Page 79 - 2019 Annual Report
P. 79

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
           At  December 31, 2019, the Company  had $21.0  million  in cash and  short-term investments that are considered cash
           equivalents. The Company manages its cash and cash equivalents to ensure short-term operating cash needs are met and
           excess  funds are  managed efficiently.  The Company subsidizes shortages in operating  cash through  credit facilities. The
           Company utilizes excess cash to either pay-down credit facility borrowings or invest in money market funds, money market
           demand deposit accounts or offshore time deposit accounts. Money market demand deposits and offshore time deposit
           accounts are exposed to bank solvency risk. Money market demand deposit accounts are FDIC insured up to $250,000. The
           Company’s investments in bank funds generally exceed the $250,000 FDIC insurance limit.

           Cash on hand, along with the Company’s projected internal cash flows and availability of financing resources, including its
           access to debt and equity capital markets, is expected to continue to be sufficient to provide the capital resources necessary
           to support  anticipated operating needs,  cover debt service requirements, meet  capital expenditures and  discretionary
           investment needs, fund  certain acquisition opportunities that may  arise and allow for payment of dividends for the
           foreseeable future. Borrowings under the Revolving Facility are unsecured and may be used for general corporate purposes.
           The Company’s ability to borrow or issue securities is dependent upon, among other things, prevailing economic, financial
           and market  conditions. At  December 31, 2019,  the  Company had $757.7 million of unused borrowing capacity under its
           Revolving Facility and Trade Receivable Facility.

           The Company may be required to obtain additional financing in order to fund certain strategic acquisitions or to refinance
           outstanding debt. Any strategic acquisition of size would likely require an appropriate balance of newly-issued equity with
           debt in order to maintain  a composite investment-grade credit rating. Furthermore, the Company is exposed to credit
           markets through the interest cost related to its variable-rate debt, which includes the Floating Rate Senior Notes due in 2020
           and borrowings under its Revolving Facility and Trade Receivable Facility.

           Contractual and Off Balance Sheet Obligations
           Postretirement medical benefits will be paid from the Company’s assets. The obligation, if any, for retiree medical payments
           is subject to the terms of the plan.  At  December 31, 2019, the Company’s recorded benefit obligation related to these
           benefits totaled $13.0 million.
           The Company has other retirement benefits related to pension plans. At December 31, 2019, the qualified pension plans
           were  underfunded by $3.4  million.  The Company estimates that it will make contributions of  $50.0  million  to qualified
           pension  plans in  2020. Any contributions beyond 2020 are currently undeterminable and will depend on the investment
           return on the related pension assets. However, management’s practice is to fund  at least the service cost annually.  At
           December 31, 2019, the Company had a total obligation of $106.4 million related to unfunded nonqualified pension plans
           and expects to make contributions of $10.2 million to these plans in 2020.
           At December 31, 2019, the Company had $27.2 million accrued for uncertain tax positions, including interest and correlative
           effects of $1.7 million. Such liabilities may become payable if the tax positions are not sustained upon examination by a
           taxing authority.
           In connection with normal, ongoing operations, the Company enters into market-rate leases  for property,  plant and
           equipment and royalty commitments principally associated with leased land and mineral reserves. Additionally, the Company
           enters into equipment rentals to meet shorter-term, nonrecurring and intermittent needs. Effective January 1, 2019, the
           Company adopted Accounting Standards Codification 842 – Leases (ASC 842), which requires virtually all leases, excluding
           mineral interest leases, to be recorded on the consolidated balance sheet (see Note A – New Accounting Pronouncements to
           the audited consolidated financial statements). At December 31, 2019, the Company had $486.6 million in operating lease
           obligations and $8.7 million in finance lease obligations. Management anticipates that, in the ordinary course of business, the
           Company will enter into additional royalty agreements for land and mineral reserves during 2020. As permitted, short-term
           leases are excluded from ASC 842 requirements and future noncancelable obligations for these leases as of December 31,
           2019 are not immaterial.
           The Company has purchase commitments for property, plant and equipment of $93.4 million as of December 31, 2019. The
           Company also has other purchase obligations related  to energy and service contracts which  totaled $82.9  million as of
           December 31, 2019.











           Celebrating 25 Years as a Public Company                                         Annual Report  ♦  Page 77
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