Letter to
Shareholders
Focused. Stronger.
2014 was a pivotal year for FMC. We made several important
decisions that help us achieve our strategic goals faster and
with greater strength and confidence, while sharpening our
focus as a leading supplier to the agricultural, health and
nutrition sectors.
FMC now benefits from Cheminova’s portfolio of more than 60
active ingredients and over 2,300 registrations. This greatly
expands our offerings of fungicide products and augments
our herbicide and insecticide portfolio with complementary
solutions that address different pest pressures on more crops.
Chief among those decisions was our move to acquire
Cheminova, a $1.2 billion multinational crop protection
company based in Denmark. Adding Cheminova to our FMC
Agricultural Solutions portfolio broadens and strengthens our
existing market access, enhances our product offerings, and
brings significant technology and innovation capabilities to
our global organization.
Benefits of the Cheminova Acquisition
In addition to expanding FMC’s position in existing core crops
and accelerating our penetration into new agricultural markets,
Cheminova strengthens our supply capabilities, complements
and expands our R&D effort and increases flexibility in our
operational network. Additionally, there is a strong cultural fit
with both companies emphasizing customer-driven solutions
and technology-focused innovation.
This acquisition also balances our geographic footprint.
Traditionally, FMC Agricultural Solutions has been heavily
weighted toward the Americas, but under-represented in
Europe. Cheminova solves this issue by providing direct
access to key countries in Europe, diversifying our overall
revenue mix.
From Cheminova:
+60 Active
Ingredients +2,300 Registrations
While this acquisition positions FMC as a top-tier crop
protection company and will provide significant growth
opportunities over the long term, we took important, proactive
steps in 2014 to shape other areas of FMC Corporation.
During the summer of 2014, Brandywine Realty Trust broke
ground on FMC Tower at Cira Centre® South in Philadelphia –
set to become our new global headquarters in mid-2016.
The Year’s
Major
Milestones
2014
MARCH
Announced Intent to Split into Two
Publicly Traded Companies
Broke Ground for a New Global
Headquarters in Philadelphia
MAY
Finalized Sale of
Peroxygens Business
Broke Ground for a New Natural
Colors Facility in Delaware
Transforming to a More Focused, Stronger Portfolio
FY 2009 Revenue
FY 2014 Revenue
Pro Forma 2014*
21%
37%
6%
10%
$2.8B
6%
20%
19%
6%
21%
5%
19%
Agricultural Solutions
Health and Nutrition
$4.0B
54%
$4.5B
Lithium
76%
Foret
Peroxygens
Alkali Chemicals
*2014 pro forma of FMC/Cheminova combined operations using average 2014 exchange rate of 0.18 USD to DKK. This also excludes our Alkali Chemicals division, which was
classified as a discontinued operation in February 2015.
Optimizing Health and Nutrition
FMC Health and Nutrition achieved its 10th consecutive
year of record earnings in 2014. This steady performance
validates this segment’s strong business fundamentals
and our laser-like focus on the food, pharmaceutical and
nutraceutical markets.
FMC Health and Nutrition achieved its 10th
consecutive year of record earnings in 2014.
In 2014, we initiated Manufacturing Excellence programs
with the goal of maintaining overall cost competitiveness and
optimizing our footprint to best serve our global customer
base. As a result, we decided to delay the planned opening
of a new microcrystalline cellulose (MCC) facility in Thailand,
which allows us to add a pharmaceutical-grade production
line. This provides greater flexibility to meet both nutrition and
health market demands.
Seizing Strategic Opportunities
We expect to complete the sale of Alkali Chemicals to Tronox
on April 1, 2015. Tronox is a leading global mining and minerals
company and a natural owner for this business. The sale provides
FMC with the necessary proceeds to reduce debt associated
with the Cheminova acquisition, retaining financial flexibility
and maintaining a strong balance sheet and credit rating.
FMC Lithium is now a separate operating segment within
the company and remains an important part of FMC. It is an
attractive business with growth potential, especially in energy
storage markets.
These major actions accelerated the strategic realignment we
began nearly five years ago. We have exited underperforming
and non-core product lines and businesses, and strengthened
our positions in attractive markets where we have
demonstrated strong performance and affirmed our expertise.
2014 Financial Performance Highlights
For the year ending December 31, 2014, FMC Corporation
posted the following results**:
Early in the year, we had announced plans to separate our
FMC Minerals business, comprised of Alkali Chemicals and
Lithium. However, when we pursued the opportunity to acquire
Cheminova, we chose to divest our Alkali Chemicals business.
$4.0
Annual
Sales
(billions)
$780
Adjusted
Operating
Profit (millions)
$4.03
Adjusted
Earnings
Per Share
17.8%
Return on
Invested
Capital
**See Non-GAAP Reconciliation on page 8.
Amended Plans to Split Into
Two Companies
JULY
SEPTEMBER
2015
APRIL
Officially Opened FMC’s Asia
Innovation Center, Shanghai
Announced Agreement
to Acquire Cheminova
Planned Closing for Sale of
Alkali Chemicals Business
2014 Annual Report 1
•
•
•
Sales for the year of $4.0 billion were up 4 percent, while
adjusted operating profit increased to $780 million, a 3
percent increase over 2013.
Adjusted earnings per share grew to $4.03 per diluted
share, an increase of 4 percent over last year despite
volatile market conditions.
Return on invested capital was 17.8 percent, exceeding
our mid-teens target.
“
FMC Agricultural Solutions
•
•
•
Full-year segment revenue increased 1 percent,
reflecting increased volumes in new and recently
introduced products.
Earnings fell 8 percent compared to 2013. Higher overall
sales were offset by unfavorable weather conditions in
North America and Brazil, and lower commodity prices
that changed the product mix during the growing season,
foreign exchange impacts and planned investments in
sales, marketing and R&D.
This segment represented 54 percent of FMC’s
consolidated revenues in 2014.
FMC Health and Nutrition
•
•
•
Full-year segment revenue increased 9 percent, driven by
higher volumes in texture and stability solutions, natural
colors and binder product lines and contributions from
the omega-3 product line.
Earnings rose 11 percent, the segment’s 10th
consecutive year of record earnings, due to increased
demand for functional ingredients and sales of new
omega-3 products.
This segment represented 21 percent of FMC’s
consolidated revenues in 2014.
FMC Lithium
•
Full-year revenues for FMC Lithium rose 15 percent
compared to 2013, propelled largely by demand for
lithium in energy storage applications.
FMC is determined to be a leader
in the markets we serve. As we
expand our geographic presence,
product portfolio and technology
capabilities, we are also narrowing
our focus on what we do best and
capitalizing on our competitive
strengths in key sectors.
•
Earnings increased 127 percent, primarily due to strong
improvement in operational performance that resulted
in additional volume. However, these advances were
partially offset by inflationary pressures in Argentina, the
site of our mining operations.
A Measurably Safer Workforce
Safety continues to be one of our top priorities at FMC, and
we work hard to instill a culture of safety – both on and off
the job. Over the past four years, we have introduced targeted
safety campaigns and messages to our employees and others
throughout our value chain. Today I am pleased that these
efforts – most notably our Th!nk. Safe. awareness program –
have paid off with meaningful, measurable results and
positive, real-life outcomes.
2 011
2 014
FMC reduced its overall
injury rate by half
between 2011 and 2014.
Our
Leadership
Team
2 FMC Corporation
Paul Graves
Executive Vice
President and Chief
Financial Officer
Andrea E. Utecht
Executive Vice
President, General
Counsel and Secretary
Mark A. Douglas
President
FMC Agricultural
Solutions
Eric W. Norris
Vice President,
Global Business
Director, FMC Health
and Nutrition
In 2011, we set an interim objective of cutting our overall
injury rate in half by 2015. I’m proud that we surpassed that
target in 2014 and will continue to pursue our injury-free goal.
Focusing on a Strong Future
In July 2014 we officially opened our Asia Innovation Center
in Shanghai, China, a state-of-the-art facility that serves
as a regional hub for research and development, technical
innovation, operational support and executive management.
Also last summer, Brandywine Realty Trust broke ground on
the FMC Tower at Cira Centre® South in Philadelphia that will
be our new global headquarters – a collaborative, modern
workplace for our employees, expected to open in mid-2016.
Our future depends on sustainability that is embraced by
our businesses and employees around the world. Over the
last several years, we have established clear objectives for
developing sustainably advantaged products, conserving
energy and natural resources, reducing greenhouse
gas emissions, improving our safety performance and
strengthening our community relationships. Our sustainability
focus is never “good enough,” and we are committed to
continual, measurable progress.
From Vision to Reality
In 2010, we developed a strategic roadmap to chart FMC’s
new, aggressive growth plan. Our vision was to become a
larger, stronger and more global company. We pursued our
vision during the last five years by transforming our company
through several divestitures and business line closures, and
more than 30 acquisitions and partnerships. These actions
culminated with the acquisition of Cheminova.
To mark the July 2014 opening of our state-of-the-art Asia
Innovation Center in Shanghai, U.S. Ambassador Max Baucus
(left), joins Pierre Brondeau to paint the eye of the lion,
symbolizing prosperity.
positioned to grow as a focused, premier agricultural, health
and nutrition company.
I want to thank our employees and our Board of Directors
for their tremendous efforts and support this past year.
Their contributions made 2014 a successful year in the
transformation of FMC.
Today, we enjoy greater market access and have expanded our
product innovation efforts, generating more than half of our
sales from rapidly developing economies. We are capturing
greater efficiencies through the value of common ownership
across our businesses. Most importantly, we are now well
Pierre R. Brondeau
President, Chief Executive Officer
and Chairman of the Board
FMC Corporation
Barry J. Crawford
Vice President
Operations
Kenneth A. Gedaka
Vice President
Communications and
Public Affairs
Kyle Matthews
Vice President
Human Resources
Andrew D. Sandifer
Vice President
Corporate
Transformation
Karen M. Totland
Vice President
Global Procurement,
Global Facilities &
Corporate Sustainability
2014 Annual Report 3
2014 Summary and Highlights
FMC Corporation enters 2015 as a stronger, more focused company, posting the following results for the year ending December 31, 2014.
Return on Invested Capital
25
22.2%
Adjusted Earnings Per Share*
5
20
15
10
5
0
19.3%
17.8%
2012
2013
2014
4
3
2
1
0
$3.88
$4.03
$3.39
*Diluted adjusted
after-tax earnings
from continuing
operations per
share, attributable
to FMC stockholders
(Non-GAAP), see
page 8.
2012
2013
2014
Revenue by Segment
(in millions)
Operating Profit by Segment
(in millions)
FMC Minerals**
$1,036
FMC Health
and Nutrition
$828
Total Shareholder Return
37.0%
29.9%
-23.6%
FMC
Corporation
40
35
30
25
20
15
10
5
0
-5
-10
-15
-20
-25
FMC
Agricultural
Solutions
$2,174
FMC
Agricultural
Solutions
$498
FMC Minerals**
$167
FMC Health
and Nutrition
$188
32.0%
31.4%
23.4%
15.9%
13.5%
10.6%
S&P 500
S&P 500 Chemicals
2012
2013
2014
** Figures for FMC Minerals include FMC Lithium and FMC Alkali Chemicals. In September 2014, the Board of Directors authorized the sale of Alkali Chemicals and in February 2015 it
was classified as a discontinued operation.
4 FMC Corporation
FMC
Agricultural
Solutions
Segment Revenue
FMC’s announced acquisition of Cheminova will expand product offerings
to current customers in sugarcane, soybeans and cotton and provide faster
access and wider market penetration into additional crops, such as cereals.
s
n
o
i
l
l
i
M
n
i
s
r
a
l
l
o
D
$2,145.7
$2,173.8
$1,763.8
2500
2000
1500
1000
500
0
2012
2013
2014
Segment revenues in 2014 rose 1 percent over
the prior year while earnings declined 8 percent
compared to record high levels in 2013.
FMC announced in September its decision to acquire
Cheminova, a multinational crop protection company,
solidifying FMC’s position as a leading global provider of crop
protection solutions. Cheminova complements and broadens
FMC’s insecticide and herbicide product line and adds an
impressive array of fungicides that will advance FMC’s sales in
existing and new markets.
The acquisition, scheduled to close in early 2015, adds 60
active ingredients and 2,300 product registrations to FMC’s
portfolio and strengthens the company’s direct market
access in Europe, Latin America and Asia. The acquisition
expands product offerings in sugarcane, soybeans and cotton
and provides faster access and penetration into additional
crops, such as cereals. Cheminova’s rich pipeline of active
ingredients and technologies under development also ensures
a steady flow of new products.
In 2014, weather significantly influenced agrochemical sales
around the world. Extreme cold during traditional planting
time in North America reduced insecticide usage. However,
growing conditions greatly improved in later months, leading
to record corn and soybean yields but adding downward
pressure on commodity prices and ultimately chemical
sales. Drought conditions in Brazil’s sugarcane growing
area reduced demand for crop protection products. By
contrast, Europe’s major crops enjoyed positive weather
conditions throughout the growing season, translating to
strong demand, particularly for fungicides. Different market
dynamics impacted the Asian region: India, for example,
faced a drought, while in Thailand the government’s removal
of rice subsidies caused a drop in plantings.
Although these conditions challenged our consistently
strong Agricultural Solutions business, we benefited from our
expanding technology offerings and customer focus. Segment
revenues ended the year at $2.2 billion, an increase of 1
percent over the prior year, while earnings declined 8 percent
compared to record-high levels in 2013.
Over the past five years, FMC has initiated more than 20
technology-focused acquisitions, alliances and collaborations
including our venture with Chr. Hansen, to develop a robust
biologicals product platform that is expected to bring new
products to market in late 2015. FMC is among the global
leaders in synthetic chemical and biological crop protection
products with a growing position in seed treatment and
plant nutrition.
2014 Annual Report 5
FMC
Health and
Nutrition
Segment Revenue
FMC Health and Nutrition initiated a segment-wide restructuring effort
and implementation of Manufacturing Excellence programs to deliver
operational improvements.
s
n
o
i
l
l
i
M
n
i
s
r
a
l
l
o
D
$828.2
$762.0
$680.8
1000
800
600
400
200
0
2012
2013
2014
Ongoing research in new product applications for foods,
pharmaceuticals and nutraceuticals helped drive the 10th
consecutive year of record earnings for this segment.
Diverse products and end markets helped FMC Health and
Nutrition continue its decade-long growth in revenues during
2014. Sales to pharmaceutical customers remained robust,
especially in Asia and Europe, as our flagship Avicel® brand
maintained a leading position and our pharmaceutical-grade
omega-3 products began reaching the market.
Demand for Avicel, FMC’s leading microcrystalline cellulose
(MCC) binder and disintegrant for oral tablet drugs, remained
strong and well ahead of the prior year, with particularly brisk
sales in India where generic tablets are produced for Western
consumption. Sales volume for our alginate-based products
grew steadily, particularly for anti-reflux applications.
FMC’s texture and stability ingredients for nutrition customers
also saw strong demand, except for some beverage
applications in China, where economic conditions moderated
sales. North America, by contrast, exhibited stronger food
ingredient demand.
FMC Health and Nutrition sales for 2014 topped $828 million,
a 9 percent increase from the prior year, as the segment
posted its 10th consecutive year of record earnings. Earnings
rose by 11 percent to $187.9 million.
July 2014 marked our one-year anniversary of acquiring Epax,
a globally recognized producer of high-concentration, high-
purity omega-3 fish oils. Initial demand for our FDA-approved,
pharmaceutical-grade omega-3s showed solid growth
potential. We also secured licensing agreements in a growing
number of regions around the world for our seaweed-based
SeaGel® technology for soft gel omega-3 capsules.
FMC also benefited from strong global demand in coffee
beverages with several new launches containing our Avicel and
Gelcarin® stabilizing systems for globally recognized leaders in
coffee and consumer packaged goods. In the oral care market,
a global toothpaste brand introduced a new product that uses
a combination of our carrageenan and Avicel, providing tooth
polishing benefits along with reduced enamel abrasion.
In 2014, FMC Health and Nutrition initiated a segment-wide
restructuring effort and implementation of Manufacturing
Excellence programs to deliver operational improvements,
particularly in light of recent acquisitions. One outcome of
these programs was our decision to delay the opening of
FMC’s Thailand MCC plant and add pharmaceutical production
capabilities. With steady, rising demand for pharmaceutical
excipients in India and weaker beverage market conditions in
China, the plant will now have more flexible capacity to serve
all customers in the region.
6 FMC Corporation
FMC
Lithium
Segment Revenue
FMC Lithium continues to wisely manage assets and optimize returns from
downstream customers. Its underlying business fundamentals and market
dynamics are stronger than ever.
s
n
o
i
l
l
i
M
n
i
s
r
a
l
l
o
D
300
250
200
150
100
50
0
$233.0
$223.0
$256.7
2012
2013
2014
Demand for energy storage applications is rising
at double-digit rates globally, fueling a 15 percent
revenue growth for this segment in 2014.
FMC Lithium made significant operational and capacity
improvements at its Argentina facility that led to improved
results in 2014. In fact, full-year revenues for FMC Lithium
rose by 15 percent and earnings more than doubled from
the prior year, mostly on the strength of Manufacturing
Excellence efforts.
Profitability remains challenged by the ongoing economic
situation in Argentina, where brine lakes high in the Andes
Mountains are the primary source of our high-quality lithium.
Continuing high inflation in that country, while clearly beyond
the control of this business segment, has greatly increased
operating costs.
Steady growth in demand is leading to stronger pricing
for both lithium hydroxide and lithium carbonate – key
components in energy storage and extended battery life. But
the Argentine economic issues remain a formidable challenge
for this business in the near term.
Demand for energy storage applications has continued to
grow at double-digit rates globally, thanks to the ubiquitous
use of smart phones, tablets and laptops, as well as rising
consumer preferences for hybrid and electric vehicles (EVs).
As domestic and international automobile manufacturers
continue to produce increasingly attractive EVs based on
lithium-ion batteries, we expect to maintain a strong position
in the automotive supply chain. Presently, we are the largest
supplier of lithium hydroxide used in batteries to power EVs.
Bolstered by these attractive demand patterns, FMC Lithium
has remained focused on operational excellence and cost
reductions wherever possible. We anticipate completion of a
gas pipeline by mid-2015 that is expected to reduce energy
costs at our Argentina facility and provide a safer, more
sustainable energy supply.
FMC Lithium continues to wisely manage assets and optimize
returns from downstream customers. Its underlying business
fundamentals and market dynamics are stronger than ever. As
the difficult economic climate eases in Argentina, this segment
will be well positioned for the future.
2014 Annual Report 7
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 income tax
Corporate special charges (income)
Tax effect of corporate special charges (income)
Tax adjustments
ROIC numerator (Non-GAAP)
2-point average denominator
Debt
Total FMC Stockholder equity
ROIC denominator (2 pt. avg) (GAAP)
ROIC (using Non-GAAP numerator)
2012 Actual
2013 Actual
2014 Actual
$ 443.7
$ 453.2
$ 396.9
29.9
69.6
(25.1)
(18.1)
32.2
96.0
(35.3)
14.5
45.9
235.6
(87.5)
(3.9)
$ 500.0
$ 560.6
$ 587.0
Dec-11
Dec-12
Dec-13
Dec-14
$
824.6
$
964.4
$
1,851.9
$
1,678.6
1,240.6
1,480.3
1,519.8
1,530.5
$
2,065.2
$
$
2,444.7
2,255.0
$
$
3,371.7
2,908.2
$
$
3,209.1
3,290.4
22.2%
19.3%
17.8%
Reconciliation of diluted earnings per common share attributable to FMC stockholders, from continuing operations (GAAP) 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)
$ 3.20
$ 3.33
$ 2.96
Diluted corporate special charges (income) per share
0.19
0.55
1.07
Diluted adjusted after-tax earnings from continuing operations per share, attributable to FMC
stockholders (Non-GAAP)
$ 3.39
$ 3.88
$ 4.03
2012
2013
2014
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
2014
$
416.2
$
293.9
$
307.5
27.5
69.6
40.7
134.5
19.5
159.3
96.0
42.2
148.6
14.1
89.4
235.6
59.5
73.5
14.6
$
708.0
$
754.1
$
780.1
8 FMC Corporation
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 fiscal year ended December 31, 2014
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission File Number 1-2376
FMC CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
1735 Market Street, Philadelphia, Pennsylvania
(Address of principal executive offices)
94-0479804
(I.R.S. Employer Identification 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 defined in Rule 405 of the Securities Act.
•• if the registrant is not required to file reports pursuant to Section 13 and Section 15(d) of the Act.
•• whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
•• whether the registrant has submitted electronically and posted on its corporate website, if any, every interactive
data file 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 files)
•• if disclosure of delinquent filers 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 definitive 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 filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions
of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (check one):
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
•• whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)
The aggregate market value of voting stock held by non-affiliates of the registrant as of June 30, 2014, the last day of the registrant’s second
fiscal quarter was $9,430,877,574. The market value of voting stock held by non-affiliates excludes the value of those shares held by
executive officers 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, 2014
133,317,671
DOCUMENTS INCORPORATED BY REFERENCE
DOCUMENT
Portions of Proxy Statement for 2015 Annual Meeting of Stockholders
FORM 10-K REFERENCE
Part III
Table of Contents
PART I
1
ITEM 1
Business �������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������1
ITEM 1A
Risk Factors ������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������9
ITEM 1B Unresolved Staff Comments ������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������12
ITEM 2
Properties ��������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������12
ITEM 3
Legal Proceedings ������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������12
ITEM 4
Mine Safety Disclosures ���������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������13
ITEM 4A
Executive Officers of the Registrant ������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������13
PART II
14
ITEM 5
Market for the Registrant’s Common Equity, Related Stockholders Matters
and Issuer Purchases of Equity Securities �������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������14
ITEM 6
Selected Financial Data �����������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������16
ITEM 7
Management’s Discussion and Analysis of Financial Condition and Results of Operations ���������������������������������������������������17
ITEM 7A Quantitative and Qualitative Disclosures About Market Risk ����������������������������������������������������������������������������������������������������������������������������������������������������32
ITEM 8
Financial Statements and Supplementary Data �����������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������33
ITEM 9
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure �������������������������������������������������85
ITEM 9A Controls and Procedures ������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������85
ITEM 9B Other Information ��������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������85
PART III
86
ITEM 10 Directors, Executive Officers and Corporate Governance ������������������������������������������������������������������������������������������������������������������������������������������������������������������86
ITEM 11
Executive Compensation �����������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������86
ITEM 12
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ��������������86
ITEM 13
Certain Relationships and Related Transactions, and Director Independence ������������������������������������������������������������������������������������������������87
ITEM 14
Principal Accountant Fees and Services ������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������87
PART IV
88
ITEM 15
Exhibits and Financial Statement Schedules ��������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������88
SIGNATURES ��������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������91
INDEX OF EXHIBITS ���������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������92
PART I
FMC Corporation (FMC) was incorporated in 1928 under Delaware
law and has its principal executive offices at 1735 Market Street,
Philadelphia, Pennsylvania 19103. Throughout 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 file 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 diversified 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. These 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. The 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. The pharmaceutical additives are
used for binding, encapsulation and disintegrant applications. Some
of our products are increasingly being used as an active ingredients
in nutraceutical and pharmaceutical markets. 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 Presentation - FMC Alkali Chemicals
In September 2014, we announced our decision to pursue the sale of
our FMC Alkali Chemicals division (“ACD”). On February 3, 2015, we
signed a definitive agreement to sell ACD to a wholly owned subsidiary
of Tronox Limited and we expect the sale to be completed in early
2015 subject to customary regulatory approvals and closing conditions.
We have concluded, as a result of the signing of the definitive agreement,
that ACD has met the criteria to be an asset held for sale and therefore
will be presented as a discontinued operation in accordance with U.S.
generally accepted accounting principles (“GAAP”) in future reporting
periods. In accordance with GAAP, the reclassification of ACD from a
continuing operation to a discontinued operation occurs in the period
for which the discontinued operation criteria has been met. Therefore
as of December 31, 2014, ACD is accounted for as a continuing
operation of FMC and throughout this Form 10-K ACD is included
in the results of continuing operations.
Beginning with the first quarter 2015 reporting on Form 10-Q, the
results of operations of ACD will be reclassified to reflect the business
as a discontinued operation for all periods presented and the assets
and liabilities of the business will be reclassified as held for sale. Our
FMC Minerals segment, which previously included our FMC Alkali
Chemicals and FMC Lithium divisions, will be renamed FMC Lithium.
As of the date of this Form 10-K filing (February 27, 2015) since we
have concluded that ACD is classified as a discontinued operation,
the following discussion within Item 1 pertains to the continuing
businesses of FMC excluding ACD.
All other sections within this Form 10-K, unless explicitly stated,
include ACD as a continuing operation.
Cheminova A/S
On September 8, 2014, we entered into a definitive Share Purchase
Agreement (the “Purchase Agreement”) with Auriga Industries A/S,
a Denmark Aktieselskab (“Aurgia”) and Cheminova A/S, a Denmark
Aktieselskab, a wholly owned subsidiary of Auriga (“Cheminova”).
Pursuant to the terms and conditions set forth in the Purchase Agreement,
we have agreed to acquire all of the outstanding equity of Cheminova
from Auriga for an aggregate purchase price of 8.5 billion Danish
Krone or approximately $1.4 billion, excluding net debt to be assumed
of approximately $0.3 billion (the “Acquisition”) as of December 31,
2014. We expect to complete the Acquisition in early 2015.
1
FMC CORPORATION - Form 10-K PART I Part I
ITEM 1 Business
FMC Strategy
Over the last five years, FMC has undergone a portfolio transformation.
During the first part of this year, we expect to close on two significant
transactions - the divestiture of our Alkali Chemicals division and
the acquisition of Cheminova - that will shape FMC into a stronger,
focused company serving agriculture, health and nutrition end markets.
company will benefit from deeper regulatory expertise and access to
local markets. Following the acquisition, FMC will be positioned
among the largest agrochemical companies in world. We will have the
scale to operate with greater resources and global reach, but will retain
the service, reliability and entrepreneurial spirit of a smaller company.
We expect to complete the divestiture of our Alkali Chemicals division
in early 2015. The proceeds from the sale will be used to fund the
acquisition of Cheminova and allow us to maintain a strong balance sheet
and financial flexibility. Subsequently, our FMC Lithium division will
become a standalone reporting segment. We intend to make investments
that will allow FMC Lithium to take advantage of strong underlying
growth potential and leading positions in a well-structured industry.
The integration of Cheminova into FMC Agricultural Solutions is an
integral part of FMC’s strategy to become a more focused and global
agriculture, health and nutrition company with strong competitive
positions in fast-growing markets. Our combined company will have
broader market access in Europe, Latin America and key Asia-Pacific
markets such as India and Australia. Our complementary technologies
will lead to improved formulation capabilities and a broader innovation
pipeline, resulting in new and differentiated products. The integration
strengthens our leadership position in crop protection chemistry and
expands our position in a variety of crop segments. The combined
In Health and Nutrition, we have a portfolio of naturally-derived,
functional ingredients that serve health, nutraceutical and nutrition
end markets. Our focus is on providing innovative solutions to our
customers by leveraging our application know-how in the nutrition,
nutraceutical and pharmaceutical markets as well as differentiating the
manufacture and delivery of our market leading products through best
in class Quality, Service, Reliability (QSR). With QSR at the forefront,
we have recently undertaken an effort to optimize our organizational
and manufacturing footprints to improve our cost competitiveness. We
will continue to implement Manufacturing Excellence programs, pursue
process technology improvements and develop innovative application
solutions to drive the highest value for our customers.
We will maintain our 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.
Financial Information About Our Business Segments
Financial Information (In Millions)
See Note 19 “Segment Information” to our consolidated financial statements included in this Form 10-K. Also see below for selected financial
information related to our segments.
The 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
Refined seaweed
Alginates
Natural Colorants
Pectin
Omega-3 EPA/DHA
Lithium
Refined seaweed
Plant sources, select
insect species
Citrus fruit peels
Fish oils
Extracted lithium
FMC Minerals (To be
renamed “FMC Lithium”)
(1) Product of FMC Alkali Chemicals division, expected to be sold in early 2015.
Soda Ash(1)
Mined trona ore
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
2
FMC CORPORATION - Form 10-K
With a worldwide manufacturing and distribution infrastructure, we are able to respond rapidly to global customer needs, offset 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.
The charts below detail our sales and long-lived assets by major geographic region.
REVENUE BY REGION 2014
REVENUE: $4,037.7 MILLION
LONGLIVED ASSETS BY REGION 2014
LONGLIVED ASSETS: $2,206.0 MILLION
PART I Part I
ITEM 1 Business
14%
Europe,
Middle East
& Africa
34%
North America
33%
Latin America
30%
Europe,
Middle East
& Africa
19%
Asia Pacific
45%
North America
9%
Latin America
16%
Asia Pacific
FMC Agricultural Solutions
AGRICULTURAL SOLUTIONS:
REVENUE AND OPERATING MARGIN 2012-2014
AGRICULTURAL SOLUTIONS:
CAPITAL EXPENDITURES AND DEPRECIATION
AND AMORTIZATION 2012-2014
$2,200
$2,000
$1,800
$1,600
$1,400
$1,200
$1,000
$800
$600
$400
$200
$0
2,146
2,174
1,764
26%
25%
23%
2012
Revenue
2013
2014
Operating Margin
60%
50%
40%
30%
20%
10%
0%
$60
$50
$40
$30
$20
$10
$0
34
50
34
23
18
17
31
25
2012
2013
2014
Capital Expenditures
Depreciation and Amortization
Overview
Our FMC Agricultural Solutions segment, which represents approximately 54 percent of our 2014 consolidated revenues, operates in the
agrochemicals industry. This segment develops, manufactures and sells a portfolio of crop protection, professional pest control and lawn and
garden products.
3
FMC CORPORATION - Form 10-K PART I Part I
ITEM 1 Business
Products and Markets
AGRICULTURAL SOLUTIONS:
2014 SALES MIX
AGRICULTURAL SOLUTIONS:
2014 REVENUE BY REGION
8%
Fungicides
6%
Other
44%
Herbicides
52%
Latin America
42%
Insecticides
26%
North America
7%
Europe,
Middle East
& Africa
16%
Asia Pacific
FMC Agricultural Solutions’ portfolio is comprised of three major
pesticide categories: insecticides, herbicides and fungicides. The 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 difficult-to-control weeds.
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
Industry Overview
The three principal categories of agricultural and non-crop chemicals
are: herbicides, insecticides and fungicides, representing approximately
40 percent, 20 percent and 20 percent of global industry revenue,
respectively.
The agrochemicals industry is relatively consolidated. Leading crop
protection companies, Syngenta AG, Bayer AG, Monsanto Company,
BASF AG, The Dow Chemical Company and E. I. du Pont de Nemours
and Company (DuPont), currently represent approximately 65 percent
Growth
our own sales and marketing organization in Canada. We currently
access key European markets utilizing a distributor model and through
joint venture arrangements. Following the Cheminova acquisition, we
will use a combination of our existing model alongside Cheminova’s
direct market access positions. We access key Asian markets either
through local independent distributors or our own sales and marketing
organizations. Through these and other alliances, along with our
own targeted marketing efforts, 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 effectively.
of the industry’s global sales. The 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
differentiated strategies and competes with unique technologies focusing
on certain crops, markets and geographies, as well as supported by a
low-cost manufacturing model.
The acquisition of Cheminova positions FMC among leading
agrochemical producers in the world. Our complementary technologies
will lead to improved formulation capabilities and a broader innovation
pipeline, resulting in new and differentiated products. We will take
advantage of enhanced market access positions and an expanded
portfolio to deliver near-term growth.
We will continue 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 strengthen our product portfolio
and our capabilities to effectively service our target markets
and customers.
Our growth efforts focus on developing environmentally compatible
and sustainable solutions that can effectively increase farmers’ yields and
provide cost-effective alternatives to chemistries which may be prone to
resistance. We are committed to providing unique, differentiated products
to our customers by acquiring and further developing technologies as
well as investing in innovation to extend product life cycles. Our external
growth efforts include product acquisitions, in-licensing of chemistries
and technologies and alliances that bolster our market access, complement
our existing product portfolio or provide entry into adjacent spaces. We
have entered 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
PART I Part I
ITEM 1 Business
HEALTH AND NUTRITION:
REVENUE AND OPERATING MARGIN 20122014
$900
$800
$700
$600
$500
$400
$300
$200
$100
$0
681
24%
762
828
22%
23%
2012
Revenue
2013
2014
Operating Margin
40%
30%
20%
10%
0%
Overview
Our FMC Health and Nutrition segment, which represents 21 percent
of our 2014 consolidated revenues, is focused on high-performance
food ingredients, pharmaceutical excipients and omega-3 oils. The
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.
Products and Markets
HEALTH AND NUTRITION:
2014 REVENUE BY REGION
9%
Latin America
23%
Asia Pacific
HEALTH AND NUTRITION:
CAPITAL EXPENDITURES AND DEPRECIATION
AND AMORTIZATION 20122014
$140
$120
$100
$80
$60
$40
$20
$0
116
97
57
26
35
45
2012
2013
2014
Capital Expenditures
Depreciation and Amortization
33%
North America
35%
Europe,
Middle East
& Africa
Our product offerings 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. The majority of our nutraceutical
product offerings are high purity omega-3.
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
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 fish oils
and utilized in other pharmaceutical and nutraceutical applications.
5
FMC CORPORATION - Form 10-K
PART I Part I
ITEM 1 Business
Industry Overview
Food Ingredients
Pharmaceutical & Nutraceutical Ingredients
The industry is dispersed geographically, with the majority of our sales
in Europe, North America and Asia. The 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 profitability. The
top suppliers of TSPS ingredients include FMC, DuPont, J.M. Huber
Corporation, Kerry Group plc and Cargill Incorporated.
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 offset that pressure by providing the most reliable and broadest
range of products and services. Our customers are pharmaceutical firms
who depend upon reliable therapeutic performance of their drug products.
FMC Minerals (to be renamed FMC Lithium)
MINERALS:
REVENUE AND OPERATING MARGIN 20122014
MINERALS:
CAPITAL EXPENDITURES AND DEPRECIATION
AND AMORTIZATION 20122014
$1,200
$1,000
966
970
40%
$100
93
1,036
88
$800
$600
$400
$200
$0
18%
13%
16%
2012
Revenue
2013
2014
Operating Margin
Overview
30%
20%
10%
0%
$80
$60
$40
$20
$0
52
52
54
50
51
2012
2013
2014
Capital Expenditures
Depreciation and Amortization
Our FMC Minerals segment, which in 2014 included the results of our FMC Alkali Chemicals division, represents 26 percent of our 2014
consolidated revenues, and during FY2014 participated in the alkali chemicals and lithium products markets.
Products and Markets
MINERALS:
2014 SALES MIX
MINERALS:
2014 REVENUE BY REGION
75%
Alkali
25%
Lithium
14%
Latin America
23%
Asia Pacific
11%
Europe,
Middle East
& Africa
51%
North America
Effective February 2015, our FMC Minerals segment has been renamed
FMC Lithium as the FMC Alkali Chemicals division has been classified
as a discontinued operation, as FMC Alkali Chemicals is under contract
to be sold, and the sale is expected to be completed in early 2015.
The following discussion pertains only to the FMC Lithium business.
6
FMC CORPORATION - Form 10-K PART I Part I
ITEM 1 Business
Lithium
Lithium is a business based on both inorganic and organic lithium
chemistries. While lithium is sold into a variety of end markets, we have
focused our strategy on the energy storage, polymer and pharmaceutical
markets and other industrial markets.
The 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 fine chemical and pharmaceutical
customers who use lithium’s unique chemical properties to synthesize
high value-added products.
Industry Overview
FMC Lithium serves a diverse group of markets, from economically
sensitive industrial sectors to technology-intensive specialty markets.
Our product offerings are primarily inorganic and generally have
few cost-effective substitutes. A major growth driver for lithium in
the future will be the rate of adoption of electric and hybrid electric
batteries in automobiles.
The markets for lithium chemicals are global with significant growth
occurring outside the U.S. in Japan, China and South Korea, driven
by the development and manufacture of lithium ion batteries. There
are three key producers of lithium compounds: FMC, Albemarle
Corporation, previously Rockwood Holdings, Inc. and Sociedad
Química y Minera de Chile S.A. Spodumene ore is also 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 Albemarle Corporation
are the primary producers of lithium specialties.
Source and Availability of Raw Materials
Our raw material requirements vary by business segment and primarily
include processed chemicals, seaweed, specialty wood pulps, mineral-
related natural resources (lithium brines) and energy sources such as
gas, coal, oil and electricity. During 2014 we encountered no significant
difficulties in obtaining adequate supplies of our raw materials.
Raw materials used by FMC Health and Nutrition include various
types of seaweed, specialty pulps, natural colorant raw materials and fish
oils that are all sourced on a global basis and purchased from selected
global producers/suppliers. We extract ores used in FMC Lithium’s
manufacturing processes from lithium brines in Argentina.
Raw materials used by FMC Agricultural Solutions, primarily processed
chemicals, are obtained from a variety of suppliers worldwide.
Patents
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 effect on the overall business
of FMC. The duration of our patents depends on their respective jurisdictions.
Seasonality
The seasonal nature of the crop protection market and the geographic
spread of the FMC Agricultural Solutions business can result in significant
variations in quarterly earnings among geographic locations. FMC
Agricultural Solutions’ products 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
first, second and third quarters. Markets in the southern hemisphere
(Latin America and parts of the Asia Pacific region, including Australia)
are served from July through February, generally resulting in earnings
in the third, fourth and first quarters. The remainder of our business
is generally not subject to significant seasonal fluctuations.
7
FMC CORPORATION - Form 10-K PART I Part I
ITEM 1 Business
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.
The 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-efficient 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 significant
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 differentiate ourselves by our global cost-
competitiveness via our manufacturing strategies, establishing effective
product stewardship programs and developing strategic alliances that
strengthen market access in key countries and regions.
Our FMC Health and Nutrition segment has significant 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 specific applications. In microcrystalline cellulose,
competitors are typically smaller than we are, while in seaweed extracts
(carrageenan and alginates) and omega-3 fish oils, we compete with
other broad-based chemical companies.
The to-be-renamed FMC Lithium segment sells lithium-based products
worldwide. We and our two most significant 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 significant and lowest cost sources of lithium.
Research and Development Expense
We perform research and development in all of our segments with the majority of our efforts focused in the FMC Agricultural Solutions segment.
The development efforts in the FMC Agricultural Solutions segment focus on developing environmentally sound solutions and new product
formulations that cost-effectively 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:
(in Millions)
FMC Agricultural Solutions
FMC Health and Nutrition
FMC Minerals
TOTAL
Environmental Laws and Regulations
Year Ended December 31,
2014
111.8 $
10.0
6.5
128.3 $
2013
100.5 $
10.5
6.7
117.7 $
$
$
2012
95.4
9.9
6.7
112.0
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 financial statements included in this Form 10-K.
Employees
We employ approximately 6,000 people (including approximately
1,000 employees who currently work in our FMC Alkali Chemicals
division), with about 2,500 people in our domestic operations and
3,500 people in our foreign operations.
Approximately 10 percent of our U.S.-based (excluding our FMC Alkali
Chemicals division) and 35 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 effect on consolidated sales and earnings.
We cannot predict, however, the outcome of future contract negotiations.
In 2015, two foreign collective-bargaining agreements will expire. These
contracts affect about 20 percent of our foreign-based employees.
Securities and Exchange Commission Filings
Securities and Exchange Commission (SEC) filings 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.
8
In accordance with New York Stock Exchange (NYSE) rules, on
May 22, 2014, we filed a certification signed by our Chief Executive Officer
(CEO) that, as of the date of the certification, he was unaware of any
violation by FMC of the NYSE’s corporate governance listing standards.
We also file with each Form 10-Q and our Form 10-K certifications by
the CEO and Chief Financial Officer under sections 302 and 906 of the
Sarbanes-Oxley Act of 2002.
FMC CORPORATION - Form 10-K PART I 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
specific and global issues and events including:
•• Capacity utilization - Our businesses are sensitive to industry capacity
utilization. As a result, pricing tends to fluctuate when capacity
utilization changes occur within our industry.
•• Competition - All of our segments face competition, which could
affect our ability to maintain or raise prices, successfully enter certain
markets or retain our market position. Our 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 significant 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
affected by climatic conditions, which could adversely impact crop
pricing and pest infestations. Adverse weather conditions can impact
our ability to extract lithium efficiently from our lithium reserves in
Argentina. Natural disasters can impact production at our facilities
in various parts of the world. The nature of these events makes them
difficult 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 significant costs or capital expenditures or require
changes in business practice that could result in reduced profitability. In
the European Union, the regulatory risk specifically includes chemicals
regulation known as REACH (Registration, Evaluation, and Authorization
of Chemicals), which affects each of our business segments to varying
degrees. The fundamental principle behind the REACH regulation is
that manufacturers must verify that their chemicals can be marketed
safely through a special registration system.
•• Geographic concentration - Although we have operations in most regions
throughout the globe, the majority of our FMC Agricultural Solutions
sales outside the United States have principally been to customers in
Brazil, Argentina and Mexico. With the acquisition of Cheminova,
we will expand the reach of international sales to include Europe and
key Asian countries. Accordingly, developments in those parts of the
world generally have a more significant effect on our operations than
developments in other places. Our operations outside the United States
are subject to special risks and restrictions, including: fluctuations in
currency values; exchange control regulations; changes in local political
or economic conditions; governmental pricing directives; import and
trade restrictions; import or export licensing requirements and trade
policy; restrictions on the ability to repatriate funds; and other potentially
detrimental domestic and foreign governmental practices or policies
affecting U.S. companies doing business abroad.
•• 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 fines,
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 affect 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 to significant additional costs or limits
on operations.
•• Fluctuations in commodity prices - Our operating results could be
significantly affected by the cost of commodities such as raw materials
and energy, including natural gas. We may not be able to raise prices or
improve productivity sufficiently to offset future increases in commodity
pricing. Accordingly, increases in commodity prices may negatively affect
our financial results. Where practical, we use hedging strategies to address
material commodity price risks, where hedge strategies are available
on reasonable terms. We also use raw material supply agreements that
contain terms designed to mitigate the risk of short-term changes in
commodity prices. However, we are unable to avoid the risk of medium-
and long-term increases. Additionally, fluctuations in commodity prices
could negatively impact our customers’ ability to sell their product at
previously forecasted prices resulting in reduced customer liquidity.
Inadequate customer liquidity could affect our customers’ abilities to
pay for our products and, therefore, affect existing and future sales or
our ability to collect on customer receivables.
•• 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 finished
products from a limited number of suppliers. An inability to obtain
these products or execute under our existing contract sourcing
arrangements would adversely impact our ability to sell products.
In FMC Minerals geological conditions can affect production of
raw materials.
9
FMC CORPORATION - Form 10-K PART I Part I
ITEM 1A Risk Factors
•• Economic and political change - Our business could be adversely affected
by economic and political changes in the markets where we compete
including: inflation 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
fluctuations in demand, price volatility, supply disruptions, or loss of
property. In Argentina, continued inflation and tightening of foreign
exchange controls along with deteriorating economic and financial
conditions could adversely affect our business.
Operational Risks
•• Market access risk - Our results may be affected 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 influence of competitors with stronger product portfolios.
•• Business disruptions - Although historically, we have engaged in contract
manufacturing and have not owned and operated its own manufacturing
facilities, Cheminova (upon acquisition) owns and operates large-scale
manufacturing facilities in Denmark and India. After the Cheminova
acquisition is completed, our operating results will be dependent on
the continued operation of its various production facilities and the
ability to manufacture products on schedule. Interruptions at these
facilities may materially reduce the productivity and profitability of a
particular manufacturing facility, or our business as a whole, during
and after the period of such operational difficulties. Although we take
precautions to enhance the safety of our operations and minimize the
risk of disruptions, our operations are subject to hazards inherent in
chemical manufacturing and the related storage and transportation of
raw materials, products and wastes. These potential hazards include,
explosions, fires, severe weather and natural disasters, mechanical
failure, unscheduled downtimes, supplier disruptions, labor shortages
or other labor difficulties, information technology systems outages,
disruption in our supply chain or manufacturing and distribution
operations, transportation interruptions, chemical spills, discharges
or releases of toxic or hazardous substances or gases, shipment of
incorrect or off-specification product to customers, storage tank
leaks, other environmental risks, 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. Some of
these hazards may cause severe damage to or destruction of property
and equipment or personal injury and loss of life and may result in
suspension of operations or the shutdown of affected facilities.
•• Our manufacturing operations and those of our key contract
manufacturers inherently entail hazards that require continuous
oversight and control, such as leaks, ruptures, fire, explosions, chemical
spills, discharges or releases of toxic or hazardous substances or
gases, other environmental risks, mechanical failure or other hazards
beyond our control such as acts of sabotage, terrorism or war, civil
or political unrest, natural disasters, pandemic situations, large scale
power outages 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 our ongoing
operations, reputation, financial results, and cash flow.
•• Information technology security risks - As with all Enterprise Information
systems, our information technology systems could be penetrated by
10
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 effect on our business,
financial 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 confidential 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, financial
condition, or results of operations.
•• Capital-intensive business - With our impending acquisition of
Cheminova, our business will be more capital intensive than it has been
historically. We rely on cash generated from operations and external
financing to fund our growth and ongoing capital needs. Limitations
on access to external financing could adversely affect our operating
results. Moreover, interest payments, dividends, the expansion of
our business and pursuit of other business opportunities may require
significant amounts of capital. We believe that our cash from operations
and available borrowings under our revolving credit facility will be
sufficient to meet these needs in the foreseeable future. However, if
we need external financing, our access to credit markets and the cost
of new capital will be dependent upon the state of the capital markets
generally and the market participants’ assessment of the adequacy of
our creditworthiness. There can be no assurances that we would be
able to obtain equity or debt financing on acceptable terms, and it is
possible that the cost of any financings could increase significantly,
thereby increasing our expenses and decreasing our net income. If
we are unable to generate sufficient cash flow or obtain adequate
external financing, including as a result of significant disruptions in
the global credit markets, we could be forced to restrict our operations
and growth opportunities, adversely affecting our operating results.
•• We may use our $1.5 billion revolving credit facility to provide for
our cash needs, including supporting our commercial paper program.
As of December 31, 2014, we had approximately $924 million of
available credit capacity, after considering utilization for letters of
credit and support for our commercial paper program. In the event
of a default under our credit agreements or any of our senior notes,
we could be required to repay immediately outstanding borrowings,
redeem commercial paper notes outstanding, and make cash deposits
as collateral for letters of credit that the facility supports, and we
may not have the financial resources to do so. A default under any
of our credit arrangements could cause a default under other credit
agreements and debt instruments. Without waivers from lenders party
to those agreements, any such default could have a materially adverse
effect on our ability to continue business operations.
FMC CORPORATION - Form 10-K •• 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. regulations,
directives, rules and ordinances concerning, among other things,
emissions in the air, discharges to land and water, and the generation,
handling, treatment, disposal and remediation of hazardous waste and
other materials. We may face liability arising out of the normal course
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.
Portfolio Management Risks
•• We expect to complete the acquisition of Cheminova and the divestiture
of our FMC Alkali Chemicals division in early 2015. The majority
of our expected proceeds from the sale of the FMC Alkali Chemicals
division will be used to settle a portion of the borrowings that will
be used to complete the acquisition of Cheminova. Any significant
delay in the sale of our Alkali Chemicals division or an inability to
complete the sale of our Alkali Chemicals division could materially
and adversely affect our financial results, as a result of the acquisition
borrowings remaining outstanding longer than expected. The expected
sale of the Alkali Chemicals division is subject to various conditions,
complex in nature and may be affected by unanticipated developments
or changes in market conditions. Completion of the divestment of our
FMC Alkali Chemicals division will be contingent upon customary
closing conditions, including receipt of regulatory approvals.
•• We continuously review our portfolio which includes the evaluation
of potential business acquisitions that may strategically fit our business
and strategic growth initiatives. If we are unable to successfully
integrate and develop our acquired businesses, we could fail to achieve
anticipated synergies which would include expected cost savings and
revenue growth. Failure to achieve these anticipated synergies, could
Financial Risks
PART I Part I
ITEM 1A Risk Factors
of business, including alleged personal injury or property damage
due to exposure to chemicals or other hazardous substances at our
current or former facilities or chemicals that we manufacture, handle
or own. We take our environmental responsibilities very seriously, but
there is a risk of environmental impact inherent in its manufacturing
operations and transportation of chemicals. Any substantial liability
for environmental damage could have a material adverse effect on
our financial condition, results of operations and cash flows.
•• Inability to attract and retain key employees - The inability to recruit
and retain key personnel or the unexpected loss of key personnel
may adversely affect 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.
materially and adversely affect our financial results. In addition to
strategic acquisitions we evaluate the diversity of our diverse portfolio
in light of our objectives and alignment with its growth strategy.
As part of this evaluation we may not be successful in separating
underperforming or non-strategic assets and gains or losses on the
divestiture of, or lost operating income from, such assets may affect
the company’s earnings. Moreover, we may incur asset impairment
charges related to acquisitions or divestitures that reduce its earnings.
•• In particular, if we are unable to successfully integrate and develop
Cheminova as planned, after the acquisition has been completed, could
result in our inability to achieve the synergies we have projected and
could thereby cause our future results of operations to be materially
and adversely worse than expected. Part of the synergies we expect
to generate is the improvement of the cost-efficiency of Cheminova’s
business operations. Another is to reduce the mix of Cheminova’s sales
from generic, lower margin products to more differentiated and higher
margin products. Yet another will be the favorable rationalization of
the different distribution channels used by FMC and Cheminova in
overlapping European markets. There can be no assurances that we
will be successful in achieving these planned synergies.
•• Deterioration in the global economy and worldwide credit and foreign
exchange markets could adversely affect our business. A worsening
of global or regional economic conditions or financial markets could
adversely affect our customers’ ability to meet the terms of sale or
our suppliers’ ability to perform all their commitments to us. A
slowdown in economic growth in our international markets, particularly
Latin American regions, or a deterioration of credit or foreign exchange
markets could adversely affect customers, suppliers and our overall
business there. Customers in weakened economies may be unable to
purchase our products, or it could become more expensive for them
to purchase imported products in their local currency, or sell their
commodity at prevailing international prices, and we may be unable
to collect receivables from such customers.
•• 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
11
FMC CORPORATION - Form 10-K PART I Part I
ITEM 1B Unresolved Staff Comments
peso, the British pound sterling and several Asian currencies,
including the Japanese yen. Our acquisition of Cheminova will
significantly expand our operations and sales in foreign countries
and correspondingly increase our exposure to foreign exchange risks.
•• Our effective tax rate is favorably impacted by the fact that a portion
of our earnings are taxed at more favorable rates in some jurisdictions
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 effective tax rate and adversely affect our financial results.
•• We have significant 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 reflect
certain assumptions. To the extent our plans’ actual experience differs
from these assumptions, our costs and funding obligations could
increase or decrease significantly.
ITEM 1B Unresolved Staff Comments
None.
ITEM 2 Properties
FMC leases executive offices in Philadelphia, Pennsylvania and operates
30 manufacturing facilities and mines in 19 countries. Our major
research and development facilities are in Ewing, New Jersey and
Shanghai, China.
We have long-term mineral rights to the Salar del Hombre Muerto
lithium reserves in Argentina. Our FMC Lithium division requires the
lithium brine that is mined from these reserves, without which other
sources of raw materials would have to be obtained.
We believe our facilities are in good operating conditions. The 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 Part IStates
2
2
2
6
Latin America
& Canada
1
1
2
4
Western
Europe
1
8
1
10
Asia-Pacific
3
4
3
10
Total
7
15
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. The 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, 2014, there were approximately 11,000 premises and
product asbestos claims pending against FMC in several jurisdictions.
Since the 1980s, approximately 106,000 asbestos claims against FMC
have been discharged, the overwhelming majority of which have been
dismissed without any payment to the claimant. Since the 1980s,
settlements by us with claimants have totaled approximately $63.6 million.
12
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 filing of asbestos-related claims with respect to
all potential defendants has changed over time, and that filing rates as
to us in particular have varied significantly 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 filing
rates against us have yet to form a predictable pattern, and we are
unable to project a reasonably accurate future filing rate and thus, we
are presently unable to reasonably estimate our asbestos liability with
respect to claims that may be filed in the future.
See Note 1 “Principal Accounting Policies and Related Financial
Information—Environmental Obligations,” Note 10 “Environmental
Obligations” and Note 18 “Guarantees, Commitments and
Contingencies” in the notes to our consolidated financial statements
included in this Form 10-K, the content of which are incorporated
by reference to this Item 3.
FMC CORPORATION - Form 10-K Part I
Item 4A executive Officers of the Registrant
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.
Item 4A executive Officers of the Registrant
The executive officers of FMC Corporation, the offices they currently hold, their business experience since at least January 1, 2010 and their ages
as of December 31, 2014, are as follows:
Name
Pierre R. Brondeau
age on
12/31/2014
57
Paul W. Graves
Andrea E. Utecht
Eric W. Norris
Edward T. Flynn
Mark A. Douglas
43
66
48
56
52
Thomas C. Deas, Jr.
64
Office, year of election and other information
President, Chief Executive Officer and Chairman of the Board (10-present); President and Chief Executive Officer
of Dow Advanced Materials, a specialty materials company (08-09); President and Chief Operating Officer 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 Officer, 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 Officer (12-present); Managing Director, Goldman Sachs
Group (00-12)
Executive Vice President, General Counsel and Secretary (01-present); Senior Vice President, Secretary and General
Counsel, Atofina Chemicals, Inc. (96-01)
Vice President, Global Business Director, FMC Health and Nutrition (14-present); Vice President, Global Business
Director, FMC Lithium (12-14); Global Commercial Director, FMC Lithium (09-12)
President, FMC Minerals (12-present); General Manager Alkali Chemicals Division, President FMC Wyoming
Corp. (02-12); Chief Information Officer (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 officers are elected to hold office for one year or until their successors
are elected and qualified. No family relationships exist among any of the
above-listed officers, and there are no arrangements or understandings
between any of the above-listed officers and any other person pursuant
to which they serve as an officer. The above-listed officers 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 officer.
13
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). There
were 3,145 registered common stockholders as of December 31, 2014. Presented below are the 2014 and 2013 quarterly summaries of the high
and low prices of the FMC common stock.
Common
stock prices:
High
Low
$
$
2014
2013
First Quarter Second Quarter Third Quarter Fourth Quarter
59.67
51.04
71.53 $
56.98 $
79.14 $
69.50 $
83.94 $
67.31 $
$
$
First Quarter Second Quarter Third Quarter Fourth Quarter
75.68
70.01
64.96 $
55.18 $
72.35 $
60.57 $
63.15 $
56.26 $
Our Board of Directors has declared regular quarterly dividends since
2006; however, any future payment of dividends will depend on our
financial condition, results of operations, conditions in the financial
markets and such other factors as are deemed relevant by our Board
of Directors. Total cash dividends of $78.1 million, $73.6 million
and $47.8 million were paid in 2014, 2013 and 2012, respectively.
FMC’s annual meeting of stockholders will be held at 2:00 p.m. on
Tuesday, April 28, 2015, at The 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 3, 2015.
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
14
FMC CORPORATION - Form 10-K PART II Part II
ITEM 5 Market for the Registrant’s Common Equity, Related Stockholders Matters and Issuer Purchases of Equity Securities
Stockholder Return Performance Presentation
The graph that follows shall not be deemed to be incorporated by
reference into any filing made by FMC under the Securities Act of
1933 or the Securities Exchange Act of 1934.
The following Stockholder Performance Graph compares the five-year
cumulative total return on FMC’s Common Stock for the period from
January 1, 2010 to December 31, 2014 with the S&P 500 Index and
the S&P 500 Chemicals Index. The comparison assumes $100 was
invested on December 31, 2009, 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
$
$
$
2009
100.00 $
100.00 $
100.00 $
2010
144.17 $
114.82 $
121.44 $
2011
156.35 $
117.22 $
119.96 $
2012
214.16 $
135.83 $
148.02 $
2013
278.13 $
179.36 $
194.55 $
2014
212.41
203.60
215.26
STOCK PERFORMANCE CHART
$300
$250
$200
$150
$100
$50
$0
2009
2010
2011
2012
2013
2014
FMC Corporation
S&P 500 Index
S&P 500 Chemicals Index
The following table summarizes information with respect to the purchase of our common stock during the three months ended December 31, 2014:
ISSUER PURCHASES OF EQUITY SECURITIES
Publicly Announced Program(1)
Period
Total Number of
Shares Purchased(2)
Maximum Dollar Value
of Shares that May Yet
be Part IIPurchased
250,000,000
250,000,000
250,000,000
TOTAL Q4 2014
250,000,000
(1) This repurchase program does not include a specific timetable or price targets and may be suspended or terminated at any time. Shares may be purchased through open
Total Dollar
Amount Purchased
—
—
—
—
Average Price Paid
Per Share
—
57.19
54.99
55.12
October 1-31, 2014
November 1-30, 2014
December 1-31, 2014
Total Number of
Shares Purchased
— $
—
—
— $
— $
$
$
$
350
5,669
6,019
$
$
market or privately negotiated transactions at the discretion of management based on its evaluation of market conditions and other factors.
(2) Represents reacquired shares for employees exercises in connection with the vesting and forfeiture of awards under our equity compensation plans.
15
FMC CORPORATION - Form 10-K
PART II Part II
ITEM 6 Selected Financial Data
ITEM 6 Selected Financial Data
Selected Consolidated Financial Data
The selected consolidated financial and other data presented below for, and as of the end of, each of the years in the five-year period ended
December 31, 2014, are derived from our consolidated financial statements. The selected consolidated financial data should be read in conjunction
with our consolidated financial statements for the year ended December 31, 2014.
Year Ended December Part II31,
2010
2012
2011
2014
2013
$
$
$
$
$
16.3
14.6
19.5
14.1
293.9
307.5
492.2
545.4
659.0
639.1
587.4
4,037.7
2,686.9
3,409.9 $
3,874.8 $
3,036.3 $
597.7
463.2
(27.5)
435.7
485.0
411.5
(89.4)
322.1
553.2
420.3
(38.1)
382.2
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 affiliates, 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 fixed charges(2)
Cash dividends declared per share
(1) Discontinued operations, net of income taxes includes our discontinued FMC Peroxygens business and 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
396.9
(89.4)
307.5
404.0
(38.1)
365.9
443.7
(27.5)
416.2
2.96
(0.67)
2.29
2.97
(0.67)
2.30
2.83
(0.26)
2.57
3.34
(1.18)
2.16
3.21
(0.20)
3.01
3.20
(0.20)
3.00
2.15
(0.97)
1.18
2.17
(0.98)
1.19
3.33
(1.17)
2.16
2.81
(0.26)
2.55
5,340.5
1,155.4
5,235.2
1,188.8
4,373.9
914.5
3,319.9
619.4
3,743.5
798.6
12.7x
0.300
12.7x
0.405
12.5x
0.540
7.5x
0.600
10.7x
0.250
416.2
365.9
172.5
12.4
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
(2) In calculating this ratio, earnings consist of income (loss) from continuing operations before income taxes plus interest expense, net of 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.
16
FMC CORPORATION - Form 10-K PART II 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 filings with
the SEC, or in reports to our stockholders.
In some cases, we have identified forward-looking statements by such
words or phrases as “will likely result,” “is confident 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.
These statements involve known and unknown risks, uncertainties and
other factors that may cause actual results to be materially different from
any results, levels of activity, performance or achievements expressed
or implied by any forward-looking statement. These 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 diversified 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. These 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. The 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. The pharmaceutical additives are
used for binding, encapsulation and disintegrant applications. Some
of our products are increasingly being used as an active ingredients
in nutraceutical and pharmaceutical markets. 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.
2014 Highlights
The following are the more significant developments in our businesses
during the year ended December 31, 2014:
•• Revenue of $4,037.7 million in 2014 increased $162.9 million or four
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 decreased by four percent,
sales in North America were up seven percent, sales in Asia were up
14 percent and sales in Europe, Middle East and Africa (EMEA)
increased by six percent.
•• Our gross margin, excluding acquisition/divestiture related charges, of
$1,379.2 million increased approximately $34 million or approximately
two percent versus last year. Gross margin as a percent of revenues of
approximately 34 percent declined one hundred basis points compared
to 2013. The increase in gross margin did not result in increased gross
margin percent primarily due to unfavorable currency movements and
product mix of sales in FMC Agricultural Solutions.
•• Selling, general and administrative expenses increased 20 percent from
$515.8 million to $621.2 million. Selling, general and administrative
expenses, excluding non-operating pension and postretirement charges
and acquisition/divestiture related charges, of $469.9 million decreased
$3.0 million or approximately one percent. Non-operating pension and
postretirement charges and acquisition/divestiture related charges are
presented in our Adjusted Earnings Non-GAAP financial measurement
below under the section titled “Results of Operations”.
•• Research and Development expenses of $128.3 million increased
$10.6 million or nine percent, largely due to spending in FMC Agricultural
Solutions to fund investments in earlier stage active ingredient research,
biological crop protection development projects and rapid market
innovation initiatives.
•• Adjusted earnings after-tax from continuing operations attributable
to FMC stockholders of $541.1 million increased approximately
$12.7 million or two percent. See the disclosure of our Adjusted Earnings
Non-GAAP financial measurement below under the section titled
“Results of Operations”.
17
FMC CORPORATION - Form 10-K PART II Part II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Other 2014 Highlights
•– On September 8, 2014, we announced that we will no longer
proceed with the planned separation of FMC into two distinct
public entities. At that time we announced the acquisition of
Cheminova and divestiture of our FMC Alkali Chemicals division.
•– In October 2014 we purchased the remaining 6.25 percent ownership
interest from the last remaining non-controlling interest holder in
2015
•– During the first part of this year, we expect to close on two significant
transactions - the divestiture of our Alkali Chemicals division
and the acquisition of Cheminova - that will shape FMC into a
stronger, focused company serving agriculture, health and nutrition
end markets.
•– The integration of Cheminova into FMC Agricultural Solutions
is an integral part of FMC’s strategy to become a more focused
and global agriculture, health and nutrition company with strong
competitive positions in fast-growing markets. Our combined
company will have broader market access in Europe, Latin America
and key Asia-Pacific markets such as India and Australia.
a legal entity within our FMC Alkali Chemicals division, which
increased our ownership from 93.75 percent to 100 percent. We
paid $95.7 million to the minority shareholder in 2014.
•– Also in October 2014, we entered into a $2.0 billion term loan
facility for the purposes of funding the acquisition of Cheminova
and amended our $1.5 billion revolving credit facility in conjunction
with the term loan facility.
•– On February 5, 2015 we signed a definitive agreement to sell our
FMC Alkali Chemicals division to Tronox Limited. We expect the
sale to be completed in early 2015 subject to customary regulatory
approvals and closing conditions. The proceeds from the sale will
be used to fund the acquisition of Cheminova and allow us to
maintain a strong balance sheet and financial flexibility.
•– Subsequent to the sale of our FMC Alkali Chemicals division, our
FMC Lithium division will become a standalone reporting segment.
We intend to make investments that will allow the business to
take advantage of strong underlying growth potential and leading
positions in a well-structured industry.
18
FMC CORPORATION - Form 10-K PART II Part II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations—2014, 2013 and 2012
Overview
The following presents a reconciliation of our segment operating profit to the net income attributable to FMC stockholders as seen through the
eyes of our management. For management purposes, we report the operating performance of each of our business segments based on earnings
before interest and income taxes excluding corporate expenses, other income (expense), net and corporate special income/(charges).
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 profit
Corporate and other
Operating profit before the items listed below
Interest expense, net
Corporate special (charges) income:
Restructuring and other (charges) income(1)
Non-operating pension and postretirement charges(2)
Business separation costs(3)
Acquisition-related charges(4)
$
$
$
$
Year Ended December 31,
2014
2013
2012
$
$
$
$
2,173.8
828.2
1,035.7
—
4,037.7
497.8
187.9
166.7
—
852.4
(72.3)
780.1
(59.5)
$
$
$
$
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)
(56.5)
(10.5)
(23.6)
(145.0)
(73.5)
(89.4)
(14.6)
307.5
(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
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 to the consolidated financial statements included within this Form 10-K for details of restructuring and other charges (income). Amounts for the
years ended 2014, 2013 and 2012 relate to FMC Agricultural Solutions of $(4.5) million, $32.6 million and $8.5 million; FMC Health and Nutrition of
$14.1 million, $1.0 million and $0.7 million; FMC Minerals of $0.1 million, $6.4 million and $13.0 million; and Corporate of $46.8 million, $7.9 million
and $5.3 million, respectively.
$
$
$
(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 are associated with the previously planned separation of our FMC Corporation into two independent public companies. On September 8, 2014, we
announced that we would no longer proceed with the planned separation of FMC into two distinct public entities. At that time we announced the acquisition of
Cheminova; see Note 3 within these consolidated financial statements included within this Form 10-K for more information. These charges are included within
“Business separation costs” on our consolidated income statement. These costs were primarily related to professional fees associated with separation activities within
the finance and legal functions through September 8, 2014.
19
FMC CORPORATION - Form 10-K PART II Part II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
(4) Charges related to the expensing of the inventory fair value step-up resulting from the application of acquisition purchase accounting, legal and professional fees
and gains or losses on hedging purchase price associated with the planned or completed acquisitions and costs incurred associated with the divestiture of our FMC
Alkali Chemicals division. Amounts represent the following:
(in Millions)
Acquisition related charges - Cheminova
Legal and professional fees(1)
Unrealized loss/(gain) on hedging purchase price(1)
Acquisition related charges
Legal and professional fees(1)
Inventory fair value step-up amortization(2)
Divestiture related charges - FMC Alkali Chemicals division
Legal and professional fees(1)
Twelve Months Ended December 31,
2014
2013
2012
$
$
32.2
99.6
—
4.2
9.0
145.0
— $
—
4.8
5.2
—
10.0
$
—
—
—
7.2
—
7.2
ACQUISITION/DIVESTITURE RELATED CHARGES
(1) On the consolidated statements of income, these charges are included in “Selling, general and administrative expenses”.
(2) On the consolidated statements of income, these charges are included in “Costs of sales and services”.
$
$
ADJUSTED EARNINGS RECONCILIATION
The following chart, which is provided to assist the readers of our
financial statements, depicts certain charges (gains) that are excluded
by us in the measures we use to evaluate business performance and
determine certain performance-based compensation. These items are
discussed in detail within the section that follows. Additionally, the chart
below discloses our Non-GAAP financial measure “Adjusted after-tax
earnings from continuing operations attributable to FMC stockholders”
reconciled from the GAAP financial 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 effect of “Corporate special
charges (income)” from operating results and discontinued operations
allows management and investors to compare more easily the financial
performance of our underlying businesses from period to period.
“Corporate special charges (income)” are defined as: restructuring and
other income and charges, non-operating pension and postretirement
charges, acquisition/divestiture related charges, business separation
charges as well as certain tax adjustments, This measure should not be
considered as a substitute for net income (loss) or other measures of
performance or liquidity reported in accordance with GAAP.
(in Millions)
Net income attributable to FMC stockholders (GAAP)
Corporate special charges (income), pre-tax
Income tax expense (benefit) on Corporate special charges (income)
Corporate special charges (income), net of income taxes
Discontinued operations, net of income taxes
Tax expenses (benefit) adjustments
ADJUSTED AFTER-TAX EARNINGS FROM CONTINUING OPERATIONS
ATTRIBUTABLE TO FMC STOCKHOLDERS (NON-GAAP)
$
Years Ended December 31,
$
2014
307.5
235.6
(87.5)
148.1
89.4
(3.9)
$
2013
293.9
96.0
(35.3)
60.7
159.3
14.5
$
541.1
$
528.4
$
2012
416.2
69.6
(25.1)
44.5
27.5
(18.1)
470.1
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 profit is defined as segment
revenue less segment operating expenses (segment operating expenses
consist of costs of sales and services, selling, general and administrative
expenses (“SG&A”) and research and development expenses (“R&D”)).
We have excluded the following items from segment operating profit:
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/divestiture related
charges, business separation costs 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 19
to our consolidated financial statements included in this Form 10-K.
FMC Agricultural Solutions
(in Millions)
Revenue
Operating Profit
20
Year Ended December 31,
2014
2,173.8
497.8
$
2013
2,145.7
539.0
$
$
2012
1,763.8
454.0
FMC CORPORATION - Form 10-K PART II Part II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
2014 vs. 2013
Revenue of $2,173.8 million increased approximately one percent
versus the prior year period due to higher sales in North America,
Asia and EMEA offset by a decline in sales in Latin America.
Sales in Latin America of $1,120.7 million decreased five percent due
to weak demand conditions in Brazil, particularly in sugarcane and
cotton segments, as drought and lower planted area reduced herbicide
and insecticide demand. This was partially offset by growth in other
Latin American countries such as Argentina and Mexico as FMC gained
market share. Sales in North America of $560.2 million increased
11 percent primarily driven by strong demand for pre-emergent
herbicides into soybeans and growth from new product introductions
into various crop segments. Revenue in Asia of $343.6 million increased
nine percent reflecting sales growth in Australia, Pakistan, Korea and
China. Sales in Europe, Middle East and Africa (EMEA) increased seven
percent to $149.3 million primarily due to higher herbicide volumes.
FMC Agricultural Solutions’ operating profit of $497.8 million
decreased approximately eight percent compared to the year-ago period,
reflecting relatively flat sales, unfavorable currency impacts, increases to
SG&A as well as additional planned R&D investments and changes in
product mix. SG&A costs were approximately $2 million higher and
R&D costs were approximately $12 million higher than the prior year
period with spending on marketing, sales and technology investments.
In 2015, we expect that earnings contributions from the Cheminova
acquisition, the continued spread of weed resistance in North and
Latin America, and market share gains in Asia and EMEA will drive
full-year segment earnings 15 to 30 percent higher than 2014.
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 offset by declines in EMEA.
FMC Health and Nutrition
(in Millions)
Revenue
Operating Profit
2014 vs. 2013
Revenue was $828.2 million, an increase of approximately nine percent
versus the prior-year period. Revenue from higher volumes in health
markets, including acquisitions completed in 2013, and higher volumes
in overall nutrition markets increased sales by approximately six percent
and two percent, respectively. Favorable pricing and mix, primarily in
nutrition-related products increased sales by one percent.
Segment operating profit of $187.9 million increased by 11 percent
versus the prior-year period driven by higher demand for pharmaceutical
excipients and texture and stability products in North America. These were
slightly offset by increased raw material costs, particularly seaweed, and
reduced demand for nutrition products into the Chinese beverage market.
For 2015, full-year segment earnings are expected to increase by mid-
single digit percent. Earnings growth is expected to come from moderate
demand recovery in the Chinese beverage market, continued demand
for pharmaceutical products, particularly excipients, and benefits from
operational improvements.
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 reflecting
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 profit of $539.0 million
increased approximately 19 percent compared to the year-ago period,
reflecting 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.
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 2015 as part of the
ongoing cycle of re-registration of our pesticide products around
the world.
$
Year Ended December 31,
2014
828.2 $
187.9
2013
762.0 $
169.5
2012
680.8
161.6
2013 vs. 2012
Revenue was $762.0 million, an increase of approximately 12 percent
versus the prior-year period. This 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 profit of $169.5 million increased by five percent versus
the prior year period as revenue growth was partially offset 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.
21
FMC CORPORATION - Form 10-K PART II Part II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
FMC Minerals
(in Millions)
Revenue
Operating Profit
2014 vs. 2013
Revenue of $1,035.7 million increased by seven percent over the prior
year. Volume gains in Alkali and Lithium along with improvements in
soda ash pricing contributed to the higher revenue.
Alkali revenues of $779.0 million increased four percent over the prior
year. Higher average prices and volume increases each contributed a
2 percent increase in revenue, respectively. The most notable price
increases were realized in Asian export markets.
Lithium revenues of $256.7 million increased 15 percent compared to
the prior year. Higher production volume that allowed for additional
sales, particularly for energy storage applications contributed a
19 percent increase in revenue, partially offset by lower pricing which
negatively impacted revenues by four percent.
Segment operating profit of $166.7 million increased approximately
30 percent versus the prior year. Operating profit was driven by higher
volumes, improved pricing and lower operating costs in Alkali as well
as higher volumes in Lithium . These increases were partially offset by
unfavorable currency and operating costs associated with Lithium’s
Argentine operations and higher energy costs in Alkali.
For 2015, reported segment earnings, which will include only our
FMC Lithium business, are expected to be within the range of $15 to
$25 million. We anticipate higher prices for both lithium hydroxide and
carbonate driven by increased demand for energy storage applications
will be offset by reduced sourcing of lithium carbonate from third
parties and higher operating costs in Argentina.
2013 vs. 2012
Revenue of $970.0 million, was essentially flat period over period.
Volume gains of three percent driven by Alkali sales were offset by
unfavorable pricing year over year. Unfavorable pricing was primarily
driven by Alkali, slightly offset by favorable pricing in Lithium.
Alkali revenues of $747.0 million increased two percent over the prior
year due to volume gains of six percent which were partially offset by
reduced pricing of four percent.
Lithium revenues of $223.0 million decreased four percent compared
to the prior year due to unfavorable sales mix. Production and sales
volumes on a lithium carbonate equivalent basis were relatively flat
year over year, as lower production in Argentina due to operational
issues was offset by higher third party product purchases.
Segment operating profit of $128.3 million decreased approximately
25 percent versus the prior year. The decrease was primarily due to
lower average export pricing in soda ash. Additionally, production
Year Ended December Part II31,
$
2014
1,035.7 $
166.7
2013
970.0 $
128.3
2012
966.2
171.4
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.
Corporate and other
Corporate expenses are included as a component of the line item
“Selling, general and administrative expenses” except for last in, first-
out (LIFO) related charges that are included as a component of “Cost
of sales and other services” on our consolidated statements of income.
2014 vs. 2013
Corporate and other expenses of $72.3 million decreased by $10.4 million
from $82.7 million in the same period in 2013. The decrease period
over period is primarily due to a decrease of $5.1 million in employees’
incentive accruals and a decrease of $4.6 million in pension service
charges. Reduced pension service charges are primarily driven by the
higher discount rate utilized to calculate the 2014 expense.
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. The increase period
over period is due to increased costs of approximately $4 million
primarily representing costs associated with the transformation of our
finance organization. This transformation is similar to past initiatives
to improve our organization.
Interest expense, net
2014 vs. 2013
Interest expense, net for 2014 of $59.5 million increased approximately
41% percent as compared to 2013 of $42.2 million. The increase is
primarily driven by the issuance of $400 million in Senior Notes in
November 2013. The $400 million debt issuance, with an interest rate
of 4.10 percent, was utilized to fund the acquisition of Epax and to
fund working capital requirements of our businesses.
2013 vs. 2012
Interest expense, net for 2013 of $42.2 million increased approximately
four percent compared to 2012 of $40.7 million. The increase was
primarily due to higher overall debt levels driven by funding requirements
for the acquisition of Epax and our share repurchases during 2013.
22
FMC CORPORATION - Form 10-K PART II Part II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
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:
Year Ended December Part II31,
2014
17.3 $
39.2
56.5 $
2013
9.6 $
38.3
47.9 $
$
$
2012
17.7
9.8
27.5
2014 vs. 2013
The charge for 2014 was $10.5 million compared to $38.1 million
for 2013. The decrease in charges was primarily attributable to lower
amortization of net actuarial losses of $21.1 million compared to 2013.
2013 vs. 2012
The charge for 2013 was $38.1 million compared to $34.9 million for
2012. The 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. The settlement charge was associated with the acceleration
of previously deferred actuarial losses triggered by the lump-sum payout
to former executives in 2013.
Business Separation costs
On September 8, 2014, we announced that we would no longer proceed
with the planned separation of FMC into two distinct public entities. At
that time we announced the acquisition of Cheminova and divestiture
of our FMC Alkali Chemicals division.
Acquisition-related charges
A detailed description of the acquisition/divestiture related charges is
included in Note 19 to the consolidated financial statements included
within this Form 10-K under the Segment Results Reconciliation above
within the Results of Operations section of the Management’s Discussion
and Analysis.
(in Millions)
Restructuring Charges and Asset Disposals
Other Charges (Income), Net
TOTAL RESTRUCTURING AND OTHER CHARGES
2014
Restructuring and asset disposal charges in 2014 of $17.3 million were
primarily associated with our Health and Nutrition restructuring as well
as other miscellaneous exit costs. Other charges (income) net in 2014 of
$39.2 million were primarily related to corporate environmental charges
of $43.7 million and charges of $22.1 million associated with our FMC
Agricultural Solutions segment which entered into 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. Offsetting these charges
is income from the sale of a portion of our ownership interest in a
pesticide distribution company which resulted in a gain on the sale of
approximately $26.6 million.
2013
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. The 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.
2012
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.
The activity of the restructuring charges listed above are also included
within Note 7 to our consolidated financial statements included in this
Form 10-K. We believe the restructuring plans implemented are on
schedule and the benefits 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.
23
FMC CORPORATION - Form 10-K PART II Part II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Provision for income taxes
(in Millions)
GAAP - Continuing
operations
Corporate special charges
Tax adjustments(1)
Income
(Expense)
$
485.0
235.6
2014
Tax
Provision
(Benefit)
Twelve Months Ended December 31
2013
Effective
Tax Rate
Income
(Expense)
Tax
Provision
(Benefit)
Effective
Tax Rate
Income
(Expense)
2012
Tax
Provision
(Benefit)
$
73.5
87.5
3.9
$ 164.9
15.2% $
615.9
96.0
$
148.6
35.3
(14.5)
$ 169.4
24.1% $
597.7 $
69.6
134.5
25.1
18.1
$ 177.7
Effective
Tax Rate
22.5%
26.6%
(1) Tax adjustments in 2014 were primarily associated with revisions to our tax liabilities associated with prior year tax matters. 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
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.
23.8% $ 667.3
$ 720.6
22.9% $
711.9
The primary drivers for the fluctuations in the effective effective tax
rate from 2012 to 2014 are provided in the table above. Excluding
the items in the table above, the decrease in the effective tax rates
from 2012 to 2014 was primarily due to a shift in earnings mix as it
relates to domestic versus foreign income. Foreign profits 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 significantly impact our effective tax rate.
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. The primary liabilities retained
include environmental liabilities, other postretirement benefit liabilities,
self-insurance, long-term obligations related to legal proceedings and
historical restructuring activities.
2014 vs 2013
Discontinued operations, net of income taxes represented a loss
of $89.4 million for December 31, 2014, compared to a loss of
$159.3 million for 2013. The loss in 2014 was driven by provisions
for environmental liabilities of $36.7 million and legal reserves of
$14.3 million and the final divestiture charge on the sale of our FMC
Peroxygens business of $34.4 million. The loss in 2014 was less than
the loss in 2013 due to the charge of $156.7 million ($122.1 million
after-tax) in 2013 associated with our discontinued FMC Peroxygens
segment. A large portion of the 2013 charge was associated with a write
down of the FMC Peroxygens segment assets held for sale to fair value.
See Note 9 within our consolidated financial statements included in
this Form 10-K for more information.
Liquidity and Capital Resources
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 2013.
The increase was a result of a charge of $156.7 million ($122.1 million
after-tax) associated with our discontinued FMC Peroxygens segment.
The charge was primarily associated with a write down of the FMC
Peroxygens segment assets held for sale to fair value.
Net income attributable to FMC stockholders
2014 vs 2013
Net income attributable to FMC stockholders increased to $307.5 million
in 2014, from $293.9 million in 2013. The increase was driven by
improvements in FMC Health and Nutrition and FMC Minerals
segment operating profits, lower effective tax rate, lower non-operating
pension and postretirement charges and reduced charges associated with
discontinued operations. Mostly offsetting these improvements were
costs associated with our previously planned business separation, the
acquisition of Cheminova, the divestiture of our FMC Alkali Chemicals
division, lower FMC Agricultural Solutions segment earnings and
higher interest expense.
2013 vs. 2012
Net income attributable to FMC stockholders decreased to $293.9 million
in 2013, from $416.2 million in 2012. This fluctuation year over year
is described in more detail above, however the primary driver is the
$122.1 million after-tax charge associated with our discontinued FMC
Peroxygens business.
Cash and cash equivalents at December 31, 2014 and 2013, were
$109.5 million and $123.2 million, respectively. Of the cash and cash
equivalents balance at December 31, 2014, $84.8 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
taxes that would be payable if we repatriated these earnings.
Term Loan Facility
On October 10, 2014, we entered into a term loan agreement (the
“Term Loan Agreement”), that provides for a senior unsecured term loan
facility of up to $2 billion (the “Term Loan Facility”) to consummate
the acquisition of Cheminova (the “Acquisition”). The Term Loan
Facility is a senior unsecured obligation that ranks equally with our
24
FMC CORPORATION - Form 10-K
PART II Part II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
other senior unsecured obligations. The proceeds of the loans to be
made pursuant to the Term Loan Facility will be available in one or
more drawings on the closing date of the Term Loan Facility, which
will be substantially concurrent with the closing of the Acquisition. The
scheduled maturity of the Term Loan Facility is on the fifth anniversary
of this closing date. The proceeds will be used to finance the Acquisition
as well as to pay fees and expenses incurred in connection with the
Acquisition and the other transactions contemplated by or related to
the Acquisition or the Term Loan Facility.
Loans under the Term Loan Agreement will bear interest at a floating
rate, which will be a base rate or a Eurocurrency rate equal to the
London interbank offered rate for the relevant interest period, plus
in each case an applicable margin, as determined in accordance with
the provisions of the Term Loan Agreement. The base rate will be the
highest of: the rate of interest announced publicly by Citibank, N.A.
in New York, New York from time to time as its “base rate”; the federal
funds effective rate plus 1/2 of 1 percent; and the Eurocurrency rate
for a one-month period plus 1 percent.
We are required to pay a commitment fee on the average daily unused
amount from October 10, 2014 until the date on which all commitments
are terminated, payable quarterly, at a rate per annum equal to an
applicable percentage in effect from time to time for commitment
fees. The initial commitment fee is 0.125 percent per annum. The
applicable margin and the commitment fee are subject to adjustment
as provided in the Term Loan Agreement.
The Term Loan Agreement contains financial and other covenants,
including a maximum leverage ratio and minimum interest coverage
ratio. Fees incurred to secure the Term Loan Facility have been deferred
and will be amortized over the term of the arrangement.
Revolving Credit Facility
On October 10, 2014 we entered into an amended and restated
credit agreement (the “Revolving Credit Agreement”). The unsecured
Revolving Credit Agreement provides for a $1.5 billion revolving credit
facility, with an option, subject to certain conditions and limitations, to
increase the aggregate amount of the revolving credit commitments to
$2.25 billion (the “Revolving Credit Facility”). The current termination
date of the Revolving Credit Facility is October 10, 2019.
Revolving loans under the Revolving Credit Facility will bear interest at
a floating rate, which will be a base rate or a Eurocurrency rate equal to
the London interbank offered rate for the relevant interest period, plus,
in each case, an applicable margin, as determined in accordance with
the provisions of the Revolving Credit Agreement. The base rate will
be the highest of: the rate of interest announced publicly by Citibank,
N.A. in New York, New York from time to time as its “base rate”; the
federal funds effective rate plus 1/2 of 1 percent; and the Eurocurrency
rate for a one-month period plus 1 percent. We are also required to pay
a facility fee on the average daily amount (whether used or unused)
at a rate per annum equal to an applicable percentage in effect from
time to time for the facility fee, as determined in accordance with the
provisions of the Revolving Credit Agreement. The initial facility fee is
0.125 percent per annum. The applicable margin and the facility fee are
subject to adjustment as provided in the Revolving Credit Agreement.
The Revolving Credit Agreement contains customary financial and
other covenants, including a maximum leverage ratio and minimum
interest coverage ratio. The financial covenant levels have been amended
in order to permit the debt incurred under the contemplated Term Loan
Facility discussed above along with certain other changes to permit the
Acquisition and the divestiture of our FMC Alkali Chemicals division.
At December 31, 2014, we had total debt of $1,678.6 million as
compared to $1,851.9 million at December 31, 2013. This included
$1,153.4 million and $1,154.1 million of long-term debt (excluding
current portions of $2.0 million and $34.7 million) at December 31, 2014
and 2013, respectively. Our short-term debt, consists of foreign
borrowings and our commercial paper program. Foreign borrowings
increased from $7.1 million at December 31, 2013 to $36.6 million
at December 31, 2014 while outstanding commercial paper decreased
from $656.0 million to $486.6 million at December 31, 2013 and
2014, respectively. Our commercial paper program allows us to borrow
at rates generally more favorable than those available under our credit
facility. At December 31, 2014, the average effective interest rate on
these borrowings was 0.48%.
25
FMC CORPORATION - Form 10-K PART II 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 $418.9 million, $378.8 million and $422.3 million for 2014, 2013 and
2012, respectively.
The table below presents the components of net cash provided by operating activities.
(in Millions)
Income from continuing operations before equity in (earnings) loss of affiliates, interest income
and expense and income taxes
Significant 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 benefit contributions(10)
Cash basis operating income (Non-GAAP)
Net interest payments(11)
Tax payments, net of refunds(12)
Excess tax benefits from share-based compensation(13)
$
$
$
Twelve months ended December 31,
2014
2013
2012
$
$
$
545.4
175.6
721.0
(276.9)
33.1
(21.0)
33.5
11.3
185.7
(9.5)
(17.5)
(68.3)
591.4
(58.8)
(109.0)
(4.7)
418.9
$
$
$
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
$
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 period is driven by revenue increases in all three of our segments as well as due to timing of payments. Trade
receivable increases are primarily driven by sales in Brazil from our FMC Agricultural Solutions segment where terms are significantly longer than the rest of our
business.
$
$
(3) Inventory levels dropped slightly in 2014 as compared to 2013 primarily due to inventory management programs and lower FMC Agricultural Solutions sales in
the fourth quarter. Inventory levels remained fairly consistent from 2012 to 2013 as projected demand in early 2014 was expected to be in-line with the prior year.
(4) The decrease in accounts payable in 2014 is consistent with the slight drop in inventory levels at the end of 2014 as discussed above. The increase in accounts
payable for 2012 and 2013 is primarily due to inventory build at the end of those years to satisfy projected demand for the following year.
(5) These rebates are associated with our FMC Agricultural Solutions segment in North America and Brazil and generally settle in the fourth quarter of each year.
The changes year over year are primarily associated with the mix in sales eligible for rebates and incentives in 2014 compared to 2013 and timing of rebate
payments.
(6) The advance payments from customers represent advances from our FMC Agricultural Solutions segment customers.
(7) Changes in all periods presented primarily represent timing of payments associated with all other operating assets and liabilities, including guarantees issued to
our vendors under our vendor finance program. The change for the twelve months ended December 31, 2014 includes an increase in an accrual of $99.6 million
for the hedge on the acquisition purchase price of Cheminova.
(8) See Note 7 in our consolidated financial statements included in this Form 10-K for further details.
(9) Included in our results for each of the years presented are environmental charges for environmental remediation at our operating sites of $43.7 million,
$6.2 million and $5.8 million. The amounts in 2014 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 $50 million, $40 million and $65 million, respectively. In 2014 the amount also
includes a lump-sum payout of approximately $8.5 million from our nonqualified pension plan.
(11) Interest payments from 2012 to 2013 remained fairly constant. In November 2013 we issued $400 million of Senior Notes at an interest rate of 4.10%. Interest
payments in 2014 increased over the preceding year primarily due to interest payments under the $400 million of Senior Notes as there was no interest payments
under these borrowings in 2013.
(12) The reduction in tax payments from 2013 to 2014 is due to a domestic prepaid tax balance at December 31, 2013 that was applied in first quarter of 2014,
thereby reducing tax payments in 2014.
(13) 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 $45.2 million, $50.1 million and
$62.6 million for 2014, 2013 and 2012, respectively.
The decrease in cash required by operating activities of discontinued operations in 2014 is due to reduced net spending associated with discontinued
environmental remediation sites. This reduced spending was slightly offset by increased spending associated with our other discontinued reserve
which primarily includes retained legal obligations.
The decrease from 2012 to 2013 is primarily due to reduced spending associated with our discontinued restructuring activities.
26
FMC CORPORATION - Form 10-K PART II Part II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Cash required by investing activities was $233.7 million,
$628.5 million and $363.6 million for 2014, 2013 and
2012, respectively.
The decrease in spending in 2014, as compared to 2013 was primarily
due to the Epax acquisition that was completed in third quarter 2013.
The 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.
Cash provided (required) by investing activities of
discontinued operations was $198.5 million, $(24.7) million
and $(30.0) million for 2014, 2013 and 2012, respectively.
Cash provided by investing activities of discontinued operations in
2014 is directly associated with the sale of our FMC Peroxygens
business which was completed on February 28, 2014. Cash required
by investing activities of discontinued operations in 2013 and 2012
represents capital expenditures for our discontinued FMC Peroxygens
business. For more information, see Note 9 in our consolidated financial
statements included in this Form 10-K.
Cash provided (required) by financing activities was
$(350.0) million, $371.2 million and $(48.2) million
in 2014, 2013 and 2012, respectively.
2014 vs. 2013
The change period over period in financing activities is primarily
due to significantly less short-term borrowings in 2014 compared to
borrowings in 2013. In 2013, increased borrowings were approximately
$889 million compared to repayments in 2014 of $171 million.
Additionally during the year ended 2013 we paid approximately
$367 million in share repurchases and $90 million to noncontrolling
interests (primarily to acquire additional ownership in our FMC
Alkali Chemicals division) compared to approximately $103 million
in combined payments in 2014.
2013 vs. 2012
The change in financing 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. These borrowings were partially
offset 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.
Other potential liquidity needs
See the preceding Liquidity and Capital Resources section for the
discussion of the financing facilities associated with the Cheminova
acquisition along with the signed definitive agreement to sell the FMC
Alkali Chemicals division for $1.64 billion.
Our cash needs for 2015, outside of the Cheminova acquisition and
related integration expenses, 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, 2014 our remaining borrowing capacity under our
credit facility was $924.0 million (which reflects borrowings under
our commercial paper program).
Projected 2015 capital expenditures as well as expenditures related to
contract manufacturers are expected to be lower than 2014 levels. This
excludes spending on the FMC Alkali Chemicals division and includes
expected spending for Cheminova subsequent to the acquisition.
Projected 2015 spending includes approximately $65 million of net
environmental remediation spending. This spending does not include
expected spending on capital projects relating to environmental control
facilities or expected spending 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 from $1,192.9 million at
December 31, 2013 to $1,255.1 million at December 31, 2014 due
primarily to additional contributions in 2014 as well as stock market
performance. Our U.S. Pension Plan assets comprise approximately
93 percent of our total plan assets with the difference representing plan
assets related to foreign pension plans. See Note 13 to the consolidated
financial statements included within this Form 10-K for details on
how we develop our long-term rate of return assumptions. We made
contributions of $50 million and $40 million in 2014 and 2013,
respectively, and intend to contribute $65 million in 2015. Our
contributions in 2013, 2014 and our intended contribution in 2015
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 the additional
contribution in 2015 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.
During the year ended December 31, 2014, we did not repurchase
any shares under the publicly announced repurchase program. At
December 31, 2014, $250 million remained unused under our Board-
authorized repurchase program. This repurchase program does not include
a specific 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. We also reacquire
shares from time to time from employees in connections with vesting,
exercise and forfeiture of awards under our equity compensation plans.
Dividends
On January 15, 2015, we paid dividends aggregating $20.1 million to
our shareholders of record as of December 31, 2014. This amount is
included in “Accrued and other liabilities” on the consolidated balance
sheets as of December 31, 2014. For the years ended December 31,
2014, 2013 and 2012, we paid $78.1 million, $73.6 million and
$47.8 million in dividends, respectively.
27
FMC CORPORATION - Form 10-K PART II Part II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Commitments
We provide guarantees to financial institutions on behalf of certain
FMC Agricultural Solutions customers, principally Brazilian customers,
for their seasonal borrowing. The total of these guarantees was
$118.4 million at December 31, 2014. These guarantees arise during
the ordinary course of business from relationships with customers and
nonconsolidated affiliates. Non-performance by the guaranteed party
triggers the obligation requiring us to make payments to the beneficiary
of the guarantee. Based on our experience these types guarantees have
not had a material effect on our consolidated financial position or on
our liquidity. Our expectation is that future payment or performance
related to the non-performance of others is considered unlikely.
Short-term debt consisted of foreign credit lines and commercial paper at
December 31, 2014, and 2013. 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 indemnification obligations
with respect to these liabilities may be indefinite 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 specific liabilities for these guarantees.
Our total significant committed contracts that we believe will affect cash over the next four years and beyond are as follows:
Expected Cash Payments by Year
$
2017
2016
2015
2.4 $
2.0 $
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 $1.9 million of long-term debt subject to variable interest
rates at December 31, 2014. The rate assumed for the variable interest component of the contractual interest obligation was the rate in effect at December 31,
2014. Variable rates are determined by the market and will fluctuate over time.
1,147.9 $
284.8
21.9
30.6
—
24.3
1,509.5 $
Total
1,157.5
504.0
83.9
51.0
92.5
103.8
1,992.7
2.6 $
53.6
12.8
5.1
—
8.0
82.1 $
2.6 $
53.5
8.8
5.1
—
4.0
74.0 $
56.0
17.1
5.1
—
21.9
102.5 $
56.1
23.3
5.1
92.5
45.6
224.6 $
2019
& beyond
2018
$
(3) Before sub-lease rental income.
(4) Obligations associated with our Ewing, NJ and Shanghai, China research and technology centers.
(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, 2014, the liability for uncertain tax positions was $47.1 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 18 to our consolidated financial 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 FMC Alkali Chemicals
division, which we expect to sell in early 2015, mines and refines trona ore
into soda ash and related products at our Westvaco and Granger facilities
near Green River, Wyoming. This activity constitutes most of FMC’s
greenhouse gas emissions globally. In 2014, we reported approximately
2.4 million metric tons of direct emissions from the Green River operations
for 2013 as part of the EPA Greenhouse gas reporting program. Also in
2014, our FMC Alkali Chemicals division received a permit to increase
the amount of greenhouse gases emitted from its facility near Granger.
A significant source of greenhouse gas emissions at the Green River
operations are emissions from the beneficiation of trona ore. That is, a
significant portion of the greenhouse gases released during the mining
and refining of soda ash occurs naturally in the trona ore feedstock.
Unlike the situation with energy efficiency, where efficiencies 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 refining 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
28
FMC CORPORATION - Form 10-K PART II Part II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
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. The soda ash industry has an interest
in assuring that climate change legislation or regulation recognizes the
benefits 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. These
could make it more difficult 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 2014, two U.S. plants in our FMC 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.
At this point our other 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 financial statements included
in this Form 10-K.
Off-Balance Sheet Arrangements
See Note 18 to our consolidated financial statements included in this
Form 10-K and Part I, Item 3 - Legal Proceedings for further information
regarding any off-balance sheet arrangements.
Fair Value Measurements
See Note 17 to our consolidated financial statements included in
this Form 10-K for additional discussion surrounding our fair value
measurements.
Critical Accounting Policies
Our consolidated financial statements are prepared in conformity
with U.S. generally accepted accounting principles (U.S. GAAP) .
The preparation of these financial statements requires us to make
estimates and judgments that affect 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 financial 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 financial 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 financial 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 sufficient to estimate the amount of liability, that estimate
has been used. Where the information is only sufficient to establish a
range of probable liability and no point within the range is more likely
than any other, the lower end of the range has been used.
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 financial and legal management and, if
necessary, adjusted as additional information becomes available. The
estimates can change substantially as additional information becomes
available regarding the nature or extent of site contamination, required
remediation methods, and other actions by 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 firms and
consultants for work related to the environmental effort, and future
monitoring costs. Estimated site liabilities are determined based upon
existing remediation laws and technologies, specific 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 significant 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.
29
FMC CORPORATION - Form 10-K PART II Part II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Provisions for environmental costs are reflected in income, net of
probable and estimable recoveries from named Potentially Responsible
Parties (“PRPs”) or other third parties. Such provisions incorporate
inflation 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 financial condition of the other PRPs at
each site to the extent possible. We have also considered the identity
and financial 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 reflect 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 offset 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 financial statements included in this
Form 10-K for changes in estimates associated with our environmental
obligations.
Impairments and valuation of long-lived assets
Our long-lived assets primarily include property, plant and equipment,
goodwill and intangible assets. The assets and liabilities of acquired
businesses are measured at their estimated fair values at the dates of
acquisition. The excess of the purchase price over the estimated fair value
of the net assets acquired, including identified intangibles, is recorded
as goodwill. The 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. The 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 flows
expected to result from their use and eventual disposition. In cases where
the estimated undiscounted expected future cash flows 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 flows at the lowest level determinable.
The estimated cash flows reflect 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 indefinite-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 financial
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
2014, we determined that no impairment charge to our continuing
operations was required.
See Note 7 to our consolidated financial 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 benefits
We provide qualified and nonqualified defined benefit and defined
contribution pension plans, as well as postretirement health care and life
insurance benefit plans to our employees and retirees. The costs (benefits)
and obligations related to these benefits reflect 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. The costs (benefits)
and obligations for these benefit programs are also affected by other
assumptions, such as average retirement age, mortality, employee turnover,
and plan participation. To the extent our plans’ actual experience, as
influenced by changing economic and financial market conditions or by
changes to our own plans’ demographics, differs from these assumptions,
the costs and obligations for providing these benefits, as well as the
plans’ funding requirements, could increase or decrease. When actual
results differ from our assumptions, the difference is typically recognized
over future periods. In addition, the unrealized gains and losses related
to our pension and postretirement benefit obligations may also affect
periodic benefit costs (benefits) in future periods.
In 2014, the Society of Actuaries released new mortality tables and a
mortality improvement scale for measurement of retirement program
obligations. We adopted these new tables in measuring the December 31,
2014 U.S. defined benefit and post retirement obligations. This
adoption has increased the benefit obligations at December 31, 2014
by approximately $95 million. The effect of this adoption will be
amortized into net periodic benefit cost beginning in 2015.
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. The expected rate of return on plan assets is based on
a market-related value of assets that recognizes investment gains and
losses over a five-year period. We use an actuarial value of assets to
determine our plans’ funding requirements. The 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, 2014, we placed particular emphasis
on a discount rate yield-curve provided by our actuary. This yield-
curve when populated with projected cash flows that represented the
expected timing and amount of our plans’ benefit payments, produced
a single effective interest discount rate of 4.15 percent, which was used
to measure the plan’s liabilities.
The discount rates used at our December 31, 2014 and 2013 measurement
dates were 4.15 percent and 4.95 percent, respectively. The effect of
the change in the discount rate from 4.95 percent to 4.15 percent
at December 31, 2014 resulted in a $143.2 million increase to our
pension and other postretirement benefit obligations. The effect of the
change in the discount rate from 4.15 percent at December 31, 2012 to
30
FMC CORPORATION - Form 10-K PART II Part II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
4.95 percent at December 31, 2013 resulted in a $8.8 million decrease
to 2014 pension and other postretirement benefit expense.
The change in discount rate from 4.95 percent at December 31, 2013
to 4.15 percent at December 31, 2014 was attributable to a decrease in
yields on high quality corporate bonds with cash flows matching the
timing and amount of our expected future benefit payments between
the 2013 and 2014 measurement dates. Using the December 31, 2013
yield curve, our plan cash flows produced a single weighted-average
discount rate of approximately 4.95 percent. Matching our plan cash
flows to a similarly constructed curve reflecting high-yielding bonds
available as of December 31, 2014, resulted in a single weighted-average
discount rate of approximately 4.15 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,
inflation 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 10.3 percent over the last 20 years (which is
in excess of comparable market indices for the same period) as well
as other factors which are discussed in Note 13 to our consolidated
financial statements in this Form 10-K. Our long-term rate of return for
the years ended December 31, 2014, 2013 and 2012 was 7.75 percent.
For the sensitivity of our pension costs to incremental changes in
assumptions see our discussion below.
Sensitivity analysis related to key pension and
postretirement benefit assumptions.
A one-half percent increase in the assumed discount rate would have
decreased pension and other postretirement benefit obligations by
$89.6 million and $67.2 million at December 31, 2014 and 2013,
respectively, and decreased pension and other postretirement benefit
costs by $6.9 million, $5.8 million and $8.2 million for 2014, 2013 and
2012, respectively. A one-half percent decrease in the assumed discount
rate would have increased pension and other postretirement benefit
obligations by $99.4 million, $73.9 million at December 31, 2014
and 2013, respectively, and increased pension and other postretirement
benefit net periodic benefit cost by $7.5 million, $6.2 million and
$8.4 million for 2014, 2013 and 2012, respectively.
A one-half percent increase in the assumed expected long-term rate of
return on plan assets would have decreased pension costs by $5.2 million,
$4.8 million and $4.7 million for 2014, 2013 and 2012, respectively.
A one-half percent decrease in the assumed long-term rate of return
on plan assets would have increased pension costs by $5.2 million,
$4.8 million and $4.7 million for 2014, 2013 and 2012, respectively.
Further details on our pension and other postretirement benefit
obligations and net periodic benefit costs (benefits) are found in
Note 13 to our consolidated financial 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 file income tax returns in the U.S. federal jurisdiction
and various state and foreign jurisdictions. The income tax returns for
FMC entities taxable in the U.S. and significant 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 benefit will be sustained, we have recorded
the largest amount of tax benefit 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 financial statements included in this
Form 10-K for additional discussion surrounding income taxes.
31
FMC CORPORATION - Form 10-K PART II Part II
ITEM 7A Quantitative and Qualitative Disclosures About Market Risk
ITEM 7A Quantitative and Qualitative Disclosures
About Market Risk
Our earnings, cash flows and financial position are exposed to market risks
relating to fluctuations in commodity prices, interest rates and foreign
currency exchange rates. Our policy is to minimize exposure to our cash
flow 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 financial institutions.
The analysis below presents the sensitivity of the market value of our
financial instruments to selected changes in market rates and prices. The
range of changes chosen reflects 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 flows considering the market
rates and prices chosen.
At December 31, 2014, our net financial instrument position was a net
liability of $92.5 million compared to a net liability of $6.4 million at
December 31, 2013. The change in the net financial instrument position
was primarily due to higher unrealized losses in our commodity and
foreign exchange portfolios.
Since our risk management programs are generally highly effective, the
potential loss in value for each risk management portfolio described
below would be largely offset by changes in the value of the underlying
exposure.
Commodity Price Risk
Energy costs are diversified 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
fixed-price contracts for the purchase of coal and fuel oil. To analyze
the effect 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, 2014 and
2013, with all other variables (including interest rates) held constant.
(in Millions)
Net asset/(liability) position at December 31, 2014
Net asset/(liability) position at December 31, 2013
Hedged energy exposure vs.
Energy market pricing
Net Asset/(Liability)
Position on Consolidated
Balance Sheets
(7.3)
0.1
$
$
Net Asset/(Liability)
Position with
10% Increase
(5.3)
3.0
$
$
Net Asset/(Liability)
Position with
10% Decrease
(9.4)
$
(2.7)
$
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 offsetting derivatives to hedge our exposure.
As of December 31, 2014 and 2013 our net financial instrument position was immaterial.
Foreign Currency Exchange Rate Risk
The primary currencies for which we have exchange rate exposure are
the U.S. dollar versus the euro, the Chinese yuan, the Brazilian real
and 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 firm and highly anticipated foreign currency
cash flows.
To analyze the effects 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, 2014 and 2013, with all other variables (including
interest rates) held constant.
(in Millions)
Net asset/(liability) position at December 31, 2014(1)
Net asset/(liability) position at December 31, 2013
(1) Includes the unrealized loss on hedging the purchase price of Cheminova.
Hedged Currency vs.
Functional Currency
Net Asset/(Liability)
Position on Consolidated
Balance Sheets
(85.2)
(6.5)
$
$
Net Asset/(Liability)
Position with
10% Strengthening
91.3
9.1
$
$
Net Asset / (Liability)
Position with
10% Weakening
(261.0)
(21.0)
$
$
32
FMC CORPORATION - Form 10-K PART II 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 specified intervals, the difference between fixed
and variable interest amounts calculated on an agreed-upon notional
principal amount. As of December 31, 2014 and 2013, we had no
interest rate swap agreements.
Our debt portfolio, at December 31, 2014, is composed of 70 percent
fixed-rate debt and 30 percent variable-rate debt. The 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 affect different
portions of our variable-rate debt portfolio in different ways.
Based on the variable-rate debt in our debt portfolio at December 31, 2014,
a one percentage point increase in interest rates would have increased
gross interest expense by $5.1 million and a one percentage point
decrease in interest rates would have decreased gross interest expense
by $2.5 million for the year ended December 31, 2014.
ITEM 8 Financial Statements and Supplementary Data
Item 8 Financial Statements and Supplemental Data
Consolidated Statements of Income for the years ended December 31, 2014, 2013 and 2012
Consolidated Statements of Comprehensive income for the years ended December 31, 2014, 2013 and 2012
Consolidated Balance Sheets as of December 31, 2014 and 2013
Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2013 and 2012
Consolidated Statements of Changes in Equity for the years ended December 31, 2014, 2013 and 2012
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
Management’s Annual Report on Internal Control Over Financial Reporting
Report of Independent Registered Public Accounting Firm
Schedule II- Valuation and Qualifying Accounts and Reserves for Years Ended December 31, 2014, 2013 and 2012
Page
33
34
35
36
37
39
40
82
83
84
85
33
FMC CORPORATION - Form 10-K
PART II 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)
Business separation costs
Total costs and expenses
Income from continuing operations before equity in (earnings) loss of affiliates, interest
income and expense and income taxes
Equity in (earnings) loss of affiliates
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 Part II31,
2014
4,037.7
$
2013
3,874.8
$
2,662.7
1,375.0
621.2
128.3
56.5
23.6
3,492.3
545.4
0.9
(0.2)
59.7
485.0
73.5
411.5
(89.4)
322.1
14.6
307.5
396.9
(89.4)
307.5
2.97
(0.67)
2.30
2.96
(0.67)
2.29
$
$
$
$
$
$
$
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
$
$
$
$
$
$
$
2012
3,409.9
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
34
FMC CORPORATION - Form 10-K PART II 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 adjustments:
Foreign currency translation gain (loss) arising during the period
Reclassification of foreign currency translations losses
Total foreign currency translation adjustments(1)
Derivative instruments:
Unrealized hedging gains (losses) and other, net of tax of ($0.8), ($2.1) and ($0.1)
Reclassification of deferred hedging (gains) losses and other, included in net income,
net of tax of ($0.6), $0.1 and $3.0
Total derivative instruments, net of tax of ($1.4), ($2.0) and $2.9
Pension and other postretirement benefits:
Unrealized actuarial gains (losses) and prior service (costs) credits, net of tax of $70.9,
$103.9 and ($30.8)(2)
Reclassification of net actuarial and other (gain) loss, amortization of prior service costs
and settlement charges, included in net income, net of tax of $12.9, $21.8 and $18.4(3)
Total pension and other postretirement benefits, net of tax of $83.8, $125.7 and ($12.4)
Other comprehensive income (loss), net of tax
Comprehensive income
Less: Comprehensive income attributable to the noncontrolling interest
$
$
Year Ended December Part II31,
2014
322.1
$
2013
308.0
$
(76.5)
49.6
(26.9)
3.1
(0.9)
2.2
0.1
—
0.1
(4.9)
0.3
(4.6)
2012
435.7
2.5
—
2.5
(0.2)
5.9
5.7
(173.3)
174.0
(57.3)
22.3
(151.0)
(175.7)
146.4
12.8
133.6
$
$
35.9
209.9
205.4
513.4
12.5
500.9
30.4
(26.9)
(18.7)
417.0
19.7
397.3
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. The amount for the twelve month ended December 31, 2014 includes reclassification to net income due to the
divestiture of our FMC Peroxygens business. See Note 9 within these consolidated financial statements for more informations.
$
$
$
(2) At December 31st of each year, we remeasure our pension and postretirement plan obligations at which time we record any actuarial gains (losses) and prior
service (costs) credits to other comprehensive income.
(3) For more detail on the components of these reclassifications and the affected line item in the Consolidated Statements of Income see Note 15 within these
consolidated financial statements.
The accompanying notes are an integral part of these condensed consolidated financial statements.
35
FMC CORPORATION - Form 10-K
PART II 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 $37.6 in 2014 and $30.2 in 2013
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
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 financing
Accrued pension and other postretirement benefits, 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 benefits, long-term
Environmental liabilities, continuing and discontinued
Deferred income taxes
Other long-term liabilities
Commitments and contingent liabilities (Note 18)
Equity
Preferred stock, no par value, authorized 5,000,000 shares; no shares issued in 2014 or 2013
Common stock, $0.10 par value, authorized 260,000,000 shares in 2014 and 2013; 185,983,792 issued
shares in 2014 and 2013
Capital in excess of par value of common stock
Retained earnings
Accumulated other comprehensive income (loss)
Treasury stock, common, at cost: 52,666,121 shares in 2014 and 53,098,103 shares in 2013
Total FMC stockholders’ equity
Noncontrolling interests
Total equity
TOTAL LIABILITIES AND EQUITY
The accompanying notes are an integral part of these consolidated financial statements.
36
December Part II31,
2014
2013
$
109.5
1,751.0
636.5
214.7
222.7
—
2,934.4
25.1
1,308.5
352.5
246.9
273.0
200.1
5,340.5
$
$
$
525.2
433.5
190.2
438.8
237.6
50.2
12.7
22.2
—
1,910.4
1,153.4
238.7
209.9
51.3
212.8
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
—
—
18.6
401.9
2,984.5
(375.8)
(1,498.7)
1,530.5
33.5
1,564.0
5,340.5
$
$
18.6
448.3
2,757.3
(201.9)
(1,502.5)
1,519.8
52.3
1,572.1
5,235.2
$
$
$
$
$
$
FMC CORPORATION - Form 10-K
PART II 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 affiliates
Restructuring and other charges (income)
Deferred income taxes
Pension and other postretirement benefits
Share-based compensation
Excess tax benefits from share-based compensation
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:
Trade receivables, net
Guarantees of vendor financing
Inventories
Accounts payable
Advance payments from customers
Accrued customer rebates
Income taxes
Pension and other postretirement benefit contributions
Environmental spending, continuing, net of recoveries
Restructuring and other spending
Change in other operating assets and liabilities, net(1)
Cash provided (required) by operating activities of continuing operations
Cash provided (required) by operating activities of discontinued operations:
Year Ended December Part II31,
$
$
2014
322.1
89.4
411.5
131.2
0.9
56.5
(61.0)
29.6
14.8
(4.7)
(276.9)
22.3
33.1
(21.0)
11.3
33.5
19.1
(68.3)
(17.5)
(9.5)
114.0
418.9
$
$
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
40.4
35.9
63.8
(20.2)
(68.0)
(7.8)
(7.3)
2.7
378.8
Environmental spending, discontinued, net of recoveries
Other activities of discontinued operations held for sale
Payments of other discontinued reserves, net of recoveries
(31.0)
(0.4)
(18.7)
Cash provided (required) by operating activities of discontinued operations
(50.1)
(1) Includes an accrual of $99.6 million for the hedge on the acquisition purchase price of Cheminova for the year ended December 31, 2014.
The accompanying notes are an integral part of these consolidated financial statements.
(9.8)
(1.2)
(34.2)
(45.2)
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)
51.4
64.0
27.2
33.9
(77.5)
(7.1)
(0.9)
(21.3)
422.3
(23.3)
2.8
(42.1)
(62.6)
37
FMC CORPORATION - Form 10-K PART II 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 affiliates
Proceeds of sale of investment
Other investing activities
Cash provided (required) by investing activities of continuing operations
Cash provided (required) by investing activities of discontinued operations:
Proceeds from FMC Peroxygens divestiture
Other discontinued investing activities
Cash provided (required) by investing activities of discontinued operations
Cash provided (required) by financing 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(2)
Issuances of common stock, net
Excess tax benefits from share-based compensation
Contingent consideration paid
Repurchases of common stock under publicly announced program
Other repurchases of common stock
Cash provided (required) by financing activities
Effect 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
(2) See Note 15 regarding quarterly cash dividend.
Year Ended December Part II31,
2014
2013
(224.7) $
0.3
—
(1.1)
27.5
(35.7)
(233.7)
(221.9) $
2.2
(339.6)
(6.4)
—
(62.8)
(628.5)
199.1
(0.6)
198.5
—
(139.6)
3.0
(10.6)
(34.6)
(95.7)
(3.0)
(78.1)
8.6
4.7
—
—
(4.7)
(350.0)
(2.2)
(13.7)
123.2
109.5
$
—
(24.7)
(24.7)
(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
$
$
$
2012
(177.3)
2.8
(142.8)
(13.9)
—
(32.4)
(363.6)
—
(30.0)
(30.0 )
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
Cash paid for interest, net of capitalized interest was $58.8 million, $39.4 million and $36.2 million, and income taxes paid, net of refunds was
$109.0 million, $153.3 million and $59.0 million in December 31, 2014, 2013 and 2012, respectively. Accrued additions to property, plant
and equipment at December 31, 2014 and 2013 were $39.3 million and $53.5 million, respectively.
The accompanying notes are an integral part of these consolidated financial statements.
38
FMC CORPORATION - Form 10-K PART II Part II
ITEM 8 Financial Statements and Supplementary Data
FMC Corporation
Consolidated Statements of Changes in Equity
FMC Stockholders’
(in Millions, Except Per Share Data)
Balance December 31, 2011
Net income
Stock compensation plans
Excess tax benefits from share-based compensation
Shares for benefit plan trust
Net pension and other benefit 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(1)
Distributions to noncontrolling interests
Balance December 31, 2012
Net income
Stock compensation plans
Excess tax benefits from share-based compensation
Shares for benefit plan trust
Net pension and other benefit 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
Common
Stock,
$0.10 Par
Value
18.6
$
Capital
In Excess
of Par
454.5
$
Retained
Earnings
$ 2,176.2
416.2
17.7
9.7
Accumulated
Other
Comprehensive
Income (Loss)
$
Treasury
Stock
(390.0) $ (1,018.7) $
Non-
controlling
Interest
63.5
19.5
(26.9)
5.7
2.3
(55.9)
17.6
2.3
(149.0)
$
18.6
$
481.9
$ 2,536.5
293.9
$
(408.9) $ (1,147.8) $
209.9
(4.6)
1.7
(73.1)
11.6
0.7
(367.0)
14.5
7.1
(55.2)
$
$
18.6
448.3
16.0
4.7
Balance December 31, 2013
Net income
Stock compensation plans
Excess tax benefits from share-based compensation
Shares for benefit plan trust
Net pension and other benefit 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 ($0.60 per share)
Repurchases of common stock
Noncontrolling interests associated with an
acquisition(1)
Distributions to noncontrolling interests
BALANCE DECEMBER 31, 2014
(1) See Note 15 for more detail.
The accompanying notes are an integral part of these consolidated financial statements.
(67.1)
401.9
18.6
$
$
$ 2,757.3
307.5
$
(201.9) $ (1,502.5) $
(151.0)
2.2
(25.1)
(80.3)
7.6
0.9
(4.7)
Total
Equity
$ 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)
(80.0)
(9.9)
$ 1,572.1
322.1
23.6
4.7
0.9
(151.0)
2.2
(26.9)
(80.3)
(4.7)
0.2
6.7
(15.4)
74.5
14.1
(1.6)
(24.8)
(9.9)
52.3
14.6
(1.8)
$ 2,984.5
$
(375.8) $ (1,498.7) $
(28.6)
(3.0)
33.5
(95.7)
(3.0)
$ 1,564.0
39
FMC CORPORATION - Form 10-K PART II Part II
ITEM 8 Financial Statements and Supplementary Data
FMC Corporation
Notes to Consolidated Financial Statements
Principal Accounting Policies and Related Financial Information ................................................................................................................................................................41
Note 1
Note 2 Recently Issued and Adopted Accounting Pronouncements and Regulatory Items .............................................................................................................45
Note 3
Acquisitions .................................................................................................................................................................................................................................................................................................................................46
Note 4 Goodwill and Intangible Assets ......................................................................................................................................................................................................................................................................48
Inventories.....................................................................................................................................................................................................................................................................................................................................49
Note 5
Note 6
Property, Plant and Equipment ......................................................................................................................................................................................................................................................................49
Note 7 Restructuring and Other Charges (Income) .................................................................................................................................................................................................................................49
Asset Retirement Obligations ............................................................................................................................................................................................................................................................................51
Note 8
Note 9 Discontinued Operations ........................................................................................................................................................................................................................................................................................51
Note 10 Environmental Obligations ..................................................................................................................................................................................................................................................................................53
Income Taxes .............................................................................................................................................................................................................................................................................................................................56
Note 11
Note 12 Debt .......................................................................................................................................................................................................................................................................................................................................................58
Note 13 Pension and Other Postretirement Benefits ..................................................................................................................................................................................................................................60
Note 14 Share-based Compensation ...................................................................................................................................................................................................................................................................................64
Note 15 Equity...................................................................................................................................................................................................................................................................................................................................................66
Note 16 Earnings Per Share .............................................................................................................................................................................................................................................................................................................68
Note 17 Financial Instruments, Risk Management and Fair Value Measurements ..........................................................................................................................................69
Note 18 Guarantees, Commitments and Contingencies .......................................................................................................................................................................................................................74
Note 19 Segment Information ....................................................................................................................................................................................................................................................................................................76
Note 20 Supplemental Information .....................................................................................................................................................................................................................................................................................79
Note 21 Quarterly Financial Information (Unaudited) ...........................................................................................................................................................................................................................80
Note 22 Subsequent Event ................................................................................................................................................................................................................................................................................................................81
40
FMC CORPORATION - Form 10-K PART II Part II
ITEM 8 Financial Statements and Supplementary Data
NOTE 1 Principal Accounting Policies and Related Financial Information
Nature of Operations
We are a diversified 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. These 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,
pharmaceutical ingredients, 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. Some of our products
are increasingly being used as active ingredients in nutraceutical and
pharmaceutical markets. Our FMC Minerals segment manufactures
a wide range of inorganic materials, that are produced from two key
minerals: Trona (soda ash) and lithium. See Note 22 for the subsequent
event related to our FMC Minerals segment.
Basis of Consolidation and Basis of Presentation
The accompanying consolidated financial statements of FMC Corporation
and its subsidiaries were prepared in accordance with accounting
principles generally accepted in the United States of America. Our
consolidated financial statements include the accounts of FMC and all
entities that we directly or indirectly control. All significant intercompany
accounts and transactions are eliminated in consolidation.
Estimates and Assumptions
In preparing the financial statements in conformity with U.S. generally
accepted accounting principles (“GAAP”) we are required to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosures of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenue
and expenses during the reporting period. Actual results are likely to
differ from those estimates, but we do not believe such differences will
materially affect our financial position, results of operations or cash flows.
Cash Equivalents
We consider investments in all liquid debt instruments with original
maturities of 3 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. The 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
specific allowances for customers where the risk of collection has been
reasonably identified 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. The allowance for trade receivable is
$37.6 million and $30.2 million as of December 31, 2014 and 2013,
respectively. The provision to the allowance for trade receivables charged
against operations was $9.4 million, $5.7 million and $8.8 million
for the years ended December 31, 2014, 2013 and 2012, respectively.
Investments
Investments in companies in which our ownership interest is 50 percent
or less and in which we exercise significant influence over operating and
financial 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 significant to our financial 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, first-out (“LIFO”) basis and our remaining inventories are
recorded on a first-in, first-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 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 reflected 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 $10.2 million in 2014, $5.7 million in
2013 and $7.2 million in 2012. These 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.
41
FMC CORPORATION - Form 10-K PART II Part II
ITEM 8 Financial Statements and Supplementary Data
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
flows expected to result from its use and eventual disposition. In cases
where undiscounted expected future cash flows 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.
The 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. This 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. The 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.
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 20 for the unamortized computer software balances.
Goodwill and Intangible Assets
Goodwill and other indefinite 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 indefinite 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 indefinite life intangible impairments to continuing operations in
2014, 2013 and 2012. Based upon our annual impairment assessment,
conducted in 2014, 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, brands, registration rights, industry licenses,
developed formulations and other intangibles and are being amortized
over periods of five 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. This 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 fixed 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. These
advance payments are recorded as deferred revenue and classified 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. Amounts billed for sales and use taxes, value-added
taxes, and certain excise and other specific transactional taxes imposed
on revenue-producing transactions are presented on a net basis and
excluded from sales in the consolidated income statements. We record
a liability until remitted to the respective taxing authority.
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 financial
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 differences 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 consolidated foreign subsidiaries as it is our
intention that such earnings will remain invested in those companies.
42
FMC CORPORATION - Form 10-K PART II Part II
ITEM 8 Financial Statements and Supplementary Data
Foreign Currency
Segment Information
We translate the assets and liabilities of our foreign operations at exchange
rates in effect 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. The 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. These remeasurement
gains and losses are recorded in the income statement as they occur.
We generally enter into foreign currency contracts to mitigate the
financial risk associated with these transactions. See “Derivative financial
instruments” below and Note 17.
Derivative Financial Instruments
We mitigate certain financial exposures, including currency risk,
interest rate risk and commodity price exposures, through a controlled
program of risk management that includes the use of derivative financial
instruments. We enter into foreign exchange contracts, including forward
and purchased option contracts, to reduce the effects of fluctuating
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 flows to be
received or paid related to a forecasted transaction (cash flow hedge)
or a hedge of the fair value of a recognized asset or liability or of an
unrecognized firm 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 flow hedge. We then reclassify these amounts into
earnings as the underlying hedged item affects earnings. We record
immediately in earnings changes in the fair value of derivatives that
are not designated as cash flow 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. This process includes
relating derivatives that are designated as fair value or cash flow hedges
to specific assets and liabilities on the balance sheet or to specific firm
commitments or forecasted transactions. We also formally assess,
both at the inception of the hedge and throughout its term, whether
each derivative is highly effective in offsetting changes in fair value
or cash flows of the hedged item. If we determine that a derivative is
not highly effective as a hedge, or if a derivative ceases to be a highly
effective 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 benefit plans or issued for option exercises, we use a first-in,
first-out (“FIFO”) method for determining cost. The difference between
the cost of the shares and the market price at the time of contribution
to an employee benefit plan is added to or deducted from the related
capital in excess of par value of common stock.
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 identified FMC Agricultural Solutions, FMC Health and
Nutrition and FMC Minerals as our reportable segments. Segment
disclosures are included in Note 19. Segment operating profit is
defined 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 profit:
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 specific segment, such as capitalized interest.
Segment liabilities exclude substantially all debt, income taxes, pension
and other postretirement benefit liabilities, environmental reserves and
related recoveries, restructuring reserves, 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 19.
Stock Compensation Plans
We recognize compensation expense in the financial 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 sufficient to estimate the amount of liability, that estimate
has been used. Where the information is only sufficient to establish a
range of probable liability and no point within the range is more likely
than any other, the lower end of the range has been used.
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
43
FMC CORPORATION - Form 10-K PART II Part II
ITEM 8 Financial Statements and Supplementary Data
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. The estimates can change
substantially as additional information becomes available regarding
the nature or extent of site contamination, required remediation
methods, and other actions by 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 firms and
consultants for work related to the environmental effort, and future
monitoring costs. Estimated site liabilities are determined based upon
existing remediation laws and technologies, specific 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 significant 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 reflected in income, net of
probable and estimable recoveries from named Potentially Responsible
Parties (“PRPs”) or other third parties. Such provisions incorporate
inflation 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 financial condition of the other PRPs
at each site to the extent possible. We have also considered the identity
and financial 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 offset 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 Benefits
We provide qualified and nonqualified defined benefit and defined
contribution pension plans, as well as postretirement health care
and life insurance benefit plans to our employees and retirees. The
costs (or benefits) and obligations related to these benefits reflect 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. The
costs (or benefits) and obligations for these benefit programs are also
affected by other assumptions, such as average retirement age, mortality,
employee turnover, and plan participation. To the extent our plans’
actual experience, as influenced by changing economic and financial
market conditions or by changes to our own plans’ demographics,
differs from these assumptions, the costs and obligations for providing
these benefits, as well as the plans’ funding requirements, could increase
or decrease. When actual results differ from our assumptions, the
difference is typically recognized over future periods. In addition, the
unrealized gains and losses related to our pension and postretirement
benefit obligations may also affect periodic benefit costs (or benefits)
in future periods. See Note 13 for additional information relating to
pension and other postretirement benefits.
Reclassifications
Certain prior year amounts have been reclassified to conform with
current year’s presentation.
44
FMC CORPORATION - Form 10-K PART II Part II
ITEM 8 Financial Statements and Supplementary Data
NOTE 2 Recently Issued and Adopted Accounting Pronouncements and Regulatory Items
New Accounting Guidance and Regulatory Items
In February 2015, the Financial Accounting Standards Board (“FASB”)
issued ASU 2015-02, Consolidation: Amendments to the Consolidation
Analysis. This new standard changes the consolidation evaluation for
entities that are required to evaluate whether they should consolidate
certain legal entities. We are required to adopt this standard in the
first quarter of 2016. Early adoption is permitted. The standard
permits the use of a modified retrospective approach by recording a
cumulative-effect adjustment to equity as of the beginning of the fiscal
year of adoption, or a reporting entity may also apply the amendments
retrospectively. We are evaluating the effect that ASU 2015-02 will have
on our consolidated financial statements. We have not yet completed
the assessment to determine the effect of the standard on our ongoing
financial reporting.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts
with Customers, which requires an entity to recognize the amount of
revenue to which it expects to be entitled for the transfer of promised
goods or services to customers. This new guidance will replace most
existing revenue recognition guidance in U.S. GAAP when it becomes
effective. We are required to adopt this standard on January 1, 2017.
Early application is not permitted. The standard permits the use of
either the retrospective or cumulative effect transition method. We are
evaluating the effect that ASU 2014-09 will have on our consolidated
financial statements and related disclosures. We have not yet selected
a transition method nor have we determined the effect of the standard
on our ongoing financial reporting.
In April 2014, the FASB issued its updated guidance on the financial
reporting of discontinued operations. This new standard changes the
criteria for reporting discontinued operations while enhancing disclosures
in this area. Under the new guidance, only disposals representing
a strategic shift in operations should be presented as discontinued
operations. Additionally, expanded disclosures about discontinued
operations will be required to provide financial statement users with
more information about the assets, liabilities, income, and expenses of
discontinued operations. This guidance impacts disclosures within an
entity’s financial statements and notes to the financial statements. We
are required to adopt this guidance prospectively in the first quarter
of 2015. The updated guidance will not impact existing conclusions
with respect to discontinued operations classification.
45
FMC CORPORATION - Form 10-K PART II Part II
ITEM 8 Financial Statements and Supplementary Data
NOTE 3 Acquisitions
2014 Acquisitions
Cheminova A/S:
On September 8, 2014, we entered into a definitive Share Purchase
Agreement (the “Purchase Agreement”) with Auriga Industries A/S,
a Denmark Aktieselskab (“Aurgia”) and Cheminova A/S, a Denmark
Aktieselskab, a wholly owned subsidiary of Auriga (“Cheminova”).
Pursuant to the terms and conditions set forth in the Purchase Agreement,
we have agreed to acquire all of the outstanding equity of Cheminova
from Auriga for an aggregate purchase price of 8.5 billion Danish
Krone or approximately $1.4 billion, excluding net debt to be assumed
of approximately $0.3 billion (the “Acquisition”) as of December 31,
2014. We expect to complete the Acquisition in early 2015.
Also, on September 8, 2014, in connection with the Purchase Agreement,
we entered into a commitment letter (the “Commitment Letter”) with
Citigroup Global Markets Inc. (collectively with certain of its affiliates,
the “Commitment Party”). The Commitment Letter provided that, in
connection with the Acquisition and subject to the conditions set forth
in the Commitment Letter, the Commitment Party will commit to
provide up to a $2.0 billion 364-day bridge term loan and a $1.5 billion
revolving credit facility to FMC to replace the existing revolving credit
facility. Fees incurred to secure these commitments have been deferred
with amortization over the term of the arrangement.
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”) for
$339.6 million. Epax is a global supplier of fish-based omega-3 EPA/
DHA fatty acid concentrates. Epax was integrated into our FMC
Health and Nutrition segment from the acquisition date.
The results of operations related to Epax have been included in our results
since the acquisition date. This acquisition was considered a business
under the U.S. GAAP business combinations accounting guidance, and
therefore we applied acquisition accounting. Acquisition accounting
On October 10, 2014, the financing available under the Commitment
Letter was terminated and replaced by a $2.0 billion term loan
facility and an amended and restated $1.5 billion revolving credit
facility. Approximately $4.3 million of the deferred fees associated
with the Commitment Letter were expensed and presented within
selling, general and administrative within our consolidated statements
of income consistent with other acquisition-related costs. The
remaining fees have been capitalized in combination with the term
loan facility. The details of the term loan facility and the revolving
credit facility are provided in Note 12 within these consolidated
financial statements.
Charges incurred for the twelve months ended December 31, 2014
associated with the Acquisition which include the unrealized loss on
the hedge of the purchase price are provided in Note 19 within these
consolidated financial statements.
Noncontrolling interest purchase:
In October 2014 we purchased the remaining 6.25% ownership
interest from the last remaining non-controlling interest holder in a
legal entity within our FMC Alkali Chemicals division. See Note 15
for more information.
requires, among other things, that assets and liabilities assumed be
recognized at their fair values as of the acquisition date. The net assets
of the Epax acquisition were recorded at the estimated fair values using
primarily Level 2 and Level 3 inputs (see Note 17 for an explanation
of Level 2 and 3 inputs). In valuing acquired assets and liabilities,
valuation inputs include an estimate of future cash flows 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.
46
FMC CORPORATION - Form 10-K Purchase Price Allocation
PART II Part II
ITEM 8 Financial Statements and Supplementary Data
(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 $9.4 million, of which $5.2 million was expensed in 2013
$
$
$
$
with the remaining, $4.2 million, expensed in 2014. Amounts are expensed to “Cost of sales and services”.
(2) The major classes of intangible assets acquired primarily represent customer relationships and brands. The weighted average useful life of the acquired finite-lived
intangibles is approximately 17 years. See Note 4 for more information.
(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.
Noncontrolling interest purchase:
In 2013, we completed the purchase of additional ownership interest in a legal entity within our FMC Alkali Chemicals division. See Note 15
for more information.
2012 Acquisitions
GAT Microencapsulation AG:
Phytone Ltd.:
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. The
acquired assets have been integrated into our FMC Agricultural
Solutions segment.
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.
Pectine Italia S.p.A.:
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. The
company has production facilities in Milazzo, on the island of Sicily.
The acquired assets of PI are reported as part of our FMC Health and
Nutrition segment.
The total purchase price for the three 2012 acquisitions was
$117.4 million. During the year ended December 31, 2013 we finalized
the purchase price allocation of the 2013 acquisitions which did not
result in any additional payments. The final purchase price for the
2012 acquisitions was primarily allocated to goodwill of $62.4 million,
property, plant and equipment of $27.7 million and identifiable
intangible assets of $38.8 million.
Unaudited pro forma revenue and net income related to all of the closed acquisitions discussed above are not presented because the pro forma
impact is not material.
47
FMC CORPORATION - Form 10-K total
277.6
99.4
12.4
389.4
(36.9)
352.5
Net
144.1
0.4
0.9
56.3
1.5
203.2
67.0
2.1
69.1
272.3
Part II Part II
ITEM 8 Financial Statements and Supplementary Data
NOTE 4 Goodwill and Intangible Assets
The changes in the carrying amount of goodwill by business segment for the years ended December 31, 2014 and 2013, are presented in the table below:
(in Millions)
Balance, December 31, 2012
Acquisitions
Foreign currency adjustments
Balance, December 31, 2013
Foreign currency adjustments
BaLaNCE, DECEMBEr 31, 2014
$
FMC agricultural
Solutions
31.0
—
—
31.0
—
31.0
$
$
FMC Health and
Nutrition
246.6
99.4
12.4
$
358.4 $
(36.9)
321.5
$
$
$
$
FMC Minerals
— $
—
—
— $
—
— $
Our intangible assets, other than goodwill, consist of the following:
(in Millions)
Intangible assets subject to amortization (finite-lived)
Weighted avg. useful life
at December 31, 2014
December 31, 2014
accumulated
amortization
Gross
Customer relationships
Patents
Brands(1)
Purchased and licensed technologies
Other intangibles
18 years $
1 year
2 years
12 years
36 years
Intangible assets not subject to amortization (indefinite life)
Brands(1)
In-process research & development(2)
$
$
152.8 $
1.7
1.2
74.3
3.6
233.6 $
63.4
—
63.4
297.0 $
$
$
December 31, 2013
accumulated
amortization
Gross
Net
130.3
1.6
0.6
49.8
1.2
183.5
$
$
159.3 $
0.4
1.3
75.6
4.3
240.9 $
$
63.4
—
$
63.4
246.9 $
67.0
2.1
69.1
310.0 $
(22.5) $
(0.1)
(0.6)
(24.5)
(2.4)
(50.1) $
$
$
(50.1) $
(15.2) $
—
(0.4)
(19.3)
(2.8)
(37.7) $
$
$
(37.7) $
tOtaL INtaNGIBLE aSSEtS
(1) Represents trademarks, trade names and know-how.
(2) During 2014, we abandoned our efforts to further develop the in-process research and development in our Health and Nutrition segment. See Note 7 for more
information.
At December 31, 2014, the finite-lived and indefinite life intangibles were allocated among our business segments as follows:
(in Millions)
FMC Agricultural Solutions
FMC Health and Nutrition
FMC Minerals
tOtaL
(in Millions)
Amortization Expense
Finite-lived
100.7 $
81.6
1.2
183.5 $
Indefinite life
35.2
28.2
—
63.4
$
$
Year Ended December Part II31,
2014
11.0 $
2013
9.7 $
$
2012
5.8
The estimated pre-tax amortization expense for each of the five years ending December 31, 2015 to 2019 is $13.9 million, $12.2 million,
$12.1 million, $11.8 million and $11.7 million, respectively.
48
FMC CORPORATION - Form 10-K
Part II Part II
ITEM 8 Financial Statements and Supplementary Data
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,
2014
299.7
248.8
261.8
810.3
(173.8)
636.5
$
2013
283.0
276.7
297.8
857.5
(169.1)
688.4
Approximately 40% and 38% of our inventories in 2014 and 2013, respectively were recorded on the LIFO basis.
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
December Part II31, 2014
170.9
31.4
371.3
1,881.9
285.6
2,741.1
(1,432.6)
1,308.5
$
$
December Part II31, 2013
154.3
31.4
372.7
1,839.3
265.5
2,663.2
(1,414.9)
1,248.3
$
$
Depreciation expense was $103.9 million, $94.6 million, and $84.0 million in 2014, 2013 and 2012, respectively.
NOTE 7 Restructuring and Other Charges (Income)
The 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 Part II31,
2014
17.3 $
39.2
56.5 $
2013
9.6 $
38.3
47.9 $
$
$
2012
17.7
9.8
27.5
restructuring Charges
(in Millions)
Health and Nutrition Restructuring
Other Items
YEar ENDED DECEMBEr 31, 2014
Lithium Restructuring
Other Items
Year ended December 31, 2013
Lithium Restructuring
Other Items
Year ended December 31, 2012
(1) Represents severance and employee benefit charges. Income represents adjustments to previously recorded severance and employee benefits.
(2) Primarily represents costs associated with lease payments, contract terminations, and other miscellaneous exit costs. Other Income primarily represents favorable
Severance and
Employee Benefits(1)
10.1
0.5
10.6
2.8
1.8
4.6
—
(0.3)
(0.3) $
asset Disposal
Charges(3)
3.1
0.2
3.3 $
1.9
0.4
2.3 $
13.3
4.0
17.3 $
Other Charges
(Income)(2)
0.7
2.7
3.4
4.4
(1.7)
2.7
—
0.7
0.7
total
13.9
3.4
17.3
9.1
0.5
9.6
13.3
4.4
17.7
$
$
$
$
$
$
$
$
developments on previously recorded exit costs and recoveries associated with restructuring.
(3) Primarily represents accelerated depreciation and impairment charges on long-lived assets, which were or are to be abandoned. To the extent incurred, the
acceleration effect of re-estimating settlement dates and revised cost estimates associated with asset retirement obligations due to facility shutdowns, are also
included within the asset disposal charges, see Note 7.
49
FMC CORPORATION - Form 10-K Part II Part II
ITEM 8 Financial Statements and Supplementary Data
2014 Restructuring Activities
Other Items
Health and Nutrition Restructuring
In 2014 our FMC Health and Nutrition segment implemented a plan to
restructure a portion of its operations. The objective of the restructuring
was to better align our business and costs to macroeconomic and market
realities. The restructuring decision resulted in workforce reductions
at several of our FMC Health and Nutrition facilities.
Roll forward of Restructuring Reserves
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 efficiencies.
The following table shows a roll forward of restructuring reserves that will result in cash spending. These amounts exclude asset retirement
obligations, which are discussed in Note 8.
Balance at
12/31/12(4)
Change in
reserves(2)
Cash
Balance Part IIat
12/31/13(4)
Change Part IIin
reserves(2)
Cash
Balance Part IIat
12/31/14(4)
payments Other(3)
$
— $
—
(in Millions)
Health and Nutrition
Restructuring
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
(6.2) $ — $
(0.1)
(3.3)
(12.8) $
(2.7)
(10.0) $
(1.1)
(1.1) $
7.4
10.5 $
— $ — $
(0.6)
6.7 $
— $
0.3
— $
7.2
3.0
6.1 $
2.7
10.3
2.3
16.3
10.8
—
0.7
0.7
4.6
0.2
(6.9)
(0.4)
(3.2)
—
2.8
2.8
3.2
3.1
—
0.1
—
—
$
$
$
$
payments Other(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. Environmental obligations for continuing
operations primarily represent obligations at shut down or abandoned
facilities within businesses that do not meet the criteria for presentation
as discontinued operations.
Other, net
During 2014 and 2013 our FMC Agricultural Solutions segment
entered into 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. Specifically in 2014 we entered into one transaction
consisting of an exclusive license, development and supply arrangements
for a novel crop protection product for agricultural use in the United
States. During 2013 we entered into three such transactions, consisting
Year Ended December Part II31,
2014
43.7 $
(4.5)
39.2 $
2013
6.2 $
32.1
38.3 $
$
$
2012
5.8
4.0
9.8
of: exclusive license and supply arrangements for a broad-spectrum
crop protection product and 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.
The 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.
In 2014 we sold portion of our ownership interest in a Belgium-
based pesticide distribution company, Belchim Crop Protection
N.V. (“Belchim”). Prior to and subsequent to the sale, Belchim was
accounted for as a cost method investment. The gain on the sale of
approximately $26.6 million was recorded as “Other income, net”.
50
FMC CORPORATION - Form 10-K Part II 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, 2014 and
2013. 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 sufficient
information exists to estimate a range of potential settlement dates.
The changes in the carrying amounts of AROs for the years ended December 31, 2014 and 2013 are as follows:
$
(in Millions)
Balance at December 31, 2012(1)
Increase (decrease) to previously recorded ARO liability
Accretion expense
Payments
Foreign currency translation adjustments
Balance at December 31, 2013(1)
Increase (decrease) to previously recorded ARO liability
Payments
Foreign currency translation adjustments
Transfer to environmental obligations(2)
Transfer to restructuring reserves(3)
BaLaNCE at DECEMBEr 31, 2014(1)
(1) Included in “Accrued and other liabilities” and “Other long-term liabilities” on the consolidated balance sheets.
(2) Based on the events that occurred during the year ended December 31, 2014, the remaining activities associated with these obligations are primarily environmental
remediation in nature and therefore the cost was reclassified to environmental obligations. Refer to Note 10 within these consolidated financial statements for
additional information.
25.5
4.3
0.1
(8.0)
0.8
22.7
0.2
(0.9)
(1.7)
(16.9)
(1.5)
1.9
$
$
(3) The remaining activities associated with these obligations are related to restructuring activities and therefore transfer to a restructuring reserve is more appropriate
based on events that occurred during the year ended December 31, 2014. Refer to Note 7 within these consolidated financial statements for additional
information.
NOTE 9 Discontinued Operations
FMC Peroxygens
On February 28, 2014, we completed the sale of our FMC Peroxygens
business for $199.1 million in cash to One Equity Partners (OEP),
the private investment arm of J.P. Morgan Chase & Co. The sale
resulted in approximately $198.6 million in after-tax proceeds and
a final pre-tax loss of $10.1 million ($33.4 million after-tax) for
the twelve months ended December 31, 2014. The after-tax loss of
$33.4 million was driven by the allocation of the $199.1 million of
proceeds which was agreed to between us and OEP. The majority of
the proceeds were allocated to higher taxing jurisdictions (i.e., United
States) which resulted in tax expense within those jurisdictions, that
were not offset by tax benefits from other taxing jurisdictions. We did
not benefit the tax losses produced in those other taxing jurisdictions,
as we do not expect the losses produced in those jurisdictions to be
recoverable. The loss was recorded in discontinued operations, net of
income taxes in our consolidated income statements for the year ended
December 31, 2014.
The results of our discontinued FMC Peroxygens operations are summarized below:
Year Ended December Part II31,
(in Millions)
Revenue
(Loss) income from discontinued operations before income taxes(1)
Provision (Benefit) for income taxes
tOtaL DISCONtINUED OPEratIONS OF FMC PErOXYGENS, NEt OF INCOME taXES $
(1) Includes allocated interest expense $0.8 million, $4.7 million and $4.5 million for the years ended ended December 31, 2014, 2013 and 2012. Interest was
2013
328.8
(101.7)
9.4
(111.1) $
2014
55.5
(10.7)
23.7
(34.4) $
2012
338.4
25.5
13.7
11.8
$
$
$
allocated in accordance with relevant discontinued operations accounting guidance. Interest expense allocated in 2014 was prior to the complete sale.
51
FMC CORPORATION - Form 10-K Part II Part II
ITEM 8 Financial Statements and Supplementary Data
The following table presents the major classes of assets and liabilities of the FMC Peroxygens business as of 2014 and 2013:
December Part II31,
2014
(in Millions)
assets
Current assets of discontinued operations held for sale (primarily trade receivables and inventories)
Property, plant & equipment
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.
$
$
$
$
— $
—
—
—
—
— $
—
—
— $
— $
2013
94.8
61.1
2.7
39.7
103.5
198.3
43.0
5.2
48.2
150.1
In addition to our discontinued FMC Peroxygens segment, our other discontinued operations include adjustments to retained liabilities from
previous discontinued operations. The primary liabilities retained include environmental liabilities, other postretirement benefit liabilities, self-
insurance, long-term obligations related to legal proceedings and historical restructuring activities.
Our discontinued operations comprised the following:
Year Ended December Part II31,
2014
2013
(in Millions)
Adjustment for workers’ compensation, product liability, and other postretirement benefits,
net of income tax benefit (expense) of $0.5, ($0.3) and $0.2, respectively
Provision for environmental liabilities, net of recoveries, net of income tax benefit of $16.4,
$14.2 and $7.8, respectively(1)
Provision for legal reserves and expenses, net of recoveries, net of income tax benefit of $8.4,
$5.5, and $10.6, respectively(2)
Provision for restructuring charges, net of income tax benefit of $0.1, $0.5 and $1.5, respectively(3)
Discontinued operations of FMC Peroxygens, net of income tax benefit (expense) of ($23.7),
$25.1 and ($13.7), 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) $
(34.4
)
(89.4) $
11.8
(27.5)
(9.0)
(16.7)
(14.3)
(2.2)
(17.3)
(9.1)
(1.8) $
(23.1)
(12.6)
(36.7)
(0.3
0.6
$
$
$
)
2012
in 2014 or 2012.
(3) See roll forward of our restructuring reserves in Note 7.
Reserves for Discontinued Operations at December 31, 2014 and 2013
2013
(in Millions)
6.7
Workers’ compensation and product liability reserve
9.6
Postretirement medical and life insurance benefits reserve, net
36.9
Reserves for legal proceedings
rESErVE FOr DISCONtINUED OPEratIONS(1)
53.2
(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
10.0
36.5
53.3 $
6.8 $
$
$
December Part II31,
2014
discontinued environmental reserves.
The discontinued postretirement medical and life insurance benefits liability
equals the accumulated postretirement benefit obligation. Associated
with this liability is a net pretax actuarial gain and prior service credit
of $6.5 million ($3.5 million after-tax) and $7.9 million ($3.9 million
after-tax) at December 31, 2014 and 2013, respectively. The estimated net
pre-tax actuarial gain and prior service credit that will be amortized from
accumulated other comprehensive income into discontinued operations
during 2015 are $1.0 million and zero, respectively.
Net, spending in 2014, 2013 and 2012 was $0.8 million, $0.9 million
and $1.0 million, respectively, for workers’ compensation, product
liability and other claims; $1.1 million, $0.9 million and $0.7 million,
respectively, for other postretirement benefits; and $23.0 million,
$8.8 million and $24.6 million, respectively, related to reserves for legal
proceedings associated with discontinued operations.
52
FMC CORPORATION - Form 10-K
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.
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. These 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
Part II Part II
ITEM 8 Financial Statements and Supplementary Data
reasonable estimate of the obligation can be made. Accordingly, total
reserves of $296.2 million and $225.7 million, respectively, before
recoveries, existed at December 31, 2014 and 2013.
The estimated reasonably possible environmental loss contingencies,
net of expected recoveries, exceed amounts accrued by approximately
$210 million at December 31, 2014. This reasonably possible estimate
is based upon information available as of the date of the filing 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
significant, the impact on our future consolidated financial results is
not subject to reasonable estimation due to numerous uncertainties
concerning the nature and scope of possible contamination at many
sites, identification 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 Potentially Responsible Parties
(“PRPs”) as well as other third parties. The 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 effect on our liquidity or financial condition as it may
be satisfied over many years.
The table below is a roll forward of our total environmental reserves, continuing and discontinued, from December 31, 2011 to December 31, 2014.
(in Millions)
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
2014
Provision
Spending, net of recoveries
Transfer from asset retirement obligations(1)
Foreign currency translation adjustments
Operating and
Discontinued Sites total
226.9
$
31.2
(42.1)
(10.9)
216.0
48.2
(59.5)
(11.3)
204.7
$
$
106.2
(42.4)
16.9
(1.1)
79.6
284.3
Net Change
tOtaL ENVIrONMENtaL rESErVES, NEt OF rECOVErIES at DECEMBEr 31, 2014
(1) Based on events that occurred during the year ended December 31, 2014, the remaining activities associated with these obligations are primarily environmental
$
remediation in nature and therefore the cost was transferred to environmental obligations.
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, 2014
and 2013, 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 offset to the
“Environmental liabilities, continuing and discontinued” or as “Other
assets” on the consolidated balance sheets.
53
FMC CORPORATION - Form 10-K
Part II Part II
ITEM 8 Financial Statements and Supplementary Data
The table below is a roll forward of our total recorded recoveries from December 31, 2012 to December 31, 2014:
Increase in
recoveries Cash received
December 31,
2012
December 31,
2013
(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” on the consolidated balance sheets. See Note 20 for more details.
21.0 $
35.5
56.5 $
20.5 $
51.6
72.1 $
4.0 $
20.8
24.8 $
1.2 $
9.4
10.6 $
10.3 $
15.0
25.3 $
Increase in
recoveries
4.5 $
4.7
9.2 $
Cash
received
$
$
December Part II31,
2014
11.9
29.9
41.8
The table below provides detail of current and long-term environmental reserves, continuing and discontinued.
(in Millions)
Environmental reserves, current, net of recoveries(1)
Environmental reserves, long-term continuing and discontinued, net of recoveries(2)
tOtaL ENVIrONMENtaL rESErVES, NEt OF rECOVErIES
(1) These amounts are included within “Accrued and other liabilities” on the consolidated balance sheets.
(2) These amounts are included in “Environmental liabilities, continuing and discontinued” on the consolidated balance sheets.
$
$
December Part II31,
2014
74.4 $
209.9
284.3 $
2013
29.5
175.2
204.7
Our net environmental provisions relate to costs for the continued clean-up of both operating sites and for certain discontinued manufacturing
operations from previous years. The net provisions are comprised as follows:
2012
(in Millions)
Continuing operations(1)
5.8
Discontinued operations(2)
20.4
NEt ENVIrONMENtaL PrOVISION
26.2
(1) Recorded as a component of “Restructuring and other charges (income)” on our consolidated statements of income. See Note 7. Environmental obligations for
continuing operations primarily represent obligations at shut down or abandoned facilities within businesses that do not meet the criteria for presentation as
discontinued operations.
37.3
43.5 $
6.2 $
2013
$
$
Year ended December Part II31,
2014
43.7 $
53.1
96.8 $
(2) Recorded as a component of “Discontinued operations, net” on our consolidated statements of income. See Note 9.
On our consolidated balance sheets, the net environmental provisions affect assets and liabilities as follows:
Year ended December Part II31,
(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 20 for details of “Other assets” as presented on our consolidated balance sheets.
2014
106.2 $
(9.4)
96.8 $
$
$
2013
48.2 $
(4.7)
43.5 $
2012
31.2
(5.0)
26.2
Significant Environmental Sites
Front Royal
This 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. The 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 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. This groundwater treatment plant was completed 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. The
amount of the reserve for this site was $16.9 million and $25.6 million at
December 31, 2014 and 2013, 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
54
FMC CORPORATION - Form 10-K 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 $68.6 million and
$61.3 million at December 31, 2014 and 2013, 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 beneficiary 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. The third-party beneficiary 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. The 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.
The permit and fee were affirmed 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, finding that they were not authorized under tribal law, and
dismissed the Tribes’ breach of contract claim. The 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 finding 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), the Tribes’ demand as set forth in the lawsuit.
It also reinstated the breach of contract claim. The Tribes have filed
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 a trial on certain jurisdictional issues which occurred during
April 2014, the Shoshone-Bannock Tribal Appellate Court issued a
Part II Part II
ITEM 8 Financial Statements and Supplementary Data
Statement of Decision finding in favor of the Tribes’ jurisdiction over
FMC and awarding costs on appeal to the Tribes. The Tribal Appellate
Court conducted further post-trial proceedings and on May 6, 2014
issued Finding and Conclusions and a Final Judgment consistent with
its earlier Statement of Decision.
The finding by the Shoshone-Bannock Tribal Appellate Court
in May 2014 does not impact our reserves for the period ended
December 31, 2014. Having now exhausted the Tribal administrative
and judicial process, in November 2014 we filed an action in the United
States District Court seeking declaratory and injunctive relief on the
grounds that the Tribes lacked jurisdiction over us.
We have estimated a reasonably possible loss for this matter and it has
been reflected 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 the site that have affected soil, sediment, surface
water and groundwater at the facility’s property and also in adjacent
off-site areas. The 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. The AOC requires us to (1) define 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 defined 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 satisfied the first two requirements
of the AOC.
In 2013 we received from the New York State Department of
Environmental Conservation (“NYSDEC”), the Final Statement of
Basis (“FSOB”). The FSOB includes the same CMA as the Preliminary
Statement of Basis, which we continue to believe is overly conservative
and is not consistent with the 1991 AOC, which governs the remedy
selection.
In order to negotiate with the NYSDEC with respect to the FSOB,
we entered into a tolling agreement with the NYSDEC. The tolling
agreement serves as a “standstill” agreement to the FSOB so that time
spent negotiating with the NYSDEC does not go against the statute of
limitations under the FSOB. The tolling agreement expired on April
30, 2014. We were not able to reach an agreement with the NYSDEC;
thus, on May 1, 2014, we submitted a Notice of Dispute to the EPA
seeking review of the remedy chosen by the NYSDEC. On May 30,
2014, 30 days after the tolling period expired, we filed an action in
the Supreme Court of New York formally challenging the NYSDEC’s
FSOB. In that lawsuit, we are contending that NYSDEC breached
the 1991 AOC by not following the procedures set forth in the AOC
for remedy selection. On June 3, 2014, we received a letter from EPA
(dated May 22, 2014) declining to review the Notice of Dispute. On
June 20, 2014, we filed an action in the United States District Court
for the Western District of New York seeking a declaratory judgment
that the EPA is obligated under the 1991 AOC to hear the dispute.
55
FMC CORPORATION - Form 10-K Part II Part II
ITEM 8 Financial Statements and Supplementary Data
The amount of the reserve for this site is $44.9 million and $41.7 million
at December 31, 2014 and 2013, respectively. Our reserve continues to
include the estimated liability for clean-up to reflect the costs associated
with our recommended CMA. Our estimated reasonably possible
environmental loss contingencies exposure reflects the additional cost
of the CMA proposed in the FSOB.
Other Potentially Responsible Party (“PRP”) Sites
We have been named a PRP at 32 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 identified 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 ROD has been issued.
One site where FMC is listed as a PRP is the Portland Harbor Superfund
Site (“Portland Harbor”), that includes the river and sediments of a
12 mile section of the lower reach of the Willamette River in Portland,
NOTE 11 Income Taxes
Oregon that runs through an industrialized area. Portland Harbor is
listed on the NPL. FMC formerly owned and operated a manufacturing
site adjacent to this section of the river and has since sold its interest in
this business. When the EPA determines the cleanup remedy from the
RI/FS conducted during the last decade at the site, it will issue a ROD.
Currently, FMC and 70 other parties including the current owner of
the former FMC site are involved in a non-judicial allocation process
to determine each party’s respective share of the cleanup costs. The
EPA is expected to develop a ROD by 2017. It is anticipated that the
cleanup activities will begin within one year of the issuance of the ROD.
Any potential liability to FMC will represent a portion of the costs of the
remedy the EPA is expected to select for Portland Harbor. The cost of
that remedy is expected to be allocated among more than 70 potentially
responsible parties. Because of the large number of responsible parties
and the variability in range of remediation alternatives, we are unable
to develop a reasonable estimate of our potential exposure for Portland
Harbor at this time. Based on information currently available, we
have no reason to believe that the ultimate resolution of our potential
obligations at Portland Harbor will have a material adverse effect on
our consolidated financial position, liquidity or results of operations.
However, there can be no assurance that the outcome will be favorable.
Adverse results in the outcome of the EPA decision could have a
material adverse effect on our consolidated financial position, results
of operations in any one reporting period, or liquidity.
Domestic and foreign components of income from continuing operations before income taxes are shown below:
(in Millions)
Domestic
Foreign
tOtaL
Year Ended December Part II31,
2014
148.6
336.4
485.0
$
$
2013
287.1
328.8
615.9
$
$
$
$
The provision (benefit) 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
Year Ended December Part II31,
2014
86.5
43.4
4.6
134.5
$
$
(40.7)
(21.1)
0.8
(61.0) $
$
73.5
2013
57.1 $
66.2
5.7
129.0 $
29.7
(18.0)
7.9
19.6 $
$
148.6
$
$
$
$
2012
359.3
238.4
597.7
2012
23.1
55.6
0.7
79.4
73.3
(12.3)
(5.9)
55.1
134.5
Significant components of the deferred income tax provision (benefit) 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 Part II31,
$
$
2014
(61.8) $
0.8
(61.0) $
2013
19.4 $
0.2
19.6
$
2012
68.8
(13.7)
55.1
56
FMC CORPORATION - Form 10-K
Part II Part II
ITEM 8 Financial Statements and Supplementary Data
We have recognized that it is more likely than not that certain future
tax benefits may not be realized through future taxable income. During
the year ended December 31, 2014, the valuation allowance change
was due to $1.7 million of tax losses incurred by certain foreign
operations that are not expected to be recoverable, partially offset by
a $0.9 million release primarily due to state net operating losses now
expected to be recoverable. 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 offset 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 offset by a $1.2 million provision due to
tax losses of foreign operations that are not expected to be recoverable.
Significant 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 benefits
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 Part II31,
2014
111.1
70.4
7.4
143.0
34.2
266.2
632.3
(125.3)
507.0
138.2
138.2
368.8
2013
96.1
9.4
8.4
104.0
43.4
187.9
449.2
(108.2)
341.0
108.7
108.7
232.3
$
$
$
$
$
$
$
$
$
$
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. This assessment considers, among
other matters, the nature and severity of current and cumulative losses,
forecasts of future profitability, 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 profitable, 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, 2014, we had net operating loss and tax credit
carryforwards as follows: U.S. state net operating loss carryforwards
of $17.3 million (tax-effected) expiring in future years through 2027,
foreign net operating loss carryforwards of $125.7 million (tax-effected)
expiring in various future years, U.S. foreign tax credit carryforwards
of $1.1 million expiring in 2015 and foreign tax credit carryforwards
of $6.3 million expiring in various future years.
The effective income tax rate applicable to income from continuing operations before income taxes was different from the statutory U.S. federal
income tax rate due to the factors listed in the following table:
Year Part IIEnded Part IIDecember Part II31,
Statutory U.S. tax rate
Net difference:
Percentage depletion
State and local income taxes, less federal income tax benefit
Foreign earnings subject to different 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 benefits
Change in valuation allowance
Other
Total difference
EFFECtIVE taX ratE
2014
35.0%
(4.5)
0.8
(17.3)
(1.6)
2.2
1.3
1.0
0.2
(1.9)
(19.8)
15.2%
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%
57
FMC CORPORATION - Form 10-K
Part II Part II
ITEM 8 Financial Statements and Supplementary Data
Unremitted earnings of foreign subsidiaries for which we have not
provided taxes approximate $1,638.1 million. We have not provided
taxes for these earnings given that our intention, as of December 31,
2014, is to indefinitely reinvest such earnings in the respective existing
foreign operations. We have not provided deferred tax liabilities for
basis differences 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 indefinitely 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, classification, interest and penalties,
disclosure and transition.
We file income tax returns in the U.S. federal jurisdiction, and various
states and foreign jurisdictions. The income tax returns for FMC entities
taxable in the U.S. and significant foreign jurisdictions are open for
examination and adjustment. As of December 31, 2014, the U. S. federal
and state income tax returns are open for examination and adjustment
for the years 2011-2014 and 2004-2014, respectively. Our significant
foreign jurisdictions, which total 19, are open for examination and
adjustment during varying periods from 2004-2014.
The total amount of unrecognized tax benefits that, if recognized, would
impact the effective tax rate was $15.5 million and $10.8 million as of
December 31, 2014 and December 31, 2013, respectively. Interest and
penalties related to unrecognized tax benefits are reported as a component
of income tax expense. For the years ended December 31, 2014,
December 31, 2013, and December 31, 2012 we recognized interest and
penalties of $1.0 million, $2.1 million, and $0.1 million respectively,
in the consolidated statements of income. As of December 31, 2014
and December 31, 2013, we have accrued interest and penalties in the
consolidated balance sheets of $3.2 million and $2.2 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 benefits will decrease within the next 12 months by
a range of $3.7 million to $2.5 million.
A reconciliation of the beginning and ending amount of unrecognized tax benefits 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:
$
$
2014
37.3
9.9
—
$
2013
23.3
15.4
(1.3)
2012
8.1
5.5
—
Adjustments
Settlements during the period
BaLaNCE at END OF YEar(1)
(1) At December 31, 2014, 2013, and 2012 we recognized an offsetting non-current deferred tax asset of $34.8 million, $28.7 million, and $16.7 million
1.5
(1.6)
47.1
(0.1)
—
37.3
9.7
—
23.3
$
$
$
respectively, relating to specific 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(2)
Total short-term debt
$
$
Current portion of long-term debt
SHOrt-tErM DEBt aND CUrrENt POrtION OF LONG-tErM DEBt
(1) At December 31, 2014, the average effective interest rate on the borrowings was 5.20%. We often provide parent-company guarantees to lending institutions that
extend credit to our foreign subsidiaries. Since these guarantees are provided to consolidated subsidiaries the consolidated financial position is not affected by the
issuance of these guarantees.
$
$
$
December Part II31,
2014
36.6
486.6
523.2
2.0
525.2
$
2013
7.1
656.0
663.1
34.7
697.8
(2) At December 31, 2014, the average effective interest rate on the borrowings was 0.48%.
58
FMC CORPORATION - Form 10-K Long-term debt
Long-term debt consists of the following:
Part II Part II
ITEM 8 Financial Statements and Supplementary Data
December Part II31, 2014
December Part II31,
Interest Part IIrate
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 $1.9 and $2.2, 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 $89.4 million and available funds under this facility were $924.0 million at December 31, 2014 (which
0.2-6.5% 2021-2035 $
3.95-5.2% 2019-2024
2019
0-9.3% 2015-2024
141.5
998.1
—
15.8
1,155.4
2.0
1,153.4
174.0
997.8
—
17.0
1,188.8
34.7
1,154.1
2.6%
$
$
$
$
$
2014
2013
reflects borrowings under our commercial paper program).
Maturities of Long-Term Debt
Maturities of long-term debt outstanding, excluding discounts, at
December 31, 2014, are $2.0 million in 2015, $2.4 million in 2016,
$2.6 million in 2017, $2.6 million in 2018, $302.6 million in 2019
and $845.3 million thereafter.
Covenants
Among other restrictions, the Credit Facility contains financial 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
actual leverage for the four consecutive quarters ended December 31,
2014 was 2.4 which is below the maximum leverage of 3.5. Our actual
interest coverage for the four consecutive quarters ended December 31,
2014 was 12.9 which is above the minimum interest coverage of 3.5.
We were in compliance with all covenants at December 31, 2014.
Term Loan Facility
On October 10, 2014, we entered into a term loan agreement (the “Term
Loan Agreement”), that provides for a senior unsecured term loan facility
of up to $2.0 billion (the “Term Loan Facility”) to consummate the
acquisition of Cheminova (the “Acquisition”). The Term Loan Facility
is a senior unsecured obligation that ranks equally with our other senior
unsecured obligations. The proceeds of the loans to be made pursuant to
the Term Loan Facility will be available in one or more drawings on the
closing date of the Term Loan Facility, which will be substantially concurrent
with the closing of the Acquisition. The scheduled maturity of the Term
Loan Facility is on the fifth anniversary of this closing date. The proceeds
will be used to finance the Acquisition as well as to pay fees and expenses
incurred in connection with the Acquisition and the other transactions
contemplated by or related to the Acquisition or the Term Loan Facility.
Loans under the Term Loan Agreement will bear interest at a floating
rate, which will be a base rate or a Eurocurrency rate equal to the
London interbank offered rate for the relevant interest period, plus
in each case an applicable margin, as determined in accordance with
the provisions of the Term Loan Agreement. The base rate will be
the highest of: the rate of interest announced publicly by Citibank,
N.A. in New York, New York from time to time as its “base rate”; the
federal funds effective rate plus 0.50 percent of one percent; and the
Eurocurrency rate for a one-month period plus one percent.
We are required to pay a commitment fee on the average daily unused
amount from October 10, 2014 until the date on which all commitments
are terminated, payable quarterly, at a rate per annum equal to an
applicable percentage in effect from time to time for commitment
fees. The initial commitment fee is 0.125 percent per annum. The
applicable margin and the commitment fee are subject to adjustment
as provided in the Term Loan Agreement.
The Term Loan Agreement contains financial and other covenants,
including a maximum leverage ratio and minimum interest coverage
ratio. The Term Loan Agreement also contains a cross-default provision
whereby a default under our other indebtedness in excess of $50.0 million,
after grace periods and absent a waiver from the lenders, would be an
event of default under the Term Loan Agreement and could result in
a demand for payment of all amounts outstanding under this facility.
Fees incurred to secure the Term Loan Facility have been deferred and
will be amortized over the term of the arrangement.
Revolving Credit Facility
On October 10, 2014 we entered into an amended and restated
credit agreement (the “Revolving Credit Agreement”). The unsecured
Revolving Credit Agreement provides for a $1.5 billion revolving credit
facility, with an option, subject to certain conditions and limitations, to
increase the aggregate amount of the revolving credit commitments to
$2.25 billion (the “Revolving Credit Facility”). The current termination
date of the Revolving Credit Facility is October 10, 2019.
Revolving loans under the Revolving Credit Facility will bear interest
at a floating rate, which will be a base rate or a Eurocurrency rate equal
to the London interbank offered rate for the relevant interest period,
plus, in each case, an applicable margin, as determined in accordance
with the provisions of the Revolving Credit Agreement. The base
rate will be the highest of: the rate of interest announced publicly by
Citibank, N.A. in New York, New York from time to time as its “base
rate”; the federal funds effective rate plus 0.50 percent of one percent;
and the Eurocurrency rate for a one-month period plus one percent.
We are also required to pay a facility fee on the average daily amount
(whether used or unused) at a rate per annum equal to an applicable
percentage in effect from time to time for the facility fee, as determined
in accordance with the provisions of the Revolving Credit Agreement.
The initial facility fee is 0.125 percent per annum. The applicable
margin and the facility fee are subject to adjustment as provided in
the Revolving Credit Agreement.
59
FMC CORPORATION - Form 10-K
Part II Part II
ITEM 8 Financial Statements and Supplementary Data
The Revolving Credit Agreement contains customary financial and other
covenants, including a maximum leverage ratio and minimum interest
coverage ratio. The financial covenant levels have been amended in
order to permit the debt incurred under the contemplated Term Loan
Facility discussed above along with certain other changes to permit the
Acquisition and the divestiture of our FMC Alkali Chemicals division.
The Revolving Credit Agreement also contains a cross-default provision
whereby a default under our other indebtedness in excess of $50.0 million,
after grace periods and absent a waiver from the lenders, would be an
event of default under the Revolving Credit Agreement and could result
in a demand for payment of all amounts outstanding under this facility.
Fees incurred to secure the Revolving Credit Facility have been deferred
and will be amortized over the term of the arrangement.
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 Benefits
The funded status of our U.S. qualified and nonqualified defined benefit
pension plans, our United Kingdom, Ireland, Belgium, and Norway
defined benefit pension plans, plus our U.S. other postretirement
healthcare and life insurance benefit plans for continuing operations,
together with the associated balances and net periodic benefit cost
recognized in our consolidated financial 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 defined benefit postretirement
plans. The overfunded or underfunded status is defined as the difference
between the fair value of plan assets and the projected benefit 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.
The following table summarizes the weighted-average assumptions used and components of our defined benefit postretirement plans. The following
tables also reflect a measurement date of December 31:
(in Millions, except for percentages)
Following are the weighted average assumptions used to determine the benefit
obligations at December 31:
Discount rate
Rate of compensation increase
Change in projected benefit obligation
Projected benefit obligation at January 1
Service cost
Interest cost
Actuarial loss (gain)(4)
Amendments
Foreign currency exchange rate changes
Plan participants’ contributions
Settlements
Curtailments
Benefits paid
Projected benefit obligation at December 31
Change in 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
Benefits paid
Fair value of plan assets at December 31
Funded Status
U.S. plans with assets
U.S. plans without assets
Non-U.S. plans with assets
All other plans
NEt FUNDED StatUS OF tHE PLaN (LIaBILItY)
Pensions
Other Benefits(1)
December Part II31,
2014
2013
2014
2013
4.15%
3.60%
4.95%
3.40%
4.15%
—%
4.95%
—%
$ 1,315.2
17.3
62.3
261.3
3.3
(12.0)
—
(8.5)
—
(69.9)
$ 1,569.0
$ 1,285.4
83.2
(11.1)
65.8
—
(8.5)
(69.9)
$ 1,344.9
$ 1,428.1
22.0
57.7
(103.6)
0.7
0.6
—
(16.1)
—
(74.2)
$ 1,315.2
$ 1,060.2
250.9
0.7
63.9
—
(16.1)
(74.2)
$ 1,285.4
$
$
(167.6)
(40.2)
(7.4)
(8.9)
(224.1)
$
$
15.0
(38.2)
(0.2)
(6.4)
(29.8)
$
$
$
$
$
$
23.5
0.1
1.0
1.0
3.4
—
6.1
—
—
(8.7)
26.4
$
$
— $
—
—
2.6
6.1
—
(8.7)
— $
— $
(26.4)
—
—
(26.4)
$
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)
60
FMC CORPORATION - Form 10-K
Part II Part II
ITEM 8 Financial Statements and Supplementary Data
Pensions
Other Benefits(1)
December Part II31,
(in Millions, except for percentages)
Amount recognized in the consolidated balance sheets:
Pension other asset(2)
Accrued benefit liability(3)
tOtaL
(1) Refer to Note 9 for information on our discontinued postretirement benefit plans.
(2) Included in “Other assets” on the consolidated balance sheets.
(3) Recorded as “Accrued pension and other postretirement benefits, current and long-term” on the consolidated balance sheets.
(4) In 2014, the Society of Actuaries released new mortality tables and a mortality improvement scale for measurement of retirement program obligations. The
adoption of these new tables is included in the measurement of the December 31, 2014 U.S. defined benefit and post retirement obligations and resulted in
an actuarial loss of approximately $95 million.
0.7
(224.8)
(224.1)
17.2
(47.0)
(29.8)
(26.4)
(26.4)
—
(23.5)
(23.5)
— $
$
$
$
$
$
$
$
2014
2013
2014
2013
(in Millions)
The amounts in accumulated other comprehensive income (loss) that have not yet been
recognized as components of net periodic benefit 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.
$
Pensions
Other Part IIBenefits(1)
December Part II31,
2014
2013
2014
2013
(7.7)
(512.9)
(520.6)
(329.5)
$
$
$
(6.3)
(281.7)
(288.0)
(182.5)
$
$
$
(3.3)
10.4
7.1
4.4
$
$
$
—
13.0
13.0
8.1
The accumulated benefit obligation for all pension plans was $1,495.0 million and $1,255.3 million at December 31, 2014 and 2013, respectively.
(in Millions)
Information for pension plans with projected benefit obligation in excess of plan assets
Projected benefit obligations
Accumulated benefit obligations
Fair value of plan assets
(in Millions)
Information for pension plans with accumulated benefit obligation in excess of plan assets
Projected benefit obligations
Accumulated benefit obligations
Fair value of plan assets
$
$
December Part II31,
2014
1,544.7 $
1,475.6
1,319.9
December Part II31,
2014
1,544.8 $
1,475.6
1,319.9
2013
75.0
65.3
28.0
2013
53.1
46.8
8.6
Other changes in plan assets and benefit 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
Settlement loss (gain)
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 Part IIBenefits(1)
Year ended December Part II31
2014
262.1
3.3
(30.5)
(1.9)
(4.2)
(3.6)
225.2
145.1
$
$
$
2013
(276.3)
0.7
(51.9)
(2.1)
(7.4)
1.0
(336.0)
(211.7)
$
$
$
$
$
$
2014
0.9
3.4
1.6
(0.1)
—
—
5.8
3.6
$
$
$
2013
(4.2)
—
2.0
—
—
—
(2.2)
(1.4)
61
FMC CORPORATION - Form 10-K Part II Part II
ITEM 8 Financial Statements and Supplementary Data
The 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 benefit cost (income) during 2015
are $47.2 million and $1.6 million, respectively. The estimated net
actuarial gain and prior service cost for our other benefits that will be
amortized from accumulated other comprehensive income (loss) into
net annual benefit cost (income) during 2015 will be $(0.8) million
and $0.6 million.
The following table summarizes the weighted-average assumptions used for and the components of net annual benefit cost (income):
(in Millions, except for percentages)
Discount rate
Expected return on plan assets
Rate of compensation increase
Components of net annual benefit cost (in millions):
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
2013
4.15%
7.75%
3.40%
$
$
22.0
57.7
(78.0)
2.1
51.9
7.4
2014
4.95%
7.75%
3.60%
17.3
62.3
(86.3)
1.9
30.5
4.2
Year Ended December Part II31,
Other Benefits(1)
2012
4.95%
7.75%
3.40%
20.2
61.3
(76.6)
2.1
51.2
—
$
2014
4.95%
—
—
0.1
1.0
—
0.2
(1.6)
—
$
2013
4.15%
—
—
0.1
1.0
—
—
(1.9)
—
$
2012
4.95%
—
—
0.1
1.4
—
(0.2)
(2.4)
—
NEt aNNUaL BENEFIt COSt FrOM
CONtINUING OPEratIONS
(1) Refer to Note 9 for information on our discontinued postretirement benefit plans.
29.9
$
$
63.1
$
58.2
$
(0.3)
$
(0.8)
$
(1.1)
Our U.S. qualified defined benefit pension plan (“U.S. Plan”) holds
the majority of our pension plan assets. The expected long-term rate
of return on these plan assets was 7.75 percent for the years ended
December 31, 2014, 2013 and 2012. 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, inflation
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 10.3 percent over the last 20 years (which
is in excess of comparable market indices for the same period) and
other factors. Given an actively managed investment portfolio,
the expected annual rates of return by asset class for our portfolio,
assuming an estimated inflation rate of approximately 2.2 percent,
is between 8.9 percent and 10.6 percent for equities, and between
5.9 percent and 6.8 percent for fixed-income investments, which
generates a total expected portfolio return that is in line with our
assumption for the rate of return on assets. The target asset allocation
for 2014, by asset category, is 75 to 85 percent equity securities,
15 to 25 percent fixed income investments and zero to five percent
cash and other short-term investments.
Our U.S. qualified pension plan’s investment strategy consists of a
total return investment management approach using a portfolio mix
of equities and fixed income investments to maximize the long-term
return of plan assets for an appropriate level of risk. The 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 diversified across U.S. and
non-U.S. stocks. Derivatives and hedging instruments may be
used effectively 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.
62
FMC CORPORATION - Form 10-K The following tables present our fair value hierarchy for our major categories of pension plan assets by asset class. See Note 17 for the definition
of fair value and the descriptions of Level 1, 2 and 3 in the fair value hierarchy.
Part II Part II
ITEM 8 Financial Statements and Supplementary Data
(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)
Significant Other
Observable Inputs
(Level 2)
12/31/2014
$
54.1 $
54.1 $
— $
Significant
Unobservable
Inputs (Level 3)
—
799.8
3.0
286.9
185.5
9.9
0.9
3.9
799.8
3.0
198.3
—
9.9
0.9
3.9
—
—
88.6
184.8
—
—
—
0.8
0.1
1,344.9 $
—
—
1,069.9 $
—
—
273.4 $
—
—
—
0.7
—
—
—
0.8
0.1
1.6
Quoted Prices in
active Markets for
Identical assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
12/31/2013
55.2 $
55.2 $
— $
Significant
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
—
—
—
—
—
—
—
—
—
—
$
$
Real estate/property
Other
0.7
0.1
tOtaL aSSEtS
0.8
$
(1) As of December 31, 2014 and 2013 we have $88.6 million and $95.8 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.
—
—
1,008.2 $
0.7
0.1
1,285.4 $
—
—
276.4 $
The change in the value of plan assets using significant unobservable inputs (Level 3) for all periods presented was not material.
We made the following contributions to our pension and other postretirement benefit plans:
(in Millions)
U.S. qualified pension plan
U.S. nonqualified pension plan
Non-U.S. plans
Other postretirement benefits, net of participant contributions
tOtaL
Year Part IIEnded Part IIDecember Part II31,
2014
50.0 $
10.8
4.9
2.6
68.3 $
2013
40.0
19.8
5.5
2.7
68.0
$
$
We expect our voluntary cash contributions to our U.S. qualified pension plan to be $65 million in 2015.
63
FMC CORPORATION - Form 10-K Part II Part II
ITEM 8 Financial Statements and Supplementary Data
The following table reflects the estimated future benefit payments for our pension and other postretirement benefit plans. These estimates take
into consideration expected future service, as appropriate:
ESTIMATED NET FUTURE BENEFIT PAYMENTS (IN MILLIONS)
(in Millions)
2015
2016
2017
2018
2019
2020-2024
Pension Benefits
$
$
73.7 $
77.3
81.7
83.4
86.7
467.5 $
Other Benefits
2.6
2.5
2.4
2.2
2.1
9.3
Assumed health care cost trend rates have an effect on the other
postretirement benefit 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
benefit costs for the year ended December 31, 2014, and our other
postretirement benefit obligation at December 31, 2014.
FMC Corporation Savings and Investment Plan
The FMC Corporation Savings and Investment Plan is a qualified
salary-reduction plan under Section 401(k) of the Internal Revenue
Code in which substantially all of our U.S. employees may participate
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 five percent of the employee’s compensation. Eligible employees
participating in the Plan that do not participate in the U.S. qualified
pension plan are entitled to receive an employer contribution of
five percent of the employee’s eligible compensation. Charges against
income for all contributions were $11.4 million in 2014, $11.8 million
in 2013, and $10.2 million in 2012.
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, officers and directors. This
plan is described below.
FMC Corporation Incentive Compensation
and Stock Plan
The FMC Corporation Incentive Compensation and Stock Plan (the
“Plan”) provides for the grant of a variety of cash and equity awards
to officers, 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.
The Compensation and Organization Committee of the Board of
Directors (the “Committee”), subject to the provisions of the Plan,
approves financial targets, award grants, and the times and conditions for
payment of awards to employees. The total number of shares of common
stock authorized for issuance under the Plan is 29.0 million of which
approximately 6.0 million shares of common stock are available for
future grants of share based awards under the Plan as of December 31,
2014. The FMC Corporation Non-Employee Directors’ Compensation
Policy, 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.
64
Stock options granted under the Plan may be incentive or nonqualified
stock options. The 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
designated by the Committee, which has generally been three years
from the date of grant. Incentive and nonqualified options granted
under the Plan expire not later than 10 years from the grant date.
Under the Plan, awards of restricted stock and restricted stock units
may be made to selected employees. The awards vest over periods
designated by the Committee, which has generally been 3 years, with
vesting 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.
At December 31, 2014 and 2013, there were restricted stock units
representing an aggregate of 140,656 shares and 142,200 shares of
common stock, respectively, credited to the directors’ accounts.
FMC CORPORATION - Form 10-K Stock Compensation
We recognized the following stock compensation expense:
Part II Part II
ITEM 8 Financial Statements and Supplementary Data
Year Ended December Part II31,
(in Millions)
Stock Option Expense, net of taxes of $2.2, $2.4 and $2.7(1)
Restricted Stock Expense, net of taxes of $3.3, $3.1 and $3.9(2)
tOtaL StOCK COMPENSatION EXPENSE, NEt OF taXES OF $5.5, $5.5 aND $6.6(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, net of tax, of
$0.5 million, $1.0 million, and $1.4 million for the years ended December 31, 2014, 2013 and 2012, respectively, is included in the Discontinued operations,
net of income taxes in the Consolidated Statements of Income.
2012
4.4
6.4
10.8
2013
4.2
5.5
9.7
2014
3.8
5.5
9.3
$
$
$
$
$
$
We received $8.7 million, $10.7 million and $18.8 million in cash
related to stock option exercises for the years ended December 31,
2014, 2013 and 2012, respectively. The shares used for the exercise of
stock options occurring during the years ended December 31, 2014,
2013 and 2012 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 financial reporting purposes,
share-based compensation expense is based upon grant-date fair value
and amortized over the vesting period. Excess tax benefits represent the
difference between the share-based compensation expense for financial
reporting purposes and the deduction taken for tax purposes. The
excess tax benefits for the years ended December 31, 2014, 2013 and
2012 totaled $4.7 million, $7.1 million and $9.7 million, respectively.
Stock Options
The grant-date fair values of the stock options we granted in the years
ended December 31, 2014, 2013 and 2012 were estimated using the
Black-Scholes option valuation model, the key assumptions for which
are listed in the table below. The expected volatility assumption is based
on the actual historical experience of our common stock. The expected
life represents the period of time that options granted are expected to
be outstanding. The 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. The dividend yield assumption reflects
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
2014
0.74%
41.96%
6.5
2.01%
2013
0.91%
42.10%
6.5
1.29%
2012
0.63%
42.09%
6.5
1.30%
The weighted-average grant-date fair value of options granted during the years ended December 31, 2014, 2013 and 2012 was $30.01, $23.32
and $19.26 per share, respectively.
The following summary shows stock option activity for employees under the Plan for the three years ended December 31, 2014:
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)
Granted
Exercised
Forfeited
DECEMBEr 31, 2014 (1,023 SHarES
EXErCISaBLE aND 1,903 SHarES EXPECtED
tO VESt Or BE EXErCISED)
Number of Options
Granted But Not
Exercised
Weighted-average
remaining Contractual
Life (in Years)
Weighted-average
Exercise Price Per
Share
Number of Shares in Thousands
2,810
422
(943)
(50)
2,239
339
(462)
(58)
2,058
253
(313)
(67)
6.4 years
$
6.5 years
$
5.9 years
$
24.67
47.58
19.86
39.24
30.69
59.47
23.20
42.75
36.76
72.66
27.76
51.15
aggregate Intrinsic
Value
(In Millions)
51.6
$
$
$
30.7
62.3
18.1
79.6
14.0
1,931
5.5 YEarS
$
42.46
$
32.7
65
FMC CORPORATION - Form 10-K
Part II Part II
ITEM 8 Financial Statements and Supplementary Data
The number of stock options indicated in the above table as being
exercisable as of December 31, 2014, had an intrinsic value of
$29.2 million, a weighted-average remaining contractual term of
3.9 years, and a weighted-average exercise price of $28.45.
As of December 31, 2014, we had total remaining unrecognized
compensation cost related to unvested stock options of $7.4 million
which will be amortized over the weighted-average remaining requisite
service period of approximately 1.8 years.
Restricted Equity Awards
The 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.
The following table shows our employee restricted award activity for the three years ended December 31, 2014:
Number Part IIof Part IIawards Part IIin Part IIThousands
Nonvested at December 31, 2011
Granted
Vested
Forfeited
Nonvested at December 31, 2012
Granted
Vested
Forfeited
Nonvested at December 31, 2013
Granted
Vested
Forfeited
NONVEStED at DECEMBEr 31, 2014
Number of awards
758
221
(257)
(18)
704
150
(326)
(5)
523
129
(203)
(21)
428
$
Weighted-average
Grant Date Fair
Value
31.33
49.88
27.60
39.21
38.29
58.95
31.76
51.61
49.07
71.92
46.06
57.40
57.86
$
$
$
As of December 31, 2014, we had total remaining unrecognized compensation cost related to unvested restricted awards of $9.0 million which
will be amortized over the weighted-average remaining requisite service period of approximately 1.6 years.
NOTE 15 Equity
The following is a summary of our capital stock activity over the past three years:
Common
Stock Part IIShares
185,983,792
—
—
185,983,792
—
—
185,983,792
—
185,983,792
treasury
Stock Part IIShares
46,309,476
(1,156,452)
3,160,390
48,313,414
(753,389)
5,538,078
53,098,103
(431,982)
52,666,121
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
Stock options and awards
DECEMBEr 31, 2014
66
FMC CORPORATION - Form 10-K Accumulated other comprehensive income (loss)
Summarized below is the roll forward of accumulated other comprehensive income (loss), net of tax.
Part II Part II
ITEM 8 Financial Statements and Supplementary Data
(in Millions)
accumulated other comprehensive income (loss), net of tax at December 31, 2011 $
2012 Activity
Other comprehensive income (loss) before reclassifications
Amounts reclassified from accumulated other comprehensive income (loss)
accumulated other comprehensive income (loss), net of tax at December 31, 2012 $
2013 Activity
Other comprehensive income (loss) before reclassifications
Amounts reclassified from accumulated other comprehensive income (loss)
accumulated other comprehensive income (loss), net of tax at December 31, 2013 $
2014 Activity
Other comprehensive income (loss) before reclassifications
Amounts reclassified from accumulated other comprehensive income (loss)
aCCUMULatED OtHEr COMPrEHENSIVE INCOME (LOSS), NEt OF
taX at DECEMBEr 31, 2014
(1) See Note 17 for more information.
(2) See Note 13 for more information.
Foreign
currency
adjustments
Derivative
Instruments(1)
Pension
and other
postretirement
benefits(2)
(29.3) $
(7.2) $
(353.5) $
total
(390.0)
2.3
—
(27.0) $
1.7
—
(25.3) $
(74.7)
49.6
(0.2)
5.9
(1.5) $
(4.9)
0.3
(6.1) $
3.1
(0.9)
(57.3)
30.4
(380.4) $
(55.2)
36.3
(408.9)
174.0
35.9
(170.5) $
170.8
36.2
(201.9)
(173.3)
22.3
(244.9)
71.0
$
(50.4) $
(3.9) $
(321.5) $
(375.8)
Reclassifications of accumulated other comprehensive income (loss)
The table below provides details about the reclassifications from accumulated other comprehensive income (loss) and the affected line items in
the consolidated statements of income for each of the periods presented.
Details about accumulated Other Comprehensive
Income Components
(in Millions)
Foreign Currency translation adjustments:
Divestiture of FMC Peroxygens(3)
Derivative instruments:
Foreign currency contracts
Energy contracts
Foreign currency contracts
Other contracts
Total before tax
Amount included in net income
Pension and other postretirement benefits(2):
Amortization of prior service costs
Amortization of unrecognized net actuarial and other
gains (losses)
Recognized loss due to settlement
Total before tax
$
$
$
$
amounts reclassified from accumulated Other
Comprehensive Income(1)
Year ended December 31,
2014
2013
2012
affected Line Item in the Consolidated
Statements of Income
$
(49.6) $
— $
— Discontinued operations, net of income taxes
3.0
1.4
(2.9)
—
1.5
(0.6)
0.9
$
$
(0.1)
(0.6)
0.5
(0.2)
(0.4) $
0.1
(0.3) $
Selling, general and administrative expenses
Interest expense, net
11.5 Costs of sales and services
(9.8) Costs of sales and services
(10.5)
(0.1)
(8.9)
3.0
(5.9)
Provision for income taxes
(2.1) $
(2.0) $
(1.9)
Selling, general and administrative expenses
(28.9)
(4.2)
(35.2) $
12.9
(22.3) $
(71.0) $
(48.3)
(7.4)
(57.7) $
21.8
(35.9) $
(36.2) $
(46.9)
Selling, general and administrative expenses
— Selling, general and administrative expenses
Provision for income taxes
(48.8)
18.4
(30.4)
(36.3) amount included in net income
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.
(3) The reclassification of historical cumulative translation adjustments was the result of the divestiture of our FMC Peroxygens business. The loss recognized from this
reclassification is considered permanent for tax purposes and therefore no tax has been provided. See Note 9 for more information. In accordance with accounting
guidance, this amount was previously factored into the lower of cost or fair value test associated with the 2013 Peroxygens’ asset held for sale write-down charges.
67
FMC CORPORATION - Form 10-K Part II Part II
ITEM 8 Financial Statements and Supplementary Data
Noncontrolling interest purchase
In 2013 we purchased an additional 6.25 percent ownership interest in a legal entity within our FMC Alkali Chemicals division for $80.0 million
from one of two remaining noncontrolling interest holders. In 2014 we purchased the remaining 6.25 percent ownership interest from the last
remaining non-controlling interest holder for $95.7 million.
Dividends and Share Repurchases
On January 15, 2015, we paid dividends totaling $20.1 million to
our shareholders of record as of December 31, 2014. This amount is
included in “Accrued and other liabilities” on the consolidated balance
sheets as of December 31, 2014. For the years ended December 31,
2014, 2013 and 2012, we paid $78.1 million, $73.6 million and
$47.8 million in dividends, respectively.
We did not repurchase any shares under the publicly announced
repurchase program. At December 31, 2014, $250.0 million remained
unused under our Board-authorized repurchase program. This repurchase
program does not include a specific 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. 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.
NOTE 16 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.
there were 386 thousand and 374 thousand 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 effect. 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, 2014 and 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. The 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,
2014
396.9
(89.4)
307.5
(0.9)
306.6
2.97
(0.67)
2.30
2.96
(0.67)
2.29
$
$
$
$
$
$
$
2013
453.2
(159.3)
293.9
(1.6)
292.3
3.34
(1.18)
2.16
3.33
(1.17)
2.16
$
$
$
$
$
$
$
2012
443.7
(27.5)
416.2
(2.0)
414.2
3.21
(0.20)
3.01
3.20
(0.20)
3.00
133,327
955
134,282
135,209
928
136,137
137,701
1,112
138,813
68
FMC CORPORATION - Form 10-K Part II Part II
ITEM 8 Financial Statements and Supplementary Data
NOTE 17 Financial Instruments, Risk Management and Fair Value Measurements
Our financial instruments include cash and cash equivalents, trade receivables, other current assets, certain receivables classified as other long-term
assets, accounts payable, and amounts included in investments and accruals meeting the definition of financial instruments. The carrying value
of these financial instruments approximates their fair value. Our other financial 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.
The estimated fair value of the financial instruments in the above table
have been determined using standard pricing models which take into
account the present value of expected future cash flows discounted to
the balance sheet date. These 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. The estimated fair values of foreign exchange
forward contracts and commodity forward and option contracts are
included in the tables within this Note. The estimated fair value of debt
is $1,773.2 million and $1,895.8 million and the carrying amount is
$1,678.6 million and $1,851.9 million as of December 31, 2014 and
December 31, 2013, respectively.
We enter into various financial instruments with off-balance-sheet
risk as part of the normal course of business. These off-balance sheet
instruments include financial guarantees and contractual commitments
to extend financial guarantees under letters of credit, and other assistance
to customers (Note 18). Decisions to extend financial 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 financial exposures, including currency risk,
commodity purchase exposures and interest rate risk through a program of
risk management that includes the use of derivative financial instruments.
We enter into foreign exchange contracts, including forward and
purchased option contracts, to reduce the effects of fluctuating 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. This process
includes relating derivatives that are designated as fair value or cash
flow hedges to specific assets and liabilities on the balance sheet or to
specific firm commitments or forecasted transactions. We also assess
both at the inception of the hedge and on an ongoing basis, whether
each derivative is highly effective in offsetting changes in fair values
or cash flows of the hedged item. If we determine that a derivative is
not highly effective as a hedge, or if a derivative ceases to be a highly
effective 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
flows, and our financial position to foreign currency risks. The 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. This
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 firm
and highly anticipated foreign currency cash flows, with an objective of
balancing currency risk to provide adequate protection from significant
fluctuations in the currency markets.
The primary currencies for which we have exchange rate exposure are the
U.S. dollar versus the euro, the Chinese yuan, the Brazilian real and the
Argentine peso.
Commodity Price Risk
We are exposed to risks in energy costs due to fluctuations 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.
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 offsetting
derivatives to hedge our exposure.
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 fixed and variable-rate debt. In the agreements we exchange, at
specified intervals, the difference between fixed and variable-interest
amounts calculated on an agreed-upon notional principal amount. As
of December 31, 2014 and December 31, 2013, we had no such swap
agreements in place.
Concentration of Credit Risk
Our counterparties to derivative contracts are primarily major financial
institutions. We limit the dollar amount of contracts entered into with any
one financial institution and monitor counterparties’ credit ratings. We
also enter into master netting agreements with each financial institution,
where possible, which helps mitigate the credit risk associated with our
financial instruments. While we may be exposed to credit losses due to
the nonperformance of counterparties, we consider this risk remote.
69
FMC CORPORATION - Form 10-K Part II Part II
ITEM 8 Financial Statements and Supplementary Data
Financial Guarantees and Letter-of-Credit
Commitments
We enter into various financial instruments with off-balance-sheet
risk as part of the normal course of business. These off-balance-sheet
instruments include financial guarantees and contractual commitments
to extend financial guarantees under letters of credit and other assistance
to customers (Notes 1 and 19). Decisions to extend financial 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 generally designate
the derivative as a hedge of the variability of cash flows to be received
or paid related to a forecasted transaction (cash flow hedge). We record
in AOCI changes in the fair value of derivatives that are designated
as and meet all the required criteria for, a cash flow hedge. We then
reclassify these amounts into earnings as the underlying hedged
item affects earnings. In contrast we immediately record in earnings
changes in the fair value of derivatives that are not designated as cash
flow hedges.
As of December 31, 2014, we had open foreign currency forward contracts
in AOCI in a net after-tax loss position of $0.6 million designated as
cash flow hedges of underlying forecasted sales and purchases. Current
open contracts hedge forecasted transactions until December 31, 2015.
At December 31, 2014, we had open forward contracts with various
expiration dates to buy, sell or exchange foreign currencies with a
U.S. dollar equivalent of approximately $567.1 million.
As of December 31, 2014, we had current open commodity contracts
in AOCI in a net after-tax loss position of $4.6 million designated as
cash flow hedges of underlying forecasted purchases, primarily related
to natural gas. Current open commodity contracts hedge forecasted
transactions until December 31, 2016. At December 31, 2014, we
had 5.5 million mmBTUs (millions of British Thermal Units) in
aggregate notional volume of outstanding natural gas commodity
forward contracts to hedge forecasted purchases.
Of the $5.2 million of net after-tax losses, representing both open
foreign currency exchange contracts and open commodity contracts,
substantially all of the $5.2 million of these losses would be realized in
earnings during the twelve months ending December 31, 2015, if spot
rates in the future are consistent with forward rates as of December 31,
2014. The actual effect on earnings will be dependent on the 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
flow hedging instruments for accounting purposes. Contracts used to
hedge the exposure to foreign currency fluctuations associated with certain
monetary assets and liabilities are not designated as cash flow hedging
instruments, and changes in the fair value of these items are recorded in
earnings. We periodically hold soybean barter contracts which qualify as
derivatives and we have entered into offsetting commodity contracts to
hedge our exposure. Both the change in fair value of the soybean barter
contracts and the offsetting commodity contracts are recorded in earnings.
We had open forward contracts not designated as cash flow hedging
instruments for accounting purposes with various expiration dates to
buy, sell or exchange foreign currencies with a U.S. dollar equivalent
of approximately $6.1 billion at December 31, 2014, which included
approximately $5.2 billion associated with the derivative contracts to
hedge the purchase of Cheminova.
Fair Value of Derivative Instruments
The following tables provide the gross fair value and net balance sheet presentation of our derivative instruments as of December 31, 2014 and 2013.
(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, 2014
Designated
as Cash Flow
Hedges
Not Designated
as Hedging
Instruments
total Gross
amounts
Gross amounts
Offset in the
Consolidated
Balance Sheet(3)
Net amounts
$
$
17.1
0.3
17.4
(17.4)
(7.6)
(25.0)
(7.6)
$
$
$
15.1
—
15.1
(100.0)
—
(100.0)
(84.9) $
$
32.2
0.3
32.5
(117.4)
(7.6)
(125.0)
(92.5) $
(3.6) $
(0.3)
(3.9)
3.6
0.3
3.9
— $
28.6
—
28.6
(113.8)
(7.3)
(121.1)
(92.5)
70
FMC CORPORATION - Form 10-K Part II Part II
ITEM 8 Financial Statements and Supplementary Data
Gross amount of Derivatives
December 31, 2013
Designated
as Cash Flow
Hedges
Not Designated
as Hedging
Instruments
total
Gross amounts
Gross amounts
Offset in the
Consolidated
Balance Sheet(3)
Net amounts
$
$
(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.
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)
The following tables summarize the gains or losses related to our cash flow hedges and derivatives not designated as hedging instruments.
Derivatives in Cash Flow Hedging Relationships
(in Millions)
accumulated other comprehensive income (loss), net of tax at December 31, 2011
2012 Activity
Unrealized hedging gains (losses) and other, net of tax
Reclassification of deferred hedging (gains) losses, net of tax
Effective 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
Reclassification of deferred hedging (gains) losses, net of tax
Effective Portion(1)
accumulated other comprehensive income (loss), net of tax at December 31, 2013
2014 Activity
Unrealized hedging gains (losses) and other, net of tax
Reclassification of deferred hedging (gains) losses, net of tax
Effective Portion(1)
$
$
Contracts(2)
Foreign exchange
$
(1.1) $
Energy
Other
(4.8) $
(1.3) $
total
(7.2)
2.1
(2.3)
—
(0.3)
1.8
0.7 $
(8.0)
(0.2)
(8.2)
(7.5) $
6.9
—
6.9
6.1
3.8
(1.0) $
0.1
0.1
(1.2) $
$
0.7
0.4
1.1
0.1
(3.8)
(0.9)
(4.7)
$
2.4
0.1
2.5
1.3
—
—
—
(0.2)
5.9
5.7
(1.5)
(4.9)
0.3
(4.6)
(6.1)
3.1
(0.9)
2.2
aCCUMULatED OtHEr COMPrEHENSIVE INCOME (LOSS),
NEt OF taX at DECEMBEr 31, 2014
(0.6) $
(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, 2014, 2013 and 2012, there was no material ineffectiveness with regard to cash flow hedges.
$
(4.6) $
1.3
$
(3.9)
71
FMC CORPORATION - Form 10-K Part II Part II
ITEM 8 Financial Statements and Supplementary Data
Derivatives Not Designated as Hedging Instruments
(in Millions)
Foreign Exchange contracts
Location of Gain or (Loss)
recognized in Income on Derivatives
Cost of Sales and Services
Selling, general & administrative(2)
$
amount of Pre-tax Gain or (Loss)
recognized in Income on Derivatives(1)
Year Ended December 31,
2014
(2.9)
(99.6)
(102.5) $
$
$
2013
11.2
—
11.2
2012
6.7
—
6.7
tOtaL
(1) Amounts in the columns represent the gain or loss on the derivative instrument offset by the gain or loss on the hedged item.
(2) Charges represent an unrealized loss on hedging the purchase price of the Cheminova acquisition. See Note 3 within these consolidated financial statements more
$
$
information.
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 defined 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. The 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 different levels of the hierarchy, the categorization is based on
the lowest level input that is significant to the fair-value measurement
of the instrument.
Recurring Fair Value Measurements
The 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.
(in Millions)
ASSETS
Derivatives – Commodities:(1)
Energy contracts
Derivatives – Foreign exchange(1)
Other(2)
tOtaL aSSEtS
LIABILITIES
Derivatives – Commodities:(1)
Energy contracts
Derivatives – Foreign exchange(1)
Other(3)
December 31, 2014
Quoted Prices in active
Markets for Identical
assets (Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable
Inputs (Level 3)
$
$
$
— $
28.6
30.9
59.5 $
7.3 $
113.8
33.7
154.8 $
— $
—
30.9
30.9 $
— $
—
33.1
33.1 $
— $
28.6
—
28.6 $
7.3 $
113.8
0.6
121.7 $
—
—
—
—
—
—
—
—
tOtaL LIaBILItIES
(1) See the Fair Value of Derivative Instruments table within this Note for classifications on our 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) 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.
72
FMC CORPORATION - Form 10-K Part II Part II
ITEM 8 Financial Statements and Supplementary Data
December 31, 2013
Quoted Prices in active
Markets for Identical
assets (Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable
Inputs (Level 3)
$
$
0.5 $
5.1
32.7
38.3 $
— $
—
32.7
32.7 $
0.5 $
5.1
—
5.6 $
—
—
—
—
(in Millions)
ASSETS
Derivatives – Commodities:(1)
Energy contracts
Derivatives – Foreign exchange(1)
Other(2)
tOtaL aSSEtS
LIABILITIES
Derivatives – Commodities:(1)
Energy contracts
Derivatives – Foreign exchange(1)
Other(3)
— $
—
37.4
37.4 $
tOtaL LIaBILItIES
(1) See the Fair Value of Derivative Instruments table within this Note for classifications on our 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
0.4 $
11.6
37.4
49.4 $
11.6
—
12.0 $
—
—
—
—
0.4 $
$
$
liability are recorded at fair value. Asset amounts included in “Other assets” in the consolidated balance sheets.
(3) 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.
Nonrecurring Fair Value Measurements
The 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, 2014 and 2013. 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, 2014
Quoted Prices
in active Markets
for Identical assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable
Inputs (Level 3)
total Gains (Losses)
(Year Ended
December 31, 2014)
Long-lived assets associated with exit activities(1)
(3.1)
tOtaL aSSEtS
(3.1)
(1) We recorded charges, within our FMC Health and Nutrition segment, to write down the value of certain long-lived assets to zero related to our FMC Health and
— $
— $
— $
— $
— $
— $
— $
— $
$
$
Nutrition restructuring as they have no future use. See Note 7 within these consolidated financial statements for more information.
(in Millions)
ASSETS
Year ended
December 31, 2013
Quoted Prices
in active Markets
for Identical assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable
Inputs (Level 3)
total Gains (Losses)
(Year Ended
December 31, 2013)
Net assets of discontinued operations held for sale(1) $
Long-lived assets to be abandoned(2)
(156.7)
(1.9)
tOtaL aSSEtS
(158.6)
(1) 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.
150.1 $
2.6
152.7 $
150.1
2.6
152.7
— $
—
— $
— $
—
— $
$
$
$
(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.
73
FMC CORPORATION - Form 10-K Part II Part II
ITEM 8 Financial Statements and Supplementary Data
NOTE 18 Guarantees, Commitments and Contingencies
Guarantees
We continue to monitor the conditions that are subject to guarantees
and indemnifications to identify whether a liability must be recognized
in our financial statements.
The following table provides the estimated undiscounted amount
of potential future payments for each major group of guarantees at
December 31, 2014. These guarantees arise during the ordinary course
of business from relationships with customers and nonconsolidated
(in Millions)
Guarantees:
affiliates. Non-performance by the guaranteed party triggers the
obligation requiring us to make payments to the beneficiary of the
guarantee. Based on our experience these types of guarantees have
not had a material effect on our consolidated financial position or on
our liquidity. Our expectation is that future payment or performance
related to the non-performance of others is considered unlikely.
Guarantees of vendor financing(1)
Debt guarantees(2)
50.2
68.2
tOtaL
118.4
(1) Represents guarantees to financial institutions on behalf of certain FMC Agricultural Solutions customers for their seasonal borrowing. This amount is recorded
$
$
on the condensed consolidated balance sheets as “Guarantees of vendor financing.”
(2) These guarantees represent support provided to third-party banks for credit extended to various FMC Agricultural Solutions customers and nonconsolidated
affiliates. The liability for the guarantees is recorded at an amount that approximates fair-value (i.e. representing the stand-ready obligation) based on our
historical collection experience and a current assessment of credit exposure. We believe the fair-value of these guarantees is immaterial. The majority of these
guarantees have an expiration date of less than one year.
Excluded from the chart above, in connection with our property and
asset sales and divestitures, we have agreed to indemnify the buyers 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 indemnification
or guarantee obligations with respect to these liabilities may be indefinite
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 specific liabilities for these guarantees.
(in Millions)
Rent Expense
Commitments
Leases
We lease office 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. Our capital leases primarily relate to our two
research and technology centers in the U.S. and China. Our capital lease
asset balances (net of accumulated amortization of $1.4 million and
$0.9 million), which are classified as buildings within our property, plant
and equipment on our consolidated balance sheets, were $28.7 million
and $29.3 million as of December 31, 2014 and 2013, respectively.
Amortization of capital lease assets is included within depreciation
expense. See Note 20 within these consolidated financial statements
for obligations associated with our capital leases.
Year ended December 31,
2014
2013
2012
Operating Leases(1)
12.3
(1) Rent expense is net of credits (received for the use of leased transportation assets) of $26.3 million, $25.0 million and $25.4 million for the years ended December
12.9 $
15.7 $
$
31, 2014, 2013 and 2012, respectively.
Future Minimum Lease Payments
Capital Leases
(in Millions)
5.1
2015
5.1
2016
5.1
2017
5.1
2018
5.2
2019
25.4
Thereafter
(1) Minimum future lease payments for transportation assets (which are primarily associated with our FMC Alkali Chemicals division) included above aggregated
Operating Leases(1)
$
$
$
$
$
$
23.3 $
17.1 $
12.8 $
8.8 $
6.8 $
15.1 $
approximately $48.8 million, against which we expect to continue to receive credits to substantially defray our rental expense.
74
FMC CORPORATION - Form 10-K
Purchase Obligations
Our minimum commitments under our take-or-pay purchase obligations
associated with the sourcing of materials and energy total approximately
$103.8 million of which approximately $45 million relate to our FMC
Alkali Chemicals division. 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 fulfill the obligations associated with these contracts through
our purchases associated with the normal course of business.
Contingencies
Competition / antitrust litigation related to the discontinued FMC Peroxygens
segment. We are subject to actions brought by private plaintiffs 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 firm. The single
entity then filed a lawsuit in Germany in March 2009 against European
producers, including our wholly-owned Spanish subsidiary, Foret.
Initial defense briefs were filed in April 2010, and an initial hearing was
held during the first 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. The ECJ had not yet issued a ruling
in the reference proceeding. 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 filing of
various class actions in U.S. federal and state courts, which have all been
settled, putative class actions against us and five other major hydrogen
peroxide producers were filed in provincial courts in Ontario, Quebec and
British Columbia under the laws of Canada. The other five defendants
have settled these claims for a total of approximately $20.6 million. On
September 28, 2009, the Ontario Superior Court of Justice certified a
class of direct and indirect purchasers of hydrogen peroxide from 1994 to
2005. Our motion for leave to appeal the class certification decision was
denied in June 2010. The case was largely dormant while the Canadian
Supreme Court considered, in different litigation, whether indirect
purchasers may recover overcharges in antitrust actions. In October
2013 the Court ruled that such recovery is permissible. Despite this
Part II Part II
ITEM 8 Financial Statements and Supplementary Data
ruling, the plaintiffs 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 certified 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 classified 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
filing of asbestos-related claims with respect to all potential defendants
has changed over time, and that filing rates as to us in particular have
varied significantly 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 filing rates against us have
yet to form a predictable pattern, and we are unable to project a
reasonably accurate future filing rate and thus, we are presently unable
to reasonably estimate our asbestos liability with respect to claims that
may be filed 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. Therefore,
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 effect on our consolidated financial 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
effect on our consolidated financial position, results of operations in
any one reporting period, or liquidity.
See Note 10 for the Pocatello tribal litigation and Middleport litigation
for legal proceedings associated with our environmental contingencies.
75
FMC CORPORATION - Form 10-K Part II Part II
ITEM 8 Financial Statements and Supplementary Data
NOTE 19 Segment Information
Year Ended December 31,
2014
2013
2012
$
$
$
$
$
$
$
2,173.8
828.2
1,035.7
—
4,037.7
1,763.8
680.8
966.2
(0.9)
3,409.9
2,145.7
762.0
970.0
(2.9)
3,874.8
(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 profit
Corporate and other
Operating profit before the items listed below
Restructuring and other (charges) income(1)
Interest expense, net
Non-operating pension and postretirement (charges) income(2)
Business separation cost(3)
Acquisition/divestiture related charges(4)
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 2014, 2013 and 2012 relate to FMC Agricultural Solutions of
$(4.5) million, $32.6 million and $8.5 million; FMC Health and Nutrition of $14.1 million, $1.0 million and $0.7 million; FMC Minerals of $0.1 million,
$6.4 million and $13.0 million; and Corporate of $46.8 million, $7.9 million and $5.3 million, respectively.
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
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
497.8
187.9
166.7
—
852.4
(72.3)
780.1
(56.5)
(59.5)
(10.5)
(23.6)
(145.0)
(73.5)
(89.4)
(14.6)
307.5
$
$
$
$
$
(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. These expenses are included as a component of the line item “Selling, general and administrative expenses” on
our consolidated statements of income.
(3) Charges are associated with the previously planned separation of our FMC Corporation into two independent public companies. On September 8, 2014, we
announced that we would no longer proceed with the planned separation of FMC into two distinct public entities. At that time we announced the acquisition of
Cheminova; see Note 3 within these consolidated financial statements for more information. These charges are included within “Business separation costs” on our
consolidated income statement. These costs were primarily related to professional fees associated with separation activities within the finance and legal functions
through September 8, 2014.
(4) Charges related to the expensing of the inventory fair value step-up resulting from the application of purchase accounting, legal and professional fees and gains
or losses on hedging purchase price associated with the planned or completed acquisitions and costs incurred associated with the divestiture of our FMC Alkali
Chemicals division. Amounts represent the following:
(in Millions)
acquisition related charges - Cheminova
Legal and professional fees(1)
Unrealized loss/(gain) on hedging purchase price(1)
Acquisition related charges
Legal and professional fees(1)
Inventory fair value step-up amortization(2)
Divestiture related charges - FMC Alkali Chemicals division
Legal and professional fees(1)
9.0
aCQUISItION/DIVEStItUrE rELatED CHarGES
145.0 $
(1) On the consolidated statements of income, these charges are included in “Selling, general and administrative expenses”.
(2) On the consolidated statements of income, these charges are included in “Costs of sales and services”.
$
76
twelve Months Ended
December 31,
2014
2013
2012
$
32.2 $
99.6
—
4.2
— $
—
4.8
5.2
—
10.0 $
—
—
—
7.2
—
7.2
FMC CORPORATION - Form 10-K Part II Part II
ITEM 8 Financial Statements and Supplementary Data
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 each have one product line group, and therefore net sales to external customers within each of those segments are included
in the table above.
Year Ended December 31,
(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
$
$
$
$
$
$
$
$
$
$
2014
779.0 $
256.7
1,035.7 $
2013
747.0
223.0
970.0
December 31,
2013
2014
1,612.3 $
1,365.8
801.1
—
3,779.2
1,011.7
—
549.6
5,340.5 $
1,398.1
1,380.5
758.4
—
3,537.0
1,039.0
198.3
460.9
5,235.2
2,399.0 $
1,452.3
939.6
—
4,790.9
—
549.6
5,340.5 $
2,190.7
1,508.2
877.1
—
4,576.0
198.3
460.9
5,235.2
2012
733.2
233.0
966.2
2012
1,184.3
874.2
702.1
—
2,760.6
821.2
336.6
455.5
4,373.9
1,793.7
958.1
830.0
—
3,581.8
336.6
455.5
4,373.9
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.
77
FMC CORPORATION - Form 10-K Part II Part II
ITEM 8 Financial Statements and Supplementary Data
Year Ended December Part II31,
Depreciation and amortization
research and Development Expense
2012
(in Millions)
95.4
FMC Agricultural Solutions
9.9
FMC Health and Nutrition
6.7
FMC Minerals
—
Corporate
tOtaL
112.0
$
(1) Cash spending associated with our contract manufacturers in our FMC Agricultural Solutions segment, which are not included in the chart above was $8.1
Capital Expenditures(1)
2014
25.4 $
96.8
87.5
15.0
224.7 $
2013
100.5 $
10.5
6.7
—
117.7 $
2014
111.8 $
10.0
6.5
—
128.3 $
2014
31.0 $
44.9
51.4
3.9
131.2 $
2013
34.1 $
35.4
53.9
3.8
127.2 $
2012
34.4
25.8
52.4
3.3
115.9
2012
18.4
56.5
92.9
9.5
177.3
115.7
50.3
5.8
221.9 $
2013
50.1 $
$
$
$
$
$
million, $24.1 million and $23.5 million for the years ended December 31, 2014. 2013 and 2012, respectively.
Geographic Segment Information
(in Millions)
revenue from continuing operations (by location of customer):
Year Ended December 31,
2014
2013
2012
North America(1)
Europe/Middle East/Africa
Latin America(1)
Asia Pacific
1,107.6
494.9
1,161.2
646.2
tOtaL
3,409.9
(1) In 2014, countries with sales in excess of ten percent of consolidated revenue consisted of the U.S. and Brazil. Sales for the years ended December 2014, 2013
and 2012 for the U.S. totaled $1,313.8 million, $1,244.8 million and $1,073.4 million and for Brazil totaled $958.8 million, $1,043.1 million and
$845.4 million, respectively.
1,368.3 $
559.0
1,334.5
775.9
4,037.7 $
1,285.1 $
528.1
1,382.4
679.2
3,874.8 $
$
$
(in Millions)
Long-lived assets(1):
North America(2)
Europe/Middle East/Africa(2)
Latin America
Asia Pacific
950.0
736.7
168.2
343.9
tOtaL
2,198.8
(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, 2014 and 2013 are the U.S. and Norway. Long lived
assets at December 31, 2014 and 2013 for the U.S. totaled $987.5 million and $948.0 million and for Norway totaled $453.5 million and $511.3 million,
respectively. Norway assets included goodwill of $194.3 million and $273.1 million at December 31, 2014 and 2013, respectively.
989.1 $
659.4
209.5
348.0
2,206.0 $
$
$
December 31,
2014
2013
78
FMC CORPORATION - Form 10-K Part II Part II
ITEM 8 Financial Statements and Supplementary Data
NOTE 20 Supplemental Information
The 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 17)
Argentina government receivable(1)
Other prepaid and current assets
tOtaL
December 31,
2014
7.0 $
74.9
8.0
28.6
14.8
81.4
214.7 $
2013
7.1
81.0
16.8
5.6
13.5
112.8
236.8
$
$
$
Other assets
2013
(in Millions)
10.6
Debt financing fees, net
62.2
Advance to contract manufacturers
32.5
Capitalized software, net
18.7
Environmental obligation recoveries (Note 10)
Argentina government receivable(1)
41.4
32.7
Deferred compensation arrangements
17.2
Pension and other postretirement benefits (Note 13)
46.7
Other long-term assets
tOtaL
262.0
(1) We have various subsidiaries that conduct business within Argentina, primarily in our FMC Agricultural Solutions and FMC Minerals segments. At December 31,
2014 and 2013, $42.2 million and $35.0 million of outstanding receivables due from the Argentina government, which primarily represent export tax and
valued added tax receivables, were denominated in U.S. dollars. As with all outstanding receivable balances we continually review recoverability by analyzing
historical experience, current collection trends and regional business and political factors among other factors. We have further analyzed the recoverability of our
outstanding receivables from the Argentina government in light of the current economic and political environment within Argentina, including the recent credit
downgrades of local and federal governments and the July 31, 2014 default by the Argentina government on some of its debt obligations. Based on our analysis
of the impact of economic conditions in Argentina on our receivables, at this time, we believe the outstanding receivables to be recoverable.
December 31,
2014
14.5 $
62.8
33.4
21.9
47.0
30.9
0.7
61.8
273.0 $
$
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 17)
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
December Part II31,
2014
0.1 $
10.3
20.1
62.3
74.4
121.1
150.5
438.8 $
December Part II31,
2014
1.6 $
47.1
33.1
13.8
33.6
53.3
30.3
212.8 $
2013
17.9
6.1
18.0
74.6
29.5
12.0
148.9
307.0
2013
4.8
37.3
37.4
14.9
32.4
53.2
36.2
216.2
$
$
$
$
79
FMC CORPORATION - Form 10-K Part II Part II
ITEM 8 Financial Statements and Supplementary Data
NOTE 21 Quarterly Financial Information (Unaudited)
(in Millions, Except Share and Per Share Data)
Revenue
Gross Profit
Income (loss) from continuing operations before
equity in (earnings) loss of affiliates, net interest
income and expense and income taxes
Income (loss) from continuing operations
Discontinued operations, net of income taxes(2)
Net income (loss)
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:
2014
2013
1Q
$ 941.8
328.5
$
2Q
987.8
357.6
3Q
$ 1,015.9
323.7
4Q
$ 1,092.2
365.2
1Q
$ 910.7
353.6
$
2Q
876.0
327.5
$
3Q
957.4
304.4
4Q
$ 1,130.7
354.9
173.3
120.5
(50.1)
70.4
182.9
125.9
(12.6)
113.3
4.8
4.2
$
65.6
$ 109.1
$ 115.7
(50.1)
65.6
$
$
121.7
(12.6)
$ 109.1
$
$
0.87
(0.38)
0.91
(0.09)
$
$
$
$
103.3
80.6
(20.5)
60.1
3.8
56.3
76.8
(20.5)
56.3
0.57
(0.15)
$
$
$
$
85.9
84.5
(6.2)
78.3
194.4
138.2
(3.2)
135.0
166.6
119.7
1.5
121.2
1.8
4.1
3.2
76.5
$ 130.9
$ 118.0
82.7
(6.2)
76.5
$ 134.1
(3.2)
$ 130.9
$
116.5
1.5
$ 118.0
0.62
(0.05)
$
$
0.97
(0.02)
0.85
0.01
118.4
76.5
(56.6)
19.9
2.0
17.9
74.5
(56.6)
17.9
0.55
(0.42)
179.6
132.9
(101.0)
31.9
4.8
27.1
128.1
(101.0)
27.1
0.96
(0.76)
$
$
$
$
$
$
$
$
$
0.49
$
0.82
$
0.42
$
0.57
$
0.95
$
0.86
$
0.13
$
0.20
$
$
0.86
(0.37)
0.90
(0.09)
$
$
0.57
(0.15)
0.62
(0.05)
$
$
0.96
(0.02)
$
0.85
0.01
$
0.55
(0.42)
0.95
(0.75)
$
0.49
$
0.81
$
0.42
$
0.57
$
0.94
$
0.86
$
0.13
$
0.20
Basic
Diluted
133.1
134.3
133.3
134.4
133.4
134.3
133.5
134.3
137.1
138.1
136.3
137.1
134.1
135.0
133.3
134.3
(1) The sum of quarterly earnings per common share may differ from the full-year amount.
(2) In the first quarter of 2014, our discontinued operations included a loss of $10.1 million ($39.0 million after-tax) associated with the completed sale of our
FMC Peroxygens segment. 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).
80
FMC CORPORATION - Form 10-K Part II Part II
ITEM 8 Financial Statements and Supplementary Data
NOTE 22 Subsequent Event
In September 2014, we announced our decision to pursue the sale of
our FMC Alkali Chemicals division (“ACD”). On February 3, 2015,
we signed a definitive agreement to sell ACD to a wholly owned
subsidiary of Tronox Limited for $1.64 billion. We expect the sale to
be completed in early 2015 subject to customary regulatory approvals
and closing conditions. The proceeds from the sale will be used to fund
the acquisition of Cheminova.
We have concluded, as a result of the signing of the definitive agreement,
that ACD has met the criteria to be an asset held for sale and therefore
will be presented as a discontinued operation in accordance with
GAAP in future reporting periods. In accordance with GAAP, the
reclassification of ACD from a continuing operation to a discontinued
operation occurs in the period for which the discontinued operation
criteria has been met. Therefore as of December 31, 2014, ACD is
accounted for as a continuing operation.
Beginning with the first quarter 2015 reporting on Form 10-Q, the
results of operations of ACD will be reclassified to reflect the business
as a discontinued operation for all periods presented and the assets
and liabilities of the business will be reclassified as held for sale. Our
FMC Minerals segment, which previously included our FMC Alkali
Chemicals and FMC Lithium divisions, will be renamed FMC Lithium.
The carrying amounts of the major classes of assets and liabilities related
to ACD were as follows:
(in Millions)
assets
Current assets (primarily trade receivables and inventories)
Property, plant & equipment
Other non-current assets
Liabilities
Current Liabilities
Other Liabilities
NEt aSSEtS
as of
December 31, 2014
$
$
203.3
378.6
22.9
(88.4)
(4.7)
511.7
81
FMC CORPORATION - Form 10-K Part II Part II
ITEM 8 Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
FMC Corporation:
We have audited the accompanying consolidated balance sheets of
FMC Corporation and subsidiaries as of December 31, 2014 and 2013,
and the related consolidated statements of income, comprehensive
income, cash flows, and changes in equity for each of the years in the
three-year period ended December 31, 2014. In connection with our
audits of the consolidated financial statements, we also have audited
the related financial statement schedule. These consolidated financial
statements and financial statement schedule are the responsibility of the
Company’s management. Our responsibility is to express an opinion on
these consolidated financial statements and financial statement schedule
based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of FMC
Corporation and subsidiaries as of December 31, 2014 and 2013, and
the results of their operations and their cash flows for each of the years
in the three-year period ended December 31, 2014, in conformity with
U.S. generally accepted accounting principles. Also in our opinion, the
related financial statement schedule, when considered in relation to the
basic consolidated financial 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 financial reporting as of December 31, 2014, based
on criteria established in Internal Control – Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO), and our report dated February 27, 2015 expressed
an unqualified opinion on the effectiveness of the Company’s internal
control over financial reporting.
/s/ KPMG LLP
Philadelphia, Pennsylvania
February 27, 2015
82
FMC CORPORATION - Form 10-K Part II 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 financial reporting as defined in Exchange Act
Rule 13a-15(f ). FMC’s internal control over financial reporting is a
process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for
external purposes in accordance with U.S. generally accepted accounting
principles. Internal control over financial reporting includes those
written policies and procedures that:
•• pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the
assets of FMC;
•• provide reasonable assurance that transactions are recorded as necessary
to permit preparation of financial 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 effect on the consolidated financial statements.
Internal control over financial reporting includes the controls themselves,
monitoring and internal auditing practices and actions taken to correct
deficiencies as identified.
Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness 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 effectiveness of our internal control over financial
reporting as of December 31, 2014. We based this assessment on
criteria for effective internal control over financial reporting described
in “Internal Control—Integrated Framework (COSO 2013)” 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 financial reporting and testing
of the operational effectiveness of our internal control over financial
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,
2014, FMC has effective internal control over financial reporting.
KPMG LLP, our independent registered public accounting firm, has
issued an attestation report on the effectiveness of internal control
over financial reporting as of December 31, 2014, which appears on
the following page.
83
FMC CORPORATION - Form 10-K Part II Part II
ITEM 8 Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
FMC Corporation:
We have audited FMC Corporation’s internal control over financial
reporting as of December 31, 2014, based on criteria established in
Internal Control – Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO).
FMC Corporation’s management is responsible for maintaining effective
internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial 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 financial
reporting based on our audit.
We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance
about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an
understanding of internal control over financial reporting, assessing
the risk that a material weakness exists, and testing and evaluating the
design and operating effectiveness 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 financial reporting is a process
designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes
those policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to
permit preparation of financial 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 effect on the financial statements.
Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness 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,
effective internal control over financial reporting as of December 31,
2014, based on criteria established in Internal Control – Integrated
Framework (2013) 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, 2014 and 2013, and the related consolidated statements of income,
comprehensive income, cash flows, and changes in equity for each of
the years in the three-year period ended December 31, 2014, and our
report dated February 27, 2015 expressed an unqualified opinion on
those consolidated financial statements.
/s/ KPMG LLP
Philadelphia, Pennsylvania
February 27, 2015
84
FMC CORPORATION - Form 10-K Part II Part II
ITEM 9B Other Information
FMC Corporation
Schedule II - Valuation and Qualifying Accounts and Reserves
for Years Ended December 31, 2014, 2013 and 2012
(in Millions)
December 31, 2014
Reserve for doubtful accounts
Deferred tax valuation allowance
December 31, 2013
Reserve for doubtful accounts
Deferred tax valuation allowance
December 31, 2012
Reserve for doubtful accounts
Deferred tax valuation allowance
(1) Write-offs are net of recoveries.
Provision /(Benefit)
Charged to
Costs and
Expenses
Charged
to Other
Comprehensive
Income
Balance,
Beginning of Year
$
$
$
$
$
$
30.2
108.2
26.8
84.5
20.7
92.6
9.4
17.3
5.7
23.1
8.8
(8.1)
—
(0.2)
—
0.6
—
—
Write-offs(1)
Balance,
End of Year
(2.0) $
— $
(2.3) $
— $
(2.7) $
— $
37.6
125.3
30.2
108.2
26.8
84.5
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 Officer and Chief Financial Officer), the Chief
Executive Officer and Chief Financial Officer have concluded that,
as of the end of the period covered by this report, the Company’s
disclosure controls and procedures (as defined in Rules 13a-15(e)
and 15d-15(e) under the Securities Exchange Act of 1934) are
effective to provide reasonable assurance that information required
to be disclosed by the Company in reports filed or submitted
under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in the
SEC’s rules and forms and is accumulated and communicated to
management, including our principal executive officer and principal
financial officer, as appropriate to allow timely decisions regarding
required disclosure.
Management’s annual report on internal control over financial
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 firm.
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. There have been no changes in
internal control over financial reporting that occurred during the
quarter ended December 31, 2014, that materially affected or
are reasonably likely to materially affect our internal control over
financial reporting.
ITEM 9B Other Information
None.
85
FMC CORPORATION - Form 10-K
PART III PART III
ITEM 10 Directors, Executive Officers and Corporate Governance
PART III
ITEM 10 Directors, Executive Officers and Corporate
Governance
Information concerning directors, appearing under the caption “III. Board
of Directors” in our Proxy Statement to be filed with the SEC in
connection with the Annual Meeting of Stockholders scheduled to be
held on April 28, 2015 (the “Proxy Statement”), information concerning
executive officers, appearing under the caption “Item 4A. Executive
Officers of the Registrant” in Part I of this Form 10-K, 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)
Beneficial Ownership Reporting Compliance” in the Proxy Statement,
is incorporated herein by reference in response to this Item 10.
ITEM 11 Executive Compensation
The 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 Beneficial Owners
and Management and Related Stockholder Matters
The information contained in the section titled “V. Security Ownership of FMC Corporation” in the Proxy Statement, with respect to security
ownership of certain beneficial owners and management, is incorporated herein by reference in response to this Item 12.
86
FMC CORPORATION - Form 10-K PART III PART III
ITEM 14 Principal Accountant Fees and Services
Equity Compensation Plan Information
The table below sets forth information with respect to compensation plans under which equity securities of FMC are authorized for issuance as
of December 31, 2014. All of the equity compensation plans pursuant to which we are currently granting equity awards have been approved by
stockholders.
(Shares in thousands, except per share data)
Number of Securities
remaining available for
future issuance under
equity compensation
plans (excluding securities
reflected in column (A))
Plan Category
(C)
Equity Compensation Plans approved by stockholders
6,047
(1) Taking into account all outstanding awards included in this table, the weighted-average exercise price of such stock options is $42.46 and the weighted-average
Number of Securities to
be issued upon exercise of
outstanding options and
restricted stock awards
(A)(2)
2,485 $
Weighted-average
exercise price of
outstanding
options and restricted
stock awards
(B)(1)
42.46
term-to-expiration is 5.5 years.
(2) Includes 1,931 stock options and 413 restricted stock awards granted to employees and 141 Restricted Stock Units (RSUs) held by directors.
ITEM 13 Certain Relationships and Related Transactions,
and Director Independence
The 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
The information contained in the Proxy Statement in the section titled “II. The Proposals to be Voted On—Ratification of Appointment of
Independent Registered Public Accounting Firm” is incorporated herein by reference in response to this Item 14.
87
FMC CORPORATION - Form 10-K PART IV PART IV
ITEM 15 Exhibits and Financial Statement Schedules
PART IV
ITEM 15 Exhibits and Financial Statement Schedules
(a) Documents filed with this Report
1. Consolidated financial statements of FMC Corporation and its subsidiaries are incorporated under Item 8 of this Form 10-K.
2. The following supplementary financial information is filed in this Form 10-K:
Financial Statements Schedule II – Valuation and qualifying accounts and reserves for the years ended December 31, 2014, 2013
and 2012
Financial Statements Schedule II – Valuation and qualifying accounts and reserves for the years ended December 31, 2014, 2013 and 2012
The schedules not included herein are omitted because they are not applicable or the required information is presented in the financial
The schedules not included herein are omitted because they are not applicable or the required information is presented in the financial statements
statements or related notes.
or related notes.
103
3. Exhibits: See attached Index of Exhibits
(b) Exhibits
Exhibit No. Exhibit Description
(2)
*2.1a
Plan of acquisition, reorganization, arrangement, liquidation or succession
Share Purchase Agreement, dated September 8, 2014, by and between FMC Corporation, Auriga Industries A/S and Cheminova A/S
(Exhibit 2.1 to the Current Report on Form 8-K/A filed on September 11, 2014)
Stock and Asset Purchase Agreement, dated as of February 3, 2015, by and among FMC Corporation, Tronox US Holdings Inc. and Tronox
Limited (Exhibit 2.1 to the Current Report on Form 8-K/A filed on February 4, 2015)
Articles of Incorporation and By-Laws
Restated Certificate of Incorporation, as amended through May 23, 2013 (Exhibit 3.1 to the Quarterly Report on Form 10-Q filed on July
30, 2013)
Restated By-Laws of FMC Corporation as of February 18, 2014 (Exhibit 3.2 to the Quarterly Report on Form 10-Q filed on May 7, 2014)
Instruments defining the rights of security holders, including indentures. FMC Corporation undertakes to furnish to the SEC upon
request, a copy of any instrument defining the rights of holders of long-term debt of FMC Corporation and its consolidated subsidiaries and
for any of its unconsolidated subsidiaries for which financial statements are required to be filed.
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 filed 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 filed 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 filed on November 17, 2011).
Third 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 filed 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 Thereto, 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, The Bank of Tokyo-Mitsubishi
UFJ, Ltd., and Sumitomo Mitsui Banking Corp., as Co-Documentation Agents, and DNB NOR Bank ASA, The 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 filed 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 filed on October 29, 2013)
Amended and Restated Credit Agreement, dated as of October 10, 2014, 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 Current Report on Form 8-K filed on October 14, 2014)
*2.1b
(3)
*3.1
*3.2
(4)
*4.1
*4.2
*4.3
*4.4
(10)
*10.1
*10.1a
*10.1b
88
FMC CORPORATION - Form 10-K PART IV PART IV
ITEM 15 Exhibits and Financial Statement Schedules
Exhibit No. Exhibit Description
*10.1c
Term Loan Agreement, dated as of October 10, 2014, among FMC Corporation, certain subsidiaries of FMC Corporation party thereto, the
lenders party thereto, and Citibank, N.A., as Administrative Agent for such lenders. (Exhibit 10.1 to the Current Report on Form 8-K filed on
October 14, 2014)
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 filed on November 8, 2005)
FMC Corporation Compensation Plan for Non-Employee Directors As Amended and Restated Effective February 20, 2009 (Exhibit 10.4 to the
Annual Report on Form 10-K filed on February 23, 2009)
Non-Employee Director Restricted Stock Unit Award Agreement (Exhibit 10.4.a to the Annual Report on Form 10-K filed on February 23,
2009)
Non-Employee Director Restricted Stock Unit Award Agreement (Exhibit 10.4.b to the Annual Report on Form 10-K filed on February 23, 2009)
FMC Corporation Salaried Employees’ Equivalent Retirement Plan, as amended and restated effective as of January 1, 2009 (Exhibit 10.5 to the
Annual Report on Form 10-K filed on February 23, 2009)
FMC Corporation Salaried Employees’ Equivalent Retirement Plan Grantor Trust, as amended and restated effective as July 31, 2001
(Exhibit 10.6.a to the Quarterly Report on Form 10-Q filed on November 7, 2001)
FMC Corporation Non-Qualified Savings and Investment Plan, as adopted by the Company on December 17, 2008 (Exhibit 10.7 to the
Annual Report on Form 10-K filed on February 23, 2009)
FMC Corporation Non-Qualified Savings and Investment Plan Trust, as amended and restated effective as of September 28, 2001
(Exhibit 10.7.a to the Quarterly Report on Form 10-Q filed on November 7, 2001)
First Amendment to FMC Corporation Non-Qualified Savings and Investment Plan Trust between Fidelity Management Trust Company and
FMC Corporation, effective as of October 1, 2003 (Exhibit 10.15a to the Annual Report on Form 10-K filed on March 11, 2004)
Second Amendment to FMC Corporation Non-Qualified Savings and Investment Plan Trust, effective as of January 1, 2004 (Exhibit 10.12b to
the Annual Report on Form 10-K filed on March 14, 2005)
*10.2
†*10.3
†*10.3.a
†*10.3.b
†*10.4
†*10.5
†*10.6
†*10.7
†* 10.7.a
†* 10.7.b
†*10.7.c Third Amendment to FMC Corporation Non-Qualified 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, effective as of February 14, 2005 (Exhibit 10.8.c to the Annual Report on Form 10-K filed on February 23, 2009)
Fourth Amendment to FMC Corporation Non-Qualified Savings and Investment Plan Trust between Fidelity Management Trust Company and
FMC Corporation, effective as of July 1, 2005 (Exhibit 10.8.d to the Annual Report on Form 10-K filed on February 23, 2009)
Fifth Amendment to FMC Corporation Non-Qualified Savings and Investment Plan Trust between Fidelity Management Trust Company and
FMC Corporation, effective as of April 23, 2008 (Exhibit 10.8.e to the Annual Report on Form 10-K filed 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 filed 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 filed on February 18, 2013)
Form of Nonqualified Stock Option Agreement Pursuant to the FMC Corporation Incentive Compensation and Stock Plan (Exhibit 10.8 to the
Annual Report on Form 10-K filed 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 filed on February 18, 2013)
FMC Corporation Executive Severance Plan, as amended and restated effective as of January 1, 2009 (Exhibit 10.10 to the Annual Report on
Form 10-K filed 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
filed 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 filed 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 filed.
Amended and Restated Executive Severance Agreement, dated November 6, 2012, between FMC Corporation and Andrea E. Utecht.
(Exhibit 10.12 to FMC Corporation’s Annual Report on Form 10-K filed on February 18, 2014)
Amended and Restated Executive Severance Agreement, entered into as of November 6, 2012, by and between FMC Corporation and Thomas
C. Deas, Jr. (Exhibit 10.13 to FMC Corporation’s Annual Report on Form 10-K filed on February 18, 2014)
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 filed on February 18, 2013) 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 Eric Norris was not filed.
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 filed 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 filed on April 27, 2000)
First Amendment to Joint Venture Agreement between FMC Corporation and Solutia Inc., effective as of December 29, 1999 (Exhibit 2.II to
Solutia’s Current Report on Form 8-K filed on April 27, 2000)
Second Amendment to Joint Venture Agreement between FMC Corporation and Solutia Inc., effective as of February 2, 2000 (Exhibit 2.III to
Solutia’s Current Report on Form 8-K filed on April 27, 2000)
*10.15.c Third Amendment to Joint Venture Agreement between FMC Corporation and Solutia Inc., effective as of March 31, 2000 (Exhibit 2.IV to
*10.15.d
Solutia’s Current Report on Form 8-K filed 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 filed on November 9, 2005)
89
FMC CORPORATION - Form 10-K PART IV PART IV
ITEM 15 Exhibits and Financial Statement Schedules
Exhibit No. Exhibit Description
*10.16
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) filed 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 filed 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 filed 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 filed on November 9, 2012)
Computation of Ratios of Earnings to Fixed Charges
FMC Corporation List of Significant Subsidiaries
Consent of KPMG LLP
Chief Executive Officer Certification
Chief Financial Officer Certification
Chief Executive Officer Certification of Annual Report
Chief Financial Officer Certification of Annual Report
Mine Safety Disclosures
Interactive Data File
†*10.17
†*10.17.a
†*10.18
12
21
23.1
31.1
31.2
32.1
32.2
95
101
* Incorporated by reference
† Management contract or compensatory plan or arrangement
90
FMC CORPORATION - Form 10-K PART IV 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 Officer
February 27, 2015
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.
Signature
/S/ PAUL W. GRAVES
Paul W. Graves
/S/ NICHOLAS L. PFEIFFER
Nicholas L. Pfeiffer
/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/ 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
Title
Executive Vice President and Chief Financial Officer
Corporate Controller (Principal Accounting Officer)
President, Chief Executive Officer and Chairman of the Board
Director
Director
Director
Director
Director
Director
Director
Director
Director
Date
February 27, 2015
February 27, 2015
February 27, 2015
February 27, 2015
February 27, 2015
February 27, 2015
February 27, 2015
February 27, 2015
February 27, 2015
February 27, 2015
February 27, 2015
February 27, 2015
91
FMC CORPORATION - Form 10-K PART IV 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, 2014
Exhibit No.
12
21
23.1
31.1
31.2
32.1
32.2
95
101
Exhibit Description
Computation of Ratios of Earnings to Fixed Charges
FMC Corporation List of Significant Subsidiaries
Consent of KPMG LLP
Chief Executive Officer Certification
Chief Financial Officer Certification
Chief Executive Officer Certification of Annual Report
Chief Financial Officer Certification of Annual Report
Mine Safety Disclosures
Interactive Data File
EXHIBIT 12
Statements of Computation of Ratio of Earnings to Fixed Charges
Year ended December PART IV31,
2010
2012
2011
2014
2013
$
(in Millions, Except Ratios)
Earnings:
Income from continuing operations before income taxes
Equity in (earnings) loss of affiliates
Interest expense and amortization of debt discount, fees and expenses
Amortization of capitalized interest
Interest included in rental expense
TOTAL EARNINGS
Fixed charges:
Interest expense and amortization of debt discount, fees and expenses
35.1
Interest capitalized as part of fixed assets
7.5
Interest included in rental expense
4.3
46.9
TOTAL FIXED CHARGES
Ratio of earnings to fixed charges(1)
10.7
(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.
553.2 $
(0.8)
35.1
3.0
4.9
595.4
597.7 $
0.7
40.8
3.6
2.4
645.2
485.0 $
0.9
59.7
4.2
4.3
554.1 $
615.9 $
0.9
42.4
3.7
3.5
35.1 $
6.9
4.9
46.9
12.7
40.8 $
7.8
2.4
51.0
12.7
457.6
(0.3)
35.1
2.8
4.3
499.5
59.7 $
10.2
4.3
74.2 $
7.5
42.4 $
7.4
3.5
53.3
12.5
666.4
$
$
$
$
$
$
$
$
$
92
FMC CORPORATION - Form 10-K
PART IV PART IV
ITEM 15 Exhibits and Financial Statement Schedules
EXHIBIT 21
Significant Subsidiaries of the Registrant
The following is a list of the Company’s consolidating subsidiaries, as of December 31, 2014, 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
FMC Chemicals (Thailand) Ltd
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
Thailand
93
FMC CORPORATION - Form 10-K PART IV PART IV
ITEM 15 Exhibits and Financial Statement Schedules
EXHIBIT 23.1 Consent of Independent Registered Public Accounting Firm
The 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 27, 2015, with respect to the consolidated balance sheets of FMC Corporation
and subsidiaries as of December 31, 2014 and 2013, and the related consolidated statements of income, comprehensive income, cash flows, and
changes in equity for each of the years in the three-year period ended December 31, 2014, and the related financial statement schedule, and
the effectiveness of internal control over financial reporting as of December 31, 2014, which reports appear in the December 31, 2014 annual
report on Form 10-K of FMC Corporation.
/s/ KPMG LLP
Philadelphia, Pennsylvania
February 27, 2015
EXHIBIT 31.1 Chief Executive Officer Certification
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 financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined 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 financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness 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 financial reporting that occurred during the registrant’s most
recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial 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 significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonable likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting.
/s/ PIERRE R. BRONDEAU
Pierre R. Brondeau
President and Chief Executive Officer
February 27, 2015
94
FMC CORPORATION - Form 10-K PART IV PART IV
ITEM 15 Exhibits and Financial Statement Schedules
EXHIBIT 31.2 Chief Financial Officer Certification
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 financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined 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 financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness 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 financial reporting that occurred during the registrant’s most
recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial 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 significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonable likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting.
/s/ PAUL W. GRAVES
Paul W. Graves
Executive Vice President
and Chief Financial Officer
February 27, 2015
EXHIBIT 32.1 CEO Certification of Annual Report
I, Pierre R. Brondeau, President and Chief Executive Officer 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, 2014 (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 financial condition and results of operations of the
Company.
/s/ PIERRE R. BRONDEAU
Pierre R. Brondeau
President and Chief Executive
Officer
February 27, 2015
95
FMC CORPORATION - Form 10-K PART IV PART IV
ITEM 15 Exhibits and Financial Statement Schedules
EXHIBIT 32.2 CFO Certification of Annual Report
I, Paul W. Graves, Executive Vice President and Chief Financial Officer 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, 2014 (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 financial condition and results of operations of the
Company.
/s/ PAUL W. GRAVES
Paul W. Graves
Executive Vice President
and Chief Financial Officer
February 27, 2015
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.
The 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
2014 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
27
(D)
Section
Operation
110(b)(2)
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
(H)
Pending
Legal Action
3
(F)
Proposed
Assessments*
*
(C)
Section
104(d)
1
(E)
Section
107(a)
—
(B)
Section
104(b)
—
Fatalities
—
(G)
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, 2014.
(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
96
FMC CORPORATION - Form 10-K This page is intentionally left blank.
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BOARD OF DIRECTORS
EXECUTIVE COMMITTEE
OFFICERS
Pierre R. Brondeau
President, Chief Executive Officer
and Chairman of the Board
Brian P. Angeli
Vice President, Corporate Strategy
and Development
Paul Graves
Executive Vice President
and Chief Financial Officer
Andrea E. Utecht
Executive Vice President
General Counsel and Secretary
Mark A. Douglas
President
FMC Agricultural Solutions
Eric W. Norris
Vice President, Global Business Director
FMC Health and Nutrition
Barry J. Crawford
Vice President, Operations
Kenneth A. Gedaka
Vice President
Communications and Public Affairs
Kyle Matthews
Vice President
Human Resources
Andrew D. Sandifer
Vice President
Corporate Transformation
Karen M. Totland
Vice President, Global Procurement,
Global Facilities & Corporate
Sustainability
Thomas C. Deas, Jr.
Vice President and Treasurer
Marc L. Hullebroeck
Vice President and Business Director
FMC Agricultural Solutions,
North America and EMEA
David A. Kotch
Vice President, Chief Information Officer
Nicholas L. Pfeiffer
Corporate Controller
Tom Schneberger
Vice President, Global Business Director
FMC Lithium
Charles J. Thomas
Vice President, Finance
Bethwyn Todd
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
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.
C. Scott Greer
Principal
Greer and Associates
K’Lynne Johnson
Chief Executive Officer and President
Elevance Renewable Sciences
Dirk A. Kempthorne
President and Chief Executive Officer
American Council of Life Insurers
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.
STOCKHOLDER DATA
FMC Corporation’s Annual Meeting of Stockholders will be held on
Tuesday, April 28, 2015, 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 3, 2015.
Transfer Agent and Registrar of Stock:
Wells Fargo Bank N.A.
Shareowner 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, Avicel, SeaGel, Gelcarin and Epax are trademarks of FMC
Corporation or its subsidiaries.
FMC Corporation
1735 Market Street
Philadelphia, PA 19103
USA
www.FMC.com
Portions of this publication are printed on recycled paper using soy-based inks.
Copyright© 2015, FMC Corporation. All rights reserved.