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Property and Business Interruption Insurance Claims and Recoveries | 6 Months Ended
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Jun. 30, 2014
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Property and Business Interruption Insurance Claims and Recoveries | Note 12: Property and Business Interruption Insurance Claims and Recoveries Cherokee Facility On November 13, 2012, a pipe ruptured within our Cherokee Facility causing damage primarily to the heat exchanger portion of its ammonia plant. No serious injuries or environmental impact resulted from the pipe rupture. As a result of the damage, the Cherokee Facility could only produce, on a limited basis, nitric acid and AN solution from purchased ammonia until the repairs were completed. Our insurance policy provided, for the policy period covering this claim, for repair or replacement cost coverage relating to property damage with a $2.5 million deductible and provided for business interruption coverage for certain lost profits and extra expense with a 30-day waiting period. As a result of this event, a notice of insurance claims for property damage and business interruption was filed with the insurance carriers. Based upon our assessment that it was probable that the amount of coverage for property damages would exceed our property loss deductible, the net book value of the damaged property and other recoverable costs incurred, we recorded an insurance claim receivable relating to this event, which offset the loss on the disposal of the damaged property and certain repairs and clean-up costs incurred (“recoverable costs”). In March 2013, our insurance carriers approved payments relating to our business interruption claim totaling $15 million. We received correspondence associated with the approval, which stated that our insurance carriers were still investigating the circumstances surrounding this event (including the cause of this event, scope of our losses and support for our claim) under a reservation of rights. The business interruption insurance recovery of $15.0 million was applied against recoverable costs (primarily relating to additional expenses associated with purchased product sold or used in products sold to our customers while our facility was being repaired) totaling $13.0 million as a reduction to cost of sales during the six months ended June 30, 2013 ($10.1 million during the first quarter of 2013 and $2.9 million during the second quarter of 2013). The insurance recovery in excess of recoverable costs of $2.0 million was not recognized at June 30, 2013 since a portion of this amount related to recoverable costs, which we were unable to conclude that it was at least probable (for financial reporting purposes) that these costs would be approved and a portion of this amount related to lost profits, which was considered a gain contingency. In January 2014, we settled the claim with our insurance carriers for the aggregate amount of approximately $43.5 million, including the $15.0 million paid to us as discussed above and the remaining $28.5 million was paid to us in January 2014. As it relates to the $28.5 million paid in January 2014, for financial reporting purposes, we allocated $7.0 million to our property insurance claim and $21.5 million to our business interruption claim primarily based on negotiations with our insurance carriers concerning our claims. The $7.0 million allocated to the property insurance claim was partially applied against our insurance claim receivable, consisting of recoverable costs, totaling $1.9 million at December 31, 2013. The insurance recovery in excess of the recoverable costs of $5.1 million was recognized as property insurance recoveries in excess of losses incurred in the first quarter of 2014. The insurance recovery of $21.5 million allocated to the business interruption claim was recognized as a reduction to cost of sales in the first quarter of 2014. In addition, the insurance recovery in excess of recoverable costs of $1.4 million (that was deferred and included in deferred gain on insurance recoveries at December 31, 2013) was recognized as a reduction to cost of sales in the first quarter of 2014.

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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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