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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 11-K

☑	ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2014

 

or

 

☐	TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File Number 001-31921

A.	Full title of the plan and the address of the plan, if different from that of the issuer named below:

Compass Minerals International, Inc. Savings Plan

B.	Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

Compass Minerals International, Inc.

9900 West 109^th Street, Suite 100

Overland Park, Kansas 66210

 

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Contents

 

 

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Report of Independent Registered Public Accounting Firm

 

The Plan Administrator

Compass Minerals International, Inc. Savings Plan

We have audited the accompanying statements of net assets available for benefits of Compass Minerals International, Inc. Savings Plan as of December 31, 2014 and 2013, and the related statements of changes in net assets available for benefits for the years ended December 31, 2014 and 2013. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Plan's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of Compass Minerals International, Inc. Savings Plan at December 31, 2014 and 2013, and the changes in its net assets available for benefits for the years ended December 31, 2014 and 2013, in conformity with U.S. generally accepted accounting principles.

The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2014, has been subjected to audit procedures performed in conjunction with the audit of Compass Minerals International, Inc. Savings Plan’s financial statements. The information in the supplemental schedule is the responsibility of the Plan’s management. Our audit procedures included determining whether the information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental schedule. In forming our opinion on the information, we evaluated whether such information, including its form and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole.

/s/ Ernst & Young LLP

Kansas City, Missouri

June 25, 2015

 

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Compass Minerals International, Inc. Savings Plan

Statements of Net Assets Available for Benefits

The accompanying notes are an integral part of the financial statements.

 

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Compass Minerals International, Inc. Savings Plan

Statements of Changes in Net Assets Available for Benefits

The accompanying notes are an integral part of the financial statements.

 

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Compass Minerals International, Inc. Savings Plan

Notes to Financial Statements

Note 1.

Description of the Plan

The following description of the Compass Minerals International, Inc. (the Company, CMP or Compass Minerals) Savings Plan (the Plan) provides only general information.  Participants should refer to the plan document for a more complete description of the Plan’s provisions.

General:  The Plan is a contributory, defined contribution plan covering all U.S. employees of the Company.  The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA).

Contributions:  Participants are allowed to contribute, in pre-tax dollars, a percentage of their eligible compensation as defined by the Plan, up to the maximum of the lesser of 60% of their eligible compensation or the annual limit allowed by the Internal Revenue Code (IRC) – ($17,500 in 2014 and 2013).  Participants may also elect to contribute to the Plan on an after-tax basis or through a Roth 401(k) option.  Participants may contribute from a minimum of 1% to a maximum of 10% of their eligible compensation on an after-tax basis to the Roth 401(k), subject to the maximum allowed by IRC rules.  Newly-hired participants are automatically enrolled in the Plan at an initial, pre-tax amount of 1% of their eligible compensation.  Participants may terminate or change their election at any time subsequent to the automatic enrollment.

The Company contributes, for each participant, a non-discretionary matching contribution on up to 6% of a participant’s eligible compensation as follows:  100% of their pre-tax deferrals up to the first 3% of eligible compensation, and 50% of their pre-tax deferrals on the next 3% of eligible compensation.  For non-union participants, the Company may also make profit sharing contributions to the Plan at the discretion of the Company’s Board of Directors.  Those participants must be employed on the last day of the plan year to be eligible for discretionary profit-sharing contributions except in the case of a participant’s death, disability, or retirement, as defined in the Plan document.  For the years ended December 31, 2014 and 2013, discretionary profit sharing contributions totaling $3,550,290 and $1,090,966, respectively, were accrued for the Plan.

The Company has elected to make a fixed contribution to each participant’s account equal to 1% of the participant’s gross compensation which is automatically invested in Compass Minerals common stock.  This contribution will remain in Compass Minerals common stock until the participant redirects the investment into another investment option available under the Plan. In addition, the Company may designate a qualified non-elective contribution to be allocated to non-highly compensated employees to maintain compliance with IRC non-discrimination tests.

The Plan also allows participants to rollover part or all of an eligible rollover distribution received by the participant from another qualified plan.

Participant accounts:  Each participant’s account is credited with the participant’s salary deferral contribution, the Company’s non-discretionary matching contribution, rollover contributions, allocation of the Company’s discretionary profit-sharing contribution, if applicable, the fixed employer contribution in CMP common stock and Plan earnings or losses.  Allocations are based on earnings or account balances as defined in the Plan agreement.  A participant is entitled to receive only the vested portion of their account balance at the time of a distributable event.

Eligibility:  All U.S. employees are eligible to participate in the Plan immediately upon employment.

The Plan excludes from eligibility those employees who are citizens of Puerto Rico, or non-resident aliens, leased employees and independent contractors.

 

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Compass Minerals International, Inc. Savings Plan

Notes to Financial Statements

Participants’ investment options:  Participants must direct their salary deferral, rollover contributions, employer non-discretionary matching contribution and employer discretionary profit sharing contribution to the selected investments as made available and determined by the Company.  In addition, the participants may invest in shares of Compass Minerals common stock.  Participants may change their investment options at any time throughout the year via the internet or direct phone access to Fidelity Management Trust Company.  However, employees who are subject to trading window restrictions for transactions in Compass Minerals common stock may not change their investment in Compass Minerals common stock during specified blackout periods.

Vesting:  All participants are immediately vested in the portion of their plan account related to participant salary deferral contributions, rollover deposits, non-discretionary Company matching contributions, fixed Company contributions of funds to purchase CMP stock and earnings or losses thereon.  Employees vest in the Company discretionary profit sharing contributions and any earnings or losses thereon, at a rate of 20% each year beginning on the participant’s first anniversary of employment.

Forfeitures:  Forfeitures of terminated participants’ non-vested Company contributions are used to pay Plan administrative expenses and reduce employer contributions.  The Plan used forfeitures of $0 and $66,342 to reduce employer contributions in 2014 and 2013, respectively. The Plan used forfeitures of $30,000 and $0 to pay Plan expenses in 2014 and 2013, respectively.  At December 31, 2014, the forfeiture balance of $48,338, included in interest-bearing cash on the Statements of Net Assets Available for Benefits, was available to apply to future administrative expenses or employer contributions.

Participant loans:  Participants are able to borrow from their fund accounts a minimum of $1,000 up to a maximum amount equal to the lesser of $50,000 or 50% of their vested account balance.  The terms of the loans are over one to five years for general purpose loans and over one to ten years for residential loans, except for certain loans grandfathered in under pre-existing Plans which had terms up to 30 years.  The loans must be adequately secured by the vested account balance and bear interest at a rate commensurate with local prevailing rates.  Interest rates on outstanding loans at December 31, 2014 range from 4.25% to 10.0%.  Principal and interest are paid ratably through after-tax payroll deductions with maturity dates ranging from 2015 through 2023.

Payment of benefits:  Upon death, disability, retirement or termination of service, participants, or their designated beneficiaries in case of death, are eligible to request a distribution of their vested account balance.  If a participant’s vested account balance exceeds $5,000, a participant or designated beneficiary may elect to receive a lump sum payment or defer distributions to a later date.  Vested account balances of less than $5,000 but greater than $1,000 will be rolled-over into an investment retirement account while vested account balances of $1,000 or less will be distributed in one lump sum payment, unless the participant elects another option before the end of the Plan year.  Distributions are made in accordance with Plan provisions in the form of lump sum distributions or installment distributions.

Administrative expenses:  Certain administrative functions are performed by officers or employees of the Company.  No such officer or employee receives compensation from the Plan.  A portion of the expenses incurred in the administration of the Plan, which consist primarily of trustee fees, are paid by the participants.  Other administrative expenses of the Plan may be paid by the Company or from forfeitures of non-vested Company contributions to the Plan.

Recent Accounting Pronouncements: In May 2015, the Financial Accounting Standards Board issued guidance, which removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. Disclosures about investments that calculate net asset value per share are limited under this guidance to those investments for which the entity has elected to estimate the fair value using the net asset value practical expedient. This guidance is effective for entities (other than public business entities) for fiscal years beginning after

 

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Compass Minerals International, Inc. Savings Plan

Notes to Financial Statements

December 15, 2016, with retrospective application for all periods presented.  Early adoption is permitted.  The Plan’s managing committee is currently evaluating the impact of the pending adoption of this guidance on the Plan’s financial statements.

Note 2.

Significant Accounting Policies

The Plan’s significant accounting policies are as follows:

Basis of accounting:  The financial statements of the Plan are presented on the accrual basis of accounting, in accordance with U.S. generally accepted accounting principles.

Investment valuation and income recognition:  Investments held by the Plan are stated at fair value less costs to sell, if those costs are significant.  Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price).  See Note 4 for further discussion of fair value measurements.

The Fidelity Managed Income Portfolio fund invests in fully benefit-responsive investment contracts. This fund is recorded at fair value (see Note 4); however, since these contracts are fully benefit-responsive, an adjustment is reflected in the statements of net assets available for benefits to present these investments at contract value. Contract value is the relevant measurement attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan. The contract value represents contributions plus earnings, less participant withdrawals and administrative expenses.

Purchases and sales of securities are accounted for on a trade-date basis.  Interest income is recorded on an accrual basis.  Dividend income is recorded on the ex-dividend date.

Use of estimates:  The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires the Plan Administrator to make estimates and assumptions that affect the reported amounts of net assets available for benefits and changes therein.  Actual results could differ from those estimates.

Payment of benefits:  Benefits are recorded when paid.

Notes receivable from participants:  Notes receivable from participants represent participant loans that are recorded at their unpaid principal balance plus any accrued but unpaid interest.  Interest income on notes receivable from participants is recorded when it is earned.  Any related fees are recorded as administrative expenses and expensed when incurred.  No allowance for losses has been recorded as of December 31, 2014 and 2013.  If a participant ceases to make loan repayments and the plan administrator deems the participant loan to be a distribution, the remaining participant loan balance is recorded as a benefit payment.

 

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Compass Minerals International, Inc. Savings Plan

Notes to Financial Statements

Note 3.

Investments

The following table presents the fair value of the Plan’s investments.  Single investments representing more than 5% of the Plan’s net assets as of December 31, 2014 and 2013 are separately identified.

*Investment represents 5% or more of net assets.

During the years ended December 31, 2014 and 2013, the Plan’s investments, primarily mutual funds, appreciated in value (including gains and losses on investments bought and sold, as well as held during the year) by $779,077 and $11,628,826, respectively, including appreciation of $446,662 and $346,567, respectively, in Compass Minerals common stock.

Although the collective trust fund’s fully benefit-responsive investment contracts allow participant withdrawals and exchanges to be paid at contract value (principal and interest accrued to date), during the term of the contract, withdrawals prompted by certain events that would cause a significant withdrawal from the fund, such as Company-initiated layoffs, the sale of a division or Plan termination, may be paid at market value, which may be less than contract value.  The Company does not believe the occurrence of any such event that would limit the collective trust fund’s ability to transact at contract value is probable.

 

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Compass Minerals International, Inc. Savings Plan

Notes to Financial Statements

Note 4.

Fair Value Measurements

As required, the Plan’s financial instruments are measured and reported at their estimated fair value less costs to sell, if those costs are significant.   Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction.  The following provides a description of the fair value hierarchy of inputs that may be used to measure fair value.

Level 1 – Quoted market prices in active markets for identical assets or liabilities;

Level 2 – Inputs other than Level 1 that are either directly or indirectly observable; and

Level 3 – Unobservable inputs developed using estimates and assumptions developed by the Plan.

The Plan’s investments are measured using the following valuation methods:

Interest-bearing cash:  The carrying amount of the Plan’s cash accounts approximates fair value.

Mutual funds:  The fair value of these funds is determined using the net asset value based upon observable market quotations as of the close of business on the last trading day of the year.

Common/collective trust:  The fair value of the investment in the common/collective trust’s net asset value is determined using an income approach by the fund trustee based upon the contractual terms at year end of the underlying fully benefit-responsive investment contracts comprising the fund.

Non-employer common stock:  The fair value of these securities is based upon observable market quotations as of the close of business on the last trading day of the year.

Employer common stock: The fair value of these securities is based upon observable market quotations as of the close of business on the last trading day of the year.

The Plan’s receivables approximate fair value.

 

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Compass Minerals International, Inc. Savings Plan

Notes to Financial Statements

The fair values of investments as of December 31, 2014 and 2013 are included in the tables below:

(a)

Includes mutual fund investments of approximately 42% in the common stock of large-cap U.S. companies, approximately 3% in the common stock of mid-cap U.S. companies, approximately 4% in the common stock of small-cap U.S. companies, approximately 6% in the common stock of international companies, approximately 9% in debt securities of U.S. companies and approximately 36% in funds that invest in both debt and equity securities.

(a)

Includes mutual fund investments of approximately 39% in the common stock of large-cap U.S. companies, approximately 2% in the common stock of mid-cap U.S. companies, approximately 5% in the common stock of small-cap U.S. companies, approximately 8% in the common stock of international companies, approximately 11% in debt securities of U.S. companies and approximately 35% in funds that invest in both debt and equity securities.

Note 5.

Reconciliation of Financial Statements to Form 5500

As discussed in Note 2, the Plan’s fully benefit-responsive investment contracts allow participant withdrawals and exchanges to be paid at contract value which differs from fair value.  The Form 5500 requires the net assets available for benefits to be stated at fair value.  The following table is a reconciliation of net assets available for benefits per the financial statements to the Form 5500 as of December 31 of each year.

 

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Compass Minerals International, Inc. Savings Plan

Notes to Financial Statements

The following table is a reconciliation of the net increase in net assets per the financial statements and the net income as shown in the Form 5500 for the year ended December 31, 2014.

Note 6.

Related-Party Transactions

Certain Plan investments are mutual funds and a common/collective trust, which are managed by Fidelity Management Trust Company.  Fidelity Management Trust Company is the trustee as defined by the Plan and, therefore, these transactions qualify as party-in-interest transactions.

The Company, as plan administrator and sponsor, is a related party to the Plan.  At December 31, 2014 and 2013, the plan held 68,029.689 and 64,776.84 shares, respectively, of CMP common stock with market values of $5,907,018 and $5,185,386, respectively.  During 2014 and 2013, the Plan purchased $1,223,961 and $1,015,772, respectively, of CMP stock and sold $948,991 and $514,498, respectively, of CMP stock. During 2014 and 2013, the Company declared and paid dividends of $2.40 and $2.18, respectively, per share.

Note 7.

Income Tax

The Plan has received a determination letter from the Internal Revenue Service dated April 27, 2012, stating that the Plan is qualified under Section 401(a) of the IRC and therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the IRC to maintain its qualified status. The plan administrator believes the Plan is being operated in compliance with the applicable requirements of the IRC and therefore, believes the Plan is qualified and the related trust is tax-exempt.

Accounting principles generally accepted in the United States require plan management to evaluate uncertain tax positions taken by the Plan. The financial statement effects of a tax position are recognized when the position is more likely than not, based on the technical merits, to be sustained upon examination by the IRS. The plan administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2014, there are no uncertain positions taken or expected to be taken. The Plan has recognized no interest or penalties related to uncertain tax positions. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The plan administrator believes the Plan is no longer subject to income tax examinations for years prior to 2011.

Note 8.

Risks and Uncertainties

The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market volatility and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the statements of net assets available for benefits.

Note 9.

Plan Termination

Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA.  In the event of Plan termination, participants would become 100% vested in their accounts.

 

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Compass Minerals International, Inc. Savings Plan

Employer Identification Number 36-3972986, Plan 001

Form 5500 Schedule H, Line 4i

Schedule of Assets (Held at end of Year)

As of December 31, 2014

 *Represents a party in interest.

**Primarily Fidelity investments.

 

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EXHIBIT INDEX

 

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* Filed herewith

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, Compass Minerals International, Inc., as plan administrator for the Savings Plan, has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.