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Property and Business Interruption Insurance Claims | 6 Months Ended
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Jun. 30, 2012
Property and Business Interruption Insurance Claims [Abstract] |
Property and Business Interruption Insurance Claims | Note 11: Property and Business Interruption Insurance Claims Note 11: Property and Business Interruption Insurance Claims Beginning on February 27, 2012, the Pryor Facility experienced unplanned downtime in the urea plant due to a damaged stainless steel liner within the urea reactor. As a result, the Pryor Facility was unable to produce urea ammonium nitrate (“UAN”) through the end of the second quarter of 2012. Our insurance policy provides for replacement cost coverage relating to property damage with a $1.0 million deductible and provides for business interruption coverage for certain lost profits and extra expense with a 30-day waiting period. A notice of insurance claims for property damage and business interruption was filed with the insurance carrier but the total amount has not been determined. After an initial investigation was performed by an insurance adjuster, we received a reservation of rights letter stating that some insurance policy exclusions could apply resulting in a full or partial denial as to our claims for property damage and/or business interruption. A recovery, if any, from our insurance coverage has not been recognized since for accounting purposes it is not probable and reasonably estimable and/or it is considered a gain contingency, which will be recognized if, and when, realized or realizable and earned. On May 15, 2012, the El Dorado Facility suffered significant damage when a reactor in its 98% concentrated nitric acid plant (“DSN plant”) exploded. No employees or individuals in the surrounding area were seriously injured as a result of the explosion. Due to extensive damages, the DSN plant is not being repaired but is being replaced with a new 65% concentrated nitric acid plant and a separate nitric acid concentration plant. In addition, several other plants and infrastructure within the El Dorado Facility sustained various degrees of damage. Our insurance policy provides for replacement cost coverage relating to property damage with a $1.0 million deductible and provides for business interruption coverage for certain lost profits and extra expense with a 30-day waiting period. A notice of insurance claims for property damage and business interruption was filed with the insurance carriers but the total amounts have not been determined but are expected to be substantial. Because our replacement cost coverage for property damages is estimated to exceed our property loss deductible, the net book value of the damaged property and other recoverable costs incurred through June 30, 2012, we did not recognize a loss relating to property damage from this explosion but we recorded an insurance claim receivable relating to this event primarily consisting of the disposal of the net book value of damaged property and certain repairs and clean-up costs incurred. In addition, a recovery for certain lost profits, if any, from our business interruption coverage has not been recognized since it is considered a gain contingency, which will be recognized if, and when, realized or realizable and earned. As of June 30, 2012, the balance of the insurance claim receivable relating to this event was $13.5 million. In general, if a recovery from our insurance coverage exceeds the balance of the insurance claim receivable, a gain will be recognized when realized or realizable and earned.

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- Definition A block of text that may be used to disclose all or part of the information relating to business interruption and property insurance claims. This may include the nature of the event resulting in the insurance claim, the aggregate amount of insurance recoveries recognized during the period, and the line item(s) in the statement of operations in which those insurance recoveries are classified. + References No definition available. + Details
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- Details
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