FMC Corporation
1735 Market Street
Philadelphia, PA 19103
USA
www.FMC.com
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A L I G N I N G F O R
Portions of this publication are printed on recycled paper using soy-based inks.
Copyright © 2014, FMC Corporation. All rights reserved.
LETTER TO SHAREHOLDERS
Throughout our more than 130-year history, FMC’s
success has been defined not only by its customer
relationships, innovative products and financial
discipline, but also by a steadfast focus on future
opportunities. Last year was no exception.
Early in 2013, after another year of record sales
and earnings, we realigned reporting segments to
strengthen our core businesses, improve operational
efficiencies and manage our portfolio consistent with
Vision 2015 goals. As you will read in this report, we
expanded and invested in FMC’s two leading growth
business segments that serve agriculture and health
and nutrition markets. We placed two structurally
advantaged minerals businesses under common
management, and announced the divestiture of
FMC Peroxygens.
As a result of our considerable progress during the
last four years to achieve Vision 2015, we concluded
that the best means to realize FMC’s full potential is to
create two independent, publicly traded companies.
The Board of Directors determined in March 2014 to
pursue the creation of “FMC Minerals,” which will be
comprised of FMC Corporation’s Alkali Chemicals and
Lithium businesses; and “New FMC*,” which will include
the Agricultural Solutions and Health and Nutrition
segments. The company expects that the separation
will take the form of a tax-free distribution of shares
to existing FMC shareholders and be completed in
early 2015, subject to final board approval and other
customary conditions.
expected to deliver meaningful benefits to the separated
businesses, shareholders, customers, employees and
other stakeholders, and the communities in which
they operate.
“FMC Minerals” will be a leading, structurally
advantaged minerals company and the largest global
producer of natural soda ash. The Alkali Chemicals
business will continue to use unique, low-cost
technologies to extract trona ore to produce soda
ash and related products used in the glass, chemical
processing and detergent industries. The Lithium
AS A RESULT OF OUR
CONSIDERABLE PROGRESS
DURING THE LAST FOUR YEARS
TO ACHIEVE VISION 2015, WE
CONCLUDED THAT THE BEST
MEANS TO REALIZE FMC’S
FULL POTENTIAL IS TO CREATE
TWO INDEPENDENT, PUBLICLY
TRADED COMPANIES.
business is the only brine-to-metals producer with a
broad global product portfolio, selling into the energy
storage, pharmaceuticals, polymers and industrial
markets. Underlying market demand for lithium remains
strong, driven by growth in energy storage from electric
vehicle adoption and other applications.
We believe that creating two companies, each with its
own publicly listed equity, will enable the management
of each company to pursue its own strategies. This
will give each company greater focus on the success
factors that are most important to its business and
allow the adoption of a capital structure that is
appropriate to its business profile. Each company is
“New FMC” will continue to develop health, nutrition
and crop protection products that help safeguard and
improve human health, and enable growers to produce
more food. As in the past, customers will be able to
rely on “New FMC’s” Health and Nutrition business for
its technical excellence and innovative solutions. This
business provides texture, stability and natural color
* The official name for New FMC will be determined in the coming months.
F M C C O R P O R A T I O N
BOARD OF DIRECTORS
EXECUTIVE COMMITTEE
OFFICERS
Pierre R. Brondeau
President, Chief Executive Officer
and Chairman of the Board
Thomas C. Deas, Jr.
Vice President and Treasurer
Pierre R. Brondeau
President, Chief Executive Officer
and Chairman of the Board
FMC Corporation
Eduardo E. Cordeiro
Executive Vice President
and Chief Financial Officer
Cabot Corporation
G. Peter D’Aloia
Managing Director
and Member of the Board of Directors
Ascend Performance Materials
Holdings, Inc.
Paul Graves
Executive Vice President
and Chief Financial Officer
Mark A. Douglas
President
FMC Agricultural Solutions
Edward T. Flynn
President
FMC Minerals
C. Scott Greer
Principal
Greer and Associates
Mike Smith
Vice President, Global Business Director
FMC Health and Nutrition
K’Lynne Johnson
Chief Executive Officer and President
Elevance Renewable Sciences
Andrea E. Utecht
Executive Vice President
General Counsel and Secretary
Barry J. Crawford
Vice President, Operations
Kenneth A. Gedaka
Vice President
Communications and Public Affairs
Kimberly Johnson
Vice President
Human Resources
Andrew D. Sandifer
Vice President
Strategic Development
Karen M. Totland
Vice President, Global Procurement,
Global Facilities & Corporate
Sustainability
Dirk A. Kempthorne
President and Chief Executive Officer
American Council of Life Insurers
Edward J. Mooney
Retired Chairman
and Chief Executive Officer
Nalco Chemical Company
Paul J. Norris
Retired Chairman
and Chief Executive Officer
W. R. Grace & Co.
Robert C. Pallash
Retired President, Global Customer
Group and Senior Vice President
Visteon Corporation
William H. Powell
Retired Chairman
and Chief Executive Officer
National Starch and Chemical Company
Vincent R. Volpe, Jr.
Chief Executive Officer and President
Dresser-Rand Group, Inc.
Marc L. Hullebroeck
Vice President and Business Director
FMC Agricultural Solutions,
North America and EMEA
David A. Kotch
Vice President, Chief Information Officer
Eric W. Norris
Vice President, Global Business Director
Lithium
Nicholas L. Pfeiffer
Corporate Controller
Tom Schneberger
Vice President, Global Business Director
Alkali Chemicals
Charles J. Thomas
Vice President, Finance
Ulrich Trogele
President, FMC Asia
Vice President
FMC Agricultural Solutions, Asia
Victoria V. Walton
Vice President, Tax
Shawn Whitman
Vice President, Government Affairs
Antonio Zem
President, FMC Latin America
Vice President
FMC Agricultural Solutions,
Latin America
STOCKHOLDER DATA
FMC Corporation’s Annual Meeting of Stockholders will be
held on Tuesday, April 29, 2014, at 2:00 p.m. ET at the Top
of the Tower, 1717 Arch Street, 50th Floor, Philadelphia, Pa.,
19103. Notice of the meeting, together with proxy materials,
will be mailed approximately five weeks prior to the meeting,
to stockholders of record as of Tuesday, March 4, 2014.
Transfer Agent and Registrar of Stock:
Wells Fargo Bank N.A.
Shareholder Services
1110 Centre Pointe Curve
Mendota Heights, MN 55120
Phone: 1.800.468.9716
(1.651.450.4064 local and outside the United States)
www.wellsfargo.com/shareownerservices
FMC was incorporated in Delaware in 1928.
Stock Exchange Listing: New York Stock Exchange
Chicago Stock Exchange
Stock Exchange Symbol: FMC
FMC Corporation is an active participant in the American
Chemistry Council (ACC) and we support the principles of
the ACC’s Responsible Care® Program by working with
our employees, suppliers, customers, contractors and
commercial partners to promote responsible management of
our products and processes through their entire life cycle, and
for their intended use, worldwide. FMC has received third-
party certification of our conformance with the Responsible
Care Management System requirements at our headquarters
offices and all of our sites located in the United States. For
additional information on our Responsible Care Program,
please go to www.FMC.com.
FMC, SeaGel, and Epax are trademarks of FMC Corporation
or its subsidiaries. Clube da Fibra and Clube da Cana are
service marks of FMC Corporation or its subsidiaries.
OUR LEADERSHIP TEAM
FMC’s executive leadership includes (left to right): Kym Johnson, vice president, human resources; Mike Smith, vice
president and global business director, FMC Health and Nutrition; Paul Graves, executive vice president and chief
financial officer; Edward T. Flynn, president, FMC Minerals; Andrea E. Utecht, executive vice president, general counsel and
secretary; Pierre Brondeau, president, chief executive officer and chairman of the board; Mark A. Douglas, president, FMC
Agricultural Solutions; Andrew D. Sandifer, vice president, strategic development; Karen M. Totland, vice president, global
procurement, global facilities & corporate sustainability; Kenneth A. Gedaka, vice president, communications and public
affairs; and Barry Crawford, vice president, operations.
solutions that go into healthy, convenient foods, as well
as naturally derived binders, encapsulations and high
purity, high concentration omega-3 for pharmaceutical
and nutraceutical uses. Growers will continue to rely on
the Agricultural Solutions business for innovative crop
protection products developed from science-based
innovation, field development and applications expertise
that, on a crop-by-crop, region-by-region basis,
enhance quality and yield.
This is an exciting time for FMC Corporation. We look
forward to keeping our investors and other important
stakeholders apprised of our transition.
Another High-Performance Year
We concluded 2013 with noteworthy results:
• Sales of $3.9 billion were up 14 percent, while
adjusted earnings rose 12 percent.
• Adjusted earnings per share grew 15 percent to
$3.88 per diluted share, and return on invested
capital was 19 percent – well above our mid-
teens target.
• We returned $360 million to shareholders in the
form of share repurchases and another $74 million
in dividends. Our total cash returned to investors
since 2010 is now over $1 billion, a Vision 2015
goal achieved two years ahead of schedule.
2 0 1 3 A N N U A L R E P O R T
Safety Remains Top Priority
A safe, injury-free workplace is critical to our success.
During the past three years, we have introduced new
processes and awareness campaigns that encourage
employees to “own” safety every minute of every
day. I’m pleased to report that we made significant
improvements in 2013 with a 35 percent reduction
in our overall injury rate and an 80 percent decrease
in non-manufacturing incidents. FMC employees are
proud of this performance, and will continue to strive for
the ultimate goal of zero injuries.
Aligning for Success
2013 was an extraordinary year for FMC. We delivered
record sales and earnings, introduced new products
and technologies, expanded into new spaces,
including biologicals and ultra-high purity omega-3s,
and continued to proactively manage our portfolio for
growth. We have established the foundation for two
independent companies. “FMC Minerals” and “New
FMC” share a longstanding heritage of commitment
to the customer; a legacy of strong performance;
sustainable, safe and ethical operations; and leading
market positions. Each company will be well positioned
with a bright future.
Pierre R. Brondeau
President, Chief Executive Officer
and Chairman of the Board
FMC Agricultural Solutions and FMC Health and
Nutrition led the way in 2013, propelled by innovation,
new product introductions and strong customer
relationships. In FMC Minerals, we faced challenges
with operational issues and soft commodity pricing
in Asia, but this segment is poised for steady
improvements in 2014.
2013 Business Highlights
FMC Agricultural Solutions increased earnings
by 19 percent, our 10th consecutive year of record
results. This performance underscores the segment’s
deep customer relationships, market-driven product
introductions and innovation pipeline. FMC Agricultural
Solutions also entered into new product licensing deals
and launched a biologicals platform that will open new
opportunities for growth in our crop protection portfolio.
FMC Health and Nutrition increased earnings by
5 percent, its ninth consecutive year of record EBIT.
Demand for our colloidal microcrystalline cellulose for
food texture and stability solutions continues to exceed
overall food market growth, especially in Asia, and we
are beginning to see increasing demand for natural
colors in the food sector. FMC Health and Nutrition
also maintained stable performance in pharmaceutical
markets based on our reputation for product quality,
reliability and security. And in mid-2013, we acquired
Epax, a producer of high purity, high concentration
omega-3 fish oils and DHA fatty acids used in the
pharmaceutical and nutraceutical industries.
FMC Minerals, a leader in the production of soda
ash and lithium, experienced a 25 percent decline in
earnings for the year. Although this business segment
produced record soda ash sales in 2013, profitability
was adversely impacted by a pricing trough in Asia.
At the same time, FMC Minerals resolved operational
issues in its Lithium business and is poised for strong
market growth as a result of strategic manufacturing
expansions during 2013.
F M C C O R P O R A T I O N
FMC AGRICULTURAL SOLUTIONS
is aligned principally around meeting the crop
protection needs of food and fiber producers
globally. This business segment is poised to
introduce a new generation of products,
including biologicals.
FMC HEALTH AND NUTRITION is
aligned to serve pharmaceutical, nutraceutical,
food and personal care customers with an
expanding portfolio of high-performance,
value-added, nature-based ingredients
for their products.
FMC MINERALS is aligned to produce
high-quality, cost-advantaged minerals whose
sales are tied to rising global demand trends
in several key consumer markets, especially in
rapidly developing economies.
2 0 1 3 A N N U A L R E P O R T 2013 SUMMARY AND HIGHLIGHTS
Earnings Per Share*
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
2013 $3.88
2012 $3.39
2011 $2.90
*Diluted adjusted after-tax
earnings from continuing
operations per share,
attributable to FMC
stockholders (Non-GAAP)
2011
2012
2013
Return on Invested Capital
25
20
15
10
5
2013 19.3%
2012 22.2%
2011 23.1%
2011
2012
2013
Total Shareholder Return
40
35
30
25
20
15
10
5
0
-5
2011
2012
2013
FMC Corporation
2013 29.9%
2012 37.0%
8.5%
2011
S&P 500
2013 32.0%
2012 15.9%
2.1%
2011
S&P 500 Chemicals
2013 31.4%
2012 23.4%
-1.2%
2011
FMC delivered another year of strong, steady
performance in 2013, driven by new technologies,
market share growth and manufacturing excellence.
Highlights include:
FMC Agricultural Solutions
• Achieved its 10th consecutive year of record
earnings.
• Demonstrated strong performance through new
product introductions and market share gains.
• Created a world-class biological crop protection
platform through an exclusive strategic alliance
with Denmark-based biosciences company
Chr. Hansen and the acquisition of the Center for
Agricultural and Environmental Biosolutions.
• Delivered robust growth in key Latin American
and North American markets by expanding
market positions and introducing new products.
FMC Health and Nutrition
• Marked its ninth consecutive year of record
earnings.
• Delivered strong sales growth in Asia in
food and pharmaceutical markets, driven by
FMC’s microcrystalline cellulose products.
• Acquired Epax, a producer of premium omega-3
fish oil concentrates, accelerating the segment’s
earnings growth through a broader portfolio of
nutraceutical and active pharmaceutical
ingredients.
• Launched Manufacturing Excellence program
to increase production and yields at FMC’s
Norway alginate plant.
F M C C O R P O R A T I O N
FMC Minerals
• Realigned the portfolio to pair the alkali
chemicals and lithium businesses within a
common segment.
• Completed operational improvements at the
Argentina lithium facility, increasing annualized
capacity by over 30 percent from pre-
expansion levels.
• Met broad global demand for soda ash with
record volume in the face of a cyclical pricing
trough in Asia.
• Implemented Manufacturing Excellence initiatives
to improve efficiency and cost competitiveness,
resulting in record soda ash sales volume.
Corporate
• Achieved more than $80 million in cumulative
procurement savings, two years ahead of
schedule.
• Announced plans to sell its former Peroxygens
business to One Equity Partners, which was
completed in February 2014.
• Completed construction of the Asia Innovation
Center in Shanghai, China.
• Started construction of a new world-class
microcrystalline cellulose manufacturing facility in
Rayong, Thailand, scheduled for completion in
late 2014.
• Announced plans to occupy a new headquarters
building in mid-2016 in Philadelphia’s University
City area, reflecting the company’s anticipated
need for a growing workforce.
Revenue by Segment
(in millions)
FMC
Minerals
$970
FMC
Health
and
Nutrition
$762
FMC
Agricultural
Solutions
$2,146
Operating Profit by Segment
(in millions)
FMC
Minerals
$128
FMC
Health
and
Nutrition
$170
FMC
Agricultural
Solutions
$539
YEAR ENDING DECEMBER 31, 2013
2 0 1 3 A N N U A L R E P O R T
FMC AGRICULTURAL SOLUTIONS
Increasing global demand for food, feed, fiber and
fuel continues to provide broad opportunities for
FMC Agricultural Solutions, which delivered its 10th
consecutive year of record earnings in 2013 and
surpassed $2.14 billion in revenue.
FMC Agricultural Solutions, the company’s largest and
fastest growing segment, has reinforced its competitive
position by broadening its product portfolio, expanding
its supply chain and investing in adjacent spaces such
as biologicals and seed treatment solutions. Latin
America led the year’s growth, reflecting a rebound
in cotton acreage, increased participation in soybean
markets and greater sales from new products. Pest
resistance to generic products in North American
markets also contributed to increased sales. The
business outpaced competitors while successfully
navigating unpredictable weather.
Customer relationships have long been a differentiating
pillar of the company’s success. For example, FMC’s
“agricultural clubs” in key markets such as Latin
America help our sales organization better understand
grower needs, leading to smarter decisions and novel
product solutions. In fact, FMC’s first club in Brazil, the
Cotton Club (Clube da Fibra), spawned the Brazilian
Cotton Growers Association and served as a model
for the FMC Sugar Cane Club (Clube da Cana). These
groups, in turn, inspired similar customer outreach
initiatives in other parts of the world, such as an FMC
traveling farm education program in Pakistan.
Building a Biological Platform
In 2013, FMC Agricultural Solutions entered the fast-
growing biological crop protection market with two
important transactions. FMC formed a strategic alliance
with Chr. Hansen, a leading biosciences company
specializing in cultures, enzymes and fermentation. It
also acquired the assets of the Center for Agricultural
and Environmental Biosolutions, giving it access to
a proprietary library of microorganisms and deep
knowledge of biological discovery. Combined with
FMC’s global market access and formulation science
expertise, these transactions have created a strong
platform to launch new, more sustainable crop
protection solutions that work in conjunction with
traditional synthetic products.
Innovation Centers, New Products
and Acquisitions
Science-based innovation and application expertise
drive new product development. In 2013, FMC
expanded this capability by opening its Asia Innovation
Center in Shanghai, China. The company also
continues to invest in Latin America with plans for a
second formulation plant and new laboratories in Brazil.
Recent product innovations are filling FMC’s pipeline
of protected intellectual property with 150 patents
granted since 2011and over 200 patents pending.
FMC introduced 80 new products during the year,
now representing about 25 percent of this segment’s
revenue stream. To broaden its active ingredients
portfolio, FMC acquired exclusive rights to a patented,
broad-spectrum crop protection product from Bayer
CropScience for use on row crops in the United States
and Canada. The company also signed an agreement
with Belchim Crop Protection to develop, register,
manufacture and sell the patented fungicide valifenalate
in North America, Latin America and select countries
outside the Americas.
Aligning for Success
FMC Agricultural Solutions is a premier business that
is growing stronger and larger to meet the increasingly
complex needs of crop protection markets globally.
The segment is well positioned for the future with new
products, new alliances and a culture of deep
customer intimacy.
“FMC CONTINUES TO DIVERSIFY ITS CROP PROTECTION PORTFOLIO IN A MANNER
THAT DELIVERS MORE OPTIONS AND VALUE TO GROWERS.”
MARK DOUGLAS, FMC AGRICULTURAL SOLUTIONS PRESIDENT
F M C C O R P O R A T I O N
100+
NEW PRODUCTS
FMC Agricultural Solutions envisioned
100 new products by 2015, a priority
outlined in its 2010 strategic plan. The
business has surpassed this goal.
PERCENT25
In its 10th consecutive year of record
earnings, FMC Agricultural Solutions
delivered operating margins of
25 percent in 2013.
Strong product sales for cotton and
soybean crops in Brazil contributed to
another impressive earnings year for
FMC Agricultural Solutions.
FMC North American field trials during
the past year addressed the issue of
insecticide-resistant root worms and
herbicide-resistant weeds in corn.
Chr. Hansen’s specialized knowledge
in cultures, enzymes and fermentation
will help FMC develop and manufacture
advanced biological products.
Photo courtesy: Chr. Hansen.
2 0 1 3 A N N U A L R E P O R T 6
NATURAL PRODUCT
LINES
FMC Health and Nutrition ingredients
include carrageenan and alginates from
seaweed, microcrystalline cellulose
from wood pulps, omega-3 from fish oil,
natural colors from plants and pectin
from lemon peel.
YEARS9
In 2013, this FMC business segment
increased earnings by 5 percent
over 2012 – its ninth consecutive
year of record EBIT.
The nutritional supplements market
utilizes FMC’s carrageenan-based
SeaGel® technology to produce
omega-3 soft gel capsules.
FMC has opened food research labs in
Singapore (above), Chile, India, Russia
and China to support growing demand in
rapidly developing economies.
Many nutritional beverages in Asia use FMC’s
microcrystalline cellulose and carrageenan
to provide texture and stabilization as well as
extended product shelf life.
F M C C O R P O R A T I O N FMC HEALTH AND NUTRITION
As consumers’ standard of living and health awareness
increase in many parts of the world, demand is soaring
for nutritious and convenient foods, beneficial nutrient
supplements and effective pharmaceuticals. In 2013,
FMC Health and Nutrition marked its ninth consecutive
year of earnings growth. The company’s competitive
edge is rooted in deep knowledge of natural ingredient
extraction technology, strong customer relationships
and years of experience with regulated end markets.
The business serves multi-national and regional
customers, delivering innovative solutions through a
portfolio of naturally derived functional ingredients.
In 2013, FMC Health and Nutrition continued to
strengthen its business in emerging markets, benefiting
from fast-growing economies and increasing protein
demand from large consumer populations. The
segment made steady gains in Asia, especially in
microcrystalline cellulose (MCC) products. Although it
remains focused primarily on food and pharmaceutical
markets, FMC Health and Nutrition expanded its
presence in nutraceuticals, personal care and related
product categories.
Broadening Opportunities With Epax
In 2013, FMC acquired Epax, a producer of premium
omega-3 fish oil concentrates, expanding the
company’s product portfolio in pharmaceuticals and
adding end-market participation in nutraceuticals.
Proven health benefits of omega-3s, such as improved
functioning of the brain, eye, joint and cardiovascular
system, are driving demand growth.
The Epax acquisition included novel process technology
and world-scale production facilities in Alesund,
Norway, and in Seal Sands, United Kingdom. FMC
brought the U.K. plant online in the fourth quarter to
begin cost-advantaged production of ultra-high purity,
high concentration omega-3 fish oil. FMC is also
working closely with nutraceutical customers on its
proprietary, nature-based SeaGel® capsule technology
that utilizes carrageenan extracted from seaweed.
Core Business Sets Sights on Asia
In Asia, demand for MCC used in foods and high-
protein beverages continues to rise. In 2013,
FMC broke ground on a new $100 million MCC
manufacturing facility in Rayong, Thailand, to meet
increasing demand for colloidal MCC. The facility,
scheduled for completion by year-end 2014, will
integrate production, blending, packaging and
warehousing. It will serve Asia’s growing customer
base with products unique to that market.
FMC’s expertise and well-developed commercial and
technical organizations in Asia are driving business
expansion in this market. In addition to food-based
products in Asia, FMC is increasing its supply of
pharmaceutical ingredients, particularly in India and
China, as part of a strategy to broaden its global
MCC presence.
In developed economies, FMC is growing sales by
enhancing texture, color, structure and stability in many
food products. For example, today’s trend to reduce
fat and sugar content in foods has changed the way
many products, such as ice cream, yogurt and protein
shakes, must be stabilized. Working closely with
customers, FMC is developing new formulations to
stabilize these healthier, high-demand foods.
Aligning for Success
FMC Health and Nutrition’s recent acquisition,
innovative products and expansion into end markets are
fueling its success. This business has expanded on its
core strengths and is poised for future growth.
“FMC DIFFERENTIATES ITSELF FROM ITS COMPETITORS GLOBALLY WITH REGIONAL
TEAMS POISED TO QUICKLY ASSIST CUSTOMERS WITH NEW APPLICATIONS AND PRODUCT
LAUNCHES IN THE FOOD INDUSTRY. OUR SUCCESS IS TIED TO OUR TECHNOLOGY,
INNOVATION AND GREAT PRODUCTS.”
MIKE SMITH, FMC HEALTH AND NUTRITION VICE PRESIDENT AND GLOBAL BUSINESS DIRECTOR
2 0 1 3 A N N U A L R E P O R T
FMC MINERALS
In 2013, FMC realigned two cost-advantaged
commodity businesses under one business segment,
FMC Minerals. The segment continued to focus on
low-cost, stable and safe manufacturing operations
to successfully produce and distribute its two core
products, soda ash and lithium. FMC’s expertise in
mining and efficient manufacturing contributed to global
competitiveness in 2013, despite operational and
pricing challenges.
Increased Production and Sales of Soda Ash
FMC Minerals produces natural soda ash from its plants
in Green River, Wyoming, located on the world’s largest
natural reserve of trona ore. Soda ash is the largest
inorganic chemical exported from the United States.
Global soda ash demand increased by nearly 3 percent
in 2013, while FMC Minerals increased its total export
volume by 9 percent. The company’s ore reserves,
production processes and streamlined transportation
helped to maintain lower delivered costs for FMC’s
more environmentally sustainable products compared
to competitors’ synthetic soda ash.
In 2013, FMC Minerals faced a cyclical pricing dip for
soda ash exports to Asia, the result of synthetic over-
expansion in 2012 and weaker-than-expected demand.
In an effort to offset lower pricing, the Green River
facility increased its production output efficiency through
Manufacturing Excellence initiatives.
FMC also benefited from its relationship with the
American Natural Soda Ash Corporation (ANSAC), an
export consortium that provides a reliable, high-quality
supply of product to meet overseas demand. ANSAC
helps producers deliver soda ash to markets more
affordably through efficient transportation strategies,
such as longer unit trains and higher capacity
cargo ships.
Soda ash demand generally correlates with overall
industrial production and the economic strength of
consumer markets. It is an essential ingredient used
in windows, windshields, glass containers, light bulbs,
computer and smart phone screens, as well as farm
feeds and detergents. Demand in 2013 was particularly
strong in emerging markets, including China.
Lithium Market Remains Strong
The lithium business started the year slowly. But by late
third quarter, FMC completed operational improvements
at its Argentina salar facility that increased annualized
capacity by over 30 percent from pre-expansion levels.
FMC anticipates a rise in lithium demand of
approximately 10 percent annually through 2020, driven
mainly by energy storage for batteries used in hybrid
and electric vehicles. The company’s improved lithium
process technology and engineering have increased
manufacturing efficiency at its Argentina plants and
reduced the business’s cost structure, particularly at its
Bessemer City, North Carolina, plant.
Aligning for Success
Despite challenges in 2013, FMC Minerals anticipates
improved conditions during the coming year with
recovery in export soda ash prices and reliable lithium
operations that will reduce manufacturing costs and
enhance profit margins. The business expects to regain
ground during 2014 and 2015 as improved production
efficiencies, pricing and demand continue to propel
the business.
“WE HAVE RETOOLED ASPECTS OF OUR MANUFACTURING PROCESS THROUGH OUR
MANUFACTURING EXCELLENCE INITIATIVE IN BOTH LITHIUM AND ALKALI OPERATIONS AND
WE EXPECT THESE EFFICIENCIES TO PROVIDE AN UPWARD TREND THROUGHOUT 2014.”
ED FLYNN, FMC MINERALS PRESIDENT
F M C C O R P O R A T I O N
PERCENT23
Lithium represented 23 percent of FMC
Minerals sales in 2013. The product,
shown here as rolled ingots, is ideal for
energy storage in smart phones, tablets,
laptops and electric vehicles.
MILLION4
FMC produces roughly 4 million tons of
natural soda ash annually to meet rising
global demand for detergents and glass,
maintaining a delivered cost advantage
over synthetic soda ash.
FMC’s Green River, Wyoming, production
plants sit atop the world’s largest natural
deposits of trona ore, the raw material used
to produce soda ash.
Soda ash is used to manufacture baking
soda, detergents and glass containers
as well as automobile windshields and
windows in homes and office buildings.
Lithium demand is expected to rise
approximately 10 percent annually
through 2020, mirroring steady growth in
the sales of hybrid and electric vehicles.
2 0 1 3 A N N U A L R E P O R T NON-GAAP RECONCILIATIONS
Return on invested capital (ROIC), adjusted after-tax earnings per share and adjusted earnings from continuing operations before
interest and income taxes (i.e., adjusted operating profit) are not measures of financial performance under U.S. generally accepted
accounting principles (GAAP) and should not be considered in isolation from, or as substitutes for, income from continuing operations,
net income, or earnings per share determined in accordance with GAAP, nor as substitutes for measures of profitability, performance or
liquidity reported in accordance with GAAP. For those not already presented in the Form 10-K, the following charts reconcile Non-GAAP
terms used in this report to the closest GAAP term. All tables are unaudited and presented in millions, except for per share amounts.
Income from continuing operations attributable to
FMC stockholders, net of tax (GAAP):
Interest expense, net, net of tax
Corporate special charges (income)
Tax effect of corporate special charges (income)
Tax adjustments
ROIC numerator (Non-GAAP)
2011 Actual
2012 Actual
2013 Actual
$ 404.0
$ 443.7
$ 453.2
26.3
29.9
32.2
21.4
(7.6)
(2.0)
69.6
(25.1)
(18.1)
96.0
(35.3)
14.5
$ 442.1
$ 500.0
$ 560.6
2-point average denominator
Dec-10
Dec-11
Dec-12
Dec-13
Total debt
Total FMC stockholders’ equity
ROIC denominator (2 pt. avg) (GAAP)
ROIC (using Non-GAAP numerator)
$
637.8
1,131.5
$
1, 769.3
$
$
$
824.6
1,240.6
2,065.2
1,917.3
23.1%
$
$
$
964.4
1,480.3
2,444.7
2,255.0
22.2%
$
1,851.9
$
$
1,519.8
3,371.7
2,908.2
19.3%
Reconciliation of diluted earnings per common share from continuing operations (GAAP), attributable to FMC stockholders, to diluted
adjusted after-tax earnings from continuing operations per share, attributable to FMC stockholders (Non-GAAP)
Diluted earnings per common share from continuing operations (GAAP),
attributable to FMC stockholders
Diluted corporate special charges (income) per share
Diluted adjusted after-tax earnings from continuing operations per share,
attributable to FMC stockholders (Non-GAAP)
2011
2012
2013
$
2.81
$
3.20
$
3.33
0.09
0.19
0.55
$
2.90
$
3.39
$
3.88
Reconciliation of net income (loss) attributable to FMC stockholders (GAAP) to adjusted earnings from continuing operations
attributable to FMC stockholders, before interest, income taxes and noncontrolling interests (i.e., adjusted operating profit) (Non-GAAP)
Net income (loss) attributable to FMC stockholders (GAAP)
Discontinued operations, net of income taxes
Corporate special charges (income)
Interest expense, net
Provision for income taxes
Net income attributable to noncontrolling interests
Adjusted earnings from continuing operations attributable to FMC stockholders,
before interest, income taxes and noncontrolling interests (Non-GAAP)
2012
2013
$ 416.2
27.5
69.6
40.7
134.5
19.5
$ 293.9
159.3
96.0
42.2
148.6
14.1
$ 708.0
$ 754.1
F M C C O R P O R A T I O N
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fi scal year ended December 31, 2013
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 specifi ed in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
1735 Market Street, Philadelphia, Pennsylvania
(Address of principal executive offi ces)
94-0479804
(I.R.S. Employer Identifi cation No.)
19103
(Zip Code)
215-299-6000
(Registrant’s telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Title of each class
Common Stock, $0.10 par value
Name of each exchange on which registered
New York Stock Exchange
Chicago Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
Indicate by check mark
YES
NO
• if the registrant is a well-known seasoned issuer, as defi ned in Rule 405 of the Securities Act.
• if the registrant is not required to fi le reports pursuant to Section 13 and Section 15(d) of the Act.
• whether the Registrant (1) has fi led all reports required to be fi led 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 fi le such reports), and (2) has been subject to such fi ling requirements for the past 90 days.
• whether the registrant has submitted electronically and posted on its corporate website, if any, every interactive
data fi le required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit and post such fi les)
• if disclosure of delinquent fi lers pursuant to Item 405 of Regulation S-K is not contained herein, and will
not be contained, to the best of Registrant’s knowledge, in defi nitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K
• whether the Registrant is a large accelerated fi ler, an accelerated fi ler, a non-accelerated fi ler or a smaller reporting company. See defi nitions
of “large accelerated fi ler,” “accelerated fi ler,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (check one):
Large accelerated fi ler
Accelerated fi ler
Non-accelerated fi ler
Smaller reporting company
• whether the registrant is a shell company (as defi ned in Rule 12b-2 of the Exchange Act)
Th e aggregate market value of voting stock held by non-affi liates of the registrant as of June 30, 2013, the last day of the registrant’s second
fi scal quarter was $8,250,312,236. Th e market value of voting stock held by non-affi liates excludes the value of those shares held by
executive offi cers and directors of the registrant.
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
CLASS
Common Stock, par value $0.10 per share
DECEMBER 31, 2013
132,885,689
DOCUMENTS INCORPORATED BY REFERENCE
DOCUMENT
Portions of Proxy Statement for 2014 Annual Meeting of Stockholders
FORM 10-K REFERENCE
Part III
Table of Contents
PART I
1
Business ...........................................................................................................................................................................................................................................................................................................................................1
ITEM 1
ITEM 1A
Risk Factors .........................................................................................................................................................................................................................................................................................................................10
ITEM 1B Unresolved Staff Comments ..................................................................................................................................................................................................................................................................12
Properties ................................................................................................................................................................................................................................................................................................................................12
ITEM 2
Legal Proceedings ......................................................................................................................................................................................................................................................................................................12
ITEM 3
Mine Safety Disclosures .................................................................................................................................................................................................................................................................................12
ITEM 4
PART II
13
ITEM 5
Market for the Registrant’s Common Equity, Related Stockholders Matters
and Issuer Purchases of Equity Securities .........................................................................................................................................................................................................................13
Selected Financial Data ...................................................................................................................................................................................................................................................................................15
ITEM 6
ITEM 7
Management’s Discussion and Analysis of Financial Condition and Results of Operations ...................................................16
ITEM 7A Quantitative and Qualitative Disclosures About Market Risk ....................................................................................................................................................30
Financial Statements and Supplementary Data .....................................................................................................................................................................................................31
ITEM 8
ITEM 9
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure .................................................79
ITEM 9A Controls and Procedures ..............................................................................................................................................................................................................................................................................79
ITEM 9B Other Information ..................................................................................................................................................................................................................................................................................................79
PART III
80
ITEM 10 Directors, Executive Offi cers and Corporate Governance ..................................................................................................................................................................80
Executive Compensation .............................................................................................................................................................................................................................................................................81
ITEM 11
Security Ownership of Certain Benefi cial Owners and Management and Related Stockholder Matters ..........81
ITEM 12
Certain Relationships and Related Transactions, and Director Independence ................................................................................................81
ITEM 13
Principal Accountant Fees and Services ..............................................................................................................................................................................................................................81
ITEM 14
PART IV
82
ITEM 15
Exhibits and Financial Statement Schedules ..............................................................................................................................................................................................................82
SIGNATURES ..............................................................................................................................................................................................................................................................................................................................................................84
INDEX OF EXHIBITS ...................................................................................................................................................................................................................................................................................................................................85
PART I
FMC Corporation (FMC) was incorporated in 1928 under Delaware
law and has its principal executive offi ces at 1735 Market Street,
Philadelphia, Pennsylvania 19103. Th roughout this Annual Report
on Form 10-K, except where otherwise stated or indicated by the
context, “FMC”, “We,” “Us,” or “Our” means FMC Corporation
and its consolidated subsidiaries and their predecessors. Copies of the
annual, quarterly and current reports we fi le with the Securities and
Exchange Commission (“SEC”), and any amendments to those reports,
are available on our website at www.FMC.com as soon as practicable
after we furnish such materials to the SEC.
ITEM 1 Business
General
We are a diversifi ed chemical company serving agricultural, consumer and
industrial markets globally with innovative solutions, applications and
market-leading products. We operate in three distinct business segments:
FMC Agricultural Solutions, FMC Health and Nutrition and FMC
Minerals. Our FMC Agricultural Solutions segment develops, markets
and sells all three major classes of crop protection chemicals – insecticides,
herbicides and fungicides. Th ese products are used in agriculture to
enhance crop yield and quality by controlling a broad spectrum of
insects, weeds and disease, as well as in non-agricultural markets for
pest control. Th e FMC Health and Nutrition segment focuses on food,
pharmaceutical ingredients, nutraceuticals, personal care and similar
markets. Our food ingredients are used to enhance texture, color,
structure and physical stability. Th e pharmaceutical additives are used
for binding, encapsulation and disintegrant applications. Our FMC
Minerals segment manufactures a wide range of inorganic materials,
including soda ash and lithium. Soda ash is utilized in markets such as
glass and detergents and lithium is utilized in energy storage, specialty
polymers and pharmaceutical synthesis.
Discontinued Operations
FMC Peroxygens divestiture:
In April 2013, the Board of Directors authorized management to pursue
the sale of our FMC Peroxygens segment. Th is segment was classifi ed as
a discontinued operation and an asset held for sale beginning with our
September 30, 2013 condensed consolidated fi nancial statements fi led
on Form 10-Q. In December 2013, we signed a defi nitive agreement
to sell FMC Peroxygens and we expect the sale to be completed in the
fi rst quarter of 2014.
Results of operations related to our FMC Peroxygens segment have been
reclassifi ed as a discontinued operation on a retrospective basis for all
years presented. Unless otherwise indicated, the following discussions in
this section (Item 1: Business) pertain only to our continuing operations.
For additional information see Note 9 “Discontinued Operations” to
our consolidated fi nancial statements included in this Form 10-K.
Th e following table shows the principal products produced by our three business segments and their raw materials and uses:
Segment
FMC Agricultural Solutions Insecticides
Product
Herbicides
Fungicides
Raw Materials
Synthetic chemical
intermediates
Synthetic chemical
intermediates
Synthetic and biological
chemical intermediates
Uses
Protection of crops, including cotton, sugarcane, rice, corn, soybeans, cereals,
fruits and vegetables from insects and for non-agricultural applications
including pest control for home, garden and other specialty markets
Protection of crops, including cotton, sugarcane, rice, corn, soybeans,
cereals, fruits and vegetables from weed growth and for non-agricultural
applications including turf and roadsides
Protection of crops, including fruits and vegetables from fungal disease
FMC Health and Nutrition Microcrystalline Cellulose Specialty pulp
Carrageenan
Refi ned seaweed
Alginates
Natural Colorants
Pectin
Omega-3 EPA/DHA
Lithium
Refi ned seaweed
Plant sources, select
insect species
Citrus fruit peels
Fish oils
Extracted lithium
Soda Ash
Mined trona ore
FMC Minerals
Drug dry tablet binder and disintegrant, food ingredient
Food ingredient for thickening and stabilizing, pharmaceutical and
nutraceutical encapsulates
Food ingredient, pharmaceutical excipient, healthcare and industrial uses
Food, pharmaceutical and cosmetics
Food ingredients for texture and stabilizing
Nutraceutical and pharmaceutical uses.
Batteries, polymers, pharmaceuticals, greases and lubricants, glass
and ceramics and other industrial uses
Glass, chemicals, detergents
FMC CORPORATION - Form 10-K 1
PART I
ITEM 1 Business
With a worldwide manufacturing and distribution infrastructure, we are able to respond rapidly to global customer needs, off set downward
economic trends in one region with positive trends in another and match local revenues to local costs to mitigate the impact of currency volatility.
Th e charts below detail our sales and long-lived assets by major geographic region.
REVENUE BY REGION 2013
REVENUE: $3,874.8 MILLION
LONGLIVED ASSETS BY REGION 2013
LONGLIVED ASSETS: $2,198.8 MILLION
13%
Europe,
Middle East
& Africa
33%
North America
36%
Latin America
34%
Europe,
Middle East
& Africa
18%
Asia Pacific
43%
North America
8%
Latin America
15%
Asia Pacific
Our Strategy
Since 2010, we have invested signifi cant resources and managerial
time in the development and implementation of a new strategic plan
for FMC. Th is corporate strategy, which we refer to as Vision 2015,
is focused on driving sales and earnings growth while sustaining a
return on invested capital well above our cost of capital. Th is strategy’s
objective is to achieve a total shareholder return in the top quartile of
a broad group of industry peers. Vision 2015 has fi ve key elements:
Growing Leadership Positions. We intend to continue to build and
strengthen our market-leading positions by executing a plan that relies
primarily on organic growth, complemented by a focused external
growth strategy. We benefi t from a business portfolio that is exposed
to fast-growing end markets and geographic regions. FMC Agricultural
Solutions’ organic growth plan focuses on market and product innovations
while strengthening market access. FMC Health and Nutrition’s
organic focus is primarily on new products and new applications for
existing products. FMC Minerals’ focus is on achieving lowest unit
cost production of natural commodities. To complement these growth
initiatives, our external growth strategy employs a focused, disciplined
approach to company, product and technology acquisitions and ventures.
We believe this strategy reduces risks inherent in external growth. In
FMC Agricultural Solutions, we are focused on acquiring access to new
products and technologies, as well as strengthening market access and
entering adjacent spaces. FMC Health and Nutrition’s external growth
eff orts are directed toward product and small company acquisitions
that fi t or complement existing supply chain competencies and have
similar end-market characteristics as the markets in which we already
participate. FMC Minerals evaluates acquisitions opportunistically.
Across FMC our strategy excludes making large-scale, complex, or
transformational acquisitions or adding another business platform to
our portfolio through acquisition.
Increasing Our Reach. We intend to bias our growth initiatives toward
further strengthening our positions in rapidly developing economies
(RDEs). Our growth in Latin America will be largely driven by leveraging
FMC Agricultural Solutions’ leadership positions. In Asia, our growth
initiatives will be more broad-based, with targeted investments in
human, scientifi c and technological resources across our businesses in
the region. In Central and Eastern Europe, Turkey and Russia, we will
focus on establishing strong footholds in key countries.
Capturing the Value of Common Ownership. We are moving from a highly
decentralized organizational model to one that has both centralized
and decentralized qualities. We believe this shift will enable us to better
leverage the size and scope of our company to realize cost savings and
increase effi ciencies yet maintain strong accountability in our business
units. Our eff orts are focused on such areas as procurement, strategic
planning, mergers and acquisitions, communications, global supply
chain, RDE infrastructure, human resources and fi nance.
Proactively Managing our Portfolio. We continually assess the performance
of all of our business units, and will take actions as needed should a
unit’s performance change. Within our businesses, we continue to
evaluate the performance of specifi c product lines and have taken
action where a product line or business has become non-core or
economically unsustainable, such as the exit in 2011 of the sodium
percarbonate product line, of the zeolites product line in 2012 and
the FMC Peroxygens segment divestiture in 2013.
Disciplined Cash Deployment. Under our Vision 2015 plan, we expect
to fund our growth strategies and return a signifi cant amount of cash
to our shareholders through share repurchases and dividends.
Underlying our ambition to deliver our Vision 2015 plan is a continued
commitment to enterprise sustainability, including responsible
stewardship. As we grow, we will do so in a responsible way. Safety is
and will remain of utmost importance. Meeting and exceeding our
customers’ expectations will continue to be a primary focus. We will,
as always, conduct our business in an ethical manner.
2
FMC CORPORATION - Form 10-K
Financial Information About Our Business Segments
See Note 20 “Segment Information” to our consolidated fi nancial statements included in this Form 10-K. Also see below for selected fi nancial
information related to our segments.
PART I
ITEM 1 Business
FMC Agricultural Solutions
Financial Information (In Millions)
AGRICULTURAL SOLUTIONS:
REVENUE AND OPERATING MARGIN 2009-2013
AGRICULTURAL SOLUTIONS:
CAPITAL EXPENDITURES AND DEPRECIATION
AND AMORTIZATION 2009-2013
$2,200
$2,000
$1,800
$1,600
$1,400
$1,200
$1,000
$800
$600
$400
$200
$0
2,146
1,764
1,465
1,242
1,052
27%
25%
24%
26%
25%
2009
2010
2011
2012
2013
Revenue
Operating Margin
60%
50%
40%
30%
20%
10%
0%
Overview
$60
$50
$40
$30
$20
$10
$0
50
34
34
29
22
23
17
18
18
13
2009
2010
2011
2012
2013
Capital Expenditures
Depreciation and Amortization
Our FMC Agricultural Solutions segment, which represents approximately 55 percent of our 2013 consolidated revenues, operates in the
agrochemicals industry. Th is segment develops, manufactures and sells a portfolio of crop protection, professional pest control and lawn and
garden products.
Products and Markets
AGRICULTURAL SOLUTIONS:
2013 SALES MIX
AGRICULTURAL SOLUTIONS:
2013 REVENUE BY REGION
14%
Fungicides/Other
46%
Insecticides
40%
Herbicides
55%
Latin America
24%
North America
6%
Europe,
Middle East
& Africa
15%
Asia Pacific
FMC CORPORATION - Form 10-K 3
PART I
ITEM 1 Business
FMC Agricultural Solutions’ portfolio is comprised of three major
pesticide categories: insecticides, herbicides and fungicides. Th e majority
our product line consists of insecticides and herbicides, and we have a
small but fast-growing portfolio of fungicides mainly used in high value
crop segments. Our insecticides are used to control a wide spectrum
of pests, while our herbicide portfolio primarily targets a large variety
of diffi cult-to-control weeds.
In October 2013, we announced the formation of a new biological
platform created by the combination of an alliance with Chr. Hansen
and the acquisition of the Center for Agricultural and Environmental
Biosolutions (“CAEB”). Th rough these transactions, we will combine
best-in-class capabilities for scouting, screening and fermentation, and
scale up from Chr. Hansen and CAEB with our formulation science,
product development and registration experience. We will then exclusively
market these products via our global market access positions.
In the Latin American region, which includes the large agricultural
market of Brazil, we sell directly to large growers through our own
sales and marketing organization, and we access the market through
independent distributors. In North America, we access the market
through several major national and regional distributors and have
our own sales and marketing organization in Canada. We access
key Western European markets through a Belgium-based pesticide
distribution company, Belchim Crop Protection N.V., in which we
have an ownership interest. We also have joint venture arrangements
with Nufarm Limited in three countries in Eastern Europe, which allow
us to capitalize on growth in this part of Europe. We access key Asian
markets either through local independent distributors or our own sales
and marketing organizations. Th rough these and other alliances, along
with our own targeted marketing eff orts, access to novel technologies
and our innovation initiatives, we expect to maintain and enhance
our access in key agricultural and non-crop markets and develop new
products that will help us continue to compete eff ectively.
Industry Overview
Th e three principal categories of agricultural and non-crop chemicals
are herbicides, representing approximately half of global industry
revenue; insecticides, representing approximately a quarter of global
industry revenue; and fungicides, representing most of the remaining
portion of global industry revenue.
Th e agrochemicals industry is relatively consolidated. Leading crop
protection companies, Syngenta AG, Bayer AG, Monsanto Company,
BASF AG, Th e Dow Chemical Company and E. I. du Pont de Nemours
and Company (DuPont), currently represent approximately 65 percent
of the industry’s global sales. Th e next tier of agrochemical producers
include FMC, ADAMA Agricultural Solutions, Ltd., Sumitomo
Chemical Company Ltd., Nufarm Ltd., Arysta LifeScience Corp.,
United Phosphorous Ltd. and Cheminova AS. FMC employs various
diff erentiated strategies and competes through unique technologies
focusing on certain crops, markets and geographies, as well as competitive
pricing based on low-cost manufacturing positions.
Growth
We plan to grow by obtaining new and approved uses for existing product
lines and acquiring, accessing, developing, marketing, distributing and/
or selling complementary chemistries and related technologies in order
to enhance and expand our product portfolio and our capabilities to
eff ectively service our target markets and customers.
Our growth eff orts focus on developing environmentally compatible
and sustainable solutions that can eff ectively increase farmers’ yields and
provide cost-eff ective alternatives to chemistries which may be prone to
resistance. We are committed to providing unique, diff erentiated products
to our customers by acquiring and further developing technologies
as well as investing in innovation to extend product life cycles. Our
external growth eff orts include product acquisitions, in-licensing of
chemistries and technologies and alliances that strengthen our market
access, complement our existing product portfolio or provide entry
into adjacent spaces. We have continued to enter into a range of
development and distribution agreements with other companies that
provide us access to new technologies and products which we can
subsequently commercialize.
4
FMC CORPORATION - Form 10-K
FMC Health and Nutrition
Financial Information (In Millions)
HEALTH AND NUTRITION:
REVENUE AND OPERATING MARGIN 20092013
654
681
612
762
40%
30%
24%
24%
24%
22%
20%
579
23%
10%
0%
2009
2010
2011
2012
2013
Revenue
Operating Margin
Overview
$800
$700
$600
$500
$400
$300
$200
$100
$0
PART I
ITEM 1 Business
HEALTH AND NUTRITION:
CAPITAL EXPENDITURES AND DEPRECIATION
AND AMORTIZATION 20092013
$140
$120
$100
$80
$60
$40
$20
$0
116
53
57
32
21
21
39
23
26
35
2009
2010
2011
2012
2013
Capital Expenditures
Depreciation and Amortization
Our FMC Health and Nutrition segment, which represents 20 percent
of our 2013 consolidated revenues, is focused on high-performance
food ingredients, pharmaceutical excipients and with the acquisition of
Epax Nutra Holding III AS and Epax UK Holding III AS, (collectively
“Epax”), completed in July 2013, omega-3 oils. Th e majority of FMC
Health and Nutrition sales are to customers in non-cyclical end
markets. We believe our future growth in this segment will continue
to be based on the value-added performance capabilities of these
products and our research and development capabilities, as well as on
the alliances and close working relationships we have developed with
key global customers. Th e focus and our intent for external growth is
to broaden our product line and expand our participation in RDEs
through acquisitions, joint ventures, and alliances.
Products and Markets
HEALTH AND NUTRITION:
2013 REVENUE BY REGION
9%
Latin America
25%
Asia Pacific
32%
North America
34%
Europe,
Middle East
& Africa
Our product off erings into the food markets principally provide texture,
structure and physical stability (“TSPS”) solutions to thicken and
stabilize certain food products. Our formulation ingredients serving the
pharmaceutical industry function as binders, disintegrants, suspending
agents, and control-release compounds for the production of both solid
and liquid pharmaceutical products. Th e majority of our nutraceutical
product off erings are high purity omega-3 oils.
FMC Health and Nutrition is a supplier of microcrystalline cellulose
(“MCC”), carrageenan, alginates, natural colorants, pectin and omega-3,
all naturally derived ingredients that have high value-added applications
in the production of food, pharmaceutical, nutraceutical and other
specialty consumer products. MCC, processed from specialty grades
of renewable hardwood and softwood pulp, provides binding and
disintegrant properties for dry tablets and capsules and has unique
functionality that improves the texture and stability of many food
FMC CORPORATION - Form 10-K 5
PART I
ITEM 1 Business
products. Carrageenan and alginates, both processed from natural
seaweed, are used in a wide variety of food, pharmaceutical and oral
care applications. Natural colorants are utilized in specialty products
used in the food, beverage, personal care, nutrition and pharmaceutical
markets. Pectin, derived from natural citrus fruit peels, is utilized as a
hydrocolloid texturant and stabilizer. Omega-3 is sourced from fi sh oils
and utilized in other pharmaceutical and nutraceutical applications.
Industry Overview
Food Ingredients
Th e industry is dispersed geographically, with the majority of our sales
in Europe, North America and Asia. Th e food ingredients market is
comprised of a large number of suppliers due to the broad spectrum
of chemistries employed. Segment leadership, global position and
investment in technology are key factors to sustaining profi tability. Th e
top suppliers of TSPS ingredients include FMC, DuPont, J.M. Huber
Corporation, Kerry Group plc and Cargill Incorporated.
Pharmaceutical & Nutraceutical Ingredients
Competitors tend to be grouped by chemistry. Our principal MCC
competitors include J. Rettenmaier & Sôhne GmbH, Ming Tai Chemical
Co., Ltd., Asahi Kasei Corporation and Blanver Farmoquimica Ltda.
While pricing pressure from low-cost producers is a common competitive
dynamic, companies look to off set that pressure by providing the most
reliable and broadest range of products and services. Our customers are
pharmaceutical fi rms who depend upon reliable therapeutic performance
of their drug products. DSM, BASF AG and Croda International Plc.
also produce a variety of omega-3 fi sh oils. We have a cost-eff ective
production capability that yields very high concentrates and distinguishes
FMC products from others.
FMC Minerals
Financial Information (In millions)
MINERALS:
REVENUE AND OPERATING MARGIN 20092013
MINERALS:
CAPITAL EXPENDITURES AND DEPRECIATION
AND AMORTIZATION 20092013
$1,000
$800
754
918
834
966
970
40%
$100
89
93
$600
$400
$200
$0
30%
20%
13%
10%
16%
17%
19%
18%
2009
2010
2011
2012
2013
Revenue
Operating Margin
0%
$80
$60
$40
$20
$0
52
49
56
54
50
52
54
50
2009
2010
2011
2012
2013
Capital Expenditures
Depreciation and Amortization
Overview
Our FMC Minerals segment, which represents 25 percent of our 2013 consolidated revenues, participates in the alkali chemicals and lithium
products markets.
6
FMC CORPORATION - Form 10-K
PART I
ITEM 1 Business
55%
North America
Products and Markets
MINERALS:
2013 SALES MIX
MINERALS:
2013 REVENUE BY REGION
23%
Lithium
13%
Latin America
18%
Asia Pacific
14%
Europe,
Middle East
& Africa
77%
Alkali
Alkali
Our Alkali Chemicals division produces natural soda ash. Soda ash
is used by manufacturers in glass, chemical processing and detergent
industries. We also produce smaller volumes of sodium bicarbonate,
caustic soda and sodium sesquicarbonate. Th e majority of our alkali sales
are manufactured by and sold through FMC Wyoming Corporation,
which we manage as an integral part of our alkali business. We hold a
93.75 percent ownership interest in FMC Wyoming Corporation which
increased 6.25 percentage points from 87.50 percent in March 2013 as
a result of our purchase of Nippon Sheet Glass Company’s 6.25 percent
ownership interest. Th e remaining shares are held by a third party
Japanese company.
Lithium
Lithium is a vertically integrated business, based on both inorganic
and organic lithium chemistries. While lithium is sold into a variety
Industry Overview
of end markets, we have focused our strategy on the energy storage,
polymer and pharmaceutical markets and other industrial markets.
Th e electrochemical properties of lithium make it an ideal material for
portable energy storage in high performance applications, including
smart phones, tablets, laptop computers, military devices and aerospace
and other next-generation energy storage technologies. Lithium is a
critical element in advanced batteries for use in hybrid electric, plug-in
hybrids and all-electric vehicles.
Organolithium products are highly valued in the polymer market
as initiators in the production of synthetic rubbers and elastomers.
Organolithiums are also sold to fi ne chemical and pharmaceutical
customers who use lithium’s unique chemical properties to synthesize
high value-added products.
FMC Minerals serves a diverse group of markets, from economically sensitive industrial sectors to technology-intensive specialty markets. Our
product off erings are primarily inorganic and are generally commodities that, in many cases, have few cost-eff ective substitutes. Growth is typically
a function of industrial production in developed economies and a function of the rate of industrialization in developing economies, though a
major growth driver for lithium in the future will be the rate of adoption of electric and hybrid electric batteries in automobiles.
Alkali
Lithium
Natural soda ash is typically produced from trona ore through mining
and chemical processing. Soda ash may also be produced synthetically,
but requires signifi cantly more energy and produces large quantities
of waste by-products, making it much less cost-eff ective than natural
soda ash production. Due to the processing cost advantages of mining
trona and the large natural reserves of trona ore in the U.S., particularly
in the Green River Basin of Wyoming, all U.S. soda ash is naturally
produced. By contrast, due to a lack of trona ore, the majority of the
soda ash that is manufactured in the rest of the world is produced
synthetically. Other U.S. producers are OCI Chemical Corporation,
Solvay S.A., Tata Chemicals (Soda Ash) Partners and Nirma Limited.
Th e markets for lithium chemicals are global with signifi cant growth
occurring outside the U.S. in Japan, China and South Korea, driven by
the development and manufacture of lithium ion batteries. Th ere are
three key producers of lithium compounds: FMC, Rockwood Holdings,
Inc., and Sociedad Química y Minera de Chile S.A. A fourth producer,
Talison, produces spodumene ore that is subsequently converted to
lithium compounds by a large number of Chinese producers. We
expect a few new producers may add primary inorganics capacity to
the global lithium supply in the future. FMC and Rockwood are the
primary producers of lithium specialties.
FMC CORPORATION - Form 10-K 7
PART I
ITEM 1 Business
Source and Availability of Raw Materials
Our raw material requirements vary by business segment and primarily
include mineral-related natural resources (trona ore and lithium brines),
processed chemicals, seaweed, specialty wood pulps and energy sources
such as gas, coal, oil and electricity. During 2013 we encountered no
signifi cant diffi culties in obtaining adequate supplies of our raw materials.
We extract ores used in FMC Minerals’ manufacturing processes
from mines (e.g., trona ore) in North America and lithium brines in
Patents
Argentina. Raw materials used by FMC Health and Nutrition include
various types of seaweed, specialty pulps, natural colorant raw materials
and fi sh oils that are all sourced on a global basis and purchased from
selected global producers/suppliers. Raw materials used by FMC
Agricultural Solutions, primarily processed chemicals, are obtained
from a variety of suppliers worldwide.
We own a number of U.S. and foreign patents, trademarks and licenses that are cumulatively important to our business. We do not believe that
the loss of any individual or combination of related patents, trademarks or licenses would have a material adverse eff ect on the overall business
of FMC. Th e duration of our patents depends on their respective jurisdictions.
Seasonality
Th e seasonal nature of the crop protection market and the geographic
spread of the FMC Agricultural Solutions business can result in
signifi cant variations in quarterly earnings among geographic locations.
FMC Agricultural Solutions sold into the northern hemisphere (North
America, Europe and parts of Asia) serve seasonal agricultural markets
from March through September, generally resulting in earnings in the
fi rst, second and third quarters. Markets in the southern hemisphere
(Latin America and parts of the Asia Pacifi c region, including Australia)
are served from July through February, generally resulting in earnings
in the third, fourth and fi rst quarters. Th e remainder of our business
is generally not subject to signifi cant seasonal fl uctuations.
Competition
We encounter substantial competition in each of our three business
segments. We market our products through our own sales organization and
through alliance partners, independent distributors and sales representatives.
Th e number of our principal competitors varies from segment to segment.
In general, we compete by providing advanced technology, high product
quality and reliability, and quality customer and technical service, and
by operating in a cost-effi cient manner.
Our FMC Agricultural Solutions segment competes primarily in the
global chemical crop protection market for insecticides, herbicides and
fungicides. Industry products include crop protection chemicals and, for
certain major competitors, genetically engineered (crop biotechnology)
products. Competition from generic agrochemical producers is signifi cant
as a number of key product patents held industry-wide have expired in
the last decade. In general, we compete as an innovator by focusing on
product development, including novel formulations, proprietary mixes,
and advanced delivery systems and by acquiring or licensing (mostly)
proprietary chemistries or technologies that complement our product
and geographic focus. We also diff erentiate ourselves by our global cost-
competitiveness via our manufacturing strategies, establishing eff ective
product stewardship programs and developing strategic alliances that
strengthen market access in key countries and regions.
Our FMC Health and Nutrition segment has signifi cant positions in
markets that include alginate, carrageenan, and microcrystalline cellulose.
We compete with both direct suppliers of cellulose and seaweed extract
as well as suppliers of other hydrocolloids, which may provide similar
functionality in specifi c applications. In microcrystalline cellulose,
competitors are typically smaller than us, while in seaweed extracts
(carrageenan and alginates) and omega-3 fi sh oils, we compete with
other broad-based chemical companies.
Our FMC Minerals segment sells soda ash and lithium-based products
worldwide. In North America, our soda ash business competes with
four domestic producers of natural soda ash, three of which operate
in the vicinity of our mine and processing facilities near Green River,
Wyoming. Outside of the U.S., Canada, Europe and South Africa, we sell
soda ash mainly through the American Natural Soda Ash Corporation
(“ANSAC”). Internationally, our natural soda ash competes with synthetic
soda ash manufactured by numerous producers, ranging from integrated
multinational companies to smaller regional companies. Th e primary
competitive factor aff ecting the sales of soda ash to commodity markets
is price. FMC as well as the other North American producers of soda ash
benefi t from the lowest cost of soda ash production globally, especially
when compared to the foreign synthetic soda ash manufacturers. We
and each of our two most signifi cant competitors in lithium extract
the element from naturally occurring lithium-rich brines located in the
Andes Mountains of Argentina and Chile, which are believed to be the
world’s most signifi cant and lowest cost sources of lithium.
8
FMC CORPORATION - Form 10-K
Research and Development Expense
We perform research and development in all of our segments with the majority of our eff orts focused in the FMC Agricultural Solutions segment.
Th e development eff orts in the FMC Agricultural Solutions segment focus on developing environmentally sound solutions and new product
formulations that cost-eff ectively increase farmers’ yields and provide alternatives to existing and new chemistries. Our research and development
expenses in the last three years are set forth below:
PART I
ITEM 1 Business
(in Millions)
FMC Agricultural Solutions
FMC Health and Nutrition
FMC Minerals
TOTAL
Environmental Laws and Regulations
Year Ended December 31,
2013
100.5 $
10.5
6.7
117.7 $
2012
95.4 $
9.9
6.7
112.0 $
2011
84.4
10.1
6.6
101.1
$
$
A discussion of environmental related factors can be found in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results
of Operations” and in Note 10 “Environmental Obligations” in the notes to our consolidated fi nancial statements included in this Form 10-K.
Employees
We employ approximately 5,600 people (excluding approximately
600 employees who currently work in our discontinued Peroxygens
segment), with about 2,400 people in our domestic continuing
operations and 3,200 people in our foreign continuing operations.
Approximately 30 percent of our U.S.-based and 40 percent of our
foreign-based employees, respectively, are represented by collective
bargaining agreements. We have successfully concluded most of our
recent contract negotiations without any material work stoppages. In
those rare instances where a work stoppage has occurred, there has been
no material eff ect on consolidated sales and earnings. We cannot predict,
however, the outcome of future contract negotiations. In 2014, fi ve
foreign collective-bargaining agreements will expire. Th ese contracts
aff ect about 30 percent of our foreign-based employees.
Securities and Exchange Commission Filings
Securities and Exchange Commission (SEC) fi lings are available free
of charge on our website, www.fmc.com. Our annual report on Form
10-K, quarterly reports on Form 10-Q, current reports on Form 8-K
and amendments to those reports are posted as soon as practicable
after we furnish such materials to the SEC.
In accordance with New York Stock Exchange (NYSE) rules, on May 20,
2013, we fi led a certifi cation signed by our Chief Executive Offi cer
(CEO) that, as of the date of the certifi cation, he was unaware of any
violation by FMC of the NYSE’s corporate governance listing standards.
We also fi le with each Form 10-Q and our Form 10-K certifi cations
by the CEO and Chief Financial Offi cer under sections 302 and 906
of the Sarbanes-Oxley Act of 2002.
FMC CORPORATION - Form 10-K 9
PART I
ITEM 1A Risk Factors
ITEM 1A Risk Factors
Among the factors that could have an impact on our ability to achieve operating results and meet our other goals are:
Industry Risks
Pricing and volumes in our markets are sensitive to a number of industry
specifi c and global issues and events including:
• Capacity utilization- Our businesses are sensitive to industry capacity
utilization. As a result, pricing tends to fl uctuate when capacity
utilization changes occur within our industry.
• Competition- All of our segments face competition, which could
aff ect our ability to maintain or raise prices, successfully enter certain
markets or retain our market position. Our FMC Minerals - Alkali
division from time to time experiences competitive pricing pressures
from our Chinese competition who will price their products at or
near their manufacturing costs in an attempt to gain control of or
reacquire short-term market position. Additionally, in FMC Agricultural
Solutions, competition includes not only generic suppliers of the same
pesticidal active ingredient, but also alternative proprietary pesticide
chemistries, crop protection technologies that are bred into or applied
onto seeds, and intellectual property regarding production or use of
pesticides. Increased generic presence in agricultural chemical markets
has been driven by the number of signifi cant product patents and
product data protections that have expired in the last decade, and
this trend is expected to continue.
• Changes in our customer base- Our customer base has the potential to
change, especially when long-term supply contracts are renegotiated.
Our FMC Minerals and FMC Health and Nutrition businesses are
most sensitive to this risk.
• Climatic conditions- Our FMC Agricultural Solutions markets are
aff ected by climatic conditions, which could adversely impact crop
pricing and pest infestations. Adverse weather conditions can impact
our ability to extract lithium effi ciently from our lithium reserves in
Argentina. Natural disasters can impact production at our facilities
in various parts of the world. Th e nature of these events makes them
diffi cult to predict.
• Changing regulatory environment- Changes in the regulatory
environment, particularly in the United States, Brazil, China and
the European Union, could adversely impact our ability to continue
producing and/or selling certain products in our domestic and foreign
markets or could increase the cost of doing so. Our FMC Agricultural
Solutions business is most sensitive to this general regulatory risk given
the need to obtain and maintain pesticide registrations in every country
in which we sell our products. Compliance with changing laws and
regulations may involve signifi cant costs or capital expenditures or require
changes in business practice that could result in reduced profi tability. In
the European Union, the regulatory risk specifi cally includes chemicals
regulation known as REACH (Registration, Evaluation, and Authorization
of Chemicals), which aff ects each of our business segments to varying
degrees. Th e fundamental principle behind the REACH regulation is
that manufacturers must verify that their chemicals can be marketed
safely through a special registration system.
• Food and pharmaceutical regulation - Some of our manufacturing
processes and facilities, as well as some of our customers, are subjected
to regulation by the U.S. Food and Drug Administration (FDA) or
similar foreign agencies. Regulatory requirements of the FDA are
complex, and any failure to comply with them including as a result
of contamination due to acts of sabotage could subject us and/or
our customers to fi nes, injunctions, civil penalties, lawsuits, recall or
seizure of products, total or partial suspension of production, denial
of government approvals, withdrawal of marketing approvals and
criminal prosecution. Any of these actions could adversely impact
our net sales, undermine goodwill established with our customers,
damage commercial prospects for our products and materially adversely
aff ect our results of operations.
• Climate change regulation- Changes in the regulation of greenhouse
gases, depending on their nature and scope, could subject our
manufacturing operations, particularly certain FMC Minerals’
operations in the United States, to signifi cant additional costs or
limits on operations.
• Raw materials and energy costs- Our operating results are signifi cantly
aff ected by the cost of raw materials and energy, including natural gas.
We may not be able to raise prices or improve productivity suffi ciently
to off set future increases in the costs of raw materials or energy.
• Supply arrangements- Certain raw materials are critical to our
production process. While we have made supply arrangements to
meet planned operating requirements, an inability to obtain the
critical raw materials or execute under the contract manufacturing
arrangements would adversely impact our ability to produce certain
products. We increasingly source critical intermediates and fi nished
products from a number of suppliers. An inability to obtain these
products or execute under the contract sourcing arrangements would
adversely impact our ability to sell products. In FMC Minerals
geological conditions can aff ect production of raw materials.
• Economic and political change- Our business could be adversely aff ected
by economic and political changes in the markets where we compete
including: infl ation rates, recessions, trade restrictions, foreign ownership
restrictions and economic embargoes imposed by the United States or any
of the foreign countries in which we do business; changes in laws, taxation,
and regulations and the interpretation and application of these laws, taxes,
and regulations; restrictions imposed by foreign governments through
exchange controls or taxation policy; nationalization or expropriation
of property, undeveloped property rights, and legal systems or political
instability; other governmental actions; and other external factors over
which we have no control. Economic and political conditions within
foreign jurisdictions or strained relations between countries can cause
fl uctuations in demand, price volatility, supply disruptions, or loss of
property. In Argentina, continued infl ation and tightening of foreign
exchange controls along with deteriorating economic and fi nancial
conditions could adversely aff ect our business.
10
FMC CORPORATION - Form 10-K
• Market access risk- Our results may be aff ected by changes in
distribution channels, which could impact our ability to access the
market. In certain FMC Agricultural Solutions segments, we access
the market through joint ventures in which we do not have majority
control. Where we do not have a strong product portfolio or market
access relationships, we may be vulnerable to changes in the distribution
model or infl uence of competitors with stronger product portfolios.
• Business disruptions- Our business could be adversely aff ected by
information technology systems outages, disruption in our supply
chain or manufacturing and distribution operations, or other sudden
disruption in business operations beyond our control as a result of
events such as acts of sabotage, terrorism or war, civil or political unrest,
natural disasters, pandemic situations and large scale power outages.
• Information technology security risks - As with all Enterprise
Information systems, our information technology systems could
be penetrated by outside parties intent on extracting information,
corrupting information, or disrupting business processes. Our systems
have in the past been, and likely will in the future be, subject to
unauthorized access attempts. Unauthorized access could disrupt
our business operations and could result in failures or interruptions
in our computer systems and in the loss of assets and could have a
material adverse eff ect on our business, fi nancial condition or results
of operations. In addition, breaches of our security measures or the
accidental loss, inadvertent disclosure, or unapproved dissemination
of proprietary information or sensitive or confi dential information
about us, our employees, our vendors, or our customers, could result
in litigation and potential liability for us, damage our reputation,
or otherwise harm our business, fi nancial condition, or results of
operations.
Technology Risks
• Our ability to compete successfully depends in part upon our ability
to maintain a superior technological capability and to continue to
identify, develop and commercialize new and innovative, high value-
added products for existing and future customers.
Financial Risks
• Deterioration in the global economy and worldwide credit and foreign
exchange markets could adversely aff ect our business. A worsening
of global or regional economic conditions or fi nancial markets could
adversely aff ect our customers’ ability to meet the terms of sale or our
suppliers’ ability to perform all their commitments to us. A slowdown
in either Brazilian or Argentine economic growth or a deterioration of
credit or foreign exchange markets could adversely aff ect customers,
suppliers and our overall business there.
• We are an international company and face foreign exchange rate risks
in the normal course of our business. We are particularly sensitive to
the euro, the Brazilian real and the Chinese yuan. To a lesser extent,
we are sensitive to the Mexican peso, the Argentine peso, the British
pound sterling and several Asian currencies, including the Japanese yen.
• Our eff ective tax rate is favorably impacted by the fact that a portion
of our earnings are taxed at more favorable rates in some jurisdictions
PART I
ITEM 1A Risk Factors
• Operational Risks- Our manufacturing operations and those of our key
contract manufacturers inherently entail hazards that require continuous
oversight and control, such as leaks, ruptures, fi re, explosions, toxic
releases, mechanical failures, or vehicle accidents. If operational
risks materialize, they could result in loss of life, damage to the
environment, or loss of production, all of which could negatively
impact the Company’s ongoing operations, reputation, fi nancial
results, and cash fl ow.
• Litigation and environmental risks- Current reserves relating to our
ongoing litigation and environmental liabilities may ultimately prove
to be inadequate.
• Hazardous materials- We manufacture and transport certain materials
that are inherently hazardous due to their toxic or volatile nature.
While we take precautions to handle and transport these materials in a
safe manner, if they are mishandled or released into the environment,
they could cause property damage or personal injury claims against us.
• Environmental Compliance- We are subject to extensive federal,
state, local, and foreign environmental and safety laws and regulations
concerning, among other things, emissions in the air, discharges to land
and water, and the generation, handling, treatment, and disposal of
hazardous waste and other materials. We take our environmental
responsibilities very seriously, but there is a risk of environmental
impact inherent in its manufacturing operations and transportation
of chemicals.
• Inability to attract and retain key employees - Th e inability to recruit
and retain key personnel or the unexpected loss of key personnel
may adversely aff ect our operations. In addition, our future success
depends in part on our ability to identify and develop talent to
succeed senior management.
• Failure to continue to make process improvements to reduce costs
could impede our competitive position.
outside the United States. Changes in tax laws or in their application
with respect to matters such as transfer pricing, dividends from
subsidiaries or restriction in tax relief allowed on intercompany
debt could increase our eff ective tax rate and adversely aff ect our
fi nancial results.
• We have signifi cant investments in long-lived assets and continually
review the carrying value of these assets for recoverability in light
of changing market conditions and alternative product sourcing
opportunities.
• Obligations related to our pension and postretirement plans refl ect
certain assumptions. To the extent our plans’ actual experience diff ers
from these assumptions, our costs and funding obligations could
increase or decrease signifi cantly.
FMC CORPORATION - Form 10-K 11
PART I
ITEM 1B Unresolved Staff Comments
ITEM 1B Unresolved Staff Comments
None.
ITEM 2 Properties
FMC leases executive offi ces in Philadelphia, Pennsylvania and operates
30 manufacturing facilities and mines in 18 countries. Our major
research and development facility is in Ewing, New Jersey.
Trona ore, used for soda ash production in Green River, Wyoming, is
mined primarily from property held under long-term leases. We have
long-term mineral rights to the Salar del Hombre Muerto lithium
reserves in Argentina. A number of our chemical plants require the
basic raw materials that are provided by these mines, without which
other sources of raw materials would have to be obtained.
We believe our facilities are in good operating conditions. Th e number and location of our owned or leased production properties for continuing
operations are:
FMC Agricultural Solutions
FMC Health and Nutrition
FMC Minerals
TOTAL
United States
2
2
2
6
Latin America
& Canada
1
1
2
4
Western
Europe
—
8
1
9
Asia-Pacifi c
3
5
3
11
Total
6
16
8
30
ITEM 3 Legal Proceedings
Like hundreds of other industrial companies, we have been named as
one of many defendants in asbestos-related personal injury litigation.
Most of these cases allege personal injury or death resulting from
exposure to asbestos in premises of FMC or to asbestos-containing
components installed in machinery or equipment manufactured or
sold by discontinued operations. Th e machinery and equipment
businesses we owned or operated did not fabricate the asbestos-
containing component parts at issue in the litigation, and to this day,
neither the U.S. Occupational Safety and Health Administration nor
the Environmental Protection Agency has banned the use of these
components. Further, the asbestos-containing parts for this machinery
and equipment were accessible only at the time of infrequent repair
and maintenance. A few jurisdictions have permitted claims to proceed
against equipment manufacturers relating to insulation installed by
other companies on such machinery and equipment. We believe that,
overall, the claims against FMC are without merit.
As of December 31, 2013, there were approximately 11,100 premises and
product asbestos claims pending against FMC in several jurisdictions.
Since the 1980s, approximately 104,000 asbestos claims against FMC
have been discharged, the overwhelming majority of which have been
dismissed without any payment to the claimant. Settlements by us with
claimants have totaled approximately $53 million.
We intend to continue managing these asbestos-related cases in accordance
with our historical experience. We have established a reserve for
this litigation within our discontinued operations and believe that
any exposure of a loss in excess of the established reserve cannot be
reasonably estimated. Our experience has been that the overall trends
in terms of the rate of fi ling of asbestos-related claims with respect to
all potential defendants has changed over time, and that fi ling rates as
to us in particular have varied signifi cantly over the last several years.
We are a peripheral defendant - that is, we have never manufactured
asbestos or asbestos-containing components. As a result, claim fi ling
rates against us have yet to form a predictable pattern, and we are
unable to project a reasonably accurate future fi ling rate and thus, we
are presently unable to reasonably estimate our asbestos liability with
respect to claims that may be fi led in the future.
FIFRA advertising dispute. EPA Region 7 has informed us that certain
radio advertising regarding one of our pesticide products did not
comply with the Federal Insecticide, Fungicide and Rodenticide
Act (“FIFRA”) and has calculated a proposed penalty in excess of
$100,000. We disagree with EPA on whether a violation occurred and,
if a violation did occur, the appropriate penalty calculation. While we
are presently unable to reasonably estimate our potential liability for
the matter, we do not expect that any penalty associated with fi nal
resolution would be material.
See Note 1 “Principal Accounting Policies and Related Financial
Information—Environmental Obligations,” Note 10 “Environmental”
and Note 19 “Commitments, Guarantees and Contingent Liabilities”
in the notes to our consolidated fi nancial statements included in this
Form 10-K, the content of which are incorporated by reference to
this Item 3.
ITEM 4 Mine Safety Disclosures
Information regarding mine safety and other regulatory actions at our mine in Green River, Wyoming is included in Exhibit 95 to this Form 10-K.
12
FMC CORPORATION - Form 10-K
PART II
ITEM 5 Market for the Registrant’s Common Equity,
Related Stockholders Matters and Issuer Purchases
of Equity Securities
FMC common stock of $0.10 par value is traded on the New York Stock Exchange and the Chicago Stock Exchange (Symbol: FMC). Th ere
were 3,310 registered common stockholders as of December 31, 2013. Presented below are the 2013 and 2012 quarterly summaries of the high
and low prices of the company’s common stock.
Common
stock prices:
High
Low
$
$
2013
2012
First Quarter Second Quarter Th ird Quarter Fourth Quarter
75.68
70.01
72.35 $
60.57 $
63.15 $
56.26 $
64.96 $
55.18 $
$
$
First Quarter Second Quarter Th ird Quarter Fourth Quarter
59.08
50.76
59.41 $
50.45 $
53.14 $
42.93 $
56.45 $
48.00 $
Our Board of Directors has declared regular quarterly dividends since
2006; however, any future payment of dividends will depend on our
fi nancial condition, results of operations, conditions in the fi nancial
markets and such other factors as are deemed relevant by our Board
of Directors. Total cash dividends of $73.6 million, $47.8 million
and $41.2 million were paid in 2013, 2012 and 2011, respectively.
FMC’s annual meeting of stockholders will be held at 2:00 p.m. on
Tuesday, April 29, 2014, at Th e Top of the Tower, 1717 Arch Street,
50th Floor, Philadelphia, Pennsylvania. Notice of the meeting, together
with proxy materials, will be mailed approximately 30 days prior to the
meeting to stockholders of record as of March 4, 2014.
Transfer Agent and Registrar of Stock:
Wells Fargo Bank, N.A.
Shareowner Services
1110 Centre Pointe Curve, Suite 101
Mendota Heights, MN 55120-4100
Phone: 1-800-401-1957
(651-450-4064 local and outside the U.S.)
www.wellsfargo.com/shareownerservices
or
P.O. Box 64874
St. Paul, MN 55164-0856
FMC CORPORATION - Form 10-K 13
PART II
ITEM 5 Market for the Registrant’s Common Equity, Related Stockholders Matters and Issuer Purchases of Equity Securities
Stockholder Return Performance Presentation
Th e graph that follows shall not be deemed to be incorporated by
reference into any fi ling made by FMC under the Securities Act of
1933 or the Securities Exchange Act of 1934.
Th e following Stockholder Performance Graph compares the fi ve-year
cumulative total return on FMC’s Common Stock for the period from
January 1, 2009 to December 31, 2013 with the S&P 500 Index and
the S&P 500 Chemicals Index. Th e comparison assumes $100 was
invested on December 31, 2008, in FMC’s Common Stock and in
both of the indices, and the reinvestment of all dividends.
FMC Corporation
S&P 500 Index
S&P 500 Chemicals Index
$
$
$
2008
100.00 $
100.00 $
100.00 $
2009
125.78 $
125.92 $
144.10 $
2010
181.33 $
144.58 $
174.99 $
2011
196.66 $
147.60 $
172.86 $
2012
269.36 $
171.04 $
213.30 $
2013
349.82
225.85
280.34
STOCK PERFORMANCE CHART
$400
$350
$300
$250
$200
$150
$100
$50
$0
2008
2009
2010
2011
2012
2013
FMC Corporation
S&P 500 Index
S&P 500 Chemicals Index
Th e following table summarizes information with respect to the purchase of our common stock during the three months ended December 31, 2013:
ISSUER PURCHASES OF EQUITY SECURITIES
Publicly Announced Program
Period
Total Number of
Shares Purchased
6,217
October 1-31, 2013
November 1-30, 2013
December 1-31, 2013(1)
Maximum Dollar Value
of Shares that May Yet
be Purchased
300,000,000
300,000,000
250,000,000
Q4 2013
250,000,000
(1) Shares purchased in December 2013 include the final share delivery amount under the accelerated share repurchase (ASR) agreement, see paragraph below for
more information on the ASR. In July 2013, we received 3,145,643 shares as an initial share delivery under the ASR agreement, which represented 80% of the
$250 million notional amount of the ASR agreement.
Total Dollar
Amount Purchased
—
—
50,000,000
50,000,000
Average Price Paid
Per Share
73.25
—
69.95
Total Number of
Shares Purchased
$
— $
$
428,264
428,264
428,296
434,513
— $
—
$
$
$
On April 23, 2013 our Board-authorized the repurchase of up to $500
million of our common shares. Th is repurchase program does not
include a specifi c timetable or price targets and may be suspended or
terminated at any time. Shares may be purchased through open market
or privately negotiated transactions at the discretion of management
based on its evaluation of market conditions and other factors. Th e
authorization of April 23, 2013 replaced the previous authority under
which $134.9 million was unused. We also reacquire shares from time
to time from employees in connection with the vesting, exercise and
forfeiture of awards under our equity compensation plans.
In July 2013 we entered into an accelerated share repurchase agreement
(ASR) and paid $250 million to a fi nancial institution for an initial
delivery of 3,145,643 shares. Th e repurchase took place under our
previously announced $500 million share repurchase program. Th e
value of the initial shares received on the date of purchase was $200
million, refl ecting a $63.58 price per share which was recorded as a
treasury share purchase for purposes of calculating earnings per share.
We recorded the remaining $50 million as a forward contract indexed
to our common stock in additional paid in capital. Final settlement
of the ASR occurred on December 20, 2013 when we purchased the
14
FMC CORPORATION - Form 10-K
remaining $50 million of common stock under the ASR. Th e fi nal
number of shares that we repurchased under the ASR was 3,573,907
shares at a weighed average price of $69.95 per share. Th e average price
paid per share and total number of shares purchased as part of the ASR
share buyback plan was determined using the volume-weighted average
price of our common stock over the term of the ASR agreement.
PART II
ITEM 6 Selected Financial Data
ITEM 6 Selected Financial Data
Selected Consolidated Financial Data
Th e selected consolidated fi nancial and other data presented below for, and as of the end of, each of the years in the fi ve-year period ended
December 31, 2013, are derived from our consolidated fi nancial statements. Th e selected consolidated fi nancial data should be read in conjunction
with our consolidated fi nancial statements for the year ended December 31, 2013.
Year Ended December 31,
2011
2012
2013
2010
2009
$
$
$
$
$
12.4
14.1
19.5
16.3
416.2
293.9
409.0
587.4
659.0
639.1
492.2
3,874.8
2,377.1
2,686.9 $
3,036.3 $
3,409.9 $
386.2
318.7
(79.9)
238.8
553.2
420.3
(38.1)
382.2
597.7
463.2
(27.5)
435.7
457.6
327.0
(142.1)
184.9
615.9
467.3
(159.3)
308.0
(in Millions, except per share data and ratios)
Income Statement Data:
Revenue
Income from continuing operations before equity
in (earnings) loss of affi liates, interest income and
expense and income taxes
Income from continuing operations
before income taxes
Income from continuing operations
Discontinued operations, net of income taxes(1)
NET INCOME
Less: Net income attributable to noncontrolling
interest
NET INCOME ATTRIBUTABLE TO FMC
STOCKHOLDERS
Amounts attributable to FMC stockholders:
Continuing operations, net of income taxes
Discontinued operations, net of income taxes
NET INCOME
Basic earnings (loss) per common share
attributable to FMC stockholders:
Continuing operations
Discontinued operations
NET INCOME
Diluted earnings (loss) per common share
attributable to FMC stockholders:
Continuing operations
Discontinued operations
NET INCOME
Balance Sheet Data:
Total assets
Long-term debt
Other Data:
Ratio of earnings to fi xed charges(2)
Cash dividends declared per share
(1) Discontinued operations, net of income taxes includes our discontinued FMC Peroxygens operations as well as other historical discontinued gains and losses related to
adjustments to our estimates of our retained liabilities for environmental exposures, general liability, workers’ compensation, postretirement benefit obligations, legal
defense, property maintenance and other costs, losses for the settlement of litigation and gains related to property sales.
453.2
(159.3)
293.9
314.6
(142.1)
172.5
404.0
(38.1)
365.9
443.7
(27.5)
416.2
308.4
(79.9)
228.5
3.33
(1.17)
2.16
3.34
(1.18)
2.16
2.13
(0.55)
1.58
2.11
(0.55)
1.56
2.17
(0.98)
1.19
2.15
(0.97)
1.18
2.83
(0.26)
2.57
3.20
(0.20)
3.00
3.21
(0.20)
3.01
2.81
(0.26)
2.55
5,235.2
1,188.8
4,373.9
914.5
3,743.5
798.6
3,136.2
610.5
3,319.9
619.4
12.9x
0.250
12.7x
0.405
10.7x
0.250
12.7x
0.300
12.5x
0.540
365.9
172.5
228.5
10.3
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
(2) In calculating this ratio, earnings consist of income (loss) from continuing operations before income taxes plus interest expense, amortization expense related to debt
discounts, fees and expenses, amortization of capitalized interest, interest included in rental expenses (assumed to be one-third of rent) and equity in (earnings) loss of
affiliates. Fixed charges consist of interest expense, amortization of debt discounts, fees and expenses, interest capitalized as part of fixed assets and interest included in
rental expenses.
FMC CORPORATION - Form 10-K 15
PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Information
Statement under the Safe Harbor Provisions of the Private Securities
Litigation Reform Act of 1995: We and our representatives may from
time to time make written or oral statements that are “forward-looking”
and provide other than historical information, including statements
contained in Management’s Discussion and Analysis of Financial
Condition and Results of Operations within, in our other fi lings with
the SEC, or in reports to our stockholders.
In some cases, we have identifi ed forward-looking statements by such
words or phrases as “will likely result,” “is confi dent that,” “expect,”
“expects,” “should,” “could,” “may,” “will continue to,” “believe,”
“believes,” “anticipates,” “predicts,” “forecasts,” “estimates,” “projects,”
“potential,” “intends” or similar expressions identifying “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995, including the negative of those words and phrases.
Such forward-looking statements are based on our current views and
assumptions regarding future events, future business conditions and
the outlook for the company based on currently available information.
Th ese statements involve known and unknown risks, uncertainties and
other factors that may cause actual results to be materially diff erent from
any results, levels of activity, performance or achievements expressed
or implied by any forward-looking statement. Th ese factors include,
among other things, the risk factors listed in Item 1A of this Form
10-K. We wish to caution readers not to place undue reliance on any
such forward-looking statements, which speak only as of the date made.
ITEM 7 Management’s Discussion and Analysis of
Financial Condition and Results of Operations
Overview
We are a diversifi ed chemical company serving agricultural, consumer
and industrial markets globally with innovative solutions, applications
and market-leading products. We operate in three distinct business
segments: FMC Agricultural Solutions, FMC Health and Nutrition and
FMC Minerals. Our FMC Agricultural Solutions segment develops,
markets and sells all three major classes of crop protection chemicals
– insecticides, herbicides and fungicides. Th ese products are used in
agriculture to enhance crop yield and quality by controlling a broad
spectrum of insects, weeds and disease, as well as in non-agricultural
markets for pest control. Th e FMC Health and Nutrition segment focuses
on food, pharmaceutical ingredients, nutraceuticals, personal care and
similar markets. Our food ingredients are used to enhance texture, color,
structure and physical stability. Th e pharmaceutical additives are used
for binding, encapsulation and disintegrant applications. Our FMC
Minerals segment manufactures a wide range of inorganic materials,
including soda ash and lithium. Soda ash is utilized in markets such as
glass and detergents and lithium is utilized in energy storage, specialty
polymers and pharmaceutical synthesis.
Discontinued Operations
FMC Peroxygens divestiture
2013 Highlights
In April 2013, the Board of Directors authorized management to pursue
the sale of our FMC Peroxygens segment. Th is segment was classifi ed as
a discontinued operation and an asset held for sale beginning with our
September 30, 2013 condensed consolidated fi nancial statements fi led
on Form 10-Q. In December 2013, we signed a defi nitive agreement to
sell FMC Peroxygens and we expect the sale to be completed in the fi rst
quarter of 2014.
Results of operations related to our FMC Peroxygens segment have been
reclassifi ed as a discontinued operation on a retrospective basis for all
years presented. Unless otherwise indicated, the following discussions
in this section pertain only to our continuing operations. For additional
information see Note 9 “Discontinued Operations” to our consolidated
fi nancial statements included in this Form 10-K.
Th e following are the more signifi cant developments in our businesses
during the year ended December 31, 2013:
• Revenue of $3,874.8 million in 2013 increased $464.9 million or
14 percent versus last year. Revenue increases are associated with sales
growth in all segments. A more detailed review of revenues by segment
are included under the section entitled “Results of Operations”. On a
regional basis, sales in Latin America increased by 19 percent, sales in
North America were up 16 percent, sales in Asia were up fi ve percent
and sales in Europe, Middle East and Africa (EMEA) increased by
seven percent.
• Our gross margin of $1,340.4 million increased $72.1 million or
approximately six percent versus last year. Gross margin as a percent
of revenues of approximately 35 percent declined two hundred basis
points compared to 2012. Th is decline was primarily due to lower selling
prices in our Alkali division.
16
FMC CORPORATION - Form 10-K
PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
• Selling, general and administrative expenses increased fi ve percent from
$489.7 million to $515.8 million. Selling, general and administrative
expenses, excluding non-operating pension and postretirement charges
and acquisition related charges, of $472.9 million increased $18.1 million
or approximately four percent. Th is was largely due to increased spending
to meet the demands of the growth in our business as well as expenditures
related to a transformation of our fi nance organization. Th e majority
of these increases were experienced in our FMC Agricultural Solutions
segment. Non-operating pension and postretirement charges and
acquisition related charges are presented in our Adjusted Earnings
Non-GAAP fi nancial measurement below under the section titled
“Results of Operations”.
• Research and Development expenses of $117.7 million increased
$5.7 million or fi ve percent, largely due to increased spending in FMC
Agricultural Solutions associated with various innovation projects.
• Adjusted earnings after-tax from continuing operations attributable
to FMC stockholders of $528.4 million increased approximately
$58.3 million or 12 percent primarily due to higher operating results
in FMC Agricultural Solutions. See the disclosure of our Adjusted
Earnings Non-GAAP fi nancial measurement below under the section
titled “Results of Operations”.
Other 2013 Highlights
– In April 2013, we made the decision to simplify our organizational
structure to focus on three core business segments. Th e new segments
better refl ect the markets where we participate and lead today,
and where we expect to grow in the future. For more information
on this change see Note 20 within the notes to the consolidated
fi nancial statements within this Form 10-K.
– In July 2013, we acquired Epax Nutra Holding III AS and Epax
UK Holding III AS (together, “Epax”). Epax is a global supplier of
fi sh-based omega-3 EPA/DHA fatty acid concentrates. Epax will
be integrated into our newly formed FMC Health and Nutrition
segment from the acquisition date. Th e acquisition of Epax is an
important step in fulfi lling our strategic intent to broaden our
product and customer base within our Health and Nutrition segment.
– In August 2013, we concluded a licensing agreement with Belchim
Crop Protection for access to valifenalate, a fungicide which will
be introduced into our Agricultural Solutions segment. Our rights
are exclusive for use in mixtures in the Americas as well as select
countries in Asia. Th e product is already registered and sold in
certain countries in Latin America, and we plan to register in many
other countries in our territory.
– In late September and early October 2013, we entered into two
separate transactions that together provide our Agricultural Solutions
segment with a strong foundation for developing, manufacturing and
marketing biologically-based products to enhance yields and respond
to evolving pest pressures and resistance. Namely, we acquired the
assets of the Center for Agricultural and Environmental Biosolutions
(CAEB), based in Research Triangle Park, NC, including CAEB’s
library of microorganisms and a pipeline of biological products
in various stages of development. Further, in October 2013, we
entered into an exclusive collaboration with Chr. Hansen A/S, a
leading global biosciences company with expertise in screening,
fermentation, and scale up of microbially-based products. Together
with Agricultural Solutions’ existing capabilities, we believe these
transactions establish FMC as an industry leader in the growing
market for biologically-based agricultural products.
– Investments in our existing businesses continued in 2013. We began
construction of our new MCC facility in Th ailand, which will be
completed late in 2014. We completed the restructuring of our
Lithium operations and we introduced new improvements to our
manufacturing capabilities, which we refer to as Manufacturing
Excellence, in Alkali, Lithium and Health and Nutrition.
2014 Outlook
In 2014, we expect another year of record performance. We expect
higher revenues and an increase in earnings from all three of our
segments. Higher revenues and stronger earnings are expected to be
driven by the following:
– In FMC Agricultural Solutions, we expect new product introductions
and our deep customer relationships to continue to drive volume
growth.
– In FMC Health and Nutrition, we expect growth in 2014 from
food and pharmaceutical ingredients driven by our texturants,
binders and natural colors product lines, principally in emerging
markets. We are also confi dent that our recently acquired omega-3
business will add momentum to the segment’s growth, with strong
sales into the pharmaceutical sector and with steadily increasing
penetration into the nutraceutical market.
– In FMC Minerals, we expect Alkali to operate at record production
levels in 2014 aided by better geological conditions and supported
by Manufacturing Excellence programs already underway. We
also remain optimistic that the soda ash pricing environment is
improving. In Lithium, we expect stable pricing, consistent plant
operations and increased volumes to enhance profi tability.
We expect cash fl ow from our business segments to remain strong.
FMC CORPORATION - Form 10-K 17
PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations—2013, 2012 and 2011
Overview
Th e following presents a reconciliation of our segment results to net income attributable to FMC stockholders as seen through the eyes of
management.
SEGMENT RESULTS RECONCILIATION
(in Millions)
Revenue
FMC Agricultural Solutions
FMC Health and Nutrition
FMC Minerals
Eliminations
TOTAL
Income (loss) from continuing operations before income taxes
FMC Agricultural Solutions
FMC Health and Nutrition
FMC Minerals
Eliminations
Segment operating profi t
Corporate expense
Operating profi t before the items listed below
Interest expense, net
Corporate special (charges) income:
Restructuring and other (charges) income
Non-operating pension and postretirement charges(1)
Acquisition-related charges(2)
$
$
$
$
Year Ended December 31,
2013
2012
2011
$
$
$
$
2,145.7
762.0
970.0
(2.9)
3,874.8
539.0
169.5
128.3
—
836.8
(82.7)
754.1
(42.2)
$
$
$
$
1,763.8
680.8
966.2
(0.9)
3,409.9
454.0
161.6
171.4
(0.4)
786.6
(78.6)
708.0
(40.7)
1,464.5
654.3
917.5
—
3,036.3
349.8
159.4
175.7
—
684.9
(75.3)
609.6
(35.0)
(47.9)
(38.1)
(10.0)
(148.6)
(159.3)
(14.1)
293.9
(27.5)
(34.9)
(7.2)
(134.5)
(27.5)
(19.5)
416.2
(6.3)
(14.5)
(0.6)
(132.9)
(38.1)
(16.3)
365.9
Provision for income taxes
Discontinued operations, net of income taxes
Net income attributable to noncontrolling interests
NET INCOME ATTRIBUTABLE TO FMC STOCKHOLDERS
(1) Our non-operating pension and postretirement costs are defined as those costs related to interest, expected return on plan assets, amortized actuarial gains and
losses and the impacts of any plan curtailments or settlements. These costs are primarily related to changes in pension plan assets and liabilities which are tied to
financial market performance and we consider these costs to be outside our operational performance. We exclude these non-operating pension and postretirement
costs from our segments as we believe that removing them provides a better understanding of the underlying profitability of our businesses, provides increased
transparency and clarity in the performance of our retirement plans and enhances period-over-period comparability. We continue to include the service cost and
amortization of prior service cost in our operating segments noted above. We believe these elements reflect the current year operating costs to our businesses for the
employment benefits provided to active employees.
$
$
$
(2) Charges related to the expensing of the inventory fair value step-up resulting from the application of purchase accounting for acquisitions and certain professional
fees associated with the completion of acquisitions. Charges for the year ended December 31, 2013, represented amortization of inventory fair value step-up
of $5.2 million and certain professional fees of $4.8 million associated with the completion of our Epax acquisition within our FMC Health and Nutrition
segment. The charges for 2012 and 2011 represent amortization of inventory fair value step-up related to a number of acquisitions completed in 2012 and 2011.
On the consolidated statements of income, the charges associated with inventory fair value step-up are included in “Costs of sales and services” and fees associated
with concluding the acquisitions are included in “Selling, general and administrative expenses”.
Th e following chart, which is provided to assist the readers of our
fi nancial statements, depicts certain after-tax charges (gains). Th ese
items are excluded by us in the measures we use to evaluate business
performance and determine certain performance-based compensation.
Th ese after-tax items are discussed in detail within the “Other results of
operations” section that follows. Additionally, the chart below discloses
our Non-GAAP fi nancial measure “Adjusted after-tax earnings from
continuing operations attributable to FMC stockholders” reconciled
from the GAAP fi nancial measure “Net income attributable to FMC
stockholders”. We believe that this measure provides useful information
about our operating results to investors and securities analysts. We also
believe that excluding the eff ect of restructuring and other income and
charges, non-operating pension and postretirement charges, certain
tax adjustments from operating results and discontinued operations
allows management and investors to compare more easily the fi nancial
performance of our underlying businesses from period to period. Th is
measure should not be considered as a substitute for net income (loss)
or other measures of performance or liquidity reported in accordance
with GAAP.
18
FMC CORPORATION - Form 10-K
PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
ADJUSTED EARNINGS RECONCILIATION
(in Millions)
Net income attributable to FMC stockholders (GAAP)
Corporate special charges (income), pre-tax
Income tax expense (benefi t) on Corporate special charges (income)
Corporate special charges (income), net of income taxes
Discontinued operations, net of income taxes
Tax adjustments
ADJUSTED AFTER-TAX EARNINGS FROM CONTINUING OPERATIONS
ATTRIBUTABLE TO FMC STOCKHOLDERS (NON-GAAP)
$
Years Ended December 31,
$
2013
293.9
96.0
(35.3)
60.7
159.3
14.5
$
2012
416.2
69.6
(25.1)
44.5
27.5
(18.1)
2011
365.9
21.4
(7.6)
13.8
38.1
(2.0)
$
528.4
$
470.1
$
415.8
In the discussion below, please refer to our chart titled “Segment Results Reconciliation” within the Results of Operations section. All comparisons
are between the periods unless otherwise noted.
Segment Results
For management purposes, segment operating profi t is defi ned as
segment revenue less segment operating expenses (segment operating
expenses consist of costs of sales and services, selling, general and
administrative expenses and research and development expenses). We
have excluded the following items from segment operating profi t:
corporate staff expense, interest income and expense associated with
corporate debt facilities and investments, income taxes, gains (or losses)
on divestitures of businesses, restructuring and other charges (income),
non-operating pension and postretirement charges, investment gains
and losses, loss on extinguishment of debt, asset impairments, Last-in,
First-out (“LIFO”) inventory adjustments, acquisition related charges
and other income and expense items.
Information about how each of these items relates to our businesses
at the segment level and results by segment are discussed below and
in Note 20 to our consolidated fi nancial statements included in this
Form 10-K.
FMC Peroxygens divestiture
Results of operations related to our FMC Peroxygens segment have
been reclassifi ed as a discontinued operation on a retrospective basis
for all years presented. Unless otherwise indicated, the following
discussions in this section pertain only to our continuing operations.
For additional information see Note 9 “Discontinued Operations”
to our consolidated fi nancial statements included in this Form 10-K.
FMC Agricultural Solutions
(in Millions)
Revenue
Operating Profi t
2013 vs. 2012
Revenue of $2,145.7 million increased approximately 22 percent versus
the prior year period due to sales growth in North America, Latin America
and Asia, partially off set by declines in EMEA.
Sales in Latin America of $1,184.7 million increased 23 percent driven
by Brazil volume growth in herbicide and insecticide sales for soybeans,
including growth from new and recently launched products. Sales in
North America of $506.1 million increased 37 percent driven by strong
demand for pre-emergent herbicides and at-plant insecticides as well as
growth from new product introductions. Revenue in Asia of $315.4 million
increased 14 percent refl ecting sales growth in China, Indonesia, Australia
and a number of other key countries. EMEA declined 12 percent to
$139.5 million primarily due to unfavorable weather conditions and
lower insecticide sales.
FMC Agricultural Solutions’ operating profi t of $539.0 million increased
approximately 19 percent compared to the year-ago period, refl ecting the
sales growth described in the preceding paragraph, a favorable geographic
mix and selected price increases. Selling, general and administrative costs
were approximately $9 million or three percent higher compared to the
prior year due to increased spending on growth initiatives and higher
people-related costs to support the higher sales. Research and development
costs also increased period over period by approximately $5 million
due to increased spending associated with various innovation projects.
$
Year Ended December 31,
2013
2,145.7
539.0
$
2012
1,763.8
454.0
$
2011
1,464.5
349.8
In 2014, we expect full-year revenue percentage growth in the mid-
teens refl ecting increased volumes due to strong market conditions and
growth from new and recently introduced products, particularly in
Latin America, North America and Asia. We expect full-year segment
operating profi t to grow in the mid-teens percentage, driven primarily
by continued market share gains in Latin America and increased demand
for resistance management products in North America.
Certain Regulatory Issues
We intend to defend vigorously all our products in the U.S., EU and
other countries as our pesticide products are reviewed in the ordinary
course of regulatory programs during 2014 as part of the ongoing
cycle of re-registration of our pesticide products around the world.
2012 vs. 2011
Revenue of $1,763.8 million increased approximately 20 percent
versus the prior year period due to strong sales across all regions. Th e
increase in revenue for the year ended December 31, 2012 was also
attributable to acquisitions that closed in the second half of 2011 of
approximately $60 million.
FMC CORPORATION - Form 10-K 19
PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Sales in North America improved by 30 percent to $368.5 million
refl ecting favorable market conditions, strong demand for our proprietary
herbicides and insecticides and growth from new or recently introduced
products. Latin America revenue of $960.5 million increased 23 percent
refl ecting strong market conditions in Brazil driven by key crops such
as sugarcane and soybeans, increased planted acres and sales from our
new market access joint venture, Ruralco, in Argentina. Revenue in
Asia of $275.7 million increased 12 percent as a result of growth in
recently launched and acquired products, coupled with growth in China,
Indonesia and the Philippines. EMEA revenues of $159.1 million
increased fi ve percent driven by higher herbicide sales in Europe and
insecticide volume gains in Africa.
FMC Health and Nutrition
(in Millions)
Revenue
Operating Profi t
FMC Agricultural Solutions’ operating profi t of $454.0 million increased
approximately 30 percent compared to the prior year, refl ecting the
broad-based sales growth and targeted price increases. Th is increase
was partially off set by a $51.7 million increase in selling, general and
administrative costs mainly for focused growth initiatives and increased
people-related costs to support the higher sales. Segment earnings were
also impacted by higher research and development costs of $11.1 million
due to increased spending associated with various innovation projects.
$
Year Ended December 31,
2013
762.0 $
169.5
2012
680.8 $
161.6
2011
654.3
159.4
2013 vs. 2012
Revenue was $762.0 million, an increase of approximately 12 percent
versus the prior-year period. Th is increase was due to volume increases
of three percent in core product lines, revenue from acquisitions which
increased sales by six percent, favorable pricing and foreign currency
impacts which increased sales by two and one percent, respectively.
Segment operating profi t of $169.5 million increased by fi ve percent versus
the prior year period as revenue growth was partially off set by acquisition
integration costs, higher raw material costs and costs associated with our
Manufacturing Excellence program. Selling, general and administrative
costs also increased approximately $6 million compared to the prior year
due to the addition of the Epax business within the segment.
In 2014, we expect full-year revenue to be up in the mid to high-teens
percent driven by higher volumes in texture and stability solutions,
natural colors and binder product lines and contributions from the
omega-3 product line. Full-year segment operating profi t are expected
to grow in the mid-teens percent with benefi ts from omega-3 sales and
strong demand in food ingredients.
2012 vs. 2011
Revenue of $680.8 million increased approximately four percent from
the prior year. Th is increase was due to favorable pricing which impacted
sales by six percent and revenue from acquisitions which increased sales
by two percent. Th ese increases were partially off set by decreased volumes
of two percent and unfavorable currency impacts of two percent.
Segment operating profi t of $161.6 million increased one percent versus
the prior year. Th e higher revenues were negatively impacted by higher raw
material costs. Additionally, selling, general and administrative expenses
also increased by approximately $7 million to support growth initiatives.
FMC Minerals
(in Millions)
Revenue
Operating Profi t
$
Year Ended December 31,
2013
970.0 $
128.3
2012
966.2 $
171.4
2011
917.5
175.7
2013 vs. 2012
Revenue of $970.0 million, was essentially fl at period over period.
Volume gains of three percent driven by Alkali sales were off set by
unfavorable pricing year over year. Unfavorable pricing was primarily
driven by Alkali, slightly off set by favorable pricing in Lithium.
Alkali revenues of $747.0 million increased 2 percent over the prior
year due to volume gains of six percent which were partially off set by
reduced pricing of four percent.
Lithium revenues of $223.0 million decreased 4 percent compared
to the prior year due to unfavorable sales mix. Production and sales
volumes on a lithium carbonate equivalent basis were relatively fl at
year over year, as lower production in Argentina due to operational
issues was off set by higher third party product purchases.
Segment operating profi t of $128.3 million decreased approximately
25 percent versus the prior year. Th e decrease was primarily due to
lower average export pricing in soda ash. Additionally, production
factors, such as poor geological conditions at the alkali mine as well as
poor weather at the lithium mine and unfavorable currency in lithium
impacted the results.
In 2014, we expect full-year revenue percentage growth up to the
mid-to high-single digits percent driven primarily by increased volumes
in lithium and soda ash and short- and long-term contract price increases
in soda ash. We expect full-year segment operating profi t to increase in
the high-teens percent, refl ecting lithium margin improvements and
more favorable contractual soda ash pricing versus 2013.
20
FMC CORPORATION - Form 10-K
PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
2012 vs. 2011
Revenue in FMC Minerals was $966.2 million, an increase of
approximately fi ve percent versus the prior year. Revenue increased
four percent due to higher pricing across the segment and by
one percent due to volume increases in Alkali.
Alkali revenues of $733.2 million increased six percent over the prior
year due to higher average pricing which impacted sales by four percent
in both the domestic and export markets. Additionally higher export
volumes favorably impacted sales by two percent. Volume growth
was partially related to full production at our Granger facility which
came on line in the middle of last year. Export volumes were robust,
especially in Asia and Latin America.
Lithium revenue of $233.0 million increased approximately four
percent compared to the prior year. Th is increase was due to higher
pricing which impacted sales by six percent, partially off set by decreased
volumes which decreased sales by two percent. Lithium sales growth
was led by higher selling prices in lithium primaries. Lower volumes
also resulted from production downtime in the fi rst quarter of 2012
associated with our capacity expansion in Argentina, as well as the
eff ect of related operational issues which primarily impacted the fi rst
half of 2012 and the extended planned outage in Lithium’s Argentina
facility in third quarter 2012.
Segment operating profi t of $171.4 million decreased approximately
two percent versus the year ago period. Higher pricing and volumes
experienced in Alkali were more than off set by higher royalty and energy
costs associated with our Wyoming Alkali operations and increased
manufacturing costs within our Lithium operations. Selling, general and
administrative costs increased seven percent or $2.7 million primarily
for targeted growth initiatives.
Other Results of Operations
Corporate expenses
Corporate expenses are included as a component of the line item
“Selling, general and administrative expenses” on our consolidated
statements of income.
2013 vs. 2012
Corporate and other expenses of $82.7 million increased by
$4.1 million from $78.6 million in the same period in 2012. Th e increase
period over period is due to increased costs of approximately $4 million
primarily representing costs associated with the transformation of our
fi nance organization. Th is transformation is similar to past initiatives
to improve our organization.
2012 vs. 2011
Corporate and other of $78.6 million in 2012 increased by $3.3 million
from $75.3 million in 2011. Th e year-over-year increase is primarily
due to higher LIFO inventory charges of $5.0 million.
Interest expense, net
2013 vs. 2012
Interest expense, net for 2013 of $42.2 million increased approximately
four percent compared to 2012 of $40.7 million. Th e increase was
primarily due to higher overall debt levels driven by funding requirements
for the acquisition of Epax and our share repurchases during 2013.
2012 vs. 2011
Interest expense, net for 2012 of $40.7 million increased approximately
16 percent compared to the same period in 2011 of $35.0 million.
Th e increase was primarily due to higher debt levels associated with
the issuance of our 3.95% senior notes during the 4th quarter of 2011.
Th e interest expense on these notes was approximately $12 million in
2012. Th e higher interest associated with our senior notes was slightly
off set by a decrease in our foreign debt interest expense during 2012
as compared to 2011 of approximately $5.3 million.
Corporate special (charges) income
Restructuring and other (charges) income
Our restructuring and other (charges) income are comprised of restructuring, assets disposals and other charges (income) as described below:
(in Millions)
Restructuring Charges and Asset Disposals
Other Charges (Income), Net
TOTAL RESTRUCTURING AND OTHER CHARGES
Year Ended December 31,
2013
9.6 $
38.3
47.9 $
2012
17.7 $
9.8
27.5 $
$
$
2011
2.3
4.0
6.3
Restructuring and asset disposal charges in 2013 of $9.6 million were
primarily associated with the announced Lithium restructuring. Other
charges (income) net in 2013 of $38.3 million primarily related to charges
associated with collaboration and license agreements entered into by our
FMC Agricultural Solutions segment for the purpose of obtaining certain
technology and intellectual property rights relating to new compounds
still under development. Th e rights and technology obtained is referred
to as in-process research and development and in accordance with GAAP,
the amounts paid were expensed as incurred since they were acquired
outside of a business combination.
FMC CORPORATION - Form 10-K 21
PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Restructuring and asset disposal charges in 2012 primarily included charges
of $13.3 million associated with the Lithium restructuring. Other charges
(income) net in 2012 were primarily due to charges of $5.8 million for
environmental remediation at operating sites and a $4.4 million charge
related to our FMC Agricultural Solutions segment for the purpose of
acquiring certain rights to a fungicide still under development.
Restructuring and asset disposal charges in 2011 were primarily associated
with continuing charges related to facility restructurings and shutdowns
which were announced in years prior to 2011. Other charges (income)
net in 2011 were primarily associated with charges of $3.1 million for
environmental remediation at operating sites.
Th e activity of the restructuring charges listed above are also included
within Note 7 to our consolidated fi nancial statements included in this
Form 10-K. We believe the restructuring plans implemented are on
schedule and the benefi ts and savings either have been or will be achieved.
Non-operating pension and postretirement (charges)
income
Non-operating pension and postretirement (charges) income are included
in “Selling, general and administrative expenses” on our consolidated
statements of income.
2013 vs. 2012
Th e charge for 2013 was $38.1 million compared to $34.9 million for
2012. Th e increase in charges were primarily the result of a settlement
charge of $7.4 million, partially offset by lower interest costs of
$3.7 million. Th e settlement charge was associated with the acceleration
of previously deferred actuarial losses triggered by the lump-sum payout
to former executives in 2013.
2012 vs. 2011
Th e charge for 2012 was $34.9 million compared to $14.5 million for
2011. Th e increased charge was primarily the result of higher amortization
impacts of actuarial losses of $14.9 million.
Acquisition-related charges
Acquisition-related charges associated with inventory fair value step-
up are included in “Costs of sales and services” and fees associated
with concluding the acquisitions are included in “Selling, general and
administrative expenses”.
2013 vs. 2012
Charges related to the expensing of the inventory fair value step-up
resulting from the application of purchase accounting for acquisitions and
certain professional fees associated with the completion of acquisitions.
Charges in 2013 represent amortization of inventory fair value step-up
of $5.2 million and certain professional fees of $4.8 million associated
with the completion of our Epax acquisition within our FMC Health
and Nutrition segment. Th e charges in 2012, represented amortization of
inventory fair value step-up relate to a number of acquisitions completed
in 2011 and in the second quarter of 2012.
2012 vs. 2011
Th e charge in 2012 of $7.2 million, related to the expensing of the
inventory fair value step-up resulting from the application of purchase
accounting associated with acquisitions completed in 2012 and 2011.
Th e charges for year ended December 31, 2011 relate to a number of
acquisitions completed in late 2011. See Note 3 to our consolidated
fi nancial statements included in this Form 10-K for more information
on our acquisitions.
Provision for income taxes
2013 vs. 2012
Provision for income taxes is $148.6 million for 2013 compared to a
provision of $134.5 million for the prior year period resulting in eff ective
tax rates of 24.1 percent and 22.5 percent, respectively. Excluding the
impact of tax adjustments in both periods, our eff ective rate in 2013 was
21.7% and in 2012 was 25.5%. Tax adjustments in 2013 were primarily
associated with adjustments to U.S. state deferred tax balances established
prior to 2013 driven by a change in enacted tax rates and other state
related items. Tax benefi t adjustments in 2012 were primarily driven
by a reduction in our valuation allowance related to state net operating
losses expected to be recoverable in future years. When excluding these
impacts, the decrease in the eff ective tax rates was primarily due to a mix
shift in domestic versus foreign income. Foreign profi ts are generally
taxed at lower rates compared to domestic income. See Note 11 to the
Consolidated Financial Statements for additional details related to the
provisions for income taxes on continuing operations, as well as items
that signifi cantly impact our eff ective tax rate.
2012 vs. 2011
Provision for income taxes was $134.5 million for 2012 compared to a
provision of $132.9 million for the prior year period resulting in eff ective tax
rates of 22.5 percent and 24.0 percent, respectively. Excluding the impact
of tax adjustments in both periods, which in 2012 were primarily driven
by a reduction in our valuation allowance related to state net operating
losses expected to be recoverable in future years, our eff ective rate in 2012
was 25.5 percent versus 24.4 percent in 2011. Th is increase was driven
by slightly higher domestic profi ts in 2012 versus 2011. Domestic profi ts
are taxed at higher rates as compared to foreign profi ts.
Discontinued operations, net of income taxes
Our discontinued operations represent our discontinued FMC
Peroxygens segment results as well as adjustments to retained liabilities
from previous discontinued operations. Th e primary liabilities retained
include environmental liabilities, other postretirement benefi t liabilities,
self-insurance, long-term obligations related to legal proceedings and
historical restructuring activities.
2013 vs. 2012
Discontinued operations, net of income taxes totaled a charge of
$159.3 million for 2013, compared to a charge of $27.5 million 2012.
Th e increase was a result of a charge of $156.7 million ($122.1 million
after-tax) associated with our discontinued FMC Peroxygens segment.
Th e charge was associated with a write down of the FMC Peroxygens
segment assets held for sale to fair value. For more information on
our discontinued operations, net of income taxes see Note 9 to our
consolidated fi nancial statements included in this Form 10-K.
22
FMC CORPORATION - Form 10-K
PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
2012 vs. 2011
Discontinued operations, net of income taxes totaled a charge of
$27.5 million for 2012, compared to a charge of $38.1 million for 2011.
Th e decrease is primarily attributable to lower restructuring charges
of approximately $9 million associated with our discontinued FMC
Peroxygens’ Spanish operations.
Net income attributable to FMC stockholders
2013 vs. 2012
Net income attributable to FMC stockholders decreased to $293.9 million
in 2013, from $416.2 million in 2012. Th is fl uctuation year over year
Liquidity and Capital Resources
Cash and cash equivalents at December 31, 2013 and 2012, were
$123.2 million and $77.1 million, respectively. Of the cash and cash
equivalents balance at December 31, 2013, $112.6 million were held
by our foreign subsidiaries. Our intent is to reinvest permanently the
earnings of our foreign subsidiaries, and therefore we have not recorded
additional taxes that would be payable if we repatriated these earnings.
However, in the third quarter of 2013, we changed our assertion on
the portion of our foreign subsidiaries unremitted earnings that we
intend to repatriate upon the sale of our discontinued FMC Peroxygens
segment and have recorded the taxes that would be payable upon
such repatriation. In the event that additional funds from our foreign
subsidiaries are repatriated to the U.S., we would be required to accrue
and pay U.S. taxes on those amounts.
In June 2013, we commenced a $1.5 billion commercial paper program
supported by our credit facility. Th is program allows us to borrow at
rates generally more favorable than those available under our credit
facility. We have used proceeds from the commercial paper program
for general corporate purposes. At December 31, 2013, the average
eff ective interest rate on these borrowings was 0.34 percent.
is described in more detail above, however the primary driver is the
$122.1 million after-tax charge associated with our discontinued FMC
Peroxygens segment.
2012 vs. 2011
Net income attributable to FMC stockholders increased to $416.2 million
in 2012, from $365.9 million in 2011. Th e increase was primarily due
to higher operating profi ts in our FMC Agricultural Solutions segment
and a lower eff ective tax rate. Th ese items were partially off set by higher
non-operating pension and postretirement charges and slightly reduced
FMC Minerals results.
On August 5, 2013, we entered into an Amendment and Consent No.
1 (the “Amendment”) to our credit agreement, dated as of August 5,
2011. Th e Amendment, among other things, extended the termination
date of the credit facility to August 5, 2017 from August 5, 2016.
On November 15, 2013, we issued $400 million aggregate principal
amount of 4.10 percent Senior Notes due 2024. Th e net proceeds
from the off ering were used for general corporate purposes including
repayment of outstanding commercial paper.
At December 31, 2013, we had total debt of $1,851.9 million as
compared to $964.4 million at December 31, 2012. Th is included
$1,154.1 million and $908.8 million of long-term debt (excluding
current portions of $34.7 million and $5.7 million) at December 31,
2013 and 2012, respectively. Other short-term debt, which consists solely
of foreign borrowings, decreased from $49.9 million at December 31,
2012 to $7.1 million at December 31, 2013.
FMC CORPORATION - Form 10-K 23
PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Statement of Cash Flows
Cash provided by operating activities was $378.8 million, $422.3 million and $506.0 million for 2013, 2012 and
2011, respectively.
Th e table below presents the components of net cash provided by operating activities.
(in Millions)
Income from continuing operations before equity in (earnings) loss of affi liates, interest income
and expense and income taxes
Signifi cant non-cash expenses(1)
Operating income before non-cash expenses (Non-GAAP)
Change in trade receivables(2)
Change in inventories(3)
Change in accounts payable(4)
Change in accrued rebates(5)
Change in advance payments from customers(6)
Change in all other operating assets and liabilities(7)
Restructuring and other spending(8)
Environmental spending, continuing, net of recoveries(9)
Pension and other postretirement benefi t contributions(10)
Cash basis operating income (Non-GAAP)
Net interest payments
Tax payments, net of refunds(11)
Excess tax benefi ts from share-based compensation(12)
$
$
$
Twelve months ended December 31,
2013
2012
2011
$
$
$
659.0
221.6
880.6
(394.5)
5.1
40.4
63.8
35.9
30.4
(7.3)
(7.8)
(68.0)
578.6
(39.4)
(153.3)
(7.1)
378.8
$
$
$
639.1
220.6
859.7
(191.6)
(194.5)
51.4
27.2
64.0
(3.5)
(0.9)
(7.1)
(77.5)
527.2
(36.2)
(59.0)
(9.7)
422.3
587.4
264.6
852.0
(107.8)
(109.9)
65.4
15.5
44.7
(80.9)
(2.4)
(12.0)
(67.0)
597.6
(36.3)
(47.9)
(7.4)
506.0
$
Cash provided by operating activities of continuing operations
(1) Represents the sum of depreciation, amortization, non-cash asset write down, share-based compensation and pension charges.
(2) Overall, the increase in trade receivables in each year is primarily due to revenue increases, particularly for FMC Agricultural Solutions sales in Brazil where
$
$
terms are significantly longer than the rest of our businesses.
(3) Inventory levels remained fairly consistent from 2012 to 2013 as projected demand in early 2014 is expected to be in-line with prior year. The change in
inventory from 2011 to 2012 was primarily due to an inventory build to fulfill strong projected 2013 season demand in FMC Agricultural Solutions and to
support continued growth in the business.
(4) The increase in accounts payable for all years present is primarily due to inventory build at the end of each year to satisfy projected demand for the following year.
(5) These rebates are associated with our FMC Agricultural Solutions segment and are primarily in North America and Brazil and generally settle in the fourth
quarter of each year. The changes year over year are primarily associated with timing of payments and increased sales.
(6) The advance payments from customers represent advances from our FMC Agricultural Solutions segment customers. The change for each year presented are
consistent with our sales increases year over each year and our projected demand in early 2014.
(7) Changes in all periods presented primarily represent timing of payments associated with all other operating assets and liabilities.
(8) See Note 7 in our consolidated financial statements included in this Form 10-K for further details.
(9) Included in our income for each of the years presented are environmental charges of $6.2 million, $5.8 million and $3.1 million for environmental and
remediation at our operating sites. The amounts in 2013 will be spent in future years. The amounts represent environmental remediation spending at our
operating sites which were recorded against pre-existing reserves, net of recoveries.
(10) Amounts include voluntary contributions to our U.S. defined benefit plan of $40 million, $65 million and $55 million, respectively. In 2013 the amount also
includes a lump-sum payout of approximately $15.4 million from our nonqualified pension plan.
(11) We utilized the last of our tax losses and tax credit carryforwards in the United States in 2012, and therefore, saw an increase in total cash taxes paid. Higher
tax cash payments in 2013, were reflective of higher profits in the U.S. as well as $35.5 million in advanced tax payments which were classified as prepaid taxes
in the consolidated balance sheet at December 31, 2013.
(12) Amounts are presented as a financing activity in the statement of cash flows, from share-based compensation.
Cash required by operating activities of discontinued operations was $50.1 million, $62.6 million and
$124.7 million for 2013, 2012 and 2011, respectively.
Th e decrease from 2012 to 2013 is primarily due to reduced spending associated with our discounted restructuring activities. Th e spending
decrease from 2011 to 2012 was directly associated with the exit of our discontinued Huevla, Spain - FMC Peroxygens’ operations. In the fourth
quarter of 2010, we exited our Huelva operations, and most of the spending associated with the exit was spent in 2011. Additionally, in 2011
amounts included the $44 million payment associated with the European Union Fine.
24
FMC CORPORATION - Form 10-K
PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Cash required by investing activities was $628.5
million, $363.6 million and $302.0 million for 2013,
2012 and 2011, respectively.
Th e increase in spending during the year ended December 31, 2013, as
compared to the same period in 2012, was primarily due to the Epax
acquisition completed in the third quarter of 2013 and higher spending
on capital expenditures compared to 2012. Increased spending from 2011
to 2012 is primarily due to higher capital spending associated with capital
expansions, primarily in our Health and Nutrition segment and our
Alkali and Lithium divisions, and as well as increased expenditures related
to our FMC Agricultural Solutions segment contract manufacturers.
See Note 3 to the consolidated fi nancial statements included within
this Form 10-K for more information on our acquisitions.
Cash provided (required) by fi nancing activities was
$371.2 million, $(48.2) million and $(25.3) million
in 2013, 2012 and 2011, respectively.
Th e change in fi nancing activities is primarily due to borrowings under
our commercial paper (“CP”) program which was implemented during
the second quarter of 2013 and the issuance of $400 million in senior
notes in the fourth quarter of 2013. Th ese borrowings were partially
off set by repayments of borrowings under our committed credit
facility, the acquisition of an additional 6.25% ownership interest in
our consolidated entity FMC Wyoming and higher dividends paid
and share repurchases compared to 2012. Th e change in 2012 as
compared to 2011 was primarily due to lower proceeds from long term
debt borrowings, slightly off set by higher borrowings under our credit
facility and lower repayments of scheduled long term debt maturities.
Other potential liquidity needs
Our cash needs for 2014 include operating cash requirements, capital
expenditures, scheduled mandatory payments of long-term debt,
dividend payments, share repurchases, contributions to our pension
plans, environmental and asset retirement obligation spending and
restructuring. We plan to meet our liquidity needs through available
cash, cash generated from operations, commercial paper issuances
and borrowings under our committed revolving credit facility.
At December 31, 2013 our remaining borrowing capacity under our
credit facility was $770.8 million (which includes borrowings under
our commercial paper program).
In December 2013, we signed a defi nitive agreement to sell FMC
Peroxygens for $200 million. We expect the sale to be completed in
fi rst quarter of 2014. We intend to use the proceeds to pay down our
short term debt borrowings.
Projected 2014 capital expenditures as well as expenditures related to
contract manufacturers are expected to be approximately 15 percent
higher than 2013 levels, primarily to increase capacity in our FMC
Health and Nutrition segment and our Alkali division within our
FMC Minerals segment.
Projected 2014 spending includes approximately $35 million of
net environmental remediation spending. Th is spending does not
include expected spending of approximately $10 million in 2014 on
capital projects relating to environmental control facilities. Also, we
expect to spend approximately $30 million in 2014 for environmental
compliance costs, which we will include as a component of costs of
sales and services in our consolidated statements of income since these
amounts are not covered by established reserves. Capital spending to
expand, maintain or replace equipment at our production facilities
may trigger requirements for upgrading our environmental controls,
which may increase our spending for environmental controls over the
foregoing projections.
Our U.S. Pension Plan assets increased signifi cantly from $984.0 million
at December 31, 2012 to $1,192.9 million at December 31, 2013 due to
stock market performance. Our U.S. Pension Plan assets comprise
approximately 93 percent of our total plan assets with the diff erence
representing plan assets related to foreign pension plans. See Note 13 to
the consolidated fi nancial statements included within this Form 10-K
for details on how we develop our long-term rate of return assumptions.
We made contributions of $40 million and $65 million in 2013 and
2012, respectively, and intend to contribute $50 million in 2014. Our
contributions in 2012, 2013 and our intended contribution in 2014
are all in excess of the minimum requirements. Our contributions in
excess of the minimum requirement are done with the objective of
reducing future funding volatility. We do not believe that this additional
contribution in 2014 will have a material impact on our current and
future liquidity needs. However, volatility of interest rates and equity
returns may require greater contributions in the future.
On April 23, 2013, our Board-authorized the repurchase of up to
$500 million of our common shares. Th is repurchase program does not
include a specifi c timetable or price targets and may be suspended or
terminated at any time. Shares may be purchased through open market
or privately negotiated transactions at the discretion of management
based on its evaluation of market conditions and other factors. Th e
authorization on April 23, 2013 replaced the previous authority under
which $134.9 million was unused. We also reacquire shares from time
to time from employees in connection with the vesting, exercise and
forfeiture of awards under our equity compensation plans. During
the year ended December 31, 2013, we repurchased 4,998,843 shares
under the publicly announced repurchase program for $359.9 million.
At December 31, 2013, $250 million remained unused under our
Board-authorized repurchase program.
Commitments
We provide guarantees to fi nancial institutions on behalf of certain FMC
Agricultural Solutions customers, principally Brazilian customers, for
their seasonal borrowing. Th e total of these guarantees was $27.9 million
and $31.4 million at December 31, 2013, and 2012, respectively,
and are recorded on the consolidated balance sheets for each date as
“Guarantees of vendor fi nancing”.
Short-term debt consisted of foreign credit lines at December 31,
2013, and 2012. We provide parent-company guarantees to lending
institutions providing credit to our foreign subsidiaries.
We continually evaluate our options for divesting real estate holdings
and property, plant and equipment that are no longer integral to our
operating businesses. In connection with our property and asset sales
and divestitures, we have agreed to indemnify the buyer for certain
liabilities, including environmental contamination and taxes that
occurred prior to the date of sale. Our indemnifi cation obligations
with respect to these liabilities may be indefi nite as to duration and
may or may not be subject to a deductible, minimum claim amount
or cap. As such, it is not possible for us to predict the likelihood that a
claim will be made or to make a reasonable estimate of the maximum
potential loss or range of loss. If triggered, we may be able to recover
certain of the indemnity payments from third parties. We have not
recorded any specifi c liabilities for these guarantees.
FMC CORPORATION - Form 10-K 25
PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Our total signifi cant committed contracts that we believe will aff ect cash over the next four years and beyond are as follows:
Expected Cash Payments by Year
$
2016
2015
0.9 $
Contractual Commitments
(in Millions)
Debt maturities(1)
Contractual interest(2)
Lease obligations(3)
Certain long-term liabilities(4)
Derivative contracts
Purchase obligations(5)
TOTAL(6)
(1) Excluding discounts.
(2) Contractual interest is the interest we are contracted to pay on our long-term debt obligations. We had $18.6 million of long-term debt subject to variable interest
rates at December 31, 2013. The rate assumed for the variable interest component of the contractual interest obligation was the rate in effect at December 31,
2013. Variable rates are determined by the market and will fluctuate over time.
1,154.0 $
317.3
157.3
35.3
—
19.5
1,683.4 $
2014
697.8 $
55.6
26.3
4.5
6.4
36.8
827.4 $
Total
1,854.4
530.7
242.2
55.1
6.4
65.5
2,754.3
52.6
25.9
5.1
—
8.6
93.1 $
52.6
15.4
5.1
—
—
73.8 $
52.6
17.3
5.1
—
0.6
76.6 $
2018
& beyond
0.7 $
1.0 $
2017
$
(3) Before sub-lease rental income.
(4) Obligations associated with our Ewing research and development facility and our Shanghai innovation center.
(5) Purchase obligations consist of agreements to purchase goods and services that are enforceable and legally binding on us and specify all significant terms, including
fixed or minimum quantities to be purchased, price provisions and timing of the transaction. We have entered into a number of purchase obligations for the
sourcing of materials and energy where take-or-pay arrangements apply. Since the majority of the minimum obligations under these contracts are take-or-pay
commitments over the life of the contract as opposed to a year by year take-or-pay, the obligations in the table related to these types of contacts are presented in the
earliest period in which the minimum obligation could be payable under these types of contracts.
(6) As of December 31, 2013, the liability for uncertain tax positions was $37.3 million and this liability is excluded from the table above. Additionally, accrued
pension and other postretirement benefits and our environmental liabilities as recorded on our consolidated balance sheets are excluded from the table above. Due
to the high degree of uncertainty regarding the timing of potential future cash flows associated with these liabilities, we are unable to make a reasonably reliable
estimate of the amount and periods in which these liabilities might be paid.
Contingencies
See Note 19 to our consolidated fi nancial statements included in this Form 10-K.
Climate Change
We continue to follow legislative and regulatory developments regarding
climate change because the regulation of greenhouse gases, depending
on their nature and scope, could subject some of our manufacturing
operations to additional costs or limits on operations. Our Alkali
Chemicals Division mines and refi nes trona ore into soda ash and
related products at our Westvaco and Granger facilities near Green
River, Wyoming. Th is activity constitutes most of FMC’s greenhouse
gas emissions globally. In 2013, we reported approximately 2.2 million
metric tons of direct emissions from the Green River operations for
2012 as part of the EPA Greenhouse gas reporting program.
In the absence of federal climate change legislation in the United
States, EPA has moved forward with a fi nding of “endangerment” and
a promulgated “tailoring rule” to apply the Prevention of Signifi cant
Deterioration (PSD) provisions of the Clean Air Act to greenhouse
gas emissions. Pursuant to the Tailoring rule, FMC has submitted
a PSD application for a proposed project for one of our Wyoming
facilities, and EPA has issued a draft permit. A signifi cant source of
greenhouse gas emissions at the Green River operations are emissions
from the benefi ciation of trona ore. Th at is, a signifi cant portion of
the greenhouse gases released during the mining and refi ning of soda
ash occurs naturally in the trona ore feedstock. Unlike the situation
with energy effi ciency, where effi ciencies may result in a reduction of
greenhouse gases, the amount of greenhouse gases present in the trona
ore cannot be reduced. All of the companies producing natural soda
ash have such refi ning emissions. Yet, the lower energy intensity of
natural soda ash provides a favorable carbon intensity compared with
synthetic soda ash produced throughout the rest of the world. Soda
ash is an essential raw material in the production of glass of all kinds.
Climate change, energy intensity and alternative forms of energy will
drive increased production of new forms of glass (lower emissivity glass,
solar panel glass, etc.) and will increase the need for this essential raw
material from FMC. Th e soda ash industry has an interest in assuring
that climate change legislation or regulation recognizes the benefi ts of
soda ash (particularly natural soda ash) and the challenges facing this
industry in controlling its greenhouse gas emissions.
Because of the many variables, it is premature to make any estimate
of the costs of complying with possible future federal climate change
legislation in the United States. However, we are aware of the potential
impacts that could result from emissions regulations in the U.S. that are
more stringent than those experienced by our global competitors. Th ese
could make it more diffi cult for us to competitively produce natural
soda ash at Green River. A reduction in natural soda ash production as
a result of more stringent regulations in the U.S. would lead to more
greenhouse gas emissions globally because the lost supply of natural
soda ash would be replaced by the more costly and more greenhouse
gas intensive synthetic soda ash.
In 2013, two U.S. plants in our Health & Nutrition business also
reported emissions above the EPA’s reporting threshold, but each plant’s
emissions are substantially less than at our Green River operations, in
total less than 0.1 million metric tons.
26
FMC CORPORATION - Form 10-K
PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
At this point our U.S. facilities are not subject to any state or regional
greenhouse gas regulation that limits or imposes fees on current emissions,
and while some of our foreign operations may be subject to national
or local energy management or climate change regulation, the cost to
these facilities has not been and is not expected to be material to FMC.
We have considered the potential physical risks to FMC facilities and
operations and the indirect consequences of regulation or business
trends as a result of potential future climate change. We routinely assess
our facilities for potential natural hazard exposures and do not expect
material impacts based on currently available information.
Recently Adopted and Issued Accounting
Pronouncements and Regulatory Items
See Note 2 “Recently Issued and Adopted Accounting Pronouncements
and Regulatory Items” to our consolidated fi nancial statements included
in this Form 10-K.
Critical Accounting Policies
Our consolidated fi nancial statements are prepared in conformity
with U.S. generally accepted accounting principles (U.S. GAAP) .
Th e preparation of these fi nancial statements requires us to make
estimates and judgments that aff ect the reported amounts of assets,
liabilities, revenues and expenses. We have described our accounting
policies in Note 1 “Principal Accounting Policies and related Financial
Information” to our consolidated fi nancial statements included in this
Form 10-K. We have reviewed these accounting policies, identifying
those that we believe to be critical to the preparation and understanding
of our consolidated fi nancial statements. We have reviewed these critical
accounting policies with the Audit Committee of the Board of Directors.
Critical accounting policies are central to our presentation of results
of operations and fi nancial condition in accordance with U.S. GAAP
and require management to make estimates and judgments on certain
matters. We base our estimates and judgments on historical experience,
current conditions and other reasonable factors.
Environmental obligations and related recoveries
We provide for environmental-related obligations when they are
probable and amounts can be reasonably estimated. Where the available
information is suffi cient to estimate the amount of liability, that estimate
has been used. Where the information is only suffi cient 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.
Estimated obligations to remediate sites that involve oversight by the
United States Environmental Protection Agency (“EPA”), or similar
government agencies, are generally accrued no later than when a Record
of Decision (“ROD”), or equivalent, is issued, or upon completion of a
Remedial Investigation/Feasibility Study (“RI/FS”), or equivalent, that
is submitted by us to the appropriate government agency or agencies.
Estimates are reviewed quarterly by our environmental remediation
management, as well as by fi nancial and legal management and, if
necessary, adjusted as additional information becomes available. Th e
estimates can change substantially as additional information becomes
available regarding the nature or extent of site contamination, required
remediation methods, and other actions by or against governmental
agencies or private parties.
Our environmental liabilities for continuing and discontinued operations
are principally for costs associated with the remediation and/or study
of sites at which we are alleged to have released hazardous substances
into the environment. Such costs principally include, among other
items, RI/FS, site remediation, costs of operation and maintenance of
the remediation plan, management costs, fees to outside law fi rms and
consultants for work related to the environmental eff ort, and future
monitoring costs. Estimated site liabilities are determined based upon
existing remediation laws and technologies, specifi c site consultants’
engineering studies or by extrapolating experience with environmental
issues at comparable sites.
Included in our environmental liabilities are costs for the operation,
maintenance and monitoring of site remediation plans (OM&M). Such
reserves are based on our best estimates for these OM&M plans. Over
time we may incur OM&M costs in excess of these reserves. However,
we are unable to reasonably estimate an amount in excess of our recorded
reserves because we cannot reasonably estimate the period for which
such OM&M plans will need to be in place or the future annual cost
of such remediation, as conditions at these environmental sites change
over time. Such additional OM&M costs could be signifi cant in total
but would be incurred over an extended period of years.
Included in the environmental reserve balance, other assets balance and
disclosure of reasonably possible loss contingencies are amounts from
third party insurance policies, which we believe are probable of recovery.
Provisions for environmental costs are refl ected in income, net of
probable and estimable recoveries from named Potentially Responsible
Parties (“PRPs”) or other third parties. Such provisions incorporate
infl ation and are not discounted to their present values.
In calculating and evaluating the adequacy of our environmental reserves,
we have taken into account the joint and several liability imposed by
Comprehensive Environmental Response, Compensation and Liability
Act (“CERCLA”) and the analogous state laws on all PRPs and have
considered the identity and fi nancial condition of the other PRPs at
each site to the extent possible. We have also considered the identity
and fi nancial condition of other third parties from whom recovery
is anticipated, as well as the status of our claims against such parties.
Although we are unable to forecast the ultimate contributions of PRPs
and other third parties with absolute certainty, the degree of uncertainty
with respect to each party is taken into account when determining
the environmental reserve by adjusting the reserve to refl ect the facts
and circumstances on a site-by-site basis. Our liability includes our
best estimate of the costs expected to be paid before the consideration
of any potential recoveries from third parties. We believe that any
recorded recoveries related to PRPs are realizable in all material respects.
Recoveries are recorded as either an off set in “Environmental liabilities,
continuing and discontinued” or as “Other assets” in our consolidated
balance sheets in accordance with U.S. accounting literature.
See Note 10 to our consolidated fi nancial statements included in this
Form 10-K for changes in estimates associated with our environmental
obligations.
FMC CORPORATION - Form 10-K 27
PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Impairments and valuation of long-lived assets
Our long-lived assets primarily include property, plant and equipment,
goodwill and intangible assets. Th e assets and liabilities of acquired
businesses are measured at their estimated fair values at the dates of
acquisition. Th e excess of the purchase price over the estimated fair value
of the net assets acquired, including identifi ed intangibles, is recorded
as goodwill. Th e determination and allocation of fair value to the assets
acquired and liabilities assumed is based on various assumptions and
valuation methodologies requiring considerable management judgment,
including estimates based on historical information, current market
data and future expectations. Th e principal assumptions utilized in
our valuation methodologies include revenue growth rates, operating
margin estimates and discount rates. Although the estimates were
deemed reasonable by management based on information available
at the dates of acquisition, those estimates are inherently uncertain.
We test for impairment whenever events or circumstances indicate
that the net book value of our property, plant and equipment may
not be recoverable from the estimated undiscounted expected future
cash fl ows expected to result from their use and eventual disposition.
In cases where the estimated undiscounted expected future cash fl ows
are less than net book value, an impairment loss is recognized equal
to the amount by which the net book value exceeds the estimated fair
value of assets, which is based on discounted cash fl ows at the lowest
level determinable. Th e estimated cash fl ows refl ect our assumptions
about selling prices, volumes, costs and market conditions over a
reasonable period of time.
We perform an annual impairment test of goodwill and indefi nite-lived
intangible assets in the third quarter of each year, or more frequently
whenever an event or change in circumstances occur that would
require reassessment of the recoverability of those assets. In performing
our evaluation we assess qualitative factors such as overall fi nancial
performance of our reporting units, anticipated changes in industry
and market structure, competitive environments, planned capacity and
cost factors such as raw material prices. Based on our assessment for
2013, we determined that no impairment charge to our continuing
operations was required.
See Note 7 to our consolidated fi nancial statements included in this
Form 10-K for charges associated with long-lived asset disposal costs
and the activity associated with the restructuring reserves.
Pension and other postretirement benefi ts
We provide qualifi ed and nonqualifi ed defi ned benefi t and defi ned
contribution pension plans, as well as postretirement health care
and life insurance benefi t plans to our employees and retirees. Th e
costs (benefi ts) and obligations related to these benefi ts refl ect key
assumptions related to general economic conditions, including interest
(discount) rates, healthcare cost trend rates, expected rates of return
on plan assets and the rates of compensation increase for employees.
Th e costs (benefi ts) and obligations for these benefi t programs are also
aff ected by other assumptions, such as average retirement age, mortality,
employee turnover, and plan participation. To the extent our plans’
actual experience, as infl uenced by changing economic and fi nancial
market conditions or by changes to our own plans’ demographics,
diff ers from these assumptions, the costs and obligations for providing
these benefi ts, as well as the plans’ funding requirements, could increase
or decrease. When actual results diff er from our assumptions, the
diff erence is typically recognized over future periods. In addition, the
unrealized gains and losses related to our pension and postretirement
benefi t obligations may also aff ect periodic benefi t costs (benefi ts) in
future periods.
We use several assumptions and statistical methods to determine
the asset values used to calculate both the expected rate of return on
assets component of pension cost and to calculate our plans’ funding
requirements. Th e expected rate of return on plan assets is based on
a market-related value of assets that recognizes investment gains and
losses over a fi ve-year period. We use an actuarial value of assets to
determine our plans’ funding requirements. Th e actuarial value of
assets must be within a certain range, high or low, of the actual market
value of assets, and is adjusted accordingly.
We select the discount rate used to calculate pension and other
postretirement obligations based on a review of available yields on
high-quality corporate bonds as of the measurement date. In selecting a
discount rate as of December 31, 2013, we placed particular emphasis
on a discount rate yield-curve provided by our actuary. Th is yield-
curve when populated with projected cash fl ows that represented the
expected timing and amount of our plans’ benefi t payments, produced
a single eff ective interest discount rate of 4.95 percent, which was used
to measure the plan’s liabilities.
Th e discount rates used at our December 31, 2013 and 2012 measurement
dates were 4.95 percent and 4.15 percent, respectively. Th e eff ect of
the change in the discount rate from 4.15 percent to 4.95 percent
at December 31, 2013 resulted in a $121.3 million decrease to our
pension and other postretirement benefi t obligations. Th e eff ect of the
change in the discount rate from 4.95 percent at December 31, 2011 to
4.15 percent at December 31, 2012 resulted in a $12.7 million increase
to 2013 pension and other postretirement benefi t expense.
Th e change in discount rate from 4.15 percent at December 31, 2012
to 4.95 percent at December 31, 2013 was attributable to a increase in
yields on high quality corporate bonds with cash fl ows matching the
timing and amount of our expected future benefi t payments between
the 2012 and 2013 measurement dates. Using the December 31, 2012
yield curve, our plan cash fl ows produced a single weighted-average
discount rate of approximately 4.15 percent. Matching our plan cash
fl ows to a similarly constructed curve refl ecting high-yielding bonds
available as of December 31, 2013, resulted in a single weighted-average
discount rate of approximately 4.95 percent.
In developing the assumption for the long-term rate of return on assets
for our U.S. Plan, we take into consideration the technical analysis
performed by our outside actuaries, including historical market returns,
information on the assumption for long-term real returns by asset class,
infl ation assumptions, and expectations for standard deviation related
to these best estimates. We also consider the historical performance
of our own plan’s trust, which has earned a compound annual rate of
return of approximately 9.90 percent over the last 20 years (which is
in excess of comparable market indices for the same period) as well
28
FMC CORPORATION - Form 10-K
PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
as other factors which are discussed in Note 13 to our consolidated
fi nancial statements in this Form 10-K. Our long-term rate of return
for 2013 and 2012 was 7.75 percent which we adjusted downward
from 8.50 percent in 2011. Th e eff ect of the change in the long-term
rate of return from 8.5 percent during 2011 to 7.75 percent during
2012 resulted in a $6.4 million increase to 2012 pension and other
postretirement benefi t expense.
For the sensitivity of our pension costs to incremental changes in
assumptions see our discussion below.
Sensitivity analysis related to key pension and
postretirement benefi t assumptions.
A one-half percent increase in the assumed discount rate would have
decreased pension and other postretirement benefi t obligations by
$67.2 million and $77.8 million at December 31, 2013 and 2012,
respectively, and decreased pension and other postretirement benefi t
costs by $5.8 million, $8.2 million and $6.5 million for 2013, 2012 and
2011, respectively. A one-half percent decrease in the assumed discount
rate would have increased pension and other postretirement benefi t
obligations by $73.9 million and $85.7 million at December 31, 2013
and 2012, respectively, and increased pension and other postretirement
benefi t net periodic benefi t cost by $6.2 million, $8.4 million and
$6.6 million for 2013, 2012 and 2011, respectively.
A one-half percent increase in the assumed expected long-term rate of
return on plan assets would have decreased pension costs by $4.8 million,
$4.7 million and $4.6 million for 2013, 2012 and 2011, respectively.
A one-half percent decrease in the assumed long-term rate of return
on plan assets would have increased pension costs by $4.8 million,
$4.7 million and $4.6 million for 2013, 2012 and 2011, respectively.
Further details on our pension and other postretirement benefi t
obligations and net periodic benefi t costs (benefi ts) are found in
Note 13 to our consolidated fi nancial statements in this Form 10-K.
Income taxes
We have recorded a valuation allowance to reduce deferred tax assets
to the amount that we believe is more likely than not to be realized.
In assessing the need for this allowance, we have considered a number
of factors including future taxable income, the jurisdictions in which
such income is earned and our ongoing tax planning strategies. In
the event that we determine that we would not be able to realize all
or part of our net deferred tax assets in the future, an adjustment to
the deferred tax assets would be charged to income in the period such
determination was made. Similarly, should we conclude that we would
be able to realize certain deferred tax assets in the future in excess of
the net recorded amount, an adjustment to the deferred tax assets
would increase income in the period such determination was made.
Additionally, we fi le income tax returns in the U.S. federal jurisdiction
and various state and foreign jurisdictions. Th e income tax returns for
FMC entities taxable in the U.S. and signifi cant foreign jurisdictions
are open for examination and adjustment. We assess our income tax
positions and record a liability for all years open to examination based
upon our evaluation of the facts, circumstances and information
available at the reporting date. For those tax positions where it is more
likely than not that a tax benefi t will be sustained, we have recorded
the largest amount of tax benefi t with a greater than 50% likelihood of
being realized upon ultimate settlement with a taxing authority that has
full knowledge of all relevant information. We adjust these liabilities,
if necessary, upon the completion of tax audits or changes in tax law.
See Note 11 to our consolidated fi nancial statements included in this
Form 10-K for additional discussion surrounding income taxes.
Off -Balance Sheet Arrangements
We do not have any off -balance sheet arrangements that have or are
reasonably likely to have a current or future eff ect on our fi nancial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that is material to investors.
Dividends
On January 16, 2014, we paid dividends aggregating $18.0 million to
our shareholders of record as of December 31, 2013. Th is amount is
included in “Accrued and other liabilities” on the consolidated balance
sheets as of December 31, 2013. For the years ended December 31,
2013, 2012 and 2011, we paid $73.6 million, $47.8 million and
$41.2 million in dividends, respectively.
Fair Value Measurements
See Note 18 to our consolidated fi nancial statements included in
this Form 10-K for additional discussion surrounding our fair value
measurements.
FMC CORPORATION - Form 10-K 29
PART II
ITEM 7A Quantitative and Qualitative Disclosures About Market Risk
ITEM 7A Quantitative and Qualitative Disclosures
About Market Risk
Our earnings, cash fl ows and fi nancial position are exposed to market
risks relating to fl uctuations in commodity prices, interest rates and
foreign currency exchange rates. Our policy is to minimize exposure
to our cash fl ow over time caused by changes in commodity, interest
and currency exchange rates. To accomplish this, we have implemented
a controlled program of risk management consisting of appropriate
derivative contracts entered into with major fi nancial institutions.
Th e analysis below presents the sensitivity of the market value of our
fi nancial instruments to selected changes in market rates and prices.
Th e range of changes chosen refl ects our view of changes that are
reasonably possible over a one-year period. Market-value estimates are
based on the present value of projected future cash fl ows considering
the market rates and prices chosen.
At December 31, 2013, our net fi nancial instrument position was a
net liability of $6.4 million compared to a net liability of $2.2 million
at December 31, 2012. Th e change in the net fi nancial instrument
position was primarily due to lower unrealized losses in our commodity
and foreign exchange portfolios.
Since our risk management programs are generally highly eff ective, the
potential loss in value for each risk management portfolio described below
would be largely off set by changes in the value of the underlying exposure.
Commodity Price Risk
Energy costs are diversifi ed among coal, electricity and natural gas.
We attempt to mitigate our exposure to increasing energy costs by
hedging the cost of future deliveries of natural gas and by entering into
fi xed-price contracts for the purchase of coal and fuel oil. To analyze
the eff ect of changing energy prices, we have performed a sensitivity
analysis in which we assume an instantaneous 10 percent change in
energy market prices from their levels at December 31, 2013 and
2012, with all other variables (including interest rates) held constant.
(in Millions)
Net asset/(liability) position at December 31, 2013
Net asset/(liability) position at December 31, 2012
Net Asset/(Liability)
Position on Consolidated
Balance Sheets
0.1
(1.3)
$
$
Hedged energy exposure vs.
Energy market pricing
10% Increase
3.0
3.3
$
$
10% Decrease
(2.7)
$
(5.4)
$
Our FMC Agricultural Solutions segment enters into contracts with
certain customers in Brazil to exchange our products for future physical
delivery of soybeans. To mitigate the price risk associated with these
barter contracts, we enter into off setting derivatives to hedge our
exposure. As of December 31, 2013 and 2012 our net fi nancial
instrument position was immaterial.
Foreign Currency Exchange Rate Risk
Th e primary currencies for which we have exchange rate exposure are
the U.S. dollar versus the euro, the U.S. dollar versus the Chinese yuan,
the U.S. dollar versus the Brazilian real and the U.S. dollar versus the
Argentine peso. Foreign currency debt and foreign exchange forward
contracts are used in countries where we do business, thereby reducing
our net asset exposure. Foreign exchange forward contracts are also
used to hedge fi rm and highly anticipated foreign currency cash fl ows.
To analyze the eff ects of changing foreign currency rates, we have
performed a sensitivity analysis in which we assume an instantaneous
10 percent change in the foreign currency exchange rates from their levels
at December 31, 2013 and 2012, with all other variables (including
interest rates) held constant.
(in Millions)
Net asset/(liability) position at December 31, 2013
Net asset/(liability) position at December 31, 2012
Hedged Currency vs.
Functional Currency
Net Asset/(Liability)
Position on Consolidated
Balance Sheets
(6.5)
(0.9)
$
$
10% Strengthening
9.1
4.6
$
$
10% Weakening
(21.0)
(5.2)
$
$
30
FMC CORPORATION - Form 10-K
PART II
ITEM 8 Financial Statements and Supplementary Data
Interest Rate Risk
One of the strategies that we can use to manage interest rate exposure
is to enter into interest rate swap agreements. In these agreements, we
agree to exchange, at specifi ed intervals, the diff erence between fi xed
and variable interest amounts calculated on an agreed-upon notional
principal amount. As of December 31, 2013 and 2012, we had no
interest rate swap agreements.
Our debt portfolio, at December 31, 2013, is composed of 63 percent
fi xed-rate debt and 37 percent variable-rate debt. Th e variable-rate
component of our debt portfolio principally consists of borrowings under
our commercial paper program, credit facility, variable-rate industrial
and pollution control revenue bonds, and amounts outstanding under
foreign subsidiary credit lines. Changes in interest rates aff ect diff erent
portions of our variable-rate debt portfolio in diff erent ways.
Based on the variable-rate debt in our debt portfolio at December 31,
2013, a one percentage point increase in interest rates would have
increased gross interest expense by $6.8 million and a one percentage
point decrease in interest rates would have decreased gross interest
expense by $2.3 million for the year ended December 31, 2013.
ITEM 8 Financial Statements and Supplementary Data
Th e following are included herein:
(1) Consolidated Statements of Income for the years ended December 31, 2013, 2012 and 2011
(2) Consolidated Statements of Comprehensive Income for the years ended December 31, 2013, 2012 and 2011
(3) Consolidated Balance Sheets as of December 31, 2013 and 2012
(4) Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012 and 2011
(5) Consolidated Statements of Changes in Equity for the years ended December 31, 2013, 2012 and 2011
(6) Notes to Consolidated Financial Statements
(7) Report of Independent Registered Public Accounting Firm
(8) Management’s Report on Internal Control over Financial Reporting
(9) Report of Independent Registered Public Accounting Firm
FMC CORPORATION - Form 10-K 31
PART II
ITEM 8 Financial Statements and Supplementary Data
FMC Corporation
Consolidated Statements of Income
(in Millions, Except Per Share Data)
Revenue
Costs and Expenses
Costs of sales and services
Gross Margin
Selling, general and administrative expenses
Research and development expenses
Restructuring and other charges (income)
Total costs and expenses
Income from continuing operations before equity in (earnings) loss of affi liates, interest
income and expense and income taxes
Equity in (earnings) loss of affi liates
Interest income
Interest expense
Income from continuing operations before income taxes
Provision for income taxes
Income from continuing operations
Discontinued operations, net of income taxes
Net income
Less: Net income attributable to noncontrolling interests
Net income attributable to FMC stockholders
Amounts attributable to FMC stockholders:
Continuing operations, net of income taxes
Discontinued operations, net of income taxes
NET INCOME ATTRIBUTABLE TO FMC STOCKHOLDERS
Basic earnings (loss) per common share attributable to FMC stockholders:
Continuing operations
Discontinued operations
NET INCOME ATTRIBUTABLE TO FMC STOCKHOLDERS
Diluted earnings (loss) per common share attributable to FMC stockholders:
Continuing operations
Discontinued operations
NET INCOME ATTRIBUTABLE TO FMC STOCKHOLDERS
The accompanying notes are an integral part of these consolidated financial statements.
$
$
$
$
$
$
$
$
Year Ended December 31,
2013
3,874.8
$
2012
3,409.9
$
2,534.4
1,340.4
515.8
117.7
47.9
3,215.8
659.0
0.9
(0.2)
42.4
615.9
148.6
467.3
(159.3)
308.0
14.1
293.9
453.2
(159.3)
293.9
3.34
(1.18)
2.16
3.33
(1.17)
2.16
$
$
$
$
$
$
$
2,141.6
1,268.3
489.7
112.0
27.5
2,770.8
639.1
0.7
(0.1)
40.8
597.7
134.5
463.2
(27.5)
435.7
19.5
416.2
443.7
(27.5)
416.2
3.21
(0.20)
3.01
3.20
(0.20)
3.00
$
$
$
$
$
$
$
2011
3,036.3
1,935.7
1,100.6
405.8
101.1
6.3
2,448.9
587.4
(0.8)
(0.1)
35.1
553.2
132.9
420.3
(38.1)
382.2
16.3
365.9
404.0
(38.1)
365.9
2.83
(0.26)
2.57
2.81
(0.26)
2.55
32
FMC CORPORATION - Form 10-K
PART II
ITEM 8 Financial Statements and Supplementary Data
FMC Corporation
Consolidated Statements of Comprehensive Income
(in Millions)
Net Income
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments(1)
Derivative instruments:
Unrealized hedging gains (losses) and other, net of tax of ($2.1), ($0.1) and ($5.3)
Reclassifi cation of deferred hedging (gains) losses and other, included in net income, net
of tax of $0.1, $3.0 and $3.4
Total derivative instruments, net of tax of ($2.0), $2.9 and ($1.9)
Pension and other postretirement benefi ts:
Unrealized actuarial gains (losses) and prior service (costs) credits, net of tax of $103.9,
($30.8) and ($47.1)
Reclassifi cation of net actuarial and other (gain) loss and amortization of prior service
costs, included in net income, net of tax of $21.8, $18.4 and $13.3
Total pension and other postretirement benefi ts, net of tax of $125.7,
($12.4) and ($33.8)
Other comprehensive income (loss), net of tax
Comprehensive income
Less: Comprehensive income attributable to the noncontrolling interest
$
$
Year Ended December 31,
2013
308.0
$
2012
435.7
$
0.1
(4.9)
0.3
(4.6)
174.0
35.9
2.5
(0.2)
5.9
5.7
(57.3)
30.4
2011
382.2
(15.0)
(10.3)
6.6
(3.7)
(80.3)
20.1
209.9
205.4
513.4
12.5
500.9
$
$
(26.9)
(18.7)
417.0
19.7
397.3
(60.2)
(78.9)
303.3
15.7
287.6
COMPREHENSIVE INCOME ATTRIBUTABLE TO FMC STOCKHOLDERS
(1) Income taxes are not provided on the equity in undistributed earnings of our foreign subsidiaries or affiliates since it is our intention that such earnings will
remain invested in those affiliates permanently, however see Note 11, regarding the impact from the expected sale of our discontinued FMC Peroxygens segment
on certain of these foreign subsidiaries.
$
$
$
The accompanying notes are an integral part of these consolidated financial statements.
FMC CORPORATION - Form 10-K 33
PART II
ITEM 8 Financial Statements and Supplementary Data
FMC Corporation
Consolidated Balance Sheets
(in Millions, Except Share and Par Value Data)
ASSETS
Current assets
Cash and cash equivalents
Trade receivables, net of allowance of $30.2 in 2013 and $26.8 in 2012
Inventories
Prepaid and other current assets
Deferred income taxes
Current assets of discontinued operations held for sale
Total current assets
Investments
Property, plant and equipment, net
Goodwill
Other intangibles, net
Other assets
Deferred income taxes
Noncurrent assets of discontinued operations held for sale
TOTAL ASSETS
LIABILITIES AND EQUITY
Current liabilities
Short-term debt and current portion of long-term debt
Accounts payable, trade and other
Advance payments from customers
Accrued and other liabilities
Accrued customer rebates
Guarantees of vendor fi nancing
Accrued pension and other postretirement benefi ts, current
Income taxes
Current liabilities of discontinued operations held for sale
Total current liabilities
Long-term debt, less current portion
Accrued pension and other postretirement benefi ts, long-term
Environmental liabilities, continuing and discontinued
Deferred income taxes
Noncurrent liabilities of discontinued operations held for sale
Other long-term liabilities
Commitments and contingent liabilities (Note 19)
Equity
Preferred stock, no par value, authorized 5,000,000 shares; no shares issued in 2013 or 2012
Common stock, $0.10 par value, authorized 260,000,000 shares in 2013 and 2012; 185,983,792
issued shares in 2013 and 2012
Capital in excess of par value of common stock
Retained earnings
Accumulated other comprehensive income (loss)
Treasury stock, common, at cost: 53,098,103 shares in 2013 and 48,313,414 shares in 2012
Total FMC stockholders’ equity
Noncontrolling interests
Total equity
TOTAL LIABILITIES AND EQUITY
The accompanying notes are an integral part of these consolidated financial statements.
34
FMC CORPORATION - Form 10-K
$
$
$
December 31,
2013
2012
$
123.2
1,484.3
688.4
236.8
214.0
198.3
2,945.0
26.8
1,248.3
389.4
272.3
262.0
91.4
—
5,235.2
$
$
697.8
475.2
178.9
307.0
203.7
27.9
12.7
35.3
48.2
1,986.7
1,154.1
57.8
175.2
73.1
—
216.2
77.1
1,073.7
642.4
172.9
123.4
92.4
2,181.9
26.1
956.2
277.6
205.7
247.6
234.6
244.2
4,373.9
55.6
404.2
140.2
254.1
141.7
31.4
21.3
32.9
54.1
1,135.5
908.8
375.8
200.2
—
3.3
195.5
—
—
18.6
448.3
2,757.3
(201.9)
(1,502.5)
1,519.8
52.3
1,572.1
$
5,235.2
$
18.6
481.9
2,536.5
(408.9)
(1,147.8)
1,480.3
74.5
1,554.8
4,373.9
PART II
ITEM 8 Financial Statements and Supplementary Data
FMC Corporation
Consolidated Statements of Cash Flows
(in Millions)
Cash provided (required) by operating activities of continuing operations:
Net income
Discontinued operations
Income from continuing operations
Adjustments from income from continuing operations to cash provided (required)
by operating activities of continuing operations:
$
$
Depreciation and amortization
Equity in (earnings) loss of affi liates
Restructuring and other charges (income)
Deferred income taxes
Pension and other postretirement benefi ts
Share-based compensation
Excess tax benefi ts from share-based compensation
Changes in operating assets and liabilities, net of eff ect of acquisitions and divestitures:
Trade receivables, net
Guarantees of vendor fi nancing
Inventories
Other current assets and other assets
Accounts payable
Accrued and other current liabilities and other liabilities
Advance payments from customers
Accrued customer rebates
Income taxes
Pension and other postretirement benefi t contributions
Environmental spending, continuing, net of recoveries
Restructuring and other spending
Cash provided (required) by operating activities
Cash provided (required) by operating activities of discontinued operations:
Environmental spending, discontinued, net of recoveries
Operating activities of discontinued operations held for sale
Payments of other discontinued reserves
Cash provided (required) by operating activities of discontinued operations
The accompanying notes are an integral part of these consolidated financial statements.
Year Ended December 31,
$
$
2013
308.0
159.3
467.3
127.2
0.9
47.9
19.6
62.3
14.2
(7.1)
(394.5)
(3.6)
5.1
(32.3)
40.4
35.0
35.9
63.8
(20.2)
(68.0)
(7.8)
(7.3)
378.8
(31.0)
(0.4)
(18.7)
(50.1)
$
$
2012
435.7
27.5
463.2
115.9
0.7
27.5
55.1
57.1
16.0
(9.7)
(191.6)
12.9
(194.5)
(56.1)
51.4
34.8
64.0
27.2
33.9
(77.5)
(7.1)
(0.9)
422.3
(23.3)
2.8
(42.1)
(62.6)
2011
382.2
38.1
420.3
99.6
(0.8)
6.3
82.4
35.1
14.8
(7.4)
(107.8)
(5.6)
(109.9)
(5.2)
65.4
31.0
44.7
15.5
9.0
(67.0)
(12.0)
(2.4)
506.0
(21.1)
16.7
(120.3)
(124.7)
FMC CORPORATION - Form 10-K 35
PART II
ITEM 8 Financial Statements and Supplementary Data
FMC Corporation
Consolidated Statements of Cash Flows (Continued)
(in Millions)
Cash provided (required) by investing activities of continuing operations:
Capital expenditures
Proceeds from disposal of property, plant and equipment
Acquisitions, net of cash acquired
Investments in nonconsolidated affi liates
Other investing activities
Cash provided (required) by investing activities of continuing operations
Cash provided (required) by investing activities of discontinued
operations held for sale
Cash provided (required) by fi nancing activities of continuing operations:
Net borrowings (repayments) under committed credit facility
Increase (decrease) in short-term debt
Proceeds from borrowing of long-term debt
Financing fees
Repayments of long-term debt
Acquisitions of noncontrolling interests
Distributions to noncontrolling interests
Dividends paid
Issuances of common stock, net
Excess tax benefi ts from share-based compensation
Contingent consideration paid
Repurchases of common stock under publicly announced program
Other repurchases of common stock
Cash provided (required) by fi nancing activities
Eff ect of exchange rate changes on cash and cash equivalents
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of period
CASH AND CASH EQUIVALENTS, END OF PERIOD
Year Ended December 31,
2013
2012
(221.9) $
2.2
(339.6)
(6.4)
(62.8)
(628.5)
(177.3) $
2.8
(142.8)
(13.9)
(32.4)
(363.6)
(24.7)
(30.0)
(130.0)
613.3
410.5
(4.0)
(4.9)
(80.0)
(9.9)
(73.6)
10.7
7.1
(1.0)
(359.9)
(7.1)
371.2
(0.6)
46.1
77.1
123.2
$
130.0
22.6
5.9
—
(20.4)
—
(15.4)
(47.8)
18.7
9.7
(2.5)
(144.9)
(4.1)
(48.2)
0.3
(81.8)
158.9
77.1
$
$
$
2011
(156.8)
1.2
(124.8)
(3.2)
(18.4)
(302.0)
(56.0)
—
9.0
300.2
(8.5)
(121.3)
—
(12.9)
(41.2)
11.3
7.4
—
(165.1)
(4.2)
(25.3)
(0.6)
(2.6)
161.5
158.9
Cash paid for interest, net of capitalized interest was $39.4 million, $36.2 million and $36.3 million, and income taxes paid, net of refunds was
$153.3 million, $59.0 million and $47.9 million in December 31, 2013, 2012 and 2011, respectively. Accrued additions to property, plant and
equipment at December 31, 2013 and 2012 were $53.5 million and $25.3 million, respectively.
See Note 15 regarding quarterly cash dividend.
Th e accompanying notes are an integral part of these consolidated fi nancial statements.
36
FMC CORPORATION - Form 10-K
PART II
ITEM 8 Financial Statements and Supplementary Data
FMC Corporation
Consolidated Statements of Changes in Equity
Common
Stock,
$0.10 Par
Value
18.6
$
Capital
In Excess
of Par
434.3
$
FMC Stockholders’
Accumulated
Other
Comprehensive
Income (Loss)
$
(311.7) $
Retained
Earnings
$ 1,853.0
365.9
12.8
7.4
(60.2)
(3.7)
(14.4)
(42.7)
Treasury
Stock
(862.7) $
Non-
controlling
Interest
57.7
16.3
14.1
(0.8)
(169.3)
$
18.6
$
454.5
$ 2,176.2
416.2
$
(390.0) $ (1,018.7) $
17.7
9.7
(26.9)
5.7
2.3
(55.9)
17.6
2.3
(149.0)
(in Millions, Except Per Share Data)
Balance, December 31, 2010
Net income
Stock compensation plans
Excess tax benefi ts from share-based compensation
Shares for benefi t plan trust
Net pension and other benefi t actuarial gains/(losses)
and prior service costs, net of income tax
Net hedging gains (losses) and other,
net of income tax
Foreign currency translation adjustments
Dividends ($0.30 per share)
Repurchases of common stock
Noncontrolling interests associated
with an acquisition
Distributions to noncontrolling interests
Balance, December 31, 2011
Net income
Stock compensation plans
Excess tax benefi ts from share-based compensation
Shares for benefi t plan trust
Net pension and other benefi t actuarial gains/(losses)
and prior service costs, net of income tax
Net hedging gains (losses) and other,
net of income tax
Foreign currency translation adjustments
Dividends ($0.405 per share)
Repurchases of common stock
Noncontrolling interests associated
with an acquisition
Distributions to noncontrolling interests
$
$
7.1
14.5
18.6
481.9
Balance, December 31, 2012
Net income
Stock compensation plans
Excess tax benefi ts from share-based
compensation
Shares for benefi t plan trust
Net pension and other benefi t actuarial gains/(losses)
and prior service costs, net of income tax
Net hedging gains (losses) and other,
net of income tax
Foreign currency translation adjustments
Dividends ($0.54 per share)
Repurchases of common stock
Noncontrolling interests associated
with an acquisition(1)
Distributions to noncontrolling interests
BALANCE, DECEMBER 31, 2013
(1) See Note 15 for more detail.
The accompanying notes are an integral part of these consolidated financial statements.
(55.2)
448.3
18.6
$
$
$ 2,536.5
293.9
$
(408.9) $ (1,147.8) $
11.6
0.7
(367.0)
209.9
(4.6)
1.7
(73.1)
$ 2,757.3
$
(201.9) $ (1,502.5) $
(24.8)
(9.9)
52.3
(80.0)
(9.9)
$ 1,572.1
FMC CORPORATION - Form 10-K 37
Total
Equity
$ 1,189.2
382.2
26.9
7.4
(0.8)
(60.2)
(3.7)
(15.0)
(42.7)
(169.3)
3.0
(12.9)
$ 1,304.1
435.7
35.3
9.7
2.3
(26.9)
5.7
2.5
(55.9)
(149.0)
6.7
(15.4)
$ 1,554.8
308.0
26.1
7.1
0.7
209.9
(4.6)
0.1
(73.1)
(367.0)
(0.6)
3.0
(12.9)
63.5
19.5
0.2
6.7
(15.4)
74.5
14.1
(1.6)
PART II
ITEM 8 Financial Statements and Supplementary Data
FMC Corporation
Notes to Consolidated Financial Statements
Principal Accounting Policies and Related Financial Information ................................................................................................................................................................39
Note 1
Note 2 Recently Issued and Adopted Accounting Pronouncements and Regulatory Items .............................................................................................................43
Acquisitions .................................................................................................................................................................................................................................................................................................................................44
Note 3
Note 4 Goodwill and Intangible Assets ......................................................................................................................................................................................................................................................................46
Inventories.....................................................................................................................................................................................................................................................................................................................................46
Note 5
Property, Plant and Equipment ......................................................................................................................................................................................................................................................................47
Note 6
Note 7 Restructuring and Other Charges (Income) .................................................................................................................................................................................................................................47
Asset Retirement Obligations ............................................................................................................................................................................................................................................................................49
Note 8
Note 9 Discontinued Operations ........................................................................................................................................................................................................................................................................................49
Note 10 Environmental Obligations ..................................................................................................................................................................................................................................................................................51
Income Taxes .............................................................................................................................................................................................................................................................................................................................54
Note 11
Note 12 Debt .......................................................................................................................................................................................................................................................................................................................................................56
Note 13 Pension and Other Postretirement Benefi ts ..................................................................................................................................................................................................................................57
Note 14 Share-based Compensation ...................................................................................................................................................................................................................................................................................61
Note 15 Equity...................................................................................................................................................................................................................................................................................................................................................63
Note 16 Reclassifi cations of Accumulated Other Comprehensive Income ..................................................................................................................................................................64
Note 17 Earnings Per Share .............................................................................................................................................................................................................................................................................................................65
Note 18 Financial Instruments, Risk Management and Fair Value Measurements ..........................................................................................................................................65
Note 19 Guarantees, Commitments and Contingencies .......................................................................................................................................................................................................................70
Note 20 Segment Information ....................................................................................................................................................................................................................................................................................................72
Note 21 Supplemental Information .....................................................................................................................................................................................................................................................................................74
Note 22 Quarterly Financial Information (Unaudited) ...........................................................................................................................................................................................................................75
38
FMC CORPORATION - Form 10-K
PART II
ITEM 8 Financial Statements and Supplementary Data
NOTE 1 Principal Accounting Policies and Related Financial Information
Nature of Operations
Cash Equivalents
We are a diversifi ed chemical company serving agricultural, consumer
and industrial markets globally with innovative solutions, applications
and market-leading products. We operate in three distinct business
segments: FMC Agricultural Solutions, FMC Health and Nutrition and
FMC Minerals. Our FMC Agricultural Solutions segment develops,
markets and sells all three major classes of crop protection chemicals –
insecticides, herbicides, and fungicides. Th ese products are used in
agriculture to enhance crop yield and quality by controlling a broad
spectrum of insects, weeds and disease, as well as pest control in non-
agricultural markets. FMC Health and Nutrition focuses on food
ingredients and pharmaceuticals additives with an intention to expand
into nutraceuticals, personal care and similar markets. Food ingredients
are used to enhance texture, color, structure and physical stability;
pharmaceutical additives are used for binding, encapsulation and
disintegrant applications. Our FMC Minerals segment manufactures
a wide range of inorganic materials, that are produced from two key
minerals: Trona (soda ash) and lithium.
2013 Segment Realignment and
Presentation Change
In April 2013, we made the decision to simplify our organizational
structure to focus on three core business segments. For more information
on this presentation change see Note 20.
FMC Peroxygens Divestiture
In July 2013 our FMC Peroxygens segment was classified as a
discontinued operation. For more information on the discontinued
operations see Note 9.
Basis of Consolidation and Basis of Presentation
Th e accompanying consolidated fi nancial statements of FMC Corporation
and its subsidiaries were prepared in accordance with accounting
principles generally accepted in the United States of America. Our
consolidated fi nancial statements include the accounts of FMC and all
entities that we directly or indirectly control. All signifi cant intercompany
accounts and transactions are eliminated in consolidation.
Estimates and Assumptions
In preparing the fi nancial statements in conformity with U.S. generally
accepted accounting principles (“GAAP”) we are required to make
estimates and assumptions that aff ect the reported amounts of assets
and liabilities and disclosures of contingent assets and liabilities at the
date of the fi nancial statements and the reported amounts of revenue
and expenses during the reporting period. Actual results are likely to
diff er from those estimates, but we do not believe such diff erences will
materially aff ect our fi nancial position, results of operations or cash fl ows.
We consider investments in all liquid debt instruments with original
maturities of three months or less to be cash equivalents.
Trade Receivables, Net of Allowance
Trade receivables consist of amounts owed to us from customer sales
and are recorded when revenue is recognized. Th e allowance for trade
receivables represents our best estimate of the probable losses associated
with potential customer defaults. In developing our allowance for trade
receivables, we utilize a two stage process which includes calculating a
general formula to develop an allowance to appropriately address the
uncertainty surrounding collection risk of our entire portfolio and
specifi c allowances for customers where the risk of collection has been
reasonably identifi ed either due to liquidity constraints or disputes over
contractual terms and conditions.
Our method of calculating the general formula consists of estimating
the recoverability of trade receivables based on historical experience,
current collection trends, and external business factors such as economic
factors, including regional bankruptcy rates, and political factors. Our
analysis of trade receivable collection risk is performed quarterly, and the
allowance is adjusted accordingly. Th e allowance for trade receivable is
$30.2 million and $26.8 million as of December 31, 2013 and 2012,
respectively. Th e provision to the allowance for trade receivables charged
against operations was $5.7 million, $8.8 million and $3.9 million
for the years ended December 31, 2013, 2012 and 2011, respectively.
Investments
Investments in companies in which our ownership interest is 50 percent
or less and in which we exercise signifi cant infl uence over operating and
fi nancial policies are accounted for using the equity method. Under the
equity method, original investments are recorded at cost and adjusted
by our share of undistributed earnings and losses of these investments.
Majority owned investments in which our control is restricted are also
accounted for using the equity method. All other investments are carried
at their fair values or at cost, as appropriate. We are party to several
joint venture investments throughout the world, which individually
and in the aggregate are not signifi cant to our fi nancial results.
Inventories
Inventories are stated at the lower of cost or market value. Inventory
costs include those costs directly attributable to products before sale,
including all manufacturing overhead but excluding distribution costs.
All domestic inventories, excluding materials and supplies, are determined
on a last-in, fi rst-out (“LIFO”) basis and our remaining inventories are
recorded on a fi rst-in, fi rst-out (“FIFO”) basis. See Note 5.
Property, Plant and Equipment
We record property, plant and equipment, including capitalized interest,
at cost. Depreciation is provided principally on the straight-line basis over
FMC CORPORATION - Form 10-K 39
PART II
ITEM 8 Financial Statements and Supplementary Data
the estimated useful lives of the assets (land improvements—20 years,
buildings—20 to 40 years, and machinery and equipment—three
to 18 years). Gains and losses are refl ected in income upon sale or
retirement of assets. Expenditures that extend the useful lives of
property, plant and equipment or increase productivity are capitalized.
Ordinary repairs and maintenance are expensed as incurred through
operating expense.
Capitalized Interest
We capitalized interest costs of $5.7 million in 2013, $7.2 million in
2012 and $6.3 million in 2011. Th ese costs were associated with the
construction of certain long-lived assets and have been capitalized as
part of the cost of those assets. We amortize capitalized interest over
the assets’ estimated useful lives.
Impairments of Long- Lived Assets
We review the recovery of the net book value of long-lived assets whenever
events and circumstances indicate that the net book value of an asset
may not be recoverable from the estimated undiscounted future cash
fl ows expected to result from its use and eventual disposition. In cases
where undiscounted expected future cash fl ows are less than the net
book value, we recognize an impairment loss equal to an amount by
which the net book value exceeds the fair value of the asset. Long-lived
assets to be disposed of are reported at the lower of carrying amount
or fair value less cost to sell.
Asset Retirement Obligations
We record asset retirement obligations at fair value at the time the
liability is incurred if we can reasonably estimate the settlement date. Th e
associated asset retirement obligations (“AROs”) are capitalized as part
of the carrying amount of related long-lived assets. In future periods,
the liability is accreted to its present value and the capitalized cost is
depreciated over the useful life of the related asset. We also adjust the
liability for changes resulting from the passage of time and/or revisions
to the timing or the amount of the original estimate. Upon retirement
of the long-lived asset, we either settle the obligation for its recorded
amount or incur a gain or loss. See Note 8 for further discussion on
our AROs.
Restructuring and Other Charges
We continually perform strategic reviews and assess the return on our
businesses. Th is sometimes results in a plan to restructure the operations
of a business. We record an accrual for severance and other exit costs
under the provisions of the relevant accounting guidance.
Additionally, as part of these restructuring plans, write-downs of
long-lived assets may occur. Two types of assets are impacted: assets
to be disposed of by sale and assets to be abandoned. Assets to be
disposed of by sale are measured at the lower of carrying amount or
estimated net proceeds from the sale. Assets to be abandoned with
no remaining future service potential are written down to amounts
expected to be recovered. Th e useful life of assets to be abandoned that
have a remaining future service potential are adjusted and depreciation
is recorded over the adjusted useful life.
40
FMC CORPORATION - Form 10-K
Capitalized Software
We capitalize the costs of internal use software in accordance with
accounting literature which generally requires the capitalization of
certain costs incurred to develop or obtain internal use software. We
assess the recoverability of capitalized software costs on an ongoing
basis and record write-downs to fair value as necessary. We amortize
capitalized software costs over expected useful lives ranging from three to
10 years. See Note 21 for the unamortized computer software balances.
Goodwill and Intangible Assets
Goodwill and other indefi nite life intangible assets (“intangibles”) are
not subject to amortization. Instead, they are subject to at least an
annual assessment for impairment by applying a fair value-based test.
We test goodwill and indefi nite life intangibles for impairment annually
using the criteria prescribed by U.S. GAAP accounting guidance for
goodwill and other intangible assets. We did not record any goodwill
or indefi nite life intangible impairments to continuing operations
in 2013, 2012 and 2011. Based upon our annual impairment test,
conducted in 2013, we believe that the fair value of our reporting units
with goodwill substantially exceeds their carrying value.
Finite-lived intangible assets consist primarily of patents, access rights,
customer relationships, trade names, registration rights, industry
licenses, developed formulations and other intangibles and are being
amortized over periods of fi ve to 25 years. See Note 4 for additional
information on goodwill and intangible assets.
Revenue Recognition
We recognize revenue when the earnings process is complete, which
is generally upon transfer of title. Th is transfer typically occurs either
upon shipment to the customer or upon receipt by the customer. In all
cases, we apply the following criteria in recognizing revenue: persuasive
evidence of an arrangement exists, delivery has occurred, the selling price
is fi xed or determinable and collection is reasonably assured. Rebates
due to customers are accrued as a reduction of revenue in the same
period that the related sales are recorded based on the contract terms.
We periodically enter into prepayment arrangements with customers,
primarily in our FMC Agricultural Solutions segment, and receive
advance payments for product to be delivered in future periods.
Th ese advance payments are recorded as deferred revenue and classifi ed as
“Advance payments from customers” on the consolidated balance sheet.
Revenue associated with advance payments is recognized as shipments
are made and title, ownership and risk of loss pass to the customer.
We record amounts billed for shipping and handling fees as revenue.
Costs incurred for shipping and handling are recorded as costs of sales
and services.
Research and Development
Research and development costs are expensed as incurred. In-process
research and development acquired as part of asset acquisitions,
which include license and development agreements, are expensed as
incurred and included as a component of “Restructuring and other
charges (income)”.
Income and Other Taxes
We provide current income taxes on income reported for fi nancial
statement purposes adjusted for transactions that do not enter into
the computation of income taxes payable and recognize deferred
tax liabilities and assets for the expected future tax consequences of
temporary diff erences between the carrying amounts and the tax
basis of assets and liabilities. We do not provide income taxes on the
equity in undistributed earnings of foreign subsidiaries or affi liates
as it is our intention that such earnings will remain invested in those
companies. Investment tax credits or grants, which were immaterial
to us in all years presented, are accounted for in the period earned
(the fl ow-through method).
We record on a net basis all taxes collected from customers to be remitted
to governmental authorities in our consolidated statements of income.
Foreign Currency
We translate the assets and liabilities of our foreign operations at exchange
rates in eff ect at the balance sheet date. For foreign operations for which
the functional currency is not the U.S. dollar we record translation gains
and losses as a component of accumulated other comprehensive income
in equity. Th e foreign operations’ income statements are translated at
the monthly exchange rates for the period.
We record remeasurement gain and losses on monetary assets and
liabilities, such as accounts receivables and payables, which are not in
the functional currency of the operation. Th ese remeasurement gains
and losses are recorded in the income statement as they occur. We
generally enter into foreign currency contracts to mitigate the fi nancial
risk associated with these transactions. See “Derivative fi nancial
instruments” below and Note 18.
Derivative Financial Instruments
We mitigate certain fi nancial exposures, including currency risk,
interest rate risk and commodity price exposures, through a controlled
program of risk management that includes the use of derivative fi nancial
instruments. We enter into foreign exchange contracts, including forward
and purchased option contracts, to reduce the eff ects of fl uctuating
foreign currency exchange rates.
We recognize all derivatives on the balance sheet at fair value. On the
date the derivative instrument is entered into, we generally designate
the derivative as either a hedge of the variability of cash fl ows to be
received or paid related to a forecasted transaction (cash fl ow hedge)
or a hedge of the fair value of a recognized asset or liability or of an
unrecognized fi rm commitment (fair value hedge). We record in
accumulated other comprehensive income or loss changes in the fair
value of derivatives that are designated as, and meet all the required
criteria for, a cash fl ow hedge. We then reclassify these amounts into
earnings as the underlying hedged item aff ects earnings. We record
immediately in earnings changes in the fair value of derivatives that
are not designated as cash fl ow hedges.
We formally document all relationships between hedging instruments
and hedged items, as well as the risk management objective and strategy
for undertaking various hedge transactions. Th is process includes
relating derivatives that are designated as fair value or cash fl ow hedges
to specifi c assets and liabilities on the balance sheet or to specifi c fi rm
PART II
ITEM 8 Financial Statements and Supplementary Data
commitments or forecasted transactions. We also formally assess,
both at the inception of the hedge and throughout its term, whether
each derivative is highly eff ective in off setting changes in fair value
or cash fl ows of the hedged item. If we determine that a derivative is
not highly eff ective as a hedge, or if a derivative ceases to be a highly
eff ective hedge, we discontinue hedge accounting with respect to that
derivative prospectively.
Treasury Stock
We record shares of common stock repurchased at cost as treasury stock,
resulting in a reduction of stockholders’ equity in the Consolidated
Balance Sheets. When the treasury shares are contributed under our
employee benefi t plans or issued for option exercises, we use a fi rst-in,
fi rst-out (“FIFO”) method for determining cost. Th e diff erence between
the cost of the shares and the market price at the time of contribution
to an employee benefi t plan is added to or deducted from capital in
excess of par value of common stock.
Segment Information
We determined our reportable segments based on our strategic business
units, the commonalities among the products and services within each
segment and the manner in which we review and evaluate operating
performance.
We have identifi ed FMC Agricultural Solutions, FMC Health and
Nutrition and FMC Minerals as our reportable segments. Segment
disclosures are included in Note 20. Segment operating profi t is
defi ned as segment revenue less segment operating expenses (segment
operating expenses consist of costs of sales and services, selling, general
and administrative expenses and research and development expenses).
We have excluded the following items from segment operating profi t:
corporate staff expense, interest income and expense associated
with corporate debt facilities and investments, income taxes, gains
(or losses) on divestitures of businesses, restructuring and other charges
(income), investment gains and losses, loss on extinguishment of debt,
asset impairments, LIFO inventory adjustments, acquisition related
costs, non-operating pension and postretirement charges, and other
income and expense items. Information about how restructuring and
other charges (income) relate to our businesses at the segment level is
discussed in Note 7.
Segment assets and liabilities are those assets and liabilities that are
recorded and reported by segment operations. Segment operating
capital employed represents segment assets less segment liabilities.
Segment assets exclude corporate and other assets, which are principally
cash equivalents, the LIFO reserve on inventory, deferred income
taxes, eliminations of intercompany receivables and property and
equipment not attributable to a specifi c segment, such as capitalized
interest. Segment liabilities exclude substantially all debt, income taxes,
pension and other postretirement benefi t liabilities, environmental
reserves and related recoveries, restructuring reserves, deferred gains
on sale and leaseback of equipment, fair value of currency contracts,
intercompany eliminations, and reserves for discontinued operations.
Geographic segment revenue is based on the location of our customers.
Geographic segment long-lived assets include investments, net property,
plant and equipment, and other non-current assets. Geographic segment
data is included in Note 20.
FMC CORPORATION - Form 10-K 41
PART II
ITEM 8 Financial Statements and Supplementary Data
Stock Compensation Plans
We recognize compensation expense in the fi nancial statements for
all share options and other equity-based arrangements. Share-based
compensation cost is measured at the date of grant, based on the fair
value of the award, and is recognized over the employee’s requisite
service period. See Note 14 for further discussion on our share-based
compensation.
Environmental Obligations
We provide for environmental-related obligations when they are
probable and amounts can be reasonably estimated. Where the available
information is suffi cient to estimate the amount of liability, that estimate
has been used. Where the information is only suffi cient 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.
Estimated obligations to remediate sites that involve oversight by the
United States Environmental Protection Agency (“EPA”), or similar
government agencies, are generally accrued no later than when a Record
of Decision (“ROD”), or equivalent, is issued, or upon completion of
a Remedial Investigation/Feasibility Study (“RI/FS”), or equivalent,
that is submitted by us and the appropriate government agency or
agencies. Estimates are reviewed quarterly and, if necessary, adjusted
as additional information becomes available. Th e estimates can change
substantially as additional information becomes available regarding the
nature or extent of site contamination, required remediation methods,
and other actions by or against governmental agencies or private parties.
Our environmental liabilities for continuing and discontinued operations
are principally for costs associated with the remediation and/or study
of sites at which we are alleged to have released hazardous substances
into the environment. Such costs principally include, among other
items, RI/FS, site remediation, costs of operation and maintenance of
the remediation plan, management costs, fees to outside law fi rms and
consultants for work related to the environmental eff ort, and future
monitoring costs. Estimated site liabilities are determined based upon
existing remediation laws and technologies, specifi c site consultants’
engineering studies or by extrapolating experience with environmental
issues at comparable sites.
Included in our environmental liabilities are costs for the operation,
maintenance and monitoring of site remediation plans (OM&M). Such
reserves are based on our best estimates for these OM&M plans. Over
time we may incur OM&M costs in excess of these reserves. However,
we are unable to reasonably estimate an amount in excess of our recorded
reserves because we cannot reasonably estimate the period for which
such OM&M plans will need to be in place or the future annual cost
of such remediation, as conditions at these environmental sites change
over time. Such additional OM&M costs could be signifi cant in total
but would be incurred over an extended period of years.
Included in the environmental reserve balance, other assets balance and
disclosure of reasonably possible loss contingencies are amounts from
third party insurance policies which we believe are probable of recovery.
Provisions for environmental costs are refl ected in income, net of
probable and estimable recoveries from named Potentially Responsible
Parties (“PRPs”) or other third parties. Such provisions incorporate
infl ation and are not discounted to their present values.
In calculating and evaluating the adequacy of our environmental reserves,
we have taken into account the joint and several liability imposed by
Comprehensive Environmental Remediation, Compensation and
Liability Act (“CERCLA”) and the analogous state laws on all PRPs
and have considered the identity and fi nancial condition of the other
PRPs at each site to the extent possible. We have also considered the
identity and fi nancial condition of other third parties from whom
recovery is anticipated, as well as the status of our claims against such
parties. Although we are unable to forecast the ultimate contributions
of PRPs and other third parties with absolute certainty, the degree of
uncertainty with respect to each party is taken into account when
determining the environmental reserve on a site-by-site basis. Our
liability includes our best estimate of the costs expected to be paid
before the consideration of any potential recoveries from third parties.
We believe that any recorded recoveries related to PRPs are realizable
in all material respects. Recoveries are recorded as either an off set in
“Environmental liabilities, continuing and discontinued” or as “Other
assets” in our consolidated balance sheets in accordance with U.S.
accounting literature.
Pension and Other Postretirement Benefi ts
We provide qualifi ed and nonqualifi ed defi ned benefi t and defi ned
contribution pension plans, as well as postretirement health care
and life insurance benefi t plans to our employees and retirees. Th e
costs (or benefi ts) and obligations related to these benefi ts refl ect key
assumptions related to general economic conditions, including interest
(discount) rates, healthcare cost trend rates, expected rates of return on
plan assets and the rates of compensation increase for employees. Th e
costs (or benefi ts) and obligations for these benefi t programs are also
aff ected by other assumptions, such as average retirement age, mortality,
employee turnover, and plan participation. To the extent our plans’
actual experience, as infl uenced by changing economic and fi nancial
market conditions or by changes to our own plans’ demographics,
diff ers from these assumptions, the costs and obligations for providing
these benefi ts, as well as the plans’ funding requirements, could increase
or decrease. When actual results diff er from our assumptions, the
diff erence is typically recognized over future periods. In addition, the
unrealized gains and losses related to our pension and postretirement
benefi t obligations may also aff ect periodic benefi t costs (or benefi ts)
in future periods. See Note 13 for additional information relating to
pension and other postretirement benefi ts.
Reclassifi cations
We have recast all the data within this fi ling to refl ect the changes in our
reportable segments to conform to the current year presentation and
to present our FMC Peroxygens segment as a discontinued operation
retrospectively for all periods presented.
42
FMC CORPORATION - Form 10-K
NOTE 2 Recently Issued and Adopted Accounting Pronouncements and Regulatory Items
PART II
ITEM 8 Financial Statements and Supplementary Data
Accounting Guidance and Regulatory Items
Adopted in 2013
Reclassifi cation from Accumulated Other
Comprehensive Income
In February 2013, the Financial Accounting Standards Board (“FASB”)
issued its guidance requiring new disclosures for the reclassifi cation
from accumulated other comprehensive income (AOCI) to net income.
Th is new guidance requires that we present either in a single note or
parenthetically on the face of the fi nancial statements, the eff ect of
signifi cant amounts reclassifi ed from each component of accumulated
other comprehensive income based on its source and the income
statement line items aff ected by the reclassifi cation. We adopted
this new guidance eff ective on January 1, 2013. Upon adoption, we
decided to present the required disclosures in a new footnote to our
consolidated fi nancial statements. For the new disclosures refer to
the Reclassifi cations of Accumulated Other Comprehensive Income
footnote, see Note 16.
Balance Sheet - Off setting
In December 2011, the FASB issued its updated guidance on balance
sheet off setting. Th is new standard provides guidance to determine
when off setting in the balance sheet is appropriate. Th e guidance is
designed to enhance disclosures by requiring improved information
about fi nancial instruments and derivative instruments. Th e goal is to
provide users of the fi nancial statements the ability to evaluate the eff ect
or potential eff ect of netting arrangements on an entity’s statement of
fi nancial position. We adopted this new guidance on January 1, 2013.
Th e adoption of this guidance resulted in additional disclosure included
within our Financial Instruments, Risk Management and Fair Value
Measurements footnote, see Note 18.
FMC CORPORATION - Form 10-K 43
PART II
ITEM 8 Financial Statements and Supplementary Data
NOTE 3 Acquisitions
2013 Acquisitions
Epax:
In July 2013, we acquired 100 percent of the stock of Epax Nutra
Holding III AS and Epax UK Holding III AS (together, “Epax”).
Epax is a global supplier of fi sh-based omega-3 EPA/DHA fatty acid
concentrates. Epax will be integrated into our FMC Health and
Nutrition segment from the acquisition date. Th e acquisition of Epax
is an important step in fulfi lling our strategic intent to broaden our
product and customer base within our Health and Nutrition segment.
Th e results of operations related to Epax have been included in our
results since the acquisition date. Th is acquisition was considered a
business under the U.S. GAAP business combinations accounting
Purchase Price Allocation
guidance, and therefore we applied acquisition accounting. Acquisition
accounting requires, among other things, that assets and liabilities
assumed be recognized at their fair values as of the acquisition date.
Th e net assets of the Epax acquisition were recorded at the estimated
fair values using primarily Level 2 and Level 3 inputs (see Note 18 for
an explanation of Level 2 and 3 inputs). In valuing acquired assets and
liabilities, valuation inputs include an estimate of future cash fl ows and
discount rates based on the internal rate of return and the weighted
average rate of return. Transaction-related costs of approximately $4.8
million were expensed as incurred and recorded to “Selling, general and
administrative expenses” within our consolidated statements of income.
(in Millions)
15.6
Trade receivables
Inventories(1)
53.7
5.0
Other current assets
136.8
Property, plant & equipment
Intangible assets(2)
71.7
Goodwill(3)
99.4
0.6
Other assets
382.8
Total fair value of assets acquired
12.3
Current liabilities
30.5
Deferred tax liabilities
0.4
Other liabilities
43.2
Total fair value of liabilities assumed
TOTAL CASH PAID, LESS CASH ACQUIRED
339.6
(1) Fair value of finished good inventories acquired included a step-up in the value of approximately $9.1 million, of which $5.2 million was expensed in 2013
$
$
$
$
$
with the remaining to be expensed in 2014. Amounts are expensed to “Cost of sales and services.”
(2) See Note 4 for the major classes of intangible assets acquired, which primarily represent customer relationships and trade names. The weighted average useful
life of the acquired finite-lived intangibles is approximately 17 years.
(3) Goodwill largely consisted of expected revenue synergies resulting from the business combinations. None of the acquired goodwill will be deductible for income
tax purposes.
Unaudited pro forma revenue and net income related to all of the acquisitions discussed above are not presented because the pro forma impact
is not material.
FMC Wyoming:
In the fi rst quarter of 2013, we completed the purchase of additional ownership interest in FMC Wyoming. See Note 15 for more information.
2012 Acquisitions
GAT Microencapsulation AG:
Pectine Italia S.p.A.:
In December 2012, we signed a perpetual, global licensing
agreement, along with distribution and services agreements with GAT
Microencapsulation AG covering a range of advanced crop protection
products and proprietary formulation technologies. Th e acquired assets
have been integrated into our FMC Agricultural Solutions segment.
In August 2012, we acquired the assets of Pectine Italia S.p.A. (PI).
PI produces pectin, a well known stabilizer and thickening agent used
widely in many foods and derived predominately from lemon peels. Th e
company has production facilities in Milazzo, on the island of Sicily.
Th e acquired assets of PI are reported as part of our FMC Health and
Nutrition segment.
44
FMC CORPORATION - Form 10-K
PART II
ITEM 8 Financial Statements and Supplementary Data
Phytone Ltd.:
South Pole Biogroup Ltda:
In June 2012, we acquired 100 percent of the stock of Phytone Ltd.
(Phytone). Phytone is a natural colors producer based in the United
Kingdom. Phytone’s natural products and formulations are used by
global customers in the food, beverage, personal care and nutrition
sectors. Phytone has been consolidated into our existing FMC Health
and Nutrition segment.
Th e total purchase price for the three 2012 acquisitions was $117.4
million. During the year ended December 31, 2013 we fi nalized the
purchase price allocation of the 2013 acquisitions which did not result
in any additional payments. Th e fi nal purchase price for the 2012
acquisitions was primarily allocated to goodwill of $62.4 million,
property, plant and equipment of $27.7 million and identifi able
intangible assets of $38.8 million. See Note 4 for a reconciliation of
the carrying amount of goodwill and intangibles assets at December 31,
2013 and 2012.
2011 Acquisitions
Rovral and Sportak:
In December 2011, we acquired the intellectual property associated
with the fungicide chemistries: iprodione and prochloraz from Bayer
CropScience, which included the trade names Rovral and Sportak.
Th e acquired assets have been integrated into our FMC Agricultural
Solutions segment.
In November 2011, we acquired, via a stock purchase, 100 percent
of South Pole Biogroup Ltda (SPB). SPB is a South American natural
color and health ingredient producer that operates the BioColor and
BioNutrition businesses. SPB has been consolidated into our FMC
Health and Nutrition segment.
Ruralco Soluciones SA:
In July 2011, we acquired a 50 percent controlling ownership interest
in a new Argentine agrochemical distribution company named Ruralco
Soluciones SA (Ruralco). Ruralco has been integrated into our FMC
Agricultural Solutions segment.
Th e total purchase price for the three 2011 acquisitions was $149.0
million of which $124.8 million was paid in 2011 and $24.2 million
of additional purchase price was paid in 2012. During 2012 we paid
$2.5 million in contingent consideration associated with the 2011
acquisitions for which we had accrued $3.5 million at December 31,
2011. Th e remaining amount of contingent consideration of $1.0 million
was paid in 2013.
During the year ended December 31, 2012 we fi nalized the purchase
price allocation of the 2011 acquisitions which resulted in a decrease of
$0.7 million to the goodwill allocated during the preliminary purchase
price allocation. Th ese adjustments were made primarily as a result of
working capital adjustments that were fi nalized. Th e fi nal purchase
price for the 2011 acquisitions was primarily allocated to goodwill of
$17.9 million and identifi able intangible assets of $124.6 million. See
Note 4 for a reconciliation of the carrying amount of goodwill and
intangibles assets at December 31, 2013 and 2012.
FMC CORPORATION - Form 10-K 45
PART II
ITEM 8 Financial Statements and Supplementary Data
NOTE 4 Goodwill and Intangible Assets
Th e changes in the carrying amount of goodwill by business segment for the years ended December 31, 2013 and 2012, are presented in the table below:
(in Millions)
Balance, December 31, 2011
Acquisitions
Foreign currency adjustments
Purchase price allocation adjustments (See Note 3)
Balance, December 31, 2012
Acquisitions
Foreign currency adjustments
BALANCE, DECEMBER 31, 2013
$
$
FMC Agricultural
Solutions
12.4
19.5
0.2
(1.1)
31.0 $
—
—
31.0
$
$
FMC Health and
Nutrition
197.0
42.9
6.3
0.4
246.6 $
99.4
12.4
358.4
$
FMC Minerals
— $
—
—
—
— $
—
—
— $
Total
209.4
62.4
6.5
(0.7)
277.6
99.4
12.4
389.4
$
$
Our intangible assets, other than goodwill, consist of the following:
(in Millions)
Intangible assets subject to amortization (fi nite-lived)
Weighted avg. useful life
at December 31, 2013
December 31, 2013
Accumulated
Amortization
Gross
Net
December 31, 2012
Accumulated
Amortization
Gross
Net
Customer relationships
Patents
Trademarks and trade names
Purchased and licensed technologies
Other intangibles
19 years $
159.3 $
(15.2) $
144.1
$
126.6 $
(8.1) $
118.5
12 years
3 years
11 years
12 years
0.4
1.3
75.6
4.3
—
(0.4)
(19.3)
(2.8)
0.4
0.9
56.3
1.5
0.4
1.2
59.1
4.1
—
(0.1)
(14.0)
(1.9)
0.4
1.1
45.1
2.2
Intangible assets not subject to amortization (indefi nite life)
Trademarks and trade names
In-process research & development
TOTAL INTANGIBLE ASSETS
$
$
$
$
240.9 $
(37.7) $
203.2
67.0
2.1
69.1
$
$
310.0 $
(37.7) $
$
$
67.0
2.1
69.1
$
272.3 $
191.4 $
(24.1) $
167.3
36.3
2.1
38.4
$
36.3
2.1
$
38.4
229.8 $
(24.1) $
205.7
Th e increase in both fi nite-lived and indefi nite life intangible assets during the year ended December 31, 2013 was primarily due to the acquisitions
completed during 2013 as further described in Note 3.
At December 31, 2013, the fi nite-lived and indefi nite life intangibles were allocated among our business segments as follows:
(in Millions)
FMC Agricultural Solutions
FMC Health and Nutrition
FMC Minerals
TOTAL
Finite-lived
107.4 $
94.6
1.2
203.2 $
Indefi nite life
35.2
33.9
—
69.1
$
$
Amortization related to intangible assets was not signifi cant in the periods presented. Th e estimated pre-tax amortization expense for each of
the fi ve years ended December 31, 2014 to 2018 is $14.3 million, $14.1 million, $12.7 million, $12.3 million and $12.1 million, respectively.
NOTE 5
Inventories
Inventories consisted of the following:
(in Millions)
Finished goods
Work in process
Raw materials, supplies and other
FIFO inventory
Less: Excess of FIFO cost over LIFO cost
NET INVENTORIES
$
$
$
December 31,
2013
283.0
276.7
297.8
857.5
(169.1)
688.4
$
2012
268.1
235.1
304.3
807.5
(165.1)
642.4
Approximately 38% and 40% of our inventories in 2013 and 2012, respectively were recorded on the LIFO basis.
46
FMC CORPORATION - Form 10-K
NOTE 6 Property, Plant and Equipment
Property, plant and equipment consisted of the following:
(in Millions)
Land and land improvements
Mineral rights
Buildings
Machinery and equipment
Construction in progress
Total cost
Accumulated depreciation
PROPERTY, PLANT AND EQUIPMENT, NET
PART II
ITEM 8 Financial Statements and Supplementary Data
December 31, 2013
154.3
31.4
372.7
1,839.3
265.5
2,663.2
(1,414.9)
1,248.3
$
$
December 31, 2012
135.8
31.4
317.0
1,741.3
192.3
2,417.8
(1,461.6)
956.2
$
$
Depreciation expense was $94.6 million, $84.0 million, and $81.4 million in 2013, 2012 and 2011, respectively.
NOTE 7 Restructuring and Other Charges (Income)
Th e following table shows total restructuring and other charges included in the respective line items of the Consolidated Statements of Income:
(in Millions)
Restructuring Charges and Asset Disposals
Other Charges (Income), Net
TOTAL RESTRUCTURING AND OTHER CHARGES
Restructuring Charges and Asset Disposals
Year Ended December 31,
2013
9.6 $
38.3
47.9 $
2012
17.7 $
9.8
27.5 $
2011
2.3
4.0
6.3
$
$
Restructuring Charges
Severance and
Employee Benefi ts(1)
Other Charges
(Income)(2)
Asset Disposal
Charges(3)
$
(in Millions)
Lithium Restructuring
Other Items
YEAR ENDED DECEMBER 31, 2013
Lithium Restructuring
Other Items
Year ended December 31, 2012
Other Items
Year ended December 31, 2011
(1) Represents severance and employee benefit charges. Income represents adjustments to previously recorded severance and employee benefits.
(2) Primarily represents costs associated with accrued lease payments, contract terminations, and other miscellaneous exit costs. Other Income primarily represents
2.8 $
1.8
4.6
—
(0.3)
(0.3) $
0.7
0.7
4.4 $
(1.7)
2.7
—
0.7
0.7
0.4
0.4
1.9 $
0.4
2.3 $
13.3
4.0
17.3 $
1.2
1.2 $
Total
9.1
0.5
9.6
13.3
4.4
17.7
2.3
2.3
$
$
$
$
$
$
$
$
favorable developments on previously recorded exit costs as well as recoveries associated with restructuring.
(3) Primarily represents accelerated depreciation and impairment charges on plant and equipment, which were or are to be abandoned. Asset disposal charges also
included the acceleration effect of re-estimating settlement dates and revised cost estimates associated with asset retirement obligations due to facility shutdowns,
see Note 8.
FMC CORPORATION - Form 10-K 47
PART II
ITEM 8 Financial Statements and Supplementary Data
Th e restructuring charges and asset disposals noted above were the result of the following:
FMC Minerals
Lithium Restructuring
In 2012, we committed to the abandonment of various fi xed assets,
primarily equipment, associated with a Potash project that we have
decided not to complete. Potash, commonly used in fertilizers, is
a manufactured by-product of our Lithium extraction process in
Argentina. Given the changes in Potash market conditions, this project
was no longer economically viable. We recorded a non-cash charge of
$13.3 million associated with the abandonment of these assets.
Additionally, in 2013, we implemented a plan to restructure a portion
of the operations. Th e objective of the restructuring was to better align
our business and costs to macroeconomic and market realities. Th e
restructuring decision resulted in workforce reductions at several of
our Lithium facilities, primarily in North Carolina and Argentina.
Th is restructuring is substantially complete.
Other Items
In addition to the restructurings described above, we have engaged in
certain other restructuring activities, which have resulted in severance
and asset disposal costs. We expect these restructuring activities to
improve our global competitiveness through improved cost effi ciencies.
Roll Forward of Restructuring Reserves
Th e following table shows a roll forward of restructuring reserves that will result in cash spending. Th ese amounts exclude asset retirement
obligations, which are discussed in Note 8.
Balance at
12/31/11(4)
Change in
reserves(2)
Cash
payments Other(3)
$
— $
— $
(in Millions)
Lithium Restructuring
Other Workforce Related and
Facility Shutdowns(1)
Restructuring activities related
to discontinued operations(5)
TOTAL
(1) Primarily severance costs related to workforce reductions and facility shutdowns described in the “Other Items” sections above.
(2) Primarily severance, exited lease, contract termination and other miscellaneous exit costs. The accelerated depreciation and impairment charges noted above
(12.1)
(13.0) $
(10.0) $ (1.1) $
(6.9) $ — $
10.0
10.4 $
7.4
10.5 $
9.0
12.4 $
0.5
0.7 $
— $ — $
(0.6)
6.7
3.0
6.1
— $
(0.9)
(0.4)
(1.1)
(2.7)
0.2
0.4
0.1
3.1
2.8
3.4
—
$
$
$
payments Other(3)
Balance at
12/31/12(4)
Change in
reserves(2)
7.2
Cash
Balance at
12/31/13(4)
0.3
impacted our property, plant and equipment balances and are not included in the above tables.
(3) Primarily foreign currency translation adjustments and cash proceeds associated with recoveries.
(4) Included in “Accrued and other liabilities” on the consolidated balance sheets.
(5) Cash spending associated with restructuring activities of discontinued operations is reported within Payments of other discontinued reserves, net of recoveries on
the consolidated statements of cash flows.
OTHER CHARGES (INCOME), NET
(in Millions)
Environmental charges, net
Other, net
OTHER CHARGES (INCOME), NET
Environmental charges, net
Environmental charges represent the net charges associated with
environmental remediation at continuing operating sites, see Note
10 for additional details.
Other, net
During 2013 and 2012 our FMC Agricultural Solutions segment
entered into several collaboration and license agreements with various
third-party companies for the purpose of obtaining certain technology
and intellectual property rights relating to new compounds still
under development. Specifi cally in 2013 we entered into three such
transactions totaling $30.6 million consisting of: exclusive license and
supply arrangements for broad-spectrum crop protection products as
48
FMC CORPORATION - Form 10-K
Year Ended December 31,
2013
6.2 $
32.1
38.3 $
2012
5.8 $
4.0
9.8 $
$
$
2011
3.1
0.9
4.0
well as an acquisition of certain intellectual property and other assets
relating to biological products associated with our acquired assets of
the Center for Agricultural and Environmental Biosolutions (CAEB).
CAEB is based in Research Triangle Park, NC, and amounts acquired
include CAEB’s robust library of microorganisms and a pipeline of
biological products in various stages of development. Th e rights
and technology obtained is referred to as in-process research and
development and in accordance with GAAP, the amounts paid were
expensed as incurred since they were acquired outside of a business
combination. During 2012, our FMC Agricultural Solutions segment
entered into one collaboration and license agreement for $4.4 million
with a third-party company relating to a new fungicide compound
still under development.
PART II
ITEM 8 Financial Statements and Supplementary Data
NOTE 8 Asset Retirement Obligations
We have mining operations in Green River, Wyoming for our soda ash
business as well as mining operations in our lithium operations. We
have legal reclamation obligations related to these facilities upon closure
of the mines. Additionally, we have obligations at the majority of our
manufacturing facilities in the event of a permanent plant shutdown.
Certain of these obligations are recorded in our environmental reserves
described in Note 10. For certain AROs not already accrued, we have
calculated the fair value of these AROs and concluded that the present
value of these obligations was immaterial at December 31, 2013 and
2012. We have also determined that the liability for certain other AROs
cannot currently be calculated as the settlement dates are not reasonably
estimable. We will recognize the liability for these AROs when suffi cient
information exists to estimate a range of potential settlement dates.
Th e changes in the carrying amounts of AROs for the years ended December 31, 2013 and 2012 are as follows:
(in Millions)
Balance , December 31, 2011
Acceleration due to facility shutdowns
Increase (decrease) to previously recorded ARO liability
Accretion expense
Payments
Foreign currency translation adjustments
Balance , December 31, 2012(1)
Increase (decrease) to previously recorded ARO liability
Accretion expense
Payments
Foreign currency translation adjustments
BALANCE , DECEMBER 31, 2013(1)
(1) Included in “Accrued and other liabilities” and “Other long-term liabilities” on the consolidated balance sheets.
NOTE 9 Discontinued Operations
$
$
$
27.0
2.0
(0.7)
0.1
(3.2)
0.3
25.5
4.3
0.1
(8.0)
0.8
22.7
FMC Peroxygens
In April 2013, the Board of Directors authorized management to pursue
the sale of our FMC Peroxygens segment. Th is segment was classifi ed
as a discontinued operation and an asset held for sale beginning with
our September 30, 2013 condensed consolidated fi nancial statements
fi led on Form 10-Q.
In December 2013, we signed a defi nitive agreement to sell FMC
Peroxygens to One Equity Partners (OEP), the private investment
arm of J.P. Morgan Chase & Co. and expect the sale to be completed
in the fi rst quarter of 2014. In addition to the defi nitive agreement
we entered into a customary transitional services agreement with
OEP to provide for the orderly separation of the business and
transition of various functions and processes. Th ese services will be
provided by us to OEP for up to 18 months after closing. Th ese
services would be to provide short-term assistance to OEP, such as
information technology services, while OEP assumes the operations
of the Peroxygen businesses.
Th e operating results of our FMC Peroxygens segment classifi ed as discontinued operations are summarized below:
Year Ended December 31,
(in Millions)
Revenue
Income from discontinued operations before income taxes(1)
Provision for income taxes
Discontinued operations of FMC Peroxygens, net of income taxes, before divestiture related costs(2)
Divestiture related costs of discontinued operations of FMC Peroxygens, net of income taxes
Adjustment to assets held for sale, net of income taxes(3)
TOTAL DISCONTINUED OPERATIONS OF FMC PEROXYGENS, NET OF INCOME TAXES $
(1) Includes allocated interest expense $4.7 million, $4.5 million and $3.9 million for the years ended December 31, 2013, 2012 and 2011. Interest was allocated
2013
328.8
24.2
9.4
14.8
(3.8)
(122.1)
(111.1) $
2012
338.4 $
25.5
13.7
11.8
—
—
11.8 $
2011
341.6
23.4
11.5
11.9
—
—
11.9
$
$
$
$
$
in accordance with relevant discontinued operations accounting guidance.
(2) In accordance with the held for sale accounting criteria effective July 2013 we stopped amortizing and depreciating all assets classified as held for sale.
(3) Assets held for sale be reported at the lower of carrying value or fair value less costs to sell. During the year ended December 31, 2013 we recorded an impairment
charge of $156.7 million ($122.1 million after tax) to adjust the carrying value based on our evaluation.
FMC CORPORATION - Form 10-K 49
PART II
ITEM 8 Financial Statements and Supplementary Data
Th e following table presents the major classes of assets and liabilities of discontinued FMC Peroxygens segment classifi ed as held for sale and
included as part of a disposal group in the consolidated balance sheets:
December 31,
2013
$
(in Millions)
Assets
Current assets of discontinued operations held for sale (primarily trade receivables and inventories)
Property, plant & equipment
Goodwill
Intangible assets, net
Other non-current assets
Noncurrent assets of discontinued operations held for sale(1)
Total Assets
Liabilities
Current liabilities of discontinued operations held for sale
Noncurrent liabilities of discontinued operations held for sale(1)
Total Liabilities
NET ASSETS(2)
(1) Presented as “Current assets\liabilities of discontinued operations held for sale” on the consolidated balance sheet as of December 31, 2013.
(2) Excludes the accumulated net cumulative translation adjustment losses of our foreign FMC Peroxygens operations.
94.8 $
61.1
—
2.7
39.7
103.5
198.3
43.0
5.2
48.2
150.1 $
$
2012
92.4
180.0
16.9
9.9
37.4
244.2
336.6
54.1
3.3
57.4
279.2
In addition to our discontinued FMC Peroxygens segment our other discontinued operations include adjustments to retained liabilities from
previous discontinued operations. Th e primary liabilities retained include environmental liabilities, other postretirement benefi t liabilities, self-
insurance, long-term obligations related to legal proceedings and historical restructuring activities.
Our discontinued operations comprised the following:
Year Ended December 31,
2013
(in Millions)
Adjustment for workers’ compensation, product liability, and other postretirement benefi ts,
net of income tax benefi t (expense) of ($0.3), $0.2 and ($0.3), respectively
Provision for environmental liabilities, net of recoveries, net of income tax benefi t of $14.2,
$7.8 and $9.6, respectively(1)
Provision for legal reserves and expenses, net of recoveries, net of income tax benefi t of $5.5,
$10.6, and $10.3, respectively(2)
Provision for restructuring charges, net of income tax benefi t of $0.5, $1.5 and $7.9, respectively(3)
Discontinued operations of FMC Peroxygens, net of income tax benefi t (expense) of $25.1,
($13.7) and ($11.5), respectively
DISCONTINUED OPERATIONS, NET OF INCOME TAXES
(1) See a roll forward of our environmental reserves as well as discussion on significant environmental issues that occurred during the year in Note 10.
(2) Includes a gain of $13.9 million in 2013 associated with an insurance recovery related to previously discontinued operations legal matters. No such gain existed
(111.1
(159.3) $
11.8
(27.5) $
11.9
(38.1)
(16.7)
(18.2)
(9.0)
(16.7)
(17.3)
(9.1)
(0.3) $
(15.8)
(23.1)
(12.6)
0.7
0.6
$
$
$
)
2012
2011
in 2012 or 2011.
(3) See roll forward of our restructuring reserves in Note 7.
Reserves for Discontinued Operations at December 31, 2013 and 2012
2012
(in Millions)
4.9
Workers’ compensation and product liability reserve
8.3
Postretirement medical and life insurance benefi ts reserve
31.2
Reserves for legal proceedings
RESERVE FOR DISCONTINUED OPERATIONS(1)
44.4
(1) Included in “Other long-term liabilities” on the consolidated balance sheets. Also refer to Note 7 for discontinued restructuring reserves and Note 10 for
6.7 $
9.6
36.9
53.2 $
$
$
December 31,
2013
discontinued environmental reserves.
Th e discontinued postretirement medical and life insurance benefi ts liability
equals the accumulated postretirement benefi t obligation. Associated
with this liability is a net pretax actuarial gain and prior service credit
of $7.9 million ($3.9 million after-tax) and $11.3 million ($7.1 million
after-tax) at December 31, 2013 and 2012, respectively. Th e estimated
net pre-tax actuarial gain and prior service credit that will be amortized
from accumulated other comprehensive income into discontinued
operations during 2014 are $1.5 million and $0.1 million, respectively.
50
FMC CORPORATION - Form 10-K
Net, spending in 2013, 2012 and 2011 was $0.9 million, $1.0 million
and $1.3 million, respectively, for workers’ compensation, product
liability and other claims; $0.9 million, $0.7 million and $1.0 million,
respectively, for other postretirement benefi ts; and $8.8 million,
$24.6 million and $20.9 million, respectively, related to reserves for
legal proceedings associated with discontinued operations.
PART II
ITEM 8 Financial Statements and Supplementary Data
NOTE 10 Environmental Obligations
We are subject to various federal, state, local and foreign environmental
laws and regulations that govern emissions of air pollutants, discharges
of water pollutants, and the manufacture, storage, handling and
disposal of hazardous substances, hazardous wastes and other toxic
materials and remediation of contaminated sites. We are also subject to
liabilities arising under the Comprehensive Environmental Response,
Compensation and Liability Act (“CERCLA”) and similar state laws
that impose responsibility on persons who arranged for the disposal
of hazardous substances, and on current and previous owners and
operators of a facility for the clean-up of hazardous substances released
from the facility into the environment. We are also subject to liabilities
under the Resource Conservation and Recovery Act (“RCRA”) and
analogous state laws that require owners and operators of facilities
that have treated, stored or disposed of hazardous waste pursuant to
a RCRA permit to follow certain waste management practices and
to clean up releases of hazardous substances into the environment
associated with past or present practices. In addition, when deemed
appropriate, we enter certain sites with potential liability into voluntary
remediation compliance programs, which are also subject to guidelines
that require owners and operators, current and previous, to clean up
releases of hazardous substances into the environment associated with
past or present practices.
We have been named a Potentially Responsible Party (“PRP”) at
31 sites on the federal government’s National Priorities List (“NPL”),
at which our potential liability has not yet been settled. In addition,
we received notice from the EPA or other regulatory agencies that we
may be a PRP, or PRP equivalent, at other sites, including 37 sites at
which we have determined that it is reasonably possible that we have
an environmental liability. In cooperation with appropriate government
agencies, we are currently participating in, or have participated in, a
Remedial Investigation/Feasibility Study (“RI/FS”), or equivalent, at
most of the identifi ed sites, with the status of each investigation varying
from site to site. At certain sites, a RI/FS has only recently begun,
providing limited information, if any, relating to cost estimates, timing,
or the involvement of other PRPs; whereas, at other sites, the studies
are complete, remedial action plans have been chosen, or a Record of
Decision (“ROD”) has been issued.
Environmental liabilities consist of obligations relating to waste handling
and the remediation and/or study of sites at which we are alleged to
have released or disposed of hazardous substances. Th ese sites include
current operations, previously operated sites, and sites associated with
discontinued operations. We have provided reserves for potential
environmental obligations that we consider probable and for which a
reasonable estimate of the obligation can be made. Accordingly, total
reserves of $225.7 million and $236.5 million, respectively, before
recoveries, existed at December 31, 2013 and 2012.
Th e estimated reasonably possible environmental loss contingencies,
net of expected recoveries, exceed amounts accrued by approximately
$170 million at December 31, 2013. Th is reasonably possible estimate
is based upon information available as of the date of the fi ling and the
actual future losses may be higher given the uncertainties regarding
the status of laws, regulations, enforcement policies, the impact of
potentially responsible parties, technology and information related
to individual sites.
Additionally, although potential environmental remediation expenditures
in excess of the reserves and estimated loss contingencies could be
signifi cant, the impact on our future consolidated fi nancial results is
not subject to reasonable estimation due to numerous uncertainties
concerning the nature and scope of possible contamination at many
sites, identifi cation of remediation alternatives under constantly changing
requirements, selection of new and diverse clean-up technologies to
meet compliance standards, the timing of potential expenditures and
the allocation of costs among PRPs as well as other third parties. Th e
liabilities 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. However, we believe any
liability arising from such potential environmental obligations is not
likely to have a material adverse eff ect on our liquidity or fi nancial
condition as it may be satisfi ed over many years.
Th e table below is a roll forward of our total environmental reserves, continuing and discontinued, from December 31, 2010 to December 31, 2013.
(in Millions)
Total environmental reserves, net of recoveries at December 31, 2010
2011
Provision
Spending, net of recoveries
Net change
Total environmental reserves, net of recoveries at December 31, 2011
2012
Provision
Spending, net of recoveries
Net change
Total environmental reserves, net of recoveries at December 31, 2012
2013
Provision
Spending, net of recoveries
Net change
TOTAL ENVIRONMENTAL RESERVES, NET OF RECOVERIES AT DECEMBER 31, 2013
Operating and
Discontinued Sites Total
224.9
$
45.2
(43.2)
2.0
226.9
31.2
(42.1)
(10.9)
216.0
48.2
(59.5)
(11.3)
204.7
$
$
$
FMC CORPORATION - Form 10-K 51
PART II
ITEM 8 Financial Statements and Supplementary Data
To ensure we are held responsible only for our equitable share of site
remediation costs, we have initiated, and will continue to initiate, legal
proceedings for contributions from other PRPs. At December 31, 2013
and 2012, we have recorded recoveries representing probable realization
of claims against U.S. government agencies, insurance carriers and
other third parties. Recoveries are recorded as either an off set to the
“Environmental liabilities, continuing and discontinued” or as “Other
assets” in the consolidated balance sheets.
Th e table below is a roll forward of our total recorded recoveries from December 31, 2011 to December 31, 2013:
December 31,
2011
Increase in
Recoveries Cash Received
December 31,
2012
(in Millions)
Environmental liabilities,
continuing and discontinued
Other assets(1)
TOTAL
(1) The amounts are included within “Prepaid and other current assets” and “Other assets”. See Note 21 for more details.
6.0 $
11.7
17.7 $
20.5 $
51.6
72.1 $
24.3 $
58.3
82.6 $
2.2 $
5.0
7.2 $
$
$
Increase in
Recoveries
4.5 $
4.7
9.2 $
Th e table below provides detail of current and long-term environmental reserves, continuing and discontinued.
Cash
Received
December 31,
2013
4.0 $
20.8
24.8 $
21.0
35.5
56.5
December 31,
2012
(in Millions)
Environmental reserves, current, net of recoveries(1)
15.8
Environmental reserves, long-term continuing and discontinued, net of recoveries(2)
200.2
TOTAL ENVIRONMENTAL RESERVES, NET OF RECOVERIES
216.0
(1) “Current” includes only those reserves related to continuing operations. These amounts are included within “Accrued and other liabilities” on the consolidated
2013
29.5 $
175.2
204.7 $
$
$
balance sheets.
(2) These amounts are included in “Environmental liabilities, continuing and discontinued” on the consolidated balance sheets.
Our net environmental provisions relate to costs for the continued cleanup of both operating sites and for certain discontinued manufacturing
operations from previous years. Th e net provisions are comprised as follows:
(in Millions)
Continuing operations(1)
Discontinued operations(2)
NET ENVIRONMENTAL PROVISION
(1) Recorded as a component of “Restructuring and other charges (income)” on our consolidated statements of income. See Note 7.
(2) Recorded as a component of “Discontinued operations, net” on our consolidated statements of income. See Note 9.
6.2 $
37.3
43.5 $
$
$
Year ended December 31,
2013
2012
5.8 $
20.4
26.2 $
2011
3.1
25.4
28.5
On our consolidated balance sheets, the net environmental provisions aff ect assets and liabilities as follows:
Year ended December 31,
(in Millions)
Environmental reserves(1)
Other assets(2)
NET ENVIRONMENTAL PROVISION
(1) See above roll forward of our total environmental reserves as presented on our consolidated balance sheets.
(2) Represents certain environmental recoveries. See Note 21 for details of Other assets as presented on our consolidated balance sheets.
2013
48.2 $
(4.7)
43.5 $
$
$
2012
31.2 $
(5.0)
26.2 $
2011
45.2
(16.7)
28.5
Signifi cant Environmental Sites
Front Royal
Th is discontinued manufacturing site, built in 1940 by American
Viscose, was once one of the world’s largest producers of rayon, an
instrumental product for NASA’s space shuttle program. Th e facility
also made tire cord, parachutes and jump suits for the Department of
War during World War II. We purchased the plant in 1963 and sold it
in 1976 to Avtex Fibers Corporation. In 1989, this Avtex site was cited
for violations of Virginia environmental laws, associated primarily with
wastewater discharges into the Shenandoah River and was subsequently
shut down. We, as the sole surviving owner of the plant, became the
mandated “potentially responsible party” for cleanup purposes.
On October 21, 1999, the Federal District Court for the Western District of
Virginia approved a Consent Decree signed by FMC, the EPA (Region III)
and the Department of Justice (“DOJ”) regarding past response costs and
52
FMC CORPORATION - Form 10-K
future clean-up work at this site. In January 2010, the EPA issued a Record
of Decision (ROD) for Operable Unit 7 (OU-7) primarily addressing
waste basins and ground water, which should be the last operable unit
to be remediated at the site. Included in our reserves for this site is the
cost associated with a groundwater treatment plant which is an integral
component of the remedy required to address the OU-7 ROD. Th is
groundwater treatment plant is currently under construction and expected
to be complete in 2014. As part of a prior settlement, government agencies
have reimbursed us for approximately one-third of the clean-up costs due to
the government’s role at the site, and we expect reimbursement to continue
in the future. Th e amount of the reserve for this site was $25.6 million and
$41.2 million at December 31, 2013 and 2012, respectively.
Pocatello
From 1949 until 2001, we operated the world’s largest elemental
phosphorus plant in Power County, Idaho, just outside the city of
Pocatello. Since the plant’s closure, FMC has worked with the EPA,
the State of Idaho, and the Shoshone-Bannock Tribes to develop a
proposed cleanup plan for the property. In September of 2012 the EPA
issued an interim record of decision (IROD) that is environmentally
protective and that ensures the health and safety of both workers
and the general public. Since the plant’s closure, we have successfully
decommissioned our Pocatello plant, completed closure of the RCRA
ponds and formally requested that the EPA acknowledge completion of
work under a June 1999 RCRA Consent Decree. Future remediation
costs include completion of the IROD that addresses groundwater
contamination and existing waste disposal areas on the Pocatello plant
portion of the Eastern Michaud Flats Superfund Site. In June 2013
EPA issued a Unilateral Administrative Order to us under which we
will implement the IROD remedy. Our current reserves factor in the
estimated costs associated with implementing the IROD. In addition
to implementing the IROD, we continue to conduct work pursuant
to CERCLA unilateral administrative orders to address air emissions
from beneath the cap of several of the closed RCRA ponds.
The amount of the reserve for this site was $61.3 million and
$61.7 million at December 31, 2013 and 2012, respectively.
Pocatello Tribal Litigation
For a number of years, we engaged in disputes with the Tribes concerning
their attempts to regulate our activities on the reservation. On March 6,
2006, a U.S. District Court Judge found that the Tribes were a third-
party benefi ciary of a 1998 RCRA Consent Decree and ordered us to
apply for any applicable Tribal permits relating to the nearly-complete
RCRA Consent Decree work. Th e third-party benefi ciary ruling was
later reversed by the Ninth Circuit Court of Appeals, but the permitting
process continued in the tribal legal system. We applied for the tribal
permits, but preserved objections to the Tribes’ jurisdiction.
In addition, in 1998, the Tribes and we entered into an agreement
(“1998 Agreement”) that required us to pay the Tribes $1.5 million
per year for waste generated from operating our Pocatello plant and
stored on site. We paid $1.5 million per year until December 2001
when the plant closed. In our view the agreement was terminated, as
the plant was no longer generating waste. Th e Tribes claim that the
1998 Agreement has no end date.
On April 25, 2006 the Tribes’ Land Use Policy Commission issued
us a Special Use Permit for the “disposal and storage of waste” at the
Pocatello plant and imposed a $1.5 million per annum permit fee.
Th e permit and fee were affi rmed by the Tribal Business Council
on July 21, 2006. We sought review of the permit and fee in Tribal
Court, in which the Tribes also brought a claim for breach of the 1998
Agreement. On May 21, 2008, the Tribal Court reversed the permit
and fee, fi nding that they were not authorized under tribal law, and
dismissed the Tribes’ breach of contract claim. Th e Tribes appealed to
the Tribal Court of Appeals.
On May 8, 2012, the Tribal Court of Appeals reversed the May 21, 2008
Tribal Court decision and issued a decision fi nding the permit and fee
validly authorized and ordering us to pay waste permit fees in the amount
of $1.5 million per annum for the years 2002-2007 ($9.0 million in total),
PART II
ITEM 8 Financial Statements and Supplementary Data
the Tribes’ demand as set forth in the lawsuit. It also reinstated the breach
of contract claim. Th e Tribes have fi led additional litigation to recover the
permit fees for the years since 2007, but that litigation has been stayed
pending the outcome of the appeal in the Tribal Court of Appeals.
Following the issuance of the Tribal Appellate Court’s decision, the
Tribes fi led a motion to correct errors in the Court’s decision and to
seek fees and costs on appeal. We opposed that motion and fi led our
own motion to strike certain portions of the decision and supplement
the record. Th e Tribal Appellate Court granted the Tribes’ motion for
fees but scheduled a further hearing on that motion, and also ordered an
evidentiary hearing in the Tribal Appellate Court on the Tribes’ breach
of contract claim and additional issues related to Tribal jurisdiction.
Th e Tribal Appellate Court has scheduled an evidentiary hearing in
the second quarter of 2014 on certain jurisdictional issues.
After we exhaust the Tribal administrative and judicial process, we intend
to fi le an action in the United States District Court seeking declaratory
and injunctive relief on the grounds that the Tribes lacked jurisdiction
over us. We will argue that in accordance with a U.S. Supreme Court
decision, we neither consented to jurisdiction, nor engaged in conduct
that threatened the political integrity, economic security or health and
welfare of tribal members; therefore, the exceptions under which Tribes
may assert jurisdiction over non-Indian owners of fee land within a
reservation have not been met. Should we prevail on that theory and the
Tribes subsequently try to enforce the 1998 Agreement in federal court, we
have a number of defenses, including the termination of the agreement.
We have estimated a reasonably possible loss for this matter and it has
been refl ected in our total reasonably possible loss estimate previously
discussed within this note.
Middleport
Our Middleport, NY facility is currently an Agricultural Solutions
formulation and packaging plant that formerly manufactured arsenic-
based and other products. As a result of past manufacturing operations
and waste disposal practices at this facility, releases of hazardous substances
have occurred at the site that have aff ected soil, sediment, surface water
and groundwater at the facility’s property and also in adjacent off -site
areas. Th e impact of our discontinued operations was the subject of an
Administrative Order on Consent (“AOC”) entered into with the EPA
and New York State Department of Environmental Conservation (the
“Agencies”) in 1991. Th e AOC requires us to (1) defi ne the nature and
extent of contamination caused by our historical plant operations, (2)
take interim corrective measures and (3) evaluate Corrective Action
Management Alternatives (“CMA”) for discrete contaminated areas.
We have defi ned the nature and extent of the contamination and have
constructed an engineered cover, closed the RCRA regulated surface
water impoundments and are collecting and treating both surface water
runoff and ground water, which has satisfi ed the fi rst two requirements
of the AOC.
During the second quarter of 2013, the New York State Department
of Environmental Conservation issued the Final Statement of Basis
(FSOB). Th e FSOB is consistent with their Preliminary Statement of
Basis issued in June 2012. Th e FSOB requires a CMA in two off -site
areas that would require us to remediate contamination in approximately
200 residential properties in Middleport to a standard of 20 ppm on
a point-to-point basis. We believe that this proposed CMA for these
FMC CORPORATION - Form 10-K 53
PART II
ITEM 8 Financial Statements and Supplementary Data
areas is overly conservative and not supported under New York State
law or under the AOC and other agreements among the parties to the
AOC. Th e Middleport community has expressed objections to the
Agencies’ FSOB on the grounds that it is not supported by site-specifi c
risk assessment and would be disruptive to the community. In order to
negotiate with the Agencies with respect to the CMA, we entered into
a tolling agreement with the Agencies. Th e tolling agreement serves as
a “standstill” agreement to the FSOB so that time spent negotiating
with the Agencies does not go against the statute of limitations under
the FSOB. Th e tolling agreement expires on February 18, 2014, after
which we have 15 days to fi le a notice that we dispute the FSOB. If
we have not reached an agreement with the Agencies by that time
and the tolling agreement is not otherwise extended, we intend to
fi le such a notice.
Th e amount of the reserve for this site is $41.7 million and $42.4
million at December 31, 2013 and 2012, respectively. Our reserve
continues to include the estimated liability for clean-up to refl ect
the costs associated with our recommended CMA. Our estimated
reasonably possible environmental loss contingencies exposure refl ects
the additional cost of the CMA proposed in the FSOB.
NOTE 11 Income Taxes
Domestic and foreign components of income from continuing operations before income taxes are shown below:
(in Millions)
Domestic
Foreign
TOTAL
Year Ended December 31,
2013
287.1
328.8
615.9
$
$
2012
359.3
238.4
597.7
$
$
$
$
Th e provision (benefi t) for income taxes attributable to income from continuing operations consisted of:
(in Millions)
Current:
Federal
Foreign
State
Total current
Deferred:
Federal
Foreign
State
Total deferred
TOTAL
Total income tax provisions (benefi ts) were allocated as follows:
(in Millions)
Continuing operations
Discontinued operations
Items charged directly to equity
TOTAL
Year Ended December 31,
2013
57.1 $
66.2
5.7
129.0
29.7
(18.0)
7.9
19.6
148.6
$
2012
23.1
55.6
0.7
79.4
73.3
(12.3)
(5.9)
55.1
134.5
$
$
Year Ended December 31,
2013
148.6 $
(45.0)
116.6
220.2
$
2012
134.5 $
(6.4)
(19.2)
108.9
$
$
$
$
$
2011
300.8
252.4
553.2
2011
11.6
39.2
(0.3)
50.5
61.8
14.8
5.8
82.4
132.9
2011
132.9
(16.0)
(43.1)
73.8
Signifi cant components of the deferred income tax provision (benefi t) attributable to income from continuing operations before income taxes
are as follows:
(in Millions)
Deferred tax (exclusive of valuation allowance)
Net increase (decrease) in the valuation allowance for deferred tax assets
DEFERRED INCOME TAX PROVISION
Year Ended December 31,
2013
19.4 $
0.2
19.6
$
2012
68.8
(13.7)
55.1
$
$
$
$
2011
71.7
10.7
82.4
54
FMC CORPORATION - Form 10-K
PART II
ITEM 8 Financial Statements and Supplementary Data
We have recognized that it is more likely than not that certain future
tax benefi ts may not be realized through future taxable income. During
the year ended December 31, 2013, the valuation allowance change
was due to $2.1 million of tax losses incurred by certain foreign
operations that are not expected to be recoverable, partially off set by
a $1.9 million release primarily due to state net operating losses now
expected to be recoverable. During the year ended December 31, 2012,
the decrease was primarily due to a release of $14.9 million related to
state net operating losses expected to be recoverable, partially off set by
a $1.2 million provision due to tax losses of foreign operations that are
not expected to be recoverable. During the year ended December 31,
2011, the valuation allowance increased by $10.7 million primarily
due to tax losses incurred by foreign operations that were not expected
to be recoverable.
Signifi cant components of our deferred tax assets and liabilities were attributable to:
(in Millions)
Reserves for discontinued operations, environmental and restructuring
Accrued pension and other postretirement benefi ts
Alternative minimum, foreign tax and other credit carryforwards
Net operating loss carryforwards
Deferred expenditures capitalized for tax
Other
Deferred tax assets
Valuation allowance, net(1)
Deferred tax assets, net of valuation allowance
Property, plant and equipment, net
Deferred tax liabilities
NET DEFERRED TAX ASSETS
(1) The change in the net valuation allowance was primarily driven by our FMC Peroxygens’ foreign operations which are classified as discontinued operations.
December 31,
2013
127.7 $
9.4
8.4
104.0
44.9
124.6
419.0
(108.2)
310.8
78.5
78.5
232.3
2012
103.1
135.3
11.8
112.5
55.6
118.5
536.8
(84.5)
452.3
94.3
94.3
358.0
$
$
$
$
$
$
$
$
$
We evaluate our deferred income taxes quarterly to determine if valuation
allowances are required or should be adjusted. U.S. GAAP accounting
guidance requires that companies assess whether valuation allowances
should be established against their deferred tax assets based on all available
evidence, both positive and negative, using a “more likely than not”
standard. In assessing the need for a valuation allowance, appropriate
consideration is given to all positive and negative evidence related to the
realization of the deferred tax assets. Th is assessment considers, among
other matters, the nature and severity of current and cumulative losses,
forecasts of future profi tability, the duration of statutory carryforward
periods, and tax planning alternatives. We operate and derive income
from multiple lines of business across multiple jurisdictions. As each
of the respective lines of business experiences changes in operating
results across their geographic footprint, we may encounter losses
in jurisdictions that have been historically profi table, and as a result
might require additional valuation allowances to be recorded. We
are committed to implementing tax planning actions, when deemed
appropriate, in jurisdictions that experience losses in order to realize
deferred tax assets prior to their expiration.
At December 31, 2013, we had net operating loss and tax credit
carryforwards as follows: U.S. state net operating loss carryforwards
of $20.6 million (tax-eff ected) expiring in future years through 2027,
foreign net operating loss carryforwards of $83.4 million (tax-eff ected)
expiring in various future years, U.S. foreign tax credit carryforwards
of $1.1 million expiring in 2015 and foreign tax credit carryforwards
of $7.3 million expiring in various future years.
Th e eff ective income tax rate applicable to income from continuing operations before income taxes was diff erent from the statutory U.S. federal
income tax rate due to the factors listed in the following table:
Year Ended December 31,
Statutory U.S. tax rate
Net diff erence:
Percentage depletion
State and local income taxes, less federal income tax benefi t
Foreign earnings subject to diff erent tax rates
Manufacturer’s production deduction and miscellaneous tax credits
Tax on intercompany dividends and deemed dividend for tax purposes
Nondeductible expenses
Changes to unrecognized tax benefi ts
Change in valuation allowance
Other
Total diff erence
EFFECTIVE TAX RATE
2013
35.0%
(3.4)
2.2
(11.3)
(1.1)
0.6
0.4
0.9
—
0.8
(10.9)
24.1%
2012
35.0%
(3.5)
1.1
(7.3)
(1.3)
0.4
0.4
(0.3)
(1.6)
(0.4)
(12.5)
22.5%
2011
35.0%
(3.7)
1.1
(9.2)
(0.8)
1.0
1.0
(1.8)
2.1
(0.7)
(11.0)
24.0%
FMC CORPORATION - Form 10-K 55
PART II
ITEM 8 Financial Statements and Supplementary Data
In the third quarter of 2013, we changed our assertion on unremitted
earnings related to certain foreign subsidiaries as a result of the expected
sale of our discontinued FMC Peroxygens segment. As of December 31,
2013, we provided deferred tax liabilities of approximately $0.1 million
attributable to the intended repatriation of proceeds earned on the sale.
Unremitted earnings of foreign subsidiaries for which we have not
provided taxes approximate $1,392.9 million. We have not provided
taxes for these earnings given that our intention, as of December 31,
2013, is to indefi nitely reinvest such earnings in the respective existing
foreign operations. We have not provided deferred tax liabilities for
basis diff erences in investments in subsidiaries because the investments
are essentially permanent in duration or we have concluded that no
additional tax liability will arise upon disposal. A liability may arise
in the future if our intention to indefi nitely reinvest such earnings
were to change, however it is not practical to estimate the income tax
liability that may be incurred.
Uncertain Income Tax Positions
U.S. GAAP accounting guidance for uncertainty in income taxes
prescribes a model for the recognition and measurement of a tax
position taken or expected to be taken in a tax return, and provides
guidance on derecognition, classifi cation, interest and penalties,
disclosure and transition.
We fi le income tax returns in the U.S. federal jurisdiction, and various
states and foreign jurisdictions. Th e income tax returns for FMC entities
taxable in the U.S. and signifi cant foreign jurisdictions are open for
examination and adjustment. As of December 31, 2013, the U. S. federal
and state income tax returns are open for examination and adjustment
for the years 2010-2013 and 2004-2013, respectively. Our signifi cant
foreign jurisdictions, which total 19, are open for examination and
adjustment during varying periods from 2004-2013.
Th e total amount of unrecognized tax benefi ts that, if recognized, would
impact the eff ective tax rate was $10.8 million and $6.6 million as of
December 31, 2013 and December 31, 2012, respectively. Interest
and penalties related to unrecognized tax benefi ts are reported as a
component of income tax expense. For the years ended December 31,
2013 and December 31, 2012, we recognized interest and penalties
of $2.1 million and $0.1 million, respectively, in the consolidated
statements of income. No interest or penalties were recognized in
2011. As of December 31, 2013 and December 31, 2012, we have
accrued interest and penalties in the consolidated balance sheets of
$2.2 million and $0.1 million, respectively.
Due to the potential for resolution of federal, state, or foreign
examinations, and the expiration of various jurisdictional statutes
of limitation, it is reasonably possible that our liability for gross
unrecognized tax benefi ts will decrease within the next 12 months by
a range of $1.2 million to $1.7 million.
A reconciliation of the beginning and ending amount of unrecognized tax benefi ts is as follows:
(in Millions)
Balance at beginning of year
Additions for the current year
Additions for tax positions on acquisitions
Adjustments for tax positions of prior years for:
$
$
2013
23.3
15.4
(1.3)
$
2012
8.1
5.5
—
2011
17.3
4.9
1.4
Adjustments
Settlements during the period
BALANCE AT END OF YEAR(1)
(1) At December 31, 2013 and 2012, we recognized an offsetting non-current deferred tax asset of $28.7 million and $16.7 million, respectively, relating to specific
—
(15.5)
8.1
(0.1)
—
37.3
9.7
—
23.3
$
$
$
uncertain tax positions presented above.
NOTE 12 Debt
Debt maturing within one year
Debt maturing within one year consists of the following:
(in Millions)
Short-term foreign debt(1)
Commercial paper
Total short-term debt
Current portion of long-term debt
SHORT-TERM DEBT AND CURRENT PORTION OF LONG-TERM DEBT
Weighted average interest rates for short-term debt outstanding at year-end
(1) We often provide parent-company guarantees to lending institutions that extend credit to our foreign subsidiaries.
Commercial Paper
$
$
$
December 31,
2013
7.1
656.0
663.1
34.7
697.8
$
0.4%
2012
49.9
—
49.9
5.7
55.6
6.5%
In June 2013, we commenced a $1.5 billion commercial paper program
supported by our Credit Facility. Th is program allows us to borrow at
rates generally more favorable than those available under our Credit
Facility. We primarily use the proceeds from the commercial paper
program for general corporate purposes. At December 31, 2013, the
average eff ective interest rate on these borrowings was 0.34 percent.
56
FMC CORPORATION - Form 10-K
PART II
ITEM 8 Financial Statements and Supplementary Data
2013 Senior Notes
On November 15, 2013, we issued $400 million aggregate principal
amount of 4.10 percent Senior Notes due 2024. Th e net proceeds
from the off ering were used for general corporate purposes including
repayment of outstanding commercial paper.
Credit Facility
On August 5, 2013, we entered into an Amendment and Consent No.
1 (the Amendment) to our credit agreement, dated August 5, 2011. Th e
Amendment, among other things, extended the termination date of
the Credit Facility to August 5, 2017 from August 5, 2016. Our Credit
Facility provides a $1.5 billion unsecured revolving credit facility for
general corporate purposes. We have the option to increase the facility
to $2.25 billion. Borrowings under the Credit Facility bear interest
at either a fl oating rate, which will be a base rate, or a Eurocurrency
rate equal to the London Inter-Bank Off ered Rate for the relevant
term, plus in each case, an applicable margin. Th e applicable margin is
1.13 percent per year, subject to adjustment based on the credit rating
assigned to our senior unsecured debt.
Long-term debt
Long-term debt consists of the following:
December 31, 2013
Interest Rate
Percentage
Maturity
Date
(in Millions)
Pollution control and industrial revenue bonds (less unamortized discounts
of $0.2 and $0.2, respectively)
Senior notes (less unamortized discount of $2.2 and $1.8, respectively)
Credit Facility(1)
Foreign debt
Total long-term debt
Less: debt maturing within one year
TOTAL LONG-TERM DEBT, LESS CURRENT PORTION
(1) Letters of credit outstanding under the Credit Facility totaled $73.2 million and available funds under this facility were $770.8 million at December 31, 2013 (which
0.1-6.5% 2014-2035 $
3.95-5.2% 2019-2024
2017
0-8.9% 2014-2023
174.0
997.8
—
17.0
1,188.8
34.7
1,154.1
176.7
598.2
130.0
9.6
914.5
5.7
908.8
2.4%
$
$
$
12/31/2013
12/31/2012
reflects borrowing under our commercial paper program).
Maturities of long-term debt
Maturities of long-term debt outstanding, excluding discounts, at
December 31, 2013, are $34.7 million in 2014, $0.9 million in 2015,
$1.0 million in 2016, $0.7 million in 2017, $0.7 million in 2018 and
$1,150.8 million thereafter.
actual leverage for the four consecutive quarters ended December 31,
2013 was 2.4 which is below the maximum leverage of 3.5. Our actual
interest coverage for the four consecutive quarters ended December
31, 2013 was 19.4 which is above the minimum interest coverage of
3.5. We were in compliance with all covenants at December 31, 2013.
Covenants
Among other restrictions, the Credit Facility contains fi nancial covenants
applicable to FMC and its consolidated subsidiaries related to leverage
(measured as the ratio of debt to adjusted earnings) and interest coverage
(measured as the ratio of adjusted earnings to interest expense). Our
Compensating Balance Agreements
We maintain informal credit arrangements in many foreign countries.
Foreign lines of credit, which include overdraft facilities, typically
do not require the maintenance of compensating balances, as credit
extension is not guaranteed but is subject to the availability of funds.
NOTE 13 Pension and Other Postretirement Benefi ts
Th e funded status of our U.S. qualifi ed and nonqualifi ed defi ned benefi t
pension plans, our United Kingdom, Ireland, Belgium, and Norway
defi ned benefi t pension plans, plus our U.S. other postretirement
healthcare and life insurance benefi t plans for continuing operations,
together with the associated balances and net periodic benefi t cost
recognized in our consolidated fi nancial statements as of December 31,
are shown in the tables below.
We are required to recognize in our consolidated balance sheets the
overfunded and underfunded status of our defi ned benefi t postretirement
plans. Th e overfunded or underfunded status is defi ned as the diff erence
between the fair value of plan assets and the projected benefi t obligation.
We are also required to recognize as a component of other comprehensive
income the actuarial gains and losses and the prior service costs and
credits that arise during the period.
FMC CORPORATION - Form 10-K 57
PART II
ITEM 8 Financial Statements and Supplementary Data
Th e following table summarizes the weighted-average assumptions used and components of our defi ned benefi t postretirement plans. Th e following
tables also refl ect a measurement date of December 31:
Pensions
Other Benefi ts(1)
December 31,
2013
2012
2013
2012
4.95%
3.40%
4.15%
3.40%
4.95%
—%
4.15%
—%
$
1,255.3
$
1,367.3
$ 1,428.1
22.0
57.7
(103.6)
0.7
0.6
—
(16.1)
—
(74.2)
$ 1,268.3
20.2
61.3
140.7
—
3.4
0.2
—
(3.0)
(63.0)
$ 1,315.2 $ 1,428.1
$ 1,060.2 $
250.9
0.7
63.9
—
(16.1)
(74.2)
918.8
127.2
3.1
73.9
0.2
—
(63.0)
$ 1,285.4 $ 1,060.2
(367.9)
$
(29.8)
$
17.2
(47.0)
(29.8)
$
$
—
(367.9)
(367.9)
$
$
$
$
$
$
$
$
—
$
—
$
29.2
0.1
1.0
(4.2)
—
0.1
6.2
—
—
(8.9)
23.5 $
— $
—
—
2.7
6.2
—
(8.9)
— $
$
(23.5)
— $
(23.5)
(23.5)
$
28.4
0.1
1.4
3.0
—
(0.1)
6.1
—
—
(9.7)
29.2
—
—
—
3.6
6.1
—
(9.7)
—
(29.2)
—
(29.2)
(29.2)
Pensions
Other Benefi ts(1)
December 31,
2013
2012
2013
2012
(6.3)
(281.7)
(288.0)
(182.5)
$
$
(7.7)
(620.3)
(628.0)
(394.2)
$
$
— $
13.0
13.0
8.1
$
—
10.7
10.7
6.7
(in Millions, except for percentages)
Following are the weighted average assumptions used to determine the benefi t
obligations at December 31:
Discount rate
Rate of compensation increase
Accumulated benefi t obligation:
Plans with unfunded accumulated benefi t obligation
Change in projected benefi t obligation
Projected benefi t obligation at January 1
Service cost
Interest cost
Actuarial loss (gain)
Amendments
Foreign currency exchange rate changes
Plan participants’ contributions
Settlements
Curtailments
Benefi ts paid
Projected benefi t obligation at December 31
Change in fair value of plan assets:
Fair value of plan assets at January 1
Actual return on plan assets
Foreign currency exchange rate changes
Company contributions
Plan participants’ contributions
Settlements
Benefi ts paid
Fair value of plan assets at December 31
NET FUNDED STATUS OF THE PLAN (LIABILITY)
Amount recognized in the consolidated balance sheets:
Pension other asset(2)
Accrued benefi t liability
TOTAL
(1) Refer to Note 9 for information on our discontinued postretirement benefit plans.
(2) Included in “Other assets” on the consolidated balance sheets.
(in Millions)
Th e amounts in accumulated other comprehensive income (loss) that have not yet been
recognized as components of net periodic benefi t cost are as follows:
Prior service (cost) credit
Net actuarial (loss) gain
Accumulated other comprehensive income (loss) – pretax
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) – NET OF TAX
(1) Refer to Note 9 for information on our discontinued postretirement benefit plans.
58
FMC CORPORATION - Form 10-K
$
$
$
$
PART II
ITEM 8 Financial Statements and Supplementary Data
Other changes in plan assets and benefi t obligations for continuing operations recognized in other comprehensive loss (income) are as follows:
(in Millions)
Current year net actuarial loss (gain)
Current year prior service cost (credit)
Amortization of net actuarial (loss) gain
Amortization of prior service (cost) credit
Foreign currency exchange rate changes on the above line items
Total recognized in other comprehensive (income) loss, before taxes
TOTAL RECOGNIZED IN OTHER COMPREHENSIVE
(INCOME) LOSS, AFTER TAXES
(1) Refer to Note 9 for information on our discontinued postretirement benefit plans.
Pensions
Other Benefi ts(1)
Year ended December 31
$
$
2013
(276.3)
0.7
(59.3)
(2.1)
1.0
(336.0)
$
2012
84.3
—
(51.2)
(2.1)
0.9
31.9
$
2013
(4.2)
—
2.0
—
—
(2.2)
2012
3.0
—
2.4
0.2
—
5.6
$
(211.7)
$
20.7
$
(1.4)
$
4.6
Th e estimated net actuarial loss and prior service cost for our pension
plans that will be amortized from accumulated other comprehensive
income (loss) into our net annual benefi t cost (income) during 2014 are
$31.4 million and $1.7 million, respectively. Th e estimated net actuarial
gain for our other benefi ts that will be amortized from accumulated
other comprehensive income (loss) into net annual benefi t cost (income)
during 2014 will be $1.6 million.
Th e following table summarizes the weighted-average assumptions used for and the components of net annual benefi t cost (income):
(in Millions, except for percentages)
Discount rate
Expected return on plan assets
Rate of compensation increase
Components of net annual benefi t cost :
Service cost
Interest cost
Expected return on plan assets
Amortization of prior service cost
Amortization of net actuarial and other (gain) loss
Recognized (gain) loss due to settlement and curtailments
$
Pensions
2012
4.95%
7.75%
3.40%
$
$
20.2
61.3
(76.6)
2.1
51.2
—
2013
4.15%
7.75%
3.40%
22.0
57.7
(78.0)
2.1
51.9
7.4
Year Ended December 31,
Other Benefi ts(1)
2011
5.40%
8.50%
4.20%
18.8
61.6
(82.5)
1.9
36.3
—
$
2013
4.15%
—
—
0.1
1.0
—
—
(1.9)
—
$
2012
4.95%
—
—
0.1
1.4
—
(0.2)
(2.4)
—
$
2011
5.40%
—
—
0.1
1.5
—
(0.2)
(2.4)
—
NET ANNUAL BENEFIT COST FROM
CONTINUING OPERATIONS
(1) Refer to Note 9 for information on our discontinued postretirement benefit plans.
63.1
$
$
58.2
$
36.1
$
(0.8)
$
(1.1)
$
(1.0)
Our U.S. qualifi ed defi ned benefi t pension plan (“U.S. Plan”) holds
the majority of our pension plan assets. Th e expected long-term rate
of return on these plan assets was 7.75 percent for 2013 and 2012 and
8.50 percent for 2011. In developing the assumption for the long-term
rate of return on assets for our U.S. Plan, we take into consideration
the technical analysis performed by our outside actuaries, including
historical market returns, information on the assumption for long-term
real returns by asset class, infl ation assumptions and expectations for
standard deviation related to these best estimates. We also consider
the historical performance of our own plan’s trust, which has earned
a compound annual rate of return of approximately 9.9 percent over
the last 20 years (which is in excess of comparable market indices for
the same period) as well as other factors. Given an actively managed
investment portfolio, the expected annual rates of return by asset class
for our portfolio, assuming an estimated infl ation rate of approximately
2.2 percent, is between 7.0 percent and 9.0 percent for equities, and
between 4.5 percent and 5.0 percent for fi xed-income investments,
which generates a total expected portfolio return that is in line with our
assumption for the rate of return on assets. Th e target asset allocation
for 2013, by asset category, is 75 to 85 percent equity securities, 15 to
25 percent fi xed income investments and zero to fi ve percent cash and
other short-term investments.
Our U.S. qualifi ed pension plan’s investment strategy consists of a
total return investment management approach using a portfolio mix
of equities and fi xed income investments to maximize the long-term
return of plan assets for an appropriate level of risk. Th e goal of this
strategy is to minimize plan expenses by matching asset growth to the
plan’s liabilities over the long run. Furthermore, equity investments
are weighted towards value equities and diversifi ed across U.S. and
non-U.S. stocks. Derivatives and hedging instruments may be
used eff ectively to manage and balance risks associated with the
plan’s investments. Investment performance and related risks are
measured and monitored on an ongoing basis through annual liability
measurements, periodic asset and liability studies, and quarterly
investment portfolio reviews.
FMC CORPORATION - Form 10-K 59
PART II
ITEM 8 Financial Statements and Supplementary Data
Th e following tables present our fair value hierarchy for our major categories of pension plan assets by asset class. See Note 18 for the defi nition
of fair value and the descriptions of Level 1, 2 and 3 in the fair value hierarchy.
(in Millions)
Cash and short-term investments
Equity securities:
Common stock
Preferred stock
Mutual funds and other investments(1)
Fixed income investments:
Investment contracts
Mutual funds
Corporate debt instruments
Government debt
Other investments:
Real estate/property
Other
TOTAL ASSETS
(in Millions)
Cash and short-term investments
Equity securities:
Common stock
Preferred stock
Mutual funds and other investments(1)
Fixed income investments:
Investment contracts
Mutual funds
Corporate debt instruments
Government debt
Other investments:
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Signifi cant Other
Observable Inputs
(Level 2)
12/31/2013
$
55.2 $
55.2 $
— $
Signifi cant
Unobservable
Inputs (Level 3)
—
740.5
4.7
289.1
180.6
9.3
1.8
3.4
740.5
4.7
193.3
—
9.3
1.8
3.4
—
—
95.8
180.6
—
—
—
0.7
0.1
1,285.4 $
—
—
1,008.2 $
—
—
276.4 $
—
—
—
—
—
—
—
0.7
0.1
0.8
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Signifi cant Other
Observable Inputs
(Level 2)
12/31/2012
50.3 $
50.3 $
— $
Signifi cant
Unobservable
Inputs (Level 3)
—
556.3
6.3
232.7
200.8
9.4
1.0
2.7
556.3
6.3
158.2
—
9.4
1.0
2.7
—
—
74.5
200.8
—
—
—
—
—
—
—
—
—
—
$
$
Real estate/property
Other
0.6
0.1
TOTAL ASSETS
0.7
$
(1) As of December 31, 2013 and 2012 we have $95.8 million and $74.5 million, respectively, of investments in certain funds where the net asset value reported by
the underlying funds approximates the fair value. These investments are redeemable with the fund at net asset value under the original terms of the partnership
agreements and/or subscription agreements and operations of the underlying funds. However, it is possible that these redemption rights may be restricted or
eliminated by the funds in the future in accordance with the underlying fund agreements. Due to the nature of the investments held by the funds, changes in
market conditions and the economic environment may significantly impact the net asset value of the funds and, consequently, the fair value of the interests in the
funds. Furthermore, changes to the liquidity provisions of the funds may significantly impact the fair value of the interest in the funds.
0.6
0.1
1,060.2 $
—
—
275.3 $
—
—
784.2 $
Th e change in the value of plan assets using signifi cant unobservable inputs (Level 3) from December 31, 2012 to December 31, 2013 was not
material for the period presented. Th ere were no changes to the Level 3 investments during 2011.
We made the following contributions to our pension and other postretirement benefi t plans:
(in Millions)
U.S. qualifi ed pension plan
U.S. nonqualifi ed pension plan
Non-U.S. plans
Other postretirement benefi ts, net of participant contributions
TOTAL
60
FMC CORPORATION - Form 10-K
Year Ended December 31,
2013
40.0 $
19.8
5.5
2.7
68.0 $
2012
65.0
5.0
3.9
3.6
77.5
$
$
PART II
ITEM 8 Financial Statements and Supplementary Data
We expect our voluntary cash contributions to our U.S. qualifi ed pension plan to be $50 million in 2014.
Th e following table refl ects the estimated future benefi t payments for our pension and other postretirement benefi t plans. Th ese estimates take
into consideration expected future service, as appropriate:
ESTIMATED NET FUTURE BENEFIT PAYMENTS
$
$
78.5
75.5
79.0
82.2
84.4
458.7
by contributing a portion of their compensation. For eligible employees
participating in the Plan, except for those employees covered by certain
collective bargaining agreements, the Company makes matching
contributions of 80 percent of the portion of those contributions up
to fi ve percent of the employee’s compensation. Eligible employees
participating in the Plan that do not participate in the U.S. qualifi ed
pension plan are entitled to receive an employer contribution of fi ve
percent of the employee’s eligible compensation. Charges against
income for both of these contributions were $11.8 million in 2013,
$10.2 million in 2012, and $10.6 million in 2011.
(in Millions)
2014
2015
2016
2017
2018
2019-2023
Assumed health care cost trend rates have an eff ect on the other
postretirement benefi t obligations and net periodic other postretirement
benefit costs reported for the health care portion of the other
postretirement plan. A one-percentage point change in the assumed
health care cost trend rates would be immaterial to our net periodic other
postretirement benefi t costs for the year ended December 31, 2013,
and our other postretirement benefi t obligation at December 31, 2013.
FMC Corporation Savings and Investment Plan
Th e FMC Corporation Savings and Investment Plan is a qualifi ed
salary-reduction plan under Section 401(k) of the Internal Revenue
Code in which substantially all of our U.S. employees may participate
NOTE 14 Share-based Compensation
Stock Compensation Plans
We have a share-based compensation plan, which has been approved
by the stockholders, for certain employees, offi cers and directors. Th is
plan is described below.
designated by the Committee, which has generally been three years
from the date of grant. Incentive and nonqualifi ed options granted
under the Plan expire not later than 10 years from the grant date.
FMC Corporation Incentive Compensation
and Stock Plan
Th e FMC Corporation Incentive Compensation and Stock Plan
(the “Plan”) provides for the grant of a variety of cash and equity
awards to offi cers, directors, employees and consultants, including
stock options, restricted stock, performance units (including restricted
stock units), stock appreciation rights, and multi-year management
incentive awards payable partly in cash and partly in common stock.
Th e Compensation and Organization Committee of the Board of
Directors (the “Committee”), subject to the provisions of the Plan,
approves fi nancial targets, award grants, and the times and conditions for
payment of awards to employees. Th e FMC Corporation Non-Employee
Directors’ Compensation Policy (formerly the FMC Corporation
Compensation Plan for Non-Employee Directors), administered by
the Nominating and Corporate Governance Committee of the Board
of Directors, sets forth the compensation to be paid to the directors,
including awards (currently restricted stock units only) to be made to
directors under the Plan.
Stock options granted under the Plan may be incentive or nonqualifi ed
stock options. Th e exercise price for stock options may not be less than
the fair market value of the stock at the date of grant. Awards granted
under the Plan vest or become exercisable or payable at the time
Under the Plan, awards of restricted stock and restricted stock units
may be made to selected employees. Th e awards vest over periods
designated by the Committee, which has generally been 3 years, with
payment conditional upon continued employment. Compensation
cost is recognized over the vesting periods based on the market value
of the stock on the date of the award. Restricted stock units granted
to directors under the Plan vest immediately if granted as part of, or in
lieu of, the annual retainer (but are subject to forfeiture on a pro rata
basis if the director does not serve the full year except under certain
circumstances); other restricted stock units granted to directors vest
at the Annual Meeting of Shareholders in the calendar year following
the May 1 annual grant date.
Th e total number of shares of common stock authorized for issuance
under the Plan is 28.8 million, which is in addition to the shares available
from predecessor plans. Cancellations (through expiration, forfeiture
or otherwise) of outstanding awards increase the shares available for
future awards or grants. At December 31, 2013, 8.0 million shares
of FMC common stock were reserved for share based awards which
represents the sum of available future grants of share based awards of
5.3 million and unvested share-based awards of 2.7 million.
At December 31, 2013 and 2012, there were restricted stock units
representing an aggregate of 142,200 shares and 119,482 shares of
common stock, respectively, credited to the directors’ accounts.
FMC CORPORATION - Form 10-K 61
PART II
ITEM 8 Financial Statements and Supplementary Data
Stock Compensation
We recognized the following stock compensation expense:
Year Ended December 31,
(in Millions)
Stock Option Expense, net of taxes of $2.4, $2.7 and $2.3(1)
Restricted Stock Expense, net of taxes of $3.1, $3.9 and $3.7(2)
TOTAL STOCK COMPENSATION EXPENSE, NET OF TAXES OF $5.5, $6.6 AND $6.0(3)
(1) We applied an estimated forfeiture rate of four percent per stock option grant in the calculation of the expense.
(2) We applied an estimated forfeiture rate of two percent of outstanding grants in the calculation of the expense.
(3) This expense is classified as selling, general and administrative expense in our consolidated statements of income. Total stock compensation expense of $1.0 million,
$1.4 million, and $1.0 million for the years ended December 31, 2013, 2012 and 2011, respectively, is included in the discontinued operations held for sale in
the Consolidated Statements of Income.
2012
4.4
6.4
10.8
2011
3.7
6.1
9.8
2013
4.2
5.5
9.7
$
$
$
$
$
$
We received $10.7 million, $18.8 million and $11.3 million in cash
related to stock option exercises for the years ended December 31,
2013, 2012 and 2011, respectively. Th e shares used for the exercise of
stock options occurring during the years ended December 31, 2013,
2012 and 2011 came from treasury shares.
For tax purposes, share-based compensation expense is deductible in
the year of exercise or vesting based on the intrinsic value of the award
on the date of exercise or vesting. For fi nancial reporting purposes,
share-based compensation expense is based upon grant-date fair value
and amortized over the vesting period. Excess tax benefi ts represent the
diff erence between the share-based compensation expense for fi nancial
reporting purposes and the deduction taken for tax purposes. Th e
excess tax benefi ts for the years ended December 31, 2013, 2012 and
2011 totaled $7.1 million, $9.7 million and $7.4 million, respectively.
Stock Options
Th e grant-date fair values of the stock options we granted in the years
ended December 31, 2013, 2012 and 2011 were estimated using the
Black-Scholes option valuation model, the key assumptions for which
are listed in the table below. Th e expected volatility assumption is based
on the actual historical experience of our common stock. Th e expected
life represents the period of time that options granted are expected to
be outstanding. Th e risk-free interest rate is based on U.S. Treasury
securities with terms equal to the expected timing of stock option
exercises as of the grant date. Th e dividend yield assumption refl ects
anticipated dividends on our common stock.
Black Scholes valuation assumptions for stock option grants:
Expected dividend yield
Expected volatility
Expected life (in years)
Risk-free interest rate
2013
0.91%
42.10%
6.5
1.29%
2012
0.63%
42.09%
6.5
1.30%
2011
0.61%
41.61%
6.5
2.84%
Th e weighted-average grant-date fair value of options granted during the years ended December 31, 2013, 2012 and 2011 was $23.32, $19.26
and $17.59 per share, respectively.
Th e following summary shows stock option activity for employees under the Plan for the three years ended December 31, 2013:
December 31, 2010 (1,554 shares exercisable)
Granted
Exercised
Forfeited
December 31, 2011 (1,340 shares exercisable)
Granted
Exercised
Forfeited
December 31, 2012 (932 shares exercisable)
Granted
Exercised
Forfeited
DECEMBER 31, 2013 (948 SHARES
EXERCISABLE AND 2,017 SHARES EXPECTED
TO VEST OR BE EXERCISED)
62
FMC CORPORATION - Form 10-K
Number of Options
Granted But Not
Exercised
Weighted-Average
Remaining Contractual
Life (in Years)
Weighted-Average
Exercise Price Per
Share
Number of Shares in Th ousands
3,170
432
(750)
(42)
2,810
422
(943)
(50)
2,239
339
(462)
(58)
6.4 years
$
6.4 years
$
6.5 years
$
20.17
40.89
15.05
23.08
24.67
47.58
19.86
39.24
30.69
59.47
23.20
42.75
Aggregate Intrinsic
Value
(In Millions)
62.8
$
$
$
19.7
51.6
30.7
62.3
18.1
2,058
5.9 YEARS
$
36.76
$
79.6
PART II
ITEM 8 Financial Statements and Supplementary Data
Th e number of stock options indicated in the above table as being
exercisable as of December 31, 2013, had an intrinsic value of
$49.8 million, a weighted-average remaining contractual term of
4.0 years, and a weighted-average exercise price of $22.87.
As of December 31, 2013, we had total remaining unrecognized
compensation cost related to unvested stock options of $7.3 million
which will be amortized over the weighted-average remaining requisite
service period of approximately 1.7 years.
Restricted Equity Awards
Th e grant-date fair value of restricted stock awards and stock units under
the Plan is based on the market price per share of our common stock
on the date of grant, and the related compensation cost is amortized
to expense on a straight-line basis over the vesting period during which
the employees perform related services, which is typically three years
except for those eligible for retirement prior to the stated vesting period.
Th e following table shows our employee restricted award activity for the three years ended December 31, 2013:
Number of Awards in Th ousands
Nonvested at December 31, 2010
Granted
Vested
Forfeited
Nonvested at December 31, 2011
Granted
Vested
Forfeited
Nonvested at December 31, 2012
Granted
Vested
Forfeited
NONVESTED AT DECEMBER 31, 2013
Number of Awards
912
182
(320)
(16)
758
221
(257)
(18)
704
150
(326)
(5)
523
$
$
Weighted-Average
Grant Date Fair
Value
26.86
40.76
24.25
25.58
31.33
49.88
27.60
39.21
38.29
58.95
31.76
51.61
49.07
$
$
As of December 31, 2013, we had total remaining unrecognized compensation cost related to unvested restricted awards of $10.0 million which
will be amortized over the weighted-average remaining requisite service period of approximately 1.9 years.
NOTE 15 Equity
Th e following is a summary of our capital stock activity over the past three years:
December 31, 2010
Stock options and awards
Repurchases of common stock, net
December 31, 2011
Stock options and awards
Repurchases of common stock, net
December 31, 2012
Stock options and awards
Repurchases of common stock, net
DECEMBER 31, 2013
Accumulated other comprehensive gain (loss) consisted of the following:
(in Millions)
Deferred (loss) gain on derivative contracts
Pension and other postretirement liability adjustment
Foreign currency translation adjustments
ACCUMULATED OTHER COMPREHENSIVE GAIN (LOSS)
Common
Stock Shares
185,983,792
—
—
185,983,792
—
—
185,983,792
—
—
185,983,792
Treasury
Stock Shares
43,012,104
(918,946)
4,216,318
46,309,476
(1,156,452)
3,160,390
48,313,414
(753,389)
5,538,078
53,098,103
December 31,
2013
(6.1)
(170.5)
(25.3)
(201.9)
$
$
2012
(1.5)
(380.4)
(27.0)
(408.9)
$
$
FMC CORPORATION - Form 10-K 63
PART II
ITEM 8 Financial Statements and Supplementary Data
FMC Wyoming
In 2013 we purchased an additional 6.25 percent ownership interest
in FMC Wyoming Corporation (FMC WY) in March 2013 from
Nippon Sheet Glass Company Ltd. for $80.0 million which increased
our ownership from 87.50 percent to 93.75 percent. FMC WY is our
majority owned joint venture that manufactures, markets and sells
soda ash products. Th e seller of the 6.25 percent interest was one of
two noncontrolling interest holders of FMC WY stock.
Dividends and Share Repurchases
On January 16, 2014, we paid dividends totaling $18.0 million to
our shareholders of record as of December 31, 2013. Th is amount is
included in “Accrued and other liabilities” on the consolidated balance
sheets as of December 31, 2013. For the years ended December 31,
2013, 2012 and 2011, we paid $73.6 million, $47.8 million and
$41.2 million in dividends, respectively.
On April 23, 2013, our Board authorized the repurchase of up to
$500 million of our common shares. Th is repurchase program does not
include a specifi c timetable or price targets and may be suspended or
terminated at any time. Shares may be purchased through open market
or privately negotiated transactions at the discretion of management
based on its evaluation of market conditions and other factors. Th e
authorization of April 23, 2013 replaced the previous authority under
which $134.9 million was unused. We also reacquire shares from time
to time from employees in connection with the vesting, exercise and
forfeiture of awards under our equity compensation plans.
In July 2013 we entered into an accelerated share repurchase agreement
(ASR) and paid $250 million to a fi nancial institution for an initial
delivery of 3,145,643 shares. Th e repurchase took place under our
previously announced $500 million share repurchase program. Th e value
of the initial shares received on the date of purchase was $200 million,
refl ecting a $63.58 price per share which was recorded as a treasury
share purchase for purposes of calculating earnings per share. We
recorded the remaining $50 million as a forward contract indexed
to our common stock in additional paid in capital. Final settlement
of the ASR occurred on December 20, 2013 when we purchased the
remaining $50 million of common stock under the ASR. Th e fi nal
number of shares that we repurchased under the ASR was 3,573,907
shares at a weighed average price of $69.95 per share.
NOTE 16 Reclassifi cations of Accumulated Other Comprehensive Income
Th e table below provides details about the reclassifi cations from Accumulated Other Comprehensive Income and the aff ected line items in the
consolidated statements of income for each of the periods presented.
Details about Accumulated Other Comprehensive
Income Components
(in Millions)
Derivative instruments:
Foreign currency contracts
Energy contracts
Foreign currency contracts
Other contracts
Total before tax
Pension and other postretirement benefi ts(2):
Amortization of prior service costs
Amortization of unrecognized net actuarial and other
gains (losses)
Recognized loss due to settlement
Total before tax
$
$
$
$
$
Amounts Reclassifi ed from Accumulated Other
Comprehensive Income(1)
Year Ended December 31,
2013
2012
2011
Aff ected Line Item in the Consolidated
Statements of Income
(0.1) $
(0.6)
0.5
(0.2)
(0.4) $
0.1
(0.3) $
11.5 $
(9.8)
(10.5)
(0.1)
(8.9) $
3.0
(5.9) $
0.5 Costs of sales and services
(8.1) Costs of sales and services
(2.4)
Selling, general and administrative expenses
— Interest expense, net
(10.0)
3.4
(6.6) Amount included in net income
Income tax (expense) benefi t
(2.0) $
(1.9) $
(1.7) Selling, general and administrative expenses
(48.3)
(7.4)
(57.7) $
21.8
(35.9) $
(36.2) $
(46.9)
—
(48.8) $
18.4
(30.4) $
(36.3) $
(31.7)
Selling, general and administrative expenses
— Selling, general and administrative expenses
Income tax (expense) benefi t
(33.4)
13.3
(20.1) Amount included in net income
(26.7) Amount included in net income
$
TOTAL RECLASSIFICATIONS FOR THE PERIOD $
(1) Amounts in parentheses indicate charges to the consolidated statements of income.
(2) Pension and other postretirement benefits amounts include the impact from both continuing and discontinued operations. For detail on the continuing operations
components of pension and other postretirement benefits, see Note 13.
64
FMC CORPORATION - Form 10-K
PART II
ITEM 8 Financial Statements and Supplementary Data
NOTE 17 Earnings Per Share
Earnings per common share (“EPS”) is computed by dividing net
income by the weighted average number of common shares outstanding
during the period on a basic and diluted basis.
and 2011 there were 374,400 and 430,812 potential common shares
excluded from Diluted EPS. For the year ended December 31, 2012
there were no potential common shares excluded from Diluted EPS.
Our potentially dilutive securities include potential common shares
related to our stock options, restricted stock and restricted stock units.
Diluted earnings per share (“Diluted EPS”) considers the impact of
potentially dilutive securities except in periods in which there is a loss
because the inclusion of the potential common shares would have
an antidilutive eff ect. Diluted EPS excludes the impact of potential
common shares related to our stock options in periods in which the
option exercise price is greater than the average market price of our
common stock for the period. For the years ended December 31, 2013
Our non-vested restricted stock awards contain rights to receive non-
forfeitable dividends, and thus, are participating securities requiring the
two-class method of computing EPS. Th e two-class method determines
EPS by dividing the sum of distributed earnings to common stockholders
and undistributed earnings allocated to common stockholders by the
weighted average number of shares of common stock outstanding for
the period. In calculating the two-class method, undistributed earnings
are allocated to both common shares and participating securities based
on the weighted average shares outstanding during the period.
Earnings applicable to common stock and common stock shares used in the calculation of basic and diluted earnings per share are as follows:
(in Millions, Except Share and Per Share Data)
Earnings (loss) attributable to FMC stockholders:
Continuing operations, net of income taxes
Discontinued operations, net of income taxes
Net income
Less: Distributed and undistributed earnings allocable to restricted award holders
NET INCOME ALLOCABLE TO COMMON STOCKHOLDERS
Basic earnings (loss) per common share attributable to FMC stockholders:
Continuing operations
Discontinued operations
NET INCOME
Diluted earnings (loss) per common share attributable to FMC stockholders:
Continuing operations
Discontinued operations
NET INCOME
Shares (in thousands):
Weighted average number of shares of common stock outstanding - Basic
Weighted average additional shares assuming conversion of potential common shares
SHARES – DILUTED BASIS
$
$
$
$
$
$
$
Year Ended December 31,
2013
2012
453.2 $
(159.3)
293.9
(1.6)
292.3
$
$
443.7 $
(27.5)
416.2
(2.0)
414.2
$
$
3.34 $
(1.18)
2.16
$
3.33 $
(1.17)
2.16
$
3.21 $
(0.20)
3.01
$
3.20 $
(0.20)
3.00
$
2011
404.0
(38.1)
365.9
(1.9)
364.0
2.83
(0.26)
2.57
2.81
(0.26)
2.55
135,209
928
136,137
137,701
1,112
138,813
142,056
1,252
143,308
NOTE 18 Financial Instruments, Risk Management and Fair Value Measurements
Our fi nancial instruments include cash and cash equivalents, trade receivables, other current assets, certain receivables classifi ed as other long-term
assets, accounts payable, and amounts included in investments and accruals meeting the defi nition of fi nancial instruments. Th e carrying value
of these fi nancial instruments approximates their fair value. Our other fi nancial instruments include the following:
Financial Instrument
Foreign Exchange Forward Contracts
Commodity Forward and Option Contracts
Debt
Valuation Method
Estimated amounts that would be received or paid to terminate the contracts at the reporting date
based on current market prices for applicable currencies.
Estimated amounts that would be received or paid to terminate the contracts at the reporting date
based on quoted market prices for applicable commodities.
Our estimates and information obtained from independent third parties using market data, such as
bid/ask spreads for the last business day of the reporting period.
Th e estimated fair value of the fi nancial instruments in the above table
have been determined using standard pricing models which take into
account the present value of expected future cash fl ows discounted to
the balance sheet date. Th ese standard pricing models utilize inputs
derived from, or corroborated by, observable market data such as
interest rate yield curves and currency and commodity spot and forward
rates. In addition, we test a subset of our valuations against valuations
received from the transaction’s counterparty to validate the accuracy
of our standard pricing models. Accordingly, the estimates presented
may not be indicative of the amounts that we would realize in a market
exchange at settlement date and do not represent potential gains or
losses on these agreements. Th e estimated fair values of foreign exchange
FMC CORPORATION - Form 10-K 65
PART II
ITEM 8 Financial Statements and Supplementary Data
forward contracts and commodity forward and option contracts are
included in the tables within this Note. Th e estimated fair value of debt
is $1,895.8 million and $1,056.3 million and the carrying amount is
$1,851.9 million and $964.4 million as of December 31, 2013 and
December 31, 2012, respectively.
Our Agricultural Solutions segment enters into contracts with certain
customers in Brazil whereby we exchange our products for physical
delivery of soybeans from the customer. In order to mitigate the price
risk associated with these barter contracts, we have entered into off setting
derivatives to hedge our exposure.
We enter into various fi nancial instruments with off -balance-sheet
risk as part of the normal course of business. Th ese off -balance sheet
instruments include fi nancial guarantees and contractual commitments
to extend fi nancial guarantees under letters of credit, and other assistance
to customers (Note 19). Decisions to extend fi nancial guarantees to
customers, and the amount of collateral required under these guarantees
is based on our evaluation of creditworthiness on a case-by-case basis.
Use of Derivative Financial Instruments to
Manage Risk
We mitigate certain fi nancial exposures, including currency risk, interest
rate risk, and commodity purchase exposures, through a program of risk
management that includes the use of derivative fi nancial instruments. We
enter into foreign exchange contracts, including forward and purchased
option contracts, to reduce the eff ects of fl uctuating foreign currency
exchange rates.
We formally document all relationships between hedging instruments
and hedged items, as well as the risk management objective and strategy
for undertaking various hedge transactions. Th is process includes relating
derivatives that are designated as fair value or cash fl ow hedges to specifi c
assets and liabilities on the balance sheet or to specifi c fi rm commitments
or forecasted transactions. We also formally assess at the inception of the
hedge and on an ongoing basis, whether each derivative is highly eff ective
in off setting changes in fair values or cash fl ows of the hedged item. If
we determine that a derivative is not highly eff ective as a hedge, or if a
derivative ceases to be a highly eff ective hedge, we discontinue hedge
accounting with respect to that derivative prospectively.
Foreign Currency Exchange Risk Management
We conduct business in many foreign countries, exposing earnings, cash
fl ows, and our fi nancial position to foreign currency risks. Th e majority of
these risks arise as a result of foreign currency transactions. Our policy is
to minimize exposure to adverse changes in currency exchange rates. Th is
is accomplished through a controlled program of risk management that
includes the use of foreign currency debt and forward foreign exchange
contracts. We also use forward foreign exchange contracts to hedge fi rm
and highly anticipated foreign currency cash fl ows, with an objective of
balancing currency risk to provide adequate protection from signifi cant
fl uctuations in the currency markets.
Th e primary currency movements for which we have exchange-rate
exposure are the U.S. dollar versus the euro, the U.S. dollar versus the
Chinese yuan, the U.S. dollar versus the Brazilian real and the U.S. dollar
versus the Argentine peso.
Commodity Price Risk
We are exposed to risks in energy costs due to fl uctuations in energy
prices, particularly natural gas. We attempt to mitigate our exposure
to increasing energy costs by hedging the cost of future deliveries of
natural gas and entering into fi xed-price contracts for the purchase of
coal and fuel oil.
66
FMC CORPORATION - Form 10-K
Interest Rate Risk
We use various strategies to manage our interest rate exposure, including
entering into interest rate swap agreements to achieve a targeted mix
of fi xed and variable-rate debt. In the agreements we exchange, at
specifi ed intervals, the diff erence between fi xed and variable-interest
amounts calculated on an agreed-upon notional principal amount. As
of December 31, 2013 and December 31, 2012, we had no such swap
agreements in place.
Concentration of Credit Risk
Our counterparties to derivative contracts are primarily major fi nancial
institutions. We limit the dollar amount of contracts entered into with any
one fi nancial institution and monitor counterparties’ credit ratings. We
also enter into master netting agreements with each fi nancial institution,
where possible, which helps mitigate the credit risk associated with our
fi nancial instruments. While we may be exposed to credit losses due to
the nonperformance of counterparties, we consider this risk remote.
Financial Guarantees and Letter-of-Credit
Commitments
We enter into various fi nancial instruments with off -balance-sheet
risk as part of the normal course of business. Th ese off -balance-sheet
instruments include fi nancial guarantees and contractual commitments
to extend fi nancial guarantees under letters of credit and other assistance
to customers (Notes 1 and 19). Decisions to extend fi nancial guarantees
to customers, and the amount of collateral required under these
guarantees, is based on our evaluation of creditworthiness on a case-
by-case basis.
Accounting for Derivative Instruments and
Hedging Activities
Cash Flow Hedges
We recognize all derivatives on the balance sheet at fair value. On
the date the derivative instrument is entered into, we designate the
derivative as a hedge of the variability of cash fl ows to be received or
paid related to a forecasted transaction (cash fl ow hedge). We record
in accumulated other comprehensive income or loss (“AOCI”) changes
in the fair value of derivatives that are designated as and meet all the
required criteria for, a cash fl ow hedge. We then reclassify these amounts
into earnings as the underlying hedged item aff ects earnings. We record
immediately in earnings changes in the fair value of derivatives that
are not designated as cash fl ow hedges.
As of December 31, 2013, we had open foreign currency forward contracts
in AOCI in a net after-tax loss position of $7.5 million designated as
cash fl ow hedges of underlying forecasted sales and purchases. Current
open contracts hedge forecasted transactions until December 31, 2014.
At December 31, 2013, we had open forward contracts with various
PART II
ITEM 8 Financial Statements and Supplementary Data
expiration dates to buy, sell or exchange foreign currencies with a U.S. dollar
equivalent of approximately $565 million.
As of December 31, 2013, we had current open commodity contracts
in AOCI in a net after-tax gain position of $0.1 million designated as
cash fl ow hedges of underlying forecasted purchases, primarily natural
gas. Current open commodity contracts hedge forecasted transactions
until December 31, 2014. At December 31, 2013, we had 5.2 million
mmBTUs (millions of British Th ermal Units) in aggregate notional
volume of outstanding natural gas commodity forward contracts to
hedge forecasted purchases.
Of the $7.4 million of net after-tax losses, representing both open
foreign currency exchange contracts and open commodity contracts,
approximately $7.4 million of these losses would be realized in earnings
during the twelve months ending December 31, 2014, if spot rates in
the future are consistent with forward rates as of December 31, 2013.
Th e actual eff ect on earnings will be dependent on actual spot rates
when the forecasted transactions occur. We recognize derivative gains
and losses in the “Costs of sales and services” line in the consolidated
statements of income.
Derivatives Not Designated as Hedging Instruments
We hold certain forward contracts that have not been designated as cash
fl ow hedging instruments for accounting purposes. Contracts used to
hedge the exposure to foreign currency fl uctuations associated with certain
monetary assets and liabilities are not designated as cash fl ow hedging
instruments, and changes in the fair value of these items are recorded in
earnings. We hold call options that are eff ective as economic hedges of a
portion of our natural gas exposure and the change in fair value of this
instrument is also recorded in earnings. We periodically hold soybean
barter contracts which qualify as derivatives and we have entered into
off setting commodity contracts to hedge our exposure. Both the change
in fair value of the soybean barter contracts and the off setting commodity
contracts are recorded in earnings.
We had open forward contracts not designated as cash fl ow hedging
instruments for accounting purposes with various expiration dates to
buy, sell or exchange foreign currencies with a U.S. dollar equivalent of
approximately $958 million at December 31, 2013. We held an immaterial
amount of bushels, in aggregate notional volume of outstanding soybean
contracts, to hedge outstanding barter contracts at December 31, 2013.
Fair Value of Derivative Instruments
Th e following tables provide the gross fair value and net balance sheet presentation of our derivative instruments as of December 31, 2013 and 2012.
(in Millions)
Derivatives
Foreign exchange contracts
Energy contracts
Total derivative assets(1)
Foreign exchange contracts
Energy contracts
Total derivative liabilities(2)
NET DERIVATIVE ASSETS/(LIABILITIES)
Gross Amount of Derivatives
December 31, 2013
Designated
as Cash Flow
Hedges
Not Designated
as Hedging
Instruments
Total Gross
Amounts
Gross Amounts
Off set in the
Consolidated
Balance Sheet(3)
Net Amounts
$
$
$
6.3
0.7
7.0
(17.7)
(0.6)
(18.3)
(11.3) $
$
5.5
—
5.5
(0.6)
—
(0.6)
4.9 $
$
11.8
0.7
12.5
(18.3)
(0.6)
(18.9)
(6.4) $
(6.7) $
(0.2)
(6.9)
6.7
0.2
6.9
— $
5.1
0.5
5.6
(11.6)
(0.4)
(12.0)
(6.4)
Gross Amount of Derivatives
December 31, 2012
Designated
as Cash Flow
Hedges
Not Designated
as Hedging
Instruments
$
$
(in Millions)
Derivatives
Foreign exchange contracts
Energy contracts
Other contracts
Total derivative assets(1)
Foreign exchange contracts
Energy contracts
Total derivative liabilities(2)
NET DERIVATIVE ASSETS/(LIABILITIES)
(1) Net balance is included in “Prepaid and other current assets” in the consolidated balance sheets.
(2) Net balance is included in “Accrued and other liabilities” in the consolidated balance sheets.
(3) Represents net derivatives positions subject to master netting arrangements.
5.7
0.2
0.2
6.1
(4.7)
(1.7)
(6.4)
(0.3) $
$
— $
—
—
—
(1.9)
—
(1.9)
(1.9) $
Gross Amounts
Off set in the
Consolidated
Balance Sheet(3)
Total Gross
Amounts
Net Amounts
$
5.7
0.2
0.2
6.1
(6.6)
(1.7)
(8.3)
(2.2) $
(4.2) $
(0.2)
—
(4.4)
4.2
0.2
4.4
— $
1.5
—
0.2
1.7
(2.4)
(1.5)
(3.9)
(2.2)
FMC CORPORATION - Form 10-K 67
PART II
ITEM 8 Financial Statements and Supplementary Data
Th e following tables provide the impact of derivative instruments and related hedged items on the consolidated statements of income for the
years ended December 31, 2013 and 2012.
Derivatives in Cash Flow Hedging Relationships
(in Millions)
Accumulated other comprehensive income (loss), net of tax at December 31, 2010
2011 Activity
Unrealized hedging gains (losses) and other, net of tax
Reclassifi cation of deferred hedging (gains) losses, net of tax
Eff ective Portion(1)
Accumulated other comprehensive income (loss), net of tax at December 31, 2011
2012 Activity
Unrealized hedging gains (losses) and other, net of tax
Reclassifi cation of deferred hedging (gains) losses, net of tax
Eff ective Portion(1)
Accumulated other comprehensive income (loss), net of tax at December 31, 2012
2013 Activity
Unrealized hedging gains (losses) and other, net of tax
Reclassifi cation of deferred hedging (gains) losses, net of tax
Eff ective Portion(1)
$
$
Contracts(2)
Foreign exchange
0.4
$
Energy
Other
$
(3.9) $
— $
Total
(3.5)
(3.1)
(5.9)
(1.3)
(10.3)
1.6
(1.5)
(1.1) $
5.0
(0.9)
(4.8) $
—
(1.3)
(1.3) $
2.1
(2.3)
—
(0.3)
1.8
0.7
$
6.1
3.8
(1.0) $
0.1
0.1
(1.2) $
(8.0)
(0.2)
(8.2)
0.7
0.4
1.1
2.4
0.1
2.5
6.6
(3.7)
(7.2)
(0.2)
5.9
5.7
(1.5)
(4.9)
0.3
(4.6)
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS),
(7.5) $
NET OF TAX AT DECEMBER 31, 2013
(1) Amounts are included in “Cost of sales and services” and “Interest expense” on the consolidated statements of income.
(2) For the years ended December 31, 2013, 2012 and 2011, there was no material ineffectiveness with regard to cash flow hedges.
0.1
$
$
1.3
$
(6.1)
Derivatives Not Designated as Hedging Instruments
(in Millions)
Foreign Exchange contracts
Commodity contracts:
Energy contracts
TOTAL
Location of Gain or (Loss)
Recognized in Income on Derivatives
Cost of Sales and Services
$
Cost of Sales and Services
$
Amount of Pre-tax Gain or (Loss)
Recognized in Income on Derivatives
Year Ended December 31,
2013
11.2 $
—
11.2 $
2012
6.7 $
—
6.7
$
2011
3.3
(0.2)
3.1
Fair-Value Measurements
Fair-Value Hierarchy
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants
at the measurement date. Market participants are defi ned as buyers or
sellers in the principle or most advantageous market for the asset or
liability that are independent of the reporting entity, knowledgeable
and able and willing to transact for the asset or liability.
We have categorized our assets and liabilities that are recorded at fair
value, based on the priority of the inputs to the valuation technique,
into a three-level fair-value hierarchy. Th e fair-value hierarchy gives the
highest priority to quoted prices in active markets for identical assets
or liabilities (Level 1) and the lowest priority to unobservable inputs
(Level 3). If the inputs used to measure the assets and liabilities fall
within diff erent levels of the hierarchy, the categorization is based on
the lowest level input that is signifi cant to the fair-value measurement
of the instrument.
68
FMC CORPORATION - Form 10-K
(in Millions)
ASSETS
Derivatives – Commodities:(1)
Energy contracts
Derivatives – Foreign Exchange(1)
Other(2)
TOTAL ASSETS
LIABILITIES
Derivatives – Commodities:(3)
Energy contracts
Derivatives – Foreign Exchange(3)
Other(4)
(in Millions)
ASSETS
Derivatives – Commodities:(1)
Energy contracts
Derivatives – Foreign Exchange(1)
Other(2)
TOTAL ASSETS
LIABILITIES
Derivatives – Commodities:(3)
Energy contracts
Derivatives – Foreign Exchange(3)
Acquisition(4)
Other(5)
Th e following tables present our fair-value hierarchy for those assets and liabilities measured at fair-value on a recurring basis in our consolidated
balance sheets as of December 31, 2013 and December 31, 2012.
PART II
ITEM 8 Financial Statements and Supplementary Data
December 31, 2013
Quoted Prices in Active
Markets for Identical
Assets (Level 1)
Signifi cant Other
Observable Inputs
(Level 2)
Signifi cant
Unobservable
Inputs (Level 3)
$
$
$
0.5 $
5.1
32.7
38.3 $
0.4 $
11.6
37.4
49.4 $
— $
—
32.7
32.7 $
— $
—
37.4
37.4 $
0.5 $
5.1
—
5.6 $
0.4 $
11.6
—
12.0 $
TOTAL LIABILITIES
(1) Amounts included in “Prepaid and other current assets” in the consolidated balance sheets.
(2) Consists of a deferred compensation arrangement, through which we hold various investment securities, recognized on our balance sheet. Both the asset and
$
liability are recorded at fair value. Asset amounts included in “Other assets” in the consolidated balance sheets.
(3) Amounts included in “Accrued and other liabilities” in the consolidated balance sheets.
(4) Consists of a deferred compensation arrangement recognized on our balance sheet. Both the asset and liability are recorded at fair value. Liability amounts
included in “Other long-term liabilities” in the consolidated balance sheets.
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Signifi cant Other
Observable
Inputs (Level 2)
Signifi cant
Unobservable Inputs
(Level 3)
December 31, 2012
0.2 $
1.5
33.0
34.7 $
— $
—
33.0
33.0 $
0.2 $
1.5
—
1.7 $
—
—
—
—
$
$
$
1.5 $
2.4
1.0
39.8
44.7 $
— $
—
—
39.8
39.8 $
1.5 $
2.4
—
—
3.9 $
TOTAL LIABILITIES
(1) Amounts included in “Prepaid and other current assets” in the consolidated balance sheets.
(2) Consists of a deferred compensation arrangement, through which we hold various investment securities, recognized on our balance sheet. Both the asset and
$
liability are recorded at fair value. Asset amounts included in “Other assets” in the consolidated balance sheets.
(3) Amounts included in “Accrued and other liabilities” in the consolidated balance sheets.
(4) Represents contingent consideration associated with the acquisitions during 2011. See Note 3 for more information. The changes in this Level 3 liability were not
material for the period presented.
(5) Consists of a deferred compensation arrangement recognized on our balance sheet. Both the asset and liability are recorded at fair value. Liability amounts
included in “Other long-term liabilities” in the consolidated balance sheets.
FMC CORPORATION - Form 10-K 69
—
—
—
—
—
—
—
—
—
—
1.0
—
1.0
PART II
ITEM 8 Financial Statements and Supplementary Data
Th e following tables present our fair value hierarchy for those assets and liabilities measured at fair value on a non-recurring basis in our consolidated
balance sheets during the year ended December 31, 2013 and 2012. See Note 3 for the assets and liabilities measured on a non-recurring basis
at fair value associated with our acquisitions.
(in Millions)
ASSETS
Year ended
December 31, 2013
Quoted Prices
in Active Markets
for Identical Assets
(Level 1)
Signifi cant Other
Observable Inputs
(Level 2)
Signifi cant
Unobservable
Inputs (Level 3)
Total Gains (Losses)
Year Ended
December 31, 2013
Net assets of discontinued operations held for sale(1) $
Long-lived assets associated with exit activities(2)
TOTAL ASSETS
LIABILITIES
$
150.1 $
2.6
152.7 $
— $
—
— $
— $
—
— $
150.1
2.6
152.7
$
$
(156.7)
(1.9)
(158.6)
Liabilities associated with exit activities(3)
(7.2)
(7.2)
TOTAL LIABILITIES
(1) As further discussed in Note 9, we assessed the carrying value of the net assets held for sale of our discontinued FMC Peroxygens segment at December 31, 2013.
The charge was recorded in “Discontinued operations, net of income taxes” for the year ended December 31, 2013. Our evaluation of fair value, less cost to sell was
based on the signed definitive agreement with One Equity Partners. The value of “net assets of discontinued operations held for sale” in the table above excludes the
accumulated net CTA losses of our foreign operations which were included in our fair value less cost to sell evaluation. See Note 9 for more information.
— $
— $
— $
— $
— $
— $
— $
— $
$
$
(2) We recorded charges, within our FMC Minerals segment, to write down the value of certain long-lived assets to their fair value related to our Lithium
restructuring. A portion of the assets were written down to zero during the first quarter of 2013 as they have no future use and are anticipated to be demolished.
(3) This amount represents severance liabilities associated with the Lithium restructuring as further described in Note 7.
(in Millions)
ASSETS
Long-lived assets to be abandoned(1)
TOTAL ASSETS
LIABILITIES
Year ended
December 31, 2012
Quoted Prices
in Active Markets
for Identical Assets
(Level 1)
Signifi cant Other
Observable Inputs
(Level 2)
Signifi cant
Unobservable
Inputs (Level 3)
Total Gains (Losses)
Year Ended
December 31, 2012
$
$
3.1 $
3.1 $
— $
— $
— $
— $
3.1
3.1
$
$
(15.9)
(15.9)
Liabilities associated with exit activities(2)
(5.6)
TOTAL LIABILITIES
(5.6)
(1) We recorded charges to write down the value of certain long-lived assets to be abandoned within our FMC Agricultural Solutions and FMC Minerals segments
to zero and in our discontinued FMC Peroxygens segment to their salvage value of $3.1 million, respectively. These long-lived assets have no future use and are
anticipated to be demolished. The loss noted in the above table represents the accelerated depreciation of these assets recorded during the period.
— $
— $
5.6 $
5.6 $
5.6 $
5.6 $
— $
— $
$
$
(2) This amount represents severance liabilities associated with our discontinued FMC Peroxygens segment.
NOTE 19 Guarantees, Commitments and Contingencies
We lease offi ce space, plants and facilities, and various types of
manufacturing, data processing and transportation equipment. Leases
of real estate generally provide for our payment of property taxes,
insurance and repairs. Capital leases are not signifi cant. Rent expense
under operating leases amounted to $15.7 million, $12.3 million and
$19.5 million in 2013, 2012 and 2011, respectively. Rent expense is
net of credits (received for the use of leased transportation assets) of
$25.0 million, $25.4 million and $23.1 million in 2013, 2012 and
2011, respectively.
Minimum future rentals under noncancelable leases are estimated to be
payable as follows: $26.3 million in 2014, $25.9 million in 2015, $17.3
million in 2016, $15.4 million in 2017, $14.6 million in 2018 and
Th e following table provides the estimated undiscounted amount of potential future payments for each major group of guarantees at December 31, 2013:
$142.7 million thereafter. Minimum future rentals for transportation
assets included above aggregated approximately $60.2 million, against
which we expect to continue to receive credits to substantially defray
our rental expense.
Our minimum commitments under our take-or-pay purchase obligations
associated with the sourcing of materials and energy total approximately
$65.5 million. Since the majority of our minimum obligations under
these contracts are over the life of the contract as opposed to a year-
by-year basis, we are unable to determine the periods in which these
obligations could be payable under these contracts. However, we intend
to fulfi ll the obligations associated with these contracts through our
purchases associated with the normal course of business.
(in Millions)
Guarantees:
Guarantees of vendor fi nancing
Foreign equity method investment debt guarantees
Other debt guarantees of distributor fi nancing
TOTAL
70
FMC CORPORATION - Form 10-K
$
$
27.9
7.9
16.5
52.3
We provide guarantees to fi nancial institutions on behalf of certain
Agricultural Solutions customers, principally in Brazil and Mexico, for
their seasonal borrowing. Th e total of these guarantees was $27.9 million
and $31.4 million at December 31, 2013 and 2012, respectively, and is
recorded on the consolidated balance sheets for each date as “Guarantees
of vendor fi nancing”. Th e change in the guarantees is generally due to
the seasonality of the Agricultural Solutions business.
Excluded from the chart above, in connection with our property and
asset sales and divestitures, we have agreed to indemnify the buyer for
certain liabilities, including environmental contamination and taxes that
occurred prior to the date of sale or provided guarantees to third parties
relating to certain contracts assumed by the buyer. Our indemnifi cation
or guarantee obligations with respect to these liabilities may be indefi nite
as to duration and may or may not be subject to a deductible, minimum
claim amount or cap. As such, it is not possible for us to predict the
likelihood that a claim will be made or to make a reasonable estimate of
the maximum potential loss or range of loss. If triggered, we may be able
to recover some of the indemnity payments from third parties. We have
not recorded any specifi c liabilities for these guarantees.
Contingencies
Competition / antitrust litigation related to the discontinued FMC
Peroxygens segment. We are subject to actions brought by private plaintiff s
relating to alleged violations of European and Canadian competition and
antitrust laws, as further described below.
European competition action. Multiple European purchasers of hydrogen
peroxide who claim to have been harmed as a result of alleged violations of
European competition law by hydrogen peroxide producers assigned their
legal claims to a single entity formed by a law fi rm. Th e single entity then
fi led a lawsuit in Germany in March 2009 against European producers,
including our wholly-owned Spanish subsidiary, Foret. Initial defense
briefs were fi led in April 2010, and an initial hearing was held during
the fi rst quarter of 2011, at which time case management issues were
discussed. At a subsequent hearing in October 2011, the Court indicated
that it was considering seeking guidance from the European Court of
Justice (“ECJ”) as to whether the German courts have jurisdiction over
these claims. After submission of written comments on this issue by the
parties, on March 1, 2012, the judge announced that she would refer
the jurisdictional issues to the ECJ, which she did on April 29, 2013.
Such a reference to the ECJ normally takes 12-18 months, from the date
of formal reference, for completion. Since the case is in the preliminary
stages and is based on a novel procedure - namely the attempt to create
a cross-border “class action” which is not a recognized proceeding under
EU or German law - we are unable to develop a reasonable estimate
of our potential exposure of loss at this time. We intend to vigorously
defend this matter.
Canadian antitrust actions. In 2005, after public disclosures of the U.S.
federal grand jury investigation into the hydrogen peroxide industry
(which resulted in no charges brought against us) and the fi ling of various
class actions in U.S. federal and state courts, which have all been settled,
putative class actions against us and fi ve other major hydrogen peroxide
producers were fi led in provincial courts in Ontario, Quebec and British
Columbia under the laws of Canada. Th e other fi ve defendants have settled
these claims for a total of approximately $20.6 million. On September
28, 2009, the Ontario Superior Court of Justice certifi ed a class of direct
PART II
ITEM 8 Financial Statements and Supplementary Data
and indirect purchasers of hydrogen peroxide from 1994 to 2005. Our
motion for leave to appeal the class certifi cation decision was denied in
June 2010. Th e case was largely dormant while the Canadian Supreme
Court considered, in diff erent litigation, whether indirect purchasers
may recover overcharges in antitrust actions. In October 2013 the Court
ruled that such recovery is permissible. Despite this ruling, the plaintiff s
have now moved to dismiss certain downstream purchasers from the case
and to reduce the class period to November 1, 1998 through December
31, 2003 - thereby eliminating six of the eleven years of the originally
certifi ed class period. Since the proceedings are in the preliminary stages
with respect to the merits, we are unable to develop a reasonable estimate
of our potential exposure of loss at this time. We intend to vigorously
defend these matters.
Asbestos claims. Like hundreds of other industrial companies, we have
been named as one of many defendants in asbestos-related personal injury
litigation. Most of these cases allege personal injury or death resulting
from exposure to asbestos in premises of FMC or to asbestos-containing
components installed in machinery or equipment manufactured or sold
by businesses classifi ed as discontinued operations. We intend to continue
managing these cases in accordance with our historical experience. We have
established a reserve for this litigation within our discontinued operations
and are unable to develop a reasonable estimate of any exposure of a loss in
excess of the established reserve. Our experience has been that the overall
trends in terms of the rate of fi ling of asbestos-related claims with respect
to all potential defendants has changed over time, and that fi ling rates as
to us in particular have varied signifi cantly over the last several years. We
are a peripheral defendant - that is, we have never manufactured asbestos
or asbestos-containing components. As a result, claim fi ling rates against
us have yet to form a predictable pattern, and we are unable to project a
reasonably accurate future fi ling rate and thus, we are presently unable
to reasonably estimate our asbestos liability with respect to claims that
may be fi led in the future.
Other contingent liabilities. In addition to the matters disclosed above,
we have certain other contingent liabilities arising from litigation, claims,
products we have sold, guarantees or warranties we have made, contracts we
have entered into, indemnities we have provided, and other commitments
incident to the ordinary course of business. Some of these contingencies
are known - for example pending product liability litigation or claims -
but are so preliminary that the merits cannot be determined, or if more
advanced, are not deemed material based on current knowledge; and
some are unknown - for example, claims with respect to which we have
no notice or claims which may arise in the future, resulting from products
we have sold, guarantees or warranties we have made, or indemnities we
have provided. Th erefore, we are unable to develop a reasonable estimate
of our potential exposure of loss for these contingencies, either individually
or in the aggregate, at this time. Based on information currently available
and established reserves, we have no reason to believe that the ultimate
resolution of our known contingencies, including the matters described
in this Note, will have a material adverse eff ect on our consolidated
fi nancial position, liquidity or results of operations. However, there can
be no assurance that the outcome of these contingencies will be favorable,
and adverse results in certain of these contingencies could have a material
adverse eff ect on our consolidated fi nancial position, results of operations
in any one reporting period, or liquidity.
See Note 10 for the Pocatello tribal litigation for a legal proceeding
associated with our environmental contingencies.
FMC CORPORATION - Form 10-K 71
PART II
ITEM 8 Financial Statements and Supplementary Data
NOTE 20 Segment Information
In April 2013, we made the decision to simplify our organizational
structure to focus on three core business segments. Th e new segments
better refl ect the markets where we participate and lead today, and
where we expect to grow in the future. As a result of this decision the
following changes were made:
• Our BioPolymer division has been moved into a standalone reporting
segment and renamed FMC Health and Nutrition. Th is change better
refl ects our strategic intent to continue to broaden our product and
customer base in faster growing food and pharmaceutical segments
and to expand into nutraceuticals, personal care and similar markets.
• We have combined our Lithium and Alkali Chemicals divisions into
a single reporting segment, FMC Minerals. We believe doing this
will enable us to leverage technical resources and improve operating
performance in both businesses.
• Our Agricultural Products Group has been renamed FMC Agricultural
Solutions. We believe this name change better refl ects the value-added
solutions and services that we provide to our customers.
• Finally, our Peroxygens and related Environmental Solutions product
lines became a standalone reporting segment called FMC Peroxygens.
During the second quarter of 2013 we began the process of marketing
the segment for sale. In July 2013, we classifi ed the FMC Peroxygens
segment as a discontinued operation and asset held for sale. For more
information on this presentation change see Note 9.
Additionally, eff ective in January 2013, our segment presentations
including allocation of certain corporate expenses were updated to
refl ect how we currently make fi nancial decisions and allocate resources.
Th e presentation change was also made since we believe the changes
provide a better understanding of the underlying profi tability of each
individual business segment. Th e changes were the following:
• Allocation of certain long-term incentives, primarily stock-based
compensation, from the category other income (expense), net to
each business segment.
• Allocation of the depreciation on capitalized interest associated with
completed construction projects from the category other income
(expense), net to each business segment.
• Th e presentation of the impact of noncontrolling interest as its own
line item. Noncontrolling interest impacts were previously netted
within each individual segment. Th e majority of the noncontrolling
interest pertains to our FMC Minerals segment.
• We have combined other income (expense), net and corporate expense
into one line item renamed “Corporate and other”.
We have recast the data below to refl ect the above changes in our reportable segments to conform to the current year presentation and to present
FMC Peroxygens segment as a discontinued operation retrospectively for all periods presented.
Year Ended December 31,
2012
2013
2011
$
$
$
1,464.5
654.3
917.5
—
3,036.3
2,145.7 $
762.0
970.0
(2.9)
3,874.8
1,763.8 $
680.8
966.2
(0.9)
3,409.9
(in Millions)
Revenue
FMC Agricultural Solutions
FMC Health and Nutrition
FMC Minerals
Eliminations
TOTAL
Income (loss) from continuing operations before income taxes
FMC Agricultural Solutions
FMC Health and Nutrition
FMC Minerals
Eliminations
Segment operating profi t
Corporate and other
Operating profi t before the items listed below
Restructuring and other (charges) income(1)
Interest expense, net
Non-operating pension and postretirement (charges) income(2)
Acquisition related charges(3)
Provision for income taxes
Discontinued operations, net of income taxes
Net income attributable to noncontrolling interests
NET INCOME ATTRIBUTABLE TO FMC STOCKHOLDERS
(1) See Note 7 for details of restructuring and other charges (income). Amounts for the years ended 2013, 2012 and 2011 relate to FMC Agricultural Solutions of
$32.6 million, $8.5 million and $1.2 million; FMC Health and Nutrition of $1.0 million, $0.7 million and $1.5 million; FMC Minerals of $6.4 million,
$13.0 million and $0.7 million; and Corporate of $7.9 million, $5.3 million and $2.9 million, respectively.
454.0 $
161.6
171.4
(0.4)
786.6
(78.6)
708.0
(27.5)
(40.7)
(34.9)
(7.2)
(134.5)
(27.5)
(19.5)
416.2
539.0 $
169.5
128.3
—
836.8
(82.7)
754.1
(47.9)
(42.2)
(38.1)
(10.0)
(148.6)
(159.3)
(14.1)
293.9
349.8
159.4
175.7
—
684.9
(75.3)
609.6
(6.3)
(35.0)
(14.5)
(0.6)
(132.9)
(38.1)
(16.3)
365.9
$
$
$
$
$
$
$
$
$
$
$
(2) Our non-operating pension and postretirement costs are defined as those costs related to interest, expected return on plan assets, amortized actuarial gains and
losses and the impacts of any plan curtailments or settlements. These costs are primarily related to changes in pension plan assets and liabilities which are tied to
financial market performance and we consider these costs to be outside our operational performance. We exclude these non-operating pension and postretirement
costs from our segments as we believe that removing them provides a better understanding of the underlying profitability of our businesses, provides increased
transparency and clarity in the performance of our retirement plans and enhances period-over-period comparability. We continue to include the service cost and
amortization of prior service cost in our operating segments noted above. We believe these elements reflect the current year operating costs to our businesses for the
employment benefits provided to active employees.
(3) Charges related to the expensing of the inventory fair value step-up resulting from the application of purchase accounting for acquisitions and certain professional
fees associated with the completion of acquisitions. Charges for the year ended December 31, 2013, represented amortization of inventory fair value step-up
of $5.2 million and certain professional fees of $4.8 million associated with the completion of our Epax acquisition within our FMC Health and Nutrition
segment. The charges for 2012 and 2011 represent amortization of inventory fair value step-up related to a number of acquisitions completed since fourth quarter
2011. On the consolidated statements of income, the charges associated with inventory fair value step-up are included in “Costs of sales and services” and fees
associated with concluding the acquisitions are included in “Selling, general and administrative expenses”.
72
FMC CORPORATION - Form 10-K
Net sales to external customers for each of our product line groups is presented below. Our FMC Agricultural Solutions and FMC Health and
Nutrition segment has one product line group, and therefore net sales to external customers within each of those segments are included in the
table above.
PART II
ITEM 8 Financial Statements and Supplementary Data
(in Millions)
Net Sales
Alkali
Lithium
TOTAL FMC MINERALS SEGMENT
(in Millions)
Operating capital employed(1)
FMC Agricultural Solutions
FMC Health and Nutrition
FMC Minerals
Elimination
Total operating capital employed
Segment liabilities included in total operating capital employed
Assets of discontinued operations held for sale
Corporate items
TOTAL ASSETS
Segment assets(2)
FMC Agricultural Solutions
FMC Health and Nutrition
FMC Minerals
Elimination
Total segment assets
$
$
$
$
$
Year Ended December 31,
2013
2012
747.0 $
223.0
970.0 $
733.2 $
233.0
966.2 $
December 31,
2012
2013
1,398.1 $
1,380.5
758.4
—
3,537.0
1,039.0
198.3
460.9
5,235.2 $
1,184.3 $
874.2
702.1
—
2,760.6
821.2
336.6
455.5
4,373.9
$
2011
692.7
224.8
917.5
2011
903.2
696.1
610.2
(0.2)
2,209.3
670.2
307.6
556.4
3,743.5
2,190.7 $
1,508.2
877.1
—
4,576.0
198.3
460.9
5,235.2 $
1,793.7 $
958.1
830.0
—
3,581.8
336.6
455.5
4,373.9
1,382.8
765.1
731.9
(0.3)
2,879.5
307.6
556.4
3,743.5
Assets of discontinued operations held for sale
Corporate items
TOTAL ASSETS
(1) We view operating capital employed, which consists of assets, net of liabilities, reported by our operations and excluding corporate items such as cash equivalents,
$
$
debt, pension liabilities, income taxes and LIFO reserves, as our primary measure of segment capital.
(2) Segment assets are assets recorded and reported by the segments and are equal to segment operating capital employed plus segment liabilities. See Note 1.
(in Millions)
FMC Agricultural Solutions
FMC Health and Nutrition
FMC Minerals
Corporate
TOTAL
Capital Expenditures
2013
50.1 $
115.7
50.3
5.8
221.9 $
2012
18.4 $
56.5
92.9
9.5
177.3 $
$
$
Year Ended December 31,
Depreciation and Amortization
2011
17.4
38.8
88.9
11.7
156.8
$
$
2013
34.1 $
35.4
53.9
3.8
127.2 $
2012
34.4 $
25.8
52.4
3.3
115.9 $
2011
23.3
23.1
50.1
3.1
99.6
$
Research and Development Expense
2011
84.4
10.1
6.6
—
101.1
2013
100.5 $
10.5
6.7
—
117.7 $
2012
95.4 $
9.9
6.7
—
112.0 $
$
Geographic Segment Information
(in Millions)
Revenue from continuing operations (by location of customer):
Year Ended December 31,
2013
2012
2011
North America(1)
Europe/Middle East/Africa
Latin America(1)
Asia Pacifi c
1,009.4
496.7
958.6
571.6
TOTAL
3,036.3
(1) In 2013, countries with sales in excess of ten percent of consolidated revenue consisted of the U.S. and Brazil. Sales for the years ended December 2013,
2012 and 2011 for the U.S. totaled $1,244.8 million, $1,073.4 million and $975.2 million and for Brazil totaled $1,043.1 million, $845.4 million and
$694.0 million, respectively.
1,107.6 $
494.9
1,161.2
646.2
3,409.9 $
1,285.1 $
528.1
1,382.4
679.2
3,874.8 $
$
$
FMC CORPORATION - Form 10-K 73
PART II
ITEM 8 Financial Statements and Supplementary Data
(in Millions)
Long-lived assets(1):
North America(2)
Europe/Middle East/Africa(2)
Latin America
Asia Pacifi c
861.9
463.6
141.8
245.9
TOTAL
1,713.2
(1) Geographic segment long-lived assets exclude long-term deferred income taxes and assets of discontinued operations held for sale on the consolidated balance sheets.
(2) The countries with long-lived assets in excess of ten percent of consolidated long-lived assets at December 31, 2013 and 2012 are the U.S. and Norway. Long lived
assets at December 31, 2013 and 2012 for the U.S. totaled $948.0 million and $860.1 million and for Norway totaled $511.3 million and $245.8 million,
respectively. Norway assets included goodwill of $273.1 million and $162.3 million at December 31, 2013 and 2012, respectively.
950.0 $
736.7
168.2
343.9
2,198.8 $
$
$
December 31,
2013
2012
NOTE 21 Supplemental Information
Th e following tables present details of prepaid and other current assets, other assets, accrued and other liabilities and other long-term liabilities
as presented on the consolidated balance sheets:
Prepaid and other current assets
(in Millions)
Prepaid insurance
Income and value added tax receivables
Environmental obligation recoveries (Note 10)
Derivative assets (Note 18)
Other prepaid and current assets
TOTAL
Other assets
(in Millions)
Debt fi nancing fees, net
Advance to contract manufacturers
Capitalized software, net
Environmental obligation recoveries (Note 10)
Export tax receivable
Deferred compensation arrangements
Pension and other postretirement benefi ts (Note 13)
Other long-term assets
TOTAL
Accrued and other liabilities
(in Millions)
Asset retirement obligations, current (Note 8)
Restructuring reserves (Note 7)
Dividend payable (Note 15)
Accrued payroll
Environmental reserves, current, net of recoveries (Note 10)
Derivative liabilities (Note 18)
Other accrued and other liabilities
TOTAL
Other long-term liabilities
(in Millions)
Asset retirement obligations, long-term (Note 8)
Contingencies related to uncertain tax positions (Note 11)
Deferred compensation arrangements
Self insurance reserves (primarily workers’ compensation)
Lease obligations
Reserve for discontinued operations (Note 9)
Other long-term liabilities
TOTAL
74
FMC CORPORATION - Form 10-K
December 31,
2013
7.1 $
81.0
16.8
5.6
126.3
236.8 $
December 31,
2013
10.6 $
62.2
32.5
18.7
26.6
32.7
17.2
61.5
262.0 $
December 31,
2013
17.9 $
6.1
18.0
74.6
29.5
12.0
148.9
307.0 $
December 31,
2013
4.8 $
37.3
37.4
14.9
32.4
53.2
36.2
216.2 $
2012
7.1
47.0
13.3
1.7
103.8
172.9
2012
7.7
55.9
32.8
38.3
23.5
33.0
—
56.4
247.6
2012
15.4
10.5
18.7
68.6
15.8
3.9
121.2
254.1
2012
10.1
23.3
39.8
19.6
31.8
44.4
26.5
195.5
$
$
$
$
$
$
$
$
NOTE 22 Quarterly Financial Information (Unaudited)
PART II
ITEM 8 Financial Statements and Supplementary Data
(in Millions, Except Share and Per Share Data)
Revenue
Gross Profi t
Income (loss) from continuing operations before
equity in (earnings) loss of affi liates, net interest
income and expense and income taxes
Income (loss) from continuing operations(2)
Discontinued operations, net of income taxes(4)
Net income (loss)(3)
Less: Net income attributable to noncontrolling
interests
NET INCOME (LOSS) ATTRIBUTABLE
TO FMC STOCKHOLDERS
Amounts attributable to FMC stockholders:
Continuing operations, net of income taxes
Discontinued operations, net of income taxes
NET INCOME (LOSS)
Basic earnings (loss) per common share
attributable to FMC stockholders:
Continuing operations
Discontinued operations
BASIC NET INCOME (LOSS)
PER COMMON SHARE(1)
Diluted earnings (loss) per common share
attributable to FMC stockholders:
Continuing operations
Discontinued operations
DILUTED NET INCOME (LOSS)
PER COMMON SHARE(1)
Weighted average shares outstanding:
$
1Q
910.7 $
353.6
2013
2Q
3Q
4Q
1Q
876.0 $ 957.4 $ 1,130.7 $ 855.0 $
327.5
354.9
329.6
304.4
2012
2Q
817.5 $
319.2
3Q
821.9 $
298.0
4Q
915.5
321.5
194.4
138.2
(3.2)
135.0
166.6
119.7
1.5
121.2
118.4
76.5
(56.6)
19.9
179.6
132.9
(101.0)
31.9
182.0
130.1
(5.5)
124.6
170.3
118.3
(8.0)
110.3
145.7
105.8
(11.2)
94.6
141.1
109.0
(2.8)
106.2
4.1
3.2
2.0
4.8
5.5
5.4
4.6
4.0
$ 130.9
$ 118.0
$
17.9
$
27.1
$ 119.1
$ 104.9
$
90.0
$ 102.2
$
134.1 $
(3.2)
$ 130.9
116.5 $
1.5
$ 118.0
$
74.5 $
(56.6)
17.9
$
128.1 $ 124.6 $
(101.0)
27.1
(5.5)
$ 119.1
112.9 $
(8.0)
$ 104.9
$
101.2 $
(11.2)
90.0
105.0
(2.8)
$ 102.2
$
0.97 $
(0.02)
0.85 $
0.01
0.55 $
(0.42)
0.96 $
(0.76)
0.90 $
(0.04)
0.82 $
(0.06)
0.73 $
(0.08)
0.76
(0.02)
$
0.95
$
0.86
$
0.13
$
0.20
$
0.86
$
0.76
$
0.65
$
0.74
$
0.96 $
(0.02)
0.85 $
0.01
0.55 $
(0.42)
0.95 $
(0.75)
0.89 $
(0.04)
0.82 $
(0.06)
0.73 $
(0.08)
0.76
(0.02)
$
0.94
$
0.86
$
0.13
$
0.20
$
0.85
$
0.76
$
0.65
$
0.74
Basic
Diluted
137.1
138.1
136.3
137.1
134.1
135.0
133.3
134.3
138.3
139.5
137.2
138.3
137.4
138.4
137.6
138.6
(1) The sum of quarterly earnings per common share may differ from the full-year amount.
(2) Fourth quarter 2012 results were unfavorably impacted by $13.3 million ($9.3 million after-tax) of restructuring and other charges (income), due to the
Lithium restructuring (See Note 7).
(3) In the fourth quarter of 2012, our results were favorably impacted due to a valuation allowance decrease of $14.9 million related to U.S. state net operating
losses now expected to be recoverable (See Note 11).
(4) In the third and fourth quarter of 2013, our discontinued operations included impairment charges of $65.0 million ($50.8 million after-tax) and $91.7 million
($71.3 million after-tax), respectively associated with the sale of our FMC Peroxygens segment (See Note 9).
FMC CORPORATION - Form 10-K 75
PART II
ITEM 8 Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
Th e Board of Directors and Stockholders
FMC Corporation:
We have audited the accompanying consolidated balance sheets of
FMC Corporation and subsidiaries as of December 31, 2013 and 2012,
and the related consolidated statements of income, comprehensive
income, cash fl ows, and changes in equity for each of the years in the
three-year period ended December 31, 2013. In connection with our
audits of the consolidated fi nancial statements, we also have audited
the related fi nancial statement schedule. Th ese consolidated fi nancial
statements and fi nancial statement schedule are the responsibility of the
Company’s management. Our responsibility is to express an opinion
on these consolidated fi nancial statements and fi nancial statement
schedule based on our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Th ose
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the fi nancial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the fi nancial statements.
An audit also includes assessing the accounting principles used and
signifi cant estimates made by management, as well as evaluating the
overall fi nancial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated fi nancial statements referred to above
present fairly, in all material respects, the fi nancial position of FMC
Corporation and subsidiaries as of December 31, 2013 and 2012, and
the results of their operations and their cash fl ows for each of the years
in the three-year period ended December 31, 2013, in conformity with
U.S. generally accepted accounting principles. Also in our opinion, the
related fi nancial statement schedule, when considered in relation to
the basic consolidated fi nancial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.
We also have audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), FMC Corporation’s
internal control over fi nancial reporting as of December 31, 2013, based
on criteria established in Internal Control – Integrated Framework (1992)
issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO), and our report dated February 18, 2014 expressed
an unqualifi ed opinion on the eff ectiveness of the Company’s internal
control over fi nancial reporting.
/s/ KPMG LLP
Philadelphia, Pennsylvania
February 18, 2014
76
FMC CORPORATION - Form 10-K
PART II
ITEM 8 Financial Statements and Supplementary Data
Management’s Annual Report on Internal Control
Over Financial Reporting
Management is responsible for establishing and maintaining adequate
internal control over fi nancial reporting as defi ned in Exchange Act
Rule 13a-15(f ). FMC’s internal control over fi nancial reporting is a
process designed to provide reasonable assurance regarding the reliability
of fi nancial reporting and the preparation of fi nancial statements for
external purposes in accordance with U.S. generally accepted accounting
principles. Internal control over fi nancial reporting includes those
written policies and procedures that:
• pertain to the maintenance of records that, in reasonable detail,
accurately and fairly refl ect the transactions and dispositions of the
assets of FMC;
• provide reasonable assurance that transactions are recorded as necessary
to permit preparation of fi nancial statements in accordance with U.S.
generally accepted accounting principles;
• provide reasonable assurance that receipts and expenditures of FMC
are being made only in accordance with authorization of management
and directors of FMC; and
• provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use or disposition of assets that could
have a material eff ect on the consolidated fi nancial statements.
Internal control over fi nancial reporting includes the controls themselves,
monitoring and internal auditing practices and actions taken to correct
defi ciencies as identifi ed.
Because of its inherent limitations, internal control over fi nancial
reporting may not prevent or detect misstatements. Also, projections
of any evaluation of eff ectiveness to future periods are subject to
the risk that controls may become inadequate because of changes
in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
We assessed the eff ectiveness of our internal control over fi nancial
reporting as of December 31, 2013. We based this assessment on
criteria for eff ective internal control over fi nancial reporting described
in “Internal Control—Integrated Framework (1992)” issued by the
Committee of Sponsoring Organizations of the Treadway Commission.
Management’s assessment included an evaluation of the design of our
internal control over fi nancial reporting and testing of the operational
eff ectiveness of our internal control over fi nancial reporting. We
reviewed the results of our assessment with the Audit Committee of
our Board of Directors.
Based on this assessment, we determined that, as of December 31,
2013, FMC has eff ective internal control over fi nancial reporting.
KPMG LLP, our independent registered public accounting fi rm, has
issued an attestation report on the eff ectiveness of internal control
over fi nancial reporting as of December 31, 2013, which appears on
the following page.
FMC CORPORATION - Form 10-K 77
PART II
ITEM 8 Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
Th e Board of Directors and Stockholders
FMC Corporation:
We have audited FMC Corporation’s internal control over fi nancial
reporting as of December 31, 2013, based on criteria established in
Internal Control – Integrated Framework (1992) issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO).
FMC Corporation’s management is responsible for maintaining eff ective
internal control over fi nancial reporting and for its assessment of the
eff ectiveness of internal control over fi nancial reporting, included in
the accompanying report titled “Management’s Annual Report on
Internal Control Over Financial Reporting.” Our responsibility is to
express an opinion on the Company’s internal control over fi nancial
reporting based on our audit.
We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Th ose standards
require that we plan and perform the audit to obtain reasonable assurance
about whether eff ective internal control over fi nancial reporting was
maintained in all material respects. Our audit included obtaining an
understanding of internal control over fi nancial reporting, assessing
the risk that a material weakness exists, and testing and evaluating the
design and operating eff ectiveness of internal control based on the
assessed risk. Our audit also included performing such other procedures
as we considered necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinion.
A company’s internal control over fi nancial reporting is a process
designed to provide reasonable assurance regarding the reliability of
fi nancial reporting and the preparation of fi nancial statements for
external purposes in accordance with generally accepted accounting
principles. A company’s internal control over fi nancial reporting includes
those policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly refl ect the
transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to
permit preparation of fi nancial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of
the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could have
a material eff ect on the fi nancial statements.
Because of its inherent limitations, internal control over fi nancial
reporting may not prevent or detect misstatements. Also, projections
of any evaluation of eff ectiveness to future periods are subject to
the risk that controls may become inadequate because of changes
in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
In our opinion, FMC Corporation maintained, in all material respects,
eff ective internal control over fi nancial reporting as of December 31,
2013, based on criteria established in Internal Control – Integrated
Framework (1992) issued by the Committee of Sponsoring Organizations
of the Treadway Commission.
We also have audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), the consolidated
balance sheets of FMC Corporation and subsidiaries as of December 31,
2013 and 2012, and the related consolidated statements of income,
comprehensive income, cash fl ows, and changes in equity for each of
the years in the three-year period ended December 31, 2013, and our
report dated February 18, 2014 expressed an unqualifi ed opinion on
those consolidated fi nancial statements.
/s/ KPMG LLP
Philadelphia, Pennsylvania
February 18, 2014
78
FMC CORPORATION - Form 10-K
PART II
ITEM 9B Other Information
FMC Corporation
Schedule II - Valuation and Qualifying Accounts and Reserves
for Years Ended December 31, 2013, 2012 and 2011
(in Millions)
December 31, 2013
Reserve for doubtful accounts
Deferred tax valuation allowance
December 31, 2012
Reserve for doubtful accounts
Deferred tax valuation allowance
December 31, 2011
Reserve for doubtful accounts
Deferred tax valuation allowance
(1) Write-offs are net of recoveries.
Provision /(Benefi t)
Charged to
Costs and
Expenses
Charged
to Other
Comprehensive
Income
Balance,
Beginning of Year
$
$
$
$
$
$
26.8
84.5
20.7
92.6
20.3
76.3
5.7
23.1
8.8
(8.1)
3.9
16.3
—
0.6
—
—
—
—
Write- off s(1)
Balance,
End of Year
(2.3) $
— $
(2.7) $
— $
(3.5) $
— $
30.2
108.2
26.8
84.5
20.7
92.6
ITEM 9 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure
None.
ITEM 9A Controls and Procedures
(a) Evaluation of disclosure controls and procedures. Based on
management’s evaluation (with the participation of the Company’s
Chief Executive Offi cer and Chief Financial Offi cer), the Chief
Executive Offi cer and Chief Financial Offi cer have concluded
that, as of the end of the period covered by this report, the
Company’s disclosure controls and procedures (as defi ned in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange
Act of 1934) are eff ective to provide reasonable assurance that
information required to be disclosed by the Company in reports
fi led or submitted under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time
periods specifi ed in the SEC’s rules and forms and is accumulated
and communicated to management, including our principal
executive offi cer and principal fi nancial offi cer, as appropriate
to allow timely decisions regarding required disclosure.
Management’s annual report on internal control over fi nancial
reporting. Refer to Management’s Report on Internal Control Over
Financial Reporting which is included in Item 8 of Part II of this
Annual Report on Form 10-K and is incorporated by reference
to this Item 9A.
Audit report of the independent registered public accounting
fi rm. Refer to Report of Independent Registered Public Accounting
Firm which is included in Item 8 of Part II of this Annual Report
on Form 10-K and is incorporated by reference to this Item 9A.
(b) Change in Internal Controls. Th ere have been no changes in
internal control over fi nancial reporting that occurred during
the quarter ended December 31, 2013, that materially aff ected
or are reasonably likely to materially aff ect our internal control
over fi nancial reporting.
ITEM 9B Other Information
None.
FMC CORPORATION - Form 10-K 79
PART III
ITEM 10 Directors, Executive Offi cers and Corporate Governance
PART III
ITEM 10 Directors, Executive Offi cers and Corporate
Governance
Information concerning directors, appearing under the caption “III.
Board of Directors” in our Proxy Statement to be fi led with the SEC
in connection with the Annual Meeting of Stockholders scheduled
to be held on April 24, 2014 (the “Proxy Statement”), information
concerning the Audit Committee, appearing under the caption “IV.
Information About the Board of Directors and Corporate Governance-
Committees and Independence of Directors-Audit Committee” in the
Proxy Statement, information concerning the Code of Ethics, appearing
under the caption “IV. Information About the Board of Directors and
Corporate Governance—Corporate Governance-Code of Ethics and
Business Conduct Policy” in the Proxy Statement, and information
about compliance with Section 16(a) of the Securities Exchange Act of
1934 appearing under the caption “VII. Other Matters—Section 16(a)
Benefi cial Ownership Reporting Compliance” in the Proxy Statement,
is incorporated herein by reference in response to this Item 10.
Th e executive offi cers of FMC Corporation, the offi ces they currently
hold, their business experience since at least January 1, 2009 and their
ages as of December 31, 2013, are as follows:
Age on
12/31/2013 Offi ce, year of election and other information
Name
Pierre R. Brondeau
Paul W. Graves
Andrea E. Utecht
Mike P. Smith
Edward T. Flynn
Mark A. Douglas
56
42
65
52
55
51
Th omas C. Deas, Jr.
63
President, Chief Executive Offi cer and Chairman of the Board (10-present); President and Chief Executive Offi cer
of Dow Advanced Materials, a specialty materials company (08-09); President and Chief Operating Offi cer of Rohm
and Haas Company, a predecessor of Dow Advanced Materials (07-08); Executive Vice President and Business Group
Executive, Electronic Materials and Specialty Materials (03-07); Vice President and Business Group Executive, Electronic
Materials, (03); President and Chief Executive Offi cer, Rohm and Haas Electronic Materials LLC and Regional Director,
Europe, (03); Board Member, T.E. Connectivity Electronics (07 – Present), Marathon Oil Company (10-present)
Executive Vice President and Chief Financial Offi cer (12-present); Managing Director, Goldman Sachs Group (06-12)
Executive Vice President, General Counsel and Secretary (01-present); Senior Vice President, Secretary and General
Counsel, Atofi na Chemicals, Inc. (96-01)
Vice President, Health and Nutrition (13-present); Division General Manager, BioPolymer (08-13); General Manager,
Food Ingredients (04-08); Division General Manager, Hydrogen Peroxide (01-04); Division General Manager,
Speciality Peroxygens (99-01)
President, FMC Minerals (12-present); General Manager Alkali Chemicals Division, President FMC Wyoming Corp.
(02-12); Chief Information Offi cer (00-02)
President, FMC Agricultural Solutions (12-present); President, Industrial Chemicals Group (11-12); Vice President,
Global Operations and International Development (10-11); Vice President, President Asia, Dow Advanced Materials
(09-10); Corporate Vice President, President Asia, Rohm and Haas Company (07-09); Board Member, Quaker
Chemical (13-present)
Vice President and Treasurer (01-present); Vice President, Treasurer and CFO, Applied Tech Products Corp. (98-01);
Vice President, Treasurer and CFO, Airgas, Inc. (97-98); Vice President, Treasurer and CFO, Maritrans, Inc. (96-97);
Vice President—Treasury and Assistant Treasurer, Scott Paper Company (88-96)
All offi cers are elected to hold offi ce for one year or until their successors
are elected and qualifi ed. No family relationships exist among any of the
above-listed offi cers, and there are no arrangements or understandings
between any of the above-listed offi cers and any other person pursuant
to which they serve as an offi cer. Th e above-listed offi cers have not
been involved in any legal proceedings during the past ten years of a
nature for which the SEC requires disclosure that are material to an
evaluation of the ability or integrity of any such offi cer.
80
FMC CORPORATION - Form 10-K
PART III
ITEM 14 Principal Accountant Fees and Services
ITEM 11 Executive Compensation
Th e information contained in the Proxy Statement in the section titled “VI. Executive Compensation” with respect to executive compensation,
in the section titled “IV. Information About the Board of Directors and Corporate Governance—Director Compensation” and “—Corporate
Governance—Compensation Committee Interlocks and Insider Participation” is incorporated herein by reference in response to this Item 11.
ITEM 12 Security Ownership of Certain Benefi cial Owners
and Management and Related Stockholder Matters
Th e information contained in the section titled “V. Security Ownership of FMC Corporation” in the Proxy Statement, with respect to security
ownership of certain benefi cial owners and management, is incorporated herein by reference in response to this Item 12.
Equity Compensation Plan Information
Th e table below sets forth information with respect to compensation plans under which equity securities of FMC are authorized for issuance as
of December 31, 2013. All of the equity compensation plans pursuant to which we are currently granting equity awards have been approved by
stockholders.
Number of Securities
remaining available for
future issuance under
equity compensation
plans (excluding securities
refl ected in column (A))
(C)
Plan Category
Equity Compensation Plans approved by stockholders
5,345,924
(1) Taking into account all outstanding awards included in this table, the weighted-average exercise price of such stock options is $36.76 and the weighted-average
Number of Securities to
be issued upon exercise of
outstanding options and
restricted stock awards
(A)(2)
2,703,434 $
Weighted-average
exercise price of
outstanding
options and restricted
stock awards
(B)(1)
36.76
term-to-expiration is 5.94 years.
(2) Includes 2,058,076 stock options and 503,158 restricted stock awards granted to employees and 142,200 Restricted Stock Units (RSUs) held by directors.
ITEM 13 Certain Relationships and Related Transactions,
and Director Independence
Th e information contained in the Proxy Statement concerning our independent directors under the caption “IV. Information About the Board of
Directors and Corporate Governance,” and the information contained in the Proxy Statement concerning our related party transactions policy,
appearing under the caption “IV. Information About the Board of Directors and Corporate Governance—Corporate Governance—Related Party
Transactions Policy,” is incorporated herein by reference in response to this Item 13.
ITEM 14 Principal Accountant Fees and Services
Th e information contained in the Proxy Statement in the section titled “II. Th e Proposals to be Voted On—Ratifi cation of Appointment of
Independent Registered Public Accounting Firm” is incorporated herein by reference in response to this Item 14.
FMC CORPORATION - Form 10-K 81
PART IV
ITEM 15 Exhibits and Financial Statement Schedules
PART IV
ITEM 15 Exhibits and Financial Statement Schedules
(a) Documents fi led with this Report
1. Consolidated fi nancial statements of FMC Corporation and its subsidiaries are incorporated under Item 8 of this Form 10-K.
2. Th e following supplementary fi nancial information is fi led in this Form 10-K:
Financial Statements Schedule II – Valuation and qualifying accounts and reserves for the years ended December 31, 2013, 2012 and 2011
Th e schedules not included herein are omitted because they are not applicable or the required information is presented in the fi nancial statements
or related notes.
3. Exhibits: See attached Index of Exhibits
(b) Exhibits
Exhibit No. Exhibit Description
(3)
*3.1
Articles of Incorporation and By-Laws
Restated Certifi cate of Incorporation, as amended through May 23, 2013 (Exhibit 3.1 to the Quarterly Report on Form 10-Q fi led on July
30, 2013)
Restated By-Laws of FMC Corporation as of September 23, 2013 (Exhibit 3.2 to the Current Report on Form 8-K fi led September 23, 2013)
Instruments defi ning the rights of security holders, including indentures. FMC Corporation undertakes to furnish to the SEC upon request,
a copy of any instrument defi ning the rights of holders of long-term debt of FMC Corporation and its consolidated subsidiaries and for any of
its unconsolidated subsidiaries for which fi nancial statements are required to be fi led.
Indenture, dated as of November 15, 2009, by and between FMC Corporation and U.S. Bank National Association, as trustee (Exhibit 4.1 to
the Current Report on Form 8-K fi led on November 30, 2009).
First Supplemental Indenture, dated as of November 30, 2009, by and between FMC Corporation and U.S. Bank National Association, as
trustee (including the form of the Note) (Exhibit 4.2 to the Current Report on Form 8-K fi led on November 30, 2009).
Second Supplemental Indenture, dated as of November 17, 2011, by and between the Company and U.S. Bank National Association, as trustee
(including the form of the Note) (Exhibit 4.2 to the Current Report on Form 8-K fi led on November 17, 2011).
Th ird Supplemental Indenture, dated as of November 15, 2013, by and between the Company and U.S. Bank National Association, as
trustee (including the form of the Note) (Exhibit 4.1 to the Current Report on Form 8-K fi led on November 12, 2013).
Material contracts
Credit Agreement, dated as of August 5, 2011, among FMC Corporation and certain Foreign Subsidiaries, the Lenders and Issuing Banks Parties
Th ereto, Citibank, N.A., as Administrative Agent, Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated,
as Joint Lead Arrangers, Bank of America, N.A., as Syndication Agent, DNB NOR Bank ASA, Th e Bank of Tokyo-Mitsubishi UFJ, Ltd.,
and Sumitomo Mitsui Banking Corp., as Co-Documentation Agents, and DNB NOR Bank ASA, Th e Bank of Tokyo-Mitsubishi UFJ, Ltd.,
Sumitomo Mitsui Banking Corp., BNP Paribas, HSBC Bank USA, National Association, and U.S. Bank, National Association, as Co-Senior
Managing Agents (Exhibit 10.1 to the Current Report on Form 8-K fi led on August 8, 2011)
Amendment and Consent No. 1, dated as of August 5, 2013, to the Credit Agreement, dated as of August 5, 2011, among FMC Corporation,
certain subsidiaries of FMC Corporation party thereto, the lenders and issuing banks party thereto, and Citibank, N.A., as Administrative Agent
for such lenders (Exhibit 10.1 to the Quarterly Report on Form 10-Q fi led on October 29, 2013)
Asset Purchase Agreement among FMC Corporation, Solutia Inc., Astaris LLC, Israel Chemicals Limited and ICL Performance Products
Holding Inc., dated as of September 1, 2005 (Exhibit 10 to the Quarterly Report on Form 10-Q/A fi led on November 8, 2005)
FMC Corporation Compensation Plan for Non-Employee Directors As Amended and Restated Eff ective February 20, 2009 (Exhibit 10.4 to the
Annual Report on Form 10-K fi led on February 23, 2009)
Non-Employee Director Restricted Stock Unit Award Agreement (Exhibit 10.4.a to the Annual Report on Form 10-K fi led on February 23, 2009)
Non-Employee Director Restricted Stock Unit Award Agreement (Exhibit 10.4.b to the Annual Report on Form 10-K fi led on February 23, 2009)
FMC Corporation Salaried Employees’ Equivalent Retirement Plan, as amended and restated eff ective as of January 1, 2009 (Exhibit 10.5 to the
Annual Report on Form 10-K fi led on February 23, 2009)
FMC Corporation Salaried Employees’ Equivalent Retirement Plan Grantor Trust, as amended and restated eff ective as July 31, 2001 (Exhibit
10.6.a to the Quarterly Report on Form 10-Q fi led on November 7, 2001)
FMC Corporation Non-Qualifi ed Savings and Investment Plan, as adopted by the Company on December 17, 2008 (Exhibit 10.7 to the
Annual Report on Form 10-K fi led on February 23, 2009)
*3.2
(4)
*4.1
*4.2
*4.3
*4.4
(10)
*10.1
*10.1a
*10.2
†*10.3
†*10.3.a
†*10.3.b
†*10.4
†*10.5
†*10.6
82
FMC CORPORATION - Form 10-K
PART IV
ITEM 15 Exhibits and Financial Statement Schedules
Exhibit No. Exhibit Description
†*10.7
†* 10.7.a
†* 10.7.b
FMC Corporation Non-Qualifi ed Savings and Investment Plan Trust, as amended and restated eff ective as of September 28, 2001 (Exhibit 10.7.a to
the Quarterly Report on Form 10-Q fi led on November 7, 2001)
First Amendment to FMC Corporation Non-Qualifi ed Savings and Investment Plan Trust between Fidelity Management Trust Company and
FMC Corporation, eff ective as of October 1, 2003 (Exhibit 10.15a to the Annual Report on Form 10-K fi led on March 11, 2004)
Second Amendment to FMC Corporation Non-Qualifi ed Savings and Investment Plan Trust, eff ective as of January 1, 2004 (Exhibit 10.12b to the
Annual Report on Form 10-K fi led on March 14, 2005)
†*10.7.c Th ird Amendment to FMC Corporation Non-Qualifi ed Savings and Investment Plan Trust between Fidelity Management Trust Company and
†*10.7.d
†*10.7.e
†*10.8
†*10.8a
†*10.8b
†*10.8c
†*10.9
†*10.10
†*10.11
†10.12
†10.13
†*10.14
†*10.14a
*10.15
*10.15.a
*10.15.b
FMC Corporation, eff ective as of February 14, 2005 (Exhibit 10.8.c to the Annual Report on Form 10-K fi led on February 23, 2009)
Fourth Amendment to FMC Corporation Non-Qualifi ed Savings and Investment Plan Trust between Fidelity Management Trust Company and
FMC Corporation, eff ective as of July 1, 2005 (Exhibit 10.8.d to the Annual Report on Form 10-K fi led on February 23, 2009)
Fifth Amendment to FMC Corporation Non-Qualifi ed Savings and Investment Plan Trust between Fidelity Management Trust Company and
FMC Corporation, eff ective as of April 23, 2008 (Exhibit 10.8.e to the Annual Report on Form 10-K fi led on February 23, 2009)
FMC Corporation Incentive Compensation and Stock Plan as amended and restated through February 18, 2013 (Exhibit 10.8 to the Annual
Report on Form 10-K fi led on February 18, 2013)
Form of Employee Restricted Stock Unit Agreement Pursuant to the FMC Corporation Incentive Compensation and Stock Plan (Exhibit 10.8
to the Annual Report on Form 10-K fi led on February 18, 2013)
Form of Nonqualifi ed Stock Option Agreement Pursuant to the FMC Corporation Incentive Compensation and Stock Plan (Exhibit 10.8 to the
Annual Report on Form 10-K fi led on February 18, 2013)
Form of Key Manager Restricted Stock Agreement Pursuant to the FMC Corporation Incentive Compensation and Stock Plan (Exhibit 10.8 to
the Annual Report on Form 10-K fi led on February 18, 2013)
FMC Corporation Executive Severance Plan, as amended and restated eff ective as of January 1, 2009 (Exhibit 10.10 to the Annual Report on
Form 10-K fi led on February 23, 2009)
FMC Corporation Executive Severance Grantor Trust Agreement, dated July 31, 2001 (Exhibit 10.10.a to the Quarterly Report on Form 10-Q
fi led on November 7, 2001)
Amended and Restated Executive Severance Agreement, dated November 6, 2012, between FMC Corporation and Pierre Brondeau.
(Exhibit 10.2 to FMC Corporation’s Current Report on Form 8-K fi led on November 9, 2012) Pursuant to Instruction 2 to Item 601 of
Regulation S-K, an Amended and Restated Executive Severance Agreement that is substantially identical in all material respects, except as to
the parties thereto, between the Company and Mark A. Douglas was not fi led.
Amended and Restated Executive Severance Agreement, dated November 6, 2012, between FMC Corporation and Andrea E. Utecht.
Amended and Restated Executive Severance Agreement, entered into as of November 6, 2012, by and between FMC Corporation and
Th omas C. Deas, Jr.
Amended and Restated Executive Severance Agreement, entered into as of November 6, 2012, by and between FMC Corporation and
Edward T. Flynn. (Exhibit 10.14 to the Annual Report on Form 10-K fi led on February 18, 2013)
Transition Agreement by and between D. Michael Wilson and FMC Corporation, dated April 29, 2013. (Exhibit 10.1 to FMC Corporation’s
Current Report on Form 8-K fi led on April 30, 2013)
Joint Venture Agreement between FMC Corporation and Solutia Inc., made as of April 29, 1999 (Exhibit 2.I to Solutia’s Current Report on
Form 8-K fi led on April 27, 2000)
First Amendment to Joint Venture Agreement between FMC Corporation and Solutia Inc., eff ective as of December 29, 1999 (Exhibit 2.II to
Solutia’s Current Report on Form 8-K fi led on April 27, 2000)
Second Amendment to Joint Venture Agreement between FMC Corporation and Solutia Inc., eff ective as of February 2, 2000 (Exhibit 2.III to
Solutia’s Current Report on Form 8-K fi led on April 27, 2000)
*10.15.c Th ird Amendment to Joint Venture Agreement between FMC Corporation and Solutia Inc., eff ective as of March 31, 2000 (Exhibit 2.IV to
*10.15.d
*10.16
†*10.17
†*10.17.a
†*10.18
Solutia’s Current Report on Form 8-K fi led on April 27, 2000)
Fourth Amendment to Joint Venture Agreement between FMC Corporation and Solutia Inc., dated November 4, 2005 (Exhibit 10 to FMC
Corporation’s Current Report on Form 8-K fi led on November 9, 2005)
Separation and Distribution Agreement by and between FMC Corporation and FMC Technologies, Inc., dated as of May 31, 2001 (Exhibit 2.1
to Form S-1/A for FMC Technologies, Inc. (Registration No. 333-55920) fi led on June 6, 2001)
Letter Agreement dated October 23, 2009 between FMC Corporation and Pierre Brondeau (Exhibit 10.18 to FMC Corporation’s Annual
Report on Form 10-K fi led on February 22, 2010)
Amendment to October 23, 2009 Letter Agreement, dated November 6, 2012, between FMC Corporation and Pierre Brondeau. (Exhibit 10.1
to FMC Corporation’s Current Report on Form 8-K fi led on November 9, 2012)
Executive Severance Agreement, dated November 6, 2012, between FMC Corporation and Paul W. Graves. (Exhibit 10.3 to FMC Corporation’s
Current Report on Form 8-K fi led on November 9, 2012)
Computation of Ratios of Earnings to Fixed Charges
FMC Corporation List of Signifi cant Subsidiaries
Consent of KPMG LLP
Chief Executive Offi cer Certifi cation
Chief Financial Offi cer Certifi cation
Chief Executive Offi cer Certifi cation of Annual Report
Chief Financial Offi cer Certifi cation of Annual Report
Mine Safety Disclosures
Interactive Data File
12
21
23.1
31.1
31.2
32.1
32.2
95
101
*
† Management contract or compensatory plan or arrangement
Incorporated by reference
FMC CORPORATION - Form 10-K 83
PART IV
ITEM 15 Exhibits and Financial Statement Schedules
Signatures
Pursuant to the requirements of Section 13 or 15(d) 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)
By:
Date:
/S/ PAUL W. GRAVES
Paul W. Graves
Executive Vice President
and Chief Financial Offi cer
February 18, 2014
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the date indicated.
Title
Executive Vice President and Chief Financial Offi cer
Corporate Controller (Principal Accounting Offi cer)
President, Chief Executive Offi cer and Chairman of the Board
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Date
February 18, 2014
February 18, 2014
February 18, 2014
February 18, 2014
February 18, 2014
February 18, 2014
February 18, 2014
February 18, 2014
February 18, 2014
February 18, 2014
February 18, 2014
February 18, 2014
February 18, 2014
Signature
/S/ PAUL W. GRAVES
Paul W. Graves
/S/ NICHOLAS L. PFEIFFER
Nicholas L. Pfeiff er
/S/ PIERRE R. BRONDEAU
Pierre R. Brondeau
/S/ G. PETER D’ALOIA
G. Peter D’Aloia
/S/ EDUARDO E. CORDEIRO
Eduardo E. Cordeiro
/S/ C. SCOTT GREER
C. Scott Greer
/S/ DIRK A. KEMPTHORNE
Dirk A. Kempthorne
/S/ EDWARD J. MOONEY
Edward J. Mooney
/S/ PAUL J. NORRIS
Paul J. Norris
/S/ ROBERT C. PALLASH
Robert C. Pallash
/S/ VINCENT R. VOLPE, JR.
Vincent R. Volpe, Jr.
/S/ WILLIAM H. POWELL
William H. Powell
/S/ K’LYNNE JOHNSON
K’Lynne Johnson
84
FMC CORPORATION - Form 10-K
PART IV
ITEM 15 Exhibits and Financial Statement Schedules
Index of Exhibits Filed with the Form 10-K of FMC
Corporation for the Year Ended December 31, 2013
Exhibit No.
10.12
10.13
12
21
23.1
31.1
31.2
32.1
32.2
95
101
Exhibit Description
Amended and Restated Executive Severance Agreement, dated November 6, 2012, between FMC Corporation and Andrea E. Utecht.
Amended and Restated Executive Severance Agreement, entered into as of November 6, 2012, by and between FMC Corporation and
Th omas C. Deas, Jr.
Computation of Ratios of Earnings to Fixed Charges
FMC Corporation List of Signifi cant Subsidiaries
Consent of KPMG LLP
Chief Executive Offi cer Certifi cation
Chief Financial Offi cer Certifi cation
Chief Executive Offi cer Certifi cation of Annual Report
Chief Financial Offi cer Certifi cation of Annual Report
Mine Safety Disclosures
Interactive Data File
EXHIBIT 12
Statements of Computation of Ratio of Earnings to Fixed Charges
Year ended December 31,
2009
2011
2010
2013
2012
$
(in Millions, Except Ratios)
Earnings:
Income from continuing operations before income taxes
Equity in (earnings) loss of affi liates
Interest expense and amortization of debt discount, fees and expenses
Amortization of capitalized interest
Interest included in rental expense
TOTAL EARNINGS
Fixed charges:
23.7
Interest expense and amortization of debt discount, fees and expenses
3.8
Interest capitalized as part of fi xed assets
4.8
Interest included in rental expense
32.3
TOTAL FIXED CHARGES
Ratio of earnings to fi xed charges(1)
12.9
(1) In calculating this ratio, earnings consist of income (loss) from continuing operations before income taxes plus interest expense, net, amortization expense related to
debt discounts, fees and expenses, amortization of capitalized interest, interest included in rental expenses (assumed to be one-third of rent) and Equity in (earnings)
loss of affiliates. Fixed charges consist of interest expense, amortization of debt discounts, fees and expenses, interest capitalized as part of fixed assets and interest
included in rental expenses.
457.6 $
(0.3)
35.1
2.8
4.3
499.5
553.2 $
(0.8)
35.1
3.0
4.9
595.4
615.9 $
0.9
42.4
3.7
3.5
666.4 $
597.7 $
0.7
40.8
3.6
2.4
35.1 $
6.9
4.9
46.9
12.7
35.1 $
7.5
4.3
46.9
10.7
386.2
(0.7)
23.7
2.7
4.8
416.7
42.4 $
7.4
3.5
53.3 $
12.5
40.8 $
7.8
2.4
51.0
12.7
645.2
$
$
$
$
$
$
$
$
$
FMC CORPORATION - Form 10-K 85
PART IV
ITEM 15 Exhibits and Financial Statement Schedules
EXHIBIT 21
Signifi cant Subsidiaries of the Registrant
The following is a list of the Company’s consolidating subsidiaries, as of December 31, 2013, except for certain subsidiaries of the Registrant which do
not, in the aggregate, constitute a significant subsidiary as that term is defined in Rule 12b-2 under the Securities Exchange Act of 1934. This list does not
include equity affiliate investments and cost investments.
Name of Subsidiary
FMC Corporation (the Registrant)
FMC Agricultural Products International AG
FMC Agroquímica de México S.R.L de C.V.
FMC BioPolymer AS
FMC Norway Holding AS
Epax Norway AS
Epax Pharma UK Ltd.
FMC BioPolymer UK Limited
FMC Chemicals Netherlands BV
FMC Chemical International, AG
FMC Chemicals Limited
FMC Chemical sprl
FMC Finance BV
FMC Foret SA
FMC India Private Limited
FMC International - Irish Partnership
FMC Philippines Inc.
FMC of Canada
FMC Química do Brasil Ltda
FMC Specialty Alkali Corporation
FMC (Suzhou) Crop Care Co., Ltd
FMC WFC I, Inc.
FMC Wyoming Corporation
Minera del Altiplano SA
PT Bina Guna Kimia
Phytone Limited
Ruralco Soluciones SA
FMC Italy srl
State or Country of Incorporation
Delaware
Switzerland
Mexico
Norway
Norway
Norway
United Kingdom
United Kingdom
Netherlands
Switzerland
United Kingdom
Belgium
Netherlands
Spain
India
Ireland
Philippines
Canada
Brazil
Delaware
China
Wyoming
Delaware
Argentina
Indonesia
United Kingdom
Argentina
Italy
86
FMC CORPORATION - Form 10-K
PART IV
ITEM 15 Exhibits and Financial Statement Schedules
EXHIBIT 23.1 Consent of Independent Registered Public Accounting Firm
Th e Board of Directors
FMC Corporation:
We consent to the incorporation by reference in the registration statements (Nos. 333-64702, 333-62683, 333-36973, 333-24039, 333-18383,
333-69805, 333-69714, 333-111456, 333-172387 and 333-172388) on Form S-8 and the registration statement (No. 333-184736) on
Form S-3 of FMC Corporation of our reports dated February 18, 2014, with respect to the consolidated balance sheets of FMC Corporation
and subsidiaries as of December 31, 2013 and 2012, and the related consolidated statements of income, comprehensive income, cash fl ows,
and changes in equity for each of the years in the three-year period ended December 31, 2013, and the related fi nancial statement schedule, and
the eff ectiveness of internal control over fi nancial reporting as of December 31, 2013, which reports appear in the December 31, 2013 annual
report on Form 10-K of FMC Corporation.
/s/ KPMG LLP
Philadelphia, Pennsylvania
February 18, 2014
EXHIBIT 31.1 Chief Executive Offi cer Certifi cation
I, Pierre R. Brondeau, certify that:
1.
I have reviewed this Annual Report on Form 10-K of FMC Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the fi nancial statements, and other fi nancial information included in this report, fairly present in all material
respects the fi nancial condition, results of operations and cash fl ows of the registrant as of, and for, the periods presented in this report;
4. Th e registrant’s other certifying offi cer and I are responsible for establishing and maintaining disclosure controls and procedures (as defi ned
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over fi nancial reporting (as defi ned in Exchange Act Rules 13a-15(f )
and 15d-15(f )) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over fi nancial reporting, or caused such internal control over fi nancial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of fi nancial reporting and the preparation of fi nancial statements
for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the eff ectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
eff ectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over fi nancial reporting that occurred during the registrant’s most
recent fi scal quarter (the registrant’s fourth fi scal quarter in the case of an annual report) that has materially aff ected, or is reasonably
likely to materially aff ect, the registrant’s internal control over fi nancial reporting; and
5. Th e registrant’s other certifying offi cer and I have disclosed, based on our most recent evaluation of internal control over fi nancial reporting,
to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
a. All signifi cant defi ciencies and material weaknesses in the design or operation of internal control over fi nancial reporting which are
reasonable likely to adversely aff ect the registrant’s ability to record, process, summarize and report fi nancial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a signifi cant role in the registrant’s internal
control over fi nancial reporting.
/S/ PIERRE R. BRONDEAU
Pierre R. Brondeau
President and Chief Executive Offi cer
February 18, 2014
FMC CORPORATION - Form 10-K 87
PART IV
ITEM 15 Exhibits and Financial Statement Schedules
EXHIBIT 31.2 Chief Financial Offi cer Certifi cation
I, Paul W. Graves, certify that:
1.
I have reviewed this Annual Report on Form 10-K of FMC Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the fi nancial statements, and other fi nancial information included in this report, fairly present in all material
respects the fi nancial condition, results of operations and cash fl ows of the registrant as of, and for, the periods presented in this report;
4. Th e registrant’s other certifying offi cer and I are responsible for establishing and maintaining disclosure controls and procedures (as defi ned
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over fi nancial reporting (as defi ned in Exchange Act Rules 13a-15(f )
and 15d-15(f )) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over fi nancial reporting, or caused such internal control over fi nancial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of fi nancial reporting and the preparation of fi nancial statements
for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the eff ectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
eff ectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over fi nancial reporting that occurred during the registrant’s most
recent fi scal quarter (the registrant’s fourth fi scal quarter in the case of an annual report) that has materially aff ected, or is reasonably
likely to materially aff ect, the registrant’s internal control over fi nancial reporting; and
5. Th e registrant’s other certifying offi cer and I have disclosed, based on our most recent evaluation of internal control over fi nancial reporting,
to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
a. All signifi cant defi ciencies and material weaknesses in the design or operation of internal control over fi nancial reporting which are
reasonable likely to adversely aff ect the registrant’s ability to record, process, summarize and report fi nancial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a signifi cant role in the registrant’s internal
control over fi nancial reporting.
/S/ PAUL W. GRAVES
Paul W. Graves
Executive Vice President
and Chief Financial Offi cer
February 18, 2014
EXHIBIT 32.1 CEO Certifi cation of Annual Report
I, Pierre R. Brondeau, President and Chief Executive Offi cer of FMC Corporation (“the Company”), certify, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, based on my knowledge that:
(1)
(2)
the Annual Report on Form 10-K of the Company for the year ended December 31, 2013 (the “Report”) fully complies with the requirements
of Section 13(a) of the Securities Exchange Act of 1934; and
the information contained in the Report fairly presents, in all material respects, the fi nancial condition and results of operations of the
Company.
/S/ PIERRE R. BRONDEAU
Pierre R. Brondeau
President and Chief Executive
Offi cer
February 18, 2014
88
FMC CORPORATION - Form 10-K
PART IV
ITEM 15 Exhibits and Financial Statement Schedules
EXHIBIT 32.2 CFO Certifi cation of Annual Report
I, Paul W. Graves, Executive Vice President and Chief Financial Offi cer of FMC Corporation (“the Company”), certify, pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, based on my knowledge that:
(1)
(2)
the Annual Report on Form 10-K of the Company for the year ended December 31, 2013 (the “Report”) fully complies with the requirements
of Section 13(a) of the Securities Exchange Act of 1934; and
the information contained in the Report fairly presents, in all material respects, the fi nancial condition and results of operations of the
Company.
/S/ PAUL W. GRAVES
Paul W. Graves
Executive Vice President
and Chief Financial Offi cer
February 18, 2014
EXHIBIT 95 Mine Safety Disclosures
Section 1503 of the Dodd-Frank Act contains new reporting requirements regarding coal or other mine safety. We operate a mine in conjunction
with our Green River, Wyoming facility, which is subject to regulation by the Mine Safety and Health Administration (“MSHA”) under the
Federal Mine Safety and Health Act of 1977 (the “Mine Act”), and is therefore subject to these reporting requirements. Presented in the table
below is information regarding certain mining safety and health citations which MSHA has issued with respect to our operation as required by
the Dodd-Frank Act. In evaluating this information, consideration should be given to the fact that citations and orders can be contested and
appealed, and in that process, may be reduced in severity, penalty amount or sometimes dismissed (vacated) altogether.
Th e letters used as column headings in the table below correspond to the explanations provided underneath the table as to the information set
forth in each column with respect to the numbers of violations, orders, citations or dollar amounts, as the case may be, during the fourth quarter
2013 unless otherwise indicated.
(1) For each coal or other mine, of which the issuer or a subsidiary of the issuer is an operator:
(A)
Section
104
26
(B)
Section
104(b)
—
(C)
Section
104(d)
—
(D)
Section
110(b)(2)
—
Operation
Name
Westvaco
* Assessments are generally delayed up to 60 days after the close of the inspection.
(A) The total number of violations of mandatory health or safety standards that could significantly and substantially contribute to the cause and effect of a coal
Fatalities
—
— $
(E)
Section
107(a)
(F)
Proposed
Assessments*
11,067
(G)
(H)
Pending
Legal Action
3
or other mine safety and health hazard under section 104 of the Mine Act for which the operator received a citation from MSHA.
(B) The total number of orders issued under section 104(b) of the Mine Act.
(C) The total number of citations and orders for unwarrantable failure of the operator to comply with mandatory health or safety standards under section 104(d)
of the Mine Act.
(D) The total number of flagrant violations under section 110(b)(2) of the Mine Act.
(E) The total number of imminent danger orders issued under section 107(a) of the Mine Act.
(F) The total dollar value of proposed assessments from the MSHA under the Mine Act.
(G) The total number of mining related fatalities.
(H) Any pending legal action before the Federal Mine Safety and Health Review Commission involving such coal or other mines.
a. All cases included in the number listed were pending before the Office of Administrative Law Judges of the Federal Mine Safety and Health Review
Commission on December 31, 2013.
(2) A list of such coal or other mines, of which the issuer or a subsidiary of the issuer is an operator, that received written notice from MSHA of (A) a pattern of
violations of mandatory health or safety standards that are of such nature as could have significantly and substantially contributed to the cause and effect of coal
or other mine health and safety hazards under section 104(e) of the Mine Act, or (B) the potential to have such a pattern.
NONE
(3) Any pending legal action before the Federal Mine Safety and Health Review Commission involving such coal or other mine.
SEE COLUMN (H) OF SECTION (1) ABOVE
FMC CORPORATION - Form 10-K 89
Th is page is intentionally left blank.
LETTER TO SHAREHOLDERS
Throughout our more than 130-year history, FMC’s
success has been defined not only by its customer
relationships, innovative products and financial
discipline, but also by a steadfast focus on future
opportunities. Last year was no exception.
Early in 2013, after another year of record sales
and earnings, we realigned reporting segments to
strengthen our core businesses, improve operational
efficiencies and manage our portfolio consistent with
Vision 2015 goals. As you will read in this report, we
expanded and invested in FMC’s two leading growth
business segments that serve agriculture and health
and nutrition markets. We placed two structurally
advantaged minerals businesses under common
management, and announced the divestiture of
FMC Peroxygens.
As a result of our considerable progress during the
last four years to achieve Vision 2015, we concluded
that the best means to realize FMC’s full potential is to
create two independent, publicly traded companies.
The Board of Directors determined in March 2014 to
pursue the creation of “FMC Minerals,” which will be
comprised of FMC Corporation’s Alkali Chemicals and
Lithium businesses; and “New FMC*,” which will include
the Agricultural Solutions and Health and Nutrition
segments. The company expects that the separation
will take the form of a tax-free distribution of shares
to existing FMC shareholders and be completed in
early 2015, subject to final board approval and other
customary conditions.
expected to deliver meaningful benefits to the separated
businesses, shareholders, customers, employees and
other stakeholders, and the communities in which
they operate.
“FMC Minerals” will be a leading, structurally
advantaged minerals company and the largest global
producer of natural soda ash. The Alkali Chemicals
business will continue to use unique, low-cost
technologies to extract trona ore to produce soda
ash and related products used in the glass, chemical
processing and detergent industries. The Lithium
AS A RESULT OF OUR
CONSIDERABLE PROGRESS
DURING THE LAST FOUR YEARS
TO ACHIEVE VISION 2015, WE
CONCLUDED THAT THE BEST
MEANS TO REALIZE FMC’S
FULL POTENTIAL IS TO CREATE
TWO INDEPENDENT, PUBLICLY
TRADED COMPANIES.
business is the only brine-to-metals producer with a
broad global product portfolio, selling into the energy
storage, pharmaceuticals, polymers and industrial
markets. Underlying market demand for lithium remains
strong, driven by growth in energy storage from electric
vehicle adoption and other applications.
We believe that creating two companies, each with its
own publicly listed equity, will enable the management
of each company to pursue its own strategies. This
will give each company greater focus on the success
factors that are most important to its business and
allow the adoption of a capital structure that is
appropriate to its business profile. Each company is
“New FMC” will continue to develop health, nutrition
and crop protection products that help safeguard and
improve human health, and enable growers to produce
more food. As in the past, customers will be able to
rely on “New FMC’s” Health and Nutrition business for
its technical excellence and innovative solutions. This
business provides texture, stability and natural color
* The official name for New FMC will be determined in the coming months.
F M C C O R P O R A T I O N
BOARD OF DIRECTORS
EXECUTIVE COMMITTEE
OFFICERS
Pierre R. Brondeau
President, Chief Executive Officer
and Chairman of the Board
Thomas C. Deas, Jr.
Vice President and Treasurer
Pierre R. Brondeau
President, Chief Executive Officer
and Chairman of the Board
FMC Corporation
Eduardo E. Cordeiro
Executive Vice President
and Chief Financial Officer
Cabot Corporation
G. Peter D’Aloia
Managing Director
and Member of the Board of Directors
Ascend Performance Materials
Holdings, Inc.
Paul Graves
Executive Vice President
and Chief Financial Officer
Mark A. Douglas
President
FMC Agricultural Solutions
Edward T. Flynn
President
FMC Minerals
C. Scott Greer
Principal
Greer and Associates
Mike Smith
Vice President, Global Business Director
FMC Health and Nutrition
K’Lynne Johnson
Chief Executive Officer and President
Elevance Renewable Sciences
Andrea E. Utecht
Executive Vice President
General Counsel and Secretary
Barry J. Crawford
Vice President, Operations
Kenneth A. Gedaka
Vice President
Communications and Public Affairs
Kimberly Johnson
Vice President
Human Resources
Andrew D. Sandifer
Vice President
Strategic Development
Karen M. Totland
Vice President, Global Procurement,
Global Facilities & Corporate
Sustainability
Dirk A. Kempthorne
President and Chief Executive Officer
American Council of Life Insurers
Edward J. Mooney
Retired Chairman
and Chief Executive Officer
Nalco Chemical Company
Paul J. Norris
Retired Chairman
and Chief Executive Officer
W. R. Grace & Co.
Robert C. Pallash
Retired President, Global Customer
Group and Senior Vice President
Visteon Corporation
William H. Powell
Retired Chairman
and Chief Executive Officer
National Starch and Chemical Company
Vincent R. Volpe, Jr.
Chief Executive Officer and President
Dresser-Rand Group, Inc.
Marc L. Hullebroeck
Vice President and Business Director
FMC Agricultural Solutions,
North America and EMEA
David A. Kotch
Vice President, Chief Information Officer
Eric W. Norris
Vice President, Global Business Director
Lithium
Nicholas L. Pfeiffer
Corporate Controller
Tom Schneberger
Vice President, Global Business Director
Alkali Chemicals
Charles J. Thomas
Vice President, Finance
Ulrich Trogele
President, FMC Asia
Vice President
FMC Agricultural Solutions, Asia
Victoria V. Walton
Vice President, Tax
Shawn Whitman
Vice President, Government Affairs
Antonio Zem
President, FMC Latin America
Vice President
FMC Agricultural Solutions,
Latin America
STOCKHOLDER DATA
FMC Corporation’s Annual Meeting of Stockholders will be
held on Tuesday, April 29, 2014, at 2:00 p.m. ET at the Top
of the Tower, 1717 Arch Street, 50th Floor, Philadelphia, Pa.,
19103. Notice of the meeting, together with proxy materials,
will be mailed approximately five weeks prior to the meeting,
to stockholders of record as of Tuesday, March 4, 2014.
Transfer Agent and Registrar of Stock:
Wells Fargo Bank N.A.
Shareholder Services
1110 Centre Pointe Curve
Mendota Heights, MN 55120
Phone: 1.800.468.9716
(1.651.450.4064 local and outside the United States)
www.wellsfargo.com/shareownerservices
FMC was incorporated in Delaware in 1928.
Stock Exchange Listing: New York Stock Exchange
Chicago Stock Exchange
Stock Exchange Symbol: FMC
FMC Corporation is an active participant in the American
Chemistry Council (ACC) and we support the principles of
the ACC’s Responsible Care® Program by working with
our employees, suppliers, customers, contractors and
commercial partners to promote responsible management of
our products and processes through their entire life cycle, and
for their intended use, worldwide. FMC has received third-
party certification of our conformance with the Responsible
Care Management System requirements at our headquarters
offices and all of our sites located in the United States. For
additional information on our Responsible Care Program,
please go to www.FMC.com.
FMC, SeaGel, and Epax are trademarks of FMC Corporation
or its subsidiaries. Clube da Fibra and Clube da Cana are
service marks of FMC Corporation or its subsidiaries.
FMC Corporation
1735 Market Street
Philadelphia, PA 19103
USA
www.FMC.com
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Portions of this publication are printed on recycled paper using soy-based inks.
Copyright © 2014, FMC Corporation. All rights reserved.