ITEM 3. LEGAL PROCEEDINGS
AGREEMENT SUSPENDING POTASH DUMPING INVESTIGATION
In March 1987, the U.S. International Trade Commission made a preliminary determination that there was a reasonable indication that the U.S. potash producers had been injured by imports of Canadian potash, assuming that Canadian potash had been "dumped" into the U.S. market at less than "fair value". On August 26, 1987, the U.S. Department of Commerce ("Commerce") determined on a preliminary basis that Canadian potash was, or was likely to be, sold in the United States at less than "fair value".
On January 8, 1988, Commerce signed a suspension agreement with all of the potash producers in Canada, suspending the dumping investigation by Commerce. The agreement stipulates that each producer's minimum price for potash sold in the United States is to be based upon a formula determined by Commerce for each producer that is designed to limit any dumping by that producer in the future. Compliance with the agreement is monitored by Commerce. The agreement can be terminated without termination of the suspended investigation if Commerce determines that sales are made below the price determined under the formula, producers having 15% or more of the total Canadian volume or value exported into the United States withdraw from the agreement, or the conditions of the agreement are otherwise not being met, in which case the suspended investigation could be resumed by Commerce.
CIVIL ANTITRUST COMPLAINTS
In June, 1993, the Company and PCS Sales were served with a complaint relating to a suit filed in the United States District Court for Minnesota against most North American potash producers, including the Company. The complaint alleged a conspiracy among the defendants to fix the price of potash purchased by the plaintiffs as well as potash purchased by the members of a class of certain purchasers proposed by the plaintiffs. The complaint sought treble damages in an unspecified amount and other relief. Similar complaints
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were filed in the United States District Courts for the Northern District of Illinois and the Western District of Virginia. On motion of the defendants, all of the complaints were transferred and consolidated for pre-trial purposes in the United States District Court for Minnesota. Amended complaints were filed in March and April 1994. On January 12, 1995, the Minnesota Federal Court granted the plaintiffs' motion for class certification. Merits discovery was completed in September 1995. Expert discovery was completed in November 1995. The Company and PCS Sales filed a motion for summary judgment on December 22, 1995. On January 2, 1997, Judge Richard H. Kyle issued an order granting the motions for summary judgment and dismissing the lawsuit. The plaintiffs appealed that order to the United States Court of Appeals for the Eighth Circuit, on January 31, 1997.
Additional complaints were filed in the California and Illinois State Courts on behalf of purported classes of indirect purchasers of potash in those states. The Company moved to dismiss the California State Court lawsuit for lack of personal jurisdiction and the court ruled that it does not have personal jurisdiction over PCS but that it does have personal jurisdiction over PCS Sales. The case remains at an early stage; no merits discovery has taken place. The Illinois State Court dismissed the Illinois State Court complaint for failure to state a cause of action. The Illinois plaintiff appealed that dismissal and that dismissal was affirmed by the Appellate Court of Illinois on November 27, 1996. On January 15, 1997 the appellate court denied the plaintiff's request for rehearing. The plaintiff has the right to petition the Supreme Court of Illinois to review the Appellate Court's decision.
FTC INVESTIGATION
PCS Phosphate received a letter dated October 2, 1995 from the Federal Trade Commission requesting certain information concerning its phosphate operations in connection with a non-public investigation being conducted by its Bureau of Competition. The investigation is described in the letter as being made in order to determine whether manufacturers of concentrated phosphates may have engaged in or are engaging in practices prohibited under the Federal Trade Commission Act. The Company cooperated in the investigation and responded to the government's requests for information. On November 21, 1996, an official of the Bureau of Competition advised the Company that the investigation had been closed.
BFI, INC. LITIGATION
On May 20, 1995 a complaint was filed by OxyChem against Bienville Forest Investments, Inc. ("BFI, Inc.") seeking conveyance of 365 acres of land from BFI, Inc., pursuant to an option to purchase reclaimed lands. BFI, Inc. counterclaimed against OxyChem seeking damages arising from alleged trespass, nuisance, interference with business relationships and fraud. BFI, Inc. also requested that the court require OxyChem to convey certain properties to BFI, Inc. that had been previously deeded by BFI, Inc. to OxyChem. White Springs moved to intervene as a party and the court granted the motion. BFI, Inc. has argued that the option is unenforceable on grounds including: (i) the option allegedly constitutes an unreasonable restraint on alienation or a violation of the rule against perpetuities; and (ii) enforcement allegedly is barred by the statute of limitations, by the doctrine of laches, or by estoppel. White Springs has similar options with respect to approximately 25,000 additional acres of land in which BFI, Inc., and/or its affiliates, has an interest. On August 22, 1996, White Springs, BFI, Inc. and Glawson Investments Corp., a BFI, Inc. affiliate ("Glawson"), signed a Settlement Agreement and a Letter of Intent for Operating Agreement. The agreements settle the dispute among the parties thereto as to current and future land ownership and use. The agreements also release White Springs from claims occurring after October 30, 1995, but do not release claims that occurred while OxyChem owned White Springs. Under the agreements, White Springs did not agree to release any of its rights to mine on any property; however, White Springs released future rights to purchase property in the Suwannee River mining area while acquiring the right to purchase immediately property in the Swift Creek mining area, and White Springs agreed to exchange with BFI, Inc. and Glawson certain properties, to make their respective holdings more nearly contiguous. White Springs was formally dismissed from the BFI, Inc. litigation on December 16, 1996.
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PCS NITROGEN LEGAL MATTERS
See Recent Acquisition of Arcadian Corporation -- PCS Nitrogen Litigation.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.
Not Applicable.
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PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The information under "Common Share Prices and Volumes" in the registrant's 1996 Annual Report is incorporated herein by reference.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA.
The information under "Selected Ten-Year Data" in the registrant's 1996 Annual Report is incorporated herein by reference.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The information under "Manager's Discussion and Analysis of Financial Condition and Results of Operations" in the registrant's 1996 Annual Report is incorporated herein by reference.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements and notes thereto in the registrant's 1996 Annual Report are incorporated herein by reference.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
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PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information under "Election of Directors" in the Proxy Circular for the Annual Meeting of Shareholders in 1997 is incorporated herein by reference. Information concerning executive officers is set forth under "Executive Officers of the Company" in Part I.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION.
The information under "Executive Compensation" in the Proxy Circular for the Annual Meeting of Shareholders in 1997 is incorporated herein by reference.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information under "Ownership of Shares by Directors and Executive Officers" and "Election of Directors" in the Proxy Circular for the Annual Meeting of Shareholders in 1997 is incorporated herein by reference.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information under "Election of Directors" and "Executive Compensation" in the Proxy Circular for the Annual Meeting of Shareholders in 1997 is incorporated herein by reference.
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PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) Lists of Documents Filed as Part of this Report
1. Financial Statements in Annual Report
2. Schedules
All Schedules are omitted because the required information is inapplicable or it is presented in the Consolidated Financial Statements or the notes thereto.
3. Exhibits
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(b) No reports on Form 8-K were filed by the registrant during the last quarter of 1996.
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SIGNATURES
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.
POTASH CORPORATION OF SASKATCHEWAN, INC.
By: /s/ CHARLES E. CHILDERS ------------------------------------- Charles E. Childers Chief Executive Officer March 26, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
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EXHIBIT INDEX
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