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The Mosaic Company Reports First Quarter 2014 Results

            The Mosaic Company Reports First Quarter 2014 Results

PR Newswire

PLYMOUTH, Minn., May 6, 2014

PLYMOUTH, Minn., May 6, 2014 /PRNewswire/ -- The Mosaic Company (NYSE: MOS)
today reported first quarter 2014 net earnings of $218 million, compared to
$380 million a year ago. Earnings per diluted share were $0.54 in the quarter
compared to $0.89 last year. Mosaic's net sales in the first quarter of 2014
were $2.0 billion, down from $2.3 billion last year. Operating earnings during
the quarter were $267 million, down from $491 million a year ago, as higher
phosphate and potash sales volumes were more than offset by lower realized
prices. On a combined basis, notable items, including a discrete tax benefit
and a mark-to-market loss in value of the forward share repurchase agreement,
had a negligible effect on the quarter.

The Mosaic Company logo

"Mosaic delivered another quarter of solid results amid improving global
demand for both phosphate and potash," said Jim Prokopanko, President and
Chief Executive Officer. "While weather continued to create challenges in the
operating environment, strong global demand for phosphates pushed prices and
margins higher during the first three months of the year, and our early
positioning of potash in North America allowed for significant volume growth.

"Our long list of strategic accomplishments continued to grow in early 2014.
We reached agreements to repurchase an additional 8.2 million of Mosaic's
shares, bringing our total repurchase commitments to 12 percent of our 2013
year-end shares. In addition, we completed the acquisition of CF Industries'
phosphate business in Central Florida and announced an agreement to acquire
ADM's fertilizer distribution business in Brazil. We are also implementing
plans to generate cost savings of one-half billion dollars over the next five
years, ensuring Mosaic remains a low-cost producer."

Cash flow provided by operating activities in the first quarter of 2014 was
$627 million compared to $579 million in the prior year. First quarter 2014
cash flows reflect strong sales volumes and declining inventory levels.
Capital expenditures totaled $275 million in the quarter. Net cash used in
investing activities was $1.6 billion, leaving Mosaic's total cash and cash
equivalents at $2.5 billion and long-term debt at $3.0 billion as of March 31,
2014.

Business Highlights – First Quarter 2014

  oMosaic successfully closed the acquisition of CF Industries' phosphate
    business and began integration work.
  oThe Company's organic growth projects continue to progress as planned:

       oThe Esterhazy K3 mine development is on track, with both shafts more
         than 1000 feet below surface.
       oThe construction of the Saudi Arabia phosphate project began during
         the quarter.

  oMosaic announced plans to expand MicroEssentials® capacity, adding an
    incremental 1.2 million tonnes, and bringing total capacity to 3.5 million
    tonnes by 2017.
  oThe Company repurchased 8.2 million shares of Class A stock from Cargill
    family trusts, in addition to the 27.8 million repurchased from the MAC
    Trusts, for a total of 36 million shares repurchased in the quarter. In
    total, Mosaic has repurchased or committed to repurchase approximately 52
    million shares, 12 percent of year-end 2013 shares outstanding.
  oMosaic launched Aspire™, the first-of-its-kind micronutrient-enhanced
    potash fertilizer.
  oMosaic continued to execute onan enterprise-wide initiative focused on
    achieving $500 million in annual operating cost savings over the next five
    years, in alignment with a goal first communicated in October of 2013 and
    the special equity incentive awards granted during the quarter.
  oThe Company's reportable injury rate in the first quarter of 2014 improved
    by almost five percent over record setting results in the same period last
    year.
  oSubsequent to the quarter end, Mosaic announced an agreement to purchase
    Archer Daniels Midland's fertilizer distribution business in Brazil and
    Paraguay, allowing the Company to accelerate its growth strategy there.

Phosphates
Phosphates Results          1Q 2014 Actual              1Q 2014 Guidance
Average DAP selling price   $414                        $390 to $420
Sales volume                2.7 million tonnes          2.3 to 2.6 million
                                                        tonnes
Processed phosphate         79% of operational capacity Low 80% range
production

"Our Phosphates business began the year with strong global shipments and
improving margins," Mr. Prokopanko said. "With a robust North American
application season underway, we have a positive outlook for the second half of
the year."

Net sales in the Phosphates segment were $1.3 billion for the first quarter,
down 16 percent compared to last year, driven by lower finished product
prices. Gross margin was $207 million, or 17 percent of net sales, compared to
$253 million, or 17 percent of net sales, for the same period a year ago. The
year-over-year change in gross margin dollars reflects lower finished product
prices, partially offset by lower raw material costs. Operating earnings were
$138 million, down from $185 million last year.

The first quarter average DAP selling price, FOB plant, was $414 per tonne,
compared to $491 a year ago. Phosphates segment total sales volumes were 2.7
million tonnes, flat with last year.

Mosaic's North American finished phosphate production was 2.0 million tonnes,
roughly flat with the year ago period, at 79 percent of operational capacity.

Potash
Potash Results            1Q 2014 Actual              1Q 2014 Guidance
Average MOP selling price $267                        $245 to $275
Sales volume              2.4 million tonnes          2.3 to 2.7 million
                                                      tonnes
Potash production         70% of operational capacity Mid 80% range

"We saw strong demand for potash for North American spring planting, and our
early positioning of potash into U.S. warehouses allowed us to capitalize on
that demand," Mr. Prokopanko said. "Both our international volumes and our
ability to restock in North America were impacted by logistical constraints,
but we are shipping product at our maximum current logistical capacity. In the
second half of the year, we expect rail constraints to be resolved and potash
prices to be stable."

Net sales in the Potash segment totaled $733 million for the first quarter,
down from $825 million last year, as higher shipment volumes were more than
offset by a 29 percent decline in average realized MOP prices. Gross margin
was $212 million, or 29 percent of net sales, compared to $397 million, or 48
percent of net sales a year ago. Operating earnings were $166 million, down
from $306 million in the prior year. The year-over-year decrease in operating
earnings was driven by lower realized prices, a lower operating rate, and
higher depreciation expense, partially offset by lower brine management costs.

The first quarter average MOP selling price, FOB plant, was $267 per tonne,
down from $376 a year ago. The Potash segment's total sales volumes for the
first quarter were 2.4 million tonnes, compared to 2.0 million tonnes a year
ago.

Potash production was 1.9 million tonnes, or 70 percent of operational
capacity, down from 2.2 million tonnes, or 83 percent of operational capacity,
a year ago as a result of rail shipping delays.

Other

SG&A expenses were $120 million for the first quarter, compared with $92
million last year. The year-over-year increase was driven by the timing of
annual performance incentive compensation, reflecting a change in year-end
date, and recognition of special equity incentives tied to cost saving targets
over the next three years.

The provision for income taxes included a $62 million discrete tax benefit,
which primarily related to the intended sale of our distribution business in
Argentina. Excluding this discrete tax benefit, our effective tax rate in the
quarter would have been approximately 27 percent.

Financial Guidance

"We are optimistic about the remainder of 2014, for both of our business
units," Mr. Prokopanko said. "In the second quarter, we expect improving
phosphates margins, stable potash prices and strong volumes for both
nutrients. We have taken important strategic actions in order to accelerate
our growth as the business cycle continues to improve".

Total sales volumes for the Phosphates segment are expected to range from 3.1
to 3.4 million tonnes for the second quarter of 2014, compared to 2.9 million
tonnes last year. Mosaic's realized DAP price, FOB plant, for the second
quarter of 2014 is estimated to range from $430 to $460 per tonne. The segment
gross margin percentage in the second quarter is estimated to be in the high
teens, which includes a three-percentage point negative accounting impact from
the acquisition of the CF phosphate assets. The operating rate in the segment
is expected to be in the mid 80 percent range.

Total sales volumes for the Potash segment are expected to range from 2.2 to
2.5 million tonnes for the second quarter of 2014, compared to 2.4 million
tonnes last year. Mosaic's realized MOP price, FOB plant, for the second
quarter of 2014 is estimated to range from $250 to $275 per tonne, reflecting
a significant increase in proportion of lower netback international sales
compared to the first quarter. Mosaic's gross margin rate in the segment is
expected to be in the high twenty percent range during the second quarter of
2014. The operating rate in the segment is expected to be in the mid 80
percent range.

For the 2014 full year, Mosaic estimates:

  oSG&A expenses to range from $400 to $425 million, including acquisition
    and integration expense related increases.
  oCanadian Resource Taxes and Royalties to range from $120 to $180 million.
  oBrine management costs of approximately $200 million.
  oThe effective tax rate to be in the mid to upper twenty percent range,
    excluding any discrete tax items. The current year effective tax rate,
    excluding discrete items, is elevated as a result of our change in
    intention to repatriate Canadian cash and is expected to return to the
    long-term rate of low to mid twenty percent range thereafter.
  oCapital expenditures and equity investments, including the Saudi Arabian
    joint venture, in the range of $1.2 billion to $1.4 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, May 6, 2014 at 9:00 a.m. EDT
to discuss first quarter 2014 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 acquisition and assumption of
certain related liabilities of the Florida phosphate assets of CF Industries,
Inc. ("CF") and the ammonia supply agreements with CF; the benefits of the
transactions with CF; repurchases of stock; other proposed or pending future
transactions or 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 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, 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 Mosaic's 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 and other risks associated with Mosaic's
international operations and those of joint ventures in which Mosaic
participates, including the risk that protests against natural resource
companies in Peru extend to or impact the Miski Mayo mine; 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, the
Mississippi River basin, the Gulf Coast of the United States or Canada, and
including potential hurricanes, excess heat, cold, snow, 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, the liabilities Mosaic assumed in the Florida phosphate assets
acquisition or the cost of Mosaic's commitments to repurchase its stock;
reduction of Mosaic's available cash and liquidity, and increased leverage,
due to its use of cash and/or available debt capacity to fund share
repurchases, financial assurance requirements and strategic investments; 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 March31, 2014, the Company reported the following
notable items which, combined, positively impacted earnings per share by
$0.02:

                                                Amount     Tax        EPS
                                                           effect     impact
Description       Segment      Line item        (in        (in        (per
                                                millions)  millions)  share)
                               Change in value
Share repurchase  Consolidated of share         $    60    $   —      $ 0.15
                               repurchase
                               agreement
Special Equity                 Selling,
Incentive         Consolidated general &        15         (4)        0.03
                               administrative
Severance         Potash       Other operating  6          (2)        0.01
                               expense
Remediation of a
pre-combination   Phosphates   Other expense    5          (1)        0.01
event
                               Foreign
Foreign currency  Consolidated currency         (43)       12         (0.08)
transaction gain               transaction
                               (gain) loss
Unrealized (gain)              Cost of goods
loss on           Potash       sold             4          (1)        0.01
derivatives
Closing and                    Selling,
integration costs Phosphates   general &        5          (2)        0.01
for CF                         administrative
acquisition
Discrete tax                   (Benefit from)
items             Consolidated provision for    —          (62)       (0.16)
                               income taxes
Total Notable Items                             $    52    $   (60)   $ (0.02)



For the three months ended March31, 2013, the Company reported the following
notable items which, combined, negatively impacted earnings per share by
$0.06:

                                                 Amount     Tax effect  EPS
                                                                        impact
Description    Segment      Line item            (in        (in         (per
                                                 millions)  millions)   share)
Potash                      Other operating
antitrust      Potash       expense              $    42    (11)        $ 0.07
settlement
Unrealized
(gain) loss on Potash       Cost of goods sold   7          (2)         0.01
derivatives
Unrealized
(gain) loss on Phosphates   Cost of goods sold   (5)        1           (0.01)
derivatives
Foreign                     Foreign currency
currency       Consolidated transaction (gain)   (17)       4           (0.03)
transaction                 loss
(gain)
ARO adjustment Phosphates   Other operating      10         (3)         0.02
                            expense
Total Notable Items                              $    37    $   (11)    $ 0.06





Condensed Consolidated Statements of Earnings

(in millions, except per share amounts)
The Mosaic Company                                        (unaudited)
                                                          Three months ended
                                                          March 31,
                                                          2014       2013
Net sales                                                 $ 1,986.2  $ 2,312.4
Cost of goods sold                                        1,574.6    1,670.6
Gross margin                                              411.6      641.8
Selling, general and administrative expenses              120.0      91.9
Other operating expense                                   25.0       58.8
Operating earnings                                        266.6      491.1
Change in value of share repurchase agreement             (60.0)     —
Interest (expense) income, net                            (26.7)     3.7
Foreign currency transaction gain                         43.4       16.9
Other expense                                             (4.9)      (0.4)
Earnings from consolidated companies before income taxes  218.4      511.3
(Benefit from) provision for income taxes                 (2.6)      133.7
Earnings from consolidated companies                      221.0      377.6
Equity in net earnings (loss) of nonconsolidated          (3.3)      2.3
companies
Net earnings including noncontrolling interests           217.7      379.9
Less: Net earnings attributable to noncontrolling         0.2        0.1
interests
Net earnings attributable to Mosaic                       $ 217.5    $ 379.8
      Diluted net earnings per share attributable to      $ 0.54     $ 0.89
      Mosaic
      Diluted weighted average number of shares           379.6      427.2
      outstanding





Condensed Consolidated Balance Sheets

(in millions, except per share amounts)
The Mosaic Company                                                (unaudited)
                                                      March 31,   December 31,
                                                      2014        2013
Assets
Current assets:
 Cash and cash equivalents                            $ 2,490.7   $   5,293.1
 Receivables, net                                     597.4       543.1
 Inventories                                          1,606.6     1,432.9
 Deferred income taxes                                156.5       129.9
 Other current assets                                 504.2       706.8
           Total current assets                       5,355.4     8,105.8
 Property, plant and equipment, net                   9,551.9     8,576.6
 Investments in nonconsolidated companies             579.6       576.4
 Goodwill                                             1,764.7     1,794.4
 Deferred income taxes                                189.2       152.2
 Other Assets                                         671.5       348.6
           Total assets                               $ 18,112.3  $   19,554.0
Liabilities and Equity
Current liabilities:
 Short-term debt                                      $ 41.3      $   22.6
 Current maturities of long-term debt                 0.4         0.4
 Accounts payable                                     592.8       570.2
 Accrued liabilities                                  753.2       666.3
 Contractual share repurchase liability               755.8       1,985.9
 Deferred income taxes                                19.8        20.5
           Total current liabilities                  2,163.3     3,265.9
Long-term debt, less current maturities               3,009.1     3,008.9
Deferred income taxes                                 993.2       1,031.5
Other noncurrent liabilities                          1,095.6     927.1
Equity:
 Preferred stock, $0.01 par value, 15,000,000 shares
 authorized, none issued and outstanding as of March  —           —
 31, 2014 and December 31, 2013
 Class A Common Stock, $0.01 par value, 211,380,055
 shares authorized, 49,814,264 shares issued and
 outstanding as of March 31, 2014, 254,300,000       0.5         1.3
 shares authorized, 128,759,772 shares issued and
 85,839,827 shares outstanding as of December 31,
 2013
 Class B Common Stock, $0.01 par value, 87,008,602
 shares authorized, none issued and outstanding as    —           —
 of March 31, 2014 and December 31, 2013
 Common Stock, $0.01 par value, 1,000,000,000 shares
 authorized, 352,215,782 shares issued and
 340,022,320 shares outstanding as of March 31,       3.4         3.0
 2014, 352,204,571 shares issued and 340,166,109
 shares outstanding as of December 31, 2013
 Capital in excess of par value                       32.4        1.6
 Retained earnings                                    10,916.7    11,182.1
 Accumulated other comprehensive income (loss)        (120.7)     114.3
           Total Mosaic stockholders' equity          10,832.3    11,302.3
 Noncontrolling interests                             18.8        18.3
           Total equity                               10,851.1    11,320.6
           Total liabilities and equity               $ 18,112.3  $   19,554.0





Condensed Consolidated Statements of Cash Flows

(in millions, except per share amounts)
The Mosaic Company                                      (unaudited)
                                                        Three months ended
                                                        March 31,
                                                        2014       2013
Cash Flows from Operating Activities:
 Net earnings including noncontrolling interests        $ 217.7    $ 379.9
 Adjustments to reconcile net earnings including
 noncontrolling interests to net cash provided by
 operating activities:
           Depreciation, depletion and amortization     174.3      155.0
           Deferred income taxes                        (58.9)     4.4
           Equity in net loss (earnings) of             3.3        (4.6)
           nonconsolidated companies, net of dividends
           Accretion expense for asset retirement       10.5       9.8
           obligations
           Share-based compensation expense             34.9       3.0
           Change in value of share repurchase          60.0       —
           agreement
           Unrealized (gain) loss on derivatives        7.9        28.7
           Other                                        4.0        1.4
 Changes in assets and liabilities:
           Receivables, net                             (84.9)     (73.5)
           Inventories                                  (27.3)     16.7
           Other current and noncurrent assets          151.4      (26.7)
           Accounts payable                             86.8       5.2
           Accrued liabilities and income taxes         77.2       135.8
           Other noncurrent liabilities                 (29.9)     (55.7)
            Net cash provided by operating          627.0      579.4
           activities
Cash Flows from Investing Activities:
           Capital expenditures                         (274.9)    (367.5)
           Acquisition of business                      (1,353.6)  —
           Investments in nonconsolidated companies     (5.8)      (15.0)
           Other                                        —          4.0
            Net cash used in investing activities   (1,634.3)  (378.5)
Cash Flows from Financing Activities:
           Payments of short-term debt                  (58.4)     (64.2)
           Proceeds from issuance of short-term debt    65.9       83.2
           Payments of long-term debt                   (0.3)      (0.2)
           Proceeds from issuance of long-term debt     0.2        0.6
           Proceeds from stock option exercises         0.2        —
           Repurchases of stock                         (1,677.9)  —
           Cash dividends paid                          (99.7)     (106.4)
           Other                                        (0.3)      2.2
            Net cash used in financing activities   (1,770.3)  (84.8)
Effect of exchange rate changes on cash                 (24.8)     (10.0)
Net change in cash and cash equivalents                 (2,802.4)  106.1
Cash and cash equivalents - December 31                 5,293.1    3,405.3
Cash and cash equivalents - March 31                    $ 2,490.7  $ 3,511.4

Potash Gross Margin, Excluding Resource Taxes and Royalties, Calculation
                                                            Three months ended
                                                            March 31,
                                                            2014       2013
 Sales                                                      $  733.3   $ 824.5
 Gross margin                                               212.1      396.9
 Canadian resource taxes                                    30.3       32.1
 Canadian royalties                                         5.9        14.8
 Gross margin, excluding Canadian resource taxes and        $  248.3   $ 443.8
 royalties (CRT)
 Gross margin percentage, excluding CRT                     33.9%      53.8%

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.

Earnings Per Share Calculation
                                                            Three months ended
                                                            March 31,
                                                            2014       2013
 Net earnings attributed to Mosaic                          $  217.5   $ 379.8
 Undistributed earnings attributable to participating       (12.4)     —
 securities
 Numerator for basic and diluted earnings available to      $  205.1   $ 379.8
 common stockholders
 Basic weighted average number of shares outstanding        401.1      425.7
 Shares subject to forward contract                         (22.9)     —
 Basic weighted average number of shares outstanding        378.2      425.7
 attributable to common stockholders
 Dilutive impact of share-based awards                      1.4        1.5
 Diluted weighted average number of shares outstanding      379.6      427.2
 Basic net earnings per share                               $  0.54    $ 0.89
 Diluted net earnings per share                             $  0.54    $ 0.89

Logo - http://photos.prnewswire.com/prnh/20060331/MOSAICLOGO

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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