(NOTIFY) 72731,347
(CONTACT-NAME) David A. Kain
(CONTACT-PHONE) (312) 861-6050
PAGE 0
DOCUMENT HEADER
DOCUMENT DESCRIPTION 8-K-A
DOCUMENT TYPE 1
COUNT 28
PAGE 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K-A
Amendment to Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Amendment No. 1
Amendment to Current Report on Form 8-K
date January 28, 1994, and filed on
February 14, 1994
FMC CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-2376 94-0479804
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
200 East Randolph Drive, Chicago, Illinois 60601
(Address of principal executive offices) Zip Code)
(312) 861-6000
Registrant's telephone number,
including area code
PAGE 2
The undersigned registrant hereby amends the
following item of its Current Report on Form 8-
K dated January 28, 1994, and filed February
14, 1994, as set forth in the pages attached
hereto:
Item 7. Financial Statements and Exhibits
(a) Financial Statements of BMY-Combat Systems-
A Division of Harsco Corporation
1. Independent Auditors Report
2. Balance Sheet as of December 31, 1993
3. Statement of Income for the Year 1993
4. Statement of Cash Flows for the Year 1993
5. Notes to Financial Statements
(b) Pro Forma Financial Information
(unaudited) to reflect FMC's acquisition
of an interest in United Defense, L.P.
formed to combine FMC's Defense Systems
Group and Harsco's BMY-Combat Systems
Division
1. Balance Sheet as of December 31, 1993
2. Statement of Income for the Year Ended
December 31, 1993
(c) Exhibits
Number Exhibit
15 Consent of Independent Accountants
PAGE 3
ITEM 7(a)
BMY-COMBAT SYSTEMS
A DIVISION OF HARSCO CORPORATION
STATEMENT OF INCOME
for the year 1993
(All dollars in thousands) 1993
Net sales $347,958
Operating expenses:
Cost of sales 261,254
Selling, administrative
and general expenses 20,510
Research and development 2,140
283,904
Profit from operations 64,054
Other income (expense):
Interest income 25
Interest expense (16)
Other, net 3
12
Income before provision
for income taxes 64,066
Provision for income taxes 24,653
Net income $ 39,413
See accompanying notes to the financial statements.
PAGE 4
BMY-COMBAT SYSTEMS
A DIVISION OF HARSCO CORPORATION
BALANCE SHEET
as of December 31, 1993
(All dollars in thousands) 1993
ASSETS
Current assets:
Accounts receivable
U.S. government $12,813
Other accounts receivable 32,503
Allowance for uncollectible
accounts (30) $ 45,286
Inventories 86,815
Deferred income taxes 5,615
Other 759
Total current assets 138,475
Property, plant and equipment, net 50,597
Other assets 212
$189,284
PAGE 5
1993
LIABILITIES
Current liabilities:
Accounts payable $18,272
Accrued expenses:
Compensation 8,628
Long-term contract costs 528
Insurance 1,205
Other 8,658
Advances on long-term contracts 78,882
Total current liabilities 116,173
Pension plans 4,452
Postretirement benefits 4,661
Deferred income taxes 3,544
Other liabilities 51
128,881
COMMITMENTS AND CONTINGENCIES
Parent's Equity in Division 60,403
$189,284
See accompanying notes to the financial statements.
PAGE 6
BMY-COMBAT SYSTEMS
A DIVISION OF HARSCO CORPORATION
STATEMENT OF CASH FLOWS
for the year 1993
(All dollars in thousands) 1993
Cash flows from operating activities:
Net income $ 39,413
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 9,110
Loss on sale of equipment 39
Changes in assets and liabilities:
Notes and accounts receivable 30,728
Inventories (15,363)
Accounts payable (3,916)
Accrued long-term contract costs 528
Advance deposits on long-term
contracts received 38,383
Advance deposits on long-term
contracts utilized (25,610)
Other assets and liabilities 3,656
Net cash provided by operating
activities 76,968
Cash flows from investing activities:
Expenditures for property, plant and
equipment (5,141)
Proceeds from sale of property, plant
and equipment 29
Net cash used by investing
activities (5,112)
Cash flows from financing activities:
Parent company capital withdrawals,
net (71,856)
Net cash used by financing
activities (71,856)
Net decrease in cash and cash
equivalents -0-
Cash and cash equivalents at
beginning of year -0-
Cash and cash equivalents at
end of year $ -0-
See accompanying notes to the financial statements.
PAGE 7
BMY-COMBAT SYSTEMS
A DIVISION OF HARSCO CORPORATION
STATEMENT OF CHANGES IN PARENT'S EQUITY IN DIVISION
for the year 1993
(All dollars in thousands) 1993
Balance January 1, 1993 $ 92,846
Net income 39,413
Parent company capital withdrawals, net (71,856)
Balance December 31, 1993 $ 60,403
See accompanying notes to the financial statements.
PAGE 8
BMY-COMBAT SYSTEMS
A DIVISION OF HARSCO CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES:
Basis of Presentation:
The BMY-Combat Systems Division of Harsco
Corporation (BMY-CS) is a prime contractor to
the United States Department of Defense for the
design, development and manufacturing of select
defense systems composed mainly of tracked
vehicles, and an important supplier to
international customers. This Division is also
a provider of research and development services
to the U.S. Government and a co-producer of
tracked vehicles in the Far East. BMY-CS's
customer basis is limited, by the nature of its
current products, to U.S. and foreign government
agencies. In 1993, two customers comprise 95%
of net sales.
The financial statements reflect the results of
operations and financial position of BMY-CS,
including certain allocations by the parent
company. For the purpose of this presentation,
various assets and liabilities of Harsco
Corporation which relate to the operations of
BMY-CS (whether actual or contingent) are
reflected in these financial statements as if
BMY-CS was a stand-alone entity.
Cash and Capital Requirements:
As an operating division of Harsco Corporation
(Harsco), BMY-CS participates in Harsco's
centralized cash management system.
Accordingly, cash received from BMY-CS's
operations is administered centrally along with
the financing of working capital requirements
and capital expenditures. Under this system BMY-
CS has had no external sources of financing,
such as available lines of credit, as may be
necessary to operate as a separate entity.
The statement of cash flow is prepared as though
the cash received and disbursed on behalf of BMY-
CS by Harsco was transacted through BMY-CS.
Inventory Valuation:
Inventories are stated at the lower of cost or
market, cost being determined using the average
cost method.
Property, Plant and Equipment:
Property, plant and equipment is recorded at
cost and depreciated over the estimated useful
lives of the assets using principally the
straight-line method. Generally, when property
is retired from service, the cost of the
retirement is charged to the allowance for
depreciation to the extent of the accumulated
depreciation thereon and the balance is charged
to income.
PAGE 9
1.SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES:
(continued)
Long-term Defense Contracts:
Defense contracts are accounted for under the
percentage of completion (units-of-delivery)
method, whereby sales and estimated average cost
of the units to be produced under a contract are
recognized as deliveries are made or accepted.
Changes in estimates for sales, costs, and
profits are recognized in the period in which
they are determinable using the cumulative catch-
up method of accounting. Claims are considered
in the estimated contract performance at such
time as realization is probable. Any
anticipated losses on contracts are charged to
operations as soon as they are determinable.
Inventory costs include factory overhead,
general and administrative expenses, initial
tooling and other related costs.
BMY-CS sponsored research and development costs
are charged to expense or allocated to
production contracts, as applicable, when
incurred. Under certain arrangements in which a
customer shares in product development costs,
BMY-CS's portion of such costs are expensed as
incurred.
Income Taxes:
BMY-CS is not a separate tax paying entity.
Accordingly, its results of operations have been
included in tax returns filed by Harsco. The
accompanying financial statements include a
charge in lieu of tax which approximates the tax
provision assuming BMY-CS filed separate returns
and utilized an Export Sales Corporation. This
tax provision is prepared as though the
Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes" was adopted
prior to 1993.
Employee Benefits:
BMY-CS's salaried employees are covered under a
Harsco pension plan and hourly employees under a
BMY-CS pension plan, both are noncontributory,
covering substantially all its employees. The
benefits for salaried employees generally are
based on years of service and the employee's
level of compensation during specified periods
of employment. The BMY-CS plan covering hourly
employees generally provides benefits of stated
amounts for each year of service. The funding
policy for qualified plans is consistent with
federal regulations and customarily equals the
amount deducted for federal income tax purposes.
BMY-CS's policy is to amortize prior service
costs over the average future service period of
active plan participants.
PAGE 10
1.SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES:
(continued)
Employee Benefits (Continued):
BMY-CS provides and accrues postretirement life
insurance benefits for a majority of employees,
and postretirement health care benefits for a
limited number of employees. The postretirement
health care and life insurance plans are
unfunded.
Effective January 1, 1993, BMY-CS adopted
Statement of Financial Accounting Standards No.
112, "Employers' Accounting for Postemployment
Benefits" (SFAS 112). This statement requires
companies to accrue postemployment benefits if
the obligation is attributable to employees'
services already rendered, employees' rights to
those benefits accumulate or vest, payment of
the benefits is probable and the amount of the
benefits can be reasonably estimated. As of
January 1, 1993 there was no accumulated effect
to be recorded.
Casualty Insurance:
BMY-CS, through Harsco's wholly-owned captive
insurance company, provides for the payment of
its claims under a risk retention program. BMY-
CS is insured for workers compensation,
automobile, general, and product liability
losses through this risk retention program. BMY-
CS accrues for the estimated losses occurring
from both asserted and unasserted claims. The
estimate of the liability for unasserted claims
arising from unreported incidents is allocated
to BMY-CS based on an analysis of historical
claims data. Monthly contributions are made by
Harsco to the captive insurance company to
provide funding for its retained risk.
Environmental Compliance and Remediation:
Environmental expenditures that relate to
current operations are expensed or capitalized
as appropriate. Expenditures that relate to an
existing condition caused by past operations,
and which do not contribute to current or future
revenue generation, are expensed. Liabilities
are recorded when environmental assessments
and/or remedial efforts are probable, and the
cost can be reasonably estimated. Generally,
the timing of these accruals coincides with
completion of a feasibility study or BMY-CS's
commitment to a plan of action based on the then
known facts.
PAGE 11
2. INVENTORIES:
Inventories are summarized as follows:
(In thousands) 1993
Classification:
Long-term contract costs (including
general and administrative costs
of $7,432) $105,849
Contract loss reserves (2,372)
Progress payments -
U.S. Government (16,662)
$ 86,815
Valued at lower of cost or market:
Average cost basis $ 86,815
BMY-CS has incurred costs that are assignable to
units not yet produced. The aggregate amount
incurred, exclusive of raw materials and purchased
parts included in long-term contract costs, was
$12,041,000 as of December 31, 1993. These costs
relate primarily to U.S. Government contracts for
certain tracked vehicles. The U.S. Government has
a lien on inventories to the extent of any
progress payments relating thereto.
PAGE 12
3. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment, net consists of the
following:
(In thousands) 1993
Land $ 991
Buildings and improvements 36,309
Machinery and equipment 84,443
Uncompleted construction 1,317
123,060
Less allowance for depreciation 72,463
$50,597
PAGE 13
4. INCOME TAXES:
Income before taxes and the provision for
income taxes in the statement of income
consist of:
(In thousands) 1993
Income before provision for
income taxes: $64,066
Provision for income taxes:
Currently payable:
Federal $19,004
State 4,644
23,648
Deferred Federal 790
Deferred State 215
$24,653
These financial statements have been
prepared as though the financial
responsibility for income taxes currently
payable has been retained by Harsco.
The following is a reconciliation of the
normal expected statutory federal income
tax rates to the effective rates as a
percentage of income before provision for
income taxes as reported in the financial
statements:
1993
U.S. federal income tax rate 35.0%
State income taxes, net of federal
income tax benefit 4.9
Export sales corporation benefit (1.4)
Effective income tax rate 38.5%
PAGE 14
4. INCOME TAXES:
(continued)
The tax effects of the primary temporary
differences giving rise to deferred tax assets
and liabilities as of December 31, 1993 are as
follows:
(In thousands) 1993
Deferred Income Taxes: Asset Liability
Depreciation $ - $5,450
Expense accruals 5,044 -
Inventories 559 -
Postretirement benefits 1,906 -
Other 12 -
Total deferred income taxes $7,521 $5,450
PAGE 15
5. EMPLOYEE BENEFIT PLANS:
The status of defined benefit plans at
December 31, 1993, is as follows:
Salary Hourly
(In thousands) Plan Plan
Actuarial present value
of benefit obligations:
Vested $11,707 $20,921
Non-Vested 1,617 455
Accumulated benefit
obligation 13,324 21,376
Effect of increase in
compensation 12,905 -
Projected benefit
obligation 26,229 21,376
Plan assets at fair value 21,864 22,894
Plan assets in excess
of (less than) projected
benefit obligations (4,365) 1,518
Unrecognized prior service
costs 2,118 2,835
Unrecognized net
(gain) loss (256) (802)
Unrecognized transition asset (2,503) (2,997)
Prepaid (Accrued) pension cost $(5,006) $ 554
Plan assets are primarily those assets that
are part of a collective investment trust
fund in which other Harsco Division pension
plans participate. The fund assets include
equity and fixed income securities.
PAGE 16
5. EMPLOYEE BENEFIT PLANS:
(continued)
Pensions:
Net pension cost includes the following components:
1993
(In thousands) Salary Hourly Total
Defined benefit plans
Service cost $ 2,700 $ 921 $ 3,621
Interest cost 1,478 1,367 2,845
Actual return on plan assets (1,938) (2,415) (4,353)
Net amortization and deferral 11 506 517
Net periodic pension cost $ 2,251 $ 379 $ 2,630
The actuarial assumptions used
in computing the above are as
follows:
Salary Hourly
Plan Plan
Assumed discount rate 7.0% 7.0%
Expected average rate of return
on plan assets 9.0% 9.0%
Assumed average rate of
compensation increase 5.0% -
BMY-CS's pension assets and expense under the
Harsco salary pension plan are determined
under the allocation method. Under this
method, market value of assets at the end of
each year is determined by adding to the
beginning value the allocated contributions,
investment income and gains and subtracting
allocated investment losses, benefits
payments and expenses for the year.
PAGE 17
5. EMPLOYEE BENEFIT PLANS:
(continued)
Postretirement Benefits:
Postretirement benefit (health care and life
insurance) costs for 1993 include the
following components:
(In thousands) 1993
Health Life
Care Insurance Total
Service cost $ 175 $ 23 $ 198
Interest cost 226 60 286
Total postretirement
benefit costs $ 401 $ 83 $ 484
The accumulated postretirement benefit
obligation at December 31, 1993 is as follows:
(In thousands) 1993
Health Life
Care Insurance Total
Current retirees $ 167 $ 539 $ 706
Future retirees 3,237 329 3,566
Total 3,404 868 4,272
Unrecognized gain 271 118 389
Accumulated postretirement
benefit obligation $3,675 $ 986 $4,661
The assumed discount rate used to measure
the accumulated postretirement benefit
obligation was 7.0% at December 31, 1993.
The health care cost trend rate in 1993
was approximately 13%, decreasing to an
ultimate rate in the year 2004 of
approximately 6%. A one percentage point
increase in the assumed health care cost
trend rate for each future year would
have increased the cost components of
1993 net periodic postretirement benefit
cost by approximately $67,000 and would
have increased the accumulated
postretirement benefit obligation as of
December 31, 1993 by approximately $495,000.
PAGE 18
5. EMPLOYEE BENEFIT PLANS:
(continued)
Postemployment Benefits:
In 1993, BMY-CS recorded $1,040,000 for
postemployment benefits due to reductions
in the workforce.
Savings Plans:
BMY-CS participates in Harsco's defined
contribution savings plans designed to
comply with the requirements of the
Employee Retirement Income Security Act
of 1974 ("ERISA") and Section 401(k) of
the Internal Revenue Code. The plans
cover all eligible employees that wish to
participate in the Plans. Employee
contributions are generally determined as
a percentage of covered employee's
compensation received. The expense for
contributions to the plans by BMY-CS was
$1,441,000 in 1993. This expense is
based on the actual payroll dollars of
each BMY-CS employee contributions to the
401(k) Savings Plan.
PAGE 19
6. COMMITMENTS
AND CONTINGENCIES:
M9 Armored Combat Earthmover Claim:
BMY-CS and its legal counsel are of the
opinion that the US. Government did not
exercise option three under the M9
Armored Combat Earthmover (ACE) contract
in a timely manner, with the result that
the unit price for options three, four
and five are subject to renegotiation.
Claims reflecting BMY-CS's position have
been filed with respect to all options
purported to be exercised, which together
with other claims on this program, will
be in excess of $70 million (in excess of
$60 million applies to late option
exercise) plus interest. Other than the
settlement of a minor claim on this
contract, amounting to approximately $1.4
million, no recognition has been given in
the accompanying financial statements for
any recovery on these claims. BMY-CS is
awaiting a decision on its Motion for
Summary Judgment relating to the late
option exercise that is now pending
before the Armed Services Board of
Contract Appeals.
Government Furnished Equipment Overcharge
Claims:
BMY-CS filed a claim in the Armed
Services Board of Contract Appeals
asserting that the United State
Government has overcharged BMY-CS in the
sale of government furnished equipment on
various contracts, all of which have been
completed. BMY-CS has advised the
Government that the overpayment on these
contracts is approximately $24 million.
The Government disputes BMY-CS's
position, but the parties are exploring
the possibility of settling this case and
similar issues relating to other
completed contracts that are not included
in the litigation.
Other Defense Litigation:
On March 13, 1992, the U.S. Government
filed the previously threatened
counterclaim against BMY-CS in a civil
suit alleging violations of the False
Claims Act and breach of a contract to
supply M109A2 Self-Propelled Howitzers.
The counterclaim was filed in the United
States Claims Court along with the
Government's answer to BMY-CS's claim of
approximately $5 million against the
Government for costs incurred on this
contract relating to the same issue. The
Government claims breach of contract
damages of $7.3 million and in addition
seeks treble that amount under the False
Claims Act plus unquantified civil
penalties which BMY-CS estimates to be
approximately $3.3 million. BMY-CS and
its counsel believe it is unlikely BMY-CS
will incur any material liability as a
result of these claims.
PAGE 20
6. COMMITMENTS
AND CONTINGENCIES:
Other Defense Litigation (Continued):
Iran's Ministry of Defense has initiated
arbitration procedures against BMY-CS
under the rules of the International
Chamber of Commerce for damages allegedly
resulting from breach of various
contracts executed by BMY-CS and the
Ministry of Defense between 1970 and
1978. The contracts were terminated in
1978 and 1979 during the period of civil
unrest in Iran that preceded the Iranian
revolution. Iran has asserted a claim
under one contract for repayment of a
$7.5 million advance payment it made to
BMY-CS, plus interest at 12% through June
27, 1991 in the amount of $25.3 million.
Iran has also asserted a claim for
damages under other contracts for $32.1
million plus interest. BMY-CS intends to
assert various defenses and also has
filed counterclaims against Iran for
damages in excess of $7.5 million which
it sustained as a result of Iran's breach
of contract, plus interest; however, the
ultimate outcome of this matter cannot
presently be determined.
Environmental:
BMY-CS is involved in a number of
environmental remediation investigations and
clean-ups and, along with other companies,
has been identified as a "potentially
responsible party" for certain waste disposal
sites. While each of these matters is
subject to various uncertainties, it is
probable BMY-CS will agree to make payments
toward funding certain of these activities.
It is possible that some of these matters
will be decided unfavorably to BMY-CS. BMY-
CS has evaluated its potential liability, and
its financial exposure is dependent upon such
factors as the continuing evolution of
environmental laws and regulatory
requirements, the availability and
application of technology, the allocation of
cost among potentially responsible parties,
the years of remedial activity required and
the remediation methods selected. The
liability for future remediation costs is
evaluated on a quarterly basis, and it is the
opinion of management that any liability over
the amounts accrued will not have a
materially adverse effect on BMY-CS's
financial position or results of operations.
Other:
BMY-CS is subject to various other claims,
legal proceedings and investigations covering
a wide range of matters that arose in the
ordinary course of business. In the opinion
of management, all such matters are
adequately covered by insurance or by
accruals, and if not so covered, are without
merit or are of such kind, or involve such
amounts, as would not have a significant
effect on the financial position or results
of operations of BMY-CS, if disposed of
unfavorably.
PAGE 21
7. LEASE OBLIGATIONS:
Capital Leases:
BMY-CS has a gross asset value of $577,000
for Machinery and Equipment under capital
lease arrangements as of December 31, 1993.
There is one year remaining of minimum lease
payments amounting to $75,000 in 1994,
related to these assets.
Operating Leases:
BMY-CS leases certain office space, and
various office and manufacturing equipment
under noncancellable operating leases. At
December 31, 1993, total minimum lease
payments are as follows:
Amounts
Years (In Thousands)
1994 $1,159
1995 638
1996 310
1997 155
1998 70
Thereafter 11
Total $ 2,343
Total operating lease expense in 1993 was $1,577,000.
8. FINANCIAL INSTRUMENTS:
Off-Balance Sheet Risk:
As collateral for performance and advances on
long-term contracts and to ceding insurers,
BMY-CS is contingently liable under standby
letters of credit and bonds in the amount of
$161.9 million at December 31, 1993. These
standby letters of credit and bonds are
generally in force from one to three years
for which BMY-CS pays fees to various banks
and insurance companies that generally range
from .25 to 1 percent per annum of their face
value. If BMY-CS were required to obtain
replacement standby letters of credit and
bonds as of December 31, 1993 for those
currently outstanding, it is BMY-CS's opinion
that the replacement costs for such standby
letters of credit and bonds would not
significantly vary from the present fee
structure.
Concentrations of Credit Risk:
BMY-CS has a concentration of credit risk
with respect to accounts receivable due to
the limited number of customers, mainly the
U.S. and foreign government agencies. At
December 31, 1993, accounts receivable of
$45,286,000 include a receivable from Saudi
Arabia of $24,396,000.
PAGE 22
9. RELATED PARTY TRANSACTIONS:
The financial statements include allocations
by Harsco for certain corporate
administrative costs incurred for the benefit
of all operating divisions. These costs are
allocated to operating divisions on a variety
of methodologies as follows:
a)Specific identification - based on
services provided.
b)Relative identification - based on
relevant criteria that establishes the
division's relationship to the entire
pool of beneficiaries.
c)Formula driven - nonidentifiable to
division but incurred for the benefit
of all.
Corporate costs include executive, legal,
accounting, tax, auditing, cash management,
safety, human resources, environmental and
employee benefits.
Allocated costs included in general and
administrative expenses for 1993 were
$4,416,000. The allocation methods, while
reasonable under the current circumstances,
may not represent the cost of similar
activities on a separate entity basis.
10.SUBSEQUENT EVENT - FORMATION OF DEFENSE BUSINESS
PARTNERSHIP:
On January 28, 1994, FMC Corporation and
Harsco announced the completion of the joint
venture, that was first announced in December
1992, to combine FMC's Defense Systems Group
and Harsco's BMY-Combat Systems Division.
The new partnership is known as United
Defense, L.P., and is effective January 1,
1994. United Defense, L.P. is jointly owned,
with FMC holding an interest of 60 percent
and Harsco holding 40 percent. FMC is the
managing general partner, and Harsco is a
limited partner. United Defense, L.P.
expects to achieve annual sales of about $1
billion in 1994.
PAGE 23
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of Harsco Corporation:
We have audited the accompanying balance
sheet of BMY-Combat Systems, a division of
Harsco Corporation, as of December 31,
1993, and the related statements of income,
changes in parent's equity in division, and
cash flows for the year then ended. These
financial statements are the responsibility
of the Company's management. Our
responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with
generally accepted auditing standards. 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
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements
referred to above present fairly, in all
material respects, the financial position of
BMY-Combat Systems, a division of Harsco
Corporation, as of December 31, 1993, and the
results of its operations and its cash flows
for the year ended December 31, 1993 in
conformity with generally accepted accounting principles.
As discussed in Note 6 to the financial
statements, the Company is involved in a
dispute regarding a breach of contract and
other unrelated contract matters. Also, the
Company has filed or is in the process of
filing various claims against the Government
relating to certain contracts. The ultimate
outcome of these matters cannot presently be
determined. Accordingly, no provision for
such potential additional losses or
recognition of possible recovery from such
claims has been reflected in the accompanying
financial statements.
/S/ Coopers & Lybrand
Philadelphia, Pennsylvania
January 28, 1994
PAGE 24
ITEM 7(b)
FMC CORPORATION AND CONSOLIDATED SUBSIDIARIES
PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
(Unaudited)
On January 28, 1994, FMC Corporation ("FMC") and
Harsco Corporation ("Harsco") announced completion of
a series of agreements ("Agreements"), first announced
in December 1992, to combine certain assets and
liabilities of FMC's Defense Systems Group ("DSG") and
Harsco's BMY Combat Systems Division ("BMY"). The
effective date of the combination was January 1, 1994.
The combined company, United Defense, L. P. ("UDLP"),
will operate as a limited partnership, with FMC as the
Managing General Partner with a 60 percent equity
interest and Harsco Defense Holding as the Limited
Partner holding a 40 percent equity interest.
The following unaudited pro forma financial statements
combine the financial statements of FMC and
consolidated subsidiaries and BMY and establish a
minority interest in UDLP for Harsco's ownership. The
assumption, for the balance sheet, is that the
combination occurred on December 31, 1993, and for the
income statement that the combination date was January
1, 1993. The pro forma operating results are not
necessarily indicative of what would have occurred had
the combination actually taken place on January 1,
1993, or of what they are expected to be in 1994.
Also, no adjustments have been made to operations for
the impact of certain anticipated operational and
administrative efficiencies which are expected to be
realized over the first two years of UDLP's operation.
PAGE 25
FMC CORPORATION AND CONSOLIDATED SUBSIDIARIES
PRO FORMA COMBINED BALANCE SHEET
(Unaudited)
December 31, 1993
(In Millions)
FMC BMY Pro forma Pro
Assets Corporation Adjustments forma
Combined
Current Assets:
Cash and marketable $ 78 $ - $ 5 (a) $ 83
securities
Trade receivables, net 573 45 (38)(a) 580
Inventories 268 8
Other current assets 241 6 (6)(a) 241
Total current assets 1,160 138 (39) 1,259
Net property, plant & 1,390 51 - 1,441
equipment
Other assets 263 - 37 (b) 300
Total assets $2,813 $ 189 $ (2) $3,000
Liabilities and
stockholders' equity
Current liabilities:
Short-term debt and current
maturities of long-term debt $ 82 $ - $ - $ 82
Accounts payable, trade and 501 97 (1)(a) 597
other
Accrued and other 486 19 (4)(a) 501
liabilities
Income taxes payable 87 - - 87
Total current liabilities 1,156 116 (5) 1,267
Long-term debt, less current 750 - - 750
Accrued pension and other
post-retirement benefits, 303 9 - 312
less current
Reserve for discontinued
operations, restructuring
and other reserves 344 - - 344
Deferred income taxes - 4 (4)(a) -
Minority interests 43 - 67 (b) 110
Stockholders' Equity 217 60 (60)(a)(b) 217
Total liabilities and
stockholders' equity $ 2,813 $ 189 $ (2) $3,000
See accompanying notes to unaudited pro forma
combined condensed financial statements
PAGE 26
FMC CORPORATION AND CONSOLIDATED SUBSIDIARIES
PRO FORMA COMBINED STATEMENT OF INCOME
(Unaudited)
Year ended December 31, 1993
(In millions, except per share data)
FMC BMY Pro Pro
Corporation forma forma
Adjustments Combined
Sales and other revenue $3,789 $ 348 $ - $4,137
Costs and expenses:
Cost of Sales 2,835 261 - 3,096
Selling, general and 540 21 (5)(c) 556
administrative
Research and development 149 2 - 151
Restructuring and other 172 - - 172
charges
Other (income) and expense, net (10) - 2(b) (8)
Total costs and expenses 3,686 284 (3) 3,967
Operating income 103 64 3 170
Interest income (expense) net (62) - - (62)
Minority interests (3) - (84)(d) (87)
Income before income taxes
and extraordinary items 38 64 (81) 21
Income tax (expense) benefit 3 (25) 31(e) 9
Income before extraordinary $ 41 $ 3 $ (50) $ 30
items
Earnings per common share
before extraordinary items $ 1.11 $ 1.05 $(1.35) $ .81
Average common shares
outstanding 36.9 36.9 36.9 36.9
See accompanying notes to unaudited pro forma
condensed financial statements
PAGE 27
FMC CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(a) Under the Agreements, Harsco is required to
contribute net assets with a historical net
book value of $30 million, including $5 million
of cash. Harsco also will retain financial
responsibility for certain items which are not
contributed to the joint venture, including
accounts receivable balances in excess of what
needs to be contributed to meet the required
net assets of $30 million. These adjustments
are to reflect the contribution of cash, the
retention of accounts receivable, and the
elimination of those accounts provided for in
the Agreements.
(b) This adjustment provides for Harsco's initial
equity interest in UDLP of $67 million,
calculated at 40 percent of the combined net
assets contributed by FMC and Harsco of $168
million; eliminates Harsco's capital
contribution of $30 million; and establishes an
intangible asset of $37 million. The assets
and liabilities contributed by FMC and Harsco
to the joint venture will be recorded at their
historical net book values. Harsco's 40
percent equity interest in the joint venture
exceeds the book value of its net assets
contributed by approximately $37 million. As
the fair market value of net assets contributed
is considered to exceed the net book value of
such net assets by at least $37 million, an
intangible asset of $37 million is recorded.
This amount will be amortized by FMC over a 15
year period, which is approximately the
estimated remaining life of the property, plant
and equipment contributed. The related
amortization for 1993 would have been
approximately $2 million, which is shown as an
adjustment to Other (income) and expense.
(c) $5 million of general and administrative
expense incurred by Harsco and allocated to BMY
in 1993 has been eliminated in order to
approximate the operating results assuming the
transaction had occurred on January 1, 1993.
(d) The Agreements provide for sharing the income
before income taxes of the venture generally on
the basis of the partners' equity ownership
interests, after giving effect to a limited
partner preferred distribution. The minority
interest adjustment of $84 million includes the
limited partner preferred distribution and 40%
of the remaining pro forma pre-tax earnings of
UDLP. The pro forma earnings of the venture
give effect to adjustments related to items for
which financial responsibility will not be
assumed by the venture (primarily certain
customer contracts) in order to approximate the
results of operations assuming the transaction
had been effective on January 1, 1993.
(e) The income tax benefit results from the pro
forma adjustments to income at a combined
Federal and State statutory tax rate of
approximately 40%.
PAGE 28
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
FMC CORPORATION
BY Robert L. Day
Robert L. Day
Corporate Secretary
Date: April 14, 1994
PAGE 0
DOCUMENT HEADER
DOCUMENT DESCRIPTION EXHIBIT INDEX
DOCUMENT TYPE 2
COUNT 1
PAGE 1
EXHIBIT INDEX
Sequential
Exhibit No. Exhibit Description
Page No.
15 Letter regarding Audited
Financial Information 1
PAGE 0
DOCUMENT HEADER
DOCUMENT DESCRIPTION EXHIBIT 15
DOCUMENT TYPE 2
COUNT 1
PAGE 1
Exhibit 15 CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the following registration
statements of FMC Corporation and Subsidiary Companies of our report,
which includes an explanatory paragraph regarding (i) a breach of contract
and other unrelated contract matters and (ii) the Company's claims against
the Government relating to certain contracts, dated January 28, 1994,
on our audit of the balance sheet of BMY-Combat Systems, a division
of Harsco Corporation, as of December 31, 1993, and the related statements
of income, changes in parent's equity in division, and cash flows for the
year then ended, which report is included in this Amendment No. 1 to
Current Report on Form 8-K dated January 28, 1994, and filed on
February 14, 1994.
Form S-8 registration statement (registration No. 33-7749).
Form S-8 registration statement (registration No. 33-10661).
Form S-3 registration statement (registration No. 33-45648).
Philadelphia, Pennsylvania
April 14, 1994
