FMC
Salomon Smith Barney Conference
December 5, 2001
DISCLAIMER
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SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995:
These slides and the accompanying presentation contain "forward-looking
statements" that represent management's best judgment as of the date hereof
based on information currently available. Actual results of the Company may
differ materially from those contained in the forward-looking statements.
Additional information concerning factors that may cause results to materially
differ from those in the forward-looking statements is contained in the
Company's periodic reports filed under the Securities Exchange Act of 1934, as
amended.
The Company undertakes no obligation to update or revise these forward-looking
statements to reflect new events or uncertainties.
FMC CORPORATION
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o NEW COMPANY
O NEW MANAGEMENT
O NEW PERSPECTIVE
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RECENT REORGANIZATION
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O OBJECTIVE
- Split into two companies - chemicals (FMC) and machinery (FTI) - to
create higher shareholder value
o RATIONALE
- Focus
- Alignment
- Passion
O TIMING
- IPO of 17% of FTI on 6/14/01
- Favorable tax ruling on 11/29/01
- Final distribution on 12/31/01
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"NEW" FMC: A CHEMICAL COMPANY
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BUSINESS SEGMENTS
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AGRICULTURAL INDUSTRIAL SPECIALTY
678 1090 492
END-MARKETS SERVED
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FOOD PHARMACEUTICAL AGRICULTURAL GLASS DETERGENT PULP/PAPER CHEMICAL OTHER
10% 8% 31% 5% 9% 4% 9% 24%
GLOBAL DIVERSITY
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NORTH AMERICA EUROPE ASIA PACIFIC LATIN AMERICA MIDDLE EAST/AFRICA
47% 21% 12% 15% 5%
ALL CALCULATIONS INCLUDE 50% OF ASTARIS
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SIGNIFICANT COMPETITIVE POSITIONS
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o INDUSTRIAL CHEMICALS
- #1 or #2 market positions
- Leader in low cost process technology and specialty niches
O SPECIALTY CHEMICALS
- #1 market positions
- Growth franchises in pharmaceuticals, food ingredients and energy
storage
o AGRICULTURAL PRODUCTS
- #1 pyrethroid company in cotton
- Leader in the development of novel insecticides
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DIVERSIFIED COST STRUCTURE
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O BACKWARD INTEGRATED TO RAW MATERIALS
- Phosphorus (U.S.), Soda Ash, Lithium
o GLOBAL SOURCING OF RENEWABLE RESOURCES
- Seaweed, Pulp
o PURCHASED INTERMEDIATES
- Limited petrochemical exposure and low incremental cost to our
products
o ENERGY
- Less than 6% of cost of sales
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STEADY CASH GENERATION
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HISTORICAL EBITDA GENERATION OF $400 ($'s, millions)
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1998 1999 2000
Corporate $ -35 $ -27 $ -21
Industrial 195 207 178
Specialty 115 111 127
Agricultural 105 87 114
16% Of Sales 16% Of Sales 19% Of Sales
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LOW CAPITAL INTENSITY
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o Capital expenditures over next 3-5 years:
- $100 million/annum to support existing operations
- $30 million/annum to support environmental liabilities
o Large environmental items are behind us:
- Expected 2001 Pocatello remediation and closure outflows of $68
million
- Future outflows offset by tax benefit of asset abandonment
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INDUSTRIAL CHEMICALS SALES
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2001 SALES OF OVER $1 BILLION*
NORMALIZED EBITDA ~$200 MILLION
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FORET PEROXIDES ASTARIS ALKALI
21% 19% 21% 38%
*INCLUDES 50% OF ASTARIS' SALES FOR COMPARATIVE PURPOSES
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SERVING DIVERSE END MARKETS
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PROCTER & GAMBLE
PPG LEVER/UNILEVER NORSKE SKOG DOW PILLSBURY
LOF/PILKINGTON RECKITT BENCKISER STORA ENSO DUPONT NABISCO ASHLAND
ST. GOBAIN/BALL FOSTER/CERTAINTEED COLGATE FORT JAMES OXYCHEM PEPSI VWR
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Glass Detergent Pulp and Paper Chemical Food All Other
12% 19% 8% 20% 7% 34%
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POSITIONED FOR AN UPTURN
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O OVERALL, TOP LINE DRIVEN BY GDP
O SENSITIVE SUPPLY/DEMAND DYNAMIC:
- Capacity utilizations moving above 90%
- Price increases in soda ash, peroxides and phosphorus
O PUTTING PHOSPHORUS CHALLENGES IN THE PAST:
- Closure of Pocatello
- Elimination of $10 million in FMC operating costs
- Astaris' shift to PPA versus elemental sourced phosphorus
- Startup of PPA plant in Soda Springs, Idaho
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AGRICULTURAL PRODUCTS SALES
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2001 SALES OF OVER $650 MILLION
NORMALIZED EBITDA OF ~$120 MILLION
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HERBICIDES INSECTICIDES
26% 74%
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EUROPE ASIA LATIN AMERICA NORTH AMERICA
14% 19% 26% 41%
Sources: Wood-Mackenzie, FMC
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NICHE STRATEGY:
INSECTICIDE/AMERICAS
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RESEARCH AND DEVELOPMENT:
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o Insecticide focused R&D leveraging label expansions near-term and
complimentary alliance partners
o Genomics-based approach to insecticide discovery
MARKET ACCESS:
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o Direct distribution in Americas
o Partnerships in Asia and Europe to gain access, reduce cost and extend
product offerings
o Opportunities to streamline S&A costs and expand reach on a global basis
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HEALTHY DEVELOPMENT PIPELINE
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NEAR-TERM:
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o Growth in pyrethroid and carfentrazone market share
o Label expansions in carfentrazone and zeta-cypermethrin
LONGER-TERM:
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o ISK partnership to commercialize "new-to-industry" insecticide
o Devgen collaboration to identify new target sites and new corresponding
classes of insecticides
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SPECIALTY CHEMICAL SALES
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2001 SALES OF OVER $475 MILLION
NORMALIZED EBITDA OF ~$125 MILLION
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BIOPOLYMER LITHIUM
74% 26%
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ALGIN & OTHER CELLU. CARRAGEENAN
16% 49% 35%
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DOWN-STREAM UP-STREAM
75% 25%
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BIOPOLYMER: OVER 80% IN TWO GROWTH FRANCHISES
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STRUCTURAL AND TEXTURAL FOOD INGREDIENTS:
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$4B MARKET
(in millions)
Emulsifiers Starches Proteins Gelatin Carrageenan Pectin Xanthan Cellulosics Alginates Other
$850 $650 $600 $540 $300 $300 $225 $150 $100 $500
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MARKET GROWTH AND SHARE
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GROWTH SHARE
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CARRAGEENAN 4% #1
CELLULOSICS 5% #1
ALGINATES 3% #1
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PHARMACEUTICAL FORMULATION CHEMICALS:
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$2.2B MARKET
(in millions)
Sterile Water Coatings/Colors Fillers Binders Disintigrants Sweeteners Hydro-colloids Other
$375 $400 $275 $250 $150 $175 $50 $525
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MARKET GROWTH AND SHARE
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GROWTH SHARE
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Coatings/Colors 6% #3
Binders 5% #1
Disintigrants 4% #2
Hydro-colloids 4% #1
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LITHIUM: STRATEGIC FOCUS ON DOWNSTREAM MARKETS
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o PHARMACEUTICALS
O SPECIALTY POLYMERS
O LIFETIME[REGISTERED] AND RENEW[REGISTERED] ASR CONCRETE TECHNOLOGIES
O SECONDARY BATTERIES
O ELECTRIC AND HYBRID ELECTRIC VEHICLES
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EXPERIENCED MANAGEMENT TEAM
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o BILL WALTER, PRESIDENT AND CEO
- 27 years with FMC. Recently EVP; managed Specialty Chemicals.
o KIM FOSTER, SR. VICE PRESIDENT AND CFO
- 23 years with FMC. Recently managed Agricultural Products.
o BOB HARRIES, SR. VICE PRESIDENT
- 24 years with FMC. Manages Industrial Chemicals.
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NEW PERSPECTIVE GOING FORWARD
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o PORTFOLIO OF GOOD, STRONG BUSINESSES
O OPERATING AT A CYCLICAL TROUGH
O GROSSLY UNDERVALUED STOCK
O DISSATISFIED WITH STATUS QUO
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GROSSLY UNDERVALUED (P/E)
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2001E V. 2000 EPS CHANGE:
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AVERAGE: -47%
FMC: -37%
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11/28/01 PRICE TO ESTIMATED 2001 EPS
SOI DOW GLK ROH CK DD FOE IFF EMN EC ALB CYT FMC
57.75 56.36 52.04 40.5 38.95 36.98 21.94 21.79 19.17 16.19 15.26 13.95 9.97
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GROSSLY UNDERVALUED (EV/EBITDA)
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12 MOS. EBITDA/SALES:
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AVERAGE: 15%
FMC: 17%
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9/30/01 EV/EBITDA
FOE DOW DD IFF ROH SOI EC CK EMN GLK FMC ALB CYT
15.2 12.5 10.2 9.8 9.1 8.8 7.8 6.3 5.9 5.6 5.6 5.4 4.7
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DISSATISFIED WITH STATUS QUO
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FMC STOCK PRICE OVER
PAST 5 YEARS
$/SHARE
YEAR JAN. FEB. MARCH APRIL MAY JUNE JULY AUGUST SEPT. OCT. NOV. DEC.
1996 77.25 70.125
1997 70.125 68.75 61.25 67.125 72 79.4375 85.75 83.0625 88.75 80.8125 73.0625 67.3125
1998 67.25 72.375 78.5 77.5625 76.4375 68.1875 63.875 51.75 51.5625 51.0625 58.125 56
1999 54.0625 51.1875 49.375 65 66.1875 68.3125 69.75 58.25 48.25 40.6875 48.5 57.3125
2000 53.75 48.3125 56.5 58.1875 60.75 58.0469 60.25 67.8125 67.0625 76 67.875 71.6875
2001 70.36 76.76 73.64 71.69 76.32 68.56 66.53 62.49 48.99 47.46
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DIRECTION OF "NEW" FMC
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o NEAR-TERM FOCUS ON BALANCE SHEET
o EVERYTHING ON THE TABLE
o COMMITMENT TO UNLOCKING SHAREHOLDER VALUE
o CASH METRICS TO MANAGE THE BUSINESS:
- EBITDA growth
- Spread over cost of capital
- Free cash flow generation
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FMC CORPORATION
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o NEW COMPANY
O NEW MANAGEMENT
O NEW PERSPECTIVE
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