerald
Bucan
|
50%
|
Keith
Clark
|
50%
|
David
Goadby
|
45%
|
Exhibit 31.1
I, Angelo
C. Brisimitzakis, certify that:
1.
|
I
have reviewed this quarterly report on Form 10-Q of Compass Minerals
International, Inc.;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
|
(a)
|
designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
(b)
|
designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
(c)
|
|
evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation;
and
|
|
(d)
|
disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
5.
|
The
registrant’s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
|
(a)
|
all
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
|
(b)
|
any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Date:
April 28, 2009
|
/s/ ANGELO C.
BRISIMITZAKIS
|
|
|
President and Chief Executive
Officer
|
Exhibit
31.2
I, Rodney
L. Underdown, certify that:
1.
|
I
have reviewed this quarterly report on Form 10-Q of Compass Minerals
International, Inc.;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
|
(a)
|
designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
(b)
|
designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
(c)
|
|
evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
|
(d)
|
disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
5.
|
The
registrant’s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
|
(a)
|
all
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
|
(b)
|
any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Date:
April 28, 2009
|
/s/ RODNEY L.
UNDERDOWN
|
|
|
Vice
President and Chief Financial
Officer
|
Exhibit
32
CERTIFICATION PURSUANT TO 18 U.S.C.
§1350
We hereby
certify that this quarterly report on Form 10-Q for the three-month period ended
March 31, 2009, as filed with the Securities and Exchange Commission on the date
hereof, to the best of my knowledge, fully complies with the requirements of
section 13(a) or 15(d) of the Securities and Exchange Act of 1934 and that the
information contained in this report fairly presents, in all material respects,
the financial condition and results of operations of Compass Minerals
International, Inc.
COMPASS MINERALS INTERNATIONAL,
INC.
April
28, 2009
|
/s/ ANGELO C.
BRISIMITZAKIS
|
|
|
President and
Chief Executive Officer
|
/s/
RODNEY L.
UNDERDOWN
Rodney L.
Underdown
Vice President and Chief
Financial Officer