[TYPE] 10-Q
(NOTIFY) 72731,347
(CONTACT-NAME) David A. Kain
(CONTACT-PHONE) (312) 861-6050
PAGE 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 1994
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 94-0479804
----------------------------------------------------
- - ----
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 East Randolph Drive, Chicago, Illinois 60601
-----------------------------------------------------
- - -----
(312) 861-6000
------------------------------------
(Registrant's telephone number,
including area code)
Indicate by check mark 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.
Yes X No
----- ----
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest
practicable date.
Class Outstanding at June 30, 1994
- - --------------------------------------- ----------------------------
Common Stock, par value $0.10 per share 36,375,206
PAGE 2
PART I - FINANCIAL INFORMATION
ITEM 1.FINANCIAL STATEMENTS
FMC Corporation and Consolidated Subsidiaries
Consolidated Statements of Income (Unaudited)
(In thousands, except per share data)
Three Months Six Months
Ended June 30 Ended June 30
1994 1993 1994 1993
Revenue:
Sales $1,053,764 $979,290 $1,962,064 $1,880,952
Equity in net
earnings
of affiliates 1,849 1,342 3,502 2,941
Other revenue 7,715 11,497 26,124 13,655
Total revenue 1,063,328 992,129 1,991,690 1,897,548
Costs and expenses:
Cost of sales 748,772 727,219 1,403,689 1,393,348
Selling, general and
administrative
expenses 146,476 131,122 288,918 259,781
Research and
development 38,860 36,038 77,042 69,613
Other (income) and
expense, net (4,693) (3,851) (9,385) (5,131)
Total costs and
expenses 929,415 890,528 1,760,264 1,717,611
Earnings before interest,
minority interests,
and taxes 133,913 101,601 231,426 179,937
Minority interests 20,274 117 35,199 746
Interest income 2,080 3,006 3,674 5,479
Interest expense 16,723 19,675 33,130 38,095
Income before income taxes 98,996 84,815 166,771 146,575
Provision for income taxes 31,679 22,261 53,367 38,581
Income before
extraordinary item 67,317 62,554 113,404 107,994
Extraordinary item related
to debt refinancing,
net of taxes (Note 3) - (4,683) - (4,683)
Net Income $ 67,317 $ 57,871 $ 113,404 $ 103,311
Average number of shares:
Primary 37,070 36,913 37,049 36,917
Fully diluted 37,101 39,782 37,074 39,790
Earnings per common share:
Primary:
Income before
extraordinary
item $ 1.82 $ 1.69 $ 3.06 $ 2.93
Extraordinary item - (0.13) - (0.13)
Net income $ 1.82 $ 1.56 $ 3.06 $ 2.80
Fully diluted:
Income before
extraordinary
item $ 1.81 $ 1.62 $ 3.06 $ 2.81
Extraordinary item - (0.12) - (0.12)
Net income $ 1.81 $ 1.50 $ 3.06 $ 2.69
See accompanying notes to consolidated financial statements.
PAGE 3
FMC Corporation and Consolidated Subsidiaries
Consolidated Balance Sheets
(In thousands, except per share data)
June 30
1994 December 31
Assets: (Unaudited) 1993
Current assets:
Cash $ 24,664 $ 20,450
Marketable securities 41,829 57,071
Trade receivables, net of
allowance for doubtful
accounts of $8,960 and
$6,777 in 1994 and 1993,
respectively 701,101 573,181
Inventories 447,029 268,107
Other current assets 182,456 143,439
Deferred income taxes 115,263 129,479
Total current assets 1,512,342 1,191,727
Investments and other 114,858 76,197
Property, plant and equipment 3,709,653 3,498,394
Less -- accumulated
depreciation 2,258,547 2,108,145
Net property, plant and
equipment 1,451,106 1,390,249
Patents, deferred charges, and
intangibles of acquired companies 153,843 91,741
Deferred income taxes 82,876 95,199
Total assets $3,315,025 $2,845,113
Liabilities and Stockholders' Equity
Current liabilities:
Short-term debt $ 61,159 $ 66,904
Accounts payable, trade and
other 627,178 501,163
Accrued and other liabilities 555,772 481,357
Current portion of long-term
debt 17,819 15,029
Current portion of accrued
pension and other
postretirement benefits 35,000 37,119
Income taxes payable 89,025 86,432
Total current liabilities 1,385,953 1,188,004
Long-term debt, less current portion 869,119 749,855
Accrued pension and other
postretirement benefits, less
current portion 302,845 302,725
Reserve for discontinued operations
and restructuring 307,524 344,267
Minority interests in consolidated
companies 113,178 43,379
Stockholders' equity:
Common stock, $0.10 par value,
authorized 60,000,000 shares;
issued 36,672,049 shares in
1994 and 36,472,641 shares
in 1993 3,667 3,647
Capital in excess of par
value of capital stock 85,800 79,582
Retained earnings 320,537 207,133
Foreign currency translation
adjustment (64,630) (64,766)
Treasury stock, common, at cost;
296,843 shares in 1994 and
292,018 shares in 1993 (8,968) (8,713)
Total stockholders' equity 336,406 216,883
Total liabilities and stockholders'
equity $3,315,025 $2,845,113
See accompanying notes to consolidated financial statements.
PAGE 4
FMC Corporation and Consolidated Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
(Dollars in thousands)
Six Months
Ended June 30
1994 1993
Reconciliation from income before
extraordinary item to cash provided
by operating activities:
Income before extraordinary item: $ 113,404 $ 107,994
Adjustments for non-cash components:
Depreciation and amortization 109,515 112,791
Deferred income taxes 24,959 (1,309)
Equity in net earnings of
affiliates (3,502) (2,941)
Amortization of accrued
pension costs (5,763) (2,562)
Interest on zero-coupon senior
subordinated convertible
debentures - 6,060
Minority interests 35,199 746
Other (29,575) (25,418)
244,237 195,361
Tax benefit of extraordinary item - 2,664
(Increase) in assets
Trade receivables (121,411) (59,373)
Inventories (92,107) (314,211)
Other current assets (38,122) (14,551)
(Decrease) increase in liabilities
Accounts payable and accruals 89,238 288,516
Income taxes payable 2,512 3,363
Restructuring reserve (22,074) -
Accrued pension and other
postretirement benefits, net (5,378) (4,830)
(187,342) (101,086)
Cash provided by operating activities $ 56,895 $ 96,939
Supplemental disclosure of cash flow information
Cash paid for interest was $35.2 million and $35.9
million, and cash paid for income taxes, net of refunds,
was $22.8 million and $24.7 million for the six-month
periods ended June 30, 1994 and 1993, respectively.
See accompanying notes to consolidated financial statements.
PAGE 5
FMC Corporation and Consolidated Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
(Dollars in thousands)
Six Months
Ended June 30
1994 1993
Cash provided by operating activities $ 56,895 $ 96,939
Cash required by discontinued
operations (13,089) (5,554)
Cash provided (required) by investing
activities:
Capital spending (118,281) (93,010)
Disposal of property, plant and
equipment 6,009 5,151
(Increase) decrease in
investments and other (35,159) 11,280
(147,431) (76,579)
Cash provided (required) by financing
activities:
Increase (decrease) in
short-term debt (5,745) (22,335)
Net borrowings under credit
facilities 154,000 210,000
Proceeds from issuance of other
long-term debt 51,398 -
Repayment of other long-term debt (83,344) (88,039)
Distributions to limited partner (30,861) -
Premium on early retirement of debt - (553)
Issuance of capital stock, net 5,983 2,285
91,431 101,358
Effect of exchange rate changes on cash 1,166 (4,515)
Increase (decrease) in cash and
marketable securities (11,028) 111,649
Cash and marketable securities,
beginning of year 77,521 24,278
Cash and marketable securities, end
of period $ 66,493 $ 135,927
See accompanying notes to consolidated financial statements.
PAGE 6
FMC Corporation and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Note 1: Financial information
The consolidated balance sheet at June 30, 1994, and the
related statements of income and cash flows for the
interim periods ended June 30, 1994 and 1993 have been
reviewed by FMC's independent auditors. The review is
discussed more fully in their report included herein. In
the opinion of management, such financial statements have
been prepared in conformity with generally accepted
accounting principles and reflect all adjustments
necessary for a fair statement of the results of
operations for the interim periods. All such adjustments
are of a normal recurring nature. The results of
operations for the three and six-month periods ended June
30, 1994 and 1993 are not necessarily indicative of the
results of operations for the full year.
At December 31, 1993, reserves for potential
environmental obligations were recorded net of $54
million in recoveries, including recoveries from
insurance companies, the federal government and other
potentially responsible parties. Beginning in 1994,
recoveries, excluding those relating to discontinued
operations, are recorded as an asset and those relating
to discontinued operations remain recorded in the
reserve for discontinued operations and restructuring.
At June 30, 1994, recoveries of $32 million and $18
million, are recorded as an asset and as an offset to
the reserve for discontinued operations and
restructuring, respectively. Recoveries will continue
to be recorded when probable and reasonably estimable.
Certain prior period balances have been reclassified to conform
with the current period's presentation.
The accounting policies followed by the company are set
forth in Note 1 to the company's financial statements in
the 1993 FMC Corporation Annual Report, which is
incorporated by reference in Form 10-K.
Note 2: Other income and expense, net
Other income and expense, net in the three-month periods
ended June 30, 1994 and 1993 includes pension-related
income of $2.9 million and $1.4 million, respectively, and
LIFO-related income of $1.8 million and $2.5 million
($0.03 and $0.04 per share), respectively.
Other income and expense, net in the six-month periods
ended June 30, 1994 and 1993 includes pension-related
income of $5.8 million and $2.6 million, respectively, and
LIFO-related income of $3.6 million and $2.6 million
($0.06 and $0.04 per share), respectively.
Note 3: Long-term debt
Advances under uncommitted credit facilities were $49
million at June 30, 1994. Committed credit available
under the Revolving Credit Agreement provides management
with the ability to refinance this debt, and certain
subsidiary debt, on a long-term basis. Since it is
management's intent to do so, advances under the
uncommitted and committed facilities, and certain
subsidiary debt, have been classified as long-term debt in
the accompanying consolidated balance sheets.
PAGE 7
On June 1, 1994, Sweetwater County, Wyoming issued $45
million of Solid Waste Disposal Revenue Bonds. The
proceeds were loaned to the company pursuant to a Loan
Agreement dated June 1, 1994 which includes an interest
rate of 7 percent payable semi-annually through
maturity, June 1, 2024. The Loan proceeds are recorded
in investments and will be used to fund a soda ash
business capital project which is more fully described
in Management's Discussion and Analysis of Financial
Condition and Results of Operations.
During the first quarter of 1994, the company modified
its Revolving Credit Agreement whereby the maximum
credit limit was reduced from $700 million to $500
million. On April 25, 1994 FMC further modified its
Revolving Credit Agreement whereby the maximum credit
limit was reduced from $500 million to $250 million.
Also on April 25, the company entered into a new 364 day
Revolving Credit Agreement with a maximum credit limit
of $250 million. Terms of the new agreement are
virtually identical to those of the previous $700
million agreement.
During the first half of 1993, the company repurchased $15
million, less unamortized discount of $11 million, of 7-
1/2% zero coupon senior subordinated convertible
debentures with an original maturity date of 2011, $32
million of 7-1/2% sinking fund debentures,
originally due 2001, and $19 million of industrial revenue
bonds. In addition, the company called for the
redemption, in August 1993, of all of its outstanding 20-
year, zero coupon senior subordinated convertible
debentures, due 2011. The outstanding principal balance
was approximately $170 million at June 30, 1993. As a
result of the write-off of unamortized debt issue costs,
as well as other costs and expenses included, the company
incurred an extraordinary charge of $4.7 million, net of
tax benefits of $2.7 million.
Note 4: Acquisitions
On June 24, 1994, the company acquired the Fluid Control
Systems product line from National-Oilwell, a Houston-
based oil field equipment company. The Fluid Control
Systems product line is a leader in a variety of high-
performance oil field applications, including engineered
production and injection manifolds, a family of valves
and fittings used to control and distribute the flow of
production from oil and gas wells. Fluid Control
Systems will be part of the Fluid Control division
within the Energy and Transportation Equipment Group.
On May 27, 1994, the company acquired the Jetway Systems
Division of Pneumo-Abex Inc. Jetway is a leader in
design, production and installation of passenger
boarding bridges and other aircraft support systems.
Jetway Systems will be part of the Airline Equipment
Division within the Energy and Transportation Equipment
Group.
On June 30, 1993, the company acquired the assets of
Kongsberg Offshore a.s., a wholly owned subsidiary of
Siemens a.s. Kongsberg Offshore a.s. provides subsea and
metering systems on a worldwide basis as well as turnkey
subsea systems, including systems integration, project
management and FMC subsea products.
PAGE 8
Also on June 30, 1993, the company acquired SOFEC, Inc.,
a Houston based engineering and construction company.
SOFEC, Inc., is an engineering and construction company
that designs, fabricates and installs offshore mooring
systems for export and import terminals and for floating
storage and production facilities for offshore oil and
gas.
In April 1993, FMC Gold Company purchased the remaining
50% interest in the Humboldt Gold joint venture from TRE
Management Company, bringing FMC Gold's ownership
interest in all gold and precious metal-bearing ores in
the related property to 100%. As part of the
transaction, FMC Gold also obtained certain water rights
associated with the property.
The purchase prices for the aforementioned acquisitions
were satisfied from operations supplemented with cash,
marketable securities, and long-term financing. The
company has accounted for these acquisitions by the
purchase method.
Note 5: Accounting Standards Adopted
Statement of Financial Accounting Standards No. 112,
"Employers' Accounting for Postemployment Benefits" was
adopted by the company effective January 1, 1994.
Statement No. 112 requires accrual of the expected cost
of providing certain benefits to former or inactive
employees after employment but before retirement. The
effect of adoption was not material, and accordingly,
has been included as part of costs and expenses.
Note 6: Formation of United Defense, L.P.
On January 28, 1994, FMC and Harsco Corporation
("Harsco") announced completion of a series of
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.
Beginning in the first quarter 1994, all sales and
earnings of UDLP are included in FMC's consolidated
financial statements. The limited partner's share of
the partnership's earnings are included in minority
interest. Sales and profits for 1994 versus 1993 are
affected by the formation of the venture. All of the
assets and liabilities of UDLP are also consolidated in
the balance sheet resulting in increases to trade
receivables, inventories, deferred charges, accounts
payable, and minority interests.
PAGE 9
The following summary, prepared on a pro forma basis,
combines the operating results of FMC and BMY as if the
combination had occurred on January 1, 1993. The pro
forma earnings include amortization of an intangible
asset and a minority interest in UDLP for Harsco's
equity interest. The pro forma operating results are
not necessarily indicative of what would have occurred
had the combination actually taken place on January 1,
1993.
Three Months Six Months
(Dollars in millions, Ended Ended
except per share June 30, June 30,
amounts) 1993 1993
Revenue 1,085 2,084
Net Income 62 102
Earnings per common
share:
Primary 1.68 2.76
Fully diluted 1.61 2.66
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
As of June 30, 1994, the company had advances under
uncommitted facilities of $49 million. It is the
company's practice to maintain unused credit
availability under the Revolving Credit Agreements at
least equal to the amount of advances under uncommitted
facilities. As of June 30, 1994, the company's
committed credit line under the Revolving Credit
Agreements exceeded committed and uncommitted facility
borrowings by $346 million.
Certain balance sheet accounts including Trade
Receivables, Inventories, Deferred Charges, and
Accounts Payable at June 30, 1994 have increased
compared to December 31, 1993 primarily due to the
formation of United Defense, L.P., acquisitions, and
the cyclical nature of certain businesses.
On June 1, 1994, Sweetwater County, Wyoming issued $45
million of Solid Waste Disposal Revenue Bonds. The
proceeds were loaned to the company pursuant to a Loan
Agreement dated June 1, 1994 which includes an interest
rate of 7 percent payable semi-annually through
maturity, June 1, 2024. The Loan proceeds are recorded
in investments and will be used to fund a soda ash
business capital project which is more fully described
below.
PAGE 10
Spending charged to the restructuring reserve,
primarily for severance, downsizing, consolidations,
and product line rationalizations was $13 million in
the second quarter and $22 million year-to-date. In
the second quarter, the company initiated the planned
program to reduce functional support staff across the
company. The company is targeting to reduce functional
staffing levels by approximately 1,000 positions and is
expected to be largely completed by year-end 1994. The
costs associated with this reduction were included in
the $172.3 million restructuring reserve provided in
1993. In the second quarter, the company continued
severance and downsizing activities in the industrial
chemicals and machinery and equipment segments.
Projected cash requirements for the remainder of 1994
are approximately $25-30 million for severance,
downsizing and other restructuring related costs.
Total spending is unchanged from prior estimates. The
company estimates the restructuring efforts will reduce
cost levels an average of $70 million per year in 1995
and 1996.
On May 4, 1994 FMC Gold Company, an 80% owned
subsidiary of FMC, announced plans to invest $57
million to develop the Beartrack property located near
Salmon, Idaho. The decision to proceed with the
development was based largely on improved project
economics and issuance of a biological opinion by the
National Marine Fisheries Service (NMFS) that the
proposed Beartrack mine was "not likely to jeopardize"
the continued existence of the Snake River salmon. By
letter dated July 14, 1994, the Sierra Club Legal
Defense Fund, Inc., ("Sierra"), on behalf of itself and
certain other organizations, gave NMFS and other
federal agencies a statutorily required sixty-day
notice of intent to sue for violation of the Endangered
Species Act (the "Act") alleging that NMFS' biological
opinion failed to satisfy the requirements of the Act.
The company believes that the biological opinion was
carefully considered and fully supported by the record
and intends to continue development of Beartrack. The
Beartrack property encompasses approximately 30 square
miles of mining claims and contains approximately one
million ounces of proven and probable reserves.
During the first half of 1994, FMC announced the first
phase of a major investment in the soda ash business.
The $90 million investment is expected to lower soda ash
production costs at FMC's Green River facility through a
new proprietary manufacturing technology, thereby
providing the company with a competitive operating
advantage. This investment also positions FMC for an
economic capacity expansion when market conditions
improve.
During the first half of 1994, FMC announced a major
investment to develop a lithium resource in Argentina,
which will combine a high-quality brine resource with
new extraction technologies. Development of this
resource is expected to improve FMC's competitive
position, particularly in the specialty lithium compound
markets, where growth efforts are focused.
PAGE 11
Expected cash requirements for the remainder of 1994
include approximately $150-225 million for planned
capital expenditures and potential acquisitions, and
net after-tax interest payments of approximately $20
million based on current debt levels. Cash to meet
these requirements is expected to be provided by the
company's operations supplemented, if necessary, with
cash balances and available credit facilities.
RESULTS OF OPERATIONS
Second quarter 1994 compared to second quarter 1993
Industry Segment Data (Unaudited)
(Dollars in millions)
Three Months Ended
June 30
1994 1993
Sales
Industrial Chemicals (1) $ 220.5 $227.0
Performance Chemicals (1) 298.9 293.9
Precious Metals 16.9 32.9
Defense Systems 282.6 235.0
Machinery and Equipment 242.6 203.8
Eliminations (7.7) (13.3)
$1,053.8 $979.3
Income before taxes
Industrial Chemicals(1) $28.8 $ 19.4
Performance Chemicals(1) 66.3 66.4
Precious Metals (3.1) 1.9
Defense Systems 52.6 37.2
Machinery and Equipment 10.6 4.2
Operating profit 155.2 129.1
Corporate and other (26.0) (31.4)
Net interest expense (14.6) (16.7)
Other income and (expense), net 4.7 3.9
Minority interests (2) (20.3) (0.1)
Total $ 99.0 $ 84.8
(1) Certain chemical products with high value-added
content and specialty applications that formerly had been
included in the Industrial Chemicals segment have been reclassified
to the Performance Chemicals segment. Results for both
Industrial and Performance Chemicals have been restated for
comparative reporting purposes.
(2) Minority interests relates primarily to Defense
Systems (19.7) and Precious Metals (0.1) in 1994 and Precious
Metals in 1993.
PAGE 12
Sales of $1,054 million in the second quarter of 1994
increased 8 percent compared with the prior-year quarter,
primarily due to increases in the Defense Systems, Energy
and Transportation Equipment and Specialty Chemical
businesses, partially offset by expected declines in
Precious Metals. Earnings before interest and taxes
increased 12 percent to $114 million compared with $102
million in the prior-year quarter. Strong results from
Machinery and Equipment, improving European chemical
operations and cost paring within Industrial Chemicals,
combined with reduced corporate overhead, more than offset
the expected declines in Defense and Precious Metals. Net
interest expense of $15 million fell 12 percent in the
quarter due to lower debt balances and successful
refinancing in the second half of 1993.
Income before extraordinary item of $67 million compared
with $63 million in the second quarter of 1993. Primary
earnings per share were $1.82 compared with $1.69 last
year. After an extraordinary charge of $5 million related
to debt refinancing, 1993 second quarter net income was
$58 million, or $1.56 per share.
Industrial Chemicals sales of $221 million decreased 3
percent compared with last year's quarter. FMC's
European chemical operations results reflected stronger
volumes and improved pricing across most product lines,
partially offset by lower soda ash pricing and volumes
and the expected continued decline of phosphorus volumes
in the home laundry detergent market. Market conditions
in Industrial Chemicals are improving. In particular,
the continued strong demand for hydrogen peroxide and
the recent increase in caustic soda prices may
positively affect FMC's results beginning in 1995.
Profits of $29 million for the segment were higher,
reflecting the improved performance of the European
chemical operations and cost-paring throughout the
segment in 1994.
Performance Chemicals record sales of $299 million
increased 2 percent, compared with strong results of
$294 million in last year's period. Results benefited
from the continuing growth of fat substitutes in food
applications, new formulations for the over-the-counter
pharmaceutical market, and a recovery in the domestic
market for lithium products. In addition, strong
volumes of agricultural chemicals in the North American
market compared well with record results in last year's
quarter. Profits of $66 million were even with last
year, despite significantly stepped-up research and
development expenses to support the commercialization of
a new class of herbicides, substantially higher sales
and marketing expenses to expand the global market
positions of the food ingredients and pharmaceutical
businesses, and spending to develop a new, high-quality
lithium brine resource in Argentina.
As expected, Precious Metals sales of $17 million
declined compared with last year's second quarter
results of $33 million. The segment posted a loss of
$3.1 million, reflecting the closing of the Paradise
Peak mine in 1993, the higher costs of mining activity
at Jerritt Canyon, and continued exploration spending.
PAGE 13
Defense Systems sales of $283 million increased 20
percent from $235 million in last year's quarter. The
100 percent consolidation of United Defense, L.P. more
than offset the expected production declines in Ground
and Armament Systems. Profits (after the limited
partner's share of United Defense earnings) totaled $33
million in the 1994 second quarter. The profits
primarily reflect a more profitable mix of business and
favorable cost performance. Defense backlog was at $1.3
billion at the end of the quarter, up from $1.1 billion
at the beginning of the year, reflecting the formation
of United Defense.
The joint venture in Turkey to produce armored fighting
vehicles for the Turkish army has encountered delays in
the acceptance of vehicles. Negotiations with the
customer involving contract disputes are continuing.
This joint venture is accounted for as an investment and
income is recognized as dividends, royalties, and
technical fees are received.
Machinery and Equipment sales of $243 million increased
19 percent, reflecting the successful integration and
growth of recent oil field services acquisitions, as
well as market share gains in the energy equipment
business. The North American market for Food Machinery
products, including packaging and material handling
equipment, harvesters and food processing systems, has
strengthened. However, Europe, a major market for FMC
products, remains weak. Profits of $11 million were up
significantly from $4 million last year on the strength
of sales gains in the Energy and Transportation
businesses and improved manufacturing efficiencies and
cost structure in the Food Machinery businesses.
Machinery and Equipment backlog was $499 million at the
end of the quarter, up from $333 million from the
beginning of the year due to recently completed
acquisitions.
On June 20, 1994, FMC completed the sale of its
palletizer product line to Simplimatic Engineering
Company, a Lynchburg, Va. based product handling and
automation subsidiary of Paris-based CarnaudMetalbox.
Certain corporate income and expense items are not
allocated to specific business segments due to their
nature. Such items resulted in lower net expense
compared to the prior-year period due primarily to the
company's cost saving efforts.
The effective tax rates for the quarters ended June 30,
1994 and 1993 were 32 percent and 26 percent,
respectively. The increase is primarily due to lower
1994 depletion benefits and higher taxes on repatriated
earnings.
PAGE 14
Six months 1994 compared to six months 1993
Industry Segment Data (Unaudited)
(Dollars in millions)
Six Months Ended
June 30
1994 1993
Sales
Industrial Chemicals (1) $ 418.2 $435.9
Performance Chemicals (1) 549.5 528.0
Precious Metals 38.7 72.6
Defense Systems 525.4 468.0
Machinery and Equipment 445.2 393.3
Eliminations (14.9) (16.8)
$1,962.1 $1,881.0
Income before taxes
Industrial Chemicals(1) $ 63.6 $ 36.7
Performance Chemicals(1) 104.2 105.6
Precious Metals (0.3) 8.2
Defense Systems 88.4 75.7
Machinery and Equipment 18.8 6.8
Operating profit 274.7 233.0
Corporate and other $ (52.6) (58.2)
Net interest expense (29.5) (32.6)
Other income and (expense), net 9.4 5.1
Minority interest (2) (35.2) (0.7)
Total $ 166.8 $ 146.6
(1) Certain chemical products with high value-added
content and specialty applications that formerly had been
included in the Industrial Chemicals segment have been reclassified
to the Performance Chemicals segment. Results for both
Industrial and Performance Chemicals have been restated for
comparative reporting purposes.
(2) Minority interests relates primarily to Defense
Systems (33.5) and Precious Metals (0.9) in 1994 and Precious
Metals in 1993.
Sales of $2.0 billion in the first half of 1994
increased 4 percent from $1.9 billion in the 1993
period. Earnings of $196 million before interest and
taxes increased 10 percent compared with the first half
of 1993. Strong growth at Performance Chemicals,
improved manufacturing efficiencies and cost
improvements at Industrial Chemicals, and the successful
integration of acquisitions and growth at Machinery and
Equipment more than offset the expected declines in
Defense and Precious Metals. Corporate and other
expenses of $53 million declined 9 percent, reflecting
the company's cost-savings efforts. Net interest
expense declined 9 percent to $30 million, reflecting
lower debt balances and successful refinancing in 1993.
For the first six months of 1994, income before
extraordinary items increased 5 percent to $113 million.
PAGE 15
Primary earnings per share were $3.06 compared with
$2.93 per share last year. After extraordinary items
related to debt refinancing, net income for the first
half of 1993 was $103 million or $2.80 per share.
Industrial Chemicals sales of $418 million declined 4
percent in the first half of 1994 as compared to the
year ago period. Despite a decline in sales, profits of
$64 million increased significantly compared with $37
million last year. Profits benefited from improved
performance of the European chemical operations, strong
growth at Peroxygen, improved manufacturing
efficiencies, and cost-paring throughout the segment.
These favorable impacts were partially offset by lower
soda ash pricing and volumes and the expected continued
decline of phosphorus volumes in the home laundry
detergent market.
Performance Chemicals sales of $549 million rose 4
percent compared with $528 million in last year's
period. Results benefited from continued strong growth
in existing and new applications for food ingredients
products, a recovery in the domestic market for lithium
products, higher volumes and new formulations for
pharmaceutical ingredients used in over-the-counter
medications and strong agricultural chemicals volumes
throughout North America. Despite significantly higher
research, marketing and sales spending to support the
commercialization of two new herbicides and the future
growth of the pharmaceutical and food ingredients
businesses, profits of $104 million remained strong
compared with $106 million in last year's quarter.
Precious Metals sales of $39 million declined from sales
of $73 million in last year's period and a loss of $0.3
million was recognized in contrast to profits of $8
million in last year's period. The closure of the
Paradise Peak mine in 1993, higher costs of mining
activity at Jerritt Canyon, and continued exploration
spending contributed to the segment's reduced
profitability.
PAGE 16
Defense Systems sales were $525 million for the first
half of 1994 compared to $468 million for the same
period last year. The consolidation of United Defense,
L.P. more than offset the expected production declines
in Ground and Armament Systems. Profits (after the
limited partner's share of United Defense earnings)
totaled $55 million in the first half of 1994 as
compared to profits of $76 million for the same period
in 1993. The lower profits primarily reflect the
reduced production rate of Bradley Fighting Vehicles and
the shutdown of the Vertical Launching Systems
production line in fourth quarter 1993, partially offset
by a more profitable mix of business and improved cost
performance. Defense backlog stood at $1.3 billion at
the end of the quarter, up from $1.1 billion at the
beginning of the year, reflecting the formation of
United Defense.
As announced during the first half of 1994, UDLP was
designated by the Department of the Army to be the prime
contractor and systems integrator for the Bradley
Modernization Program. As prime contractor, UDLP is
strategically positioned to lead the design and
development of the electronic system to improve fire
control and integrate communications hardware and
software on the battlefield.
Machinery and Equipment sales of $445 million rose 13
percent from $393 million, and profits increased to $19
million from $7 million. Results benefited from winning
major international contracts that resulted in higher
volumes of wellheads, trees and subsea equipment
compared with last year's period. Results also
benefited from the successful integration and growth of
recent oil field services acquisitions, as well as
market share gains in the energy equipment business and
an improving North American market for Food Machinery
products. During the first half of 1994, the Energy
business established a joint venture in Oman, shipped
its first product from a new joint venture in Russia,
and with its Brazilian partner, completed construction
of the world's deepest subsea well.
Food Machinery sales remained flat during the first half
of 1994 as several of our food machinery markets,
particularly in Europe, showed no signs of recovery.
However, profits increased in the first half of 1994
compared to 1993 due to continued cost-cutting and
improved manufacturing efficiencies throughout the
businesses. Machinery and Equipment backlog stood at
$499 million at the end of the quarter, up from $333
million at the beginning of the year due to recently
completed acquisitions.
The effective tax rates for the six-month periods ended
June 30, 1994 and 1993 were 32 percent and 26 percent,
respectively. The increase is primarily due to lower
1994 depletion benefits and higher taxes on repatriated
earnings.
PAGE 17
OTHER FINANCIAL INFORMATION
FMC's backlog of unfilled orders as of June 30, 1994 was
$1.8 billion. Backlogs are not reported for Industrial
Chemicals, Performance Chemicals, and Precious Metals
due to the nature of these businesses.
INDEPENDENT ACCOUNTANTS' REPORT
A report by KPMG Peat Marwick, FMC's independent
accountants, on the financial statements included in
Form 10-Q for the quarter ended June 30, 1994 is
included on page 18.
A report by Ernst and Young, UDLP's independent
accountants, on the financial statements referred to by
KPMG Peat Marwick in its report noted above is included
on page 19.
PAGE 18
SIGNATURE
Independent Accountants' Report
The Board of Directors
FMC Corporation:
We have reviewed the accompanying consolidated balance
sheet of FMC Corporation and consolidated subsidiaries
as of June 30, 1994, and the related consolidated
statements of income for the three-month and six-month
periods ended June 30, 1994 and 1993, and the related
consolidated statements of cash flows for the six-month
periods ended June 30, 1994 and 1993. These financial
statements are the responsibility of the company's
management.
We were funished with the report of other accountants
on their review of the interim financial information of
United Defense, L.P., whose total assets as of June 30,
1994, and whose revenues for the three-month and six-
month periods ended June 30, 1994 constituted 15
percent, 27 percent, and 27 percent, respectively, of
the related consolidated totals.
We conducted our reviews in accordance with standards
established by the American Institute of Certified
Public Accountants. A review of interim financial
information consists principally of applying analytical
procedures to financial data and making inquiries of
persons responsible for financial and accounting
matters. It is substantially less in scope than an
audit conducted in accordance with generally accepted
auditing standards, the objective of which is the
expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our review and the report of other
accountants, we are not aware of any material
modifications that should be made to the accompanying
financial statements referred to above for them to be
in conformity with generally accepted accounting
principles.
KPMG Peat Marwick
Chicago, Illinois
July 19, 1994
PAGE 19
SIGNATURE
Independent Accountants' Review Report
Partners
United Defense LP
Arlington, Virginia
We have reviewed the accompanying balance sheet of
United Defense LP as of June 30, 1994, and the related
statements of income for the three-month period ended
June 30, 1994 and the six-month period from the
effective date of the Partnership (January 1, 1994)
through June 30, 1994 and the statements of partners'
equity and cash flows for the six-month period from the
effective date of the Partnership (January 1, 1994)
through June 30, 1994. These financial statements are
the responsibility of the Partnership's management.
We conducted our review in accordance with standards
established by the American Institute of Certified
Public Accountants. A review of interim financial
information consists principally of applying analytical
procedures to financial data, and making inquiries of
persons responsible for financial and accounting
matters. It is substantially less in scope than an
audit conducted in accordance with generally accepted
auditing standards, which will be performed for the
full year with the objective of expressing an opinion
regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the accompanying
financial statements referred to above for them to be
in conformity with generally accepted accounting
principles.
Ernst & Young LLP
Washington, D.C.
July 15, 1994
PAGE 20
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Registrant's Annual Meeting of Stockholders was held on
April 15, 1994. At the meeting, stockholders voted on
(i) the election of four directors, and (ii)
ratification of the appointment of KPMG Peat Marwick as
Registrant's independent auditors for 1994. Voting on
each such matter was as follows:
Votes Votes Withheld/ Broker
For Against Abstentions Non-Votes
1. Election of Directors:
L. D. Brady 33,471,548 - 354,113 -
P. A. Buffler 33,232,762 - 592,899 -
R. H. Malott 33,436,076 - 389,585 -
C. Yeutter 33,480,327 - 345,334 -
2. Ratification of Auditors 33,577,693 117,067 130,901 -
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Page Number in
Number in Document Numbering
Exhibit Table Description System
11 Statement re: computation Document type 2, page 2
of per share earnings
assuming full dilution
15 Letters re: unaudited Document type 2, pages 3
interim financial and 4
information
(b) Reports on Form 8-K
Form 8-K dated May 9, 1994 announcing Arthur D. Lyon's
departure from the company.
PAGE 21
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
(Registrant)
Date: August 12, 1994 Frank A. Riddick, III
Controller and duly authorized
officer
PAGE 0
DOCUMENT HEADER
DOCUMENT DESCRIPTION EXHIBIT INDEX
DOCUMENT TYPE 2
COUNT 1
PAGE 1
EXHIBIT INDEX
Page Number in
Number in Document Numbering
Exhibit Table Description System
11 Statement re: computation 2
of per share earnings
assuming full dilution
15 Letter re: unaudited 3
interim financial
information
15 Letter re: unaudited 4
interim financial
information (Ernst & Young)
PAGE 2
FMC Corporation
Quarterly Report
on Form 10-Q for
June 30, 1994
Exhibit 11 Statement re:
Computation of Per Share Earnings Assuming
Full Dilution (Unaudited)
(In thousands, except per share data)
Three Months Six Months
Ended June 30 Ended June 30
1994 1993 1994 1993
Earnings:
Net income $67,317 $57,871 $113,404 $103,311
Pro forma earnings
applicable
to common stock $67,317 $57,871 $113,404 $103,311
After-tax interest on
7 1/2% zero-coupon
debentures - 1,945 - 3,818
Pro forma earnings
applicable
to common stock $67,317 $59,816 $113,404 $107,129
Shares:
Average number of shares
of common stock and
common stock equivalents
outstanding 37,070 36,913 37,049 36,917
Additional shares assuming
conversion of:
Stock options 31 - 25 4
7 1/2% zero coupon
debentures - 2,869 - 2,869
Pro forma shares 37,101 39,782 37,074 39,790
Earnings per common share
assuming full dilution $ 1.81 $ 1.50 $ 3.06 $ 2.69
PAGE 3
FMC Corporation
SIGNATURE Quarterly Report
on Form 10-Q for
June 30, 1994
Exhibit 15
Letter re: Unaudited Interim Financial Information
FMC Corporation
Chicago, Illinois
Gentlemen:
Re: Registration Statement No. 33-10661 and No. 33-7749
on Form S-8 and Registration Statement No. 33-45648 on Form
S-3.
With respect to the subject registration
statements, we acknowledge our awareness of the
incorporation by reference therein of our report
dated July 19, 1994, related to our review of
interim financial information.
Pursuant to Rule 436(c) under the Securities Act
of 1933, such report is not considered a part of a
registration statement prepared or certified by an
accountant or a report prepared or certified by an
accountant within the meaning of Sections 7 and 11
of the Act.
Very truly yours,
Chicago, Illinois
August 11, 1994
PAGE 4
FMC Corporation
SIGNATURE Quarterly Report
on Form 10-Q for
June 30, 1994
Exhibit 15
Letter re: Unaudited Interim Financial Information
August 8, 1994
Securities and Exchange Commission
Washington, D.C., 20549
We are aware of the incorporation by reference in the
Registration Statements (Form S-3 No. 33-45648, Form S-
8 No. 33-10661 and Form S-8 No. 33-7749) of FMC
Corporation for the registration of its common stock of
our report dated July 15, 1994 relating to the
unaudited interim financial statements of United
Defense LP which is included in the Form 10-Q of FMC
Corporation for the quarter ended June 30, 1994.
Pursuant to Rule 436(c) of the Securities Act of
1933, our report is not a part of the registration
statements prepared or certified by accountants
within the meaning of Section 7 or 11 of the
Securities Act of 1933.
Ernst & Young LLP
