PAGE 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 1995
or
( ) Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from-------- to---------
Commission File Number 1-2376
FMC Corporation
--------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 94-0479804
--------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 East Randolph Drive, Chicago, Illinois 60601
--------------------------------------------------------
(312) 861-6000
------------------------------------
(Registrant's telephone number,
including area code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest
practicable date.
Class Outstanding at June 30, 1995
- ---------------------------------------- ----------------------------
Common Stock, par value $0.10 per share 36,599,140
PAGE 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- ----------------------------
FMC Corporation and Consolidated Subsidiaries
- ---------------------------------------------
Consolidated Statements of Income (Unaudited)
- ---------------------------------------------
(In thousands, except per share data)
Three Months Six Months
Ended June 30 Ended June 30
---------------------- -----------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
Revenue:
Sales $1,128,372 $1,053,764 $2,143,896 $1,962,064
Equity in net earnings
of affiliates 1,608 1,849 2,712 3,502
Other revenue 9,805 7,715 25,333 26,124
---------- ---------- ---------- ----------
Total revenue 1,139,785 1,063,328 2,171,941 1,991,690
---------- ---------- ---------- ----------
Costs and expenses:
Cost of sales 810,095 748,772 1,555,907 1,403,689
Selling, general and
administrative expenses 151,140 146,476 291,965 288,918
Research and development 42,906 38,860 81,167 77,042
Other (income) and
expense, net 1,096 (4,693) 1,245 (9,385)
---------- ---------- ---------- ----------
Total costs and expenses 1,005,237 929,415 1,930,284 1,760,264
---------- ---------- ---------- ----------
Earnings before interest,
minority interests, and taxes 134,548 133,913 241,657 231,426
Interest income 4,030 2,080 7,374 3,674
Interest expense 22,797 16,723 41,827 33,130
Minority interests 7,385 20,274 23,897 35,199
---------- ---------- ---------- ----------
Income before income taxes 108,396 98,996 183,307 166,771
Provision for income taxes 30,686 31,679 53,159 53,367
---------- ---------- ---------- ----------
Net Income $ 77,710 $ 67,317 $ 130,148 $ 113,404
========== ========== ========== ==========
Average number of shares:
Primary 37,669 37,070 37,600 37,049
---------- ---------- ---------- ----------
Fully diluted 37,750 37,101 37,675 37,074
---------- ---------- ---------- ----------
Earnings per common share:
Primary: $2.06 $1.82 $3.46 $3.06
========== ========== ========== ==========
Fully diluted: $2.06 $1.81 $3.45 $3.06
========== ========== ========== ==========
See accompanying notes to consolidated financial statements.
PAGE 3
FMC Corporation and Consolidated Subsidiaries
Consolidated Balance Sheets
(In thousands, except per share data) June 30
1995 December 31
Assets: (Unaudited) 1994
----------- -----------
Current assets:
Cash and cash equivalents $ 127,200 $ 98,367
Trade receivables, net of allowance
for doubtful accounts of $13,033 and
$10,929 in 1995 and 1994, respectively 759,800 642,754
Inventories 539,366 403,943
Other current assets 205,831 137,582
Deferred income taxes 85,015 93,647
---------- ----------
Total current assets 1,717,212 1,376,293
Investments 130,477 141,702
Property, plant and equipment at cost 4,167,681 3,897,467
Less -- accumulated depreciation 2,490,815 2,360,091
---------- ----------
Net property, plant and equipment 1,676,866 1,537,376
Other assets 240,363 208,863
Unallocated Purchase Price of Moorco
International Inc. 237,536 -
Deferred income taxes 60,983 87,252
---------- ----------
Total assets $4,063,437 $3,351,486
========== ==========
Liabilities and Stockholders' Equity:
Current liabilities:
Short-term debt $ 514,761 $ 66,854
Accounts payable, trade and other 703,900 676,929
Accrued and other current liabilities 413,958 405,853
Current portion of long-term debt 17,092 41,339
Current portion of accrued pension
and other postretirement benefits 18,684 22,818
Income taxes payable 64,661 55,114
---------- ----------
Total current liabilities 1,733,056 1,268,907
Long-term debt, less current portion 997,653 901,180
Accrued pension and other postretirement
benefits, less current portion 304,372 306,476
Reserve for discontinued operations 176,194 189,885
Other liabilities 177,914 169,000
Minority interests in consolidated companies 101,083 99,555
Stockholders' equity:
Common stock, $0.10 par value, authorized
60,000,000 shares; issued 36,897,366
shares in 1995 and 36,813,530 shares
in 1994 3,690 3,681
Capital in excess of par value
of capital stock 93,755 90,366
Retained earnings 510,650 380,502
Foreign currency translation adjustment (25,883) (49,019)
Treasury stock, common, at cost;
298,226 shares in 1995 and 1994 (9,047) (9,047)
---------- ----------
Total stockholders' equity 573,165 416,483
---------- ----------
Total liabilities and stockholders' equity $4,063,437 $3,351,486
---------- ----------
See accompanying notes to consolidated financial statements.
PAGE 4
FMC Corporation and Consolidated Subsidiaries
- ---------------------------------------------
Consolidated Statements of Cash Flows (Unaudited)
- -------------------------------------------------
(Dollars in thousands)
Six Months
Ended June 30
--------------------
1995 1994
-------- ---------
Reconciliation from net income to
cash provided by operating activities:
Net income $130,148 $ 113,404
Adjustments for non-cash components of
net income:
Depreciation and amortization 117,724 109,515
Deferred income taxes 21,674 24,959
Equity in net earnings of affiliates (2,712) (3,502)
Amortization of accrued pension costs 1,105 (5,763)
Minority interests 23,897 35,199
Other 2,685 (2,672)
(Increase) in assets:
Trade receivables (80,277) (121,411)
Inventories (90,738) (92,107)
Other current assets and other assets (77,061) (65,025)
(Decrease) increase in liabilities:
Accounts payable, accrued and other
current liabilities and other liabilities 5,961 89,238
Income taxes payable 8,408 2,512
Restructuring reserve (30,070) (22,074)
Accrued pension and other
postretirement benefits, net (7,343) (5,378)
-------- ---------
Cash provided by operating activities $ 23,401 $ 56,895
======== =========
See accompanying notes to consolidated financial statements.
PAGE 5
FMC Corporation and Consolidated Subsidiaries
- ---------------------------------------------
Consolidated Statements of Cash Flows (Unaudited)
- -------------------------------------------------
(Dollars in thousands)
Six Months
Ended June 30
---------------------
1995 1994
--------- ---------
Cash provided by operating activities $ 23,401 $ 56,895
Cash (required) by discontinued operations (6,538) (13,089)
Cash provided (required) by investing
activities:
Capital spending (208,959) (118,281)
Disposal of property, plant and
equipment 21,765 6,009
Decrease (increase) in investments 24,464 (35,159)
Payment for purchase of Moorco, net
of cash equivalents acquired (1) (320,100) -
Unpaid portion of Moorco purchase price 19,478 -
--------- ---------
(463,352) (147,431)
--------- ---------
Cash provided (required) by financing
activities:
Increase (decrease) in short-term debt 421,407 (5,745)
Net borrowings classified as long-term
under credit facilities 89,000 154,000
Proceeds from issuance of domestic
long-term debt - 45,152
Repayment of domestic long-term debt (2,583) (2,804)
Net (decrease) in foreign
long-term debt (15,536) (74,294)
Distributions to limited partner (22,550) (30,861)
Issuance of capital stock, net 3,398 5,983
--------- ---------
473,136 91,431
--------- ---------
Effect of exchange rate changes on cash
and cash equivalents 2,186 1,166
--------- ---------
Increase (decrease) in cash and cash equivalents 28,833 (11,028)
Cash and cash equivalents, beginning
of year 98,367 77,521
--------- ---------
Cash and cash equivalents, end
of period $ 127,200 $ 66,493
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest, net of amounts capitalized, was $43.0 million and $35.2
million, and cash paid for income taxes, net of refunds, was $13.9 million and
$22.8 million for the six-month periods ended June 30, 1995 and 1994,
respectively.
(1) FMC purchased substantially all of the capital stock of Moorco
International Inc. for $321.9 million less cash equivalents of $1.8
million. Assets acquired and liabilities assumed are as follows:
(In Thousands)
Total assets excluding cash equivalents $168,053
Debt assumed (27,708)
Other liabilities assumed (57,781)
Unallocated purchase price 237,536
--------
$320,100
========
See accompanying notes to consolidated financial statements.
PAGE 6
FMC Corporation and Consolidated Subsidiaries
- ---------------------------------------------
Notes to Consolidated Financial Statements (Unaudited)
- ------------------------------------------------------
Note 1: Financial information
- ------------------------------
The consolidated balance sheet as of June 30, 1995, and the related statements
of income and cash flows for the interim periods ended June 30, 1995 and 1994
have been reviewed by FMC's independent auditors. The review is discussed more
fully in their report included herein. In the opinion of management, such
financial statements have been prepared in conformity with generally accepted
accounting principles and reflect all adjustments necessary for a fair statement
of the results of operations for the interim periods. All such adjustments are
of a normal recurring nature. The results of operations for the three-month and
six-month periods ended June 30, 1995 and 1994 are not necessarily indicative of
the results of operations for the full year.
Certain prior period balances have been reclassified to conform with the current
period's presentation.
The accounting policies are set forth in Note 1 to the company's 1994 financial
statements which are incorporated by reference in the company's 1994 Form 10-K.
Note 2: Other income and expense, net
- ---------------------------------------
Other income and expense, net, for the three-month periods ended June 30, 1995
and 1994 primarily includes pension-related income (expense) of $(0.8) million
and $2.9 million, and LIFO-related income of $0.1 million and $1.8 million,
respectively.
Other income and expense, net, for the six-month periods ended June 30, 1995 and
1994 primarily includes pension-related income (expense) of $(1.1) million and
$5.8 million, and LIFO-related income of $0.3 million and $3.6 million,
respectively.
Note 3: Debt
- -------------
Short-term debt includes $421 million of advances under uncommitted U.S. credit
facilities. The remaining amounts in short-term debt are borrowings by FMC's
foreign subsidiaries.
The company has $500 million in committed credit facilities consisting of a $250
million, 364 day non-amortizing revolving credit agreement due in December 1995
and a $250 million, five-year non-amortizing revolving credit agreement due in
December 1999. As of June 30, 1995, the company had advances under the five-
year revolving credit agreement of $175 million.
Committed credit available under the five-year $250 million Revolving Credit
Agreement provides management with the ability to refinance $75 million of the
advances under uncommitted credit facilities on a long-term basis. Since it is
management's intent to do so, advances under the uncommitted facilities
totalling $75 million have been classified as long-term debt in the accompanying
consolidated balance sheets.
On June 1, 1994, Sweetwater County, Wyoming issued $45 million of Solid Waste
Disposal Revenue Bonds. The proceeds were loaned to the company pursuant to a
Loan Agreement dated June 1, 1994 which includes an interest rate of 7 percent
payable semi-annually through maturity, June 1, 2024. The loan proceeds are
recorded in investments and are being used to fund a soda ash business capital
project.
Note 4: Accounting Standards Adopted
- -------------------------------------
Statement of Financial Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits" was adopted by the company effective January 1, 1994.
Statement No. 112 requires accrual of the expected cost of providing certain
benefits to former or inactive employees after employment but before retirement.
The effect of adoption was not material, and accordingly, has been included as
part of costs and expenses.
PAGE 7
Note 5: Formation of United Defense, L.P.
- ------------------------------------------
On January 28, 1994, FMC and Harsco Corporation ("Harsco") announced completion
of a series of agreements, first announced in December 1992, to combine certain
assets and liabilities of FMC's Defense Systems Group ("DSG") and Harsco's BMY
Combat Systems Division ("BMY"). The effective date of the combination was
January 1, 1994. The combined company, United Defense, L. P. ("UDLP"), operates
as a limited partnership, with FMC as the Managing General Partner with a 60
percent equity interest and Harsco Defense Holding as the Limited Partner
holding a 40 percent equity interest.
Beginning in the first quarter 1994, all sales and earnings of UDLP are included
in FMC's consolidated financial statements. Harsco's share of the partnership's
earnings are included in minority interests. All of the assets and liabilities
of UDLP are also consolidated in the balance sheet.
Note 6: Acquisitions
- ---------------------
On June 26, 1995, FMC acquired substantially all of the common shares of Moorco
International Inc. ("Moorco") for $28 per share, or approximately $320 million
(including acquisition costs) upon completion of a previously-announced tender
offer. Moorco is the leading worldwide manufacturer of meters for the petroleum
industry and a leading manufacturer of valves for the process and power
generation industries. The acquisition was financed with the company's existing
cash and borrowings from short-term credit facilities.
The acquisition will be accounted for by the purchase method of accounting and,
accordingly, the purchase price will be allocated to the assets acquired and
liabilities assumed based on the estimated fair value of such assets and
liabilities at the date of acquisition. Due to the timing of the transaction,
however, FMC's consolidated balance sheet at June 30, 1995 includes the
historical accounts of Moorco as of the acquisition date, adjusted only for
certain known elements of purchase accounting. The remaining excess purchase
price at June 30, 1995 is classified as "Unallocated Purchase Price of Moorco
International Inc." on the company's consolidated balance sheet and will be
allocated to the assets acquired (which will include goodwill and other
intangible assets to be amortized over periods not exceeding 40 years, and may
include purchased in-process research and development which would be expensed)
and liabilities assumed based on the results of appraisals and other analyses
which are currently in process.
The following unaudited pro forma information is intended to show the results of
FMC's operations as if the acquisition of Moorco had occurred on January 1, 1995
and 1994, respectively, after giving effect to certain adjustments, including
the increased amortization of goodwill and other intangible assets, increased
depreciation, cost savings from certain synergies created under the combined
operations, the exclusion of non-recurring acquisition-related expenses,
additional interest on incremental acquisition indebtedness, and the related
income tax effects of these adjustments:
PAGE 8
Six months ended June 30,
------------------------
1995 1994
------ ------
(in millions, except per share data)
(unaudited)
Sales $2,245 $2,069
Net income $ 127 $ 116
Earnings per common share:
Primary $ 3.36 $ 3.13
Fully diluted $ 3.36 $ 3.13
The unaudited pro forma results of operations are based on preliminary
assumptions regarding the allocation of purchase price, are not necessarily
indicative of the results that would have occurred had the acquisition actually
been consummated on January 1, 1995 or 1994, respectively, and are not intended
to be a projection of future results or trends. Moorco will be included in the
Energy and Transportation Equipment Group.
On June 24, 1994, the company acquired the Fluid Control Systems product line
from National-Oilwell, a Houston-based oil field equipment company. The Fluid
Control Systems product line is a leader in a variety of high-performance oil
field applications, including engineered production and injection manifolds, a
family of valves and fittings used to control and distribute the flow of
production from oil and gas wells. Fluid Control Systems is part of the Energy
and Transportation Equipment Group.
On May 27, 1994, the company acquired the Jetway Systems Division of Pneumo-Abex
Inc. Jetway is a leader in design, production and installation of passenger
boarding bridges and other aircraft support systems. Jetway Systems is part of
the Energy and Transportation Equipment Group.
Note 7: Sub Contract Dispute
- -----------------------------
On May 1, 1995 the U.S. District Court for the Northern District of Alabama
entered a $17.8 million judgment in favor of FMC in a pricing dispute with a
subcontractor for FMC's multiyear program to supply a track system for the U.S.
Army's M1 Abrams tank. The court ruled that the subcontractor was contractually
obligated to perform subcontracted work for FMC at agreed upon pricing and
quantity levels for the final three years of the five year contract. The
subcontractor has appealed the court's decision.
The company and the subcontractor completed deliveries to the U.S. Army under
the contract in first quarter of 1995. The company had previously expensed
disputed amounts and has, on the strength of the court's ruling and the
company's confidence in the final outcome, reflected a substantial portion of
the possible recovery from the legal ruling in the second quarter financial
statements.
Note 8: Environmental
- ----------------------
Reserves at June 30, 1995 were provided for potential environmental obligations
which management considers probable and for which a reasonable estimate of the
obligation could be made. Where the available information is sufficient to
estimate the amount of liability, that estimate has been used; where the
information is only sufficient to establish a range of probable liability and no
point within the range is more likely than any other, the lower end of the range
has been used.
PAGE 9
Reserves of $211 million and $229 million, before recoveries, have been provided
at June 30, 1995 and December 31, 1994, respectively, of which $127 million and
$142 million are included in the reserve for discontinued operations at June 30,
1995 and December 31, 1994, respectively. In addition, the company has
estimated reasonably possible environmental loss contingencies may exceed
amounts accrued by as much as $230 million. Included in the reasonably possible
loss category are some sites where remedial studies and evaluations are
proceeding. As such studies and EPA assessments proceed estimates can change
substantially and/or result in adjustments to amounts reserved. Estimates are
reviewed quarterly by the company's Environmental Health and Safety
organization, as well as financial and legal management and adjusted as
necessary. The estimates can change substantially as additional information
becomes available regarding the nature or extent of site contamination, required
remediation methods, and other actions by governmental agencies or private
parties. It is FMC's policy to generally accrue estimated obligations no later
than when a Record of Decision or equivalent is issued or upon completion of a
Remediation Investigation/Feasibility Study that is accepted by FMC or the
appropriate government agency or agencies.
The liability arising from potential environmental obligations that have not
been reserved for at this time may be material to any one quarter's or year's
results of operations in the future. Management, however, believes the
liability arising from the potential environmental obligations is not likely to
have a material adverse effect on the company's liquidity or financial condition
and may be satisfied over the next 20 years or longer.
To ensure FMC is held responsible only for its equitable share of site
remediation costs, FMC has initiated, and will continue to initiate, legal
proceedings for contributions from other Potentially Responsible Parties, and
for a determination of coverage against its comprehensive general liability
insurance carriers.
Approximately $119 million of recoveries ($44 million as other assets and $75
million as an offset to the reserve for discontinued operations) and
approximately $123 million of recoveries ($44 million as other assets and $79
million as an offset to the reserve for discontinued operations), has been
recorded as probable realization on claims against insurance companies and other
third parties at June 30, 1995 and December 31, 1994, respectively.
Note 9: Subsequent Events
- --------------------------
Soda Ash Joint Venture
- ----------------------
On July 7, 1995, FMC Corporation and its wholly-owned subsidiary FMC Wyoming
Corporation completed the previously announced joint venture agreement involving
the sale of a 20% equity interest in FMC Wyoming to two Japanese companies,
Nippon Sheet Glass Co. Ltd. and Sumitomo Corporation. Nippon Sheet Glass has
committed to annual purchases of soda ash tonnage from the joint venture.
FMC Wyoming engages primarily in the manufacture of soda ash. To a lesser
extent, the company also mines coal and produces sodium cyanide, caustic soda
and sodium bicarbonate. Non-soda ash businesses are excluded from the joint
venture, and related assets were distributed to FMC prior to completion of the
transaction.
FMC retains an 80% ownership interest in FMC Wyoming, including operational and
management control. The Japanese partners contributed cash of $150 million in
return for their 20% interest, and will also share in the funding of capital
projects to improve and expand the soda ash facilities. The Japanese partners'
share of profits from the venture will be included in "Minority Interests". In
the third quarter, FMC will record a nontaxable gain on the sale of its 20%
interest of approximately $100 million or $2.66 per share.
Moorco Legal Claims
- -------------------
On August 2, the company settled legal claims which Moorco had outstanding
against Elsag-Bailey and Fischer & Porter Co. for $12 million.
PAGE 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------ ---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
FINANCIAL CONDITION
-------------------
As of June 30, 1995, the company had total borrowings of $1,530 million, up from
$1,009 million at December 31, 1994. The increase in debt reflects financing of
the Moorco acquisition, higher working capital levels and increased capital
spending. Advances under uncommitted facilities of $496 million at June 30,
1995, up from $76 million at December 31, 1994, represented the primary source
of the additional borrowings. The company also has $500 million in committed
credit facilities consisting of a $250 million, 364 day non-amortizing revolving
credit agreement due in December 1995 and a $250 million, five-year non-
amortizing revolving credit agreement due in December 1999. As of June 30,
1995, the company had advances under the five-year revolving credit agreement of
$175 million.
Capital and acquisition spending of $529 million for the six months ended June
30, 1995 increased $413 million versus the first half of 1994. The increase is
primarily driven by the acquisition of Moorco and spending on previously
announced major capital projects including the two-phased solution mining
project at Green River, development of FMC Gold Company's Beartrack property,
construction of an agricultural chemical plant for a new class of herbicide and
development of a lithium resource in Argentina.
Expected cash requirements for the remainder of 1995 include approximately $250-
$350 million for planned capital expenditures and potential acquisitions and net
after tax interest payments of approximately $25 million based on current debt
levels. Cash to meet these requirements will be provided primarily by the
company's operations supplemented by $150 million of proceeds from the sale of a
minority interest in the soda ash business, plus $30 million of expected
minority partner contributions towards soda ash capital projects and, if
necessary, by existing cash balances and available short- or long-term credit
facilities.
The company's ratios of earnings to fixed charges were 4.5x and 5.5x for the six
months ended June 30, 1995 and 1994, respectively. The decrease in the six-
month ratio from 1994 to 1995 primarily reflects higher interest charges
resulting from higher borrowings.
Spending charged to the restructuring reserve in the second quarter of 1995 was
approximately $17 million, primarily for severance and downsizing activities at
corporate and the machinery and equipment and industrial chemical segments.
Projected requirements for the remainder of 1995 are approximately $13-18
million for severance, downsizing and other restructuring-related costs. Total
spending and resulting savings are unchanged from prior estimates.
EFFECT OF ACQUISITION OF MOORCO INTERNATIONAL INC.
--------------------------------------------------
On June 26, 1995, FMC acquired Moorco International Inc. -- the leading
worldwide manufacturer of meters for the petroleum industry and a leading
manufacturer of valves for the process and power generation industries -- for
approximately $320 million. The company anticipates that a portion of the
unallocated purchase price at June 30, 1995 will be allocated to intangible
assets. Portions of the purchase price may also be allocated to in-process
research and development, which would be expensed, and to property, plant and
equipment which would increase the Company's depreciation expense over the
remaining useful lives of the acquired assets. In addition, the acquisition
financing will result in additional interest expense. Appraisals and other
efforts necessary to complete the purchase accounting for Moorco are in process.
PAGE 11
RESULTS OF OPERATIONS
---------------------
Second quarter 1995 compared to second quarter 1994
---------------------------------------------------
Industry Segment Data (Unaudited)
-------------------------------------
(Dollars in millions)
Three Months Ended
June 30
------------------
1995 1994
-------- --------
Sales
- -----
Performance Chemicals $ 324.3 $ 298.9
Industrial Chemicals 242.8 220.5
Machinery and Equipment 313.6 242.6
Defense Systems 242.5 282.6
Precious Metals 9.8 16.9
Eliminations (4.6) (7.7)
-------- --------
$1,128.4 $1,053.8
======== ========
Income before taxes
- -------------------
Performance Chemicals $ 61.7 $ 66.3
Industrial Chemicals 46.3 28.8
Machinery and Equipment 16.9 10.6
Defense Systems 41.5 52.6
Precious Metals (4.5) (3.1)
-------- --------
Operating profit 161.9 155.2
Corporate and other (26.3) (26.0)
Net interest expense (18.7) (14.6)
Other income and (expense), net (1.1) 4.7
Minority interests /(1)/ (7.4) (20.3)
-------- --------
Total $ 108.4 $ 99.0
======== ========
(1) Minority interests are primarily United Defense, L.P. (7.9)
and FMC Gold 0.7 in 1995 and United Defense, L.P. (19.7) and
FMC Gold 0.1 in 1994.
PAGE 12
Sales of $1.1 billion increased 7 percent from last year's quarter, and second
quarter 1995 earnings before interest and taxes and net of minority interest
were $127 million, up 11 percent, compared with $114 million in the 1994
quarter. Net income of $78 million was up 16 percent compared with $67 million
in the second quarter of 1994. Primary earnings per share were $2.06 compared
with $1.82 last year -- a 13 percent increase. This performance was primarily
driven by strong results from the Industrial Chemicals and Machinery and
Equipment segments.
Performance Chemicals
- ---------------------
Performance Chemicals sales of $324 million increased 8 percent compared with
$299 million in last year's quarter. Results benefited from improving markets
and new applications for lithium products, higher worldwide volumes of
pharmaceutical ingredients and higher pyrethroid volumes.
Profits of $62 million declined from $66 million in last year's quarter. Major
factors in the earnings decline were the loss of high-margin agricultural
chemical sales in the Midwest due to an unusually wet spring; higher prices of
seaweed, a key raw material in the food ingredients business; and problems with
starting a plant at the Process Additives operation in Trafford Park, England.
The outlook for the remainder of 1995 is positive based on strong cotton
pesticide markets worldwide, growth in the Specialty Chemicals businesses and
recovering margins for the food ingredients business as seaweed prices decrease.
Construction is continuing on the previously announced project to develop a
lithium resource in Argentina. As the project progresses, the company is
assessing the potential impact on certain U.S. lithium operations and the
recoverability of certain assets.
Industrial Chemicals
- --------------------
Industrial Chemicals sales of $243 million increased 10 percent from $220
million, and earnings of $46 million jumped 61 percent from $29 million in the
1994 quarter. These results reflect continued strength in end-markets for key
products and the benefits of cost improvement efforts. In the 1995 quarter,
soda ash volumes and prices increased, reflecting strong domestic markets and
growing export demand. Higher domestic hydrogen peroxide sales were driven by
increasing demand from the pulp and paper market, and improved pricing across
all market segments. European chemical volumes and pricing also increased.
Subsequent to the second quarter, FMC completed the previously announced joint
venture with Nippon Sheet Glass Co., Tokyo, and Sumitomo Corporation, Tokyo, to
sell a 20 percent equity interest in its soda ash business for $150 million.
FMC will record a nontaxable gain of approximately $100 million on the
transaction in the third quarter.
Machinery and Equipment
- -----------------------
Machinery and Equipment sales of $314 million increased 29 percent, and profits
of $17 million increased 59 percent. Results reflect the increasing
contributions of the Jetway and Kongsberg acquisitions, growth in several other
Energy and Transportation Equipment businesses, and the benefits of significant
cost reductions in the Food Machinery business. Machinery and Equipment backlog
(excluding the Moorco acquisition) was $567 million at the end of the quarter,
up from $480 million at the end of 1994 but down slightly from first quarter.
PAGE 13
Defense Systems
- ---------------
Defense Systems sales of $242 million decreased 14 percent from last year's $283
million, reflecting expected lower volumes. Profits (net of minority interest)
totaled $34 million in the quarter, relatively even with the 1994 period. In
1995, results include the successful close out of several contracts and a
significant portion of the possible recovery from a previously disclosed
favorable legal judgment (see Note 7 to the consolidated financial statements).
In the 1994 period, profits were also bolstered by the successful close out of
several contracts. Defense backlog was $1.4 billion at the end of the quarter,
unchanged from the end of 1994.
Precious Metals
- ---------------
Precious Metals sales of $10 million declined compared with 1994 first quarter
sales of $17 million. Expected lower production resulted in a loss of $4
million net of minority interest compared with a loss of $3 million net of
minority interest in last year's period. As previously announced, FMC
Corporation is in the process of evaluating options relating to its relationship
to FMC Gold. The Beartrack mine start-up on July 12, 1995 is expected to
provide favorable comparisons over the second half of the year.
A lawsuit filed last year by the Sierra Club Legal Defense Fund is still
pending. The lawsuit alleges that the biological opinion issued by the National
Marine Fisheries Service on the Beartrack property fails to satisfy the
requirements of the Endangered Species Act. FMC Gold believes the biological
opinion was carefully considered and is fully supported by the record. During
the second quarter, all parties to the lawsuit filed motions for summary
judgment. As of the date of this report, no hearing on these motions has been
scheduled.
Corporate and Other
- -------------------
Certain corporate income and expense items are not allocated to specific
business segments due to their nature. Corporate expenses were relatively flat
with the prior year's quarter. Net interest expense in the quarter increased to
$19 million from $15 million in last year's period, reflecting higher debt
levels associated with increased capital spending and working capital needs.
Other income declined $6 million from last year's quarter due to reduced LIFO
and pension income.
The effective tax rate for the quarters ended June 30, 1995 and 1994 was 28
percent and 32 percent, respectively. The decline is based on an assumed lower
projected full-year tax rate related to business mix.
[End of file]
PAGE 14
Results of Operations
---------------------
Six months 1995 compared to six months 1994
-------------------------------------------
Industry Segment Data (Unaudited)
---------------------------------
(Dollars in millions)
Six Months Ended
June 30
-------------------
1995 1994
-------- --------
Sales
- -----
Performance Chemicals $ 609.1 $ 549.5
Industrial Chemicals 471.1 418.2
Machinery and Equipment 577.7 445.2
Defense Systems 477.7 525.4
Precious Metals 18.7 38.7
Eliminations (10.4) (14.9)
-------- --------
$2,143.9 $1,962.1
======== ========
Income before taxes
- -------------------
Performance Chemicals $ 102.7 $ 104.2
Industrial Chemicals 87.7 63.6
Machinery and Equipment 26.0 18.8
Defense Systems 86.5 88.4
Precious Metals (9.6) (0.3)
-------- --------
Operating profit 293.3 274.7
Corporate and other (50.4) (52.6)
Net interest expense (34.5) (29.5)
Other income and (expense), net (1.2) 9.4
Minority interests /(1)/ (23.9) (35.2)
-------- --------
Total $ 183.3 $ 166.8
======== ========
(1) Minority interests are primarily United Defense, L.P. (24.9)
and FMC Gold 1.3 in 1995 and United Defense, L.P. (33.5) and
FMC Gold (0.9) in 1994.
Sales of $2.1 billion in the first half increased 9 percent from the 1994
period. Earnings of $218 million before interest and taxes and net of minority
interest increased 11 percent compared with $196 million in the first half of
1994, driven primarily by improving end-markets and cost improvements at
Industrial Chemicals, the successful integration of acquisitions, market growth
and the benefits of cost reductions at Machinery and Equipment. Corporate and
other expenses of $50 million declined from $53 million in the 1994 first half
due primarily to lower staff expenses. Net interest expense increased to $34
million from $29 million in 1994 reflecting higher borrowings to support capital
expenditures and higher working capital requirements.
Income before income taxes increased 10 percent to $183 million compared with
$167 million in the first half of 1994. Net income of $130 million compared
with $113 million in last year's period, and primary earnings per share were
$3.46 compared with $3.06 per share last year.
PAGE 15
Performance Chemicals sales of $609 million rose 11 percent compared with $549
million in last year's period and profits of $103 million declined slightly
compared with $104 million in last year's period. Although sales benefited from
improving markets and new applications for lithium products, market share gains
in flame retardants, and higher world wide pharmaceutical volumes, profits
declined slightly due to the loss of high margin agricultural product sales in
the Midwest due to an unusually wet spring and higher seaweed costs.
Industrial Chemicals sales increased 13 percent to $471 million and profits
increased 38 percent to $88 million versus last year's first half reflecting
stronger end-markets for key products and cost reduction efforts. Soda ash
volumes and prices increased during the first half of the year with gains in
both the domestic and export markets. The Peroxygen division experienced higher
volumes and prices as demand increased particularly in the pulp and paper
market. European volumes and prices have also improved compared with the year
ago period.
Machinery and Equipment sales of $578 million rose 30 percent from $445 million,
and profits increased to $26 million from $19 million. Energy & Transportation
Equipment sales benefited primarily from higher sales and profits in the airport
products markets as well as strong first half results at Kongsberg Offshore and
growth in other Energy and Transportation Equipment businesses. Food Machinery
sales were down slightly due to the sale of certain product lines in 1994;
however, profits improved due to cost reduction efforts.
Defense Systems sales were $478 million for the first half of 1995 compared to
$525 million for the same period last year, reflecting lower production volumes.
Profits (net of minority interest) total $62 million in the first half of 1995
compared to profits of $55 million for the same period in 1994 as the absence of
expenses related to the formation of United Defense, L.P. in 1994 and a
favorable legal judgment in 1995 (see Note 7 to the consolidated financial
statements) more than offset 1995's lower production volumes.
Precious Metals sales of $19 million declined from sales of $39 million in last
year's period. The segment posted a loss of $8 million net of minority
interests in 1995 which compared with a loss of $1 million in 1994 on the same
basis. First half results reflect lower results at the Jerritt Canyon mine, the
nominal production at Paradise Peak, the shutdown of the Royal Mountain King
mine in 1994 and continued exploration spending.
The effective tax rates for the six-month periods ended June 30, 1995 and 1994
were 29 percent and 32 percent, respectively. The decline from 32 percent last
year is primarily a result of a change in business mix.
INDEPENDENT ACCOUNTANTS' REPORTS
--------------------------------
A report by KPMG Peat Marwick LLP, FMC's independent accountants, on
the financial statements included in Form 10-Q for the quarter
ended June 30, 1995 is included on page 16.
A report by Ernst and Young LLP, UDLP's independent accountants, on the
financial statements referred to by KPMG Peat Marwick LLP in its report noted
above is included on page 17.
PAGE 16
SIGNATURE
Independent Accountants' Report
-------------------------------
The Board of Directors
FMC Corporation:
We have reviewed the accompanying consolidated balance sheet of FMC Corporation
and consolidated subsidiaries as of June 30, 1995, related consolidated
statements of income for the three-month and six-month periods ended June 30,
1995 and 1994, and the related consolidated statements of cash flows for the
six-month periods ended June 30, 1995 and 1994. These consolidated financial
statements are the responsibility of the company's management.
We were furnished with the report of other accountants on their review of the
interim financial information of United Defense, L.P., whose total assets as of
June 30, 1995, and whose revenues for the three-month and six-month period then
ended constituted 12 percent, 21 percent and 23 percent, respectively, of the
related consolidated totals.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review and the report of other accountants, we are not aware of any
material modifications that should be made to the consolidated financial
statements referred to above for them to be in conformity with generally
accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of FMC Corporation and consolidated
subsidiaries as of December 31, 1994 and the related consolidated statements of
income, cash flows and changes in stockholders' equity for the year then ended
(not presented herein); and in our report dated January 23, 1995, we expressed
an unqualified opinion on those consolidated financial statements. With respect
to information as of and for the year ended December 31, 1994, we did not audit
the financial statements of United Defense, L.P., which statements reflect total
assets constituting 13% and total revenues consitituting 27% of the related
consolidated totals in 1994. Those statements were audited by other auditors
whose report has been furnished to us, and our opinion, insofar as it relates to
the amounts included for United Defense, L.P., is based solely on the report of
other auditors. In our opinion, based upon our audit and the report of other
auditors, the information set forth in the accompanying consolidated balance
sheet as of December 31, 1994 is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
KPMG Peat Marwick LLP
Chicago, Illinois
July 27, 1995
Page 17
SIGNATURE
Independent Accountants' Review Report
--------------------------------------
Partners
United Defense LP
Arlington, Virginia
We have reviewed the balance sheet of United Defense LP as of June 30, 1995, and
the related statements of income for the three and six-month periods ended June
30, 1995 and 1994, and the statements of cash flows for the six-month periods
ended June 30, 1995 and 1994 and the statement of partners' equity for the six-
month period ended June 30, 1995. These financial statements (not presented
separately in the FMC Corporation Form 10-Q for the quarter ended June 30, 1995)
are the responsibility of the Partnership's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data, and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, which will be performed
for the full year with the objective of expressing an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such an
opinion.
Based on our review, we are not aware of any material modifications that should
be made to the Partnership financial statements referred to above for them to be
in conformity with generally accepted accounting principles.
Ernst and Young LLP
Washington, D.C.
July 20, 1995
PAGE 18
Part II - Other Information
---------------------------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------- ---------------------------------------------------
Registrant's Annual Meeting of Stockholders was held on April 21, 1995. At the
meeting, stockholders voted on (i) the election of four directors; (ii)
ratification of the appointment of KPMG Peat Marwick LLP as Registrant's
independent auditors for 1995; (iii) approval of the FMC 1995 Management
Incentive Plan; and (iv) approval of the FMC 1995 Stock Option Plan. Voting on
each such matter was as follows:
Votes Votes Withheld/ Broker
For Against Abstentions Non-Votes
---------- ------- ----------- ---------
1. Election of Directors:
B. A. Bridgewater, Jr. 32,174,023 - 263,897 -
P. L. Davies, Jr. 32,181,610 - 256,310 -
W. F. Reilly 32,178,923 - 258,997 -
J. R. Thompson 32,117,367 - 320,553 -
2. Ratification of Auditors 32,197,116 190,094 50,709 -
3. Approval of FMC 23,509,093 7,184,514 222,652 1,521,661
1995 Management
Incentive Plan
4. Approval of FMC 23,982,980 6,765,117 167,662 1,522,161
1995 Stock
Option Plan
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------ --------------------------------
(a) Exhibits
Page Number in
Number in Document Numbering
Exhibit Table Description System
- ------------- ----------- -------------------
11 Statement re: computation page 1
of per share earnings
assuming full dilution
12 Statement re: computation page 2
of ratios of earnings to
fixed charges
15 Letter re: unaudited page 3
interim financial
information
27 Financial Data Schedule page 5
(b) Reports on Form 8-K
-------------------
Form 8-K dated April 4, 1995 describing FMC's proposal to acquire
Moorco International.
PAGE 19
SIGNATURES
----------
Pursuant to the requirements 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.
FMC CORPORATION
---------------
(Registrant)
Date: August 11, 1995 Ronald D. Mambu
- ----------------------------- ------------------------------
Controller and duly authorized
officer
PAGE 1
EXHIBIT INDEX
-------------
Page Number in
Number in Document Numbering
Exhibit Table Description System
- ------------- ----------------------- ------------------
11 Statement re: computation 1
of per share earnings
assuming full dilution
12 Statement re: computation of 2
ratios of earnings to fixed
charges
15 Letter re: unaudited 3
interim financial
information (KPMG Peat Marwick LLP)
15 Letter re: unaudited 4
interim financial
information (Ernst & Young LLP)
27 Financial Data Schedule 5