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The Mosaic Company Reports Third Quarter 2013 Results

            The Mosaic Company Reports Third Quarter 2013 Results

PR Newswire

PLYMOUTH, Minn., Nov. 5, 2013

PLYMOUTH, Minn., Nov. 5, 2013 /PRNewswire/ --The Mosaic Company (NYSE: MOS)
reported third quarter 2013 net earnings of $124 million, compared to $417
million for the same period a year ago. Earnings per diluted share were $0.29
in the quarter compared to $0.98 for the same period last year. Current
quarter results included a $142 million, or $0.22 per share, negative impact
of notable items, largely non-cash, primarily as a result of strategic
decisions to divest assets or operations. Mosaic's net sales in the third
quarter were $1.9 billion, down from $2.6 billion for the same period last
year, primarily driven by lower prices and lower North American sales volumes.
Operating earnings during the quarter were $144 million, including $123
million in losses from write-down of assets, and were down from $644 million
for the same period a year ago.

"Lower potash and phosphate prices, a late North American fall application
season and cautious dealer behavior led to this quarter's weaker results,"
said Jim Prokopanko, President and Chief Executive Officer of Mosaic. "We
believe the current challenges in the environment in which we operate, for
both phosphate and potash, are cyclical in nature and provide Mosaic
opportunities to deploy capital, including shareholder distributions. The
long-term outlook for Mosaic remains compelling."

Cash flow provided by operating activities in the third quarter of 2013 was a
negative $45 million compared to a positive $344 million in the prior year.
For the four months ended September 30, 2013, cash flow from operations was
$389 million due to significant collections of receivables in June 2013, the
first month of the company's current 7-month stub period. Higher working
capital levels during the quarter, as a result of the late fall application
season in North America, are expected to partially reverse in the fourth
quarter. Capital expenditures totaled $333 million in the quarter. Mosaic's
total cash and cash equivalents were $3.3 billion and long-term debt was $1.0
billion as of September 30, 2013.

Business Highlights – Third Quarter 2013

  oMosaic made several portfolio optimization decisions during the quarter:

       oTo sell the salt operation and close the potash mine located in
         Hersey, Michigan;
       oTo exit underperforming Argentina and Chile distribution businesses
         and focus on growing the Company's presence in Brazil.

  oSubsequent to the third quarter, Mosaic entered into an agreement to
    purchase phosphate assets from CF Industries, Inc., for $1.2 billion.
    Total consideration of $1.4 billion includes $200 million for asset
    retirement obligation escrow funds.
  oMosaic also signed a long-term U.S. natural gas based ammonia contract
    with CF Industries, Inc., and will forego prior plans to construct an
    ammonia plant at Faustina, Louisiana.
  oMosaic's potash expansions continue to progress on time and on budget.
  oMosaic signed the Shareholder Agreement with Ma'aden and SABIC to develop
    integrated phosphate production facilities in Saudi Arabia.
  oMosaic achieved record quarterly production of MicroEssentials® of over
    500,000 tonnes.
  oThe Federal District Court in Jacksonville, Florida ruled in favor of
    Mosaic's Altman permit litigation, which involved 2,200 acres of the Four
    Corners Mine.
  oMosaic was recognized for voluntary reporting of its global greenhouse gas
    (CDP) footprint and CDP emissions reductions activity. Mosaic was also
    included in the 2013 CDP S&P 500 Climate Disclosure and Performance
    Leadership Indices. Mosaic is the first crop nutrition company recognized
    for inclusion in these indices.

Potash
Potash Results           3Q 2013 Actual            3Q 2013 Guidance
Average MOP selling      $342                      $330 to $340
price
Sales volume             1.38 million tonnes       1.45 to 1.65 million tonnes
Potash production        73% of operational        Below 75% of operational
                         capacity                  capacity

"While we continue to expect a good, albeit late, North American fall
application season, potash buyers are acting with a high degree of caution,"
Prokopanko said. "Over the long term, however, economics will ultimately win:
Supply and demand fundamentals will bring profitable growth to the industry,
as very profitable farm economics and excellent crop nutrient affordability
bode well for potash demand."

Net sales in the Potash segment totaled $523 million for the third quarter,
down from $927 million during the same period last year as a result of lower
domestic shipment volumes and lower realized prices. Gross margin was $184
million, or 35 percent of net sales, compared to $441 million, or 48 percent
of net sales, a year ago. The year-over-year decrease in gross margin was
driven by lower sales volumes, lower realized prices and higher depreciation
expenses as expansion projects were brought on line. Partially offsetting
these factors were lower brine management expenses, which were $48 million
during the quarter, down from $68 million a year ago. Operating earnings were
$92 million, compared to $398 million in the prior year, including $57 million
of charges outlined in the notable items table at the end of the release.

The third quarter average MOP selling price, FOB mine, was $342 per tonne,
down from $453 a year ago. The Potash segment's total sales volumes for the
third quarter were 1.4 million tonnes, compared to 1.8 million tonnes a year
ago.

Potash production was 2.0 million tonnes, or 73 percent of operational
capacity, up from 1.5 million tonnes, or 67 percent of operational capacity,
for the same period a year ago as a result of an ongoing proving run at
Esterhazy. Operational capacity increased from 9.3 to 10.7 million tonnes,
year-over-year, primarily due to the reversion of a third-party tolling
agreement.

Phosphates
Phosphates Results          3Q 2013 Actual              3Q 2013 Guidance
Average DAP selling price   $436                        $430 to $440
Sales volume                2.7 million tonnes          2.6 to 2.7 million
                                                        tonnes
Processed phosphate         88% of operational capacity Mid 80% range
production

"Our Phosphates business is also experiencing the impact of cautious
distributor behavior," Prokopanko said. "Despite near-term softness, we expect
the phosphate market to be balanced over the medium term, underpinned by
strong expected demand growth. Longer term, we continue to project
constructive fundamentals, which bodes well for our recently announced
acquisition and our investment in the Saudi Arabian joint venture."

Net sales in the Phosphates segment were $1.4 billion for the third quarter,
down 18 percent compared to last year, primarily driven by lower finished
product prices. Gross margin was $193 million, or 14 percent of net sales,
compared to $329 million, or 19 percent of net sales, for the same period a
year ago. The year-over-year change reflects lower finished product prices,
partially offset by lower ammonia and sulfur costs, as lower sales volumes
during the quarter delayed the benefit of declining market prices of raw
materials. Operating earnings were $58 million, down from $246 million the
same period last year, including $75 million of charges outlined in the
notable items table at the end of the release.

The third quarter average DAP selling price, FOB plant, was $436 per tonne,
compared to $533 a year ago. Phosphates segment total sales volumes were 2.7
million tonnes, down from 2.9 million tonnes a year ago due primarily to lower
domestic sales.

Mosaic's North American finished phosphate production was 2.1 million tonnes,
or 88 percent of operational capacity, roughly flat with the same period a
year ago.

Other
SG&A expenses were $94 million for the third quarter, compared with $115
million last year driven by a decrease in incentive compensation and benefits
combined with elimination of costs associated with last year's implementation
of a new human resources system. Other operating expenses were $26 million for
the third calendar quarter, up from $16 million a year ago related to the
settlement of certain mineral right interests.

Financial Guidance
"With excellent crop nutrient affordability, we anticipate strong demand in
North America for the remainder of calendar 2013, while international demand,
especially in India and China, remains less predictable," Prokopanko said. "We
expect pricing to remain challenging into 2014, followed by a cyclical
reversion, as demand growth absorbs the additional supply of phosphate and
potash. Mosaic is well positioned to take advantage of both the near term
cyclical dislocation and the positive secular trends."

Total sales volumes for the Potash segment are expected to range from 1.5 to
1.9 million tonnes for the fourth quarter of 2013, compared to 1.4 million
tonnes last year. Mosaic's average MOP selling price, FOB mine, for the fourth
quarter of 2013 is estimated to range from $285 to $310 per tonne. Mosaic's
gross margin rate in the segment is expected to be in the mid-20 percent range
during the fourth quarter. The Potash segment operating rate is expected to be
below 65 percent during the fourth quarter of 2013 with planned Esterhazy
maintenance after the completion of a proving run.

Total sales volumes for the Phosphates segment are expected to range from 2.5
to 2.9 million tonnes for the fourth quarter of 2013, compared to 2.8 million
tonnes last year. Mosaic's average DAP selling price, FOB plant, for the
fourth quarter of 2013 is estimated to range from $370 to $400 per tonne.
Segment gross margin percentage in the fourth calendar quarter is estimated to
be flat with the prior quarter, due primarily to lower selling prices offset
by lower raw materials costs. The Company's operating rate at its North
American phosphate operations is expected to be approximately 80 percent of
operational capacity during fourth quarter of 2013.

For the fourth quarter, Mosaic estimates:

  oSG&A expenses to range from $90 to $105 million
  oCanadian Resource Taxes and Royalties to range from $40 to $60 million
  oBrine managements costs of approximately $45 to $55 million

For the seven-month stub period, Mosaic continues to estimate:

  oAn effective tax rate in the upper teens percent range, excluding any
    notable tax items
  oCapital expenditures and investments in the Saudi Arabian joint venture in
    the range of $900 million to $1.1 billion

About The Mosaic Company
The Mosaic Company is one of the world's leading producers and marketers of
concentrated phosphate and potash crop nutrients. Mosaic is a single source
provider of phosphate and potash fertilizers and feed ingredients for the
global agriculture industry. More information on the Company is available at
www.mosaicco.com.

Mosaic will conduct a conference call on Tuesday, November 5, 2013 at 9:00
a.m. EST to discuss third quarter 2013 earnings results as well as global
markets and trends. Presentation slides and a simultaneous webcast of the
conference call may be accessed through Mosaic's website at
www.mosaicco.com/investors. This webcast will be available up to one year from
the time of the earnings call.

This press release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Such statements include,
but are not limited to, statements about the proposed acquisition of the
Florida phosphate assets and certain related liabilities of CF Industries,
Inc. ("CF") and the ammonia supply agreements with CF; the benefits of the
transactions with CF; future strategic plans and other statements about future
financial and operating results. Such statements are based upon the current
beliefs and expectations of The Mosaic Company's management and are subject to
significant risks and uncertainties. These risks and uncertainties include but
are not limited to risks and uncertainties arising from the possibility that
the closing of the proposed phosphate asset acquisition may be delayed or may
not occur, including delays arising from any inability to obtain governmental
approvals of the transaction on the proposed terms and schedule and the
ability to satisfy other closing conditions; difficulties with realization of
the benefits of the transactions with CF, including the risks that the
acquired assets may not be integrated successfully or that the cost or capital
savings from the transactions may not be fully realized or may take longer to
realize than expected, regulatory agencies might not take, or might delay,
actions with respect to permitting or regulatory enforcement matters that are
necessary for Mosaic to fully realize the benefits of the transactions
including replacement of CF's escrowed financial assurance funds, or the price
of natural gas or ammonia changes to a level at which the natural gas based
pricing under one of the long term ammonia supply agreements with CF becomes
disadvantageous to Mosaic; customer defaults; the effects of our decisions to
exit business operations or locations; the predictability and volatility of,
and customer expectations about, agriculture, fertilizer, raw material, energy
and transportation markets that are subject to competitive and other pressures
and economic and credit market conditions; the level of inventories in the
distribution channels for crop nutrients; changes in foreign currency and
exchange rates; international trade risks; changes in government policy;
changes in environmental and other governmental regulation, including
greenhouse gas regulation, implementation of numeric water quality standards
for the discharge of nutrients into Florida waterways or possible efforts to
reduce the flow of excess nutrients into the Mississippi River basin or the
Gulf of Mexico; further developments in judicial or administrative
proceedings, or complaints that Mosaic's operations are adversely impacting
nearby farms, business operations or properties; difficulties or delays in
receiving, increased costs of or challenges to necessary governmental permits
or approvals or increased financial assurance requirements; resolution of
global tax audit activity; the effectiveness of the Company's processes for
managing its strategic priorities; the ability of the Northern Promise joint
venture among Mosaic, Ma'aden and SABIC to obtain project financing in
acceptable amounts and upon acceptable terms, the future success of current
plans for the joint venture and any future changes in those plans; adverse
weather conditions affecting operations in Central Florida or the Mississippi
River basin or the Gulf Coast of the United States, and including potential
hurricanes, excess rainfall or drought; actual costs of various items
differing from management's current estimates, including, among others, asset
retirement, environmental remediation, reclamation or other environmental
regulation, Canadian resources taxes and royalties, or the liabilities Mosaic
is assuming in the proposed phosphate assets acquisition; brine inflows at
Mosaic's Esterhazy, Saskatchewan, potash mine or other potash shaft mines;
other accidents and disruptions involving Mosaic's operations, including
potential mine fires, floods, explosions, seismic events or releases of
hazardous or volatile chemicals, as well as other risks and uncertainties
reported from time to time in The Mosaic Company's reports filed with the
Securities and Exchange Commission. Actual results may differ from those set
forth in the forward-looking statements.

For the three months ended September 30, 2013, the Company reported the
following notable items which, combined, negatively impacted earnings per
share by $0.22:

                                             Amount       Tax Effect    EPS
                                                                        Impact
Description      Segment      Line item      (in          (in           (per
                                             millions)    millions)     share)
Hersey                        Loss on
write-down of    Potash       write down   $ 48         $ (17)        $ 0.07
long lived                    of assets
assets
Write-off of
initial                       Loss on
engineering      Phosphates   write down     25           (9)           0.04
costs for                     of assets
ammonia plant
Argentina                     Loss on
write-down to    Phosphates   write down     50           -             0.12
fair value                    of assets
Total Write                                  123          (26)          0.23
Downs
Discrete tax     Consolidated Tax            -            (17)          (0.04)
items                         provision
Settlement of                 Other
mineral          Potash       operating      9            (2)           0.02
interests                     expense
Fees related to               Other
purchase of CF   Consolidated operating      4            (1)           0.01
phosphate assets              expense
                              Foreign
Foreign currency Consolidated currency       30           (6)           0.05
transaction loss              transaction
                              loss
Unrealized                    Cost of
(gain) loss on   Potash       goods sold    (23)         5             (0.05)
derivatives
Unrealized                    Cost of
(gain) loss on   Phosphates   goods sold    (1)          -             -
derivatives
Total Notable                              $ 142        $ (47)        $ 0.22
Items

For the three months ended September 30, 2012, the Company reported the
following notable items which, combined, negatively impacted earnings per
share by $0.01:

                                             Amount       Tax Effect    EPS
                                                                        Impact
Description      Segment      Line item      (in          (in           (per
                                             millions)    millions)     share)
Write off of                  Other
equipment        Phosphates   operating    $ 7          $ (3)         $ 0.01
                              expense
Unrealized                    Cost of
(gain) loss on   Potash       goods sold     (25)         8             (0.04)
derivatives
                              Foreign
Foreign currency Consolidated currency       27           (10)          0.04
transaction loss              transaction
                              loss
Total Notable                              $ 9          $ (5)         $ 0.01
Items



Condensed Consolidated Statements of Earnings
(in millions, except per share amounts)
The Mosaic Company                                                 (unaudited)
                                                        Three months ended
                                                        September 30,
                                                        2013       2012
Net sales                                             $ 1,908.7  $ 2,645.7
Cost of goods sold                                      1,521.8    1,871.1
Gross margin                                            386.9      774.6
Selling, general and administrative expenses            94.4       114.8
Loss on write down of assets                            122.8      -
Other operating expense                                 25.6       16.1
Operating earnings                                      144.1      643.7
Interest income, net                                    1.8        5.1
Foreign currency transaction loss                       (29.6)     (27.3)
Other income (expense)                                  0.4        (0.6)
Earnings from consolidated companies before income      116.7      620.9
taxes
(Benefit from) provision for income taxes               (6.6)      189.0
Earnings from consolidated companies                    123.3      431.9
Equity in net earnings (loss) of nonconsolidated        2.5        (12.9)
companies
Net earnings including noncontrolling interests         125.8      419.0
Less: Net earnings attributable to noncontrolling       1.4        1.6
interests
Net earnings attributable to Mosaic                   $ 124.4    $ 417.4
   Basic net earnings per share attributable to       $ 0.29     $ 0.98
   Mosaic
   Diluted net earnings per share attributable to     $ 0.29     $ 0.98
   Mosaic
   Basic weighted average number of shares              425.9      425.6
   outstanding
   Diluted weighted average number of shares            427.1      426.8
   outstanding



Condensed Consolidated Balance Sheets
(in millions, except per share amounts)
The Mosaic Company                                                 (unaudited)
                                                  September 30,    May 31,
                                                  2013             2013
 Assets
 Current assets:
  Cash and cash equivalents                     $ 3,338.6        $ 3,697.1
  Receivables, net                                478.7            1,015.7
  Inventories                                     1,495.0          1,557.3
  Deferred income taxes                           81.2             75.7
  Other current assets                            897.8            534.7
                   Total current assets           6,291.3          6,880.5
 Property, plant and equipment, net of
 accumulated depreciation of $3,916.8 million     8,513.0          8,486.8
 and $3,760.8 million, respectively
 Investments in nonconsolidated companies         562.1            431.5
 Goodwill                                         1,833.2          1,844.6
 Deferred income taxes                            212.5            212.7
 Other assets                                     244.5            229.9
                   Total assets                 $ 17,656.6       $ 18,086.0
 Liabilities and Equity
 Current liabilities:
  Short-term debt                               $ 14.5           $ 68.7
  Current maturities of long-term debt            0.8              0.9
  Accounts payable                                611.7            763.1
  Accrued liabilities                             588.7            845.1
  Deferred income taxes                           86.6             87.1
                   Total current liabilities      1,302.3          1,764.9
 Long-term debt, less current maturities          1,011.5          1,009.6
 Deferred income taxes                            960.9            961.4
 Other noncurrent liabilities                     830.8            907.2
 Equity:
  Preferred stock, $0.01 par value, 15,000,000
  shares authorized, none issued and
  outstanding as of September 30, 2013 and May    -                -
  31, 2013
  Class A common stock, $0.01 par value,
  254,300,000 shares authorized, 150,059,772
  shares issued and 128,759,772 shares
  outstanding as of September 30, 2013 and May    1.3              1.3
  31, 2013
  Class B common stock, $0.01 par value,
  87,008,602 shares authorized, none issued and
  outstanding as of September 30, 2013 and May    -                -
  31, 2013
  Common stock, $0.01 par value, 1,000,000,000
  shares authorized, 309,245,292 shares issued
  and 297,206,830 shares outstanding as of
  September 30, 2013, 308,749,067 shares issued
  and 296,710,605 shares outstanding as of May    3.0              3.0
  31, 2013
  Capital in excess of par value                  1,507.8          1,491.3
  Retained earnings                               11,707.6         11,603.4
  Accumulated other comprehensive income          312.9            326.4
        Total Mosaic stockholders' equity         13,532.6         13,425.4
  Noncontrolling interests                        18.5             17.5
        Total equity                              13,551.1         13,442.9
        Total liabilities and equity            $ 17,656.6       $ 18,086.0



Condensed Consolidated Statements of Cash Flows
(in millions, except per share amounts)
The Mosaic Company                                               (unaudited)
                                                Three months ended
                                                September 30,    September 30,
                                                2013             2012
 Cash Flows from Operating Activities:
  Net earnings including noncontrolling       $ 125.8          $ 419.0
  interests
  Adjustments to reconcile net earnings
  including noncontrolling interests to net
  cash provided by operating activities:
         Depreciation, depletion and            166.1            140.6
         amortization
         Deferred income taxes                  -                0.3
         Equity in net earnings of
         nonconsolidated companies, net of      7.0              31.0
         dividends
         Accretion expense for asset            9.9              7.1
         retirement obligations
         Share-based compensation expense       14.1             17.7
         Loss on write-down of assets           122.8            -
         Unrealized (gain) on derivatives       (40.7)           (52.5)
         Other                                  (3.1)            (1.4)
  Changes in assets and liabilities:
         Receivables, net                       131.7            (81.0)
         Inventories                            (2.5)            (213.1)
         Other current and noncurrent assets    (167.8)          29.6
         Accounts payable                       (104.1)          128.3
         Accrued liabilities and income taxes   (221.0)          (108.0)
         Other noncurrent liabilities           (83.2)           26.2
               Net cash (used in) provided by   (45.0)           343.8
               operating activities
 Cash Flows from Investing Activities:
         Capital expenditures                   (332.5)          (384.6)
         Restricted cash                        -                7.8
         Investments in nonconsolidated         (134.5)          -
         companies
         Other                                  1.3              1.3
               Net cash used in investing       (465.7)          (375.5)
               activities
 Cash Flows from Financing Activities:
         Payments of short-term debt            (42.9)           (5.4)
         Proceeds from issuance of short-term   57.2             10.3
         debt
         Payments of long-term debt             (0.7)            (0.2)
         Proceeds from issuance of long-term    2.7              (0.1)
         debt
         Proceeds from stock option exercises   0.5              (1.7)
         Dividends                              (106.8)          (106.6)
         Other                                  0.5              0.8
               Net cash used in financing       (89.5)           (102.9)
               activities
 Effect of exchange rate changes on cash        23.3             26.9
 Net change in cash and cash equivalents        (576.9)          (107.7)
 Cash and cash equivalents - June 30            3,915.5          3,656.2
 Cash and cash equivalents - September 30     $ 3,338.6        $ 3,548.5
 Supplemental Disclosure of Cash Flow
 Information:
         Cash paid during the period for:
               Interest (net of amount
               capitalized of $12.1 and $12.8
               as of September 30,
               2013 and 2012, respectively)   $ -              $ -
               Income taxes (net of refunds)    -                130.4



Selected Non-GAAP Financial Measures and Reconciliations
The Mosaic Company                                                 (unaudited)
 Potash Gross Margin, Excluding Resource Taxes and Royalties, Calculation
                                                          Three months ended
                                                          September 30
                                                          2013     2012
 Sales                                                  $ 523.2  $ 927.1
 Gross margin                                             184.4    440.9
 Canadian resource taxes                                  30.8     66.1
 Canadian royalties                                       10.5     11.5
 Gross margin, excluding Canadian resource taxes and    $ 225.7  $ 518.5
 royalties (CRT)
 Gross margin percentage, excluding CRT                   43.1%    55.9%
 The Company's margins are further reduced by the impact of a third party
 tolling agreement.

The Company has presented above gross margin excluding Canadian resource taxes
and royalties ("CRT") for Potash which is a non-GAAP financial
measure.Generally, a non-GAAP financial measure is a supplemental numerical
measure of a company's performance, financial position or cash flows that
either excludes or includes amounts that are not normally excluded or included
in the most directly comparable measure calculated and presented in accordance
with U.S. generally accepted accounting principles ("GAAP"). Gross margin
excluding CRT is not a measure of financial performance under GAAP. Because
not all companies use identical calculations, investors should consider that
Mosaic's calculation may not be comparable to other similarly titled measures
presented by other companies.

Gross margin excluding CRT provides a measure that the Company believes
enhances the reader's ability to compare the Company's gross margin with that
of other companies which incur CRT expense and classify it in a manner
different than the Company in their statement of earnings. Because securities
analysts, investors, lenders and others use gross margin excluding CRT, the
Company's management believes that Mosaic's presentation of gross margin
excluding CRT for Potash affords them greater transparency in assessing
Mosaic's financial performance against competitors. Gross margin excluding
CRT, should not be considered as a substitute for, or superior to, measures of
financial performance prepared in accordance with GAAP.

SOURCE The Mosaic Company

Website: http://www.mosaicco.com
Contact: Media, Rob Litt, The Mosaic Company, 763-577-6187,
rob.litt@mosaicco.com; or Investors, Laura Gagnon, The Mosaic Company,
763-577-8213, investor@mosaicco.com
 
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