Performance Indicators - Economic

Economic Performance
G3 Indicator
Economic Performance
EC1
Direct economic value generated and distributed including revenue, operating costs, employee compensation, donations and other community investments
Mosaic - Economic (in millions)
FY2007 FY2008 FY2009
Operating Costs:
Cost of goods sold $ 4,847.6 $ 6,652.1 $ 7,148.1
Selling, general and administrative expenses 309.8 323.8 321.4
Less: Unrealized loss (gain) on derivatives (20.3) (14.8) 166.2
Less: Depreciation, depletion and amortization 329.4 358.1 360.5
Less: Wages and benefits 563.5 620.1 574.3
Total operating costs $ 4,284.8 $ 6,012.5 $ 6,368.5
Payments to Providers of Funds:
Dividends paid $ 2.6 $ - $ 88.9
Interest paid (net of amount capitalized) 220.5 130.1 90.6
Total payments to providers of funds $ 223.1 $ 130.1 $ 179.5
Retained earnings $ 1,402.6 $ 3,485.4 $ 5,746.2
Tax (Payment to Government)
Income Taxes Paid (Refunds Received)
US $ (14.1) $ 187.8 $ 628.3
Canada 68.2 150.3 213.1
Brazil 1.2 21.0 37.8
Other worldwide 10.8 23.7 35.8
Total income taxes paid $ 66.1 $ 382.8 $ 915.0
 
Canadian resource taxes and royalties expenses $ 154.1 $ 361.8 $ 415.5


The following table reflects investments made in communities where targeted beneficiaries are external to the company. This may include contributions to research institutes unrelated to Mosaic's research and development activities, funds to support community infrastructure and other philanthropic efforts. We are currently improving our processes to allow us to more accurately capture and report this information in the coming years.

Community Investments FY2007 FY2008 FY2009
Total Mosaic 2.5 3.9 8.1
US 1.9 3.1 6.0
Canada 0.4 0.4 1.6
Brazil 0.2 0.3 0.5
China   0.1  
Dollars reported in millions ($M)

EC2
Financial implications and other risks and opportunities for the organization's activities due to climate change
Any potential physical impacts of climate change on our operations and those of our customers and farmers are uncertain and may vary by geographic location. Potential impacts could include changes in rainfall patterns, water shortages or surpluses, changing sea levels, changing storm patterns and intensities and changing temperature levels that could impact our costs and operating activities, the location and cost of global grain and oilseed production and the supply and demand for grains and oilseeds.

Our Phosphates business must comply with rigorous regulatory requirements for water storage on and around our phosphogypsum stack systems. We model our water storage capacity to anticipate rainfall levels that significantly exceed normal levels. We believe that these efforts help reduce risk during seasons of above-average rainfall.

We are working to reduce our own direct and indirect greenhouse gas (GHG) emissions and investing in research and development activities to help farmers be more efficient and reduce certain emissions on farms. Our agronomy team works with farmers to maximize their yields in light of soil and weather conditions.

In our Potash business, we have significantly reduced our direct GHG emissions and the energy intensity of our business over the last two decades through cogeneration, efficiency improvements and by transitioning to lower-demand energy technologies. We continue to focus on energy efficiency initiatives within our operations. These initiatives include continued upgrading and optimizing of combustion equipment, applied research and development and grassroots research and development to advance opportunities and develop new technology.

Our continuing focus on operational excellence in our Phosphates business unit is helping us reduce our indirect greenhouse gas emissions. For example, our normal chemical processes generate heat that can be captured and converted into electricity to replace some of the electricity we currently purchase. We already have waste heat recovery systems that generate a portion of our electricity needs and are continuing waste heat recovery initiatives that will deliver significant additional energy savings. These initiatives, along with energy efficiency and conservation measures, are intended to offset most or all of Phosphates' electricity purchases and will significantly reduce the indirect greenhouse gas emissions associated with our Phosphates business.

EC3
Coverage of the organization's defined benefit plan obligation
We sponsor pension and post-retirement benefits through a variety of plans, including defined benefit plans, defined contribution plans, and post-retirement benefit plans. In addition, we are a participating employer in Cargill's defined benefit pension plans in the US, Brazil, and Argentina.

Defined Benefit Plans

We sponsor two defined benefit pension plans in the U.S. and four in Canada. We assumed these plans from one of our predecessor companies, IMC, on the date of the business combination that created Mosaic. Benefits are based on different combinations of years of service and compensation levels, depending on the plan. The U.S. salaried and non-union hourly plan provides benefits to employees who were IMC employees prior to January 1998. The plan, as amended, accrues no further benefits for plan participants, effective March 2003. The U.S union pension plan provides benefits to union employees. Certain U.S. union employees were given the option and elected to participate in a defined contribution retirement plan in January 2004, in which case their benefits were frozen under the U.S. union pension plan. Other represented employees with certain unions hired on or after June 2003 are not eligible to participate in the U.S. union pension plan. The Canadian pension plans consist of two plans for salaried and non-union hourly employees, which are closed to new members, and two plans for union employees.

Generally, contributions to the U.S. plans are made to meet minimum funding requirements of the Employee Retirement Income Security Act ("ERISA"), while contributions to Canadian plans are made in accordance with Pension Benefits Acts instituted by the provinces of Saskatchewan and Ontario. Certain employees in the U.S. and Canada, whose pension benefits exceed Internal Revenue Code and Canada Revenue Agency limitations, respectively, are covered by supplementary non-qualified, unfunded pension plans.

At the end of fiscal 2009, Mosaic's pension plan obligations were estimated at $524.7 million, while the fair value of plan assets was $468.5 million. U.S. pension plan assets consisted of a diversified blend of equity securities (19.5 %), debt securities (75.0 %), real estate (5.0%) and other investments (0.5%). Canadian pension plan assets consisted of a diversified blend of equity securities (71.4 %), debt securities (28.1 %) and other investments (0.5%).

Defined Contribution Plans

The Mosaic Investment Plan ("Investment Plan") permits eligible salaried and non-union hourly employees to defer a portion of their compensation through payroll deductions and provides matching contributions. We match 100% of the first 3% of the participant's contributed pay plus 50% of the next 3% of the participant's contributed pay to the Investment Plan, subject to Internal Revenue Service limits. Participant contributions, matching contributions and the related earnings immediately vest. The Investment Plan also provides an annual non-elective employer contribution feature for eligible salaried and non-union hourly employees based on the employee's age and eligible pay. In accordance with plan amendments effective January 1, 2007 participants are generally vested in the nonelective employer contributions after three years of service. Prior to January 1, 2007 vesting schedules in the non-elective employer contributions were generally over five years of service. In addition, a discretionary feature of the plan allows the Company to make additional contributions to employees.

The Mosaic Union Savings Plan ("Savings Plan") was established pursuant to collective bargaining agreements with certain unions. Mosaic makes contributions to the defined contribution retirement plan based on the collective bargaining agreements. The Savings Plan is the primary retirement vehicle for newly hired employees covered by certain collective bargaining agreements. Effective April 1, 2005, certain former collectively bargained employees of Cargill who were employed with Mosaic on April 1, 2005 became eligible for the Savings Plan and a portion of the Cargill Investment Plan assets were transferred to the Savings Plan.

Canadian salaried and non-union hourly employees participate in an employer funded plan with employer contributions similar to the U.S. plan. The plan provides a profit sharing component which is paid each year. We also sponsor one mandatory union plan in Canada. Benefits in these plans vest after two years of consecutive service.

EC4
Significant financial assistance from government

  FY2007 FY2008 FY2009
Tax relief / credits
US 0.0 0.0 0.0
Canada 0.0 0.0 0.0
Other 1.1 0.9 7.1
Investment grants, R&D grants, other relevant grants
US 0.0 0.0 0.0
Canada 1.1 1.8 0.0
Other 0.0 0.0 0.0
Other
US 0.0 0.0 0.0
Canada 0.0 0.0 0.0
Other 0.3 0.3 0.1


EC5
Range of Ratios of standard entry level wage compared to local minimum wage at significant locations of operations

Comparison of 2008 entry level wage to local minimum wage
  US (US $/hr) Canada (Canadian $/hr)
Mosaic Entry Level Wage Rates $11.46 - $20.00 $26.08 - $26.86
Local Minimum Wage Rates $7.25 - $7.50 $9.25


In the U.S. Mosaic's entry level pay is 53% more than the minimum wage.
In Canada Mosaic's entry level pay is 182% more than the minimum wage.

EC6
Policy, practices and proportions of spending on locally-based suppliers at significant locations of operations
Mosaic does not have a written policy for preferring locally based suppliers, but we do spend a significant amount with local suppliers.

Operational Location % Spend with Local Vendors
All Phosphates (U.S. only) 58.7%
All Potash (Canada and U.S.) 48.4%
Offshore - Quebracho, Argentina 97.5%
Offshore - Fospar, Brazil 53.8%
Offshore - Cubatao, Brazil 18.9%


For our US locations, local suppliers include those within a 60-mile radius. For our Canadian operations, a supplier was deemed local if located within Saskatchewan. For Quebracho, a supplier was deemed local if located within Argentina. For Cubatao, a supplier was deemed local if within Sao Paulo, and for Fospar, if within Parana. Purchasing for Fospar and Cubatao include blending and granulation raw materials.

EC7
Procedures for local hiring and proportion of senior management hired from the local community at significant locations of operations
Mosaic does not have a policy that requires local hiring. Mosaic's first priority is to find the talent required to operate our business at expected levels. If the top candidate requires relocation assistance, that is considered one of the costs of doing business. As a matter of practice, staff positions are often filled from the local workforce.

Indirect Economic Impacts
EC8
Development and impact of infrastructure investment and services provided through commercial, in-kind or pro bono engagement
Mosaic has committed to design, construct and donate a fire station and a park in the Duette community in Manatee County, Florida. Mosaic made this commitment after local stakeholder engagement identified those projects as being in the public interest. Mosaic will donate the fire station to the Duette Fire District. We will donate the new 80 acre Bunker Hill Park to Manatee County Parks and Recreation and will maintain the park for three years after its completion. The total value of this donation is approximately $2.5 million.

University of Florida

Mosaic donated $25,000 to the University of Florida Chemical Engineering Unit operations lab to purchase supplies to conduct water filtration experiments.

University of South Florida

Mosaic donated $75,000 to the University of South Florida (“USF”) College of Engineering in Tampa. The donation was matched dollar for dollar by the College of Engineering. The funds will be used to address urgent needs at the laboratory level and will positively impact future engineering students at USF. Specifically, the donation will be applied to the Chemical Engineering Undergraduate and Graduate Laboratory in order to enhance the curriculum with experiments emphasizing the safe handling of chemicals, while exposing students to more modern analytical techniques.

Infrastructure for Affordable Housing

In Carlsbad, New Mexico we contributed $35,000 to fund infrastructure development for affordable housing.

Disaster Relief:

Red Cross Relief Efforts
   China Earthquake $200,000
   Midwest Flood $200,000
   Hurricane $ 50,000
Baton Rouge Area Foundation (hurricane relief) $100,000
Florida Disaster Recovery Fund (Hurricane Fay) $ 50,000


Mosaic Stadium

Mosaic has committed $350,000 a year until 2015 to support the community-owned Saskatchewan Roughriders team in the Canadian Football League.

Mosaic Heart Centre at Regina General Hospital and Yorkton Regional Hospital

Mosaic is donating $2 million ($200,000 per year over 10 years), to create The Mosaic Heart Centre at Regina General Hospital. The Centre will serve cardiac patients from across Saskatchewan and eventually, Western Canada. The donation enables the hospital to buy innovative diagnostic equipment that can identify and treat cardiac symptoms before they require heart surgery or other invasive procedures. It will include an upgraded catheterization lab, new electrophysiology lab, outpatient programs and replacement of outdated monitors and equipment. The donation also supports academic programs, research and teaching. This donation has a significant impact on the province. In addition, employees have raised approximately $50,000 for the Centre and Mosaic has matched their donations dollar for dollar.

Mosaic also donated $100,000 to Yorkton Regional Hospital. Mosaic was the lead donor in a campaign to build a cardiac care center to serve the community of Yorkton and other areas surrounding Mosaic’s Esterhazy Mine. The center makes it possible for residents in these areas to get care closer to home, without traveling to Regina. Approximately 800 of Mosaic’s employees live in this area. This donation will allow the hospital to purchase new equipment that will help with physician retention in the area. An estimated 1,500 patients were treated at Yorkton in 2008.

Habitat for Humanity

Mosaic has agreed to donate $450,000 to the Regina, Saskatchewan Habitat for Humanity over a three year period. Our relationship with Habitat allows us to introduce a provincial project in every area where our employees live and work. Habitat has a marked impact on the quality of life in the province and has a lasting impact on the families it assists. This donation will benefit the cities of Regina and Saskatoon and will assist in establishing new chapters in Moose Jaw and Yorkton. In total, 37 new homes will be built during a three year period. Mosaic employees will be encouraged to participate in the building of the home in their local communities.

India

Through the use of fertilizer and the construction of an irrigation infrastructure, Mosaic is working to create a model for sustainable agricultural practices in Indian villages. Our current investment is $16,000 and is supported by in-house management, contract help in each village and three Mosaic sales managers. Farmers are enjoying better yields, higher crop quality and a sharp increase in understanding best farm practices.

Regina Symphony Orchestra

Because a strong community infrastructure is also important, Mosaic is the title sponsor for the Mosaic Masterworks Concert Series of the Regina (Saskatchewan) Symphony Orchestra. We are providing a $250,000 sponsorship over five years.

Other Sponsored University Research

We also sponsor research at several universities in the U.S. to study various agronomic issues. Among the sponsorships are: Purdue University ($20,000/year), Kansas State University ($17,000/year), Iowa State University ($11,000/year), University of Georgia ($5,000/year), University of Illinois ($50,000/year), and Louisiana State University ($120,000 one time cost for endowed chair and $25,000/year).

EC9
Understand and describe significant indirect economic impacts
Mosaic has a significant economic impact in at least five areas, although we have not undertaken an empirical measurement of these impacts:
  • Impacts from improved nutrition: Hungry, malnourished people are less able to contribute to the economic well-being of their families and their communities than those whose basic needs for food are met. Our fertilizers help farmers grow more food for more people.
  • Impacts from improved profitability for farmers and rural communities more broadly: Farmers who produce enough food to not only feed their families, but to support a profitable business, bring economic benefits through their hiring and spending practices. Likewise, the dealers who distribute our fertilizers are often meaningful contributors to the economic vitality of the rural communities where they operate.
  • Impacts from improved health in areas where we have made significant health care investments: As discussed elsewhere in this report, Mosaic has made significant investments to improve the quality of health care available to the community near our operations in Saskatchewan. Healthier people, and people who are able to get high quality care closer to home when they need it, are better able to take financial care of themselves and contribute to their communities.
  • Impacts from community investment through our philanthropy efforts: Through our work with the United Way and other local charities, our contributions help families achieve greater economic independence.
  • Impacts from the multiplier effect of the money we spend: The multiplier effect of the money that our employees, suppliers, and other stakeholders spend is dramatic. In 2009, the Fertilizer Institute commissioned a study that found, for example, that the phosphate fertilizer industry in the United States, of which Mosaic is the largest participant, provided a total economic contribution of $21.2 billion and almost 90,000 jobs. You can read the complete report here.