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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
January 21, 1999
FMC CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-2376 94-4079804
- ---------------------------- ----------- ---------------------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
200 East Randolph Drive, Chicago, Illinois 60601
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(Address of principal executive offices) (Zip Code)
(312) 861-6000
-------------------------------
Registrant's telephone number,
including area code
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Item 5. Other Events
On January 21, 1999, FMC Corporation issued the following release:
FMC REPORTS 1998 FOURTH QUARTER RESULTS
Chicago, January 21, 1999--FMC Corporation today reported 1998 fourth quarter
sales from continuing operations of $1.1 billion, up slightly from the 1997
fourth quarter. After-tax income from continuing operations in the fourth
quarter was $36 million, or $1.06 per share on a diluted basis, up from $20
million, or $0.53 per share, before restructuring and impairment charges in last
year's quarter. During the 1998 fourth quarter, FMC also took a $70 million
charge to increase environmental reserves for discontinued operations.
In 1998, sales from continuing operations were $4.4 billion, up from $4.3
billion in 1997. After-tax income from continuing operations was $185 million,
or $5.30 per share on a diluted basis, compared with $156 million, or $4.13 per
share, before restructuring and impairment charges in 1997.
Beginning this quarter, FMC is providing results based on five business
segments. The previous Machinery and Equipment segment has been divided into two
segments: Energy Systems, and Food and Transportation Equipment. Performance
Chemicals has now been divided into Agricultural Products and Specialty
Chemicals. There has been no change to the Industrial Chemicals segment.
According to FMC Chairman and Chief Executive Officer Robert N. Burt: "Fourth
quarter and 1998 results were consistent with our objectives. We made
significant progress toward our return on investment goal of 15 percent by
2001--with ROI increasing to just under 12 percent in 1998 from 9.6 percent in
1997. Earnings per share from continuing operations in 1998 were up 28 percent
from 1997 depressed levels. We continued to actively manage our portfolio,
divesting the Crosby Valve operation and acquiring the leading subsea wellhead
company in Brazil, as well as negotiating the pending purchase of Tg Soda Ash. I
feel confident that we can achieve our goals in 1999, including our goal of 10
percent annual EPS growth."
Review of Operations
Energy Systems sales of $385 million in the 1998 fourth quarter were up 17
percent from $328 million in last year's quarter. Earnings of $31 million were
up from $30 million in the prior-year period. The results reflect the continued
strength of FMC's subsea systems business, which has been strong all year, as
well as a full quarter of sales from CBV, the Brazilian subsidiary acquired in
the third quarter. Sales increased to a number of customers, including Shell,
Statoil and Elf Aquitaine. Backlog of $878 million was up $127 million from
year-end 1997.
Food and Transportation Equipment sales of $224 million decreased from $236
million in last year's quarter, primarily reflecting lower deicer sales in
airport products; however, 1998 profits of $22 million increased from $20
million in the 1997 fourth quarter. The increased profits primarily reflect the
higher margins of aftermarket sales, as well as continued cost reductions.
Backlog for the segment was $256 million, up $16 million from year-end 1997.
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Agricultural Products sales were $116 million, up from $112 million in last
year's quarter. Due to the seasonal nature of the business, this segment
reported a loss of $3 million in the traditionally weaker fourth quarter
compared with a loss of $32 million in the prior-year quarter. The large loss
in the 1997 fourth quarter reflected higher manufacturing variances, coupled
with fourth quarter weakness in developing markets, which were not repeated in
1998. Performance in the 1998 quarter resulted from improvement in Asia-
Pacific, Brazil and specialty termiticide markets.
Specialty Chemicals sales were $141 million in the 1998 fourth quarter, down
from $144 million in the prior-year quarter. Earnings were $18 million, up 13
percent from $16 million in last year's quarter. Food ingredients and process
additives had strong performances during the quarter, offset by continuing price
competition in commodity lithium products.
Industrial Chemicals sales were $257 million in the fourth quarter, down from
$262 million in last year's quarter; however, profits of $29 million improved
from $25 million in the previous year's quarter. Strong manufacturing and cost
performance across the segment was more than sufficient to offset continuing
market pressure in soda ash and hydrogen peroxide. Also, the quarter was aided
by the change in the annual longwall maintenance shutdown in the soda ash mine
from the fourth quarter last year to the third quarter in 1998. The pricing
outlook for hydrogen peroxide also improved during the quarter.
Corporate expenses were $23 million in the 1998 fourth quarter, compared with
$20 million in the prior-year quarter, while full year expenses were $85
million, down from $86 million in 1997. Interest expense was $27 million, up
from $22 million in last year's quarter, reflecting higher debt levels and the
refinancing of some debt to long-term from short-term. For the year, interest
expense was $108 million, roughly equal to 1997 levels.
In the fourth quarter of 1998 FMC took a $70 million ($43 million after tax or
$1.27 per share) environmental charge related to several discontinued
operations. The majority of the charge relates to an agreement in principle
that FMC has reached with the U.S. Environmental Protection Agency and the U.S.
Department of Justice regarding settlement of past costs and future clean-up
work at the discontinued fiber manufacturing site in Front Royal, Virginia.
There was a net loss for the quarter after this charge of $0.21 per share on a
diluted basis.
Full-year 1998 Results
Energy Systems sales of $1.3 billion were up 15 percent from prior-year sales of
$1.1 billion, and earnings of $95 million were up 24 percent from $77 million in
1997. Demand in the subsea business remained strong, with higher sales to
Shell, Statoil and Elf Aquitaine, among others. The results also reflect the
acquisition of CBV in the 1998 third quarter. FMC continued to solidify its
premier position in subsea systems during the year, receiving a $230 million
order for the Terra Nova project on the Grand Banks of Newfoundland in the first
quarter and a $200 million order for the Elf Girassol project, offshore Angola,
in the third quarter.
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Sales of Food and Transportation Equipment were $868 million in 1998, down from
$890 million in 1997. Earnings were $73 million, up 14 percent from $64 million
in 1997. Sales and earnings were up in airport products, primarily reflecting
increases at Jetway Systems. FMC FoodTech sales were down, reflecting weaker
sales in Asia, but profits improved on continued cost reductions.
Sales for Agricultural Products were $648 million in 1998, up from $638 million
in 1997. Earnings were $76 million for 1998, up from $35 million in 1997. The
low 1997 earnings primarily reflected the start-up problems at the sulfentrazone
plant in that year. Agricultural Products also cut costs significantly during
1998, increasing profitability.
Specialty Chemicals sales were $598 million in 1998, down slightly from $605
million in 1997. Earnings were $78 million, up from $77 million in 1997.
Earnings at food ingredients and process additives were up for the year. Sales
and earnings declined in the lithium business due to continued price competition
in upstream products.
Industrial Chemicals sales were $974 million in 1998, down slightly from 1997.
Earnings of $118 million in 1998 were down from $136 million in 1997. The
decline in sales and earnings primarily reflect soda ash price and volume
declines as sales to Asia were down significantly during the year.
Net income for 1998 was $107 million, or $3.05 per share on a diluted basis,
reflecting income from continuing operations of $5.30, the environmental charges
for discontinued operations in the fourth quarter and a first quarter accounting
change.
FMC is one of the world's leading producers of chemicals and machinery for
industry and agriculture. FMC employs approximately 17,000 people at more than
100 manufacturing facilities and mines in more than 25 countries. The company
divides its businesses into five segments: Energy Systems, Food and
Transportation Equipment, Agricultural Products, Specialty Chemicals, and
Industrial Chemicals.
Safe Harbor Statement under the Private Securities Litigation of 1995:
Statements in this news release that are forward-looking statements are subject
to various risks and uncertainties concerning specific factors in the
corporation's Form 10-K report and other SEC filings. Such information
contained herein represents management's best judgment as of the date hereof
based on information currently available. The corporation does not intend to
update this information and disclaims any legal liability to the contrary.
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FMC CORPORATION AND CONSOLIDATED SUBSIDIARIES
---------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
-------------------------------------------
(Unaudited and in millions, except per share amounts)
Three Months Twelve Months
Ended December 31 Ended December 31
-------------------- --------------------
1998 1997 1998 1997
--------- --------- --------- ---------
Sales $1,115.9 $1,072.4 $4,378.4 $4,259.0
Operating costs 1,039.7 1,024.1 4,014.4 3,936.1
Asset impairments - 224.0 - 224.0
Restructuring and other charges - 40.9 - 40.9
-------- -------- -------- --------
Total costs and expenses 1,039.7 1,289.0 4,014.4 4,201.0
-------- -------- -------- --------
76.2 (216.6) 364.0 58.0
Minority interests 1.9 0.8 6.2 8.9
Net interest expense 27.0 22.1 108.3 108.8
-------- -------- -------- --------
Income (loss) from continuing
operations before income taxes
and cumulative effect of changes
in accounting principles 47.3 (239.5) 249.5 (59.7)
Provision for income taxes 11.8 (78.1) 64.2 (35.2)
-------- -------- -------- --------
Income (loss) from continuing
operations before cumulative
effect of changes in accounting
principles 35.5 (161.4) 185.3 (24.5)
Discontinued operations, net of
income taxes (42.7) 152.7 (42.7) 191.4
-------- -------- -------- --------
Income (loss) before cumulative
effect of changes in accounting
principles (7.2) (8.7) 142.6 166.9
Cumulative effect of changes in
accounting principles, net of
income taxes** - (4.5) (36.1) (4.5)
-------- -------- -------- --------
Net income (loss) $ (7.2) $ (13.2) $ 106.5 $ 162.4
======== ======== ======== ========
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FMC CORPORATION AND CONSOLIDATED SUBSIDIARIES
---------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Continued)
-------------------------------------------
(Unaudited and in millions, except per share amounts)
Three Months Twelve Months
Ended December 31 Ended December 31
------------------- -------------------
1998 1997 1998 1997
--------- -------- -------- ---------
Basic earnings (loss) per common
share:
Continuing operations $ 1.08 $(4.50) $ 5.45 $(0.67)
Discontinued operations (1.30) 4.26 (1.26) 5.20
Cumulative effect of changes in
accounting principles** - (0.13) (1.06) (0.12)
------ ------ ------ ------
Net income (loss) per common share $(0.22) $(0.37) $ 3.13 $ 4.41
====== ====== ====== ======
Average number of shares used in
basic earnings per share
computations 32.9 35.8 34.0 36.8
====== ====== ====== ======
Diluted earnings (loss) per common
share:
Continuing operations $ 1.06 $(4.50) $ 5.30 $(0.67)
Discontinued operations (1.27) 4.26 (1.22) 5.20
Cumulative effect of changes in
accounting principles** - (0.13) (1.03) (0.12)
------ ------ ------ ------
Net income (loss) per common share $(0.21) $(0.37) $ 3.05 $ 4.41
====== ====== ====== ======
Average number of shares used in
diluted earnings per share
computations 33.7 35.8* 34.9 36.8*
====== ====== ====== ======
*Shares resulting from conversion of stock options are excluded from the 1997
calculations of diluted earnings (loss) per share because the effect on
continuing operations would be antidilutive.
**Reflects the required write-offs in 1997 of $7.5 million of capitalized
business process reengineering costs and in 1998 of $46.5 million of
capitalized start-up costs under newly-issued accounting pronouncements.
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FMC CORPORATION AND CONSOLIDATED SUBSIDIARIES
---------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF INCOME FROM CONTINUING OPERATIONS
----------------------------------------------------------------------
EXCLUDES SPECIAL EXPENSE ITEMS*
-------------------------------
(Unaudited and in millions, except per share amounts)
Three Months Twelve Months
Ended December 31 Ended December 31
--------------------- ---------------------
1998 1997 1998 1997
-------- -------- -------- --------
Sales $1,115.9 $1,072.4 $4,378.4 $4,259.0
Operating costs and expenses 1,039.7 1,024.1 4,014.4 3,936.1
-------- -------- -------- --------
76.2 48.3 364.0 322.9
Minority interests 1.9 0.8 6.2 8.9
Net interest expense 27.0 22.1 108.3 108.8
-------- -------- -------- --------
Income from continuing operations
before income taxes, excluding special
expense items* 47.3 25.4 249.5 205.2
Provision for income taxes 11.8 5.9 64.2 48.8
-------- -------- -------- --------
After-tax income from continuing
operations, excluding special
expense items* $ 35.5 $ 19.5 $ 185.3 $ 156.4
======== ======== ======== ========
Basic after-tax continuing income
per share, excluding special
expense items* $ 1.08 $ 0.54 $ 5.45 $ 4.25
======== ======== ======== ========
Average number of common shares
used in basic per share
computations 32.9 35.8 34.0 36.8
======== ======== ======== ========
Diluted after-tax continuing
income per share, excluding
special expense items* $ 1.06 $ 0.53 $ 5.30 $ 4.13
======== ======== ======== ========
Average number of common shares
used in diluted per share
computations 33.7 36.9 34.9 37.9
======== ======== ======== ========
* Special expense items consist of asset impairments and restructuring and other
charges in 1997.
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FMC CORPORATION AND CONSOLIDATED SUBSIDIARIES
---------------------------------------------
INDUSTRY SEGMENT DATA
---------------------
(Unaudited and in millions)
---------------------------
Three Months Twelve Months
Ended December 31 Ended December 31
------------------- -------------------
1998 1997 1998 1997
-------- -------- -------- --------
Sales
- -----
Energy Systems $ 384.7 $ 327.6 $1,320.9 $1,144.3
Food and Transportation Equipment 223.8 236.0 868.2 889.5
Agricultural Products 116.3 111.8 647.8 637.6
Specialty Chemicals 140.7 143.7 598.2 604.8
Industrial Chemicals 257.2 261.8 974.4 1,012.0
Eliminations (6.8) (8.5) (31.1) (29.2)
-------- -------- -------- --------
$1,115.9 $1,072.4 $4,378.4 $4,259.0
======== ======== ======== ========
Income (loss) from continuing
- -----------------------------
operations before income taxes and
- ----------------------------------
cumulative effect of changes in
- -------------------------------
accounting principles
- ---------------------
Energy Systems $ 30.9 $ 29.7 $ 95.2 $ 76.5
Food and Transportation Equipment 22.4 20.3 72.8 63.9
Agricultural Products (3.0) (32.2) 76.3 35.1
Specialty Chemicals 18.1 16.1 77.9 77.2
Industrial Chemicals 29.1 25.2 117.5 135.7
-------- -------- -------- --------
Operating profit from continuing
operations 97.5 59.1 439.7 388.4
Asset impairments (1) - (224.0) - (224.0)
Restructuring and other charges (2) - (40.9) - (40.9)
Corporate (22.8) (19.5) (85.1) (86.2)
Other income and (expense), net (0.4) 7.9 3.2 11.8
Net interest expense (27.0) (22.1) (108.3) (108.8)
-------- -------- -------- --------
Income (loss) from continuing
operations before income taxes
and cumulative effect of changes
in accounting principles $ 47.3 $ (239.5) $ 249.5 $ (59.7)
======== ======== ======== ========
Note: Effective December 31, 1998, FMC adopted Statement of Financial
Accounting Standards No. 131 with respect to segment reporting. As a
result, FMC has changed the number and composition of its segments. The
prior periods have been restated and are presented on a comparable basis.
(1) Asset impairments are related to Energy Systems ($18.0 million), Food and
Transportation Equipment ($9.0 million), Agricultural Products ($9.0
million), Specialty Chemicals ($62.0 million) and Industrial Chemicals
($126.0 million).
(2) Restructuring and other charges are related to Energy Systems ($17.9
million), Food and Transportation Equipment ($10.0 million) and
Agricultural Products ($13.0 million).
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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
By /s/ J. Paul McGrath
------------------------------
J. Paul McGrath
Senior vice president, general
counsel and secretary
Date: February 2, 1999