<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1994
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
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
------------------------------------------ -------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 312/861-6000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- ---------------------
Common Stock, $0.10 par value New York Stock Exchange
Midwest Stock Exchange
Pacific Stock Exchange
Preferred Share Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
<PAGE>
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 BY CHECK MARK 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. [X]
THE AGGREGATE MARKET VALUE OF VOTING STOCK HELD BY NON-AFFILIATES OF
THE REGISTRANT AS OF MARCH 2, 1995, WAS $2,154,434,767. THE NUMBER OF SHARES OF
REGISTRANT' COMMON STOCK, $0.10 PAR VALUE, OUTSTANDING AS OF THAT DATE WAS
36,543,835.
DOCUMENTS INCORPORATED BY REFERENCE
DOCUMENT FOR 10-K REFERENCE
-------- ------------------
Portions of Annual Report Part II; Part III, Item 10; and Part IV,
to Stockholders for 1994 Item (a)(1)(2)
Portions of Proxy Part III
Statement for 1995 Annual
Meeting of Stockholders
===============================================================================
<PAGE>
PART I
ITEM 1. BUSINESS.
A. GENERAL DEVELOPMENT OF BUSINESS.
FMC Corporation was incorporated in 1928 under Delaware law and has its
principal executive offices at 200 East Randolph Drive, Chicago, Illinois
60601. As used in this report, except where otherwise stated or indicated by
the context, "FMC", "the Company" or "the Registrant" means FMC Corporation and
its consolidated subsidiaries and their predecessors.
Restructuring and other charges. In 1993, FMC recorded pretax restructuring and
other charges of $172.3 million, net of minority interest (after-tax $123.3
million, or $3.34 per share). These charges primarily related to restructuring
costs associated with the Machinery and Equipment and Industrial Chemical
segments, expenses to restructure companywide functional support staffs, as well
as a write-down of the investment in the Beartrack development property in the
Precious Metals segment. The restructuring program was designed to reduce costs
and improve operating efficiencies.
During 1994, FMC carried out a number of actions consistent with the 1993
restructuring plan. Employee positions were eliminated, manufacturing
facilities were consolidated and unprofitable product lines were exited.
The restructuring reserve remaining at December 31, 1994, is expected to cover
spending associated with the remaining work force reductions, downsizing and
other restructuring related costs.
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 Airport Products and Systems 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>
Also on June 30, 1993, the Company acquired SOFEC, Inc., a Houston-based
engineering and construction company. SOFEC, Inc. designs, fabricates and
installs offshore mooring systems for export and import terminals and for
floating storage and production facilities for offshore oil and gas.
The Company also completed a number of other smaller acquisitions and joint
ventures during the years ended December 31, 1994 and 1993, respectively.
During 1992, the Company acquired the worldwide flame retardants and fluids, and
water treatment chemicals businesses of Ciba-Geigy Additives Division (Ciba-
Geigy), with annual sales of approximately $150 million.
In 1991, the Company acquired the airplane wing deicer business of The Trump
Companies, Inc. The 1991 consolidated results were not significantly affected
by this acquisition.
In 1990, FMC Gold Company, a subsidiary of the Company, acquired all of the
stock of Meridian Gold Company from a subsidiary of Burlington Resources, Inc.,
for 8 million shares of authorized but previously unissued FMC Gold Company
common stock. The acquired net assets were recorded at $56.7 million based on
the estimated market value of the shares issued. As a result of the stock
issuance, the Company's ownership interest in FMC Gold Company was reduced to 79
percent from 89 percent. In 1994, the Company purchased additional shares of
FMC Gold Company on the open market, bringing its ownership interest to 80
percent. The results of operations of the acquired properties are included in
the consolidated financial statements of FMC Corporation effective after the
acquisition date of May 15, 1990.
Also during 1990, the Company acquired full ownership of Electro Quimica
Mexicana, S.A. from Interindustrias, S.A. for $12.3 million, net of cash
acquired. FMC had previously held a 49 percent ownership interest in this
producer of hydrogen peroxide and ammonium persulfate. The phaseout of the
Company's fire apparatus business was also completed during 1990. Neither this
acquisition nor the phaseout significantly affected the 1990 consolidated
results of operations.
The purchase prices for the aforementioned acquisitions were satisfied from cash
flow from operations and long-term financing. The Company has accounted for
these acquisitions by the purchase method. These acquisitions did not have a
material impact on the consolidated results of operations.
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.
<PAGE>
("UDLP"), operates 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 is 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 at
December 31, 1994 resulting in increases to trade receivables, inventories,
property, plant and equipment, other assets, accounts payable, and minority
interests compared to December 31, 1993.
A description of the principal products and services and the major markets
served by each industry segment is included under "Narrative description of
business."
B. FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS (DOLLARS IN MILLIONS):
<TABLE>
<CAPTION>
(in millions) Year ended December 31
-------------------------------
1994 1993 1992
-------- -------- ---------
<S> <C> <C> <C>
SALES*
Performance Chemicals $1,060.5 $ 973.5 $ 912.3
Industrial Chemicals 866.8 866.7 925.9
Machinery and Equipment 972.7 870.9 876.7
Defense Systems(1) 1,080.5 950.2 1,111.8
Precious Metals(1) 60.9 125.0 170.6
Eliminations (30.6) (32.4) (23.6)
-------- -------- --------
Total $4,010.8 $3,753.9 $3,973.7
</TABLE>
_______________________
* 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.
(1) Defense System's segment data includes 100 percent of United Defense, L.P.
in 1994. Precious Metals' segment data includes 100 percent of FMC Gold
Company in 1990 through 1994. Minority shareholder interests are included
in Minority Interest, except the portion related to 1993 restructuring and
other charges.
<PAGE>
<TABLE>
<CAPTION>
INCOME BEFORE INCOME TAXES* 1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Performance Chemicals $ 154.0 $ 139.1 $ 133.4
Industrial Chemicals 119.3 58.3 79.8
Machinery and Equipment 33.3 6.7 32.1
Defense Systems(1) 159.5 161.7 167.2
Precious Metals(1) (9.0) 9.7 36.4
-------- -------- --------
Operating profit $ 457.1 $ 375.5 $ 448.9
Restructuring and other charges(2) -- (172.3) --
Net interest expense (59.1) (62.6) (82.7)
Corporate and other(3) (101.8) (110.5) (112.3)
Minority Interest(1) (61.4) (2.5) (3.6)
Other income and (expense), net(3) 17.5 10.2 29.3
-------- -------- --------
Total $ 252.3 $ 37.8 $ 279.6
IDENTIFIABLE ASSETS*
Performance Chemicals $ 754.6 $ 696.9 $ 662.2
Industrial Chemicals 883.6 824.7 872.2
Machinery and Equipment 619.3 522.9 473.0
Defense Systems(1) 492.0 269.0 277.7
Precious Metals(1) 108.9 64.8 131.8
-------- -------- --------
Subtotal 2,858.4 2,378.3 2,416.9
Corporate and other 493.1 466.8 439.7
-------- -------- --------
Total $3,351.5 $2,845.1 $2,856.6
</TABLE>
-------------
*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.
(1) Defense System's segment data includes 100 percent of United Defense, L.P.
in 1994. Precious Metals' segment data includes 100 percent of FMC Gold
Company in 1990 through 1994. Minority shareholder interests are included
in Minority Interest, except the portion related to 1993 restructuring and
other charges.
(2) Restructuring and other charges related to 1993 are described in Note 2 to
the consolidated financial statements and are related to Machinery and
Equipment ($66.0 million). Precious Metals ($47.9 million, net of minority
interest), Industrial Chemicals ($29.7 million), Performance Chemicals
($3.2 million), and Corporate ($25.5 million).
(3) Other income and (expense), net includes LIFO inventory adjustments and
pension-related income.
<PAGE>
C. NARRATIVE DESCRIPTION OF BUSINESS.
Principal Products
------------------
FMC manufactures and sells a broad range of machinery and chemical products.
FMC's machinery products are marketed principally to industrial, agricultural
and defense users. Its chemical products are mainly industrial and agricultural
chemicals. The Company conducts its business within the five industry segments
identified in b, above. Generally, in all of the segments, FMC competes on the
basis of price and product performance.
Information regarding principal products produced and sold by each industry
segment and principal markets served by each segment is presented in the columns
so designated in the segment table presented below. These products are sold
directly to customers from plants and warehouses, as well as being sold in some
cases (particularly in markets outside the United States) to and through
distributors.
Business Unit Principal Products Markets Served
------------- ------------------ --------------
PERFORMANCE CHEMICALS
---------------------
AGRICULTURAL Produces crop protection Food growers, pest
PRODUCTS and pest control control markets.
GROUP chemicals for worldwide
markets
FOOD Worldwide producer of Processed food
INGREDIENTS carrageenan and Avicel industry, personal
DIVISION cellulose gel. care products.
PHARMACEUTICAL Worldwide producer of Pharmaceutical
DIVISION micro-crystalline industry.
cellulose. Produces
other specialty chemicals
for pharmaceutical
markets.
BIOPRODUCTS Worldwide producer of Life science research;
agarose and other DNA and protein
products for life science analysis
markets.
<PAGE>
Business Unit Principal Products Markets Served
------------- ------------------ --------------
LITHIUM World's largest Aluminum, ceramics and
DIVISION producer of glass, lubricating
lithium-based products. greases, swimming pools,
textiles, aluminum
alloys, batteries,
rubber and plastic, air
conditioning,
pharmaceuticals.
PROCESS A leading world Plastics, hydraulic
ADDITIVES producer of phosphate fluids, lubricant
DIVISION ester flame retardants. additives, industrial
Leading supplier of water treatment and
specialty water desalination.
treatment chemicals.
INDUSTRIAL CHEMICALS
--------------------
ALKALI World's largest Glass-making, chemicals,
CHEMICALS producer of natural detergents, food
DIVISION soda ash. Downstream products, animal feed,
products include sodium additives, mining,
bicarbonate, sodium air/water treatment,
cyanide, sodium pulp and paper.
sesquicarbonate and
caustic soda.
PEROXYGEN A leading worldwide Pulp and paper,
CHEMICALS producer of hydrogen textiles, chemical and
DIVISION peroxide, persulfates polymer synthesis,
and other peroxygen environmental clean-up,
chemicals. electronics, detergents.
PHOSPHORUS A worldwide supplier Detergents, cleaning
CHEMICALS and North American compounds, metal
DIVISION producer of phosphorus treatment, food
and its derivatives, products, textiles,
phosphates and pesticide intermediates,
phosphoric acid. additives,
pharmaceuticals, water
treatment.
<PAGE>
Business Unit Principal Products Markets Served
------------- ------------------ --------------
FMC FORET, S.A. A European chemical Chemicals, detergents,
producer. Products pulp and paper, textiles,
include hydrogen glass, mining, rubber,
peroxide, perborate, metallurgy,
phosphates, zeolites, pharmaceuticals, tanning,
silicates, sulfur ceramics, paint, food,
derivatives. animal feed, photography,
agriculture, water
treatment.
MACHINERY AND EQUIPMENT
-----------------------
ENERGY AND Oil and gas wellhead Oil and gas drilling,
TRANSPORTATION and completion production and service
EQUIPMENT equipment; subsea companies.
GROUP engineering,
procurement,
construction and
equipment; valves,
pumps and loading
arms; marine terminals
and floating
production systems,
metering systems.
Airline and automotive Industrial manufacturing,
equipment, material airlines, airports,
handling systems. automotive repair
facilities, mining,
warehouses, newsprint,
publishing, chemicals,
electrical utilities.
FOOD Systems and equipment Food and juice
MACHINERY to process food and processors; fresh fruit
GROUP beverages, including packers; food growers;
harvesters, supermarkets; bakery,
sterilizers, confectionery, pet food,
extractors, fillers, pharmaceutical and
closers, packaging and personal care markets.
material handling
equipment.
<PAGE>
Business Unit Principal Products Markets Served
------------- ------------------ --------------
DEFENSE SYSTEMS
---------------
UNITED DEFENSE, L.P.
GROUND SYSTEMS Produces tracked U.S. Army, Marine Corps
military vehicles for and National Guard;
U.S. Army, U.S. Marine allied governments.
Corps, National Guard;
allied governments.
ARMAMENT SYSTEMS Develops high-tech U.S. Navy, Army and
weapons systems for Marine Corps and allied
U.S. Army; designs and governments.
builds guns and
launching systems and
provides support
services for U.S. Navy
and international
customers.
INTERNATIONAL Marketing and International
manufacturing arm for governments.
military products
outside the United
States.
STEEL Produces steel track, Military,
PRODUCTS forgings and castings. transportation, energy
Overhauls and converts and mining.
tracked vehicles
PRECIOUS METALS
---------------
FMC GOLD Produces gold from mines Precious metal
in the western United refineries.
States. Focusing on
exploration of precious
metals in Latin America
and western United States
SOURCE AND AVAILABILITY OF RAW MATERIALS
FMC's natural resource requirements are primarily mineral oriented rather than
oil or natural gas oriented. Substantial portions of requirements for ores and
other raw materials, especially trona and phosphate rock, are produced from
mines in the United States on property held by FMC under long-term leases which
are subject to periodic adjustments of royalty rates. Machinery operations
obtain raw materials, principally steel and castings, from many sources both
foreign and domestic. No one source is
<PAGE>
considered essential to any of the machinery operations. The Company uses oil,
gas, coal, coke, hydro-electric power and nuclear power to meet its energy
needs.
PATENTS
Although FMC's patents, trademarks and license are cumulatively important to its
business, FMC does not believe that the loss of any one or group of related
patents, trademarks or licenses would have a material adverse effect on the
overall business of FMC or on any of its business segments.
PRINCIPAL CUSTOMER
Sales to various agencies of the United States government aggregated $618.3
million, $768.4 million and $839.5 million in 1994, 1993 and 1992, respectively.
These sales were made primarily by the Defense Systems segment. Contracts with
various agencies of the United States government and subcontracts with other
prime contractors are subject to a profusion of procurement regulations, with
noncompliance found by any one agency possibly resulting in fines, penalties,
debarment or suspension from receiving additional government contracts.
Moreover, these contracts may be terminated at the government's convenience
although contractors are normally protected by provisions covering reimbursement
for costs incurred as well as the payment of any applicable fees or profits.
SEASONALITY
FMC's businesses are not generally considered to be seasonal although there has
been a bias in the Performance Chemicals segment towards lower profitability in
the fourth quarter primarily due to seasonality in the markets served by the
Agricultural Products Group.
<TABLE>
<CAPTION>
ORDER BACKLOG
December 31
------------------
(in millions) 1994 1993
-------- --------
<S> <C> <C>
Machinery and Equipment $ 480.0 $ 333.1
Defense Systems 1,412.3 1,105.0
-------- --------
Total $1,892.3 $1,438.1
</TABLE>
The increase in Defense Systems backlog resulted from Combat Systems Division
backlog not included in 1993 and additional funding in 1994 on the Paladin
howitzer contract, offset by declines in backlogs for Ground Systems and
Armament Systems Divisions.
<PAGE>
The increase in Machinery & Equipment backlog reflects the acquisition of Jetway
Systems in the Airport Product and Systems Division and the North Sea Norne
project awarded to the Wellhead Division.
Backlogs are not reported for Industrial Chemicals, Performance Chemicals and
Precious Metals due to the nature of these businesses.
COMPETITIVE CONDITIONS
FMC competes on the basis of price and product performance and is among the
market leaders in most products it manufactures. FMC is the world's largest
producer of natural soda ash, a leading North American producer of hydrogen
peroxide, a leading North American producer of industrial phosphorus chemicals
and a world leader in the mining and processing of lithium products. FMC
manufactures Furadan, one of the largest selling insecticides in the world. FMC
is also the largest worldwide producer of carrageenan, microcrystalline
cellulose, and phosphate ester flame retardants. United Defense, L.P. is a
world leader in the production of tracked, armored personnel carriers. FMC
also participates in many machinery businesses, including food processing,
material handling and energy equipment, where FMC has a significant market
share. Products are sold in highly competitive markets worldwide.
RESEARCH AND DEVELOPMENT EXPENDITURES
<TABLE>
<CAPTION>
Year ended December 31
-------------------------------------------------
in millions 1994 1993 1992
-------------------------------------------------
<S> <C> <C> <C>
Performance Chemicals $ 94.7 $ 83.0 $ 71.9
Industrial Chemicals 17.3 15.3 17.3
Machinery and Equipment 30.8 26.1 26.2
Defense Systems 23.6 24.0 27.8
Precious Metals -- 0.1 0.1
Corporate 0.4 0.7 1.7
-------------------------------------------------
Total $166.8 $149.2 $145.0
=================================================
</TABLE>
Expenditures for research and development increased in Performance Chemicals
primarily due to continued development of herbicides and insecticides.
Expenditures also increased in Machinery & Equipment primarily related to
acquisitions in 1994.
Not included in these amounts are $104.9 million, $208.8 million and $139.2
million in 1994, 1993 and 1992, respectively for research and development
projects contracted directly with the U.S. government and commercial sponsors.
The decrease in 1994 is
<PAGE>
attributable to the expected overall decline in the Armament Systems and Ground
Systems divisions.
ENVIRONMENTAL
The Company may be obligated to recognize expenses required to comply with
federal, state and local environmental laws under which the Company has been
identified as a Potentially Responsible Party ("PRP") by the Environmental
Protection Agency ("EPA") or other government agencies. The Company has been
named a PRP at 36 sites on the government's National Priority List. In
addition, the Company also has received notice form the EPA or other regulatory
agencies that the Company may be a PRP, or PRP equivalent, at other sites
including 25 sites at which the company has determined that it has a reasonably
possible environmental liability. The Company, in cooperation with appropriate
government agencies, is currently participating in, or has participated in,
Remediation Investigation/Feasibility Studies ("RI/FS") or their equivalent at
most of the identified sites, with the status of each investigation varying from
site to site. RI/FS at certain sites have just begun whereby limited
information, if any, is available 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, and Records of Decisions ("RODs") have
been issued.
Reserves at December 31, 1994 were provided for potential environmental
obligations which management considers probable and for which a reasonable
estimate of the obligation could be made. 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. Accordingly, reserves of $229 million and $187
million, before recoveries, have been provided at December 31, 1994 and December
31, 1993, respectively, of which $142 million and $99 million are included in
the reserve for discontinued operations at December 31, 1994 and December 31,
1993, respectively. In addition, the Company has estimated reasonably possible
environmental loss contingencies in excess of amounts accrued of approximately
$230 million.
Although potential environmental remediation expenditures in excess of the
current reserves and estimated loss contingencies could be significant, the
impact on the Company's future financial results is not subject to reasonable
estimation due to numerous uncertainties concerning the nature and scope of
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 PRPs as well as other third parties.
<PAGE>
The liability 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. Management, however, believes the
liability arising from the potential environmental obligations is not likely to
have a material adverse effect on the company's liquidity or financial condition
and may be satisfied over the next 20 years or longer.
To ensure FMC is held responsible only for its equitable share of site
remediation costs, FMC has initiated, and will continue to initiate, legal
proceedings for contributions from other PRPs, and for a determination of
coverage against its comprehensive general liability insurance carriers. The
Supreme Court of California has determined that FMC's clean-up costs are insured
damages under its liability insurance policies, subject to a determination of
the application of certain policy exclusions and conditions. In July 1993, in
the Superior Court of Santa Clara County, CA, a jury verdict determined that
these exclusions do not apply to several of these sites. The other sites will be
the subject of future litigation. Approximately $123 million of recoveries ($44
million as other assets and $79 million as an offset to the reserve for
discontinued operations) and approximately $54 million of recoveries ($32
million as other assets and $22 million as an offset to the reserve for
discontinued operations), has been recorded as probable realization on claims
against insurance companies and other third parties at December 31, 1994 and
December 31, 1993, respectively.
Regarding current operating sites, the Company spent approximately $20 million,
$16 million and $20 million for the years 1994, 1993 and 1992, respectively, on
capital projects relating to environmental control facilities, and expects to
spend additional capital of approximately $36 million and $21 million in 1995
and 1996, respectively. Additionally, in 1994, 1993, and 1992, FMC spent
approximately $55 million, $63 million and $57 million, respectively, for
environmental compliance costs for these sites and expects to spend
approximately $61 million in 1995.
Regarding previously operated and other sites for the year 1994, 1993 and 1992,
FMC charged approximately $18 million, $17 million and $11 million,
respectively, against established reserves for remediation spending, with
projected spending of approximately $45 million in 1995, and charged
approximately $13 million, $10 million and $11 million, respectively, against
reserves for spending on RI/FS. Recoveries from third parties of approximately
$5 million, $7 million and $3 million, respectively, were received in 1994,
1993 and 1992. FMC anticipates that the expenditures for current operating ,
previously operated and other sites will continue to be significant for the
foreseeable future.
<PAGE>
EMPLOYEES.
FMC has 21,344 employees in its domestic and foreign operations. At most of its
plants in the United States and Canada, the majority of these employees are
members of labor unions, primarily unions which are affiliated with national
labor organizations. Contracts covering about 19% of these hourly employees
expire during 1995 and certain of these contracts are under negotiation at the
present time. Occasionally, FMC experiences strikes at one or more of its
plants which adversely affect sales and earnings to varying degrees. FMC
considers its employee relations to be good; however, it cannot predict the
outcome of contract negotiations.
D. FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
SALES:
<TABLE>
<CAPTION>
----------------------------------------------------------
GEOGRAPHIC SEGMENT INFORMATION
----------------------------------------------------------
SALES Year ended December 31
----------------------------------------------------------
(in millions) 1994 1993 1992
----------------------------------------------------------
<S> <C> <C> <C>
Third party sales
----------------------------------------------------------
United States $3,084.8 $2,866.4 $3,068.1
Latin America and Canada 159.6 140.4 143.3
Europe 693.5 697.8 704.2
Asia, Africa & others 72.9 49.3 58.1
----------------------------------------------------------
$4,010.8 $3,753.9 $3,973.7
----------------------------------------------------------
Intersegment sales
----------------------------------------------------------
United States $ 110.7 $ 102.5 $ 97.6
Latin America and Canada 10.9 10.9 11.9
Europe 92.3 83.2 72.3
Asia, Africa & others 11.4 23.2 6.5
Eliminations (225.3) (219.8) (188.3)
----------------------------------------------------------
Total Sales $4,010.8 $3,753.9 $3,973.7
==========================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------
INCOME (LOSS) BEFORE
INCOME TAXES Year ended December 31
----------------------------------------------------------------------
(in millions) 1994 1993 1992
----------------------------------------------------------------------
<S> <C> <C> <C>
United States $341.5 $ 323.7 $391.6
Latin America and Canada 13.7 4.4 4.6
Europe 100.2 48.1 48.4
Asia, Africa & others 1.7 (0.8) 4.3
----------------------------------------------------------------------
Operating Profit 457.1 375.4 448.9
Net interest expense (59.1) (62.6) (82.7)
Corporate & other (84.3) (100.2) (83.0)
Minority interest (61.4) (2.5) (3.6)
Restructuring and
other charges (1) - (172.3) -
----------------------------------------------------------------------
Total $252.3 $ 37.8 $279.6
======================================================================
------------------
(1) See Item 1(a).
----------------------------------------------------------------------
IDENTIFIABLE ASSETS Year ended December 31
----------------------------------------------------------------------
(in millions) 1994 1993 1992
----------------------------------------------------------------------
United States $1,960.0 $1,544.3 $1,594.6
Latin America and Canada 157.2 142.7 141.2
Europe 676.3 640.3 636.2
Asia, Africa & others 64.9 51.0 44.9
----------------------------------------------------------------------
Subtotal 2,858.4 2,378.3 2,416.9
Corporate and other 493.1 466.8 439.7
----------------------------------------------------------------------
Total $3,351.5 $2,845.1 $2,856.6
======================================================================
----------------------------------------------------------------------
U.S. EXPORT SALES TO UNAFFILIATED CUSTOMERS BY DESTINATION OF SALE
----------------------------------------------------------------------
Year ended December 31
----------------------------------------------------------------------
(in millions) 1994 1993 1992
----------------------------------------------------------------------
Latin America and Canada $ 217.9 $176.8 $172.2
Europe 153.3 192.2 250.5
Asia, Africa & others 668.6 415.3 474.8
----------------------------------------------------------------------
Total $1,039.8 $784.3 $897.5
======================================================================
</TABLE>
ITEM 2 PROPERTIES
FMC leases executive offices in Chicago and administrative offices in
Philadelphia. The Company operates 97 manufacturing facilities and mines in 21
countries. Major
<PAGE>
research facilities are in Santa Clara, CA, and Princeton, NJ. FMC holds mining
leases on shale and ore deposits in Idaho to supply its phosphorus plant in
Pocatello, and owns substantial phosphatic ore deposits in Rich County, Utah.
Trona ore, used for soda ash production in Green River, WY, is mined primarily
from property held under long-term lease. FMC also owns half of a lithium mine
located near Cherryville, NC, and has long-term lease commitments for the
remaining portion and in Argentina FMC owns the land and mineral rights to the
Salar de Hombre Muerto lithium reserves. FMC Gold Company owns mineral rights to
gold and silver ore bodies at its wholly-owned Beartrack property in Idaho, as
well as the right to 30 percent of the gold ore reserves at the Jerritt Canyon
mine in Elko, NV, operated by its joint-venture partner, Independence Mining
Company Inc., a wholly-owned subsidiary of Minorco (USA) Inc. and leases its
administrative headquarters in Reno, Nevada. Mining operations provide basic raw
materials to many of FMC's chemical plants, without which other sources would
have to be obtained. FMC's mining properties are operated under numerous long-
term leases with no single lease or related group of leases material to the
businesses of the Company as a whole. United Defense, L.P. leases its
administrative offices in Arlington, Virginia.
Most of FMC's plant sites are owned, with an immaterial number of them being
leased. FMC believes its properties and facilities meet present requirements
and are in good operating condition. FMC believes that each of its significant
manufacturing facilities is operating at a level consistent with the industry in
which it operates. FMC's production properties for continuing operations are:
<TABLE>
<CAPTION>
Latin
America
United and Western Total
States Canada Europe Other
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Performance Chemicals 12 3 6 4 25
Industrial Chemicals 14 2 9 - 25
Machinery and Equipment 15 4 12 4 35
Defense Systems 11 - - - 11
Precious Metals 1 - - - 1
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
Environmental Proceedings
-------------------------
As previously reported in FMC's quarterly report on Form 10-Q for the period
ended September 30, 1994, an environmental inspection was conducted in July 1993
at FMC's Phosphorus Chemicals Division plant in Pocatello, Idaho. In August
1994, the United States EPA (Region 10) (the "EPA") formally notified FMC of a
number of alleged violations of the Resource Conservation and Recovery Act
("RCRA") and related
<PAGE>
environmental regulations governing the management of hazardous waste generated
by the plant, including the operations of hazardous waste storage and treatment
units without required permits, the failure to implement an adequate groundwater
monitoring program and to comply with related reporting requirements and the
existence of several other improper treatment and disposal practices. There are
no legal proceedings pending at this time; however, the EPA has stated that the
alleged violations may subject FMC to enforcement action under RCRA, including
possible actions for monetary sanctions, injunctive relief or other available
remedies. Management believes that the resolution of these matters will not
likely have a material adverse effect on FMC's liquidity, results of operations
or financial condition.
Beartrack Gold Property
-----------------------
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 endangered salmon.
The Company has submitted a request to the Army Corps of Engineers ("ACOE") for
renewal of one of the permits necessary to complete construction of the
Beartrack mine. ACOE is studying that request at this time, and the Company is
participating actively in ACOE's review.
On October 21, 1994, the Sierra Club Legal Defense Fund, Inc., ("Sierra"), on
behalf of certain other organizations, sued NMFS and other federal agencies for
violation of the Endangered Species Act (the "Act") alleging that NMFS'
biological opinion failed to satisfy the requirements of the Act.
During the third quarter of 1994, the Pacific Rivers Council and the Wilderness
Society (the "PRC"), represented by Sierra and others, in a lawsuit currently
pending in Federal District Court in Idaho (Pacific Rivers Council v. Thomas),
filed a motion seeking an injunction against all ongoing and future forest
activities which may affect endangered salmon, including mining, within various
national forests in Idaho including the Salmon National Forest in which the
Beartrack property is located. In that lawsuit, the PRC seeks to require the
U.S. Forest Service to consult under the Act with the NMFS regarding existing
land resource management plans for the subject forests and their potential
impacts on endangered salmon.
The Company, along with other mining and timber companies, has been granted
limited leave to intervene in both lawsuits and filed a memorandum in opposition
to the PRC's motion for an injunction at least as it might apply to the
Beartrack property based on, inter alia, the fact that the Company had already
obtained the requisite biological opinion by NMFS and the fact that the
Beartrack property is at least 6.5 miles from the closest habitat for salmon.
<PAGE>
On January 12, 1995, the court in the PRC lawsuit entered an order enjoining,
among other things, all ongoing and announced mining activities in the Idaho
national forests (in which the Beartrack Project is located) subject to a
determination by the court as to whether an activity may proceed under Sections
7(a)(ii) and 7(d) of the Act. The Company and the government have filed appeals
from the court's order. On January 25, 1995, the court entered an order staying
until March 16, 1995, the effectiveness of the injunction in order to give the
Forest Service time in which to complete consultation with NMFS on the Land and
Resource Management Plans for the national forests in Idaho and on March 8,
1995, the Court entered an order dissolving the injunction in recognition of
completion of the consultation process. That action is likely to end the
Company's involvement in that litigation.
The Company believes that (i) the biological opinion was carefully considered
and fully supported by the record and (ii) that it will be permitted to continue
its planned activity at the Beartrack site. However, a different conclusion in
the earlier lawsuit could result in suspension of further development and/or
operation of the Beartrack property.
The Beartrack property encompasses approximately 30 square miles of mining
claims and contains approximately one million ounces of proven and probable
reserves. At December 31, 1994, FMC Gold Company's investment in Beartrack was
approximately $48 million.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT
The Executive Officers of FMC Corporation, together with the offices in FMC
Corporation presently held by them, their business experience since January 1,
1990, and their ages, are as follows:
<PAGE>
<TABLE>
<CAPTION>
Name Age Office, year of election; and
3/14/95 other information for past 5 years
------- ------------------------------------------
<S> <C> <C>
Robert N. Burt 57 Chairman of the Board and Chief Executive
Officer (91); President (90-93);
Executive Vice President (88)
Larry D. Brady 52 President (93) and a Director (89);
Executive Vice President (89-93) Vice
President-Corporate Development (88)
William F. Beck 56 Executive Vice President (94); Vice
President (86) and General
Manager-Chemical Products Group (86);
President of FMC Europe (91)
Michael J. Callahan 55 Executive Vice President and Chief
Financial Officer (94); Executive Vice
President and Chief Financial Officer,
Whirlpool Corporation (91-94)
William J. Kirby 57 Senior Vice President (94); Vice
President-Administration (85)
Charles H. Cannon 42 Vice President and General Manager-Food
Machinery Group (94)
Cheryl A. Francis 41 Vice President (95) and Treasurer (93);
Adjunct Professor, University of Chicago
Graduate School of Business (91-93);
various financial
positions with FMC (79-91)
W. Reginald Hall 59 Vice President (91) and General
Manager-Specialty Chemicals Group (92)
General Manager-Food Machinery Group (90)
Robert I. Harries 51 Vice President (92) and General
Manager-Chemical Products Group (94)
Patrick J. Head 62 Vice President and General Counsel (81)
</TABLE>
<PAGE>
Lawrence P. Holleran 64 Vice President (95); Vice President-Human
Resources (88-94)
James A. McClung 57 Vice President (91); Vice
President-International (81-91)
Earl M. Morgan 64 Vice President (91) and General Manager-
Agricultural Chemical Group (90)
Joseph H. Netherland 48 Vice President (87) and General
Manager-Petroleum Equipment Group (86),
Specialized Machinery Group (89); Energy
and Transportation Equipment Group (93)
Thomas W. Rabaut 46 Vice President (94), President and Chief
Executive Officer, United Defense, L.P.
(94); General Manager, Defense Systems
Group (93); Manager, Ground Systems
Division (90-93)
William J. Wheeler 52 Vice President (91); President, FMC
Asia-Pacific (91); General Manager,
Phosphorus Chemical Division (86-91)
Scott H. Williamson 43 Vice President-Corporate Development
(93); Vice President, Acquisitions and
Development, Itel Corporation (85-93)
Each of the Company's executive officers has been employed by the Company in a
managerial capacity for the past five years except for Messrs. Callahan and
Williamson and Ms. Francis. No family relationships exist between any of the
above-listed officers and there are no arrangements or understandings between
any of them and any other person pursuant to which they are selected as an
officer. All officers are elected to hold office for one year and until their
successors are elected and qualify.
<PAGE>
<TABLE>
<CAPTION>
10-K Item No. Incorporated by Reference From:
------------ ------------------------------------------
<S> <C> <C>
PART II.
Item 5. Market for Registrant's Annual Report to Stockholders,
------ Common Equity and Inside back cover, pages 53, 68-70
Related Stockholder and 75
Matters
Item 6. Selected Financial Data Annual Report to Stockholders,
------- pages 76-77
Item 7. Management's Discussion Annual Report to Stockholders,
------- and Analysis of Financial pages 43-53
Condition and Results of
Operations
Item 8. Financial Statements and Annual Report to Stockholders,
------- Supplementary Data pages 7 and 54-75
(including all Schedules
required under Item 14 of
Part IV)
Item 9. Changes in and (Not Applicable)
------- disagreements with
Accountants on Accounting
and Financial Disclosure
PART III.
Item 10. Directors and Executive Part 1; Proxy Statement for 1995
-------- Officers of the Registrant Annual Meeting of stockholders,
pages 1-10
Item 11. Executive Compensation Proxy Statement for 1995 Annual
-------- Meeting of Stockholders, pages 17-
25
Item 12. Security Ownership of Proxy Statement for 1995 Annual
-------- Certain Beneficial Owners Meeting of Stockholders, pages 11-
and Management 12
Item 13. Certain Relationships and Proxy Statement for 1995 Annual
-------- Related Transactions Meeting of Stockholders, page 10
</TABLE>
<PAGE>
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(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. All required financial statement schedules are included in the
consolidated financial statements or notes thereto as
incorporated under Item 8 of this Form 10-K.
3. Independent Auditors report from Ernst & Young LLP for United
Defense, L.P. (Exhibit 99).
4. Exhibits: See attached exhibit index, page 25.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the last quarter of the
period covered by this report.
(c) Exhibits
See Index of Exhibits.
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 Michael J. Callahan
-------------------
Michael J. Callahan
Executive Vice President and
Chief Financial Officer
<PAGE>
Date: March 29, 1995
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.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C> <C>
Michael J. Callahan Executive Vice President Michael J. Callahan
and Principal Financial ----------------------
Officer Michael J. Callahan
Alan L. Lowe Acting Principal )
Accounting Officer )
Robert N. Burt Chairman of the Board )
and Chief Executive )
Officer )
William W. Boeschenstein Director )
Larry D. Brady Director )
B.A. Bridgewater, Jr. Director ) By: Michael J. Callahan
Patricia A. Buffler Director ) -------------------
Paul L. Davies, Jr. Director ) Michael J. Callahan
Jean A. Francois-Poncet Director )
Robert H. Malott Director )
Edward C. Meyer Director )
William F. Reilly Director )
James R. Thompson Director )
Clayton Yeutter Director )
</TABLE>
<PAGE>
PAGE 1
INDEX OF EXHIBITS FILED WITH OR
INCORPORATED BY REFERENCE INTO
FORM 10-K OF FMC CORPORATION
FOR YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Sequential
Exhibit No. Page No.
This This
10-K Exhibit Description 10-K
----------- ------------------- ----------
<C> <S> <C>
3.1 Restated Certificate of Incorporation, N/A
as filed on July 1, 1986 (incorporated
by reference from Exhibit 3.1 to the
form SE filed on March 25, 1993)
3.2 Amendment to Restated Certificate of N/A
Incorporation filed on April 30, 1987
(incorporated by reference from Exhibit
3.2)
3.3 By-Laws of the Company, as amended N/A
(incorporated by reference from Exhibit
3.1 to the Form SE filed on March 28,
1990)
4.1 Amended and Restated Rights Agreement, N/A
dated as of February 19, 1988, between
Registrant and Harris Trust and Savings
Bank (incorporated by reference from
Exhibit 4 to the Form SE filed on March
25, 1993)
4(iii)(A) Registrant undertakes to furnish to the N/A
Commission upon request, a copy of any
instrument defining the rights of
holders of long-term debt of the
Registrant and all of its subsidiaries
for which consolidated or consolidated
financial statements are required to be
filed
4.2 Participation Agreement, dated as of N/A
January 1, 1994, by and among FMC
Corporation, Harsco Corporation, Harsco
Defense Holding, Inc. and United
Defense, L.P.* (incorporated by
reference from Exhibit 4.1 to the Form
8-K filed on
February 14, 1994)
4.3 Partnership Agreement, dated as of N/A
January 1, 1994, by and among FMC
Corporation, Harsco Defense Holding,
Inc. and United Defense, L.P.*
(incorporated by reference from Exhibit
4.2 to the Form 8-K filed on February
14, 1994)
</TABLE>
<PAGE>
4.4 Annex A - Definitions Relating to the N/A
Partnership Agreement and the
Participation Agreement (incorporated
by reference from Exhibit 4.3 to the
Form 8-K filed on February 14, 1994)
4.5 Registration Rights Agreement, dated as N/A
of January 1, 1994, by and among FMC
Corporation, Harsco Defense Holding,
Inc. and United Defense, L.P.
(incorporated by reference from Exhibit
4.4 to the Form 8-K filed on February
14, 1994)
4.6 Management Services Agreement, dated as N/A
of January 1, 1994, by and between FMC
Corporation and United Defense, L.P.*
(incorporated by reference from Exhibit
4.6 to the Form 8-K filed on February
14, 1994)
4.7 Form of Senior Promissory Note N/A
Agreement by and between Harsco Defense
Holding, Inc. and United Defense, L.P.
(incorporated by reference from Exhibit
4.6 to the Form 8-K filed on February
14, 1994)
10.1** Directors' Retirement Plan as amended 29
on December 9, 1994
10.2** FMC 1981 Incentive Share Plan, as N/A
amended, effective May 28, 1986
(incorporated by reference from Exhibit
10.1 to the Form SE filed on March 25,
1993)
10.3** FMC 1990 Incentive Share Plan N/A
(incorporated by reference from Exhibit
10.1. to the Form SE filed on March 26,
1991)
10.4** FMC Corporation Salaried Employees'
Retirement Plan, as amended and 31
restated effective January 1, 1995
10.5** FMC Employees' Thrift and Stock N/A
Purchase Plan, as revised and restated
as of April 1, 1991 (incorporated by
reference from Exhibit 10.3 to the Form
SE filed on March 27, 1992)
10.6** Amendments to the FMC Employees' Thrift
and Stock Purchase Plan through
December 31, 1994 92
10.7** FMC Salaried Employees' Equivalent N/A
Retirement Plan (incorporated by
reference from Exhibit 10.4 to the Form
SE filed on March 27, 1992)
<PAGE>
10.8** FMC Deferred Compensation Equivalent N/A
Retirement and Thrift Plan
(incorporated by reference from Exhibit
10.5 to the Form SE filed on March 27,
1992)
10.9** FMC Management Bonus Plan (incorporated N/A
by reference from Exhibit 10.6 to the
Form SE filed on March 27, 1992)
10.10** FMC Corporation Amended and Restated N/A
Executive Severance Plan, (incorporated
by reference from Exhibit 10.1 to the
Form SE filed on March 28, 1990)
10.11** FMC Employees' Thrift and Stock N/A
Purchase Trust dated
April 1, 1982 (incorporated by
reference from Exhibit 10.7 to the Form
SE filed on March 27, 1992)
10.12** Amendment to FMC Employees' Thrift and N/A
Stock Purchase Trust dated April 1,
1988 (incorporated by reference from
Exhibit 10.8 to the Form SE filed on
March 27, 1992)
10.13** FMC Master Trust Agreement between FMC N/A
and Bankers
Trust Company (incorporated by
reference from Exhibit 10.9 to the Form
SE filed on March 27, 1992)
10.14 Fiscal Agency Agreement between FMC N/A
Corporation and Union Bank of
Switzerland, Fiscal Agent, dated as of
January 16, 1990 (incorporated by
reference from Exhibit 10.4 to the Form
SE filed on March 28, 1990)
10.15** Amended and Restated FMC-Deferred Stock
Plan for Non-Employee Directors 95
10.16** Consulting Agreement dated as of
September 1, 1990 between the Company
and Edward C. Meyer (incorporated by N/A
reference from Exhibit 10.16 to Form
10-K-A filed on April 5, 1994)
13 Annual Report of FMC Corporation for
the year ended December 31, 1994, is
included as an Exhibit to this report
for the information of the Securities
and Exchange Commission and, except for
those portions thereof specifically 100
incorporated by reference elsewhere
herein, such Annual Report should not
be deemed filed as a part of this
report.
21 List of Significant Subsidiaries of 179
Registrant
<PAGE>
23 Consent of Auditors 180
24 Powers of Attorney 182
27 Financial Data Schedule 195
99 Report of Ernst & Young LLP, 196
Independent Auditors
_______________________________
* The Registrant has omitted the schedule and certain exhibits to the
Participation Agreement, the Partnership Agreement and the Management
Services Agreement and agrees to furnish supplementally a copy of such
scheduled and exhibits to the Commission upon request.
** Indicates a management contract or compensatory plan or arrangement.
<PAGE>
DIRECTORS' RETIREMENT PLAN
--------------------------
(As Amended December 9, 1994)
1. Purpose. The Directors' Retirement Plan is created to provide retirement
-------
income to FMC Board members who retire from the Board after at least 5
years of service as a non-management Director.
2. Eligibility. All Members of the FMC Board of Directors who have completed
-----------
5 years continuous service on the Board as a non-management Director and
who either remain on the Board until age 70 or are designated by the
Nominating and Board Procedures Committee are eligible to participate in
this Plan upon their retirement from the Board.
3. Benefits. Benefits shall be paid to the Director in quarterly installments
--------
equal to one-quarter of the annual retainer for services as a Board member
in effect at the time of the last Board meeting attended. Payment of
benefits will begin the quarter following retirement or death and will
continue for the number of full years of the Director's non-management
service as a member of the Board.
4. Lump Sum Benefit. At the option of the Director, which option is
----------------
exercisable by written notice to the Corporate Secretary of FMC within
thirty days after the Director's retirement, the Director may elect to
receive in a lump sum the Actuarial Equivalent of benefits otherwise
payable. For purposes of this Plan the term "Actuarial Equivalent" means
an amount equal to the amount expected to be received under paragraph 3,
above, based on the following actuarial assumptions:
Interest - 7.5%
Mortality - Mortality Group Annuity
Table 1983.
5. Surviving Spouse Benefit. In the event of the death of a Director who is
------------------------
receiving benefits under this Plan, those benefits that would otherwise
have been payable to the Director will be paid to the Director's surviving
spouse. Such payments to a surviving spouse will terminate on the earlier
of the death of the surviving spouse or the date that
<PAGE>
benefit payments to the Director would have terminated had he/she not died.
6. Effective Date. The effective date of the Plan is January 1, l984. Past
--------------
service of members of the Board on the effective date is considered service
for purposes of this Plan."
<PAGE>
FMC CORPORATION
SALARIED EMPLOYEES' RETIREMENT PLAN
(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1995)
<PAGE>
FMC CORPORATION
SALARIED EMPLOYEES' RETIREMENT PLAN
C O N T E N T S
---------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 1 ESTABLISHMENT AND PURPOSE OF THE PLAN 1
SECTION 2 ELIGIBILITY AND PARTICIPATION........ 1
SECTION 3 SERVICE AND SERVICE AGGREGATION...... 1
(a) Service.......................... 1
(b) Aggregation of Periods
of Service..................... 3
SECTION 4 VESTING SERVICE...................... 3
SECTION 5 CREDITED SERVICE..................... 3
(a) General Rule..................... 3
(b) Exceptions....................... 3
SECTION 6 NORMAL RETIREMENT BENEFITS........... 4
(a) Normal Retirement................ 4
(b) Calculation of Normal Retirement
Benefit........................ 4
(c) Adjustments to Normal Retirement
Benefit........................ 4
SECTION 7 EARLY RETIREMENT BENEFITS............ 5
(a) Early Retirement................. 5
(b) Calculation of Early Retirement
Benefit........................ 5
(c) Early Retirement Reduction
Factor......................... 5
(d) Adjustments to Early Retirement
Benefit........................ 6
SECTION 8 DEFERRED RETIREMENT BENEFITS......... 6
(a) Deferred Retirement.............. 6
(b) Part-time Work after
Normal Retirement Date......... 6
(c) Distribution Requirements........ 7
SECTION 9 OTHER TERMINATION BENEFITS........... 7
(a) Termination of Service........... 7
(b) Amount of Termination
Benefit........................ 8
(c) Special Termination Benefit...... 9
SECTION 10 SURVIVOR'S BENEFIT................... 9
(a) Coverage of Pre-Retirement
Survivor's Benefit............. 9
(b) Amount of Pre-Retirement
Survivor's Benefit............. 9
(c) Surviving Spouse's Benefit....... 10
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
(d) Former Participants.............. 10
SECTION 11 REFUND OF EMPLOYEE CONTRIBUTIONS..... 11
(a) Employee Contributions........... 11
(b) Withdrawal of Employee
Contributions.................. 11
(c) Refund upon Death When Benefits
Have Not Commenced............. 11
(d) Refund When Benefits Have
Commenced...................... 11
SECTION 12 FORMS OF RETIREMENT BENEFITS......... 12
(a) Available Forms of Benefits...... 12
(i) Individual Life Annuity.... 12
(ii) 50% Joint & Survivor's
Annuity.................. 12
(iii) 100% Joint & Survivor's
Annuity.................. 12
(iv) Level Income Option........ 12
(b) Five Year Certain Benefit........ 13
(c) Normal Form of Annuity Benefit... 13
(d) Election of Individual Life
Annuity by a Married
Participant.................... 14
(e) Election of Other Optional
Annuity Forms.................. 15
(f) Joint Annuitants................. 16
SECTION 13 CLAIM PROCEDURE...................... 16
(a) Inquiries and Applications for
Benefits....................... 16
(b) Denial of Applications........... 16
SECTION 14 APPEAL PROCEDURE..................... 17
(a) The Review Panel................. 17
(b) Requests for a Review............ 17
(c) Decision on Review............... 17
(d) Rules and Procedures............. 18
(e) Exhaustion of Remedies........... 18
SECTION 15 ADMINISTRATION AND OPERATION
OF THE PLAN........................ 18
(a) Administrative Responsibilities.. 18
(b) Management of Plan Assets........ 18
(c) Trustee and Investment Managers.. 19
(d) Delegation of Fiduciary
Responsibilities............... 19
(e) Indemnification.................. 20
SECTION 16 FUNDING OF THE PLAN.................. 20
(a) Actuarial Cost Method............ 20
(b) Cost of the Plan................. 20
(c) Funding Policy................... 21
(d) Cash Needs of the Plan........... 21
(e) Public Accountant................ 21
(f) Enrolled Actuary................. 21
(g) Basis of Payments to the Plan.... 21
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
(h) Basis of Payments from the Plan.. 22
SECTION 17 AMENDMENT AND TERMINATION OF
THE PLAN........................... 22
(a) Future of the Plan............... 22
(b) Amendments of the Plan........... 22
(c) Termination of the Plan.......... 23
(d) Allocation of Trust Fund on
Termination.................... 24
SECTION 18 BENEFIT LIMITATIONS.................. 24
(a) Limitation on Accrued Benefit.... 24
(b) Multiple Plan Reduction.......... 25
(c) Annual Compensation Limit........ 25
SECTION 19 TOP HEAVY PROVISIONS................. 26
(a) Top Heavy Plan Requirements...... 26
(b) Determination of Top Heavy
Status......................... 26
(c) Minimum Benefit Requirement for
Top Heavy Plan................. 30
(d) Vesting Requirement For Top
Heavy Plan..................... 32
SECTION 20 MISCELLANEOUS PROVISIONS............. 33
(a) Subsequent Changes............... 33
(b) Plan Mergers..................... 33
(c) No Assignment of Property
Rights......................... 34
(d) Beneficiary...................... 34
(e) Incapacity....................... 34
(f) Employment Rights................ 35
(g) Re-employment and Suspension of
Annuities...................... 35
(h) Proof of Age and Marriage........ 35
(i) Small Annuities.................. 35
(j) Choice of Law.................... 36
(k) Direct Rollover Option........... 36
SECTION 21 DEFINITIONS.......................... 37-45
SECTION 22 EXECUTION............................ 45
</TABLE>
iii
<PAGE>
SECTION 1
FMC CORPORATION
---------------
SALARIED EMPLOYEES' RETIREMENT PLAN
-----------------------------------
SECTION 1. ESTABLISHMENT AND PURPOSE OF THE PLAN.
--------------------------------------------------
The FMC Corporation Salaried Employees' Retirement Plan was established by
FMC as the "Employees' Retirement Plan" effective on September 30, 1941. The
Plan was last amended and restated effective January 1, 1985, and except where
stated herein is amended and restated effective January 1, 1995 to read as set
forth herein. The Plan as amended is subject to change to meet applicable
regulations and rules of the Internal Revenue Service and the United States
Department of Labor. The purpose of the Plan is to provide a regular monthly
retirement benefit for salaried employees who meet the eligibility requirements
of the Plan. Certain capitalized terms used in the Plan text are defined in
Section 21 in alphabetical order.
SECTION 2. ELIGIBILITY AND PARTICIPATION.
------------------------------------------
Eligibility and Commencement of Participation. Each Eligible Employee
----------------------------------------------
shall automatically become a Participant in the Plan as of the first day of the
month in which he or she becomes an Eligible Employee.
SECTION 3. SERVICE AND SERVICE AGGREGATION.
--------------------------------------------
(a) Service. For purposes of this Plan, Service means:
--------
(i) The period an Employee maintains an employment relationship with
the Affiliated Group, including, effective December 31, 1987, any period as
a leased employee. as defined in Code section 414(n)(2). An Employee's
employment relationship with the Affiliated Group commences on the first
day the Employee performs duties for such group and ends on the date the
Employee quits, is discharged, dies or retires. An Employee shall not be
considered to have quit under the following circumstances:
(A) When the Employee takes a leave of absence, vacation or
holiday with pay;
(B) When the Employee takes an authorized leave of absence
without pay
1
<PAGE>
SECTION 3(a)(i)(B)
granted by reason of disability;
(C) When the Employee enters military service provided the
Employee makes application to return within 90 days after completion
of active service and returns to active employment as an Employee
while reemployment rights are protected by law. If the Employee does
not so return the Employee shall be deemed to have quit as of the date
of entry into military service.
(D) When the Employee takes an authorized leave of absence
without pay not in excess of 12 months, or an authorized leave of
absence without pay in excess of 12 months which constitutes Service
pursuant to a written and nondiscriminatory policy of the Company. If
the Employee violates the terms of the leave the Employee shall be
deemed to have quit as of the date of such violation. In the case of a
leave in excess of 12 months, if the Employee fails to return to
active employment as an Employee immediately after such leave, the
Employee shall be deemed to have quit as of the last day of the 12th
month of the leave.
(E) When the Employee takes a "maternity or paternity leave of
absence," which shall mean an absence from work not in excess of 12
months by reason of the Employee's pregnancy, birth of the Employee's
child, placement of a child with the Employee in connection with the
adoption of such child, or any absence for the purpose of caring for
such child for a period immediately following such birth or placement.
(ii) Such other periods as the Company expressly recognizes as
Service pursuant to a written and nondiscriminatory policy and in
accordance with regulations of the United States Department of
Labor.
(iii) A period of employment with a corporation, partnership or
other entity substantially all of the equity interest or assets of
which have been acquired by the Affiliated Group but only to the
extent that the Company expressly recognizes such period as Service
pursuant to written and nondiscriminatory rules.
(iv) A period following termination of employment, provided the
Employee is rehired
2
<PAGE>
SECTION 3(a)(iv)
before suffering a One-Year Service Break (see Section 21(aa)).
(b) Aggregation of Periods of Service. All periods of Service determined
---------------------------------
under (a) above (whether or not consecutive) shall be aggregated except that if
an Employee incurs a Full Service Break at a time when he or she has no vested
interest under this Plan, Service prior to such Full Service Break (see Section
21(q)) shall not be aggregated. Effective January 1, 1989, an Employee cannot
have vested rights under the Plan until he or she has either completed 5 Years
of Vesting Service or attained age 55.
SECTION 4. VESTING SERVICE.
----------------------------
An Employee's Vesting Service shall include all Service and Credited
Service of such Employee.
SECTION 5. CREDITED SERVICE.
-----------------------------
(a) General Rule. An Employee's Credited Service shall include only (i)
------------
Service while the Employee is an Eligible Employee (see Section 21(j)) and after
he or she has become a Participant as provided in Section 2 and (ii) such other
service as the Company recognizes as Credited Service pursuant to written and
nondiscriminatory rules.
(b) Exceptions. Notwithstanding (a) above, effective January 1, 1988,
----------
Credited Service shall not include (i) any period of Service described in
Section 3(a)(i)(D) (leave of absence without pay) unless the Employee returns to
active employment as an Employee immediately after such leave and abides by all
the terms of the leave, (ii) any period of Service described in Section
3(a)(i)(E) (maternity or paternity leave of absence) unless the Employee returns
to active employment as an Employee within 12 months after the first day of such
leave, or (iii) any period of Service with respect to which such Eligible
Employee has a vested benefit under any pension, profit sharing or other
retirement plan (listed on Exhibit A attached hereto and by this reference
incorporated herein).
3
<PAGE>
SECTION 6
SECTION 6. NORMAL RETIREMENT BENEFITS.
---------------------------------------
(a) Normal Retirement. Subject to Section 8, each Participant shall retire
-----------------
not later than the age permitted by applicable State or Federal law for the
involuntary retirement of employees (the "Age Limit"). A Participant who
retires on or after the Normal Retirement Date (see Section 21(y)) shall be
entitled to receive a Normal Retirement Benefit determined under (b) below.
Effective January 1, 1988, subject to Section 8(c), payment of such benefit
shall commence as of the later of the Participant's Normal Retirement Date or
actual retirement date.
(b) Calculation of Normal Retirement Benefit. Subject to Section 6(c), a
----------------------------------------
Participant's monthly Normal Retirement Benefit shall be equal to the greater of
either (i) or (ii) below:
(i) One-twelfth (1/12) of the sum of (A) and (B) below:
(A) The sum of (I) one percent (1%) of the Participant's Final
Average Yearly Earnings up to the Social Security Covered Compensation
Base and (II) one and one-half percent (1-1/2%) of the Participant's
Final Average Yearly Earnings in excess of the Social Security Covered
Compensation Base multiplied by the Participant's Years of Credited
Service (up to 35).
(B) One and one-half percent (1-1/2%) of the Participant's Final
Average Yearly Earnings multiplied by the Participant's Years of Credited
Service in excess of 35.
(ii) The Participant's accrued monthly Normal Retirement Benefit under
this Plan as of December 31, 1990.
(c) Adjustments to Normal Retirement Benefit. A Participant's Normal
----------------------------------------
Retirement Benefit shall be increased one dollar ($1) for each one hundred and
twenty dollars ($120) of unwithdrawn Employee Contributions and Interest
credited to the Participant, and shall be reduced by the value of any vested
benefit payable to the Participant under any pension, profit sharing or other
retirement plan other than the Thrift Plan (herein called "Duplicate Benefit
Plan") which is attributable to any period which counts as Credited Service
under this Plan. For purposes of determining the amount of the reduction, the
vested benefit under the Duplicate
4
<PAGE>
SECTION 6(c)
Benefit Plan shall be converted to a form which is identical to the form of
benefit which is to be paid under this Plan. Such conversion will be made using
the actuarial assumptions in effect under this Plan as of the date the
Participant's benefit under this Plan is to commence (as shown on Exhibits E-l,
E-2, E-3, and E-4 as amended from time to time, attached hereto and by this
reference incorporated herein). The value of the Participant's vested benefit
under the Duplicate Benefit Plan shall be determined as of the earlier of such
date or the date distribution of such vested benefit was made or commenced.
SECTION 7. EARLY RETIREMENT BENEFITS.
--------------------------------------
(a) Early Retirement. A Participant may elect to retire as of the first day
----------------
of any month coinciding with or following such Participant's Early Retirement
Date (see Section 21(h)) by giving at least 60 days' advance written notice to
the Company on the prescribed form. A Participant who retires early under this
Subsection (a) shall be entitled to receive an Early Retirement Benefit
determined under (b) below. Payment of such benefit shall commence as of the
first of the month after the Participant retires or, if the Participant so
elects, as of the first day of any subsequent month, but not later than the
Normal Retirement Date. Any such election of a deferred commencement date may
be revoked at any time prior to such date and a new date may be elected by
giving at least 60 days' advance written notice to the Company.
(b) Calculation of Early Retirement Benefit. Subject to Sections 7(c) and
---------------------------------------
(d), the monthly Early Retirement Benefit of a participant shall be equal to the
greater of (i) or (ii) below:
(i) An amount determined pursuant to Section 6(b)(i).
(ii) The Participant's accrued monthly Early Retirement Benefit under
this Plan as of December 31, 1990.
(c) Early Retirement Reduction Factor. The Participant's Early Retirement
----------------------------------
Benefit computed pursuant to Section 7(b) above shall be reduced by one third of
one percent (.33%) for each month in excess of 36 by which the commencement of
the Participant's Early Retirement Benefit precedes the Participant's Normal
Retirement Date.
5
<PAGE>
SECTION 7(d)
(d) Adjustments to Early Retirement Benefit. A Participant's Early
---------------------------------------
Retirement Benefit shall be increased and decreased as provided in Section 6(c)
except that the number of dollars of unwithdrawn Employee Contributions and
Interest required to provide one dollar ($1) of monthly retirement benefits
shall be increased by three dollars ($3) for each full year by which the
commencement of the Participant's Early Retirement Benefit precedes the
Participant's Normal Retirement Date.
SECTION 8. DEFERRED RETIREMENT BENEFITS.
-----------------------------------------
(a) Deferred Retirement. A Participant may continue in employment after
-------------------
such Participant's Normal Retirement Date until the Age Limit as defined in
Section 6(a). At the express request of the Company, a Participant may continue
in employment after reaching the Age Limit. In either event, the Participant
may retire as of the first day of any month following the Participant's Normal
Retirement Date. A Participant whose retirement is deferred under this
Subsection (a) shall be entitled to receive a Normal Retirement Benefit
determined under Sections 6(b) and (c) commencing as of the first day of the
month coinciding with or next following the date when the Participant actually
retires (or is retired by the Company). Effective January 1, 1988, each
Participant shall accrue additional benefits hereunder after the Participant's
Normal Retirement Date with respect to the portion of the Normal Retirement
Benefit which is attributable to contributions by the Company, and the amount of
Employee Contributions and Interest required to provide one dollar of monthly
retirement benefit under Section 6(c) shall be decreased by three dollars for
each full year by which the commencement of the Normal Retirement Benefit
follows the Normal Retirement Date.
(b) Part-Time Work After Normal Retirement Date. At the express request of
-------------------------------------------
the Company, a Participant may continue in employment after such Participant's
Normal Retirement Date on a part-time basis (fewer than 40 hours of service in a
calendar month) pursuant to nondiscriminatory rules adopted by the Company. In
such event (a) above shall apply except that, effective January 1, 1988, the
Participant may elect, subject to the approval of the Company, to
6
<PAGE>
SECTION 8(b)
receive the Normal Retirement Benefit commencing as of the Normal Retirement
Date or as of the first day of any subsequent month, but not later than the date
provided in Section 8(c). After December 31, 1987, if a Participant continues
in employment after the participant's Normal Retirement Date, the payment of the
accrued retirement benefit shall be suspended only for those calendar months
within the period of continued employment during which the Participant receives
compensation for at least 40 hours of service as long as proper notification of
such suspension of benefits has previously been distributed to such Participant.
(c) Distribution Requirements. Notwithstanding any provision of this Plan
-------------------------
to the contrary, effective January 1, 1988, the accrued benefit of a Participant
must be distributed or commence to be distributed, no later than the first day
of April following the year in which such individual attains age 70-1/2;
provided, however, that this sentence is not applicable to a Participant other
than a Five Percent Owner who attained age 70-1/2 before January 1, 1988.
SECTION 9. OTHER TERMINATION BENEFITS.
--------------------------------------
(a) Termination of Service. Effective January 1, 1989, a Participant who
----------------------
has five (5) Years of Vesting Service or who has attained age 55, but who ceases
to be an Employee before such Participant's Early Retirement Date for any reason
other than death, shall be entitled to receive a "Termination Benefit"
determined under (b) below. Payment of such benefit shall commence as of the
Participant's Normal Retirement Date or, if the Participant so elects, as of the
first day of any month before such Normal Retirement Date and coincident with or
following the Participant's 55th birthday. Any such election of the earlier
annuity commencement date shall be made by giving at least 60 days' advance
written notice to the Company. Except as provided in Section 10 (Survivor's
Benefits) and Section 11 (Refund of Employee Contributions), no benefits shall
be payable hereunder to any person if the Participant dies prior to the date as
of which payment of the Termination Benefit is to commence. A terminated
Participant who has no vested or non-forfeitable interest in his accrued benefit
shall be deemed to have received a distribution of his entire non-forfeitable
benefits.
7
<PAGE>
SECTION 9(b)
(b) Amount of Termination Benefit. A Participant's monthly Termination
-----------------------------
Benefit shall be determined pursuant to Sections 6(b) and (c) except that the
following adjustments shall be made if payment of the Participant's Termination
Benefit is to commence before the Participant's Normal Retirement Date:
(i) The amounts computed pursuant to Section 6(b)(i) and 6(b)(ii) each
shall be reduced by one-half of 1% (.5%) for each month between the
commencement of benefits and the Participant's Normal Retirement Date.
(ii) The amount of Employee Contributions and Interest required to
provide one dollar of monthly retirement benefit under Section 6(c) shall
be increased by three dollars for each full year by which the date as of
which the Participant's benefit commences precedes the Participant's Normal
Retirement Date.
(iii) The amounts computed pursuant to Section 6(b)(i) and 6(b)(ii)
(each shall be reduced by one-third of one percent (.33%) for each month in
excess of 36 by which the commencement of benefits precedes the
participant's Normal Retirement Date if:
(A) The Participant's combined age and Years of Service equal at
least 65, and he permanently ceases to be an Employee (1) because of the
permanent shutdown of a single site of employment or one or more
facilities or operating units within a single site of employment or (2)
in connection with a permanent reduction in force; or
(B) The Participant has Credited Service attributable to employment
before January 1, 1989, has attained age 40, and permanently ceases to be
an Employee because of the permanent shutdown of a single site of
employment, resulting in the termination of employment of not more than
20 Participants at that employment site.
Notwithstanding the provisions of Section 22(kk), for purposes of
determining a participant's total combined age and Years of Service under
Section 9(b)(iii)(A) above, a partial month of age or Service shall be
counted as a whole month, and fractional years of age and years of Service
shall be taken into account.
8
<PAGE>
SECTION 9(c)
(c) Special Termination Benefit. Notwithstanding any provision of this
---------------------------
Plan to the contrary, a Participant who is employed by the Company on November
30, 1985, shall have vested rights to the benefits accrued under this Plan as of
that date. Any such participant who ceases to be an Employee before he has ten
(10) Years of Vesting Service and before he has attained age 55 shall be
entitled to receive a Termination Benefit determined under (b) above, based on
such participant's Years of Credited Service as of November 30, 1985.
SECTION 10. SURVIV0R'S BENEFITS.
----------------------------------
(a) Coverage of Pre-Retirement Survivor's Benefit. If a Participant (i)
---------------------------------------------
continues to be employed by the Company at any time on or after such
Participant's 55th birthday and (ii) dies (whether or not so employed on the
date of death) before payment of any monthly retirement benefit under the Plan
commences, then such Participant's Surviving Joint Annuitant (if any) shall be
entitled to receive a survivor's benefit for life, determined under (b) below.
Payment of such benefit shall commence as of the first day of the month next
following the date of the Participant's death.
(b) Amount of Pre-Retirement Survivor's Benefit. The survivor's benefit
-------------------------------------------
under (a) above shall be computed as follows:
(i) If the Participant's Service has not terminated before the
Participant's death, the survivor's benefit shall be equal to the benefit
which would have been paid to the Participant's Joint Annuitant if the
Participant's Service had terminated on the date of death, benefits in the
form of a 50% Joint and Survivor Annuity commenced as of the first day of
the next following month, and the Participant died on such day.
(ii) If the Participant's Service has terminated before the
Participant's death but the Participant has deferred the commencement of
the Early Retirement Benefit, the survivor's benefit shall be equal to the
benefit which the Participant's Joint Annuitant would have been paid if the
Participant had elected a 50% Joint and Survivor benefit
9
<PAGE>
commencing as of the first day of the month next following the date of the
Participant's
SECTION 10(b)(ii)
death.
(iii) The survivor's benefit payable pursuant to this Section 10(b)
shall be reduced to eliminate any retirement benefit based upon Employee
Contributions and Interest (which will be refunded upon the Participant's
death, to the extent provided in Section 11).
(c) Surviving Spouse's Benefit. Effective January 1, 1989, if a
--------------------------
Participant who has five (5) or more Years of Service and is credited with any
Service on or after August 23, 1984, dies on or after that date, but before
attaining age 55, then such Participant's surviving spouse (if any) shall be
entitled to receive a survivor's benefit for life. The amount of such
survivor's benefit shall be determined pursuant to Section 9(b) based upon the
Participant's age and Years of Credited Service on the date of the Participant's
death and paid in the form of a 50% Joint and Survivor Annuity as if the
Participant had died on the date such benefits commenced. The survivor's
benefit payable pursuant to this Section 10(c) shall be reduced to eliminate any
retirement benefit based upon Employee Contributions and Interest (which will be
refunded upon the Participant's death to the extent provided in Section 11).
Payment of the survivor's benefit shall commence on the first day of the month
next following the Participant's 55th birthday, unless the benefit has a present
actuarial value in excess of $3,500, in which the Participant's spouse may elect
to commence payment of benefits as of the first day of any subsequent month, but
not later than the Participant's Normal Retirement Date.
(d) Former Participants. Participants who have ten (10) Years of Service
-------------------
but who are not credited with any Service on or after August 23, 1984, and are
not receiving benefits on that date shall be entitled to elect survivor's
benefits only as follows:
(i) If the Participant is credited with Service under this Plan or
a predecessor plan on or after September 2, 1974, but is not otherwise
credited with any Service in a Plan Year beginning on or after January 1,
1976, the Participant shall be afforded an
10
<PAGE>
opportunity to elect payment of benefits in the form of a 50% Joint and
Survivor's Annuity.
SECTION 10(d)(ii)
(ii) If the Participant is credited with Service under this Plan or
a predecessor plan in a Plan Year beginning after December 31, 1975, the
Participant shall be afforded the opportunity to elect a Surviving Spouse's
Benefit under Subsection 10(c).
SECTION 11. REFUND OF EMPLOYEE CONTRIBUTIONS.
-----------------------------------------------
(a) Employee Contributions. With respect to various periods prior to May
----------------------
1, 1969, Participants were required to make "Employee Contributions" to this
Plan or to certain prior plans. Since April 30, 1969, no Employee Contributions
have been made to any of said plans.
(b) Withdrawal of Employee Contributions. A Participant may withdraw all
------------------------------------
of such Participant's Employee Contributions, plus Interest thereon to the date
of withdrawal, at any time before payment of a monthly retirement benefit
commences by giving at least 60 days' advance written notice to the Company. No
partial withdrawal of Employee Contributions and Interest shall be permitted.
(c) Refund Upon Death When Benefits Have Not Commenced. If a Participant
--------------------------------------------------
dies before payment of a monthly retirement benefit commences then the
Participant's Beneficiary shall receive in a lump sum a refund of the
Participant's unwithdrawn Employee Contributions and Interest. The refund shall
be made as soon as reasonably practicable after the date of the Participant's
death, and Interest shall be computed to the date when the refund is paid.
(d) Refund When Benefits Have Commenced. If a Participant has commenced
-----------------------------------
receiving benefits and dies, there shall be paid to his or her Beneficiary the
difference, if any, between such Participant's Employee Contributions and
Interest as of the date benefits commenced and:
(i) If the Participant elected an Individual Life Annuity or a Level
Income Option, the portion of the benefits which the Participant has
received which are attributable to Employee Contributions and Interest;
11
<PAGE>
(ii) If the Participant elected any other form of benefit, the portion
of the benefits received by the Participant and the Participant's Joint
Annuitant which are attributable to Employee Contributions and Interest.
SECTION 11(d)(ii)
Any payment pursuant to (i) above shall be made as soon as reasonably
practicable after the Participant's death. Any payment pursuant to (ii) above
shall be made as soon as reasonably practicable after all other benefit payments
to the Joint Annuitant have ceased.
SECTION 12. FORMS OF RETIREMENT BENEFITS.
-------------------------------------------
(a) Available Forms of Benefits. A Participant may elect to receive any one
---------------------------
of the following forms of benefits:
(i) Individual Life Annuity. An Individual Life Annuity provides equal
-----------------------
monthly payments for the Participant's life only.
(ii) 50% Joint and Survivor's Annuity. A 50% Joint and Survivor's
--------------------------------
Annuity provides a smaller monthly annuity for the Participant's life than
an Individual Life Annuity. After the Participant's death, 50% of such
reduced annuity will, subject to Section 12(b), be paid to the
Participant's surviving Joint Annuitant for such Joint Annuitant's life. A
50% Joint and Survivor's Annuity shall be the actuarial equivalent of an
Individual Life Annuity (determined in accordance with Exhibit E-l attached
hereto and by this reference incorporated herein).
(iii) 100% Joint and Survivor's Annuity. A 100% Joint and Survivor's
---------------------------------
Annuity provides a smaller monthly annuity for the Participant's life than
a 50% Joint and Survivor's Annuity. After the Participant's death, 100% of
such reduced annuity will continue to be paid to the Participant's
surviving Joint Annuitant for such Joint Annuitant's life. A 100% Joint
and Survivor's Annuity shall be the actuarial equivalent of an Individual
Life Annuity (determined in accordance with Exhibit E-2 attached hereto and
by this reference incorporated herein).
12
<PAGE>
(iv) Level Income Option. The Level Income Option provides increased
-------------------
monthly annuity payments prior to the Participant's 62nd birthday
(determined in accordance with Exhibit E-3 attached hereto and by this
reference incorporated herein) and after such birthday provides reduced
monthly annuity payments in an amount which, when added to
SECTION 12(a)(iv)
the Primary Social Security Benefits which the Participant could elect to
receive, approximately equals the amount of the monthly annuity paid prior
to the Participant's 62nd birthday. A Participant who is entitled to an
Early Retirement Benefit under Section 7 and who elects to have such
benefit commence prior to age 62 may elect the Level Income Option, unless
the Primary Social Security Benefits which the Participant could elect to
receive at age 62 would equal or exceed the amount of the monthly annuity
payments prior to age 62 or unless the Participant is receiving Social
Security disability benefits. Such election shall be subject to the
approval of the Participant's spouse, given in accordance with the
requirements for spousal consent under Subsection 12(d).
(b) Five Year Certain Benefit. If a Participant who retires prior to
-------------------------
January 2, 1984, is receiving retirement benefits in the form of an Individual
Life Annuity or a Joint and Survivor Annuity pursuant to Sections 6, 7, or 8
(but not a Participant receiving a Termination Benefit pursuant to Section 9)
and dies before the Participant (or the Participant and the Participant's Joint
Annuitant) has received 60 monthly payments, the Participant's Beneficiary shall
receive the same benefits (other than any benefits attributable to employee
contributions) the Participant was receiving until the number of monthly
payments made to the Participant (or the Participant and the Participant's Joint
Annuitant) and the Beneficiary equals 60. Any Participant who commences
participation in this Plan prior to January 2, 1984, and retires after January
1, 1984, entitled to retirement benefits under this Plan shall receive benefits
without the Five Year Certain Benefit described in the preceding sentence in an
amount not less than the actuarial equivalent, calculated in accordance with
Exhibit E-5, of the retirement benefits the Participant had accrued under this
13
<PAGE>
plan as of January 1, 1984 (based upon his Final Average Monthly Earnings as of
that date), payable with the Five Year Certain Benefit.
(c) Normal Form of Annuity Benefit. If a married Participant fails to
------------------------------
make an effective election under (d) or (e) below during the election period,
such Participant's annuity benefit shall be paid in the form of a 50% Joint and
Survivor's Annuity, and such Participant's spouse shall be
SECTION 12(c)
the Joint Annuitant. If an unmarried Participant fails to make an effective
election under (e) below during the election period, such Participant's benefit
shall be paid in the form of an Individual Life Annuity. The Company shall
determine whether a Participant is married as of the date when payment of the
Participant's benefit is to commence.
(d) Election of Individual Life Annuity By a Married Participant. A
------------------------------------------------------------
married Participant may elect an Individual Life Annuity in lieu of a 50% Joint
and Survivor's Annuity by filing the prescribed form with the Company at any
time during the election period. Such election shall be subject to the written
consent of the Participant's spouse, acknowledging the effect of the election
and witnessed by a Plan representative or a notary public. Such spousal consent
shall not be required if the Participant establishes to the satisfaction of FMC
that the consent of the spouse may not be obtained because there is no spouse or
the spouse cannot be located. Such an election may be revoked and changed at
any time during the election period but shall be irrevocable thereafter. The
election period shall begin on the later of the date participation commences or
180 days prior to the date on which the Participant could first elect to have a
benefit commence hereunder and end on the later of the date as of which benefits
hereunder are to commence or 60 days after any information described in (iii)
below has been mailed or personally delivered to the Participant. Prior to the
beginning of the election period (or, if the election period begins on the date
participation commences, on or about such date) the Company shall provide (by
mail or personal delivery) each married Participant with the following
information in writing:
(i) Notice of the right of the Participant's spouse to consent to
any election to receive an Individual Life Annuity;
14
<PAGE>
(ii) The right of such Participant to revoke such election, and the
effect of such revocation;
(iii) A general description of the 50% Joint and Survivor's Annuity
payable pursuant to Section 12(c) if an election is not made pursuant to
this Section 12(d);
(iv) The general financial effect of an election to receive an
Individual Life
SECTION 12(d)(iv)
Annuity in lieu of a 50% Joint and Survivor's Annuity; and
(v) A statement that the Participant has the right to request in
writing information on the particular financial effect of an election by
the Participant to receive an Individual Life Annuity in lieu of a 50%
Joint and Survivor's Annuity. Any such request shall be made only within
90 days after the date the information described in (i), (ii), (iii), and
(iv) above is mailed (or in the case of personal delivery, delivered) to
the Participant, and the Company shall not be obligated to comply with more
than one such request. Any information provided pursuant to this
subparagraph will be personally delivered to the Participant or mailed by
first class mail (postage prepaid) within 30 days after the date of the
Participant's request and will be based upon the estimated benefits to
which the Participant will be entitled as of the later of the first day on
which such benefits could commence or the last day of the Plan Year in
which the Participant's request is received. If a Participant files an
election (or revokes an election) pursuant to this Section 12(d) less than
60 days prior to the date as of which benefits are to commence, such
Participant's initial payments may be delayed for administrative reasons.
In such event, the payments shall begin as soon as practicable and shall be
made retroactively to such date.
(e) Election of Other Optional Annuity Forms. A Participant may elect any
----------------------------------------
optional form of annuity described in (a) above by filing the prescribed form
with the Company at any time during the election period. Such an election may
be revoked or changed at any time during the election period, but shall become
irrevocable thereafter. The election period shall be the 60-day period ending
with the date as of which benefits hereunder are to commence. If a Participant
files
15
<PAGE>
an election (or revokes an election) pursuant to this Section 12(e) less
than 60 days prior to the date as of which benefits are to commence, such
Participant's initial payments may be delayed for administrative reasons. In
such event, the payments shall begin as soon as practicable and shall be made
retroactively to such date.
Upon written request from a Participant the Company will provide the
Participant (but not
SECTION 12(e)
more frequently than once every 12 months) with information with respect to the
financial consequences of an election to receive an optional form of annuity.
(f) Joint Annuitants. A Participant may designate any individual as the
----------------
Joint Annuitant; provided, however, that a designation of any individual other
than the Participant's spouse shall be subject to the approval of the Company
and the Participant's spouse, given in accordance with the requirements for
spousal consent under Subsection 12(d). As a condition to such approval, the
Company may require satisfactory proof that the Participant is in good health.
A Participant who elects a joint and survivor's annuity under (e) above shall
designate a Joint Annuitant when making such an election. A designation of a
Joint Annuitant may be revoked or changed at any time during the applicable
election period described in (e) above but shall become irrevocable thereafter.
If the Joint Annuitant dies on or after the date as of which payment of the
Participant's joint and survivor's annuity is to commence, the Participant shall
continue to receive the reduced monthly annuity.
SECTION 13. CLAIM PROCEDURE.
------------------------------
(a) Inquiries and Applications for Benefits. Any application for benefits
---------------------------------------
under the Plan and all inquiries concerning the Plan shall be submitted to the
Company at such address as may be announced to Participants from time to time.
Applications for benefits shall be in writing on the form prescribed by the
Company and shall be signed by the Participant or, in the case of a benefit
payable after the death of the Participant, by the Participant's Joint Annuitant
or Beneficiary, as the case may be.
16
<PAGE>
(b) Denial of Applications. The Company shall give written notice of its
----------------------
decision on any application to the applicant. In the event any application for
benefits is denied in whole or in part, the Company shall notify the applicant
in writing of the right to a review of the denial. Such written notice shall
set forth, in a manner calculated to be understood by the applicant, specific
reasons for the denial, specific references to the Plan provisions on which the
denial is based, a description of any information or material necessary to
perfect the application, an explanation of
SECTION 13(b)
why such material is necessary and an explanation of the Plan's review
procedure. Such written notice shall be given to the applicant within a
reasonable period of time after the Company receives the application, based on
its customary procedures in processing such claims.
SECTION 14. APPEAL PR0CEDURE.
-------------------------------
(a) The Review Panel. The Company shall appoint a "Review Panel," which
----------------
shall consist of three or more individuals who may (but need not) be employees
of the Company. The Review Panel shall be the named fiduciary which has the
authority to act with respect to any appeal from a denial of benefits under the
Plan.
(b) Requests for a Review. Any person (or his authorized representative)
---------------------
whose application for benefits is denied in whole or in part may appeal the
denial by submitting to the Review Panel a request for a review of the
application within three months after receiving written notice of the denial.
The Company shall give the applicant or such representative an opportunity to
review pertinent materials (other than legally privileged documents) in
preparing such request for review. The request for review shall be in writing
and addressed as follows: "Review Panel of the Employee Welfare Benefits Plan
Committee, 200 East Randolph Drive, Chicago, Illinois 60601." The request for
review shall set forth all of the grounds on which it is based, all facts in
support of the request and any other matters which the applicant deems
pertinent. The Review Panel may require the applicant to submit such additional
facts, documents or other material as it may deem necessary or appropriate in
making its review.
17
<PAGE>
(c) Decision on Review. The Review Panel shall act upon each request for
------------------
review within 60 days after receipt thereof unless special circumstances require
further time for processing, but in no event shall the decision on review be
rendered more than 120 days after the Review Panel receives the request for
review. The Review Panel shall give prompt, written notice of its decision to
the Company and to the applicant. In the event the Review Panel confirms the
denial of the application for benefits in whole or in part, such notice shall
set forth, in a manner calculated to be understood by the applicant, the
specific reasons for such denial and specific
SECTION 14(c)
references to the Plan provisions on which the decision is based.
(d) Rules and Procedures. The Review Panel shall establish such rules and
--------------------
procedures, consistent with ERISA and the Plan, as it may deem necessary or
appropriate in carrying out its responsibilities under this Section 14.
(e) Exhaustion of Remedies. No legal or equitable action for benefits
----------------------
under the Plan shall be brought unless and until the claimant (i) has submitted
a written application for benefits in accordance with Section 13(a), (ii) has
been notified by the Company that the application is denied, (iii) has filed a
written request for a review of the application in accordance with (b) above and
(iv) has been notified in writing that the Review Panel has affirmed the denial
of the application; provided that legal action may be brought after the Review
Panel has failed to take any action on the claim within the time prescribed in
(c) above.
SECTION l5. ADMINISTRATION AND OPERATION OF THE PLAN.
------------------------------------------------------
(a) Administrative Responsibilities. The Company is the "plan sponsor" and
-------------------------------
the "administrator" of the Plan, as such terms are used in ERISA. The Company
is the named fiduciary which has the authority to control and manage the
operation and administration of the Plan. The Company shall make such rules,
regulations, interpretations and computations and shall take such other action
to administer the Plan as it may deem appropriate. The Company, as plan
administrator, has discretionary authority to construe and interpret the terms
of the Plan, including, but not limited to, deciding all questions of
eligibility, determining the amount, manner
18
<PAGE>
and time of payment of any benefits under the Plan, and correcting ambiguities,
inconsistencies, or omissions. The Company may delegate this authority in
certain circumstances, subject to review by the Company under applicable
procedures. In administering the Plan, the Company shall act in a
nondiscriminatory manner to the extent required by section 401(a) and related
sections of the Code and shall at all times discharge its duties with respect to
the Plan in accordance with the standards set forth in section 404(a)(1) of
ERISA.
(b) Management of Plan Assets. The Company is the named fiduciary with
-------------------------
respect to
SECTION 15(b)
control over and management of the Plan's assets only to the extent that it (i)
shall appoint one or more Trustees to hold all assets of the Plan in Trust and
shall enter into a Trust Agreement with each Trustee it appoints, (ii) shall
have the authority to appoint one or more Investment Managers for any Plan
assets and to enter into an investment management agreement with each Investment
Manager it appoints and (iii) may direct the allocation of Plan assets among
equity securities, debt instruments or other general investment categories.
(c) Trustees and Investment Managers. Each Trustee appointed under (b)
--------------------------------
above shall have the exclusive authority and discretion to control and manage
the Plan assets held in Trust by it, except to the extent that the Company (i)
allocates the authority to manage such assets to one or more Investment Managers
or (ii) directs the allocation of such assets among general investment
categories. Each Investment Manager appointed under (b) above shall have the
exclusive authority to manage, including the power to acquire and dispose of,
the Plan assets assigned to it by the Company, except to the extent that the
Company directs the allocation of such assets among general investment
categories. The Trustee or each Investment Manager shall be solely responsible
for diversifying the investment, in accordance with section 404(a)(1)(C) of
ERISA, of the Plan assets assigned to it by the Company, subject to any
directions of the Company with respect to the allocations of Plan assets among
general investment categories.
(d) Delegation of Fiduciary Responsibilities. The Company may engage such
----------------------------------------
attorneys, actuaries, accountants, and consultants to render advice or to
perform services with regard to its
19
<PAGE>
responsibilities under the Plan as it shall determine to be necessary or
appropriate. The Company may designate by written instrument one or more
actuaries, accountants or consultants as fiduciaries to carry out, where
appropriate, fiduciary responsibilities of the Company. The Company's duties and
responsibilities under the Plan shall be carried out by its directors, officers
and employees, acting on behalf of and in the name of the Company in their
capacities as directors, officers and employees and not as individual
fiduciaries. Except as provided in Section 14(a) (Review Panel), no director,
officer nor employee of the Company shall be a fiduciary with
SECTION 15(d)
respect to the Plan unless he or she is specifically so designated and expressly
accepts such designation. Notwithstanding the foregoing, the Company may
appoint a committee (the "Committee") consisting of at least three persons to be
the "administrator" and "named fiduciary" of the Plan with the authority to
control and manage the operation and administration of the Plan. Any members of
the Committee who are Employees shall not receive compensation for their
services for the Committee.
(e) Indemnification. The Company shall indemnify any past, present,
---------------
additional or replacement director, officer or employee, of the Company who is,
or who is claimed to be, a fiduciary with respect to the Plan, or his estate,
heirs, or legal representatives in the event of his death or incompetency,
against any and all claims, losses, damages, fees, fines, interest, penalties,
taxes, expenses, including but not limited to counsel fees, incurred by such
persons and any liability or claim of liability to which they may be subjected,
including any amounts paid in settlement with the Company's approval, arising
from any such person's action or failure to act in connection with the
administration of this Plan or the investment of the Trust Fund, except when the
same is judicially determined to be attributable to the gross negligence or
willful misconduct of such person.
SECTION 16. FUNDING OF THE PLAN.
---------------------------------
(a) Actuarial Cost Method. The Company shall determine the actuarial cost
---------------------
method to be used in determining costs and liabilities under the Plan pursuant
to section 301 et seq., of ERISA,
20
<PAGE>
and section 412 of the Code. The Company shall review such actuarial cost method
from time to time, and if it determines from review that such method is no
longer appropriate, then it shall petition the Secretary of the Treasury for
approval of a change of actuarial cost method.
(b) Cost of the Plan. Annually the Company shall determine the normal cost
----------------
of the Plan for the Plan Year and the amount (if any) of the unfunded past
service cost on the basis of the actuarial cost method established for the Plan
using actuarial assumptions which, in the aggregate, are reasonable. The Company
shall also determine the contributions required to be made for each
SECTION 16(b)
Plan Year by the Company in order to satisfy the minimum funding standard (or
alternative minimum funding standard) for such Plan Year determined pursuant to
sections 302 through 305 of ERISA and section 412 of the Code.
(c) Funding Policy. The Company shall cause contributions to be made to
--------------
the Plan for each Plan Year in the amount necessary to satisfy the minimum
funding standard (or alternative minimum funding standard) for such Plan Year;
provided, however, that this obligation shall cease when the Plan is terminated.
In the case of a partial termination of the Plan, this obligation shall cease
with respect to those Participants, Joint Annuitants and Beneficiaries who are
affected by such partial termination.
(d) Cash Needs of the Plan. The Company from time to time shall estimate
----------------------
the benefits and administrative expenses to be paid out of the Plan during the
period for which the estimate is made and shall also estimate the contributions
to be made to the Plan during such period by the Company. The Company shall
inform the Trustees of the estimated cash needs of and contributions to the Plan
during the period for which such estimates are made. Such estimates shall be
made on an annual, quarterly, monthly or other basis, as the Company shall
determine.
(e) Public Accountant. The Company shall engage an independent qualified
-----------------
public accountant to conduct such examinations and to render such opinions as
may be required by section 103(a)(3) of ERISA. The Company in its discretion
may remove and discharge the person
21
<PAGE>
so engaged, but in such case it shall engage a successor independent qualified
public accountant to perform such examinations and to render such opinions.
(f) Enrolled Actuary. The Company shall engage an enrolled actuary to
----------------
prepare the actuarial statement described in section 103(d) of ERISA and to
render the opinion described in section 103(a)(4) of ERISA. The Company in its
discretion may remove and discharge the person so engaged, but in such event it
shall engage a successor enrolled actuary to perform such examination and render
such opinion.
(g) Basis of Payments to the Plan. After April 30, 1969, all contributions
-----------------------------
to the Plan shall
SECTION 16(g)
be made by the Company, and no contributions shall be required of or permitted
by Participants. All Employee Contributions made prior to May 1, 1969, shall be
held by the Trustee as part of the Trust Fund established pursuant to the Trust
Agreement. From time to time the Company shall make such contributions to the
Plan as it determines to be necessary or desirable in order to fund the benefits
provided by the Plan, including medical benefits provided for retired employees,
their spouses and dependents pursuant to Supplement A attached hereto and by
this reference incorporated herein, and any expenses thereof which are paid out
of the Trust Fund and in order to carry out the obligations of the Company set
forth in (c) above. All contributions to the Plan shall be held by the Trustee
in accordance with the Trust Agreement.
(h) Basis of Payments from the Plan. All benefits payable under the Plan
-------------------------------
shall be paid by the Trustee out of the Trust Fund pursuant to the directions of
the Company and the terms of the Trust Agreement. The Trustee shall pay all
proper expenses of the Plan and the Trust Fund out of the Trust Fund, except to
the extent paid by the Company.
SECTION 17. AMENDMENT AND TERMINATION OF THE PLAN.
----------------------------------------------------
(a) Future of the Plan. The Company expects to continue the Plan
------------------
indefinitely. Future conditions, however, cannot be foreseen, and the Company
retains the authority to amend or to terminate the Plan at any time and for any
reason. The Company may amend, modify, or terminate this Plan at any time by
resolution of the FMC Board of Directors or by resolution of or
22
<PAGE>
other action recorded in the minutes of the FMC Employee Welfare Benefits Plan
Committee or its Administration Subcommittee. The execution and delivery by the
Chairman of the Board, the President, or any Vice President of FMC of an
amendment to the Plan, a restated Plan, or other plan instrument reflecting such
amendment, modification, or termination shall conclusively evidence such
amendment, modification, or termination.
(b) Amendments of the Plan. No amendment of the Plan shall (i) reduce the
----------------------
benefit of any Participant accrued under the Plan before such amendment is
adopted or (ii) divert any part of the assets of the Plan to purposes other than
the exclusive purpose of providing benefits to the
SECTION 17(b)
Participants, Joint Annuitants and Beneficiaries who have an interest in the
Plan and of defraying the reasonable expenses of administering the Plan and the
Trust Fund. No amendment to the Plan (including a change in the actuarial basis
for determining optional benefits or Early Retirement Benefits) shall be
effective to the extent that it has the effect of decreasing a Participant's
accrued benefit. Notwithstanding the preceding sentence, a Participant's
accrued benefit may be reduced to the extent permitted under section 412(c)(8)
of the Code. For purposes of this paragraph, a Plan amendment which has the
effect of (1) eliminating or reducing an Early Retirement Benefit or a
retirement-type subsidy, or (2) eliminating an optional form of benefit, with
respect to benefits attributable to Service before the amendment shall be
treated as reducing accrued benefits. In the case of a retirement-type subsidy,
the preceding sentence shall apply only with respect to a Participant who
satisfies (either before or after the amendment) the preamendment conditions for
the subsidy. In general, a retirement-type subsidy is a subsidy that continues
after retirement, but does not include a qualified disability benefit, a medical
benefit, a social security supplement, a death benefit (including life
insurance), or a plant shutdown benefit (that does not continue after retirement
age). Furthermore, no amendment to the Plan shall have the effect of decreasing
a Participant's vested interest determined without regard to such amendment as
of the later of the date such amendment is adopted, or becomes effective.
23
<PAGE>
(c) Termination of the Plan. Upon termination of the Plan, no part of the
-----------------------
Trust Fund shall revert to the Company or be used for or diverted to purposes
other than the exclusive purpose of providing benefits to the Participants,
Joint Annuitants and Beneficiaries who have an interest in the Plan and of
defraying the reasonable expenses of administering the Plan and the Trust Fund
and such termination, except as otherwise provided in (d) below. Upon
termination of the Plan, each Participant's rights to benefits accrued hereunder
shall be vested and nonforfeitable. Upon termination of the Plan, the Trust
shall continue until the Trust Fund has been distributed as provided in (d)
below. Any other provision hereof notwithstanding, the Company shall have no
obligation to continue making contributions to the Plan after termination of the
Plan. Except as
SECTION 17(c)
otherwise provided in ERISA, neither the Company nor any other person shall have
any liability or obligation to provide benefits hereunder after such termination
in excess of the value of the Trust Fund. Upon such termination, Participants,
Joint Annuitants, and Beneficiaries shall obtain benefits solely from the Trust
Fund. Upon partial termination of the Plan, this Subsection (c) shall apply
only with respect to such Participants, Joint Annuitants and Beneficiaries as
are affected by such partial termination.
(d) Allocation of Trust Fund on Termination. On termination of the Plan,
---------------------------------------
the Trust Fund shall be allocated by the Company on an actuarial basis among
Participants, Joint Annuitants and Beneficiaries in the manner prescribed by
section 4044 of ERISA (a copy of which is attached hereto as Exhibit B and by
this reference incorporated herein). Any residual assets of the Trust Fund
remaining after such allocation shall be distributed to the Company if (i) all
liabilities of the Plan to Participants, Joint Annuitants and Beneficiaries have
been satisfied and (ii) such a distribution does not contravene any provision of
law. The foregoing notwithstanding, if any remaining assets of the Plan are
attributable to Employee Contributions, such assets shall be equitably
distributed to the Participants who made such contributions (or to their
Beneficiaries) in accordance with their rate of contribution. Effective January
1, 1989, the benefit of any highly compensated employee or former employee
(determined in accordance with section 414(g) of the
24
<PAGE>
Code and regulations thereunder) shall be limited to a benefit that is non-
discriminatory under section 401(a)(4) of the Code. In the event of a partial
termination of the Plan, the Company shall arrange for the division of the Trust
Fund, on a nondiscriminatory basis to the extent required by section 401 of the
Code, into the portion attributable to those Participants, Joint Annuitants and
Beneficiaries who are not affected by such partial termination and the portion
attributable to such persons who are so affected. The portion of the Trust Fund
attributable to persons who are so affected shall be allocated in the manner
prescribed by section 4044 of ERISA.
SECTION 18. BENEFIT LIMITATIONS.
--------------------------------
(a) Limitation on Accrued Benefit. Effective January 1, 1987,
------------------------------
notwithstanding any
SECTION 18(a)
provision of the Plan to the contrary, the accrued benefit, including the right
to any optional benefits provided in the Plan (and all other defined benefit
plans required to be aggregated with this Plan under section 415 of the Code)
shall not increase to an amount in excess of the amount permitted under section
415 of the Code when distribution of benefits to the Participant commences.
(b) Multiple Plan Reduction. With respect to a Plan Year, if a Participant
-----------------------
is (or has been) a participant in any defined contribution plan (whether or not
terminated) maintained by the Company, the sum of the Participant's defined
benefit plan fraction (as defined under Code section 415(e)(2)) and defined
contribution plan fraction (as defined under Code section 415(e)(3)) shall not
exceed one (1). If such sum exceeds one, the participant's defined benefit plan
fraction shall be reduced until such sum equal one (1).
(c) Annual Compensation Limit. The accrued benefit of each "section
-------------------------
401(a)(17) employee" under this Plan will be the greater of the accrued benefit
determined for the Employee under (1) or (2) below:
(1) The Employee's accrued benefit determined with respect to the benefit
formula applicable for the Plan Year beginning on or after January 1, 1994,
as applied to the
25
<PAGE>
Employee's total Years of Service taken into account under the Plan for the
purposes of benefit accruals, or
(2) the sum of:
(A) the employee's accrued benefit as of the last day of the last
Plan year beginning before January 1, 1994, frozen in accordance with
section 1.401(a)(4)-13 of the regulations under the Code, and
(B) the employee's accrued benefit determined under the benefit
formula applicable for the Plan Year beginning on or after January 1,
1994, as applied to the Employee's Years of Service credited to the
Employee for Plan Years beginning on or after January 1, 1994, for
purposes of benefit accruals.
SECTION 18(c)(2)(B)
A "section 401(a)(17) employee" means an Employee whose current accrued
benefit as of a date on or after the first day of the first Plan Year beginning
on or after January 1, 1994, is based on Earnings for a Year beginning prior to
the first day of the first Plan Year beginning on or after January 1, 1994, that
exceeded $150,000.
SECTION 19. TOP HEAVY PROVISIONS.
---------------------------------
(a) Top Heavy Plan Requirements. For any Top Heavy Plan Year, the Plan
---------------------------
shall provide the following:
(i) special vesting requirements of Code section 416(b) pursuant to
Section l9(d) of the Plan;
(ii) special minimum benefit requirements of Code section 416(c) pursuant
to Section l9(c) of the Plan;
(iii) special Earnings requirements of Code section 416(d) pursuant to
Section 21(i) of the Plan.
(b) Determination of Top Heavy Status.
---------------------------------
(1) This Plan shall be a Top Heavy Plan for any Plan Year commencing
after December 31, 1983, in which, as of the Determination Date, (1) the
present value of
26
<PAGE>
accrued benefits of Key Employees and (2) the sum of the Aggregate Accounts
of Key Employees under this Plan and all plans of an Aggregation Group,
exceeds sixty percent (60%) of the present value of accrued benefits and
the aggregate accounts of all Key and Non-Key Employees under this Plan and
all plans of an Aggregation Group.
If any Participant is a Non-Key Employee for any Plan Year, but such
Participant was a Key Employee for any prior Plan Year, such Participant's
present value of accrued benefits and/or Aggregate Account balance shall
not be taken into account for purposes of determining whether this Plan is
a Top Heavy or Super Top Heavy Plan (or whether any Aggregation Group which
includes this Plan is a Top Heavy Group). In addition, for Plan
SECTION 19(b)(1)
Years beginning after December 31, 1984, if a Participant or Former
Participant has not received any compensation from the Company (other than
benefits under the Plan) at any time during the five-year period ending on
the Determination Date, the Aggregate Account and/or present value of
accrued benefits for such Participant or Former Participant shall not be
taken into account for the purposes of determining whether this Plan is a
Top Heavy or Super Top Heavy Plan.
(2) This Plan shall be a Super Top Heavy Plan for any Plan Year
commencing after December 31, 1983, in which, as of the Determination Date,
(A) the present value of accrued benefits of Key Employees and (B) the sum
of the Aggregate Accounts of Key Employees under this Plan and all plans of
an Aggregation Group, exceeds ninety percent (90%) of the present value of
accrued benefits and the Aggregate Accounts of all Key and Non-Key
Employees under this Plan and all plans of an Aggregation Group.
(3) Aggregate Account: A Participant's Aggregate Account as of the
Determination Date shall be determined under applicable provisions of the
defined contribution plan used in determining Top Heavy Plan status.
27
<PAGE>
(4) "Aggregation Group" means either a Required Aggregation Group or a
Permissive Aggregation Group as hereinafter determined.
(A) Required Aggregation Group. In determining a Required Aggregation
Group hereunder, each plan of the Affiliated Group in which a Key
Employee is a participant, and each other plan of the Affiliated Group
which enables any plan in which a Key Employee participates to meet the
requirements of Code sections 401(a)(4) or 410, will be required to be
aggregated. Such group shall be known as Required Aggregation Group.
In the case of a Required Aggregation Group, each plan in the group
will be considered a Top Heavy Plan if the Required Aggregation Group is
a Top Heavy Group. No plan in the Required Aggregation Group will be
considered a Top Heavy
SECTION 19(b)(4)(A)
Plan if the Required Aggregation Group is not a Top Heavy Group.
(B) Permissive Aggregation Group: The Company may also include any
other plan not required to be included in the Required Aggregation Group,
provided the resulting group, taken as a whole, would continue to satisfy
the provisions of Code sections 401(a)(4) and 410. Such group shall be
known as a Permissive Aggregation Group.
In the case of a Permissive Aggregation Group, only a plan that is
part of the Required Aggregation Group will be considered a Top Heavy
Plan if the Permissive Aggregation Group is a Top Heavy Group. No plan
in the Permissive Aggregation Group will be considered a Top Heavy Plan
if the Permissive Aggregation Group is not a Top Heavy Group.
(C) Only those plans of the Affiliated Group in which the
Determination Dates fall within the same calendar year shall be
aggregated in order to determine whether such plans are Top Heavy Plans.
28
<PAGE>
(5) "Determination Date" means (a) the last day of the preceding Plan
Year, or (b) in the case of the first Plan Year, the last day of such Plan
Year.
(6) Present Value of Accrued Benefit: In the case of a defined benefit
plan, a Participant's present value of accrued benefits shall be
determined:
(A) As of the most recent "Actuarial Valuation Date," which is the
most recent valuation date within a twelve (12) month period ending on
the Determination Date.
(B) For the first Plan Year, as if (a) the Participant terminated
service as of the Determination Date; or (b) the Participant terminated
service as of the Actuarial Valuation Date, but taking into account the
estimated present value of accrued benefits as of the Determination Date.
(C) For any other Plan Year, as if the Participant terminated service
as of the actuarial valuation date.
SECTION 19(b)(6)(D)
(D) The Actuarial Valuation Date must be the same date used for
computing the defined benefit plan minimum funding costs, regardless of
whether a valuation is performed that Plan Year.
(7) The calculation of a Participant's present value of accrued benefits
as of a Determination Date shall be the sum of:
(A) The present value of accrued benefits using the actuarial
assumptions of Exhibit E-4.
(B) Any Plan distributions made within the Plan Year that includes the
Determination Date or within the four (4) preceding Plan Years. However,
in the case of distributions made after the valuation date and prior to
the Determination Date, such distributions are not included as
distributions for top heavy purposes to the extent that such
distributions are already included in the Participant's present value of
accrued benefits as of the valuation date. Notwithstanding anything
herein to the contrary, all distributions, including distributions made
prior to January 1, 1984, and distributions
29
<PAGE>
under a terminated plan which if it had not been terminated would have
been required to be included in an Aggregation Group, will be counted.
(C) Any Employee Contributions, whether voluntary or mandatory.
However, amounts attributable to tax deductible Qualified Voluntary
Employee Contributions shall not be considered to be a part of the
Participant's present value of accrued benefits.
(D) With respect to unrelated rollovers and plan-to-plan transfers
(ones which are both initiated by the Participant and made from a plan
maintained by one employer to a plan maintained by another employer), if
this Plan provides for rollovers or plan-to-plan transfers, it shall
always consider such rollover or plan-to-plan transfer as a distribution
for the purposes of this Section. If this Plan is the plan accepting
such rollovers or plan-to-plan transfers, it shall not consider such
rollovers or plan-to-plan
30
<PAGE>
SECTION 19(b)(7)(D)
transfers accepted after December 31, 1983, as part of the Participant's
present value of accrued benefits. However, rollovers or plan-to-plan
transfers accepted prior to January 1, 1984, shall be considered as part
of the Participant's present value of accrued benefits.
(E) With respect to related rollovers and plan-to-plan transfers (ones
either not initiated by the Participant or made to a plan maintained by
the same employer), if this Plan provides the rollover or plan-to-plan
transfer, it shall not be counted as a distribution for purposes of this
Section. If this Plan is the plan accepting such rollover or plan-to-
plan transfer, it shall consider such rollover or plan-to-plan transfer
as part of the Participant's present value of accrued benefits,
irrespective of the date on which such rollover or plan-to-plan transfer
is accepted.
(8) "Top Heavy Group" means an Aggregation Group in which, as of the
Determination Date, the sum of:
(A) The present value of accrued benefits of Key Employees under all
defined benefit plans included in the group, and
(B) The Aggregate Accounts of Key Employees under all defined
contribution plans included in the group, exceeds sixty percent (60%) of
a similar sum determined for all Participants.
(9) Notwithstanding anything herein to the contrary, the effective date
otherwise provided for herein for the application of Code section 416 to
this Plan (Plan Years beginning after December 31, 1983) shall be extended
in accordance with any act of Congress or regulatory authority.
(c) Minimum Benefit Requirement for Top Heavy Plan.
----------------------------------------------
(1) The minimum accrued benefit (expressed as an Individual Life Annuity
commencing at Normal Retirement Date) derived from Company contributions to
be provided under this Section for each Non-Key Employee who is a
Participant for any Plan
31
<PAGE>
SECTION 19(c)(1)
Year in which this Plan is a Top Heavy Plan shall equal the product of (A)
one-twelfth (1/12th) of "416 Compensation" averaged over the 5 consecutive
Plan Years (or actual number of Plan Years if less) which produce the
highest average and (B) the lesser of (i) two percent (2%) multiplied by
Years of Vesting Service or (ii) twenty percent (20%).
(2) For purposes of providing the minimum benefit under Code section
416, a Non-Key Employee who is not a Participant solely because (A) his
compensation is below a stated amount or (B) he declined to make mandatory
contributions to the Plan will be considered to be a Participant.
(3) For purposes of this Section, Years of Vesting Service for any Plan
Year ending prior to January 1, 1984, or for any Plan Year during which the
Plan was not a Top Heavy Plan shall be disregarded.
(4) For purposes of this Section, 416 Compensation for any Plan Year
ending prior to January 1, 1984, or subsequent to the last Plan Year during
which the Plan is a Top Heavy Plan shall be disregarded.
(5) For the purposes of this Section, "416 Compensation" shall mean W-2
wages for the calendar year ending with or within the Plan Year, and shall
be limited to $200,000 in Top Heavy Plan Years.
(6) If payment of the minimum accrued benefit commences at a date other
than Normal Retirement Date, or if the form of benefit is other than on
Individual Life Annuity, the minimum accrued benefit shall be the actuarial
equivalent of the minimum accrued benefit expressed as an Individual Life
Annuity commencing at Normal Retirement Date pursuant to Exhibits E-l, E-2,
E-3, and E-4.
(7) For any Plan Year when the Plan is a Top Heavy Plan but not a Super
Top Heavy Plan and (B) a Key Employee is a Participant in both this Plan
and a defined contribution plan included in a required Aggregation Group
which is top heavy, the extra minimum accrued benefit (required by Sections
18(f)(3)(H) and 18(f)(4) to provide the higher
32
<PAGE>
SECTION 19(c)(7)
limitations) shall be provided for each Non-Key Employee who is a
Participant by substituting three percent (3%) for two percent (2%) and
thirty percent (30%) for twenty percent (20%) in (1) above.
(8) In lieu of the above, if a Non-Key Employee participates in this Plan
and a defined contribution plan included in a Required Aggregation Group
which is top heavy, a minimum allocation of five percent (5%) of 416
Compensation shall be provided under the defined contribution plan. If the
defined contribution plan is amended so that the minimum benefits are no
longer provided under the defined contribution plan, the minimum benefits
shall be provided under this Plan. However, for any Plan Year when (A) the
Plan is a Top Heavy Plan but not a Super Top Heavy Plan and (B) a Key
Employee is a Participant in both this Plan and a defined contribution plan
included in a Required Aggregation Group which is top heavy, seven and one-
half percent (7-1/2%) shall be substituted for five percent (5%) above.
(9) To the extent required to be nonforfeitable under Section l9(d), the
minimum accrued benefit under this Section may not be forfeited under Code
section 411(a)(3)(B) or Code section 411(a)(3)(D).
(d) Vesting Requirement for Top Heavy Plan.
---------------------------------------
(1) Notwithstanding any other provision of this Plan, for any Top Heavy
Plan Year, the vested portion of any Participant's accrued benefit shall be
determined on the basis of the Participant's number of Years of Vesting
Service according to the following schedule:
<TABLE>
<CAPTION>
Vesting Schedule
----------------
Years of Service Percentage
---------------- ----------
<S> <C>
1 - 2 0%
--
3 100%
----
</TABLE>
33
<PAGE>
SECTION 19(d)(1)
If in any subsequent Plan Year, the Plan ceases to be a Top Heavy Plan,
the Company may, in its sole discretion, elect to (1) continue to apply
this vesting schedule in determining the vested portion of any
Participant's accrued benefit, or (2) revert to the vesting schedule in
effect before this Plan became a Top Heavy Plan. Any such reversion shall
be treated as a Plan amendment.
(2) The computation of a Participant's nonforfeitable percentage of his
interest in the Plan shall not be reduced as the result of any direct or
indirect amendment to this Plan. In the event that this Plan is amended to
change or modify any vesting schedule, a Participant with at least five (5)
Years of Service as of the expiration date of the election period may elect
to have his nonforfeitable percentage computed under the Plan without
regard to such amendment. If a Participant fails to make such election,
then such Participant shall be subject to the new vesting schedule. The
Participant's election period shall commence on the adoption date of the
amendment and shall end 60 days after the latest of
(i) the adoption date of the amendment,
(ii) the effective date of the amendment, or
(iii) the date the Participant receives written notice of the
amendment from the Company.
SECTION 20. MISCELLANEOUS PROVISIONS.
--------------------------------------
(a) Subsequent Changes. Except as provided in Exhibit D, all benefits to
------------------
which any Participant, Joint Annuitant, or Beneficiary may be entitled hereunder
shall be determined under the Plan in effect when the Participant ceases to be
an Eligible Employee and shall not be affected by any subsequent change in the
provisions of the Plan, unless the Participant again becomes an Eligible
Employee.
(b) Plan Mergers. The Plan shall not be merged or consolidated with any
------------
other plan, and no assets or liabilities of the Plan shall be transferred to any
other plan, unless each Participant would receive a benefit immediately after
such merger, consolidation or transfer (if the Plan then
34
<PAGE>
SECTION 20(b)
terminated) which is equal to or greater than the benefit such Participant would
have been entitled to receive immediately before such merger, consolidation or
transfer (if the Plan had then been terminated).
(c) No Assignment of Property Rights. The interest or property rights of
--------------------------------
any person in the Plan, in the Trust Fund or in any payment to be made under the
Plan shall not be assignable nor be subject to alienation or option, either by
voluntary or involuntary assignment or by operation of law, including (without
limitation) bankruptcy, garnishment, attachment or other creditor's process, and
any act in violation of this Subsection (c) shall be void. This provision shall
not apply to a "qualified domestic relations order" defined in Code section
414(p), and those other domestic relations orders permitted to be so treated by
FMC under the provisions of the Retirement Equity Act of 1984. FMC shall
establish a written procedure to determine the qualified status of domestic
relations orders and to administer distributions under such qualified orders.
Further, to the extent provided under a "qualified domestic relations order," a
former spouse of a Participant shall be treated as the spouse or surviving
spouse for all purposes under the Plan.
(d) Beneficiary. The "Beneficiary" of a Participant shall be the person or
-----------
persons so designated by such Participant. If no Beneficiary has been
designated or if the designated Beneficiary is not living when a Plan Benefit is
to be distributed, the Beneficiary shall be such Participant's spouse if then
living or, if not, such Participant's then living children in equal shares or,
if there are no children, such Participant's estate. A Participant may revoke
and change a designation of a Beneficiary at any time. A designation of a
Beneficiary, or any revocation and change thereof, shall be effective only if it
is made in writing in a form acceptable to the Company and is received by it
prior to the Participant's death.
(e) Incapacity. If, in the opinion of the Company, any person becomes
----------
unable to handle properly any property distributable under the Plan, the Company
may make any arrangement for distribution on such person's behalf that it
determines will be beneficial to such person, including
35
<PAGE>
SECTION 20(e)
(without limitation) distribution to such person's guardian, conservator, spouse
or dependent.
(f) Employment Rights. Nothing in the Plan shall be deemed to give any
-----------------
person a right to remain in the employ of the Affiliated Group or affect any
right of the Affiliated Group to terminate a person's employment with or without
cause.
(g) Reemployment and Suspension of Annuities. After December 31, 1987, if
----------------------------------------
any Participant who is receiving annuity benefits hereunder is reemployed by the
Affiliated Group, the payment of such benefits shall be suspended as provided in
Section 8(b) until such Participant's employment again terminates, or the
benefits otherwise become payable as provided in Section 8(c), at which time
such Participant's benefits shall be redetermined (but not decreased) in
accordance with the applicable provisions of the Plan in effect when the
Participant again ceases to be an Eligible Employee.
(h) Proof of Age and Marriage. Participants and Joint Annuitants shall
-------------------------
furnish proof of age and marital status satisfactory to the Company at such time
or times as it shall prescribe. The Company may delay the disbursement of any
benefits under the Plan until all pertinent information with respect to age or
marital status has been furnished and then make payment retroactively.
(i) Small Annuities. If any monthly annuity benefits under the Plan would
---------------
be less than $20, the Company may direct that such benefits be paid on a
quarterly basis in advance.
The Company shall pay any benefit which has a present actuarial value
(determined using the lesser of the actuarial assumptions in effect under this
Plan as shown on Exhibit E-4 attached hereto and by this reference incorporated
herein or the rate used by the Pension Benefit Guaranty Corporation for plan
terminations) of $3,500 or less to a Participant, Beneficiary or Joint Annuitant
in a lump sum. If a lump sum distribution is so paid and the Participant is
thereafter reemployed by the Company, the Participant shall have the option to
repay to the Plan the amount of such distribution, together with interest at the
rate of 5% per annum (or such other rate as may be prescribed pursuant to
section 411(c)(2)(C)(III) of the Code), compounded annually from the date of the
distribution to the date of repayment. If a reemployed Participant does not
make such repayment, no part of the Service with respect to which the lump sum
distribution was made shall
36
<PAGE>
SECTION 20(i)
count as "Service" or "Credited Service."
(j) Choice of Law. The Plan and all rights thereunder shall be interpreted
-------------
and construed in accordance with ERISA and, to the extent that state law is not
preempted by ERISA, the law of the State of Illinois.
(k) Direct Rollover Option. Notwithstanding any provision of the Plan to
----------------------
the contrary that would otherwise limit a distributee's election under this
Section 20(k), a distributee may elect, at the time and in the manner prescribed
by the Company, to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the distributee in a direct
rollover.
(1) As used in this Section 20(k), an "eligible rollover
distribution" means any distribution of all or any portion of the balance
to the credit of the distributee, except that an eligible rollover
distribution does not include: any distribution that is one of a series of
substantially equal periodic payments (not less frequently than annually)
made for the life (or life expectancy) of the distributee or the joint
lives (or joint life expectancies) of the distributee and the distributee's
designated beneficiary, or for a specified period of ten years or more; any
distribution to the extent such distribution is required under section
401(a)(9) of the Code; the portion of any distribution that is not
includible in gross income (determined without regard to the exclusion for
net unrealized appreciation with respect to employer securities); and any
other distribution(s) that is reasonably expected to total less than $200
during a year.
(2) As used in this Section 20(k), an "eligible retirement plan" means
an individual retirement account described in section 408(a) of the Code,
an individual retirement annuity described in section 408(b) of the Code,
an annuity plan described in section 403(a) of the Code, or a qualified
trust described in section 401(a) of the Code, that accepts the
distributee's eligible rollover distribution. In the case of an eligible
rollover distribution to the surviving spouse, however, an eligible
retirement plan is an individual
37
<PAGE>
SECTION 20(k)(2)
retirement account or individual retirement annuity.
(3) As used in this Section 20(k), a "distributee" includes an
Employee or former Employee. In addition, the Employee's or former
Employee's surviving spouse and the Employee's or former Employee's spouse
or former spouse who is the alternate payee under a qualified domestic
relations order, as defined in section 414(p) of the Code, are distributees
with regard to the interest of the spouse or former spouse.
(4) As used in this Section 20(k), a "direct rollover" is a payment by
the Plan to the eligible retirement plan specified by the distributee.
SECTION 21. DEFINITIONS.
-------------------------
(a) "Affiliate" means, effective January 1, 1994, any corporation (other
than FMC or a Foreign Subsidiary), or unincorporated trade or business with
respect to which at least 50 percent of the total combined voting power of all
classes of stock entitled to vote or not less than 80 percent of the total value
of shares of all classes of stock (or, in the case of an unincorporated trade or
business, a "controlling interest" as defined in regulations under section
414(c) of the Code) is owned by:
(i) FMC;
(ii) One or more corporations or unincorporated trades or businesses
owned by FMC as described in subdivision (i); or
(iii) FMC and one or more corporations or unincorporated trades or
businesses owned by FMC as described in subdivision (i).
(b) "Affiliated Group" means, effective January 1, 1994, (i) FMC and (ii)
any corporation or unincorporated trade or business (including an Affiliate) in
which FMC and/or one or more Affiliates own either stock possessing at least 80
percent of the total combined voting power of all classes of stock entitled to
vote or at least 80 percent of the total value of all shares of all classes of
stock (or in the case of an unincorporated trade or business, a "controlling
interest" as defined in regulations under section 414(c) of the Code).
38
<PAGE>
SECTION 21(c)
(c) "Aggregate Account" means, with respect to each Participant, the value
of all accounts maintained on behalf of a Participant, whether attributable to
Company or employee contributions, used to determine Top Heavy Plan status under
the provisions of a defined contribution plan included in any Aggregation Group
(as defined in Section 19).
(d) "Beneficiary" means the person or persons determined pursuant to
Section 20(d).
(e) "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
(f) "Company" means FMC, and any predecessor companies of FMC and any
Affiliates which FMC has designated as participating companies with respect to
the Plan and which have accepted participation in this Plan as the principal
funded deferred compensation plan to provide retirement benefits for Eligible
Employees. The designation of any Affiliate as a participating company may be
subject to such terms and conditions as FMC may determine.
(g) "Early Retirement Benefit" means the benefits determined pursuant to
Section 7.
(h) "Early Retirement Date" means (i) in the case of an Employee who
becomes a Participant before January 1, 1984, the Participant's 55th birthday
and (ii) in the case of an Employee who becomes a Participant after December 31,
1983, the later of the Participant's 55th birthday and the date he acquires ten
(10) years of Credited Service.
(i) "Earnings" means, effective January 1, 1989, the Participant's total
compensation earned as an Eligible Employee, including overtime, administrative
and discretionary bonuses earned, his Employee-elected Company contributions
under the Thrift Plan, and sales bonuses and sales commissions earned (whether
or not paid), but excluding awards, deferred compensation, severance pay,
accrued (but not earned) vacation and other special payments such as relocation
or moving expense allowances. Earnings also include sick pay or sickness
benefits, but not disability benefits from the Long-Term Disability Plan for
Employees of FMC Corporation. Earnings shall be determined by the Company under
such written rules and procedures as it shall adopt from time to time, and any
such determination shall be conclusive and binding on all persons.
After December 31, 1988, and before January 1, 1994, Earnings in excess
of $200,000
39
<PAGE>
SECTION 21(i)
(or such other amount as the Secretary of the Treasury may designate) shall be
disregarded. After December 31, 1993, Earnings in excess of $150,000 (as
adjusted for the cost-of-living in accordance with section 401(a)(17)(B) of the
Code) shall be disregarded.
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan Years
beginning on or after January 1, 1994, the Earnings of each Employee taken into
account under the Plan shall not exceed the OBRA '93 annual compensation limit.
The OBRA '93 annual compensation limit is $150,000, as adjusted by the
Commissioner of Internal Revenue for increases in the cost of living in
accordance with section 401(a)(17)(B) of the Code. The cost-of-living
adjustment in effect for a year applies to any period, not exceeding 12 months,
over which compensation is determined (determination period) beginning in such
year. If a determination period consists of fewer than 12 months, the OBRA '93
annual compensation limit will be multiplied by a fraction, the numerator of
which is the number of months in the determination period, and the denominator
of which is 12.
For Plan Years beginning on or after January 1, 1994, any reference in
this Plan to the limitation under section 401(a)(17) of the Code shall mean the
OBRA '93 annual compensation limit set forth in this provision.
If Earnings for any prior determination period are taken into account in
determining an employee's benefits accruing in the current Plan Year, the
Earnings for that prior determination period are subject to the OBRA '93 annual
compensation limit in effect for that prior determination period. For this
purpose, for determination periods beginning before the first day of the first
Plan Year beginning on or after January 1, 1994, the OBRA '93 annual
compensation limit is $150,000.
(j) "Eligible Employee" means, effective December 31, 1987, an Employee
who is employed by the Company on a salaried basis or in such other
classifications as the Company may designate as salaried positions. The
foregoing notwithstanding, "Eligible Employee" does not include (i) any Employee
whose employment is covered by a collective bargaining agreement
40
<PAGE>
SECTION 21(j)
unless such agreement expressly provides for participation in the Plan by such
Employee, (ii) any leased employee as defined in Code section 414 (n)(2), and
(iii) any Employee who generally resides outside the United States or whose
principal duties generally are performed outside the United States as determined
by the Company, unless such individual is a United States citizen or permanent
resident alien or the Company designates such individual as an Eligible
Employee. Any individual who is a United States citizen or permanent resident
alien and who is employed by a Foreign Subsidiary in a position which would make
such individual an Eligible Employee if employed by the Company shall be deemed
to be employed by the Company, provided that no entity other than the Company
makes contributions under any funded plan of deferred compensation (other than
the Thrift Plan or any governmental retirement plan) with respect to the
remuneration such individual receives from such Foreign Subsidiary. An
individual's status as an Eligible Employee shall be determined by the Company.
Subject to the appeal procedure described in Section 14, such determination
shall be conclusive and binding on all persons.
(k) "Employee" means any individual who is employed by the Affiliated
Group, including, effective December 31, 1987, a leased employee as defined in
Code section 414(n)(2).
(1) "ERISA" means the Employee Retirement Income Security Act of 1974, as
it may be amended from time to time.
(m) "50% Joint and Survivor's Annuity" means the annuity determined
pursuant to Section 12(a)(ii).
(n) "FMC" means FMC Corporation, a Delaware corporation.
(o) "Final Average Yearly Earnings" means one-fifth (1/5) of the sum of the
Participant's Earnings while an Eligible Employee for the sixty (60)
consecutive calendar months (not taking into account months in which the
Participant had no Earnings) out of the past one hundred and twenty (120)
calendar months in which such Earnings were the highest. If the commencement of
a Participant's retirement benefits hereunder is preceded by a period of long-
term disability, the
41
<PAGE>
SECTION 21(o)
Company may adjust Final Average Yearly Earnings on a nondiscriminatory basis.
(p) "Foreign Subsidiary" means a foreign corporation covered by an
agreement between the Company and the Internal Revenue Service extending Federal
Social Security benefits to such foreign corporation's employees who are United
States citizens, provided that either (i) not less than 20% of the voting stock
of such foreign corporation is owned by the Company or (ii) more than 50% of the
voting stock of such foreign corporation is owned by another foreign corporation
which is described in (i) above.
(q) "Full Service Break" means that the Employee's employment with the
Affiliated Group terminated before the Employee became vested and that the
Employee has not been reemployed as an Employee within a period of time equal to
the greater of 12 months or the Vesting Service completed by the Employee under
Section 4 prior to the termination of employment. (The foregoing
notwithstanding, whether a termination of continuous full-time employment prior
to January 1, 1976, constitutes a Full Service Break shall be determined under
the rules of the Plan in effect at the time of such termination.) If an
Employee's termination of employment occurs on or after January 1, 1985, then
the preceding sentence shall be read by substituting "5 years" for "12 months,"
and, if such termination of employment is also due to a "maternity or paternity
leave" as defined in Subsection 3(e)(i)(E), then that sentence shall be read by
substituting "6 years" for "12 months."
(r) "Individual Life Annuity" means the annuity determined pursuant to
Section 12(a)(i).
(s) "Interest" means interest compounded annually at the following rates:
(i) for periods prior to January 1, 1976,
(A) If Employee Contributions are withdrawn in a lump sum before or
upon retirement, 3%;
(B) If Employee Contributions are left in the Plan to provide an
adjustment to the retirement benefit, 5%;
(ii) for periods after December 31, 1975, 5%.
42
<PAGE>
SECTION 21(t)
(t) "Investment Manager" means a person who is an "investment manager" as
defined in section 3(38) of ERISA.
(u) "Joint Annunitant" means the individual determined pursuant to Section
12(f).
(v) "Key Employee" means those Employees defined in Code section 416(i) and
the Treasury regulations thereunder. Generally, they shall include any Employee
or former Employee (and his Beneficiaries) who, at any time during the Plan Year
or any of the preceding four (4) Plan Years, is:
(i) An officer of the Company (as that term is defined within the meaning
of the regulations under Code section 416) having annual 415 Compensation
greater than 150 percent of the amount in effect under Code section
415(c)(1)(A) for any such Plan Year.
(ii) One of the ten Employees owning (or considered as owning within the
meaning of Code section 318) the largest interests in all employers
required to be aggregated under Code sections 414(b), (c), and (m).
However, an Employee will not be considered a top ten owner for a Plan Year
if the Employee earns less than $30,000 (or such other amount adjusted in
accordance with Code section 415(c)(1)(A) as in effect for the calendar
year in which the Determination Date falls).
(iii) A Five Percent Owner of the Company. "Five Percent Owner" means
any person who owns (or is considered as owning within the meaning of Code
section 318) more than five percent (5%) of the outstanding stock of the
Company or stock possessing more than five percent (5%) of the total
combined voting power of all stock of the Company or, in the case of an
unincorporated business, any person who owns more than five percent (5%) of
the capital or profits interest in the Company. In determining percentage
ownership hereunder, employers that would otherwise be aggregated under
Code sections 414(b), (c), and (m) shall be treated as separate employers.
(iv) A "One Percent Owner" of the Company having an annual 415
Compensation from the Affiliated Group of more than $150,000. "One Percent
Owner" means any
43
<PAGE>
SECTION 21(v)(iv)
person who owns (or is considered as owning within the meaning of Code
section 318) more than one percent (1%) of the outstanding stock of the
Company or stock possessing more than one percent (l%) of the total
combined voting power of all stock of the Company or, in the case of an
unincorporated business, any person who owns more than one percent (1%) of
the capital or profits interest in the Company. In determining percentage
ownership hereunder, employers that would otherwise be aggregated under
Code sections 414(b), (c), and (m) shall be treated as separate employers.
However, in determining whether an individual has 415 Compensation of more
than $150,000, 415 Compensation from each employer required to be
aggregated under Code sections 414(b), (c), and (m) shall be taken into
account.
(w) "Level Income Option" means the annuity determined pursuant to Section
12(a)(iv).
(x) "Non-Key Employee" means any Employee or former Employee (and
his Beneficiaries) who is not a Key Employee.
(y) "Normal Retirement Date" means the Participant's 65th birthday. Each
Participant who retired between September 8, 1981, and December 31, 1983, shall
receive a Normal Retirement Benefit under this Plan, retroactive to the date of
such retirement, equal to the Normal Retirement Benefit the Participant would
have received if "Normal Retirement Date" had then been defined as in the
preceding sentence.
(z) "100% Joint and Survivor's Annuity" means the annuity determined
pursuant to Section 12(a)(iii).
(aa) "One-Year Service Break" means that the Employee's employment as an
Employee terminated and that the Employee has not been reemployed as an Employee
within 12 months thereafter, provided, however, whether a termination of
employment prior to January 1, 1976, constitutes a One-Year Service Break shall
be determined under the rules of the Plan in effect at the time of such
termination.
(bb) "Participant" means an individual who participates in the Plan.
44
<PAGE>
SECTION 21(cc)
(cc) "Plan" means the FMC Corporation Salaried Employees' Retirement Plan,
as amended from time to time.
(dd) "Plan Year" means the 12-month period ending December 31.
(ee) "Primary Social Security Benefit" means the primary benefit which the
Participant is eligible to receive at age sixty-five (65) under the old age
portion of the Federal O1d Age, Survivors' and Disability Insurance Program
assuming that after termination of employment with the Affiliated Group the
Participant has no further earnings subject to such Programs. A Participant's
Primary Social Security Benefit shall be determined by taking his Earnings at
the time of his employment and applying a salary scale, projected backwards,
reflecting the actual change in the average wage from year to year as determined
by the Social Security Administration. However, a Participant may provide the
Company with appropriate documentation of his actual salary history prior to the
time of his employment, and the Primary Social Security Benefit shall be
adjusted accordingly. Such documentation must be provided to the Company within
60 days after the later of (i) the Participant's separation from service by
retirement or otherwise, or (ii) the time when the Participant is notified of
the retirement benefit to which he is entitled.
(ff) "Social Security Covered Compensation Base" means the average of the
compensation and benefit bases in effect under section 230 of the Social
Security Act for each Year in the 35-year period ending with the Year in which
the participant attains social security retirement age as defined in section
415(b)(8) of the Code.
(gg) "Super Top Heavy Plan" means a plan described in Section l9(b)(2)
(hh) "Thrift Plan" means the FMC Employees' Thrift and Stock Purchase Plan.
(ii) "Top Heavy Plan" means a plan described in Section l9(b)(1).
(jj) "Top Heavy Plan Year" means that, for a particular Plan Year
commencing after December 31, 1983, the Plan is a Top Heavy Plan.
(kk) "Trust" means the trust established by the Trust Agreement. "Trust
Agreement" means the trust agreement or agreements, as amended from time to
time, entered into by the
45
<PAGE>
SECTION 21(kk)
Company and the Trustee pursuant to Section 13(b). "Trustee" means the trustee
or trustees at any time appointed by the Company pursuant to Section 13(b).
"Trust Fund" means the trust fund established and maintained by the Trustee to
hold all assets of the Plan pursuant to the Trust Agreement.
(ll) "Years of Service" means calendar months of service (a partial month
shall be counted as a whole month) divided by 12. Any fractional Year of
Service shall be ignored.
(mm) "Years of Credited Service" means calendar months of Credited Service
(a partial month shall be counted as a whole month) divided by 12. Fractional
Years of Credited Service shall be taken into account in determining a
Participant's benefits.
46
<PAGE>
SECTION 22
SECTION 22. EXECUTION
----------------------
To record the amendment and restatement of the Plan to read as set forth
herein, the Company has caused its authorized officer to execute the same this
________ day of _________, 1995, but to be effective January 1, 1995, except as
otherwise provided in the text herein.
FMC CORPORATION
BY:__________________________
Chairman, Employee Welfare Benefits
Plan Committee
47
<PAGE>
EXHIBIT "A"
CREDITED SERVICE
Any service acquired as a Participant under any of the Plans listed herein shall
not be counted as Credited Service for purposes of this Plan.
1. Stearns Electric Company Profit Sharing Plan.
2. Fritzke and Icke Employees Savings and Profit Sharing Plan.
3. Employees Profit Sharing Plan of Industrial Brush Company.
4. Wayne Manufacturing Company Profit Sharing Company.
5. P. E. Van Pelt, Inc. Profit Sharing Plan.
6. Mojonnier Bros. Co. Salaried Employees Profit Sharing Plan.
1
<PAGE>
EXHIBIT "B"
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974
Allocation of Assets
--------------------
"Sec. 4044 (a) In the case of termination of a defined benefit plan, the plan
administrator shall allocate the assets of the plan (available to provide
benefits) among the participants and beneficiaries of the plan in the following
order:
(1) First, to that portion of each individual's accrued benefit which
is derived from the participant's contributions to the plan which were
not mandatory contributions.
(2) Second, to that portion of each individual's accrued benefit which
is derived from the participant's mandatory contributions.
(3) Third, in the case of benefits payable as an annuity
(A) In the case of the benefit of a participant or beneficiary
which was in pay status as of the beginning of the 3-year period
ending on the termination date of the plan, to each such benefit,
based on the provisions of the plan (as in effect during the 5-year
period ending on such date) under which such benefit would be the
least,
(B) In the case of a participant's or beneficiary's benefit (other
than a benefit described in subparagraph (A)) which would have been in
pay status as of the beginning of such 3-year period if the
participant had retired prior to the beginning of the 3-year period
and if his benefits had commenced (in the normal form of annuity under
the plan) as of the beginning of such period, to each such benefit
based on the provisions of the plan (as in effect during the 5-year
period ending on such date) under which such benefit would be the
least.
1
<PAGE>
For purposes of subparagraph (A), the lowest benefit in pay status during
the 3-year period shall be considered the benefit in pay status for such period.
(4) Fourth -
(A) to all other benefits (if any) of individuals under the plan
guaranteed under this title (determined without regard to section
4022(b)(5)), and
(B) to the additional benefit (if any) which would be determined
under subparagraph (A) if section 4022(b)(6) did not apply.
For purposes of this paragraph, section 4021 shall be applied without
regard to subsection (c) thereof.
(5) Fifth, to all other nonforfeitable benefits under the plan.
(6) Sixth, to all other benefits under the plan.
(b) For purposes of subsection (a) -
(1) The amount allocated under any paragraph of subsection (a) with
respect to any benefit shall be properly adjusted for any allocation of
assets with respect to that benefit under a prior paragraph of subsection
(a).
(2) If the assets available for allocation under any paragraph of
subsection (a) (other than paragraphs (5) and (6)) are insufficient to
satisfy in full the benefits of all individuals which are described in that
paragraph, the assets shall be allocated pro rata among such individuals on
the basis of the present value (as of the termination date) of their
respective benefits described in that paragraph.
(3) This paragraph applies if the assets available for allocation
under paragraph (5) of subsection (a) are not sufficient to satisfy in full
the benefits of individuals described in that paragraph.
(A) If this paragraph applies, except as provided in subparagraph
(B) the assets shall be allocated to the benefits of individuals
described in such paragraph (5) on the basis of the benefits of
individuals which would have been described in
2
<PAGE>
such paragraph (5) under the plan as in effect at the beginning of the
5-year period ending on the date of plan termination.
(B) If the assets available for allocation under subparagraph (A)
are sufficient to satisfy in full the benefits described in such
subparagraph (without regard to this subparagraph), then for purposes
of subparagraph (A), benefits of individuals described in such
subparagraph shall be determined on the basis of the plan as amended
by the most recent plan amendment effective during such 5-year period
under which the assets available for allocation are sufficient to
satisfy in full the benefits of individuals described in subparagraph
(A) and any assets remaining to be allocated under such subparagraph
shall be allocated under subparagraph (A) on the basis of the plan as
amended by the next succeeding plan amendment effective during such
period.
(4) If the Secretary of the Treasury determines that the allocation
made pursuant to this section (without regard to this paragraph) results
in discrimination prohibited by section 401(a)(4) of the Internal Revenue
Code of 1954 then, if required to prevent the disqualification of the
plan (or any trust under the plan) under section 401(a), 403(a), or
405(a) of such Code, the assets allocated under subsection (a)(4)(B),
(a)(5), and (a)(6) shall be reallocated to the extent necessary to avoid
such discrimination.
(5) The term "mandatory contributions" means amounts contributed to
the plan by a participant which are required as a condition of
employment, as a condition of participation in such plan, or as a
condition of obtaining benefits under the plan attributable to employer
contributions. For this purpose, the total amount of mandatory
contributions of a participant is the amount of such contributions
reduced (but not below zero) by the sum of the amounts paid or
distributed to him under the plan before its termination.
3
<PAGE>
(6) A plan may establish subclasses and categories within the classes
described in paragraphs (1) through (6) of subsection (a) in accordance
with regulations prescribed by the corporation.
(c) Any increase or decrease in the value of the assets of a plan occurring
during the period beginning on the later of (1) the date a trustee is appointed
under section 4042(b) or (2) the date on which the plan is terminated is to be
allocated between the plan and the corporation in the manner determined by the
court (in the case of a court-appointed trustee) or as agreed upon by the
corporation and the plan administrator in any other case. Any increase or
decrease in the value of the assets of a plan occurring after the date on which
the plan in terminated shall be credited to, or suffered by, the corporation.
(d) (1) Any residual assets of a plan may be distributed to the
employer if -
(A) all liabilities of the plan to participants and their
beneficiaries have been satisfied,
(B) the distribution does not contravene any provision of law, and
(C) the plan provides for such distribution in these circumstances.
(2) Notwithstanding the provisions of paragraph (1), if any assets
of the plan attributable to employee contributions remain after all
liability of the plan to participants and their beneficiaries have been
satisfied such assets shall be equitably distributed to the employees who
made such contributions (or their beneficiaries) in accordance with their
rate of contributions.
4
<PAGE>
EXHIBIT "C" - MERGED PLANS
--------------------------
The following is a list of other plans which have been superseded and replaced
by merger into this Plan, on and after January 1, 1979. In the event the Plan
terminates or there is a spin-off of part of the Plan (in excess of the 3% of
the assets permitted under Regulation Section 1.414(1)-l(n)(2)), within five
years following the date of any merger of another plan into this Plan, and if
the sum of the assets of this Plan after any such merger was less than the sum
of the present values of the accrued benefits (whether or not vested) of both
plans on a termination basis on the merger date, then a special schedule of
benefits shall be created from the necessary (as identified by an enrolled
actuary) data maintained by the Committee or the Company and shall be inserted
in and modify the allocation priorities described in Exhibit B hereof at the
time of such Plan termination or spin-off, in accordance with Regulation Section
1.414(1)-l(e) through (j) and Regulation Section 2608.13.
<TABLE>
<CAPTION>
Plan Name Effective Date of Merger
------------------------------------ ------------------------
<S> <C>
Salaried Part of the Retirement January 1, 1979
Plan for Non-Union Employees of
Sun Cleanser Company
Marine Colloids Division of FMC January 1, 1979
Corporation Salaried Employees'
Retirement Plan
Hourly Part of the Retirement September l5, 1980
Plan for Non-Union Employees
of Sun Cleanser Company
Jetway Equipment Division of Pneumo March 15, 1995
Abex Corporation Retirement
Income Plan
Jetway Equipment Division Pension March 15, 1995
Plan for Hourly Employees
</TABLE>
1
<PAGE>
EXHIBIT "D"
-----------
A. Except as provided in paragraph B. below, the monthly benefit payment
of each Participant, Joint Annuitant, or Beneficiary who is receiving a monthly
benefit payment on November 1, 1979, with respect to a Participant who retired
before July 1, 1978, shall be increased, effective with respect to payments made
on and after November 1, 1979, by an amount determined by multiplying the
percentage to be obtained from (1) and (2) below, whichever is applicable, by
(3) below:
(1) If the Participant retired prior to January 1, 1978, the sum of the
percentage obtained under a. and b. below, but not to exceed 10%:
a. The percentage obtained from the following table:
Calendar year during which monthly benefit payments were first paid to
the Participant (if the payments on November 1, 1979, were being
received by the Participant or by the Joint Annuitant or Beneficiary
of a Participant who died after beginning to receive payments), or
were first paid to the Joint Annuitant or Beneficiary (if the payments
on November 1, 1979, were being received by the Joint Annuitant or
Beneficiary of a Participant who died before beginning to receive
payments).
<TABLE>
<CAPTION>
Percentage
--------------------- ----------
<S> <C>
1977 2%
1976 4%
1975 6%
1974 8%
1973 or earlier 10%
</TABLE>
b. A percentage equal to 1/2% for each full year of Credited Service
in excess of 30 full years of Credited Service that the Participant had
at retirement (e.g., 31 years - 1/2%, 32 years - 1%).
1
<PAGE>
(2) If the Participant retired after December 31, 1977, but before July
1, 1978, and if he had 31 or more full years of Credited Service, a
percentage equal to 2-1/2% plus an additional 1/2% for each full year of
his Credited Service in excess of 31 full years (e.g., 31 years - 2-1/2%,
32 years - 3%), but not to exceed 10%.
(3) The amount of the monthly benefit payment which the Participant,
Joint Annuitant, or Beneficiary would otherwise have received on November
1, 1979 (if this increase in amount were not granted). If the
Participant's monthly benefit payment in this paragraph A(3) is a payment
prior to the Participant's 62nd birthday under a Level Income Option, the
increase determined by applying the applicable percentage under (1) or (2)
above to such payment shall be payable only prior to his 62nd birthday, and
after such birthday the applicable percentage under (1) or (2) above shall
be applied to the reduced monthly annuity payments otherwise payable under
the Level Income Option to increase that amount by said applicable
percentage.
B If a Participant attained his Normal Retirement Date before July 1, 1978,
but continued in employment after attaining his Normal Retirement Date, the
provisions of paragraph A. above shall not be applicable, but instead the
following shall apply:
(1) If such a Participant, or his Joint Annuitant or Beneficiary, is
receiving a monthly benefit payment on November 1, 1979, the monthly
benefit payment shall be increased, effective with respect to payments made
on and after November 1, 1979, by an amount determined by multiplying the
percentage to be obtained from a., b. or c. below, whichever is applicable,
by d. below.
a. If the Participant attained his Normal Retirement Date before
January 1, 1978, and he retired prior to July 1, 1978, the sum of
the percentage obtained under i. and ii. below, but not to exceed
10%:
i. The percentage obtained from the following table:
2
<PAGE>
<TABLE>
<CAPTION>
Calendar year during which the
Participant attained his Normal
Retirement Date Percentage
------------------------------ ----------
<S> <C>
1977 2%
1976 4%
1975 6%
1974 8%
1973 and earlier 10%
</TABLE>
ii A percentage equal to 1/2% for each full year of credited Service
in excess of 30 full years of Credited Service that the
Participant had at retirement (e.g., 31 years - 1/2%, 32 years -
1%).
b. If the Participant both attained his Normal Retirement Date and
retired after December 31, 1977, but before July 1, 1978, and if he
had 31 or more full years of Credited Service, a percentage equal to
2-1/2% plus an additional 1/2% for each full year of his Credited
Service in excess of 31 full years (e.g., 31 years - 2-1/2%, 32
years - 3%), but not to exceed 10%.
c. If the Participant retired after June 30, 1978 but prior to
November 2, 1979, the percentage obtained from the following table:
<TABLE>
<CAPTION>
Calendar year during which the
Participant attained his Normal
Retirement Date Percentage
------------------------------ ----------
<S> <C>
1977 2%
1976 4%
1975 6%
1974 8%
1973 and earlier 10%
</TABLE>
d. The amount of the monthly benefit payment which the Participant,
Joint Annuitant, or Beneficiary would otherwise have received on
November 1, 1979 (if this increase in amount were not granted).
(2) If such a Participant, or his Joint Annuitant or Beneficiary, is not
receiving a monthly benefit payment on November 1, 1979, and the Participant
continues in employment, then upon his retirement, the monthly benefit payment
thereafter payable to the Participant, or his Joint
3
<PAGE>
Annuitant or Beneficiary, shall be increased by an amount determined by
multiplying the percentage to be obtained from a. or b. below, whichever is
applicable, by c. below:
a. The sum of the percentage obtained under i. and ii. below, but not
to exceed 10%:
i. The percentage obtained from the following table:
<TABLE>
<CAPTION>
Calendar year during which the
Participant attained his Normal
Retirement Date Percentage
------------------------------ ----------
<S> <C>
1977 2%
1976 4%
1975 6%
1974 8%
1973 and earlier 10%
</TABLE>
ii. A percentage equal to 1/2% for each full year of Credited
Service in excess of 30 full years of Credited Service that the
Participant had at retirement (e.g., 31 years - 1/2%,
32 years - 1%).
b. If the Participant attained his Normal Retirement Date after
December 31, 1977, but before July 1, 1978, and if he had 31 or
more full years of Credited Service, a percentage equal to 2-1/2%
plus an additional 1/2% for each full year of his Credited Service
in excess of 31 full years (e.g., 31 years -2-1/2%, 32 years - 3%),
but not to exceed 10%.
c. The amount of the monthly benefit payment which the Participant,
Joint Annuitant, or Beneficiary would otherwise have received on
the date benefit payments begin (if this increase in amount were
not granted).
C. If the amount of monthly increase in the monthly benefit payment to be
made under paragraph A. or B. above would be less than $10.00, then the amount
shall be $10.00.
4
<PAGE>
AMENDMENT
The FMC Employees' Thrift and Stock Purchase is amended as follows:
Section 3(e) Effective April 1, 1992, substitute the following:
------------
(e) Transfer of Funds. A Participant who has attained age 55 may
------------------
elect to transfer among the Fixed Income Fund, the Stock Fund, and the
Equity Fund the entire balance (if any) of his Employee Contributions
Account, Special Employee Contributions Account, and Employee-Elected
Company Contributions Account then invested in any such Funds, or any
portion of the aggregate balance of those accounts, in multiples of 25%.
Any election under this Subsection 3(e) shall be made by filing the
prescribed form with FMC, and such transfer shall be made effective the
first day of the month following the date the form is received. For
purposes of accounting for such a transfer, the value of the Participant's
balance in the account or portion thereof transferred shall be determined
as of the Valuation Date preceding the month when such transfer is
effective. No Participant shall make more than one such transfer during a
Plan Year. If a Participant makes more than one such transfer during her
lifetime, for the 12-month period following the Valuation Date of the
second or later transfer, the rate of Company Contributions applicable to
that Participant's Basic Contributions invested in the Stock Fund will be
reduced to the rate then applicable to Basic Contributions invested in the
other two Funds.
Section 9 Effective January 1, 1993, add as a new Subsection 9(i):
---------
(i) Direct Rollover Option. Notwithstanding any provision of the Plan to
----------------------
the contrary that would otherwise limit a distributee's election under this
Section 9(i), a distributee may elect, at the time and in the manner
prescribed by the Company, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan specified by the
distributee in a direct rollover.
(1) As used in this Section 9(i), an "eligible rollover distribution"
means any distribution of all or any portion of the balance to the credit
of the distributee, except that an eligible rollover distribution does not
include: any distribution
<PAGE>
that is one of a series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life expectancy) of the
distributee or the joint lives (or joint life expectancies) of the
distributee and the distributee's designated beneficiary, or for a
specified period of ten years or more; any distribution to the extent such
distribution is required under section 401(a)(9) of the Code; the portion
of any distribution that is not includible in gross income (determined
without regard to the exclusion for net unrealized appreciation with
respect to employer securities); and any other distribution(s) that is
reasonably expected to total less than $200 during a year.
(2) As used in this Section 9(i), an "eligible retirement plan"
means an individual retirement account described in section 408(a) of the
Code, an individual retirement annuity described in section 408(b) of the
Code, an annuity plan described in section 403(a) of the Code, or a
qualified trust described in section 401(a) of the Code, that accepts the
distributee's eligible rollover distribution. In the case of an eligible
rollover distribution to the surviving spouse, however, an eligible
retirement plan is an individual retirement account or individual
retirement annuity.
(3) As used in this Section 9(i), a "distributee" includes an
Employee or former Employee. In addition, the Employee's or former
Employee's surviving spouse and the Employee's or former Employee's spouse
or former spouse who is the alternate payee under a qualified domestic
relations order, as defined in section 414(p) of the Code, are distributees
with regard to the interest of the spouse or former spouse.
(4) As used in this Section 9(i), a "direct rollover" is a payment
by the Plan to the eligible retirement plan specified by the distributee.
Section 21 Effective January 1, 1994, substitute for Subsections (a) and (b):
----------
(a) "Affiliate" means, effective January 1, 1994, any corporation
(other than FMC or a Foreign Subsidiary), or unincorporated trade or
business with respect to which at least 50 percent of the total combined
voting power of all classes of stock entitled to vote or not less than 80
percent of the total value of shares of all classes of stock (or, in the
case of an unincorporated trade or business, a "controlling interest" as
defined in regulations under section 414(c) of the Code) is owned by:
<PAGE>
(i) FMC;
(ii) One or more corporations or unincorporated trades or businesses
owned by FMC as described in subdivision (i); or
(iii) FMC and one or more corporations or unincorporated trades or
businesses owned by FMC as described in subdivision (i).
(b) "Affiliated Group" means, effective January 1, 1994, (i) FMC and (ii)
any corporation or unincorporated trade or business (including an
Affiliate) in which FMC and/or one or more Affiliates own either stock
possessing at least 80 percent of the total combined voting power of all
classes of stock entitled to vote or at least 80 percent of the total value
of all shares of all classes of stock (or in the case of an unincorporated
trade or business, a "controlling interest" as defined in regulations under
section 414(c) of the Code).
Dated: ______________________ FMC Corporation
By:___________________
<PAGE>
FMC DEFERRED
STOCK PLAN FOR
NON-EMPLOYEE DIRECTORS
(As Amended Through December 31, 1994)
1. DEFINITIONS. The following terms when used herein shall have the meaning set
opposite the term:
(a) "Board of Directors" means the Board of Directors of FMC Corporation as
it may be constituted from time to time.
(b) "Common Stock" means (i) the common stock of the Company, par value $.10
per share, adjusted as provided in Section 17 or (ii) if there is a
merger or consolidation and the Company is not the surviving corporation,
the capital stock of the surviving corporation given in exchange for such
common stock of the Company.
(c) "Common Stock Account" means the account to which a Participant's Common
Stock Units are credited from time to time.
(d) "Common Stock Unit" means a right to receive one share of Common Stock.
(e) "Company" means FMC Corporation.
(f) "Deferred Compensation" means (i) $10,000 through the Plan Year beginning
May 1, 1995, and $15,000 thereafter or (ii) such greater portion of the
annual retainer payable to a Participant as the Participant from time to
time may elect provided that any election by a Participant to increase or
decrease the Deferred Compensation shall be effective as of the first day
of May following the date which is six months after the date of receipt
by the Company of the election.
(g) "Deferral Period" means the time during which a person is a director of
the Company.
(h) "Fair Market Value" means the closing price for a share of Common Stock
as reported in the New York Stock Exchange Composite Transactions on the
last trading day immediately preceding the date on which the Fair Market
Value is to be determined.
(i) "Participant" or "Participants" means all members of the Board of
Directors who are not employees of the Company or any subsidiary or
affiliate of the Company.
1
<PAGE>
(j) "Plan" means the FMC Deferred Stock Plan for Non-Employee Directors.
(k) "Plan Year" means May 1 to April 30.
2. PURPOSE. The purpose of the Plan is to make directors' compensation directly
related to and contingent on the investment performance of the Company.
3. PARTICIPATION. All directors of the Company who are not employees of the
Company or any subsidiary or affiliate of the Company are Participants in the
Plan. A person shall cease to be a Participant effective as of the first day
after he or she ceases to be a director of the Company or otherwise becomes
ineligible.
4. GRANTS. (a) Annual. On the first day of May of each year or, if such date
is a weekend or holiday, the next business day, each Participant's Common Stock
Account shall be credited with a number of Common Stock Units equal to the
number obtained by dividing the Deferred Compensation for the Plan Year
beginning on such first day of May by the Fair Market Value on such date.
(b) Interim. On the date, if any, on which the Company pays any dividend or
makes any other distribution to its stockholders with respect to its Common
Stock, each Participant's Common Stock Account shall be credited with a number
of Common Stock Units equal to the number obtained by application of the
following formula:
N = CSU X D
-------
FMV
Where D is the dollar value of the dividend or other distribution paid or made
on each share of Common Stock, CSU is the total number of Common Stock Units
credited to the Participant's Common Stock Account as of the date the dividend
was paid or distribution made and FMV is the Fair Market Value on such date.
(c) Fractional interests. Whenever the application of subsections (a) or (b)
results in a remainder, such remainder shall be deemed a fractional interest in
a Common Stock Unit in the Common Stock Account to be combined with all previous
and future such fractional interests.
5. SPECIAL LEDGER. The Company shall establish an appropriate record,
hereinafter called the Special Ledger, and shall enter therein the name of each
Participant and the number of Common Stock Units to be credited from time to
time to the Participant's Common Stock Account.
2
<PAGE>
6. DISTRIBUTION. When a Participant ceases to be a non-employee director, a
stock certificate representing a number of shares of Common Stock equal to the
number of Common Stock Units then credited to the Participant's Common Stock
Account shall be delivered, free of all restrictions, to the Participant or the
Participant's estate or beneficiary, as the case may be. The Company shall not
be required to deliver any fractional share of Common Stock and the number of
shares of Common Stock deliverable hereunder shall be rounded down to the
nearest whole number of Common Stock Units. Until termination of a
Participant's directorship, the Participant shall have no right to receive any
stock certificate.
7. ADMINISTRATION. The Plan shall be administered by the Board. Subject to the
express provisions of the Plan, the Board shall have authority to interpret the
provisions of the Plan, to prescribe, amend and rescind rules and regulations
relating to it and to make other determinations necessary or advisable in
administration of the Plan, all of which determinations shall be final and
binding upon all Participants.
8. LIMITATION ON NUMBER OF COMMON STOCK UNITS AND SHARES OF COMMON STOCK.
Subject to adjustment pursuant to Section 17, no Participant may be granted, in
the aggregate, more than 5,000 Common Stock Units in any Plan Year and not more
than a total of 100,000 shares of Common Stock may be issued pursuant to this
Plan. To the extent that the foregoing limitation results in any Participant
not receiving Common Stock Units in any Plan Year to which he or she otherwise
would be entitled, at the end of such Plan Year the Participant shall be paid
the then cash equivalent of such lost Common Stock Units.
9. ASSIGNMENT. No Participant's interest in any Common Stock Account is
assignable, either by voluntary or involuntary assignment or by operation of law
or may be paid over, loaned, sold, assigned, transferred, discounted, pledged as
collateral for a loan, or in any other way encumbered until the Participant has
ceased to be a non-employee director of the Company.
10. UNSEGREGATED FUNDS. The Company shall not segregate any funds or
securities during the Deferral Period and service as a non-employee director of
the Company shall constitute an acknowledgement and agreement by the Participant
that any interests of such Participant shall remain a part of the Company's
general funds and are subject to the claims of the Company's general creditors
during the Deferral Period. Nothing herein contained shall be construed as
creating any
3
<PAGE>
trust, express or implied, for the benefit of any participant.
11. PAYMENT OF CERTAIN COSTS OF THE PARTICIPANT. If a dispute arises regarding
the interpretation or enforcement of this Plan and the Participant (or in the
event of his death, his beneficiary) obtains a final judgment in his favor from
a court of competent jurisdiction from which no appeal may be taken, whether
because the time to do so has expired or otherwise, or his claim is settled by
the Company prior to the rendering of such a judgment, all reasonable legal and
other professional fees and expenses incurred by the Participant in contesting
or disputing any such claim or in seeking to obtain or enforce any right or
benefit provided for in this Plan or in otherwise pursuing his claim will be
promptly paid by the Company with interest thereon at the highest Illinois
statutory rate for interest on judgments against private parties from the date
of payment thereof by the Participant to the date of reimbursement to him by the
Company.
12. APPOINTMENT OF BENEFICIARY. Each Participant may appoint a beneficiary or
beneficiaries to receive payments to be made of Common Stock, if any, after the
Participant's death. In the absence of such appointment, all such securities
shall be delivered to the Participant's personal representative. The
appointment shall be made on a form to be supplied by the Company and may be
revoked or superseded at any time.
13. RESERVATION OF RIGHTS. Nothing in this Plan shall be construed to (a) give
any Participant any right to defer compensation received for services as a
director of the Company other than as expressly authorized and permitted in this
Plan or in any other plan or arrangement approved by the Board of Directors, (b)
give a Participant any rights whatsoever with respect to shares of Common Stock,
(c) limit in any way the right of the Company's Board of Directors to remove a
Participant as a director of the Company, or (d) be evidence of any agreement or
understanding, express or implied, that the Company will pay Participant any
particular rate of remuneration for services as a director.
14. AMENDMENT OR TERMINATION. The Company's Board of Directors may, at any
time, terminate or amend this Plan provided that no such termination or
amendment shall adversely affect the rights of Participants or beneficiaries of
participants, including rights with respect to Common Stock Units or shares of
Common Stock credited prior to such termination or amendment, without his
consent and provided further that subsection 1(f) may not be amended more than
once every six months.
4
<PAGE>
15. REGULATORY COMPLIANCE AND LISTING. The issuance or delivery of any shares
of Common Stock deliverable hereunder may be postponed by the Company for such
period as may be required to comply with any applicable requirements under the
federal securities laws, any applicable listing requirements of any national
securities exchange and requirements under any other law or regulation
applicable to the issuance or delivery of such shares, and the Company shall not
be obligated to issue or deliver any such shares if the issuance or delivery of
such shares shall constitute a violation of any provision of any law or of any
regulation of any governmental authority or any national securities exchange.
16. MISCELLANEOUS. (a) Nothing in the Plan shall be deemed to create any
obligation on the part of the Board to nominate any director for reelection by
the Company's stockholders, (b) the Company shall have the right to require,
prior to the issuance or delivery of any shares of Common Stock, payment by the
Participant of any taxes required by law with respect to the issuance or
delivery of such shares, and (c) the shares of Common Stock granted under the
Plan may be either authorized but unissued shares or shares which have been or
may be reacquired by the Company as determined from time to time by the Board.
17. ADJUSTMENT. Any change in the Common Stock, whether through merger,
consolidation, recapitalization, stock split, stock dividend or other change in
the Company's structure, shall be similarly reflected in the number of Common
Stock Units in the Participant's Common Stock Account.
18. WITHHOLDING. The Company shall have the right to deduct or withhold from
all payments of Deferred Compensation any taxes required by law to be withhold
from an employee with respect to such payments.
19. CHANGE IN LAW. If, for any reason, the anticipated benefits of the
deferral of any Deferred Compensation pursuant to this Plan or any provision
hereof are frustrated by reason of any interpretation of or change in law,
policy or regulation, the Board of Directors may, at its discretion, terminate
the deferral arrangement or delete or suspend the operation of such provision.
20. GOVERNING LAW. This Plan shall be governed by the laws of the State of
Delaware.
21. EFFECTIVE DATE. This Plan shall be effective as of April 24, 1987.
5
<PAGE>
<TABLE>
Financial Summary
--------------------------------------------------------------------------------
<CAPTION>
(In millions, except 1994 1993 Change
employee and stockholder data)
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales
In the United States $2,045.0 $2,082.4 -2%
Outside the United States 1,965.8 1,671.5 18%
--------------------------------------------------------------------------------
Total sales $4,010.8 $3,753.9 7%
================================================================================
Income
Income from continuing operations before
restructuring and other charges, interest
and taxes, net of minority interests(1) $ 311.4 $ 272.7 14%
--------------------------------------------------------------------------------
Income from continuing operations before
restructuring and other charge(1) (2)* $ 173.4 $ 164.3 6%
--------------------------------------------------------------------------------
Restructuring and other charges* $ -- $ 123.3 --
--------------------------------------------------------------------------------
Income from continuing operations(2)* $ 173.4 $ 41.0 323%
================================================================================
Financial data
Common stock price range $ 65-45 1/2 $ 53-41 1/2
--------------------------------------------------------------------------------
Capital expenditures $ 356.0 $ 244.5
--------------------------------------------------------------------------------
Research and development expenditures $ 166.8 $ 149.2
--------------------------------------------------------------------------------
At December 31 Operating working capital (36.1) (50.8)
Number of employees 21,344 20,696
Number of stockholders 12,438 13,180
--------------------------------------------------------------------------------
Return on investment and primary earnings per share for income from
continuing operations are shown in the bar charts.
--------------------------------------------------------------------------------
*Presented on an after-tax basis.
(1) Supplemental financial information. Income before restructuring and other
charges, and related earnings per share and return on investment, should not
be considered in isolation nor as alternatives for income from continuing
operations or as the sole measures of the company's profitability.
(2) 1993 before after-tax extraordinary charge of $(4.7) million, or $(0.13) per
share, related to the restructuring of debt.
(3) Return on investment = Income from continuing operations plus after-tax interest expense on debt
-------------------------------------------------------------------------
Average of stockholders' equity plus total debt
</TABLE>
Italicized brand names used throughout this report are trademarks of FMC
Corporation or its subsidiaries.
Return on Investment(1)(3)
24%
20.6
19.1
18.4
18%
17.2 17.9
12%
7.8
6%
0%
94 93 92 91 90
Earnings Per Share(1)
$6
5.23
$5
4.66 4.45 4.77 4.30
$4
$3
$2
1.11
$1
$0
94 93 92 91 90
--------------
(1) 1993 includes after-tax restructuring and other charges of $123.3 million,
or $3.34 per share.
(3) 1993 before after-tax restructuring and other charges of $123.3 million, or
$3.34 per share.
1
<PAGE>
Message to Shareholders
Our 1994 performance reflects the strength of FMC's businesses, the initial
results from our growth efforts and the early results from our restructuring.
Our operating income was 14 percent higher, to $311 million from $273 million
last year, while earnings per share increased to $4.66 from $4.45. We achieved
these results despite an $81 million decline in our defense and gold earnings,
and while covering a 12 percent increase in research and development spending,
to $167 million. We invested more than $370 million in acquisitions and capital
expenditures.
Most importantly, we increased the value of our shareholders' investments in
FMC. Our stock increased 22.5 percent compared with a 1.3 percent gain for the
Standard & Poor's Composite--500 Stock Index and an 8.3 percent loss for the Dow
Jones Diversified Industrials Index.
As I emphasized last year--and as I'll continue to emphasize at every
opportunity--our mission is to continue to increase value for our shareholders.
As a company, we're confident we can provide superior returns for several
reasons:
. We have strong, competitive positions in solid businesses.
. We are making investments in these businesses that provide returns above our
cost of capital.
. We have superior management throughout the company whose strong analytical
approach to decision-making will keep us focused on our goal.
. We are supplementing our focus on strong operations with more emphasis on
growth, which we believe will lead directly to maximizing shareholder value.
Solid Performance
Our Performance Chemicals businesses delivered strong results and promise even
greater worldwide growth throughout this decade. Cost improvements and volume
increases in Industrial Chemicals drove profit increases. Continued volume
growth and the resulting improved outlook for pricing position us for additional
increases over the next several years. Our Machinery and Equipment business
showed improved
[PHOTO OF LARRY D. BRADY AND ROBERT N. BURT APPEARS HERE]
2
<PAGE>
sales and earnings, reflecting restructuring and repositioning efforts, as well
as growth through acquisitions. These gains offset the declines in defense and
gold, two of our previously highest-return businesses.
On average, FMC's businesses lag movements in the economy. Therefore, FMC will
benefit from the market recovery over the next few years.
The Challenges of Change
Achieving growth has demanded a change in the way we're running the company.
The most fundamental change is increased focus on the external environment--
strengthening our market positions by serving our customers better and by
improving our understanding of competitive dynamics. External focus needs to be
the driving factor--not processes that too often focused management efforts
inward rather than on the more important challenges of satisfying customers and
creating competitive advantages. Line management should be--and now is--more
focused on achieving competitive advantage.
As part of our efforts to achieve greater staff resource efficiency and
concentrate that resource at operations, we realigned our worldwide support
staff, reducing head count by approximately 30 percent in the process. Most of
the reductions have taken place, with about half of the eventual dollar savings
realized in 1994 results. In conjunction with other restructuring activities,
this move will eliminate approximately $70 million in costs on an annual basis
compared with our 1993 base.
We also are changing our compensation system--focusing our management on
longer-term objectives through a three-year incentive program that will reward
our managers who achieve breakthrough performance with increased incentives. We
will further align the interests of employees and shareholders by providing
greater payout to employees in FMC stock.
Financial Strength and Flexibility
While our change efforts continue, I want to highlight an unchanging tenet of
how we run the company--our analytical approach toward decision making. This
approach has been a major factor in our enviable return on investment record.
Over the last decade, FMC has earned returns that place us within the top
quartile of the Standard & Poor's 400--not occasionally, or even frequently, but
every single year. Fewer than 10 percent of U.S. corporations can make this
claim.
We've applied our analytical approach to our significantly increased
acquisition effort. Since 1992 we have invested more than $275 million on
acquisitions and partnerships. Our Process Additives business, several energy
and transportation businesses, and our new partnership, United Defense, L.P.,
have been added through this effort. The acquisitions currently are contributing
to FMC sales at a level of 1.5 times their purchase prices. The cash flow from
the machinery businesses we acquired in 1993 already has covered their purchase
prices--a one-year payback--and the chemical business acquisition is generating
more than $20 million in cash flow annually before capital expenditures.
Likewise, United Defense is prospering as a combined entity even better than we
had hoped.
3
<PAGE>
Our growth efforts are supported by financial flexibility and access to
capital to finance these opportunities. In 1993, FMC reclaimed its investment-
grade status with both Standard & Poor's and Moody's investment rating services.
Last year, Standard & Poor's moved up our credit rating another notch. Included
in our debt position is a public financing completed late last year, which
raised $90 million of tax-exempt money for a soda ash cost reduction project in
Wyoming. We issued 30-year debt at an average rate of 6.95 percent--a spread
approximately 50 basis points below Treasuries at the time.
Strategies for Growth
I've talked about the changes under way at FMC and about our financial
strengths. But what about growth? And why growth?
As our long-time shareholders know, in the 1980s, we returned cash to our
share-holders through dividends, share repurchases and, ultimately, a
recapitalization in 1986. Today, we believe that continuing to extract value
from restructuring, downsizing and increasing the asset utilization of our
businesses must be supplemented with increased emphasis on growth to build
shareholder value. Our opportunities and our strategies focus on building on our
strong foundation of current businesses. The operating review in this report
details the efforts under way to implement our growth strategies. Highlights
follow.
Strategy: continuing to run our businesses superbly.
We are zealous about running our businesses well and growing based on the
improved margins that result from continuously increasing productivity. For
example, our Industrial Chemicals operations have identified significant cost
reduction opportunities, and are investing technical and management resources
and making the capital expenditures needed to capture these opportunities. Low-
cost position is a primary driver of competitive advantage for these businesses.
Strategy: globalizing our businesses.
We established significant overseas staffs to ensure that we identify and
capitalize on our global opportunities. We have vice presidents in Europe, the
Far East and Latin America, and we have just based our Food Machinery Group
manager in Europe. The proportion of our sales outside the United States grew to
49 percent in 1994, up from 45 percent in 1993.
Strategy: developing new products and markets.
We are aggressively developing two exciting, new herbicides in our Agricultural
Products business, as well as new applications for our Specialty Chemicals in
food processing and pharmaceutical markets. In addition, we have won almost all
of the major new U.S. Army programs in combat tracked vehicles.
Strategy: acquiring businesses and technologies in markets we understand.
We plan to be even more active in implementing this strategy, much like our
energy business, where we've built superior market positions in oil field
equipment based on our internal efforts and acquisitions.
Strategy: getting, developing and keeping more than our fair share of the
best people.
FMC employees are the nucleus of our
FMC Investor Highlights
. Return on investment is at the top quartile of the Standard & Poor's 400 every
year since 1984.
. Cash flow is 16 percent of share price.
. The economic upturn promises market leverage.
. A recently completed restructuring reduces costs $70 million annually from
1993 levels.
. A focus on global growth through capital investments and cost improvements
is already showing results.
. As owners of about 25 percent of FMC, employees are motivated to increase
shareholder value.
4
<PAGE>
efforts and are absolutely vital to our success. All companies talk about this,
and it's difficult to discuss without sounding trite. But at FMC, we are working
toward creating a multi-cultural environment where every employee is challenged
by his or her job and becomes a valued, contributing member of the team. Within
that environment, we want to encourage different perspectives and different
approaches, because only then will we produce superior business results.
Management Changes
We made a number of executive changes in 1994, and we have a management team in
place dedicated to achieving our goals.
Bill Beck has left Brussels and his role as head of FMC Europe and the
Chemical Products Group, returning to Chicago as executive vice president and
taking over our global regional organization, corporate development and
executive marketing efforts.
Alfredo Bernad, formerly managing director of Chemical Products Europe, was
elected vice president, heading FMC Europe and continuing as managing director
of FMC Foret.
We were fortunate to have convinced Mike Callahan to join FMC as executive
vice president and chief financial officer. He comes from Whirlpool Corporation,
where he held a similar position. He brings us a new level of expertise in the
global financial area, particularly in financial and investment banking, with
solid experience in acquisitions and growth-related strategies.
Charlie Cannon was elected vice president and heads our Food Machinery Group,
now headquartered in Europe. Charlie brings solid operating experience to his
new role.
Mike Murray succeeds Larry Holleran as FMC's vice president of human resources
as Larry approaches retirement in early 1996. Mike has worked in our chemical,
defense and machinery businesses, and most recently was European human resources
director, based in Brussels.
We also elected Cheryl Francis as vice president. Cheryl is FMC's treasurer,
and has a broad-based background in finance.
We are pleased to welcome Albert J. Costello to our board of directors. As the
retired chairman and CEO of American Cyanamid, Al is a seasoned executive who
brings us significant experience in the pharmaceutical, chemical and pesticides
industries.
Outlook
We are optimistic as we enter 1995, given what we see as a continuing strong
economy, good momentum in most of our businesses and an initial payoff from some
of our recent investments. The fundamental reason for our optimism, however, is
the strong cadre of FMC employees who accomplished so much in 1994. We're
confident that they will improve on that superb performance in 1995 and beyond.
I'm sure our FMC shareholders join me in saying to all FMC employees: "Thanks.
Well done. Keep up the good work."
[SIGNATURE OF ROBERT N. BURT APPEARS HERE]
Robert N. Burt
Chairman of the Board and
Chief Executive Officer
March 1, 1995
5
<PAGE>
President's Letter
FMC delivered a strong performance in 1994.
Sales were up 7 percent to $4 billion, and income from operations before
interest and taxes and net of minority interest increased 14 percent to $311
million, including a $6 million charge for the effects of the December Mexican
peso devaluation. Our growth in Performance Chemicals, Industrial Chemicals and
Machinery and Equipment more than offset expected declines in profits from
Defense and Precious Metals.
Our results were driven by improving markets worldwide, the initial effects of
our corporate staff restructuring and our progress in implementing key
strategies for growth.
Growing our businesses
Our efforts to grow our businesses through internal development, acquisitions
and global expansion have provided the tools we need to work more effectively
with our customers as they undergo dramatic change in their own industries.
These growth efforts are not only increasing revenues and expanding our markets,
they are also strengthening the base of our existing businesses.
Our Agricultural Products business has built a solid base for the future with
the addition of new crop labels for existing products, including Command
herbicide and Capture insecticide-miticide, that have taken us into new markets
and will contribute significantly to sales and earnings in the coming
years...Specialty Chemicals is establishing a new source of lithium in Argentina
that will assure us of a low-cost supply for at least 40 years. And as our food
and pharmaceutical industry customers outsource more of their research and
development work, our Pharmaceutical business heightened its applications
research capabilities to position FMC as a value-added supplier of choice...In
the Industrial Chemicals business, we are embarking upon an expansion for soda
ash production in Green River, Wyoming, using low-cost, proprietary technology
that reduces soda ash manufacturing costs 30 to 40 percent from conventional
manufacturing...
Targeted acquisitions in our Energy Equipment business not only will increase
revenues, but also expand our capabilities to provide a broad portfolio of
products and services that our energy customers need as they restructure their
businesses... In our Transportation Equipment line, our acquisition of Jetway
puts FMC at the forefront of the trend toward integrated gate systems that
provide additional services to the aircraft via the bridge. The acquisition also
strengthened our customer base beyond airlines to include airports and provides
our line of cargo loaders and deicers access to this broader market...Food
Machinery has emerged as a stronger business by refocusing on its core
businesses in a consolidating market. Our licensing agreement with TechniCal
brings us process control technology that reinforces our market strength in
sterilization...
And our Defense Systems business, now solidified as a partnership with
Harsco--United Defense, L.P.--has proven to be the contractor of choice on the
U.S. Army's next generation of combat vehicles and armament systems, including
the Crusader and the Armored Gun System--a position that strengthens our combat
vehicle franchise.
In working toward our goal of growing FMC, we are strengthening our existing
businesses across the board. We are entering 1995 a stronger contender.
[SIGNATURE OF LARRY D. BRADY APPEARS HERE]
Larry D. Brady
President
In working toward our goal of growing FMC, we are strengthening our existing
businesses across the board. We are entering 1995 a stronger contender.
6
<PAGE>
<TABLE>
Industry Segment Data
--------------------------------------------------------------------------------
<CAPTION>
(In millions) Year ended December 31
-------------------------------------------------
1994 1993 1992 1991 1990
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales*
Performance Chemicals $1,060.5 $ 973.5 $ 912.3 $ 764.1 $ 710.1
Industrial Chemicals 866.8 866.7 925.9 933.3 918.4
Machinery and Equipment 972.7 870.9 876.7 891.5 845.5
Defense Systems(1) 1,080.5 950.2 1,111.8 1,171.6 1,067.2
Precious Metals(1) 60.9 125.0 170.6 157.5 187.7
Eliminations (30.6) (32.4) (23.6) (18.6) (6.7)
--------------------------------------------------------------------------------
Total $4,010.8 $3,753.9 3,973.7 $3,899.4 $3,722.2
================================================================================
Income before income taxes*
Performance Chemicals $ 154.0 $ 139.1 $ 133.4 $ 116.4 $ 98.5
Industrial Chemicals 119.3 58.3 79.8 86.8 93.2
Machinery and Equipment 33.3 6.7 32.1 46.2 52.0
Defense Systems(1) 159.5 161.7 167.2 160.2 96.8
Precious Metals(1) (9.0) 9.7 36.4 28.7 81.3
--------------------------------------------------------------------------------
Operating profit 457.1 375.5 448.9 438.3 421.8
Restructuring and other
charges(2) -- (172.3) -- -- --
Net interest expense (59.1) (62.6) (82.7) (107.4) (128.1)
Corporate and other (101.8) (110.5) (112.3) (89.6) (93.7)
Minority Interest(1) (61.4) (2.5) (3.6) (3.0) (8.1)
Other income and
(expense), net(3) 17.5 10.2 29.3 17.6 19.5
--------------------------------------------------------------------------------
Total $ 252.3 $ 37.8 $ 279.6 $ 255.9 $ 211.4
================================================================================
Identifiable assets*
Performance Chemicals $ 754.6 $ 696.9 $ 662.2 $ 546.1 $ 555.0
Industrial Chemicals 883.6 824.7 872.2 908.4 914.2
Machinery and Equipment 619.3 522.9 473.0 503.3 495.2
Defense Systems(1) 492.0 269.0 277.7 367.6 444.7
Precious Metals(1) 108.9 64.8 131.8 145.1 157.4
--------------------------------------------------------------------------------
Subtotal 2,858.4 2,378.3 2,416.9 2,470.5 2,566.5
Corporate and other 493.1 466.8 439.7 303.7 392.7
--------------------------------------------------------------------------------
Total $3,351.5 $2,845.1 $2,856.6 $2,774.2 $2,959.2
================================================================================
</TABLE>
(1) Defense Systems' segment data includes 100 percent of United Defense, L.P.
in 1994. Precious Metals' segment data includes 100 percent of FMC Gold
Company in 1990 through 1994. Minority shareholder interests are included in
Minority Interests, except the portion related to 1993 restructuring and
other charges.
(2) Restructuring and other charges related to 1993 are described in Note 2 and
are related to Machinery and Equipment ($66.0 million), Precious Metals
($47.9 million, net of minority interest), Industrial Chemicals ($29.7
million), Performance Chemicals ($3.2 million), and Corporate ($25.5
million).
(3) Other income and (expense), net includes LIFO inventory adjustments and
pension-related income.
* 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.
--------------------------------------------------------------------------------
7
<PAGE>
Products and Markets
Performance Chemicals Description Markets Served
Agricultural Produces crop protection and Food growers, pest control
Products pest control chemicals for markets.
Group worldwide markets. More than
50 percent of sales outside of
United States.
Food Largest worldwide producer Process food industry,
Ingredients of carrageenan and Avicel personal care products.
Division cellulose gel. Leading
specialist in providing
texture, structure and
physical stability for
food systems.
Lithium World's largest producer of Aluminum, ceramics and
Division lithium-based products. glass, lubricating greases,
swimming pools, textiles,
aluminum alloys, batteries,
rubber and plastic, air
conditioning, pharmaceuticals.
Pharmaceutical Largest worldwide producer Pharmaceutical industry.
Division of microcrystalline cellulose.
Produces other specialty
chemicals for pharmaceutical
markets.
Process World's largest producer Plastics, hydraulic fluids,
Additives of phosphate ester flame lubricant additives,
Division retardants. Leading supplier industrial water treatment
of specialty water treatment and desalination.
chemicals.
BioProducts Largest worldwide producer Life science research; DNA
of agarose. Leading supplier and protein analysis.
of proprietary products for
life science markets.
Industrial Chemicals Description Markets Served
Alkali World's largest producer of Glass-making, chemicals,
Chemicals natural soda ash and market detergents, food products,
Division leader in North America. animal feed, additives,
Downstream products include mining, air/water treatment,
sodium bicarbonate, sodium pulp and paper.
cyanide, sodium sesquicar-
bonate, caustic soda.
Peroxygen Major worldwide producer Pulp and paper, textiles,
Chemicals of hydrogen peroxide, chemical and polymer
Division persulfates and other synthesis, environmental
peroxygen chemicals. clean-up, electronics,
detergents.
Phosphorus Major worldwide supplier and Detergents, cleaning compounds,
Chemicals leading North American producer metal treatment, food
Division of phosphorus and its products, textiles, pesticide
derivatives, phosphates and intermediates, additives,
phosphoric acid. pharmaceuticals, water
treatment.
FMC Foret, S.A. Major European chemical Chemicals, detergents, pulp
producer. Products include and paper, textiles, glass,
hydrogen peroxide, perborate, mining, rubber, metallurgy,
phosphates, zeolites, silicates, pharmaceuticals, tanning,
sulfur derivatives. Leading ceramics, paint, food, animal
share in Spanish peroxygen feed, photography, agriculture,
and phosphate markets. water treatment.
8
<PAGE>
<TABLE>
<CAPTION>
FMC Market Strengths Growth and Global Development Outlook
<S> <C> <C>
Strong global position in both Rapid expansion of new and existing Growing markets for pesticides in
developed and developing products to markets in Latin America developing countries. Growing
countries. Strong insecticide and Asia. Finalized new joint venture portfolio of pest control products
portfolio. Successful efforts in in Indonesia and formed new joint and herbicides, with substantial
developing a new class of venture in China. Building new market share gains. Expect to bring
herbicides. manufacturing plant to produce new to market new herbicides for use
family of herbicides. in U.S. and international markets.
Proprietary products. Opened new R&D laboratories; sales, Growing demand for fat replacers and
Advanced applications marketing push in Europe, Asia-Pacific. healthier foods. Further regional
technology. Worldwide Introducing Novagel line of fat replacer expansion for other food applications
manufacturing products. in Europe, Asia and Latin America.
capabilities.
Diverse, high value-added Developing new low-cost lithium Growing specialty applications. New
products. Strong manufacturing reserves in South America. products introduced for batteries,
capabilities. specialty polymers and synthetic
intermediates.
Brand recognition. Proprietary Introduced AviSphere for time-release Strong pharmaceutical customer base.
technology. Advanced applications applications. Launched new line of Expanding through value-added
technology. Strong manufacturing specialty excipients. Won major technology.
capabilities. Product quality development agreement with global
and versatility. pharmaceutical customer.
Diverse products. Strong Introduced 11 new products and Improved profitability and steady
manufacturing capabilities. formulations in 1994, including growth in water treatment and flame
Applications know-how. Reoflam PB370 and RDP flame retardants based on new product
retardants, Belclene 494 combined introductions and productivity
scale and corrosion inhibitor gains from new state-of-the-art
for water treatment and process control equipment.
Geogard SX antiscalant for
geothermal applications.
Advanced applications Introduced new products for Increasing demand for DNA and
technology. Product quality. conducting DNA separations. Continuing protein-related analysis in research
Proprietary technology. R&D investments. More new products in and diagnostics.
Worldwide brand recognition. 1995. Acquired AT Biochem to expand
into DNA sequencing markets.
FMC Market Strengths Growth and Global Development Outlook
Proprietary solution mining Focusing on new proprietary mining High capacity utilization. Improving
technology. 100+ years raw technology, reducing costs. Expansion pricing. Strong export growth.
material supply. Low production under way. Multi-year cost improvement Continued cost improvement.
costs. Largely self-sufficient programs. Assessing new trona source
in energy. Excellent in Turkey. Strong export growth
distribution system. opportunities.
Strong applications research. Pursuing new markets and new Improving North American capacity
High level of service, applications in Asia and utilization above 90 percent.
reliability, product quality North America. Improving pricing. Continued high
and safety. growth due to products'
environmental desirability
and versatility.
Low production costs. Diverse With FMC Foret, servicing customers Market position diversified to reduce
products. High level of service on a worldwide basis. dependence on laundry products.
and reliable delivery. Strong Worldwide anti-phosphate sentiment
technical support to customers. diminishing, with stable growth
expected.
Excellent cost positions. Strong New hydrogen peroxide plant in Steady hydrogen peroxide growth in
manufacturing capabilities. Delfzijl, Netherlands, on stream by Europe. Improving European economy.
Increasing technical support late 1995. Exports to 38 countries.
to customers.
</TABLE>
9
<PAGE>
Products and Markets
<TABLE>
<CAPTION>
<S> <C> <C>
Machinery and Equipment Description Markets Served
Energy and Oil and gas wellhead, completion Oil and gas drilling, production
Transportation equipment; subsea engineering, and service companies.
Equipment procurement, construction and
Group equipment; valves, pumps,
loading arms; marine terminals
and floating production
systems, metering systems.
Airline and automotive equipment, Industrial manufacturing, airlines,
material handling systems. airports, automotive repair facilities,
mining, warehouses, newsprint, publishing,
chemicals, electrical utilities.
Food Systems and equipment to Food and juice processors;
Machinery process food and beverages, fresh fruit packers; food growers;
Group including harvesters, sterilizers, supermarkets; bakery, confectionery,
extractors, fillers, closers, pet food, pharmaceutical
packaging and material and personal care markets.
handling equipment.
Defense Systems Description Markets Served
United Defense, Develops technology, including U.S. Army, Marine Corps and
L.P. hardware and software, and National Guard; allied
Ground Systems integrates into the manufacture governments.
of tracked vehicles for the
U.S. Armed Forces and allied
governments. Sole source
on major programs.
Armament Leads development team for U.S. Navy, Army, Marine
Systems high-tech weapons system Corps and allied governments.
for the U.S. Army, designs
and builds guns and launching
systems and provides support
services for the U.S. Navy
and international customers.
International Marketing and manufacturing International governments.
arm for military products
outside the United States.
Steel Produces steel track, forgings Military, transportation,
Products and castings. Overhauls and energy and mining.
converts tracked vehicles.
Precious Metals Description Markets Served
FMC Gold Focusing on exploration of Precious metal refineries.
precious metals in Latin
America and western
United States.
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
FMC Market Strengths Growth and Global Development Outlook
<S> <C> <C>
Sole industry source Acquired National-Oilwell's Acquisitions position
for supplying global Fluid Control Systems product business for future
customers with a line and CHPT's composite growth, especially
complete, integrated pump technology. Won Statoil internationally. Slow
package for the life contract for Norne North improvement in the
of their subsea Sea project. domestic oil field
oil fields. Leading market.
positions for major
products. 80 percent
of business outside
United States.
Proprietary tech- Acquired Jetway Systems and Acquisitions position
nology. Strong man- Caterpillar's automated our businesses for
ufacturing capabili- guided vehicle product line. future international
ties. A market growth.
leader in several
key segments. Lead-
ing positions for
major products.
Advanced applications Installed complete juice Continuing market weak-
technology and processing facility for ness, customer consoli-
process knowledge. Parmalat in Italy. Signifi- dation and market
Global manufacturing cant gains in converting and globalization. Grow
and marketing capa- filler-closer lines in core businesses by
bilities. Leading Asia-Pacific. Licensed expert aggressively pursuing
worldwide positions process control technology advanced technology,
for major products. from TechniCal for preser- entering attractive new
vation business. market segments and
extending global reach.
</TABLE>
<TABLE>
<CAPTION>
FMC Market Strength Growth and Global Development Outlook
<S> <C> <C>
Advanced system Prime contractor for inte- Consolidation and down-
integration capa- grating high-tech systems sizing continue, but at
bilities and applica- into the Bradley Fighting a slower rate. Business
tions technology. Vehicle and across other moving toward technology
Strong, competitive U.S. Army programs. Won integration as produc-
manufacturing capa- contracts to continue as tion volumes decline.
bilities. Proven major supplier of new and Flexible manufacturing
products. Innovative re-manufactured tracked and engineering
work-share partnership combat vehicles. contracts offer good
program with U.S. position for the future.
Army depot.
Advanced systems ap- Prime contractor for Crusader, Focus on engineering and
plications technology. a technically superior field technology development
Strong manufacturing artillery system. Developing for future U.S. Navy/
capabilities. Proven new services for the U.S. Army armament systems.
products. Navy. Ongoing international
sales.
Leading technology. Operating major co-production Aggressively pursuing
Multi-system avail- facility in Turkey. Formed international oppor-
ability. Proven deal FMC Arabia joint-venture tunities, enhanced by
structuring. company. Signed cooperation partnership. Intense
agreement with Taiwan. competition for new
contracts will continue.
Strong manufacturing Increasing sales of vehicle Declining demand from
and rebuild components to allied U.S. Army. Focus on
capabilities. governments. increasing commercial
business.
</TABLE>
<TABLE>
<CAPTION>
FMC Market Strength Growth and Global Development Outlook
<S> <C> <C>
Proven exploration Promising exploration work Declining gold
and development in Chile. production.
expertise.
</TABLE>
11
<PAGE>
Performance Chemicals
Again in 1994, our Performance Chemicals segment delivered strong results.
Sales, at $1.1 billion, were up 9 percent, and profits increased 11 percent to
$154 million. This segment encompasses a wide array of value-added products,
including agricultural chemicals, pest control chemicals, food ingredients,
pharmaceutical products, lithium, flame retardants and water additives.
For the fourth consecutive year, Agricultural Products (formerly called
Agricultural Chemical) contributed higher sales and earnings. Key factors were
robust sales of our full line of pyrethroids in the United States, higher sales
of Rugby nematicide and pyrethroids in Latin America, and improved markets in
Europe and Asia-Pacific. Worldwide sales were up for Command herbicide, and we
realized higher sales of Capture, a broad-spectrum pyrethroid, with the addition
of a label for use on corn in the United States. Increased sales worldwide
reflected market share gains for our pest control products, Dragnet for termite
control and Talstar for turf and ornamental markets.
To expand our global reach, we embarked on two international joint-venture
operations in 1994. We finalized a joint venture in Indonesia in the first
quarter of the year, and in the last quarter, became one of the first global
suppliers to form an agricultural chemical joint venture in China. Both
operations will formulate and market a variety of agricultural chemicals,
including Furadan, Marshal, Arrivo and Talstar insecticides and Command
herbicide.
Our key to future growth lies in our internal development efforts. Both new
discovery and product/crop expansion are important to our current and future
business to satisfy customer and market needs. Our focus is on lower application
rates, more environmentally friendly products, resistance management
alternatives and products that are adaptable to developing countries.
We expect to bring two new herbicides to market in the 1997-1998 time frame.
These new products will produce significant sales at attractive margins, expand
our market share and significantly increase our participation in the global
herbicide market.
These herbicides will provide superior control of several major weed species
that appear in the United States, Europe and Brazil. And unlike many recently
introduced herbicides that are already
[PHOTO OF EARL MORGAN APPEARS HERE]
"In the agricultural chemical arena, one new molecule can have an edge over
existing standards--often a quantum one. Our efforts in research and internal
development have provided FMC that edge."
Earl M. Morgan
Vice President and General Manager
Agricultural Products Group
Return on Sales
18%
---
15.2
|
14.6 |
14.5 14.3 | |
| | | | 13.9
| | | | |
12% | | | | |
--- | | | | |
| | | | |
| | | | |
6% | | | | |
-- | | | | |
| | | | |
| | | | |
0% | | | | |
--- 94 93 92 91 90
Return on Assets
30%
---
22.1
21.2 | 21.1
| | |
20% | 20.5 | |
--- | | | |
| | | |
| | | | 18.2
| | | | |
10% | | | | |
--- | | | | |
| | | | |
| | | | |
| | | | |
0% | | | | |
--- 94 93 92 91 90
12
<PAGE>
Outstanding in our field...
It begins with our successful discovery research, using cutting-edge
methodology, such as molecular modeling and super-computing. Recent efforts have
created a new class of herbicides with excellent multiple-crop, global market
potential.
Product commercialization means manufacturing. We're investing $88 million
to build a new plant to produce the first of these herbicides, Authority,
which we expect to be registered for the 1997 soybean planting season.
Putting a new product in the field demands unique attributes and stewardship
efforts to ensure our customers receive top-of-the-line technology and service.
We call it success by design. We call it competitive advantage.
13
<PAGE>
showing evidence of weed resistance, FMC's new products use a different mode of
action, which gives the farmer an effective resistance management alternative.
The first new herbicide to be manufactured will be sulfentrazone, a
pre-emergent herbicide that will control weeds in soybeans, sugarcane and
specialty crops. This product will be marketed as Authority in the United
States, Boral in Brazil and Capaz in Argentina and other Latin American markets.
We announced that we will spend $88 million to build a manufacturing facility
at our Baltimore site for the production of these herbicides. Construction
should be completed by mid-1996.
Many of our Specialty Chemicals businesses posted strong gains in 1994.
Aided by Avicel and Novagel cellulose gels, the world's leading fat-
replacement products, our Food Ingredients business recorded another year of
increased sales and earnings. Sales of cellulose gels continued to be strong in
the United States, and our business in Europe improved with the economy. The
worldwide carrageenan market continued to be tight due to increased demand,
resulting in sales gains and improved pricing for our business.
Bolling them over...
Farmers across the Cotton Belt are relying on Command herbicide. Command
controls more weeds for a longer period of time than any other herbicide on the
market, while reducing weed control costs and improving the quality of the crop.
14
<PAGE>
In 1994, we introduced Avicel AC, which met strong market interest because it
is easily dispersed in food products. We penetrated the bakery segment, a
relatively new market for us, and we developed very promising technology for
reduced-fat natural cheeses.
We are working more closely with our food processing customers worldwide. Our
Food Ingredients business is opening a series of regional developmental
applications laboratories to offer more immediate technical service to our
customers and to secure new business based on our targeted applications work.
Our Singapore lab opened in the first quarter of 1994, and we will follow with
labs in Brussels, Mexico City, Bombay and Campinas, Brazil, early in 1995.
Our Pharmaceutical business also had another excellent year in 1994, with
higher sales and profits stemming from several new product launches and a
strengthened world-share position. A stronger European economy helped improve
our position there. We also succeeded in strengthening our customer partnerships
as we negotiated contracts with several large customers to supply their
operations around the globe.
Our pharmaceutical customers continue to restructure their operations, cut
costs and look to their suppliers to provide more research
Sprouting up...
A pre-emergent application of Pounce insecticide protects corn crops from
early seedling pests such as cutworms, stalk borers and armyworms. It's the
protection farmers need for a bountiful harvest.
Going buggy...
Orkin uses Dragnet termiticide to protect homes and commercial structures from
termites and a wide spectrum of other insects. Dragnet is the foundation of a
growing line of FMC products for pest control and turf and ornamental markets.
15
<PAGE>
and development expertise. To respond more quickly to customers' market needs
and deliver within tight time frames, we increased our research and development
staff at our Princeton, N.J., research center in 1994, and by mid-1995, will
open a new technical services lab in Brussels. Our research work in solid
dosages already has resulted in several new technologies, including a more
economical way to deliver controlled-release dosages in a smaller-sized capsule.
Customer interest is high.
Sales for our Lithium business increased, and profits
were up substantially in 1994 as most worldwide markets for lithium products
rebounded. Three of our target markets proved particularly strong: synthetic
intermediates for a variety of pharmaceuticals, polymer initiators and lithium
batteries.
Opportunities exist in the pharmaceutical sector in Europe, where new
drug innovation remains strong. Rubber and elastomeric polymers, which depend on
butyllithium, are strong in North America and rapidly expanding in the Asia-
Pacific region. And our future in supplying proprietary lithium products to
the battery market will reflect worldwide developments in lightweight cellular
phones, lap-top computers and camcorders with rechargeable batteries.
Cabbage patch...
In 1994, FMC began full operation of the P.T. Bina Guna Kimia joint-venture
company in Indonesia. Under this joint venture, FMC will formulate, market and
sell crop protection chemicals in the vast Indonesian agricultural market,
characterized by small-plot vegetable growers who use Pounce, Arrivo and Marshal
insecticides.
[PHOTO OF W. REGINALD HALL APPEARS HERE]
``In the Specialty Chemicals business, we bring our expertise to the customer's
table. Opportunities exist for us to channel our expertise into new applications
in new markets around the world.
Internal development
--supplemented by targeted acquisition of technology, products and businesses on
a worldwide basis--will be key to our success.''
W. Reginald Hall
Vice President and General Manager
Specialty Chemicals Group
16
<PAGE>
A healthy outlook...
This SmithKline Beecham operation in Cork, Ireland, and pharmaceutical companies
around the world are forming closer partnerships with suppliers like FMC. FMC,
in turn, is positioning itself as a total solutions provider, offering its
customers expertise in drug delivery research, dosage form development, strong
manufacturing expertise, along with product quality and versatility.
<PAGE>
In the first quarter of 1994, we announced that we would develop the lithium
resource at the Salar del Hombre Muerto, a dried salt lake in Argentina's
northern Andes region. Lithium is plentiful in the salt brines of the salar, and
extraction costs will be low. Construction of manufacturing facilities has
started, and commercial lithium production is slated to begin in 1997. The
150-square-mile salar contains at least a 40-year supply of lithium.
Our Process Additives business, which includes flame retardants and water
additives, experienced slightly higher sales but diminished profits in 1994. In
water additives, a new entrant in the Middle East desalination market
Beginning to gel...
FMC pioneered use of carrageenan in ready-to-eat dessert gels, and today is
working with companies like Hunt-Wesson, Inc., to successfully launch gel
products in the U.S. market. Dr. Steve Henig (standing), senior vice president,
technology and marketing services for Hunt-Wesson, reviews results of work being
done by Hunt-Wesson scientist Virender Sethi on the gel texture analyzer.
Well-oiled...
FMC flame retardant chemicals help promote fire resistance in turbine control
and lubrication for Castrol (U.K.) Ltd. and other international oil companies.
18
<PAGE>
intensified market competition. And our flame retardants business had to absorb
a sudden, steep increase in the price of phenol, a key raw material. Our 1995
pricing levels reflect that additional cost, and we expect to increase
profitability in 1995.
Our industrial water additives business continued to grow on a worldwide
basis. We introduced a new water additive, Belclene 494, a breakthrough product
that combines anti-scalant and corrosion inhibition properties in a polymer for
the first time in industrial water applications. Market interest is high. We
also designed, built and commissioned a new plant in record time for the
production of our flame retardant, Reoflam RDP.
We expect Performance Chemicals will continue to perform superbly. Label
expansion, continued growth in international markets and the introduction of new
products will bolster sales and earnings for our Agricultural Products business
in the coming years. And our Specialty Chemicals operations will maintain the
momentum produced by strengthening our customer partnerships, continuing to
invest in research and development and pursuing global markets.
Sweet mystery of life...
Researchers, led by French Nobel laureate Dr. Jean Dausset and Dr. Daniel Cohen,
director of the Centre d'Etude du Polymorphisme Humain in Paris, in late 1993
produced landmark medical research--the first physical map of the entire genetic
make-up of mankind. FMC's agarose was the medium used by researchers to analyze
and study the human DNA.
Testing the waters...
In this remote northern Andes region of Argentina, FMC is developing a lithium
reserve that will provide a low-cost supply of lithium for at least 40 years.
19
<PAGE>
Industrial Chemicals
Our Industrial Chemicals segment--encompassing soda ash, phosphorus, hydrogen
peroxide, sulfur and silicates product lines--registered significant
improvements in 1994. While sales were flat at $867 million, profits doubled to
$119 million. Driving the improved performance were the many cost-improvement
programs we initiated throughout the businesses over the last two years.
Strengthening worldwide chemical markets and improving prices should have a
positive impact on 1995 results.
FMC Foret, our European industrial chemicals operation, was a strong
contributor to the segment's performance in 1994. Barcelona-based Foret is a
producer of a variety of industrial chemicals, including hydrogen peroxide,
phosphates, perborates, zeolites, silicates, sodium sulfate and sulphur
derivatives. Although the increase in Foret's sales was offset by the effects of
currency translations, volumes improved across all product lines as European
industrial chemicals markets began to recover in 1994.
Foret's earnings increased significantly as a result of our ongoing efforts to
reduce costs by restructuring our operations and increasing energy efficiency
through cogeneration. We also benefited from low prices of caustic soda, a key
raw material. We expect Foret's strong performance to continue as we proceed
with operational improvements and grow this business. To meet the growing demand
of our customers in northern and eastern Europe, Foret is opening a new hydrogen
peroxide facility in Delfzijl, Netherlands. Commercial operations are expected
to begin in late 1995.
Peroxygen Chemicals recorded higher sales and profits in 1994. Hydrogen
peroxide pricing, at an all-time low in North America in 1994, is improving.
Demand for hydrogen peroxide continues to grow rapidly, and last year resulted
in tight domestic capacity, which, in turn, resulted in lower export sales as we
serviced domestic contract customers. The demand is being driven by the pulp and
paper industry--which continues to use hydrogen peroxide as a replacement for
chlorine--with environmental and electronics industries also contributing to
growth. We continue to focus our technical efforts on performance peroxides, and
we're working with our customers to introduce a new grade of hydrogen peroxide
for the electronics industry, with product purity measured in parts per
trillion.
Our Phosphorus Chemicals business reported lower sales in 1994, partially
reflecting the virtual phase-out of phosphate volumes to the U.S. home laundry
detergent market. We did see improved
[PHOTO OF ROBERT HARRIES APPEARS HERE]
``The weak market conditions and over-capacity situations that have
characterized the industrial chemicals industry in recent years demanded superb
execution.
We have sharply improved cost positions and sharpened customer focus. We'll
continue to do so.''
Robert I. Harries
Vice President and General Manager
Chemical Products Group
Return on Sales Return on Assets
15% 15%
--- ---
13.8 14.0
||| |||
||| ||| 10.9
10% ||| 10.1 10% ||| |||
--- ||| ||| --- ||| |||
||| 9.3 ||| ||| 9.5 |||
||| 8.6 ||| ||| ||| 9.0 ||| |||
||| 6.7 ||| ||| ||| ||| 6.9 ||| ||| |||
5% ||| ||| ||| ||| ||| 5% ||| ||| ||| ||| |||
--- ||| ||| ||| ||| ||| --- ||| ||| ||| ||| |||
||| ||| ||| ||| ||| ||| ||| ||| ||| |||
||| ||| ||| ||| ||| ||| ||| ||| ||| |||
||| ||| ||| ||| ||| ||| ||| ||| ||| |||
0% ||| ||| ||| ||| ||| 0% ||| ||| ||| ||| |||
--- ---
94 93 92 91 90 94 93 92 91 90
20
<PAGE>
A tower of strength...
In Green River, Wyoming, FMC recently announced a major soda ash expansion,
based on newly developed solution mining technology. FMC's two-phased project
will increase total annual soda ash capacity to 3.55 million tons from 2.85
million tons. The solution mining technology reduces soda ash manufacturing
costs 30 to 40 percent compared with conventional manufacturing processes. In
early 1995, FMC also announced an agreement with Nippon Sheet Glass Co. and
Sumitomo Corporation to sell a 20 percent interest in its soda ash business
for $150 million. This venture gives FMC greater access to the fast-growing
Asian markets, and gives Nippon Sheet Glass and Sumitomo an interest in a low-
cost soda ash manufacturer and a reliable source of supply.
21
<PAGE>
pricing and volumes, including a strong increase in phosphate sales to Mexico to
support a robust local detergent market--a situation that may change as a result
of that country's financial situation.
Earnings improved as Phosphorus Chemicals continued to focus on cost reduction
with several major initiatives at our elemental phosphorus plant in Pocatello,
Idaho, and our phosphate plant in Green River, Wyoming. During the year, we also
brought our new Dry Valley phosphate mine to full production. We continued to
rationalize our production system with the upcoming closure of our production
facility in Newark, California, with production shifting to plants in Green
River and Lawrence, Kansas.
Despite lower sales reflecting reduced volumes and pricing, earnings were up
for our Alkali Chemicals business as we implemented a multi-year cost
improvement project at our Green River, Wyoming, facility. Cost improvements
ranged from reducing layers of management to raising mining productivity.
As expected, soda ash pricing remained low throughout 1994, but the worldwide
market has begun to tighten for this key raw material used by the glass,
detergent, pulp and paper, and chemical processing industries. An improving
export business and the sudden and
Cutting edge...
Demand for hydrogen peroxide continues to increase, driven by the pulp and paper
industry. With our global network of plants, FMC can better serve customers such
as Fort Howard Corporation, at its plant shown here in Green Bay, Wisconsin...
...as well as its subsidiary, Fort Sterling, Ltd., in England, which is supplied
by FMC Foret with chemicals used to produce soft tissue using 100 percent
recycled fibers.
22
<PAGE>
dramatic increase in prices of caustic soda, a substitute for soda ash, were the
major drivers of the improved market position. As a result, our facility in
Green River operated at significantly higher rates by year-end.
The outlook for FMC soda ash is promising. Price increases were announced in
late 1994, and we anticipate a strong increase in demand during 1995 and 1996,
driven by a stronger global economy, continued conversion from caustic soda to
soda ash in the pulp and paper and chemical markets, and further shutdown of
additional synthetic capacity worldwide.
As a result, we will increase our soda ash manufacturing capacity by 700,000
tons per year, raising our total annual capacity to 3.55 million tons in 1997.
FMC already is the world's largest producer of natural soda ash. At $45 million,
our new investment is the lowest-cost-per-ton expansion in North America.
The expansion and cost improvement projects are based on a new proprietary
technology that will allow FMC to significantly reduce soda ash production
costs, maintain or improve product quality and extend the life of trona
reserves.
While 1994 sales remained flat for our Industrial Chemicals segment, our cost
improvements had a positive effect on earnings. We expect further improvements
in 1995. A new integrated business system will enable us to slash inventory and
cut costs. Our network of plants, distribution centers and warehouses allows us
to reduce freight and free up inventory. We continue to re-engineer our
processes and pursue long-term options for upgrading process technologies in all
of our facilities.
Continuing cost-improvement efforts, coupled with growing markets, an
improving economy in Europe and increased capacity utilization in hydrogen
peroxide and soda ash, should result in improved performance in 1995.
Naturally tart...
FMC's phosphoric acid puts a natural tartness in Pepsi-Cola, being filled here
in Puerto Rico--Pepsi's largest concentrate plant in the world. Phosphoric acid
is used in carbonated cola drinks.
23
<PAGE>
Machinery and Equipment
FMC's Machinery and Equipment segment improved in 1994. Sales were up 12 percent
to $973 million, and profits increased to $33 million.
This improved performance reflects the results of targeted strategies to
restructure, reposition and grow these businesses. Our Energy Equipment
businesses focused on key acquisitions to enhance our capabilities, and two 1993
acquisitions have positioned FMC to win significant contracts worldwide. The
1994 acquisition of Jetway Systems for our Airport Products and Systems business
has enhanced current sales and market position and strengthened our growth
potential. Our Food Machinery business continued to focus on globalizing its
core businesses--and divesting unprofitable lines.
Sales and profits were up for our Energy and Transportation Equipment
operations. Several years ago, our Energy Equipment business positioned itself
to move beyond its traditional role in manufacturing to focus on the ``oil
field of the future'' by providing a package of integrated services for our
customers. Increasingly, to reduce their costs, our global energy customers are
depending on their suppliers for broad-based capabilities in engineering,
construction and servicing in remote and often hostile oil fields around the
world.
To meet these customer demands, our Energy Equipment business made key
acquisitions in 1993. Norway-based Kongsberg Offshore augmented our capabilities
in engineering, procurement and construction, and added a line of electronic
controls. Houston-based SOFEC is adding expertise in floating production storage
and offloading systems.
These expanded capabilities opened the door for us to win three important
contracts with a combined value over a several-year period of more than $200
million: Amoco's Liuhua project to provide subsea completion equipment and a
single-point mooring system in the South China Sea; the North Sea Norne project
awarded by Statoil, Norway's state-owned oil company, to provide subsea
completion equipment and control systems; and Arco's Gawain project for subsea
completion equipment and control systems in the United Kingdom sector of the
North Sea. Revenues from these three projects will increase our sales and
earnings over the next few years.
[PHOTO OF JOSEPH NETHERLAND APPEARS HERE]
"Our targeted acquisitions in the Energy Equipment area have strengthened FMC's
capabilities significantly. We are now the sole industry source for supplying
our global customers with an entire package of integrated services for the life
of their subsea oil fields."
Return on Sales Return on Assets
9% 12%
-- ---
10.9
9.3 |||
6.2 ||| |||
6% ||| 8% ||| |||
-- 5.2 ||| --- ||| |||
||| ||| 6.6 ||| |||
3.7 ||| ||| ||| ||| |||
3.4 ||| ||| ||| 5.8 ||| ||| |||
3% ||| ||| ||| ||| 4% ||| ||| ||| |||
-- ||| ||| ||| ||| --- ||| ||| ||| |||
||| ||| ||| ||| ||| ||| ||| |||
||| ||| ||| ||| ||| 1.3 ||| ||| |||
||| 0.8 ||| ||| ||| ||| ||| ||| ||| |||
0% ||| ||| ||| ||| ||| 0% ||| ||| ||| ||| |||
--- ---
94 93 92 91 90 94 93 92 91 90
24
<PAGE>
Pieces of the puzzle...
In late 1993, FMC won Amoco's $55 million contract for the subsea production
system and floating production, storage and offloading system for the Liuhua
subsea field in the South China Sea. The win recognize's FMC's expanded
capabilities in handling such engineering, procurement and construction
projects. When completed, the system will be set in 1,000 feet of water on the
ocean floor.
25
<PAGE>
Intense competition in the Wellhead Equipment business has depressed prices
throughout the industry, but FMC's emphasis on higher-margin, technologically
sophisticated projects--particularly in the subsea area--has had a positive
impact on our results.
We are further positioning our Energy Equipment business for the future with
joint ventures in Russia and Oman.
In the Fluid Control line, we bolstered our position with two significant
acquisitions in 1994. Our acquisition of National-Oilwell's lightweight valve
product line expands our capabilities for offshore projects. And we
Port of call...
This SOFEC marine terminal, destined for the Caribbean, allows tankers to be
unloaded offshore instead of coming into port.
In control...
This subsea horizontal tree, manufactured at FMC's Dunfermline, Scotland, plant,
is destined for Phillips Petroleum's Joanne project in the North Sea. Because it
uses less material and is easier to service, the tree offers customers lower-
cost solutions for subsea applications. The controls regulate the flow of oil
from the ocean floor and are accessed by remotely operated submersible vehicles.
26
<PAGE>
expanded our technological capabilities with the addition of CHPT, a
manufacturer of advanced, composite pumps. This technology currently is targeted
for water purification needs, including reverse osmosis, and we hope to develop
oil field, military and other industrial applications for these lightweight
pumps.
The trend for growth through acquisition extended into our Transportation
Equipment businesses as well. To complement and expand our existing line of
airport products, in the second quarter of 1994 we acquired Jetway Systems, the
world leader in the design, production and installation of passenger boarding
bridges. This acquisition doubles the size of our business. The addition of
Jetway, as well as significant sales of Commander 30 cargo loaders and deicers
to Federal Express and deicers to United Parcel Service, increased 1994
revenues.
Our Food Machinery business began a turnaround in 1994, posting significantly
higher profits on slightly increased sales. Our favorable earnings reflect a
number of important restructuring efforts completed in 1994, as well as stronger
worldwide performances by our core Food Machinery businesses.
Passage to adventure...
[PHOTO OF A JETWAY SYSTEMS PASSENGER BOARDING BRIDGE]
In 1994, FMC acquired Jetway Systems, the world leader in design, production and
installation of passenger boarding bridges and other aircraft support systems.
Jetway is at the forefront of the trend toward integrated gate systems, such as
the one shown here at the international terminal in Atlanta.
[PHOTO OF CHARLES CANNON APPEARS HERE]
"Consolidation in the food processing industry is leading to fewer, bigger,
stronger--and more global--food companies. To meet the demands of these
customers, FMC's Food Machinery business is taking steps to increase our
capabilities--and our global presence."
Charles H. Cannon
Vice President and General Manager
Food Machinery Group
27
<PAGE>
We moved forward with a strategic restructuring to better position our
businesses to succeed in the face of strong worldwide competition and difficult
economic conditions. We divested three noncore product lines with limited profit
potential--palletizers, horizontal wrappers and agricultural sprayers. We also
exited plants in Europe and downsized operations at two U.S. facilities.
In addition to our restructuring efforts, Food Machinery's businesses gained
ground in the global marketplace through new product introductions and superior
execution. Our Food Processing Systems business designed and installed a
complete juice processing facility in Sicily for Parmalat, an Italian food and
beverage processor, and increased penetration in the key Asian food and beverage
market with our line of closers. Our Harvester business placed pea harvesters
into the former Soviet Union and continued to sell a new soybean harvester in
Taiwan.
Something's cooking...
FMC has licensed TechniCal's process control technology for our sterilizer
business, giving customers like Gerber Products Company reduced processing time
and assured product quality and process safety.
28
<PAGE>
Our Packaging and Material Handling business launched a new film converting
products line in Asia.
We also began the implementation of our strategy to grow core lines. In 1994,
we licensed TechniCal's expert process control technology for our sterilizer
business--an enhancement that will allow our customers worldwide to more
efficiently produce USDA-approved food for the U.S. market.
For the coming years, we're focusing on acquisition opportunities in Europe,
home to a large number of quality food processing equipment manufacturers. We'll
continue to seek targets that would complement our existing core businesses by
providing enhanced technological capabilities, entry into attractive new market
segments or broader global reach. To more effectively pursue these
opportunities, we moved the headquarters of our Food Machinery business to
Europe in the fourth quarter of 1994.
We remain confident that our strategic direction in restructuring, making
targeted acquisitions, expanding globally and running our operations superbly
will continue to help us meet the needs of our customers and add to sales and
earnings, with good returns, in the coming years.
Juicing up...
In Brazil, Cambuhy MC Ltda. relies on FMC extractors to process 10 million boxes
of oranges annually.
Bountiful harvest...
FMC has become the sole supplier of vegetable soybean (edamame) harvesting
equipment in Taiwan. Chang Chi Lin (right), president of Asia Frozen Food
Corporation, meets with FMC's Alex Lim.
It's in the bag...
FMC provides durable, high-speed converting equipment that allows Carlisle
Plastics to meet the high-volume demands of its customers for plastic bags.
29
<PAGE>
Defense Systems
Effective January 1, 1994, FMC combined our Defense Systems business with that
of Harsco Corporation's BMY Combat Systems to create a new partnership, United
Defense, L.P. The union of our operations has created the most diversified
company in the combat vehicle industry and a major contender for international
contracts.
With 60 percent interest, FMC is the controlling partner. For the entire year,
100 percent of the sales--$1.1 billion--of United Defense were consolidated into
FMC's financial statements. While we continued to experience declining revenues
as a result of declining defense budgets, new projects added to our sales.
Defense Systems segment earnings, excluding the minority partner's share, were
$100 million.
In 1994, we focused on consolidating our new joint operations. We will
continue to reduce manufacturing capacity and downsize the operations to reflect
our combined business, as well as smaller defense budgets. As of January 1,
1995, we merged BMY's Combat Systems operation--producer of the Field Artillery
Ammunition Support Vehicle, Recovery Vehicle and Armored Combat Earthmover--into
our Ground Systems business.
In this time of few ``new start'' defense programs, United Defense continues
to be the contractor of choice for the U.S. Army's key projects for the future,
the Armored Gun System and the Advanced Field Artillery System, recently renamed
the Crusader.
In 1994, Ground Systems sales were down with diminished defense spending. We
continued to work on the Bradley Fighting Vehicle, the mainstay of our business
since 1980. In 1994, we produced 293 units of the Bradley A2, winding down our
contract, which ends in February 1995. We upgraded additional vehicles to the A2
model and will continue the upgrade work into 1997. Also in 1994, we won a $280
million contract for engineering and manufacturing development of the next
generation of the Bradley, the A3, an increasingly sophisticated vehicle that
can maneuver the digital battlefield.
We're also proceeding with the Armored Gun System, a light, rapidly deployable
anti-tank vehicle designed for troops that lead the way into the battlefield. In
1994 we delivered six pre-production
(Photo of Thomas W. Rabaut appears here)
``Our success as a supplier to the defense industry requires superb execution
across a range of activities--from making innovations in producing the Paladin
to consolidating the best of FMC's and Harsco's business in our new partnership,
United Defense, L.P.''
Thomas W. Rabaut
President, United Defense, L.P.
Return on Sales
20%
17.0
15% 14.8 15.0
13.7
10%
9.1
5%
0%
94 93 92 91 90
Return on Assets
60% 59.2
51.8
45%
41.9
39.4
30%
20.4
15%
0%
94 93 92 91 90
30
<PAGE>
On the mark...
Under simulated, computerized battlefield conditions at Fort Sill, Oklahoma,
U.S. Army personnel test the crew module demonstrator for the Crusader, the
Army's next-generation howitzer and resupply vehicle.
31
<PAGE>
vehicles to the Army. These vehicles are undergoing extensive testing, and the
results are proving our superior engineering. Computer-aided engineering, in
both the design and manufacturing phases, was instrumental in reducing costs.
Ground Systems completed the first year of a $54 million contract for
continuing work on the Composite Armored Vehicle. The contract, which runs
through September 1996, calls for the development of an advanced technology
demonstrator as well as production of a hull for structural testing.
Late in the year and in early 1995, United Defense won two contracts and was
named subcontractor for another that will help short-term production levels and
further solidify United Defense's position as a key systems integrator in the
modernization of the battlefield. We won a $70 million contract for tank
recovery vehicles and a $28 million contract for four pre-production Command and
Control vehicles on a Bradley chassis. United Defense will also be the
subcontractor to TRW to computerize battlefield communications.
The Paladin self-propelled howitzer--a new program for FMC--contributed to
sales and earnings. We're producing upgrades of the vehicle in close cooperation
with our customer
Taking aim...
FMC is developing the Armored Gun System, a new generation of light tanks.
Teaming up...
Employees of United Defense, L.P., and the U.S. government are working together
to produce the Paladin self-propelled howitzer at the U.S. Army's Letterkenny
depot in Pennsylvania.
32
<PAGE>
at the Army's Letterkenny Depot in Pennsylvania--an arrangement that assures
cost savings for the Army. Our October roll-out of the vehicle was two months
ahead of schedule, and we sold seven units in 1994. The Army exercised an option
to buy 20 additional howitzers, bringing the multiyear total to 650 units and
the total contract value to $329 million.
As expected, sales were down for Armament Systems because of declining demand
for missile launching systems and gun systems by U.S. and international navies.
Armament Systems is the prime contractor for the early phase work on the
Crusader, the Army's next-generation howitzer and resupply vehicle--and the
largest program funded by the Army for the coming years. Our early-phase work
includes engineering and technology demonstrators. The Crusader program has an
estimated value of $1.2 billion over the next five years of the
demonstration/validation phase. Our early work on this program positions us
well for the full-scale production contracts that will be awarded at the turn of
the century.
In 1994, Armament Systems produced 439 Vertical Launching System canisters and
four Mk45 gun systems for the U.S. Navy. We also supplied the Mk45 gun system to
Australia, Thailand and Greece.
We continue to pursue global opportunities. Upgrade programs in Pakistan and
Singapore are performing well. We're selling the M109 howitzer in South Korea,
the Multiple Launch Rocket System in Japan and the M113 armored personnel
carrier in Kuwait.
We are optimistic about our future in defense. Through the strategic
combination of our businesses, we have created a diversified, technologically
advanced, market-leading company. We already are the supplier of choice for the
U.S. Army's new projects, and we believe we are the prime contender for winning
follow-on contracts. Our international activities are strong, and we see more
opportunities for the future. We're encouraged, too, that the U.S. defense
budget for fiscal year 1995 reflects higher spending on our programs. We expect
to see an even greater upturn in defense spending beyond the next several years.
Keeping the peace...
A Haitian man on horseback keeps pace with a Bradley Fighting Vehicle on patrol
in the street of Port-au-Prince in September 1994.
33
<PAGE>
Precious Metals
Performance declined significantly for our Precious Metals segment in 1994.
Sales of $61 million, down more than 50 percent from the previous year, resulted
in an operating loss of $9 million for the segment, composed of FMC Gold
Company, our 80-percent-owned subsidiary.
The closing of the mills at Paradise Peak in May 1993 and Royal Mountain King
in July 1994, has resulted in significant declines in production. During 1994,
we recovered 39,000 ounces of gold at Paradise Peak through heap-leach
production and 26,000 ounces at the Royal Mountain King mill facility. Our share
of gold production at Jerritt Canyon, 30-percent owned by FMC Gold, declined
slightly to 98,000 ounces. Total gold production declined 49 percent to 163,000
ounces and total silver production declined 82 percent to 154,000 ounces in
1994.
In the second quarter of the year, we increased our ownership of the Beartrack
property near Salmon, Idaho, to 100 percent by acquiring the 14 percent interest
of MINEX. We began developing the property during that quarter and planned to
begin production in 1995. Early in 1995, an injunction was issued against all
ongoing and future activities--including the Beartrack development--within the
various national forests in Idaho. On January 25, 1995, the court granted a stay
until March 16, 1995, to permit the government to complete an Endangered Species
consultation between the National Marine Fisheries Service and the U.S. Forest
Service on the national forests' land resource management plans. Once
satisfactorily completed, FMC Gold expects the injunction as it applies to
Beartrack to be withdrawn.
[PHOTO OF BRIAN J. KENNEDY APPEARS HERE]
"Our future in Precious Metals depends on exploration. Increasingly, we're
focusing on global opportunities, including both grassroots exploration and
advanced-stage opportunities."
Brian J. Kennedy
President, FMC Gold Company
Return on Sales
45%
---
43.3
|
|
30% |
--- |
|
21.3 |
| 18.2 |
15% | | |
--- | | |
| | |
7.8 | | |
| | | |
0% | | | |
-- 94 93 92 91 90
|
|
|
(14.8)
Return on Assets
75%
---
63.3
|
|
50% |
--- |
|
|
26.3 |
25% | |
--- | |
| 19.0 |
9.9 | | |
| | | |
0% | | | |
-- 94 93 92 91 90
|
|
(10.4)
34
<PAGE>
Strategic Teamwork
The people of FMC are turning key strategies into decisive action. The teams of
employees featured here--representative of dozens of teams throughout the
company--have identified market opportunities and responded to customers'
rapidly changing needs.
In the process, as the case studies on these pages point out, we've expanded
our global presence--with a new joint venture to produce agricultural chemicals
in China and options for penetrating hydrogen peroxide markets worldwide.
...We've stepped up our internal development efforts--to offer new value-added
services for our pharmaceutical customers. ...We've made acquisitions--to
provide total capabilities for our energy customers. ...And we've executed
superbly--in preparing ourselves to win important defense contracts.
Our strategy of getting and keeping the best people in business today is
making it happen.
A Chinese partnership for crop protection
Once the doors were opened to trading with China, FMC, in 1976, became one of
the first U.S. agricultural chemical companies to venture into that vast
marketplace. Since the late 1970s, we've been supplying Chinese farmers via the
central purchasing organization in China with a variety of crop protection
products, including Furadan, Marshal and pyrethroid insecticides and Command
herbicide.
Over the past five years, China's agricultural sector has become increasingly
decentralized. To penetrate this market, we pursued a joint-venture arrangement
with an established Chinese pesticide producer.
In the last quarter of 1994, following two years of negotiations, FMC's
Agricultural Products team finalized an agreement to create a joint venture with
Jiangsu Chemical Pesticides Group Company, one of the largest agricultural
chemical producers in China. Together, we'll produce, market and sell a range of
crop protection chemicals aimed at China's rice, cotton, fruit, vegetable and
soybean fields.
FMC, the majority owner, will transfer technology to our Chinese partner. In
return, says Stephen Chiu, FMC's general manager of the Jiangsu JV, ``we'll gain
a sustainable, long-term position in the Chinese agricultural market.''
Capitalizing on product synergies... Chinese joint venture team leaders, in
Shanghai, Jim McCombs, Stephen Chiu, Zhen Hua Yang, Milton Steele, Wen Han Hu,
Don Boesel, Lily Zhang, Jim Decleene, and...
...in Philadelphia, Earl Morgan, John Dabrowski, Howard Seyffer and Joe
Pattison.
35
<PAGE>
The pharmaceutical challenge
Our giant pharmaceutical customers are experiencing pricing pressures as never
before. As their patent protections diminish, pharmaceutical makers are facing
keen competition from generic suppliers. As the health care industry pushes for
across-the-board cost control, pharmaceutical manufacturers are working
aggressively to lower their costs.
As a result, our customers are restructuring their operations and eliminating
some important functions. Increasingly, they are looking to their suppliers to
contribute with drug delivery research and dosage form development.
FMC's Pharmaceutical team is responding by equipping itself to be the total
solutions provider to the industry. ``In 1994, we augmented our research
capabilities to offer our customers more development expertise in immediate and
controlled-release tablets, liquid oral medications and new specialty
excipients,'' says Kevin Hrusovsky, manager of FMC's Pharmaceutical Division.
Already, the team has identified some promising new technologies--and developed
new grades of existing product lines.
We also began advising our customers on possible efficiencies in their
manufacturing processes--from reducing inventory to enhancing tableting
efficiency. In a move to eliminate duplicative testing of our products in our
customer's facilities, several leading drug makers have designated FMC as their
first ``certified vendor,'' which means our customers and the FDA accept our
assurance of quality testing and procedures.
This total solutions approach is allowing us to help improve our customers'
profitability by bringing enhanced medications to the market more rapidly and
cost-effectively.
A new start in citrus
Following severe freezes to citrus crops in northern Florida in recent years,
growers began the trek south. And as new groves cropped up in the southern
reaches of the Sunshine State, it made sense that processing plants would
follow. In 1994, Peace River Citrus Products opened a new processing facility in
Arcadia to produce citrus juice and by-products.
FMC's Citrus Systems, already the world's leading supplier of citrus
processing equipment, became Peace River's supplier of choice for installing an
automated juice room.
Our Citrus Systems team designed, built and installed a range of equipment
from conveyors to extractors, and our service people are on site to assure
continuous, smooth operations. Says Donn Sabato, sales manager: ``Our
reputation, our advanced product, and our technical and engineering support won
the business for us.''
Taking a total solutions approach:
Pharmaceutical team leaders Monique Spann-Wade, Mike Grimshaw, Steve Cugine,
Kevin Hrusovsky, Bob Majczan, Jim Cronin and (seated) Pat O'Driscoll.
Supplying Florida's newest start-up:
Citrus Systems team leaders (front) Donn Sabato and customer Bart Plymale,
(rear) Darrell Tidwell, Bob Baumez, Afton ``Slim'' Wise, Cesar Martinez, Keith
Bunce and Juan Montalvo.
36
<PAGE>
An integrated approach to mining
As new technologies emerged in the 1980s to allow gold producers to recover the
precious metal from low-grade ores, demand grew for sodium cyanide as the
leaching agent. In 1990, we constructed a new facility to produce liquid sodium
cyanide at our Alkali Chemicals site in Green River, Wyoming, near the heart of
the western U.S. gold mining industry. And our Chemical Products sales,
marketing and distribution team embarked upon a strategy to commercialize the
product.
``The market response to our team's efforts was so positive, it became clear
that other FMC businesses serving the mining industry might benefit from this
team approach,'' says Mike DeCola, director of Chemical Products sales and
distribution. ``We decided to mount an integrated effort in reaching our mining
customers.''
An integrated team of FMC chemical and equipment businesses went to work to
market hydrogen peroxide and Caro's Acid for cyanide detoxification in
tailings ponds... soda ash and caustic soda for neutralizing gold slurries and
as a PH control in mine solutions... lithium metal to eliminate oxygen, increase
density and reduce inclusions in smelting and refining processes... and a full
range of material handling equipment for moving mined and processed materials.
In the process, the team established FMC's liquid version of sodium cyanide as
the preferred product form in the industry and positioned FMC for other
developmental opportunities, including new uses for soda ash, peroxygens and
other chemical products.
A weapon system--and contract--for the future
FMC's Defense Systems business took the initiative, in the 1970s and 1980s, to
conduct independent research on self-propelled howitzers. Our expertise in the
field prompted the U.S. Army, in 1991, to award FMC the contract to develop the
Advanced Field Artillery System Demonstrator, a major portion of one of the few
developmental programs commissioned by the U.S. military since the fall of the
Berlin Wall.
AFAS, now officially christened the Crusader, will be a 55-ton self-propelled
howitzer, a tracked vehicle mounting a long-range cannon. It will respond more
quickly, shoot with greater range, speed and accuracy, and be more survivable
than any howitzer in use today. The Crusader's minimal crew will be transformed
from machine operators to machine managers, controlling the sophisticated
computer systems that FMC engineers are designing to operate the weapon system.
With the completion of our preliminary engineering work in 1994 for the
initial four-year contract, the Army awarded our Crusader team a contract to
demonstrate and validate the concepts.
``With this contract win, we are well positioned to win follow-on contracts
for full-system development and production,'' says Fred Strader, manager of
Armament Systems Division, now part of United Defense, L.P., a partnership of
FMC and Harsco.
Making an integrated marketing effort: Mining industry team leaders Tom Kline,
Randall Stewart, Jeff Butryn, Laurie Sherman, Jim Estep, Mike DeCola, Jim Lowe,
Claudio Manissero and (front) Bill Walter.
Designing our defense for the future: United Defense's Crusader artillery system
team leaders (seated) Dave Wallestad, Bill Chen, Bob Stratton, Fred Strader and
(standing) Ted Poucher, Thom Horton, Gordon Walker and Jack Kuhn.
37
<PAGE>
Becoming a total capabilities supplier of subsea systems
It became clear several years ago: Our large energy customers, exploring and
drilling for oil in deep, often hostile waters around the world, needed to
expand their technological capabilities and lower production costs. They
restructured their own organizations--and turned to their suppliers for
additional expertise.
Our oil field equipment team went to work to add the capabilities necessary to
become a full-service supplier to our subsea customers. We made acquisitions, we
developed alliances, we continued our high-tech research.
Today, only a few short years later, FMC has emerged as the industry's only
supplier of a complete package of integrated services for subsea oil fields.
Our expanded capabilities have won new contracts for us around the world.
``Now, with our heightened capabilities, we're working with our customers to
provide cost-effective solutions for their projects,'' says Peter Kinnear,
manager of Wellhead Equipment Division. ``We have a diverse product portfolio
and the engineering, installation and project management know-how to deliver to
our customers in a variety of conditions--from extreme ocean depths to Arctic
temperatures to turbulent seas.''
Global growth for hydrogen peroxide
For years, demand for hydrogen peroxide has continued to climb around the world.
The pulp and paper industry, in particular, has driven strong gains worldwide.
Our pulp and paper customers have selected the environmentally safe hydrogen
peroxide as a preferred alternative to chlorine for bleaching and de-inking
processes. Textile manufacturers, too, rely on hydrogen peroxide's bleaching
properties. The electronics industry buys highly purified grades of the product.
And a variety of industries use hydrogen peroxide to clean up wastes.
FMC's hydrogen peroxide business is a truly global one. We produce in key
regions of the world, and FMC's team of experts is working on business
development region by region. We entered the Mexican market in the early 1960s,
for instance, with a 50-50 joint venture to produce hydrogen peroxide; today,
we're the 100 percent owner of that business. In Thailand, home of a vigorous
textile industry, we began producing hydrogen peroxide as part of a 50-50 joint
venture in 1989. We continue to look at other opportunities in the Asia-Pacific
region. And in northern Europe, where the pulp and paper industry is at peak
production, FMC Foret--a long-time manufacturer of hydrogen peroxide--is opening
a new hydrogen peroxide facility in 1995.
Building broad-based capabilities: Oil field of the future team leaders Bob
Potter, Peter Kinnear and Bill Kiely.
Expanding our global reach: Hydrogen peroxide team leaders Bill Wheeler, Bill
Beck, Alfredo Bernad, Pete Weber and Bill Harvey.
38
<PAGE>
Corporate Responsibility
A set of established values governs the business of FMC. We're committed to
protecting the health and safety of our employees and customers. We're committed
to protecting the environment. We're reaching out to keep our employees, our
customers and our communities informed about our activities. We believe in
conducting business in an ethical, responsible fashion.
At FMC, we are building a wide-reaching commitment to environmental
stewardship that encompasses all of our chemical and machinery
businesses--affecting every step of what we do, from our manufacturing processes
to our distribution channels. In 1994 we recognized excellence in 17
environmental projects by naming an Environmental Honor Roll of employees,
customers and neighbors--and we contributed a total of $12,000 in their names to
the not-for-profit organization of their choice working to further environmental
education, enhance and preserve natural settings, and improve the environment.
With an eye toward diminishing on-the-job injuries, we've implemented a
training process for safety that we call START--a process that depends on
employee buy-in and involvement. Since 1991, the START team has conducted nearly
90 workshops reaching more than 3,000 employees in FMC plants across the United
States, Canada, Europe and Asia. In 1994, for the eighth consecutive year, we've
registered improvements in our overall safety record.
Meanwhile, from Trafford Park, England, to Pocatello, Idaho, we're opening our
doors, inviting the members of our communities to learn more about our
operations and our health, safety and environmental programs--and we're
listening to what they tell us in turn.
We're also finding creative ways to act as a good neighbor within our
communities. Take, for example, the employees at our new lithium development in
the remote, northernmost reaches of a high desert in Argentina's Andes
Mountains. Since they arrived on site in Argentina in 1990, the FMC team didn't
waste any time in building a new schoolhouse for the local elementary students.
Now FMC employees are working with local villagers to introduce year-round
farming in spite of the harsh weather conditions.
The case studies presented on these pages are, of course, only a handful of
examples of FMC employees' commitment to their operations, their communities and
their world.
39
<PAGE>
Involving employees in safety at Orlando
FMC has a long tradition of continuous improvement in workplace safety.
By 1992, however, it was time to deliver an updated message on safety
management to the employees of FMC. The company unveiled START, or Safety
Training and Response Techniques, to provide hands-on training and, even more
important, encourage employees to develop a real value of safety practices. As
FMC safety experts introduced START throughout our facilities in the
United States, the emphasis was on teamwork and problem-solving.
Our Airport Products and Systems operation in Orlando, Florida, already a
safety leader within FMC, set out to improve its performance under START. Nearly
50 employees participated in training, and they came from all areas of the
plant, which produces airline cargo loaders and deicers. A team of some 30
employees was charged with putting START into action.
To build awareness of the safety ideal, the Orlando team updated the plant's
health and safety policy and communicated the new guidelines to employees. To
gain employee buy-in to the safety process, the team identified potential
problem behaviors and invited employees to suggest ways to improve. To guarantee
improvement, the team worked diligently to introduce new safety practices and
announced routine safety audits.
``START reinforced our deep-seated commitment to safety at Orlando--and
presented a new way for each of our employees to take ownership of the safety
process,'' says Kim Foster, Airport Products and Systems Division manager.
Through December 1994, Airport Products and Systems' Orlando site had tallied
more than seven and a half years and nearly 6.9 million employee hours without a
lost-workday injury. This is the best safety record among all of FMC's
manufacturing sites worldwide.
Encouraging the Pocatello community to speak out
At FMC's facility in Pocatello, Idaho, where we produce elemental phosphorus for
food, detergent and chemical processing markets, our environmental challenges
are considerable. The manufacturing process at Pocatello is a complicated one,
producing a number of hazardous waste materials. To protect our workers, our
neighbors and the environment, FMC has made considerable investments over the
past 15 years in pollution monitoring and control technologies. As a result,
we've made significant reductions in chemical emissions. There's more to
accomplish, and we're working to improve.
This past year, the people of FMC Pocatello have reached out into the
community, opening their doors, explaining their processes, and strengthening
ties with local and state leaders, schools and a Native American tribe. Now FMC
Pocatello is ready for a next step.
Setting a safety record in Orlando: Members of the Airport Products and Systems
safety team (front) Kevin Hardy, Barbara Smith, George Legg, Division Manager
Kim Foster and (rear) Chris Lauridsen, Walt Jaye, Brenda Blanshan, Glenn Bays
and Henrietta Maltby.
40
<PAGE>
In the spirit of the CMA's Responsible Care initiative to enhance community
awareness, FMC has encouraged the formation of a community advisory panel--made
up of people outside the plant gates, including teachers, environmental leaders
and neighbors--to serve as a barometer of community sentiment. The panel will
monitor the community's reactions to the operations of FMC and J.R. Simplot, a
neighboring facility. And the panel will report back any concerns or
recommendations to the two manufacturers.
``Our objective in this process is to listen and learn,'' says FMC Plant
Manager Paul Yochum. ``We're taking a risk by opening ourselves up for scrutiny,
but we're confident that we'll benefit from the increased understanding and open
dialogue on our issues.''
Opening the doors at Trafford Park, England
Our Process Additives facility in Trafford Park, England, was eager to
communicate the good news about its environmental progress to a range of
audiences: employees, customers, government officials, local businesses, schools
and members of the community.
In the third quarter of 1994, couched within the framework of the United
Kingdom's Chemical Industries Association's ``Responsible Care Open Days,''
Trafford Park invited some 1,500 people inside its doors. Visitors toured the
manufacturing, warehousing and research areas, and they heard about initiatives
under way to protect the health and safety of workers and neighbors, including
success in minimizing wastes and thorough emergency planning.
Reporting on environmental progress builds citizens' trust in the chemical
industry and a particular manufacturing site, the managers at Trafford Park
believe. And it provides for better collection of data, sharper measurement of
our progress and a heightened sense of continuous improvement.
Says John Burrows, manager of FMC's Process Additives Division: ``Our
strategic approach to business requires us to look at the long-term implications
of everything we do. Respect for the environment, neighbors and friends is key
to sustaining business growth.''
Inviting feedback in Pocatello: Initiators and participants in a new community
advisory panel, FMC Pocatello Plant Manager Paul Yochum, FMC Phosphorus
Chemicals Division Manager Jerry Sibley, former State Senator and CAP member
Chick Bilyeu, FMC Grassroots Committee Chairman Gene Walter, CAP member Bette
Cagen and Pocatello Mayor Peter Angstadt.
Communicating clearly in Trafford Park: Service Operator Ramon Shannon of FMC's
Process Additives Division demonstrates safety equipment to community guests at
the facility's well-received ``Open Days.''
41
<PAGE>
Preparing for the worst case in Kanawha Valley, West Virginia
Residents of the Kanawha Valley of West Virginia--home to 13 chemical processing
facilities--are adamant about staying informed about the manufacturing processes
in their midst. In recent years, the local emergency planning committee
requested information with a new twist: hypothetical situations of the worst
possible chemical accident that could occur in the valley. The planning
committee convinced its neighboring chemical manufacturers to present models of
their ``worst case scenarios''--and discuss likely emergency responses.
Eventually, the Environmental Protection Agency will be requiring
manufacturers to compile and release this type of information. But since the
local request was well ahead of any EPA guidelines on the topic, Kanawha Valley
chemical operations--including three FMC chemical plants--became the industry
leaders in tackling the hypothetical subject of worst-case scenarios. They
unveiled their computer-modeled scenarios in the second quarter of 1994 to some
750 people during a two-day community event called ``Safety Street: Managing Our
Risks Together.''
What the Kanawha Valley chemical industry also showed in the process were more
probable accident scenarios--as well as detailed plans to solve the problem and
respond to health and safety emergencies.
Community members left the event with more confidence in the chemical
industry's safety planning and emergency response procedures. Says a satisfied
member of the planning committee, Pam Nixon: ``We felt that the chemical
community set a precedent in opening up and being as honest as they could be
with the public about the risks of living with chemical companies in the
valley.''
Zeroing in on safety in the Kanawha Valley: Members of the ``Safety Street''
team, FMC Spring Hill Plant Environmental Coordinator Bob Peters, National
Institute of Chemical Studies President Paul Hill, Emergency Response Evaluation
Group Co-chairs Peggy Weber and Mark Wolford, FMC Nitro Plant Manager Brian
Macconnachie and FMC Institute Plant Manager Tarry LaLonde.
42
<PAGE>
Management's
Discussion
and Analysis
REVIEW OF OPERATIONS
GENERAL
1994 Compared with 1993
Sales in 1994 were $4 billion, 7 percent higher than in 1993. While sales in the
United States remained flat in 1994, sales outside the United States grew 18
percent, driven by an increase in export sales of $256 million from 1993. A
significant portion of the export sales increase resulted from the inclusion in
1994 of sales of the former Harsco BMY Combat Systems Division.
Income from continuing operations before interest and taxes and net of
minority interests (and before restructuring and other charges in 1993),
increased 14 percent to $311.4 million in 1994. Income from continuing
operations was $173.4 million, or $4.66 per share, compared with $41.0 million,
or $1.11 per share, for 1993. Income from continuing operations for 1993
included pre-tax restructuring and other charges of $172.3 million, net of
minority interest ($123.3 million on an after-tax basis, or $3.34 per share). An
after-tax extraordinary charge of $4.7 million was also recorded in 1993 for
additional debt restructuring. After this charge, net income for 1993 was $36.3
million, or $0.98 per share.
Segment operating profits increased by 22 percent in 1994 as a result of
increases in the Industrial Chemicals, Performance Chemicals and Machinery and
Equipment segments, partially offset by declines in both Precious Metals and
Defense Systems. Corporate and other expenses decreased in 1994 primarily due to
reduced functional staff spending and other one-time items, including a legal
settlement. A breakdown of sales, income before income taxes, and identifiable
assets by industry segment and a review of operating performance appears on page
7. Segment operating profits exclude 1993 restructuring and other charges (Note
2), net interest expense, and other income and expense items. A review of
operating performance by segment follows.
PERFORMANCE CHEMICALS
1994 Compared with 1993
Performance Chemicals sales in 1994 were $1.1 billion, an increase of 9 percent
from 1993 sales of $973 million, and profits increased 11 percent to $154
million. Strong worldwide growth in all of the Performance Chemical businesses
more than offset higher spending on research, marketing and sales efforts to
support the future growth of the segment. This segment includes agricultural
chemicals, food and pharmaceutical ingredients, lithium chemicals, as well as
chemicals sold into the flame retardants and water additives markets.
Agricultural Products sales and operating profits increased in 1994 as a
result of sales improvements in both U.S. and export markets. Increases in the
U.S. market were attributable principally to sales of pyrethroids used as
insecticides on crops and for specialty applications. Export sales of Command
herbicide and intermediates accounted for most of the sales increase in the
Asian market. Higher sales of Rugby nematicide and Arrivo insecticide
contributed to the sales increase in the Latin American market. Sales of Rugby
in Africa and Central Europe, and Arrivo in the Middle East and CIS republics
were also contributors. Profit improvements resulted from favorable product mix
in North America, and favorable manufacturing variances. These were partially
offset by transaction losses of approximately $5 million as the result of the
Mexican peso devaluation in December 1994.
Food Ingredients Division sales were favorable in all regions of the world
versus 1993. North American sales reflect growth in water dessert gel,
confectionery, and the successful entry in low-fat cookie and cracker
applications. The division is investing in sales and technical capabilities to
take advantage of continuing growth opportunities. Higher volumes and favorable
sales mix in North America drove higher profits for the year.
Sales and operating profits of the Pharmaceutical Division increased from 1993
due to higher volumes. Volumes were up in emerging markets as well as in Europe
and North America. Emerging market growth resulted from improved customer
relations, while the European market benefited from the region's economic
43
<PAGE>
recovery. North American sales increases resulted from market growth and
applications development.
Full-year sales of the Lithium Division increased from 1993 levels as the
worldwide markets for Lithium's products rebounded. Increased demand in the
worldwide frit and lubricants industries, a favorable swimming pool chemical
selling season, as well as sales increases in three target markets: synthetic
intermediates for pharmaceuticals, lithium batteries and polymer initiators,
resulted in increased sales. The operating profit improvement in 1994 resulted
from increased volume and favorable manufacturing costs partially offset by
higher exploration spending associated with the new lithium resource in
Argentina.
Although Process Additives Division sales were up from 1993, operating profits
declined. Water additives volume was down due to intensified competition in the
Middle Eastern desalination market. Flame retardants volume and revenues were up
due to strong sales in the Asia-Pacific and Southern Europe regions. Prices
declined due to proportionately higher sales in the lower priced Asia-Pacific
region and increased competition in Europe. Increased raw material prices
contributed to the division's reduced profitability.
Outlook for Performance Chemicals
To meet the anticipated future demand in the Asian market, the Agricultural
Products Group formed two joint ventures during the year that will formulate and
distribute a variety of agricultural chemicals. These separate ventures will
operate in Indonesia and China. In the last quarter of 1994, the group also
announced plans for an investment of approximately $88 million to build a
manufacturing facility at the Baltimore production site to produce a new
family of herbicides. Construction of the plant is expected to be completed by
mid-1996. The first herbicide to be manufactured will be sulfentrazone, marketed
in the United States as Authority, a new preemergent, broad-leaved herbicide.
Registration approval is expected prior to the 1997 planting season. The group
has taken action to offset the effects of the Mexican peso devaluation in
December 1994. However, sales in the Mexican market are expected to be somewhat
lower than in 1994.
The Food Ingredients Division expects continued growth in all regions driven
by further expansion in Europe, Asia and Latin America and expansion of product
applications in major U.S. segments.
The pharmaceutical industry continues to undergo significant change.
Government pressures to reduce the cost of health care, particularly in North
America and Europe, have resulted in an industry focus on process improvements
and efficiency. These have spurred industry consolidations as pharmaceutical
companies seek to leverage their strengths, build pipelines and gain control of
downstream channels. The Pharmaceutical Division is positioning itself as a
global solutions provider to take advantage of opportunities created by
customer outsourcing of production and formulation development.
Lithium should benefit in 1995 from economic growth in Europe and continued
growth in NAFTA regions and the Pacific Rim. In the first quarter of 1994, the
division announced plans to invest more than $45 million to develop the lithium
resource at the Salar del Hombre Muerto in Argentina. Construction of the
manufacturing facilities has started, and commercial lithium production is
expected to begin in 1997. Once in operation, the facilities' production rates
are expected to satisfy current and anticipated market demands, with more than
40 years of reserves. The impact on U.S. operations from the start-up of the
Salar del Hombre Muerto is not determinable at this time.
In Water Additives, desalination competition in the Middle East is expected to
continue. Flame retardant margins and profits are expected to improve as recent
price increases appear to have taken hold. Further product growth is also
projected from the introduction of new products (RDP and Phos Bromines).
INDUSTRIAL CHEMICALS
1994 Compared with 1993
The operating performance of FMC's Industrial Chemicals segment, producer of
soda ash, phosphates, hydrogen peroxide and related chemicals, improved
significantly in 1994. While sales of $867 million were the same as in 1993,
operating profits increased by approximately $61 million, primarily as the
result of higher domestic and European hydrogen peroxide sales volumes,
manufacturing efficiencies and cost improvements throughout the segment.
Alkali Chemicals Division sales were down from 1993 as the result of lower
soda ash volume and prices
44
<PAGE>
in the domestic market, offset to some extent by increased export sales to
Mexico, Latin America and China. The decline in the soda ash domestic market was
caused primarily by competition from caustic soda, a substitute product in the
chemical and pulp and paper markets. Soda ash volumes improved in the fourth
quarter due to the rebounding domestic and export economies and the decline in
use of caustic soda in the chemical and pulp and paper markets due to increased
prices. Cyanide posted better results due to higher operating rates based on new
customers. The division's caustic soda facility, which had been closed for most
of the year, restarted in November due to recovering prices. Although division
sales declined, operating profits improved considerably in 1994 as a result of
strong manufacturing performance.
Sales of the Phosphorus Chemicals Division declined slightly from 1993 as the
result of lower domestic sales volume, partially offset by increased exports
into Mexico. Continued reductions in the use of phosphates by U.S. home
laundry detergent manufacturers was a contributing factor. Favorable
manufacturing performance, offset to some extent by increased research
spending, resulted in improvements in operating profits in 1994.
Both sales and operating profits of the Peroxygen Chemicals Division improved
in 1994. Sales of hydrogen peroxide in the domestic market increased
significantly, but were partially offset by overall sales price decreases.
Domestic hydrogen peroxide industry capacity utilization was estimated at
approximately 95 percent in the fourth quarter of 1994, and averaged
approximately 90 percent for the year. This market tightness has been driven by
double-digit growth in the pulp and paper segment, as the move to hydrogen
peroxide as a replacement for chlorine continues. Hydrogen peroxide price
increases were announced by all major U.S. producers in 1994. Persulfate price
improvements resulted from the success of a long-term contracting program
despite pressure from Chinese/Asian imports. Operating profits improved as a
result of the increases in product sales and from production cost improvement
programs, partially offset by transaction losses of approximately $1.6 million
primarily as the result of the Mexican peso devaluation in December 1994.
FMC Foret, FMC's European industrial chemicals affiliate, is a producer of
hydrogen peroxide, phosphates, perborates, zeolites, silicates, sodium sulfate
and sulfur derivatives for a wide range of industries, including detergents,
pulp and paper and textiles. Overall, Foret sales were slightly down in 1994 due
to the effects of currency translations reflecting a continued weakness in the
Spanish peseta early in the year. However, overall domestic and export volume
increased. Price deterioration continued due to competitive pressures in
hydrogen peroxide and sodium perborates, but these weaknesses were mostly offset
by higher prices in other product lines. A significant improvement in operating
profit from 1993 resulted from higher sales and production volumes and
sustained efforts to continue to improve the efficiency of the operations
including a significant cost reduction in caustic soda.
Outlook for Industrial Chemicals
Improvement in soda ash sales is expected as a result of the impact of the
stronger global economy, higher prices for domestic and export business, as well
as a contract commitment to supply a major new domestic application. Export
growth should also continue to improve in 1995. Moreover, it is anticipated that
the shutdown of additional synthetic capacity will create further demand for
natural soda ash. To meet this anticipated growth, in January 1995, FMC
announced a $45 million expansion investment at the Green River, Wyoming,
facility to add 700,000 tons of capacity by 1997, increasing the total annual
capacity to 3.55 million tons. The expansion will use a new low-cost,
proprietary solution mining technology that is expected to reduce soda ash
manufacturing costs 30 to 40 percent from conventional techniques while
producing an equivalent high-purity product. The expansion represents the second
step in a long-term project, designed to ultimately replace costly dry mining
with lower-cost solution mining. The first step in the project, a $90 million
cost reduction investment, was initiated in March 1994 and will be completed
later this year.
The phase-out of phosphate use in the domestic detergent markets is expected
to continue in 1995, although at a slower pace. The recent increased level of
phosphates sold into Mexico may decline due to Mexico's continuing economic
problems. In 1994,
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the new phosphate ore mine in Dry Valley, Idaho, was brought into full
production.
Tightness in the hydrogen peroxide market is expected to continue in 1995, and
a second round of price increases was announced by major U.S. producers for the
first quarter of 1995. The net impact of the currency devaluation in Mexico is
expected to have a positive impact on longer-term operating performance based
upon the lower dollar costs of production and the Mexican company's status as
the sole domestic producer of hydrogen peroxide.
In an effort to meet growing demand in northern Europe, Foret is constructing
a new hydrogen peroxide facility in Delfzijl, Netherlands. The project, which
will complement Foret's existing capacity in La Zaida, Spain, is under way and
is expected to be completed by the end of 1995. Economic growth in Europe
rebounded in 1994 and should continue to improve in 1995.
MACHINERY AND EQUIPMENT
1994 Compared with 1993
Machinery and Equipment sales were up 12 percent to $973 million, and operating
profits were up substantially to $33 million. Most of the improvement in sales
came from the Energy and Transportation Equipment Group, primarily as the result
of including sales of business acquisitions completed in 1993 and 1994 as well
as improved operating results in certain divisions. Food Machinery Group sales
improved slightly from 1993. Segment operating profits increased significantly
as a result of the sales increases in Energy and Transportation Equipment Group
and from the results of the downsizing/restructuring program begun in late 1993
for both groups.
The Energy and Transportation Equipment Group consists of Wellhead Equipment,
Fluid Control, Airport Products and Systems, Automotive Service Equipment,
Material Handling Systems, and SOFEC Mooring Division. Both the surface and
subsea product lines of Wellhead Equipment recorded increased sales in 1994.
Surface sales increased in both the Western Region and in the Asia/Pacific
region but declined in Europe and Africa. Sales of subsea products increased
overall due to the inclusion of a full year of sales of Kongsberg Offshore,
acquired in June 1993, the impact of Amoco's Liuhua project in the South China
Sea and an increase in the Asia/Pacific market. These increases were partially
offset by declines in sales in the North Sea due to fewer projects being awarded
and increasing competition. Operating profits improved in Wellhead Equipment
primarily due to increased sales. Fluid Control sales and operating profits
declined in 1994 as project orders completed in 1993 were not replaced with
shippable orders in 1994. Sales of Airport Product and Systems Division
increased significantly in 1994 due to the inclusion of Jetway Systems, acquired
in the second quarter of 1994, and from the successful introduction of the
Commander 30 main deck cargo loader. Shipment of 42 new loaders exceeded
expectations, but a decline in sales of other main deck loaders partially offset
these gains. Operating profits decreased despite the increase in revenue due to
costs related to the acquisition of Jetway. The Automotive Service Equipment
Division had a record year in 1994 with sales growth in all markets. Additional
penetration in the U.S. market and exports to Asia and South America contributed
to the growth. Sales in Europe also improved as a result of the economic
recovery. Operating profits improved significantly as a result of the increased
volume, offset by slightly higher operating expenses. Sales of the Material
Handling Systems Division were slightly below 1993 due to reduced sales of
conveying and processing equipment and water treatment equipment, partially
offset by stronger idler and screw conveyor volumes. Profits declined primarily
due to higher new project development costs. SOFEC sales increased from prior
years and operating profits were significantly above prior years as well as
above expectations at the time of acquisition.
The Food Machinery Group consists of Food Processing Systems, Packaging and
Material Handling Equipment, and Agricultural Machinery. During the year, three
product lines, which had annual sales totaling approximately $40 million, were
divested. The palletizer product line was divested at the end of the second
quarter and the wrapper and sprayer product lines were sold late in the fourth
quarter. These divestitures were part of a strategic initiative to exit non-core
businesses. Despite the loss of revenue as a result of these divestitures, the
group's sales increased slightly from 1993. Some recovery occurred in the North
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American markets; Asia/Pacific also improved based on greater penetration, but
European markets in food preservation equipment remained weak. Sales in the Food
Processing Systems Division increased slightly, but operating profits increased
significantly, reflecting downsizing programs initiated at the end of 1993.
Sales in the Packaging and Material Handling Division also increased slightly,
with operating profits increasing significantly as a result of downsizing
programs, improved operating performance and gains on the sales of product
lines. Sales in the Agricultural Machinery Division increased from 1993 due to
increased sales of pea and bean harvesters. However, operating profits were
adversely affected by a charge taken to settle a legal claim and significantly
higher research and development spending.
Outlook for Machinery and Equipment
The order backlog for the Machinery and Equipment segment was $480 million at
the end of 1994 as compared with $333 million in 1993. As discussed below, the
principal reasons for this increase are the order received during the year by
Kongsberg Offshore for subsea products and the inclusion in 1994 of the backlog
of Jetway Systems, acquired in the second quarter of 1994.
The Energy and Transportation group enters 1995 with a backlog of $439
million, 52 percent higher than year-end 1993.
Receipt of a large order from the Norwegian government at the end of the year
by Kongsberg Offshore will benefit sales of subsea products in the North Sea
beginning in the second half of 1995 and future years.
Fluid Control Division enters 1995 with a strong backlog. Also, two small
acquisitions in 1994 expanded the division's capabilities in production manifold
systems and lightweight pumps. Downward price pressure and lack of funding in
Third World countries will continue to negatively affect the sale of marine
loading systems.
Airport Products and System Division's backlog at the end of 1994 is up
significantly from 1993 due to the addition of Jetway and orders for the
Commander 30 loader. Future loader business depends on the deliveries of wide-
body aircraft and the ability of the airline industry to sustain profitability.
Also, 1994 saw strong pricing pressures in the domestic and international
passenger bridge markets which could have a negative impact on Jetway's
profitability.
The Material Handling Systems Division is expecting slightly higher 1995 sales
volume based on higher capital goods orders in 1994 and from the acquisition of
Caterpillar's automated guided vehicle business.
Automotive Service Equipment Division growth that began in 1994 should
continue in 1995 as the result of the recovery in various markets and the
business improvements made over the past five years. These improvements include
the development and introduction of customer-driven new products, equipment
approvals by major national accounts worldwide and increased penetration of
international markets.
After adjusting for the divested product lines, the Food Machinery Group
enters 1995 with a backlog similar to 1994. Sales are expected to improve
slightly from 1994 in most product lines. These improvements are again expected
in North America and Asia/Pacific, but Europe is not expected to recover in the
near future. Sales from a license agreement concluded in late 1994 with
TechniCal for a thermal process control system are expected to increase Food
Processing Systems Division sales in 1995. However, start-up expenses are likely
to offset part of these gains. Further restructuring of two under-utilized U.S.
facilities and the closing of a European plant began at the end of 1994. These
actions will further improve the operating profits of the group in 1995.
DEFENSE SYSTEMS
1994 Compared with 1993
Effective January 1, 1994, FMC completed the transaction to combine its defense
business with Harsco Corporation's BMY Combat Systems Division. The combined
company, United Defense, L.P., operates as a limited partnership with FMC as the
General Partner with a 60 percent equity interest and responsibility for
managing the operation. The partnership is consolidated 100 percent with FMC,
and Harsco's partnership interest is recorded as a minority interest. Combined
sales in 1994 were $1.1 billion, including sales of the former Harsco BMY Combat
Division and sales of the new Paladin self-propelled howitzer business. Sales of
FMC businesses alone were $950 million in
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1993. Segment profits, net of minority interest, were approximately $100 million
in 1994. In 1993, FMC's Defense Systems Group profits were $162 million.
Segment earnings are impacted by adjustments related to items for which
financial responsibility was not assumed by the partnership (primarily certain
customer contracts).
Sales were down for the Ground Systems business, and operating profits
declined accordingly. Fewer deliveries of the Bradley Fighting Vehicle accounted
for approximately half of the sales decrease. The production of the Armored Gun
System prototype also declined in 1994 since the bulk of this work was done in
1993. Six of the pre-production models were delivered in 1994 and are undergoing
extensive testing. Work on the Advanced Field Artillery System, recently renamed
the Crusader, also declined in 1994 as the Advanced Technology Test Demonstrator
contract was essentially completed.
Both sales and operating profits of the Armament Systems business declined in
1994. Declines occurred in all of the weapon systems, with the most significant
decrease in Vertical Launching Systems. No launcher modules were delivered in
1994 compared with 57 deliveries in 1993. Partially offsetting the decline in
launcher sales was the delivery of 233 more VLS canisters than delivered in
1993. Lower sales and profitability also resulted from two less Mk13 Pointing
Launching Systems deliveries and lower sales on the Crusader contract.
Sales of the Combat Systems Division, the business Harsco contributed to the
partnership, more than offset the declines in Ground Systems and Armament
Systems divisions in 1994. Combat Systems produces howitzer vehicles and kits, a
Field Artillery Ammunition Support Vehicle, Recovery Vehicle and Armored Combat
Earthmover.
The Paladin production operation administers the multi-year contract awarded
in April 1993 for the delivery of 630 M109A6 howitzers with options. Since the
initial award, the U.S. Army has exercised options for 20 additional vehicles,
bringing the total to 650 and the total contract value to $329 million. Seven
vehicles were delivered in 1994, two months ahead of contract schedule.
Sales of the Steel Products business were approximately the same as 1993, but
operating profits were down due to a favorable fire settlement in 1993; start-up
costs relating to the contract with the U.S. Army to overhaul and convert 471
M113A2 armored personnel carriers to the newer A3 configuration; and lower
production volumes in the forge and foundry.
International defense sales and operating profits were up significantly in
1994. The largest portion of the sales increase resulted from deliveries to
Singapore of M113 upgrade kits, which began in the last quarter of 1993 and were
essentially completed in 1994. The main contributing factor to the improved
operating profits were increased royalties and dividends from the Turkish joint
venture.
Defense Systems continued to downsize its operations. At the end of 1994,
Ground Systems' work force totaled 2,255, down from 4,200 in 1990. Armament
Systems' work force was down to 1,519 by the end of 1994, from 2,500 in 1990. At
the end of 1994, United Defense employed a total of 5,911 employees, including
1,320 in the Combat Systems Division contributed by Harsco.
In October 1994, the partnership entered into an advance agreement with the
U.S. Department of Defense concerning certain expenses associated with the
consolidation and restructuring of its tracked vehicle businesses. Under the
agreement, expenses incurred from January 1, 1994 through March 31, 1996, will
be deferred and allocated ratably to contracts with the Department of Defense
for 36 months beginning January 1, 1996. At December 31, 1994, approximately $7
million of such costs had been deferred.
Outlook for Defense Systems
The order backlog of the Defense Systems segment increased to $1.4 billion at
December 31, 1994 from $1.1 billion at the end of 1993. The increase resulted
from the Combat Systems Division backlog not included in 1993 and additional
funding in 1994 on the Paladin howitzer contract, offset by declines in backlogs
for the other operations. The lower backlog in 1994 for Ground Systems Division
is caused primarily from the completion of production contracts, partially
offset by additional engineering backlog on the Command & Control vehicle and
the Bradley A3 engineering design contract.
The Bradley A2 production contract will end in February 1995. Upgrading of
existing Bradleys to the
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A2 model began in 1994 and will continue into 1997. In 1994, Ground Systems was
awarded a $280 million contract for engineering and manufacturing development of
the next generation of the Bradley A3. Performance on this contract began in
1994 and is scheduled to be completed by 1998.
The Crusader, a self-propelled howitzer, is likely to be the largest contract
awarded by the U.S. Army in the coming years. United Defense has been chosen as
the primary contractor for the project's early phases, which includes
engineering and analysis. Incremental funding of $31 million was received late
in the year for the Crusader program, and United Defense will move forward in
1995 on requirements analysis and component maturation. This program has an
estimated value of $1.2 billion over the next five years of the
demonstration/validation phase. Early work on this program positions United
Defense well for the full-scale production contracts that will be awarded at the
turn of the century.
Sales of Combat Systems in 1995 are projected to decline from 1994 levels due
to reduced vehicle volume and sales.
The Paladin Production operation expects delivery of 87 M109A6 vehicles in
1995 along with providing system technical services. The last contract delivery
is scheduled for the third quarter of 1998.
During 1994, the joint venture in Turkey to produce armored fighting vehicles
for the Turkish army encountered delays in the acceptance of vehicles and
receipt of payment for outstanding receivables. During the fourth quarter, the
joint venture resolved the delays associated with vehicle acceptance. However,
negotiations with the customer involving payments under the terms of the
contract are continuing. Income from the joint venture is recognized as
dividends and royalties are received. Dividends were $12.4 million in 1994, $9.4
million in 1993 and $8.1 million in 1992. FMC also received royalties of $4.8
million, $3.8 million and $8.6 million in 1994, 1993 and 1992, respectively.
United Defense is currently in discussion with several foreign governments to
secure contracts on a variety of vehicles it produces to supplement current
deliveries to Saudi Arabia, Egypt, South Korea and Kuwait. Some of the
negotiations appear promising for near-term awards.
PRECIOUS METALS
1994 Compared with 1993
Due to decreased production, sales of the Precious Metals segment declined by
more than 50 percent from 1993 to $61 million. This reduction in sales, as well
as disappointing ore grades and recoveries at Jerritt Canyon (30 percent owned
by FMC Gold) and continued spending on exploration, resulted in an operating
loss of $9 million for the year.
Gold production declined to 163,000 ounces, approximately half of the gold
production in 1993, and silver production declined to 154,000 ounces, about 18
percent of 1993's total. The closure of the Paradise Peak mine in May 1993 and
the Royal Mountain King mine in July 1994 were the primary reasons for these
declines.
Cash production costs increased to $246 per gold equivalent ounce from $194
per gold equivalent ounce last year. This increase in average cash production
costs per ounce reflects a smaller proportion of low-cost Paradise Peak
production and an increase in cash production costs at Jerritt Canyon to $283
per gold equivalent ounce from $240 in 1993.
Beartrack legal proceedings
On May 4, 1994, FMC Gold Company, an 80 percent 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 endangered
salmon. The company has submitted a request to the Army Corps of Engineers
(``ACOE'') for renewal of one of the permits necessary to complete construction
of the Beartrack mine. ACOE is studying that request at this time, and the
company is participating actively in ACOE's review.
On October 21, 1994, the Sierra Club Legal Defense Fund, Inc., (``Sierra''),
on behalf of certain other organizations, sued NMFS and other federal agencies
for violation of the Endangered Species Act (the ``Act'') alleging that NMFS'
biological opinion failed to satisfy the requirements of the Act.
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During the third quarter of 1994, the Pacific Rivers Council and the
Wilderness Society (the ``PRC''), represented by Sierra and others, in a lawsuit
currently pending in Federal District Court in Idaho (Pacific Rivers Council v.
Thomas), filed a motion seeking an injunction against all ongoing and future
forest activities which may affect endangered salmon, including mining, within
various national forests in Idaho including the Salmon National Forest in
which the Beartrack property is located. In that lawsuit, the PRC seeks to
require the U.S. Forest Service to consult under the Act with the NMFS regarding
existing land resource management plans for the subject forests and their
potential impacts on endangered salmon.
The company, along with other mining and timber companies, has been granted
limited leave to intervene in both lawsuits and filed a memorandum in opposition
to the PRC's motion for an injunction at least as it might apply to the
Beartrack property based on, inter alia, the fact that the company had already
obtained the requisite biological opinion by NMFS and the fact that the
Beartrack property is at least 6.5 miles from the closest habitat for salmon.
On January 12, 1995, the court in the PRC lawsuit entered an order enjoining,
among other things, all ongoing and announced mining activities in the Idaho
national forests (in which the Beartrack project is located) subject to a
determination by the court as to whether an activity may proceed under Sections
7(a) (ii) and 7(d) of the Act. The company, and the government have filed
appeals from the court's order. On January 25, 1995, the court entered an order
staying until March 16, 1995, the effectiveness of the injunction in order to
give the Forest Service time in which to complete consultation with NMFS on the
Land and Resource Management Plans for the national forests in Idaho.
The company believes that (i) the biological opinion was carefully considered
and fully supported by the record and (ii) that it will be permitted to continue
its planned activity at the Beartrack site. However, a different conclusion in
either lawsuit could result in suspension of further development and/or
operation of the Beartrack property.
The Beartrack property encompasses approximately 30 square miles of mining
claims and contains approximately one million ounces of proven and probable
reserves. Capital spent as of the end of 1994 totals $48 million of an expected
$57 million for this development.
Outlook for Precious Metals
The disappointing results at Jerritt Canyon and the judiciary proceedings at
Beartrack have seriously affected the outlook for FMC Gold. The company is
working with the majority partner at Jerritt Canyon to remedy near-term losses
through a proposed aggressive reorientation of the mine plan. At Beartrack the
company continues toward completion in the belief that three years of successful
permitting effort and a favorable biological opinion from the National Marine
Fisheries Service will prevail.
FMC Gold plans to continue spending in 1995 on exploration in the United
States as well as in Mexico and Chile.
1993 COMPARED WITH 1992
Sales declined 6 percent in 1993 to $3.8 billion mainly due to declines in
chemicals, precious metals and defense. Income from continuing operations was
$41.0 million or $1.11 per share, compared with $192.6 million, or $5.23 per
share, for 1992. Income from continuing operations for 1993 includes pre-tax
restructuring and other charges of $172.3 million net of minority interest
($123.3 million on an after-tax basis, or $3.34 per share). An after-tax
extraordinary charge of $4.7 million was also recorded in 1993 for additional
debt restructuring. After this charge, net income for 1993 was $36.3 million, or
$0.98 per share.
After-tax special charges recorded in 1992 included $183.7 million resulting
from the adoption of Statement of Financial Accounting Standards (SFAS) No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions," $73.2
million for additional environmental and product liability requirements for
previously discontinued operations, and an extraordinary charge of $11.4 million
related to the restructuring of debt. After these charges, the net loss for 1992
was $75.7 million or $2.06 per share.
Industrial Chemicals. Sales declined 6 percent in 1993 to $867 million
primarily due to prolonged poor global markets for chemicals and overcapacity
situations in some of the major chemicals lines. Profits also declined
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to $58 million (before restructuring and other charges).
Alkali Chemicals sales and profits were down in 1993 as overcapacity in the
soda ash markets persisted worldwide, and prices remained under pressure. In
Europe, a strengthening U.S. dollar against European currencies made it more
difficult for U.S. producers to compete. In 1993, FMC concentrated on cost and
manufacturing improvements.
Phosphorus Chemicals sales and profits also were down in 1993 as U.S.
manufacturers of home laundry detergents rapidly phased down their use of
phosphates. In 1993, the phosphate production facility in Newark, California,
was closed, and one of four phosphorus furnaces at the Pocatello, Idaho facility
was idled for a portion of 1993.
Peroxygen Chemicals sales were almost even in 1993, but earnings were down due
primarily to overcapacity in the U.S. market, leading to soft prices. In 1993,
the division concentrated on new hydrogen peroxide applications, including
recycling processes for the pulp and paper industry and Caro's Acid for cyanide
detoxification in the mining industry.
FMC Foret sales were down in 1993 due to the effects of currency translations
and general weakness in Europe, but profits were even with 1992 through
significant cost-control efforts. In a major cost-reduction effort for Foret's
phosphate business, the sulfuric acid plant was closed at Palos, Spain, in 1993
based on a favorable supply contract with a neighboring copper smelter.
Performance Chemicals. Sales were up 7 percent to $974 million in 1993, and
profits increased 4 percent to $139 million (before restructuring and other
charges) due to a wide range of products.
Agricultural Products posted another year of record results in 1993. Both
sales and profits remained strong even as FMC substantially increased research
and development spending to focus on the next generation of herbicides to be
marketed later this decade. Sales were especially strong in the United States
and Latin America.
The Food Ingredients business produced higher sales and profits in 1993 due
primarily to strong Avicel sales throughout North America. FMC's Avicel
cellulose gel continues to be one of the world's leading fat-replacement
products. In 1993, a new food ingredients lab was opened at the Research and
Development Center in Princeton, NJ, to enhance the ability to solve customers'
problems and meet their needs.
The Pharmaceutical business posted strong sales and profits in 1993 due to FMC
being the leader in supplying tablet binders and other inactive ingredients for
pharmaceutical processing. In 1993, the division introduced a new product,
AviSphere, for time-release applications and continued to increase market share
with existing products.
BioProducts contributed higher sales and profits in 1993 due to a rapidly
growing market, improved performance of the line of agarose products, and
increasing demand for DNA and protein-related research reagents. The business
succeeded in extending its reach to key segments of the life science market and
is a leading supplier of specialty chemicals used in life science research and
development.
Process Additives sales and earnings increased in 1993 despite a weak European
economy and marketplace shifts in Eastern Europe. Sales were strong due
primarily to more extensive customer sales efforts and technical service,
expanded product offerings and enhanced research and development.
Lithium's sales and profits declined in 1993, representing increased spending
on resource exploration as well as weak markets worldwide, which had an adverse
effect on the lithium industry and FMC's position. Also contributing to the
decline was weakened demand for aluminum processing, one of lithium's key
markets.
Defense Systems. Sales decreased to $950 million but, given improved cost
performance, earnings of $162 million remained relatively even with 1992
results.
Sales and profits were down in 1993 for the Ground Systems business due
primarily to lower production of the Bradley A2. The Bradley Fighting Vehicle
continued to be the major product for this business.
Armament Systems posted higher sales and profits in 1993 due to a broadened
customer base. Also in 1993, Armament Systems played a key role in the
development of the Advanced Technology Demonstrator, a component of FMC's $67
million sole-source contract for the Advanced Field Artillery System, a self-
propelled howitzer.
The Steel Products business experienced lower sales and profits in 1993 due to
a declining demand from the U.S. Army. The business did however, win a $23
million
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contract from the U.S. Army to overhaul and convert 471 M113A2 armored personnel
carriers to the newer A3 configuration.
International defense sales were down in 1993, but profits were up due to
better cost control. During 1993, an office was opened in Taipei, Taiwan, to
develop new business.
Precious Metals. Sales declined in 1993 to $125 million, and earnings declined
substantially to $10 million (before write-downs and other charges of $61
million) due to decreased production and continuing soft gold prices. The
Paradise Peak mine, which represented 60 percent of FMC Gold's total production
in 1992, was closed in May 1993. In 1993, FMC Gold's total gold production was
down 23 percent to 321,000 ounces. Total silver production was less than half of
1992's production.
Machinery And Equipment. Sales were down slightly to $871 million, but profits
were down substantially to $7 million (before restructuring and other charges).
Sales and earnings for the transportation equipment businesses were
essentially flat due partly to the downturn in the airline industry.
The Energy Equipment businesses experienced lower profits in 1993 due to weak
oil prices. The Kongsberg acquisition boosted sales for the Wellhead Equipment
business in 1993, but with demand for oil essentially flat and excess OPEC
production keeping oil prices low, profits were down for this business. Strong
demand by energy service companies for fluid control equipment, as well as cost
control efforts and improved manufacturing efficiencies, increased 1993's
profitability for the Fluid Control business.
FMC's Food Machinery businesses again experienced declining sales and profits
in 1993. Soft domestic markets, the continuing recession in Europe, depressed
agricultural commodity markets and consolidations among food producers have all
contributed to this decline.
OTHER INFORMATION
Taxes
The effective tax rate for 1994 was 31.3 percent primarily reflecting depletion
and foreign sales corporation benefits. Income from foreign operations taxed at
rates lower than the U.S. statutory rate also contribute to the lower effective
rate. In 1993, the company reported a credit for income taxes of $3.2 million on
pre-tax income of $37.8 million. This unusually low rate was driven primarily by
the low level of pre-tax income in 1993. The tax rate for 1992 was 31.1 percent.
Restructuring and Other Charges
In 1993, FMC recorded pretax restructuring and other charges of $172.3 million,
net of minority interest. These charges primarily related to restructuring costs
associated with the Machinery and Equipment and Industrial Chemical segments,
expenses to restructure company-wide functional support staffs, as well as a
write-down of the investment in the Beartrack property in the Precious Metals
segment. The restructuring program was designed to reduce costs and improve
operating efficiencies.
During 1994, FMC carried out a number of actions consistent with the 1993
restructuring plan. At the end of the year, approximately 1,100 employee
positions had been eliminated, excluding 500 positions eliminated at United
Defense, L.P. which were not covered by the 1993 restructuring program. FMC's
programs to reorganize functional support staffs throughout the company to align
their activities more closely with the company's growth initiatives, as well as
severance programs within the Industrial Chemical and Machinery and Equipment
segments designed to improve operating performance, resulted in the majority of
the eliminated positions. Cash payments related to these separations were
approximately $32 million. Also during the year, $40 million of spending related
either to the consolidation of manufacturing facilities, the exiting of
unprofitable product lines or other restructuring activities was charged to the
restructuring reserve. Writedowns of $48 million, net of minority interest,
related to the Beartrack development property and the Royal Mountain King mine
were recorded in 1993.
The restructuring reserve remaining at December 31, 1994 of $49 million, is
expected to cover $22 million for spending associated with the remaining work
force reductions, and $27 million for spending on downsizing and other
restructuring related costs. The downsizing and functional staff reductions
(approximately an additional 400 positions) are expected to be substantially
complete by the end of 1995. Total anticipated restructuring and other charges
remain consistent with the original estimates contemplated in the 1993 charge.
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There was no substantial impact on revenues from the restructuring activities.
The company estimates the restructuring efforts produced pre-tax savings of
between $35 to $40 million in 1994 and will reduce cost levels an average of $70
million (pre-tax) per year in 1995 and 1996 compared to 1993. Note 2 contains
additional information on restructuring and other charges.
Environmental
FMC, like other industrial manufacturers, is involved with a variety of
environmental matters, in the ordinary course of conducting its business, that
are subject to federal, state and local environmental laws. FMC feels strongly
about its responsibility to protect the environment, public health and employee
safety. This includes cooperating with other parties to resolve issues created
by past and present handling of wastes. When such issues arise, including
notices from the Environmental Protection Agency (EPA), or other government
agencies, identifying FMC as a Potentially Responsible Party (PRP), the company
utilizes multifunctional advisory teams comprised of environmental, legal,
financial and communications management to ensure that the company's actions are
consistent with its responsibilities to the environment and public health, as
well as employees and shareholders.
Additional information regarding the company's environmental accounting
policies and potential environmental liability is included in Note 1 and Note
16, respectively, to the company's consolidated financial statements. Estimates
of 1995 environmental spending are included under Liquidity and Capital
Resources.
LIQUIDITY AND CAPITAL RESOURCES
Cash generated from operations and available credit facilities provided the
resources to meet 1994 operating needs and fund capital expenditures and
acquisitions. Debt levels increased by $178 million in 1994 as a result of
higher capital and acquisition spending. Interest expense declined by $5.6
million in 1994, primarily due to increases in capitalized interest resulting
from higher capital spending. Capital expenditures approximated $356 million.
During 1994, the company borrowed $90 million from the proceeds of Solid Waste
Disposal Revenue Bonds issued by Sweetwater County, Wyoming. The loan proceeds
were recorded in Investments and are being used to fund a soda ash business
capital project at FMC's Green River facility.
Cash generated from operations in 1995 and available credit facilities are
expected to be sufficient to meet operating needs, fund capital expenditures and
acquisitions, and meet debt service requirements for the year. Expected cash
requirements for 1995 include approximately $400 million to $500 million for
planned capital expenditures and acquisitions, including approximately $36
million for capital projects related to environmental control facilities.
Projected 1995 spending also includes approximately $61 million for
environmental compliance spending at current operating sites plus approximately
$45 million of remediation spending at previously operated and other sites. Net
after-tax interest payments are expected to approximate $40 million in 1995.
<TABLE>
<CAPTION>
-----------------------------------------------------------------
Working capital December 31
-----------------------------------------------------------------
(In millions) 1994 1993 1992
-----------------------------------------------------------------
<S> <C> <C> <C>
Operating working capital:
Trade receivables $ 642.8 $ 573.2 $ 543.5
Inventories 403.9 268.1 319.3
Accounts payable (676.9) (501.2) (513.9)
Accrued payroll and other
current liabilities (405.9) (390.9) (278.5)
-----------------------------------------------------------------
Total operating working capital (36.1) (50.8) 70.4
Cash and cash equivalents 98.4 77.5 24.3
Other 45.1 12.9 (30.7)
-----------------------------------------------------------------
Total working capital $107.4 $39.6 $64.0
=================================================================
</TABLE>
Operating working capital increased by $14.7 million in 1994 compared with 1993.
The increases in the components of operating working capital are primarily due
to the formation of United Defense, L.P. and the acquisition of Jetway Systems.
The increase in net other current assets and liabilities ("Other") is primarily
due to a decrease in income taxes payable.
Dividends
No dividends were paid in 1994, 1993 and 1992, and no dividends are expected to
be paid in 1995.
53
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Income
----------------------------------------------------------------------------------------------------
(In millions, except per share data) Year ended December 31
------------------------------------
1994 1993 1992
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------------
Revenue
Sales $4,010.8 $3,753.9 $3,973.7
Equity in net earnings of affiliates (Note 7) 5.3 6.4 11.1
Other revenue 35.2 28.6 18.7
----------------------------------------------------------------------------------------------------
Total revenue 4,051.3 3,788.9 4,003.5
----------------------------------------------------------------------------------------------------
Costs and expenses
Cost of sales 2,941.6 2,835.3 2,987.9
Selling, general and administrative expenses 587.7 539.4 534.0
Research and development 166.8 149.2 145.0
Restructuring and other charges (Note 2) -- 172.3 --
Other (income) and expense, net (17.6) (10.2) (29.3)
----------------------------------------------------------------------------------------------------
Total costs and expenses 3,678.5 3,686.0 3,637.6
----------------------------------------------------------------------------------------------------
Income from continuing operations before interest, minority
interests and taxes 372.8 102.9 365.9
----------------------------------------------------------------------------------------------------
Minority interests 61.4 2.5 3.6
Interest income 8.9 11.0 12.2
Interest expense 68.0 73.6 94.9
----------------------------------------------------------------------------------------------------
Income from continuing operations before income taxes 252.3 37.8 279.6
Provision (benefit) for income taxes (Note 10) 78.9 (3.2) 87.0
----------------------------------------------------------------------------------------------------
Income from continuing operations 173.4 41.0 192.6
Provision for discontinued operations, net of taxes (Note 2) -- -- (73.2)
----------------------------------------------------------------------------------------------------
Income before extraordinary items and cumulative
effect of change in accounting principle 173.4 41.0 119.4
Extraordinary items, net of taxes (Note 9) -- (4.7) (11.4)
Cumulative effect of change in accounting principle,
net of taxes -- -- (183.7)
----------------------------------------------------------------------------------------------------
Net income (loss) $ 173.4 $ 36.3 $ (75.7)
====================================================================================================
Earnings per common share (Note 1)
Primary:
Income from continuing operations $ 4.66 $ 1.11 $ 5.23
Provision for discontinued operations -- -- (1.99)
----------------------------------------------------------------------------------------------------
Income before extraordinary items and cumulative
effect of change in accounting principle 4.66 1.11 3.24
Extraordinary items -- (0.13) (0.31)
Cumulative effect of change in accounting principle -- -- (4.99)
----------------------------------------------------------------------------------------------------
Net income (loss) $ 4.66 $ 0.98 $ (2.06)
====================================================================================================
Assuming full dilution:
Income from continuing operations $ 4.65 $ 1.11 $ 5.04
Provision for discontinued operations -- -- (1.84)
----------------------------------------------------------------------------------------------------
Income before extraordinary items and cumulative
effect of change in accounting principle 4.65 1.11 3.20
Extraordinary items -- (0.13) (0.29)
Cumulative effect of change in accounting principle -- -- (4.63)
----------------------------------------------------------------------------------------------------
Net income $ 4.65 $ 0.98 $ *
====================================================================================================
See notes to consolidated financial statements.
*Per share amounts are antidilutive.
</TABLE>
FMC Corporation and Consolidated Subsidiaries 54
<PAGE>
<TABLE>
<CAPTION>
Consolidated Balance Sheets
----------------------------------------------------------------------------------------------------
(In millions, except share and per share data) December 31
--------------------------
<S> <C> <C>
1994 1993
----------------------------------------------------------------------------------------------------
Assets
Current assets
Cash and cash equivalents $ 98.4 $ 77.5
Trade receivables, net (Note 3) 642.8 573.2
Inventories (Note 4) 403.9 268.1
Other current assets 137.6 111.4
Deferred income taxes (Note 10) 93.6 106.9
----------------------------------------------------------------------------------------------------
Total current assets 1,376.3 1,137.1
Investments (Note 7) 141.7 76.2
Property, plant and equipment, net (Note 8) 1,537.4 1,390.3
Other assets 208.9 123.7
Deferred income taxes (Note 10) 87.2 117.8
----------------------------------------------------------------------------------------------------
Total assets $3,351.5 $2,845.1
====================================================================================================
Liabilities and Stockholders' Equity
Current liabilities
Short-term debt $ 66.9 $ 66.9
Accounts payable, trade and other 676.9 501.2
Accrued payroll 98.5 84.7
Other current liabilities 307.4 306.2
Current portion of long-term debt (Note 9) 41.3 15.0
Current portion of accrued pension and other postretirement
benefits (Notes 13 and 14) 22.8 37.1
Income taxes payable (Note 10) 55.1 86.4
----------------------------------------------------------------------------------------------------
Total current liabilities 1,268.9 1,097.5
Long-term debt, less current portion (Note 9) 901.2 749.9
Accrued pension and other postretirement benefits, less current portion
(Notes 13 and 14) 306.5 302.7
Reserve for discontinued operations (Note 2) 189.9 223.5
Other liabilities 169.0 211.2
Minority interests in consolidated companies 99.5 43.4
Commitments and contingent liabilities (Notes 16 and 17)
----------------------------------------------------------------------------------------------------
Stockholders' equity (Note 11)
Common stock, $0.10 par value, authorized 60,000,000
shares; issued 36,813,530 shares in 1994 and 36,472,641 shares in 1993 3.7 3.6
Capital in excess of par value of capital stock 90.4 79.6
Retained earnings 380.5 207.1
Foreign currency translation adjustment (Note 5) (49.0) (64.7)
Treasury stock, common, at cost; 298,226 shares in 1994 and
292,018 shares in 1993 (9.1) (8.7)
----------------------------------------------------------------------------------------------------
Total stockholders' equity 416.5 216.9
----------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $3,351.5 $2,845.1
====================================================================================================
See notes to consolidated financial statements.
55 FMC Corporation and Consolidated Subsidiaries
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements Of Cash Flows
Reconciliation from Income from Continuing Operations to Cash Provided by Operating Activities
----------------------------------------------------------------------------------------------------
(In millions) Year ended December 31
---------------------------------
1994 1993 1992
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income from continuing operations $173.4 $ 41.0 $192.6
Adjustments to reconcile income from continuing operations to
cash provided by operating activities:
Restructuring and other charges (Note 2) -- 172.3 --
Depreciation and amortization 229.0 226.6 236.9
Interest on zero coupon senior subordinated convertible
debentures -- 7.4 11.8
Deferred income taxes 30.3 (38.9) (3.0)
Equity in net earnings of affiliates (Note 7) (5.3) (6.4) (11.1)
Amortization of accrued pension costs (Note 13) (10.0) (7.6) (3.8)
Minority interests 61.4 2.5 3.6
Other 1.2 9.9 12.9
Changes in operating assets and liabilities excluding the
effects of the formation of United Defense, L.P.:
Trade receivables (61.9) (40.1) (18.6)
Inventories (46.2) 37.5 33.1
Other current assets and other assets (33.7) (18.1) (12.4)
Accounts payable, accrued payroll, other current liabilities
and other liabilities 97.5 24.7 (53.9)
Income taxes payable (31.4) (21.2) 9.0
Restructuring reserve (72.2) (2.4) --
Accrued pension and other postretirement benefits, net (6.4) (16.9) (22.0)
----------------------------------------------------------------------------------------------------
Cash provided by operating activities $325.7 $370.3 $375.1
====================================================================================================
See notes to consolidated financial statements.
FMC Corporation and Consolidated Subsidiaries 56
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------------------------
(In millions) Year ended December 31
--------------------------------------
1994 1993 1992
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH PROVIDED BY OPERATING ACTIVITIES $ 325.7 $ 370.3 $ 375.1
--------------------------------------------------------------------------------------------------
CASH REQUIRED BY DISCONTINUED OPERATIONS (20.2) (26.5) (29.9)
--------------------------------------------------------------------------------------------------
Cash provided (required) by investing activities:
Capital spending (356.0) (244.5) (314.5)
Disposal of property, plant and equipment 19.0 7.7 18.0
Decrease (increase) in investments (55.8) 23.6 12.1
--------------------------------------------------------------------------------------------------
CASH REQUIRED BY INVESTING ACTIVITIES (392.8) (213.2) (284.4)
--------------------------------------------------------------------------------------------------
Cash provided (required) by financing activities:
Net increase (decrease) in short-term debt (1.9) 14.0 (4.3)
Net borrowings (repayments) under credit facilities 161.0 (10.0) (130.0)
Increase in other long-term debt 142.6 206.4 413.2
Repayment of other long-term debt (130.0) (285.1) (355.1)
Distributions to limited partner (70.0) -- --
Premium on early retirement of debt -- (3.4) (14.3)
Issuance of capital stock, net 10.5 7.3 14.7
--------------------------------------------------------------------------------------------------
CASH PROVIDED (REQUIRED) BY FINANCING ACTIVITIES 112.2 (70.8) (75.8)
--------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash and cash equivalents (4.0) (6.6) (4.9)
--------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 20.9 53.2 (19.9)
--------------------------------------------------------------------------------------------------
Cash and cash equivalents, beginning of year 77.5 24.3 44.2
--------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 98.4 $ 77.5 $ 24.3
==================================================================================================
</TABLE>
Supplemental cash flow information:
The company considers investments in all highly liquid debt instruments with
original maturities of three months or less to be cash equivalents. Cash flows
from hedging contracts are reported in the statements of cash flows in the same
categories as the cash flows from the transactions being hedged. Income taxes
paid, net of refunds, were $63.1 million, $41.8 million and $67.7 million for
1994, 1993 and 1992, respectively. Interest payments, net of amounts
capitalized, for 1994, 1993 and 1992 were $66.4 million, $60.1 million and
$99.9 million, respectively.
See notes to consolidated financial statements.
57 FMC CORPORATION AND CONSOLIDATED SUBSIDIARIES
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
-----------------------------------------------------------------------------------------------------------------------
Common Capital Foreign
stock, $0.10 in excess Retained currency Treasury
(In millions) par value of par earnings translation stock
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE DECEMBER 31, 1991 $ 3.6 $ 57.0 $246.5 $ 10.8 $ (8.1)
Net loss (75.7)
Stock options exercised (Note 11) 15.0
Purchase of treasury shares (0.3)
Translation adjustment (Note 5) (29.8)
-----------------------------------------------------------------------------------------------------------------------
BALANCE DECEMBER 31, 1992 3.6 72.0 170.8 (19.0) (8.4)
Net income 36.3
Stock options exercised (Note 11) 7.6
Purchase of treasury shares (0.3)
Translation adjustment (Note 5) (45.7)
-----------------------------------------------------------------------------------------------------------------------
BALANCE DECEMBER 31, 1993 3.6 79.6 207.1 (64.7) (8.7)
Net income 173.4
Stock options exercised (Note 11) 0.1 10.8
Purchase of treasury shares (0.4)
Translation adjustment (Note 5) 15.7
-----------------------------------------------------------------------------------------------------------------------
BALANCE DECEMBER 31, 1994 $ 3.7 $ 90.4 $380.5 $ (49.0) $ (9.1)
=======================================================================================================================
</TABLE>
See notes to consolidated financial statements.
FMC CORPORATION AND CONSOLIDATED SUBSIDIARIES 58
<PAGE>
<TABLE>
<CAPTION>
GEOGRAPHIC SEGMENT INFORMATION
----------------------------------------------------------------------------
SALES Year ended December 31
----------------------------------------------------------------------------
(In millions) 1994 1993 1992
----------------------------------------------------------------------------
<S> <C> <C> <C>
Third party sales
----------------------------------------------------------------------------
United States $3,084.8 $2,866.7 $3,068.1
Latin America and Canada 159.6 140.4 143.3
Europe 693.5 697.5 704.2
Asia, Africa & others 72.9 49.3 58.1
----------------------------------------------------------------------------
$4,010.8 $3,753.9 $3,973.7
----------------------------------------------------------------------------
Intersegment sales
----------------------------------------------------------------------------
United States $ 110.7 102.5 $ 97.6
Latin America and Canada 10.9 10.9 11.9
Europe 92.3 83.2 72.3
Asia, Africa & others 11.4 23.2 6.5
Eliminations (225.3) (219.8) (188.3)
----------------------------------------------------------------------------
Total sales $4,010.8 $3,753.9 $3,973.7
============================================================================
</TABLE>
<TABLE>
<CAPTION>
INCOME (LOSS) BEFORE
INCOME TAXES Year ended December 31
----------------------------------------------------------------------------
(In millions) 1994 1993 1992
----------------------------------------------------------------------------
<S> <C> <C> <C>
United States $ 341.5 $ 323.8 $ 391.6
Latin America and Canada 13.7 4.4 4.6
Europe 100.2 48.1 48.4
Asia, Africa & others 1.7 (0.8) 4.3
----------------------------------------------------------------------------
Operating profit 457.1 375.5 448.9
Net interest expense (59.1) (62.6) (82.7)
Corporate and other (101.8) (110.5) (112.3)
Minority interest (61.4) (2.5) (3.6)
Other income and
(expense), net 17.5 10.2 29.3
Restructuring and
other charges (Note 2) -- (172.3) --
----------------------------------------------------------------------------
Total $ 252.3 $ 37.8 $ 279.6
============================================================================
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
IDENTIFIABLE ASSETS Year ended December 31
----------------------------------------------------------------------------
(In millions) 1994 1993 1992
----------------------------------------------------------------------------
<S> <C> <C> <C>
United States $1,960.0 $1,544.3 $1,594.6
Latin America and Canada 157.2 142.7 141.2
Europe 676.3 640.3 636.2
Asia, Africa and others 64.9 51.0 44.9
----------------------------------------------------------------------------
Subtotal 2,858.4 2,378.3 2,416.9
Corporate and other 493.1 466.8 439.7
----------------------------------------------------------------------------
Total $3,351.5 $2,845.1 $2,856.6
============================================================================
</TABLE>
59 FMC CORPORATION AND CONSOLIDATED SUBSIDIARIES
<PAGE>
<TABLE>
<CAPTION>
OTHER INDUSTRY SEGMENT INFORMATION AND EXPORT SALES
----------------------------------------------------------------------------------------------------------------
RESEARCH AND
CAPITAL EXPENDITURES DEPRECIATION AND AMORTIZATION DEVELOPMENT EXPENDITURES
----------------------------------------------------------------------------------------------------------------
Year ended December 31 Year ended December 31 Year ended December 31
----------------------------------------------------------------------------------------------------------------
(In millions) 1994 1993 1992 1994 1993 1992 1994 1993 1992
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Performance Chemicals $ 66.1 $ 53.1 $155.2 $ 56.1 $ 52.9 $ 51.2 $ 94.7 $ 83.0 $ 71.9
Industrial Chemicals 129.0 78.6 81.2 72.3 76.1 86.6 17.3 15.3 17.3
Machinery and Equipment 77.0 70.7 30.5 35.3 31.1 27.4 30.8 26.1 26.2
Defense Systems 19.3 19.2 20.5 35.4 26.0 30.4 23.6 24.0 27.8
Precious Metals 56.1 18.5 19.1 15.3 25.7 28.6 -- 0.1 0.1
Corporate 8.5 4.4 8.0 14.6 14.8 12.7 0.4 0.7 1.7
----------------------------------------------------------------------------------------------------------------
Total $356.0 $244.5 $314.5 $229.0 $226.6 $236.9 $166.8 $149.2 $145.0
================================================================================================================
</TABLE>
Descriptions of the company's industry segments are on pages 8 through 34 of
this annual report. Sales, income before income taxes and identifiable
assets by industry segment are on page 7.
Sales to various agencies of the U.S. government aggregated $618.3 million,
$768.4 million and $839.5 million in 1994, 1993 and 1992, respectively.
These sales were made primarily by the Defense Systems segment.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
U. S. EXPORT SALES TO UNAFFILIATED CUSTOMERS BY
DESTINATION OF SALE
----------------------------------------------------------------------------------------------------------------
Year ended December 31
----------------------------------------------------------------------------------------------------------------
(In millions) 1994 1993 1992
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Latin America and Canada $ 217.9 $176.8 $172.2
Europe 153.3 192.2 250.5
Asia, Africa and others 668.6 415.3 474.8
----------------------------------------------------------------------------------------------------------------
Total $1,039.8 $784.3 $897.5
================================================================================================================
</TABLE>
FMC CORPORATION AND CONSOLIDATED SUBSIDIARIES 60
<PAGE>
Notes to
Consolidated Financial
Statements
Note 1 Principal Accounting Policies
Consolidation. The consolidated financial statements include the accounts of FMC
Corporation and all significant majority-owned subsidiaries and partnerships
("FMC" or "the company") except those excluded because control is restricted or
temporary in nature. All material intercompany accounts and transactions are
eliminated in consolidation.
Investments. Investments in companies in which ownership interests are 50
percent or less and FMC has significant influence over operating and financial
policies, are accounted for using the equity method. All other investments are
carried at their fair values or cost if appropriate.
Equity in net earnings of affiliates. Equity in net earnings of affiliates has
been adjusted to eliminate the effects of any material intercompany
transactions.
Inventories. Inventories are stated at the lower of cost or market value. Cost
is determined on the last-in, first-out (LIFO) basis for all domestic
inventories, except certain inventories relating to long-term contracts which
are stated at the actual production cost incurred to date, reduced by amounts
identified with recognized revenue. The costs attributed to units delivered
under such contracts are based on the estimated average cost of all units
expected to be produced. The first-in, first-out (FIFO) method is used to
determine the cost for all other inventories.
Inventory costs include manufacturing overhead, except that certain domestic
inventories exclude depreciation, factory administration, property taxes and
certain other fixed expenses.
Revenue recognition for contracts-in-progress. Sales are recorded under most
production contracts as deliveries are made. Sales under cost reimbursement
contracts for research, engineering, prototypes, repair and maintenance, and
certain production contracts are recorded as costs are incurred and include
estimated fees in the proportion that costs incurred to date bear to total
estimated costs. The fees under certain government contracts may be increased or
decreased in accordance with cost or performance incentive provisions. Such
awards or penalties are recognized at the time the amounts can be reasonably
determined.
Property, plant and equipment. Property, plant and equipment, including
capitalized interest, is recorded at cost. Depreciation for financial reporting
purposes is provided principally on the straight-line basis over the estimated
useful lives of the assets (land improvements--20 years, buildings--20 to 50
years, and machinery and equipment--3 to 18 years). Gains and losses are
reflected in income upon sale or retirement of assets.
Expenditures that extend the useful life of property, plant and equipment or
increase its productivity are capitalized.
Interest expense. Interest costs of $4.6 million ($0.7 million in 1993 and
$2.1 million in 1992) associated with the construction of certain capital assets
have been capitalized as part of the cost of those assets and are being
amortized over their estimated useful lives.
Unamortized fees and expenses of $4.0 million and $3.7 million related to debt
restructuring were charged off as extraordinary items in 1993 and 1992,
respectively.
Other Assets. Other assets include patents, deferred charges and intangibles
of acquired companies. Patents are capitalized and amortized over the lesser of
their remaining useful or legal lives. Debt issuance costs are amortized over
the term of the related debt. Intangibles represent the excess of the
consideration paid for companies acquired in purchase transactions over the
estimated fair value of the net assets acquired. Intangibles acquired are
generally amortized on a straight-line basis over periods normally not exceeding
15 years. There have been no events or changes in circumstances for the
underlying businesses to which the intangibles relate which would indicate that
the carrying amount of the intangibles are not recoverable.
Accounts payable. Amounts advanced by customers as deposits on orders not yet
billed and progress payments on contracts-in-progress are recorded as accounts
payable ($236.6 million at December 31, 1994 and $148.9 million at December 31,
1993).
Income taxes. Effective January 1, 1993, the company adopted Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes."
SFAS No. 109 requires an asset and liability approach, whereby deferred tax
liabilities and assets are recognized for expected future tax consequences of
temporary differences between the carrying amounts and tax bases of assets and
liabilities. Income taxes are not provided for the equity in undistributed
earnings of foreign subsidiaries or affiliates when it is management's intention
that such earnings remain invested in those companies. Taxes are provided in
the year the dividend payment is received or when the decision is made to
repatriate the earnings. Prior to January 1, 1993, income tax provisions were
based on income reported for financial statement purposes, adjusted for
transactions (permanent differences) that do not enter into the computation of
income taxes payable. The company deferred the tax effects of timing differences
between financial reporting and taxable income.
Foreign currency translation. Assets and liabilities of most foreign
operations are translated at exchange rates in effect at year-end, and income
statements are translated at the average exchange rates for the year. These
translation gains and losses are accumulated in a separate component of
stockholders' equity until the
61
<PAGE>
foreign entity is sold or liquidated. For operations in highly inflationary
countries, inventories, property, plant and equipment, and other noncurrent
assets are converted to U.S. dollars at historical exchange rates, and all gains
or losses from conversion to U.S. dollars are included in income.
Derivative financial instruments and foreign currency transactions. Gains and
losses on hedges of existing assets and liabilities are included in the carrying
amounts of those assets or liabilities and are ultimately recognized in income
as part of those carrying amounts. Gains or losses related to hedges of firm
commitments are also deferred and included in the basis of the transaction when
it is completed. Gains and losses on unhedged foreign currency transactions are
included in income.
Earnings per common share. Primary earnings per common share are computed by
dividing net income (loss) by the weighted average number of shares of common
stock and common stock equivalents (primarily stock options) outstanding during
the year (37,195,000 in 1994, 36,943,000 in 1993 and 36,796,000 in 1992). Fully
diluted earnings per common share reflect the maximum dilution that would result
from exercise of convertible debentures and stock options, unless such amounts
are antidilutive. The average number of shares used in the fully diluted
computation was 37,299,000 in 1994, 36,943,000 in 1993 and 39,694,000 in 1992.
The fully diluted computation is based upon income from continuing operations
after adding back after-tax interest on convertible debentures when dilutive
($7.6 million in 1992).
Segment information. Segment operating profit is defined as total revenue less
operating expenses. The following items have been excluded in computing
operating profit: general corporate income and expenses, interest income and
expense, income taxes, equity in net earnings of affiliates not directly
associated with a segment, minority interests, significant gains or losses on
abnormal retirements of assets, restructuring and other charges, and other
income and expense items. Identifiable assets by industry segment are those
assets that are used by segment operations. Corporate assets are principally
cash and cash equivalents, deferred income tax benefits and property and
equipment.
Environmental. The company provides for environmental-related obligations,
such as estimated contractor costs and fees, site study costs, reimbursements of
regulatory agency costs, post-closure costs, litigation costs, and other
remediation costs, 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 the Environmental
Protection Agency ("EPA"), or equivalent government agencies, are generally
accrued no later than when a Record of Decision ("ROD"), or equivalent, is
issued, or upon completion of a Remediation Investigation/Feasibility Study
("RI/FS") that is accepted by FMC and the appropriate government agency or
agencies. As remediations and investigations proceed, the estimates are reviewed
quarterly by the company's Environmental Health and Safety organization, as well
as 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 governmental
agencies or private parties.
Provisions for environmental costs are reflected in income, net of estimated
recoveries from named Potentially Responsible Parties ("PRPs") or other third
parties, incorporate inflation and are not discounted to their present values.
Estimated recoveries from third parties or other PRPs are recorded when probable
and reasonably estimable. 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.
Accounting standards not adopted. The Accounting Standards Executive Committee
of the AICPA adopted Statement of Position 94-6 on December 30, 1994. This SOP,
Disclosure of Certain Significant Risks and Uncertainties and Financial
Flexibility, is effective for fiscal years ending after December 15, 1995. The
disclosures required by the SOP focus primarily on the nature of an entity's
operations, the use of estimates in preparation of financial statements and on
risks and uncertainties that could significantly affect the amounts reported in
the financial statements. FMC plans to adopt the statement for the annual report
to shareholders for 1995 but it is not possible, at this time, to determine what
additional disclosures may be necessary with respect to reasonably possible
risks and uncertainties that could significantly affect the amounts reported in
the 1995 financial statements.
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.
Reclassifications. Certain prior-year amounts have been reclassified to
conform with the current year's presentation.
62
<PAGE>
Restructuring, Acquisitions,
Note 2 Formation of United Defense L.P.
and Discontinued Operations
Restructuring and other charges. In 1993, FMC recorded pretax restructuring and
other charges of $172.3 million, net of $12.7 million of minority interest
(after-tax $123.3 million, or $3.34 per share). These charges primarily related
to restructuring costs associated with the Machinery and Equipment and
Industrial Chemical segments, expenses to restructure companywide functional
support staffs, as well as a write-down of the investment in the Beartrack
development property in the Precious Metals segment. The restructuring program
was designed to reduce costs and improve operating efficiencies.
During 1994, FMC carried out a number of actions consistent with the 1993
restructuring plan. Employee positions were eliminated, manufacturing facilities
were consolidated and unprofitable product lines were exited.
The restructuring reserve remaining at December 31, 1994 of $49 million, is
expected to cover $22 million for spending associated with the remaining work
force reductions, and $27 million for spending on downsizing and other
restructuring related costs. The downsizing and functional staff reductions are
expected to be substantially complete by the end of 1995. Total anticipated
restructuring and other charges remain consistent with the original estimates
contemplated in the 1993 charge.
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 Airport Products and Systems 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.
Also on June 30, 1993, the company acquired SOFEC, Inc., a Houston-based
engineering and construction company. SOFEC, Inc. designs, fabricates and
installs offshore mooring systems for export and import terminals and for
floating storage and production facilities for offshore oil and gas.
The company also completed a number of other smaller acquisitions and joint
ventures during the years ended December 31, 1994 and 1993 respectively.
During 1992, the company acquired the worldwide flame retardants and fluids,
and water treatment chemicals businesses of Ciba-Geigy Additives Division.
The purchase prices for the aforementioned acquisitions were satisfied from
cash flow from operations and long-term financing. The company has accounted for
these acquisitions by the purchase method. These acquisitions did not have a
material impact on the consolidated results of operations.
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"), operates 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 is 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
at December 31, 1994 resulting in increases to trade receivables, inventories,
property, plant and equipment, other assets, accounts payable, and minority
interests compared to December 31, 1993.
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.
----------------------------------------------------------------
Year Ended
(In millions, except per share amounts) December 31, 1993
----------------------------------------------------------------
Revenue $4,137
Income from continuing operations 30
Earnings per common share:
Primary $ 0.81
Fully diluted $ 0.81
----------------------------------------------------------------
63
<PAGE>
Discontinued operations. In the fourth quarter of 1992, FMC recorded a $73.2
million charge, net of applicable tax benefits of $46.8 million, for increases
in the projected costs of liquidating liabilities associated with discontinued
operations. The provision included pretax charges of $75 million for
environmental clean-up, and $45 million for higher projected product liability
claims. In addition, a one-time, pretax adjustment of $92.5 million ($57.4
million net of tax) was recorded for retiree benefits provided to former
employees of discontinued operations. The provision for retiree benefits was
recorded in conjunction with the company's adoption of Statement of Financial
Accounting Standards No. 106.
Note 16 contains additional information on environmental issues.
Note 3 Trade Receivables
Trade receivables do not contain any material amounts representing receivables
collectible over a period in excess of one year, receivables billed under
retainage provisions of contracts or similar items whose determination or
ultimate realization is uncertain.
The company maintains an allowance for doubtful accounts based upon the
expected collectibility of all trade receivables, including receivables
discounted with recourse. A summary of activity in the allowance for doubtful
accounts is shown below:
--------------------------------------------------------------------
(In millions) 1994 1993 1992
--------------------------------------------------------------------
Balance at beginning of year $ 6.8 $ 7.4 $ 6.0
Provision for doubtful accounts 7.3 2.9 7.2
Receivables written off as uncollectible,
net of recoveries (3.1) (3.5) (5.8)
--------------------------------------------------------------------
Balance at end of year $11.0 $6.8 $7.4
====================================================================
Note 4 Inventories
Inventories are recorded at the lower of cost or market value. The current
replacement cost of inventories exceeded their recorded values by approximately
$249.3 million at December 31, 1994 and $238.0 million at December 31, 1993.
During 1994, 1993 and 1992, the company reduced LIFO inventories that were
carried at lower than prevailing costs. These reductions increased pretax income
by $3.7 million in 1994, $2.6 million in 1993 and $25.5 million in 1992.
Inventories at December 31, 1994 included approximately $149.7 million ($40.7
million at December 31, 1993) of inventoried costs relating to contracts-in-
progress. There were no material amounts in inventory at December 31, 1994 and
1993 relating to the excess of production cost of delivered units over the
estimated average cost of all units expected to be produced under contracts-in-
progress, or other non-recurring costs for which ultimate recovery may be
uncertain.
Note 5 Foreign Currency
Net income for 1994, 1993 and 1992 included aggregate foreign currency losses of
$11.1 million, $1.0 million and $1.4 million, respectively. The primary
component of the $11.1 million loss in 1994 relates to the devaluation of the
Mexican peso. Translation gains or losses for operations in highly inflationary
economies are included in income, while substantially all other translation
gains or losses are reported through a separate account in stockholders' equity.
The following table presents the foreign currency adjustments to key balance
sheet categories and the offsetting adjustment to stockholders' equity or
income. The 1994 increase in stockholders' equity is primarily attributable to a
weaker U.S. dollar in relation to European currencies, particularly the Spanish
peseta. The 1993 decrease in stockholders' equity is primarily attributable to a
stronger U.S. dollar in relation to European currencies, particularly the
Spanish peseta.
Interest earned on foreign cash and cash equivalents and debt service costs
are classified as interest income and interest expense, respectively, and are
not offset in the amounts shown below. In addition, foreign currency impacts
on cash and cash equivalents and debt in hyperinflationary economies are netted
against interest income and expense and are not shown in the amounts below.
-----------------------------------------------------------
Gains (Losses)
-----------------------------------------------------------
(In millions) 1994 1993 1992
-----------------------------------------------------------
Cash and cash equivalents $(4.0) $ (6.6) $ (4.9)
Debt (5.9) 7.7 21.0
Other working capital 4.0 (24.1) (17.2)
Property, plant & equipment, net 12.7 (33.3) (36.2)
Other (2.2) 9.6 6.1
-----------------------------------------------------------
$ 4.6 $(46.7) $(31.2)
===========================================================
Stockholders' equity $15.7 $(45.7) $(29.8)
Loss in income (11.1) (1.0) (1.4)
-----------------------------------------------------------
$ 4.6 $(46.7) $(31.2)
===========================================================
64
<PAGE>
Note 6 Financial Instruments
Fair value disclosures
The carrying amounts of cash and cash equivalents, trade receivables, other
current assets, accounts payable and amounts included in investments and
accruals meeting the definition of a financial instrument approximate fair
value. The carrying value and related estimated fair values for the company's
remaining financial instruments are as follows:
-------------------------------------------------------------
December 31, 1994
-------------------------------------------------------------
Carrying Estimated
(In millions) Amount Fair Value
-------------------------------------------------------------
Assets
-------------------------------------------------------------
Foreign exchange forward contracts $ 0 $5.9
Foreign currency swap agreements 0 2.5
-------------------------------------------------------------
Liabilities
-------------------------------------------------------------
Total Debt $1,009.4 $941.1
=============================================================
The fair values have been determined through information obtained from market
sources and management estimates. Specifically, fair values relating to
derivative financial instruments reflect the estimated amounts that the company
would receive or pay to terminate the contracts at the reporting date based on
quoted market prices of comparable contracts as of December 31, 1994.
Derivative financial instruments
The company uses derivative financial instruments selectively to offset exposure
to market risks arising from changes in foreign exchange rates and interest
rates. Derivative financial instruments currently utilized by the company
primarily include foreign currency forward contracts and foreign currency swap
contracts.
Foreign currency forward and swap contracts. The company utilizes forward
contracts to hedge receivables, payables, intercompany transactions and other
known transactional exposures denominated in a currency other than the
functional currency of the business. The company also hedges anticipated
exposures in certain circumstances where there is substantial assurance that
anticipated exposures will materialize. Foreign currency hedging contracts are
not taken out to protect the U.S. dollar value of the company's equity in
foreign operations. Hedges are executed centrally to minimize transaction costs
on currency conversions, monitor consolidated net exposures in all currencies
and minimize losses due to adverse changes in foreign currency markets.
The company has entered into foreign currency swap agreements allowing the
company to swap fixed-rate British pound denominated borrowings for floating
rate dollar amounts. These swap agreements give the company access to additional
sources of finance while limiting both foreign exchange risk and exposure to
floating interest rates on U.S. borrowings.
The table below summarizes by major currency the contractual amounts of the
company's foreign exchange forward and swap contracts in U.S. dollars. The "buy"
amounts represent the U.S. dollar equivalent of commitments to purchase or swap
foreign currencies, and the "sell" amounts represent the U.S. dollar equivalent
of commitments to sell or swap foreign currencies.
---------------------------------------------------------------
December 31
---------------------------------------------------------------
1994 1993
---------------------------------------------------------------
(In millions) Buy Sell Buy Sell
---------------------------------------------------------------
Canadian dollar $ -- $ 91.7 $ -- $ 86.9
British pound 4.4 106.6 6.7 109.1
Other, primarily European
currencies and yen 144.2 113.8 127.3 81.0
---------------------------------------------------------------
Total $148.6 $312.1 $134.0 $277.0
===============================================================
Cross-currency contracts at December 31, 1994 and December 31, 1993 were not
significant. Such contracts provide for the exchange of certain European
currencies.
Foreign exchange contracts mature at the anticipated cash requirement date of
the hedged transaction, generally within one year, except for the sale and
purchase of $94 million of British pounds, which mature annually through 2001
and the sale of $15 million of Japanese yen with various maturities through
2003.
At December 31, 1994, the company had not hedged any significant firm sales or
purchase commitments that qualify for hedge accounting. The majority of
outstanding hedges relate to receivables, payables, and intercompany
transactions. Unrealized gains and losses on hedges of anticipated transactions
are included in Net Income.
65
<PAGE>
Note 7 Investments
For the year ended December 31, 1994, FMC's equity in net earnings of
unconsolidated subsidiaries and affiliates was $5.3 million ($6.4 million in
1993 and $11.1 million in 1992).
Dividends received from affiliates were $9.4 million in 1994 ($6.0 million in
1993 and $4.3 million in 1992). Dividends included in other revenue from other
investments were $13.0 million, $9.7 million and $8.2 million in 1994, 1993
and 1992, respectively.
Income taxes have not been provided for the company's share of the cumulative
undistributed earnings of unconsolidated subsidiaries and affiliates ($53.4
million at December 31, 1994). Restrictions on the payment of dividends by these
affiliates are insignificant.
<TABLE>
<CAPTION>
------------------------------------------------------------
December 31
------------------------------------------------------------
(In millions) 1994 1993
------------------------------------------------------------
<S> <C> <C>
Investments in, and advances to,
unconsolidated subsidiaries and
affiliates $ 65.0 $64.6
Other investments, net 76.7 11.6
------------------------------------------------------------
Total $141.7 $76.2
============================================================
</TABLE>
Proceeds from Sweetwater County, Wyoming's Solid Waste Disposal Revenue Bonds
(Note 9) are included in other investments in 1994 and are being used to fund a
soda ash business capital project.
Note 8 Property, Plant and Equipment
Property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
------------------------------------------------------------
December 31
------------------------------------------------------------
<S> <C> <C>
(In millions) 1994 1993
------------------------------------------------------------
Land and land improvements $ 275.7 $ 252.8
Buildings 510.1 461.3
Machinery and equipment 2,894.6 2,706.0
Construction in progress 217.1 78.3
------------------------------------------------------------
Total cost 3,897.5 3,498.4
Accumulated depreciation 2,360.1 2,108.1
------------------------------------------------------------
Net property, plant and equipment $1,537.4 $1,390.3
============================================================
</TABLE>
Depreciation expense was $220.5 million, $222.4 million and $235.0 million in
1994, 1993 and 1992, respectively.
Note 9 Debt
Long-term debt
Long-term debt consists of the following:
<TABLE>
<CAPTION>
------------------------------------------------------------
December 31
------------------------------------------------------------
(In millions) 1994 1993
------------------------------------------------------------
<S> <C> <C>
Revolving credit facility, effective rate
(1994-6.1%; 1993-5.9%)/(1)/ $ 85.0 $ --
Uncommitted facilities, effective rate
(1994-4.5%; 1993-4.2%)/(2)/ 76.0 --
Notes payable to banks, various rates,
due 1995 to 1998 75.3 39.6
Pollution control and industrial
revenue bonds, 3.8% to 7.1%,
due 1997 to 2024 181.2 94.9
Senior debt, 8-3/4% due 1999,
less unamortized discount (1994-$0.7;
1993-$0.9), effective rate 8.8% 249.3 249.1
Senior debt, 6-3/8% due 2003,
less unamortized discount (1994-$1.0;
1993-$1.1), effective rate 6.4% 199.0 198.9
Sterling denominated debt, due 2042,
less unamortized discount of
(1993-$18.9), 7.65% yield to maturity -- 104.9
Exchangeable senior subordinated
debentures, 6-3/4%, due 2005 75.0 75.0
Other 1.7 2.5
------------------------------------------------------------
Total 942.5 764.9
Less current portion 41.3 15.0
------------------------------------------------------------
Long-term portion $901.2 $749.9
============================================================
</TABLE>
/(1)/ The effective rate on the revolving credit facility is based on average
balances outstanding during the year and includes facility fees and
expenses incurred due to interest rate swaps.
/(2)/ The effective rate on uncommitted facilities is based on average balances
outstanding during the year and includes expenses incurred due to interest
rate swaps .
In December, 1994, the company entered into a $250 million, 364 day, non-
amortizing revolving credit agreement and a $250 million, five-year, non-
amortizing revolving credit agreement to replace the company's previous credit
agreements. Among other restrictions, the credit agreement contains covenants
relating to dividends, liens, consolidated net worth and cash flow coverage and
leverage ratios (as defined in the agreement). The company is in compliance
with all financial debt covenants.
At December 31, 1994, advances under uncommitted facilities were $76 million.
Committed credit available under the revolving credit facility provides
management with the ability to refinance this debt on a long-term basis and, as
it is management's intent to do so, advances under the uncommitted facilities
have been classified as long-term debt.
In June, 1994 and September, 1994, the company borrowed $45 million at 7.0%
interest and $45 million at 6.9% interest, respectively with maturities of 2024,
from the proceeds of Sweetwater County, Wyoming's Solid Waste Disposal Revenue
Bonds. (Note 7)
The company has entered into foreign currency swap agreements
allowing the Sterling denominated fixed rate borrowings, originally due to
mature 2042, to be swapped for floating rate dollar amounts.
66
<PAGE>
During 1993, the company, with funds obtained through its revolving credit
agreement, repurchased the remaining $655 million, less unamortized discount of
$481 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. As
a result of the write-off of related unamortized debt issue costs, as well as
other costs and expenses incurred, the company recognized an extraordinary
charge of $4.7 million, net of tax benefits of $2.7 million.
In August 1993, subsequent to the repurchases noted above, the company issued
$200 million of 6-3/8% senior notes due 2003. The net proceeds of $198 million
were used to repay advances under the revolving credit agreement.
Net proceeds from the 1992 issuance of $250 million of 8-3/4% senior debt were
used to repurchase the remaining $123 million of 12-1/4% senior subordinated
debentures, and to reduce debt incurred in February 1992 to repurchase the
remaining $99 million of 12-1/2% subordinated debentures. In 1992, the company
also repurchased the remaining $45 million of the 9-1/2% sinking fund
debentures. As a result of the premium paid on the above repurchases, the write-
off of related unamortized debt issuance costs, and other expenses, the company
incurred an extraordinary charge of $11.4 million, net of tax benefits of $6.7
million, in 1992.
The exchangeable senior subordinated debentures bearing interest at 6-3/4% and
maturing in 2005 are exchangeable at any time into FMC Gold Company common stock
held by FMC Corporation at an exchange price of $15-1/8, subject to change as
defined in the offering circular. However, the company may, at its option, pay
an amount equal to the market price of FMC Gold Company common stock in lieu of
delivery of the shares. The debentures are subordinated in right of payment to
all existing and future senior indebtedness of the company. The debentures are
redeemable at the option of FMC at prices decreasing from 103-3/8% of face
amount on January 16, 1995, to par on January 16, 2000.
Aggregate maturities and sinking fund requirements over the next five years
are (in millions): 1995--$41.3, 1996--$21.5, 1997--$21.5, 1998--$34.1, 1999--
$435.2, and thereafter--$388.9.
Short-term Debt and Compensating Balance Agreements. FMC maintains informal
credit arrangements in many foreign countries. Foreign lines of credit, which
usually 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. The weighted average interest rate on outstanding
short-term borrowings at December 31, 1994 and 1993 was 8.2% and 7.4%,
respectively. The average interest rates have been adjusted for currency
devaluation associated with borrowing in hyperinflationary countries.
Note 10 Income taxes
Effective January 1, 1993, the company adopted SFAS No. 109, "Accounting for
Income Taxes," which changed the company's method of accounting for income taxes
from the deferred method to an asset and liability approach. Previously, the
company deferred the tax effects of timing differences between financial
reporting and taxable income. The asset and liability approach requires the
recognition of deferred tax liabilities and assets for the expected future tax
consequences of temporary differences between the carrying amounts and tax bases
of assets and liabilities.
The company has elected not to restate the financial statements of prior years
for this change in accounting. The cumulative effect of the change on pretax
income and net income was not material.
Domestic and foreign components of pretax income (loss) from continuing
operations are shown below:
----------------------------------------------------
Year ended December 31
----------------------------------------------------
(In millions) 1994 1993 1992
----------------------------------------------------
Domestic $173.1 $(17.2) $226.5
Foreign 79.2 55.0 53.1
----------------------------------------------------
Total $252.3 $ 37.8 $279.6
====================================================
The provision (benefit) for income taxes consists of:
----------------------------------------------------
Year ended December 31
----------------------------------------------------
(In millions) 1994 1993 1992
----------------------------------------------------
Current:
Federal $24.7 $ 23.7 $56.3
Foreign 21.6 8.3 21.0
State and local 2.3 3.7 12.7
----------------------------------------------------
Total current 48.6 35.7 90.0
Deferred 30.3 (38.9) (3.0)
----------------------------------------------------
Total income taxes $78.9 $ (3.2) $87.0
====================================================
Total income tax provisions (benefits) were allocated as follows:
-------------------------------------------------------
(In millions) 1994 1993
-------------------------------------------------------
Income from continuing operations $78.9 $(3.2)
Extraordinary item -- (2.6)
Items charged directly to stockholders'
equity (2.9) (2.4)
-------------------------------------------------------
Income tax expense (benefit) $76.0 $(8.2)
=======================================================
67
<PAGE>
Significant components of the deferred income tax provision (benefit)
attributable to income from continuing operations are as follows.
<TABLE>
<CAPTION>
-------------------------------------------------------------------
(In millions) 1994 1993
-------------------------------------------------------------------
<S> <C> <C>
Deferred tax (exclusive of the effects of
other components listed below) $28.5 $(50.6)
Adjustments to deferred tax assets and
liabilities for enacted changes in tax laws
and rates -- (5.1)
Increase in the valuation allowance
for deferred tax assets 1.8 16.8
-------------------------------------------------------------------
Deferred income tax expense (benefit) $30.3 $(38.9)
===================================================================
</TABLE>
Significant components of the company's deferred tax assets and liabilities
as of December 31, 1994 and December 31, 1993 are as follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------------
(In millions) 1994 1993
-------------------------------------------------------------------
<S> <C> <C>
Accrued pension and other postretirement
benefits $119.2 $107.2
Reserves for discontinued operations
and restructuring 94.0 149.2
Other reserves 111.1 108.6
Net operating loss carryforwards 25.0 22.7
Alternative minimum tax credit carryforwards 31.8 12.4
Capitalized research and development
costs (2.3) 14.7
Other 16.8 17.1
-------------------------------------------------------------------
Deferred tax assets 395.6 431.9
Valuation allowance (39.1) (37.3)
-------------------------------------------------------------------
Deferred tax assets, net of valuation
allowance $356.5 $394.6
===================================================================
Property, plant and equipment $170.2 $163.8
Other 5.5 6.1
-------------------------------------------------------------------
Deferred tax liabilities $175.7 $169.9
===================================================================
Net deferred tax assets $180.8 $224.7
===================================================================
</TABLE>
As of December 31, 1994, the company has prepaid $31.8 million of alternative
minimum tax. These prepayments represent credits that are available in future
years to offset regular taxes to the extent they exceed alternative minimum tax.
The effective income tax rate applicable to pretax income is less than the
statutory U.S. federal income tax rate due to the various factors listed in the
following table:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
PERCENT OF PRE-TAX INCOME Year ended December 31
---------------------------------------------------------------------------
1994 1993 1992
---------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory U.S. tax rate 35% 35% 34%
---------------------------------------------------------------------------
Net increase (decrease):
Foreign sales corporation income not
subject to U.S. tax (3) (30) (3)
Percentage depletion (6) (51) (7)
State and local income taxes, less
federal income tax benefit 3 (6) 3
Foreign earnings subject to different
tax rates (1) (15) 1
Tax on intercompany dividends
and deemed dividends for
tax purposes 3 54 1
Adjustment to deferred tax
assets for enacted changes
in tax rates -- (13) --
Equity in earnings of affiliates
not taxed (2) (9) (1)
Minority interest on FMC Gold
restructuring charge -- (11) --
Change in valuation allowance -- 44 1
Other 2 (6) 2
---------------------------------------------------------------------------
Total decrease (4) (43) (3)
---------------------------------------------------------------------------
Effective tax rate 31% (8)% 31%
===========================================================================
</TABLE>
FMC Corporation's federal income tax returns for years through 1989 have been
examined by the Internal Revenue Service and have been settled. Management
believes that adequate provision for income taxes has been made for the open
years 1990 and after. Income taxes have not been provided for the equity in
undistributed earnings of foreign consolidated subsidiaries ($299.7 million at
December 31, 1994). Restrictions on the distribution of these earnings are not
significant. Foreign earnings taxable to the company as dividends were $66.2
million, $131.0 million and $22.1 million in 1994, 1993, and 1992, respectively.
NOTE 11 STOCK OPTION PLANS
An Incentive Share Plan providing certain incentives and rewards to key
employees is administered by the Compensation and Organization Committee of the
Board of Directors (the Committee). The Committee, subject to the provisions of
the plan, approves participants and awards, and times and conditions for
payment.
Awards may be made in the form of an unconditional stock option and a
conditional dollar amount. Unconditional stock options are exercisable at the
end of an award period, usually four years from the date of the grant, while
all, part, or none of the conditional dollar amount may be paid at the end of
the award period if the stock option has little or no value and, in the case of
performance awards, financial targets have been met and approved by the
Committee.
68
<PAGE>
Stock options may be incentive stock options and/or nonqualified stock
options. The exercise price for options is the fair market value of the stock at
the date of grant. Incentive stock options expire not more than 10 years after
the grant date. Nonqualified stock options expire not more than 15 years after
the grant date (10 years for grants prior to 1990), although the Committee may
extend the expiration date of any nonqualified stock option.
The following summary shows stock option activity:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
Shares optioned
but not Option price
exercised per share
-------------------------------------------------------------------------------
<S> <C> <C>
December 31, 1992 2,679,358 $7.39-$46.375
Granted 199,300 $45.00
Exercised (313,775) $7.39-$24.50
Cancelled (98,700) $29.50-$46.375
-------------------------------------------------------------------------------
December 31, 1993 2,466,183 $10.43-$46.375
Granted 851,550 $46.25
Exercised (340,459) $10.43-$31.25
Cancelled (88,900) $29.50-$46.375
-------------------------------------------------------------------------------
DECEMBER 31, 1994 2,888,374 $17.625-$46.375
===============================================================================
</TABLE>
At December 31, 1994, 1,141,024 of the optioned shares are exercisable at
prices ranging from $10.43 to $31.125 per share, with expiration dates from July
8, 1996 to April 27, 2005. On January 2, 1995, an additional 159,700 shares
became exercisable at a price of $29.50 with an expiration date of January 9,
2006. The excess of proceeds over the par value of optioned shares issued is
credited to capital in excess of par value of capital stock. Cancellation
(through expiration, forfeiture or otherwise) of awards granted after 1989
increases the shares available for future awards. At December 31, 1994,
approximately 348,000 shares are available for future award.
In April 1987, the stockholders approved the FMC Deferred Stock Plan for
Nonemployee Directors. Under this plan, a portion of the annual retainer for
these directors will be deferred and paid in the form of shares of common stock
upon retirement or other termination of their directorships. At December 31,
1994, stock units representing an aggregate of 13,523 shares of stock were
credited to the nonemployee directors' accounts.
NOTE 12 STOCKHOLDERS' EQUITY
The company is authorized to issue 60,000,000 shares of common stock, par value
$0.10 per share, and 5,000,000 shares of preferred stock, no par value. None of
the preferred stock is issued or outstanding.
The following is a summary of FMC's capital stock activity over the past three
years:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
<S> <C> <C>
Common Treasury
(In thousands) stock stock
---------------------------------------------------------------------------
Balance December 31, 1991 35,549 279
Stock options exercised 610
Stock repurchases 7
---------------------------------------------------------------------------
Balance December 31, 1992 36,159 286
Stock options exercised 314
Stock repurchases 6
---------------------------------------------------------------------------
Balance December 31, 1993 36,473 292
Stock options exercised 341
Stock repurchases 6
---------------------------------------------------------------------------
BALANCE DECEMBER 31, 1994 36,814 298
===========================================================================
</TABLE>
At December 31, 1994, 3,236,224 shares of unissued FMC common stock were
reserved for stock options and awards.
Covenants of the revolving credit facility agreement (Note 9) restrict
aggregate payment of dividends on the company's common stock to 50 percent of
consolidated net income (as defined) after December 31, 1991, plus $170 million.
However, no dividends are expected to be paid on the company's common stock in
1995. The covenants also contain a minimum net worth requirement (as defined)
of $300 million plus 50 percent of consolidated net income (as defined) after
June 30, 1992.
On February 22, 1986, the Board of Directors of the company declared a
dividend distribution to each recordholder of common stock as of March 7, 1986,
of one Preferred Share Purchase Right for each share of common stock outstanding
on that date. Each right entitles the holder to purchase, under certain
circumstances, one one-hundredth of a share of Junior Participating Preferred
Stock, Series A, without par value, at a price of $75 per share (subject to
adjustment), subject to the terms and conditions of a Rights Agreement dated
February 22, 1986.
The rights are not exercisable or transferrable apart from the common stock
until 10 days after a public announcement that a person or group either (1) has
acquired, or has obtained the right to acquire, beneficial ownership of 20
percent or more of the company's outstanding shares of common stock, or (2) has
commenced, or announced an intention to commence, a tender offer or exchange
offer that would result in the person or group beneficially owning 30 percent or
more of the outstanding shares of common stock. The rights expire on March 7,
1996, unless redeemed by the company at an earlier date. The redemption price of
$.05 per right is subject to adjustment to reflect stock splits, stock dividends
or similar transactions. The company has reserved 400,000 shares of Junior
Preferred Stock for possible issuance under the plan.
In February 1988, the Rights Agreement was amended, such that if an entity
acquired more than 20 percent of FMC's common stock, FMC stockholders, except
the acquiring stockholder, will have the right to purchase
69
<PAGE>
FMC common stock at a substantial discount to market value. For a period of 10
days after the date of the stock acquisition, the FMC Board of Directors may
redeem the rights, permit the rights to be exercised or extend the 10-day
redemption period.
Note 13 Retirement plans
FMC has retirement plans for substantially all domestic employees and certain
employees in other countries. Plans covering salaried employees provide pension
benefits based on years of service and an average of the highest 60 consecutive
months of compensation during the last 120 months of consecutive employment.
Plans covering hourly employees generally provide benefits of stated amounts for
each year of service.
The company's funding policy is to make contributions based on the projected
unit credit actuarial cost method and to limit contributions to amounts that are
currently deductible for tax reporting purposes.
Beginning in 1994, net pension benefit and plan funded pension amounts include
salaried and hourly retirement plans contributed by Harsco Corporation as part
of a limited partnership agreement between FMC's Defense Systems Group and
Harsco's BMY Combat Systems Division. Net pension benefit includes a charge of
$1.3 million for the Combat Systems Division. Also included for Combat Systems
are $40.8 million of projected benefit obligation, $43.4 million of assets and
$6.4 million of accrued pension benefit cost.
The following table summarizes the assumptions used and the components of the
domestic net benefit:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
Year ended December 31
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Assumptions: 1994 1993 1992
-------------------------------------------------------------------------------
Weighted average discount rate 8.0% 8.0% 8.0%
Rates of increase in future
compensation levels 5.0% 5.0% 5.0%
Weighted average expected
long-term asset return 9.3% 9.3% 9.3%
-------------------------------------------------------------------------------
Components (in millions):
-------------------------------------------------------------------------------
Service cost-benefits earned $ 25.5 $ 22.6 $ 22.7
Interest cost on projected benefit
obligation 55.5 50.2 47.1
Actual return on plan assets--
investment (gains) losses 2.6 (105.9) (43.9)
Net amortization and deferral:
Net transition asset amortization (23.7) (23.0) (23.0)
Prior service cost amortization 5.2 3.9 8.5
Net gain amortization (2.3) (1.9) (2.3)
Net asset gain (loss) deferred (72.8) 46.5 (12.9)
-------------------------------------------------------------------------------
Net pension benefit $(10.0) $ (7.6) $ (3.8)
===============================================================================
</TABLE>
During 1994, FMC continued implementing programs to reorganize functional
support staffs across the corporation and to consolidate and downsize various
operations within the Industrial Chemicals, and Machinery and Equipment
segments. Voluntary incentive benefit packages which either eliminated or
reduced early retirement penalties were offered to salaried and non-union hourly
employees whose age and service qualified them for the program. In addition to
the voluntary program, early retirement penalties will be adjusted for certain
employees affected by the company's restructuring, downsizing or consolidation
activities.
Net pension benefit in 1994 includes charges of $2.4 million related to these
programs. In addition, $6.2 million of special termination benefits (early
retirement incentives) were accrued for as part of the 1993 restructuring charge
and are included in accrued pension cost.
In 1992, the net pension benefit included a pension curtailment charge of $4.6
million relating to the elimination of certain employees in the company's
hourly plans.
The funded status of the plans and accrued pension cost recognized in the
company's consolidated financial statements as of December 31 are as follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
(In millions) 1994 1993
-------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of benefits for
service rendered to date:
Accumulated benefit obligation based
on salaries to date, including vested
benefits of $581.8 in 1994 and
$541.1 in 1993 $(611.6) $(565.2)
Additional benefits based on
estimated future salary levels (145.4) (117.1)
-------------------------------------------------------------------------------
Projected benefit obligation (757.0) (682.3)
Plan assets at fair value/(1)/ 727.4 717.0
-------------------------------------------------------------------------------
Projected benefit obligation (in excess of)
or less than plan assets (29.6) 34.7
Unrecognized net loss 55.7 0.4
Unrecognized prior service cost 25.5 24.6
Unrecognized net transition asset (149.6) (167.8)
-------------------------------------------------------------------------------
Accrued pension cost $(98.0) $(108.1)
===============================================================================
(1) Primarily equities, bonds and participating annuities.
</TABLE>
The financial impact of compliance with SFAS No. 87 for non-U.S. pension plans
is not materially different from the locally reported pension expense. The cost
of providing those pension benefits for foreign employees was $6.3 million in
1994, $6.7 million in 1993 and $5.9 million in 1992.
70
<PAGE>
NOTE 14 POSTRETIREMENT HEALTH CARE AND LIFE
INSURANCE BENEFITS
FMC provides retiree health care and life insurance benefits for substantially
all domestic employees. There are no significant plans for international
employees. Employees generally become eligible for retiree benefits when they
meet minimum retirement age and service requirements. The cost of providing most
of these benefits is shared with retirees. The company has reserved the right
to change or eliminate these benefit plans.
The company funds a trust for retiree health and life benefits for the Defense
Systems segment. Funding is based on amounts in negotiated government defense
contracts, in conformance with Federal Cost Accounting Standards.
Beginning in 1994, postretirement amounts include amounts for plans
contributed by Harsco Corporation as part of a limited partnership agreement
between FMC's Defense Systems Group and Harsco's BMY Combat Systems Division. As
a result, postretirement benefit cost includes charges of $0.4 million for the
Combat Systems Division, $3.4 million of accumulated postretirement benefit
obligation and $4.9 million of accrued postretirement benefit cost.
For measurement purposes, the assumed rate of future increases in per capita
cost of health care benefits was 10 percent in 1994 and 13 percent in 1993,
decreasing gradually to 6 percent by the year 2001 and assumed to remain at that
level thereafter. The health care cost trend rate assumption has a significant
effect on amounts recorded. Increasing the health care cost trend rates by one
percentage point would increase the accumulated postretirement benefit
obligation by approximately $9.0 million and would increase annual service and
interest costs by $1.0 million.
The following table summarizes the assumptions used and the components of net
periodic postretirement benefit cost:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
Year ended December 31
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Assumptions: 1994 1993 1992
-------------------------------------------------------------------------------
Weighted average discount rate 8.0% 8.0% 8.0%
Weighted average expected long-term asset return 9.0% 9.0% 9.0%
-------------------------------------------------------------------------------
Components (in millions):
-------------------------------------------------------------------------------
Service cost of benefits earned $ 4.2 $ 4.7 $ 6.9
Interest cost on accumulated
postretirement benefit obligation 13.3 14.3 18.3
Actual return on plan assets--
investment (gain) losses 0.4 (1.2) (0.7)
Net amortization and deferral:
Plan amendment amortization (7.7) (6.1) (0.3)
Net gain amortization (0.6) -- --
Net asset loss deferred (2.5) (0.3) (0.3)
-------------------------------------------------------------------------------
Net periodic postretirement
benefit cost $ 7.1 $11.4 $23.9
===============================================================================
</TABLE>
The accrued postretirement benefit cost recognized in the company's
consolidated financial statements and the funded status of the plan as of
December 31 are as follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
(In millions) 1994 1993
-------------------------------------------------------------------------------
<S> <C> <C>
Accumulated postretirement benefit obligation (APBO):
Retirees $(110.4) $ (85.2)
Fully eligible active participants (24.5) (30.8)
Other active participants (53.8) (61.4)
-------------------------------------------------------------------------------
APBO (188.7) (177.4)
Plan assets at fair value/(1)/ 24.5 20.8
-------------------------------------------------------------------------------
APBO obligation in excess of plan assets (164.2) (156.6)
Unamortized plan amendments (62.8) (70.4)
Unrecognized net (gain) or loss (4.3) (4.7)
-------------------------------------------------------------------------------
Accrued postretirement benefit cost $(231.3) $(231.7)
===============================================================================
(1) Primarily equities and fixed income securities
</TABLE>
As a part of restructuring and downsizing, a voluntary incentive benefit
package, which lowered the participants' minimum age eligibility requirement,
was offered to salaried employees. As a result, $2.4 million was accrued as part
of the 1993 restructuring charge and included in accrued postretirement benefit
cost.
In 1993, the company announced plan changes to establish a service-related
premium and a fixed-dollar cap on the company's medical plan contributions for
its salaried and non-union hourly retiree medical plans. These changes,
effective April 1, 1993, reduced the benefit obligation by $62.4 million,
amortizable over the remaining years of service to full eligibility.
SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions," was implemented by the company effective January 1, 1992 using the
immediate recognition transition option. SFAS No. 106 requires accrual of the
expected cost of providing postretirement benefits, other than pensions, during
the years that the employee renders the necessary service. This resulted in a
one-time, pretax adjustment of $296.3 million ($183.7 million, net of tax) in
1992, of which $92.5 million ($57.4 million, net of tax) was recorded for
retiree benefits provided to former employees of discontinued operations.
71
<PAGE>
Note 15 Employees' Thrift and Stock
Purchase Plans
The FMC Employees' Thrift and Stock Purchase Plan (Thrift Plan) is a qualified
salary-reduction plan under Section 401(k) of the Internal Revenue Code in which
all salaried and non-union hourly employees of the company may participate.
Under the Thrift Plan, participants may elect to have up to 15 percent of their
compensation contributed to the plan. An employee's contribution, up to five
percent of compensation, is matched by the company from 15 percent to 100
percent (80 percent prior to April 1, 1993), depending on profits and fund
elections. A participant's interest in the company's contributions vests
gradually during the first five years of active service and is fully vested
thereafter. The employee-elected contributions may be invested in company stock,
a fixed income fund or an equity fund. All matching contributions by the company
are invested in the company's stock. In addition, the company also matched the
contributions in the UDLP Salaried Employees' Plan and the UDLP York Plan. These
plans have provisions similar to the FMC plan. Charges against income for FMC's
matching contributions, net of forfeitures, were $18.8 million in 1994, $17.1
million in 1993 and $13.9 million in 1992.
Note 16 Environmental
The company may be obligated to recognize expenses required to comply with
federal, state, and local environmental laws under which the company has been
identified as a PRP by the EPA or other government agencies. The company has
been named a PRP at 36 sites on the government's National Priority List. In
addition, the company also has received notice from the EPA or other regulatory
agencies that the company may be a PRP, or PRP equivalent, at other sites,
including 25 sites at which the company has determined that it has a reasonably
possible environmental liability. The company, in cooperation with appropriate
government agencies, is currently participating in, or has participated in,
Remediation Investigation/Feasibility Studies (RI/FS) or their equivalent at
most of the identified sites, with the status of each investigation varying from
site to site. RI/FS at certain sites have just begun whereby limited
information, if any, is available 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 Record of Decisions have been issued.
Reserves at December 31, 1994 were provided for potential environmental
obligations which management considers probable and for which a reasonable
estimate of the obligation could be made. 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. Accordingly, reserves of $229 million and $187
million, before recoveries, have been provided at December 31, 1994 and December
31, 1993, respectively, of which $142 million and $99 million are included in
the reserve for discontinued operations at December 31, 1994 and December 31,
1993, respectively. In addition, the company has estimated reasonably possible
environmental loss contingencies may exceed amounts accrued by as much as $230
million.
Although potential environmental remediation expenditures in excess of the
current reserves and estimated loss contingencies could be significant, the
impact on the company's future financial results is not subject to reasonable
estimation due to numerous uncertainties concerning the nature and scope of
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 PRPs as well as other third parties.
The liability 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. Management, however, believes the liability
arising from the potential environmental obligations is not likely to have a
material adverse effect on the company's liquidity or financial condition and
may be satisfied over the next 20 years or longer.
To ensure FMC is held responsible only for its equitable share of site
remediation costs, FMC has initiated, and will continue to initiate, legal
proceedings for contributions from other PRPs, and for a determination of
coverage against its comprehensive general liability insurance carriers. The
Supreme Court of California has determined that FMC's clean-up costs are insured
damages under its liability insurance policies, subject to a determination of
the application of certain policy exclusions and conditions. In July 1993, in
the Superior Court of Santa Clara County, CA, a jury verdict determined that
these exclusions do not apply to several of these sites. The other sites will be
the subject of future litigation. Approximately $123 million of recoveries
($44 million as other assets and $79 million as an offset to the reserve for
discontinued operations) and approximately $54 million of recoveries ($32
million as other assets and $22 million as an offset to the reserve for
discontinued operations), has been recorded as probable realization on claims
against insurance companies and other third parties at December 31, 1994 and
December 31, 1993, respectively.
72
<PAGE>
Regarding current operating sites, the company spent approximately $20
million, $16 million and $20 million for the years 1994, 1993 and 1992,
respectively, on capital projects relating to environmental control facilities,
and expects to spend additional capital of approximately $36 million and $21
million in 1995 and 1996, respectively. Additionally, in 1994, 1993, and 1992,
FMC spent approximately $55 million, $63 million and $57 million, respectively,
for environmental compliance costs.
Regarding previously operated and other sites for the years 1994, 1993 and
1992, FMC charged approximately $18 million, $17 million and $11 million,
respectively, against established reserves for remediation spending, and charged
approximately $13 million, $10 million and $11 million, respectively, against
reserves for spending on RI/FS. Recoveries from third parties of approximately
$5 million, $7 million and $3 million, respectively, were received in 1994, 1993
and 1992. FMC anticipates that the expenditures for current operating,
previously operated and other sites will continue to be significant for the
foreseeable future.
Note 17 Non-Environmental Commitments
and Contingent Liabilities
FMC leases office space, plants and facilities, and various types of
manufacturing, data processing and transportation equipment. Leases of a capital
nature are not significant. Total rent expense under all leases not capitalized
amounted to $64.1 million, $60.0 million and $59.8 million in 1994, 1993 and
1992, respectively. Minimum future rentals under noncancellable leases
aggregated approximately $308 million as of December 31, 1994 and are estimated
to be payable $54 million in 1995, $39 million in 1996, $31 million in 1997, $30
million in 1998, $29 million in 1999 and $125 million thereafter. The real
estate leases generally provide for payment of property taxes, insurance and
repairs by FMC.
FMC Gold Company is involved in two lawsuits filed late in 1994 seeking to
enjoin development of the Beartrack property which is within the national
forests of Idaho. While the company believes that the biological opinion it
received prior to commencing the development was carefully considered and is
fully supported by the record, a different conclusion in either lawsuit could
result in suspension of further development and/or operation of the Beartrack
property. At December 31, 1994, capital spending totals $48 million of an
expected $57 million for this development. A further discussion of these
lawsuits is included on page 49.
The company also has certain other contingent liabilities resulting from
litigation, claims, performance guarantees, and other commitments incident to
the ordinary course of business. Management believes that the probable
resolution of such contingencies will not materially affect the financial
position or results of operations of FMC.
Note 18 Subsequent Event
On February 6, 1995, the company announced that it has reached agreement with
Nippon Sheet Glass Co., Ltd., Tokyo, and Sumitomo Corporation, Tokyo, to sell a
minority interest in its soda ash business for $150 million. In addition, Nippon
Sheet Glass Co., Ltd. and Sumitomo Corporation will be investing in FMC's $135
million two-phased solution mining project. When the deal is completed, the
Japanese companies will hold a 20 percent equity interest in FMC Wyoming
Corporation, a wholly owned subsidiary of FMC, which will be composed solely of
FMC's soda ash business. FMC Wyoming will supply soda ash to the glass
manufacturing operations of Nippon Sheet Glass.
FMC will retain management control of both the soda ash business and its Green
River, Wyoming, soda ash mining and manufacturing facility. FMC also will retain
100 percent ownership of the non-soda ash facilities and businesses located in
Green River. The joint venture is expected to be completed in the second quarter
of 1995, subject to various conditions, which include completion of due
diligence, approval by the companies' respective boards of directors and receipt
of requisite government approvals.
73
<PAGE>
Independent Auditors' Report
KPMG Peat Marwick LLP Logo
The Board of Directors and Stockholders,
FMC Corporation:
We have audited the consolidated balance sheets of FMC Corporation and
consolidated subsidiaries as of December 31, 1994 and 1993, and the related
consolidated statements of income, cash flows and changes in stockholders'
equity for each of the years in the three-year period ended December 31, 1994.
These consolidated financial statements are the responsibility of the
company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits. With respect to
information as of and for the year ended December 31, 1994, we did not audit the
financial statements of United Defense, L.P., which statements reflect total
assets constituting 13% and total revenues constituting 27% of the related
consolidated totals in 1994. Those statements were audited by other auditors
whose report has been furnished to us, and our opinion, insofar as it relates to
the amounts included for United Defense, L.P., is based solely on the report of
the other auditors.
We conducted our audits 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 audits and the report of other auditors provide a reasonable
basis for our opinion.
In our opinion, based upon our audit and the report of the other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of FMC Corporation and consolidated
subsidiaries at December 31, 1994 and 1993, and the results of their operations
and their cash flows for each of the years in the three-year period ended
December 31, 1994 in conformity with generally accepted accounting principles.
As discussed in Note 14 to the consolidated financial statements, the company
changed its method of accounting for post retirement benefits other than
pensions in 1992.
KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Chicago, Illinois
January 23, 1995
Management Report on Financial Statements
The consolidated financial statements and related information have been prepared
by management, which is responsible for the integrity and objectivity of that
information. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
FMC maintains a system of internal control over financial reporting and over
safeguarding of assets against unauthorized acquisition, use or disposition
which is designed to provide reasonable assurance as to the reliability of
financial records and the safeguarding of such assets. The system is maintained
by the selection and training of qualified personnel, by establishing and
communicating sound accounting and business policies, and by an internal
auditing program which constantly evaluates the adequacy and effectiveness of
such internal controls, policies and procedures.
The Audit Committee of the Board of Directors, composed of directors who are
not officers or employees of the company, meets regularly with management,
with the company's internal auditors, and with its independent auditors to
discuss their evaluation of internal accounting controls and the quality of
financial reporting. Both independent auditors and the internal auditors have
free access to the Audit Committee to discuss the results of their audits.
The company's independent auditors have been engaged to render an opinion on
the consolidated financial statements. They review and make appropriate tests of
the data included in the financial statements. As independent auditors, they
also provide an objective, outside review of management's performance in
reporting operating results and financial condition.
/s/Michael J. Callahan
Michael J. Callahan
Executive Vice President
and Chief Financial Officer
Chicago, Illinois
January 23, 1995
74
<PAGE>
<TABLE>
<CAPTION>
OTHER SUPPLEMENTAL INFORMATION
----------------------------------------------------------------------------------------------------------------------------------
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
----------------------------------------------------------------------------------------------------------------------------------
(In millions, except per share data) 1994 1993
----------------------------------------------------------------------------------------------------------------------------------
1st 2nd 3rd 4th 1st 2nd 3rd 4th
Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr.
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales $908.3 $1,053.8 $1,009.6 $1,039.1 $901.6 $979.3 $926.5 $ 946.5
Income (loss) from continuing operations before interest,
minority interests and taxes $ 97.5 $ 133.9 $ 79.8 $ 61.6 $ 78.3 $101.6 $ 61.2 $(138.2)
----------------------------------------------------------------------------------------------------------------------------------
Income (loss) before extraordinary items $ 46.1 $ 67.3 $ 34.7 $ 25.3 $ 45.4 $ 62.6 $ 35.3 $(102.3)
Per share--Primary $ 1.24 $ 1.82 $ 0.93 $ 0.68 $ 1.23 $ 1.69 $ 0.95 $ (2.77)
--Fully diluted $ 1.24 $ 1.81 $ 0.93 $ 0.67 $ 1.19 $ 1.62 $ 0.94 $ (2.77)
Net income (loss) $ 46.1 $ 67.3 $ 34.7 $ 25.3 $ 45.4 $ 57.9 $ 35.3 $(102.3)
Per share--Primary $ 1.24 $ 1.82 $ 0.93 $ 0.68 $ 1.23 $ 1.56 $ 0.95 $ (2.77)
--Fully diluted $ 1.24 $ 1.81 $ 0.93 $ 0.67 $ 1.19 $ 1.50 $ 0.94 $ (2.77)
----------------------------------------------------------------------------------------------------------------------------------
Common stock prices:
High $ 50 $ 54 1/8 $ 62 1/4 $ 65 $ 53 $ 48 1/8 $ 49 3/4 $ 49 7/8
Low $ 47 $ 45 1/2 $ 54 1/4 $ 56 1/4 $ 45 5/8 $ 41 1/2 $ 44 1/8 $ 45 1/8
==================================================================================================================================
</TABLE>
Fourth-quarter 1993 results include after-tax restructuring and other charges of
$123.3 million (Note 2). The second quarter of 1993 reflects an after-tax
extraordinary charge of $4.7 million related to debt restructuring.
Quarterly earnings per common share may differ from full-year amounts due to
changes in the number of shares outstanding during the year.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
ORDER BACKLOG (UNAUDITED) December 31
--------------------------------------------------------------------------------------------------
(In millions) 1994 1993 1992
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Machinery and Equipment $ 480.0 $ 333.1 $ 340.9
Defense Systems 1,412.3 1,105.0 1,342.6
---------------------------------------------------------------------------------------------------
Total $1,892.3 $1,438.1 $1,683.5
=====================================================================================================
</TABLE>
Backlogs are not reported for Industrial Chemicals, Performance Chemicals and
Precious Metals due to the nature of these businesses.
75
<PAGE>
<TABLE>
<CAPTION>
TEN-YEAR FINANCIAL SUMMARY
------------------------------------------------------------------------------------------------------------------------------------
(In millions, except per share, employee and stockholder data) 1994 1993 1992
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SUMMARY OF EARNINGS
Sales $4,010.8 3,753.9 3,973.7
Equity in earnings of affiliates 5.3 6.4 11.1
Other revenue 35.2 28.6 18.7
------------------------------------------------------------------------------------------------------------------------------------
Total revenue 4,051.3 3,788.9 4,003.5
------------------------------------------------------------------------------------------------------------------------------------
Cost of sales 2,928.0 2,825.3 2,960.2
Selling, general and administrative expenses 583.7 539.2 532.4
Research and development 166.8 149.2 145.0
Restructuring and other charges -- 172.3 --
------------------------------------------------------------------------------------------------------------------------------------
Total costs and expenses 3,678.5 3,686.0 3,637.6
------------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations before interest, minority interest,
gain on FMC Gold Company sale of stock and taxes 372.8 102.9 365.9
------------------------------------------------------------------------------------------------------------------------------------
Minority interest 61.4 2.5 3.6
Interest income 8.9 11.0 12.2
Interest expense 68.0 73.6 94.9
Gain on FMC Gold Company sale of stock -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations before income taxes 252.3 37.8 279.6
Provision (benefit) for income taxes 78.9 (3.2) 87.0
------------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations 173.4 41.0 192.6
Discontinued operations, net of taxes -- -- (73.2)
------------------------------------------------------------------------------------------------------------------------------------
Income before extraordinary items and cumulative
effect of change in accounting principle 173.4 41.0 119.4
Extraordinary items, net of taxes -- (4.7) (11.4)
Cumulative effect of change in accounting principle,
net of taxes -- -- (183.7)
------------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 173.4 36.3 (75.7)
------------------------------------------------------------------------------------------------------------------------------------
Total dividends $ -- -- --
------------------------------------------------------------------------------------------------------------------------------------
SHARE DATA
Average number of shares used in earnings per share
computations (thousands):
Primary 37,195 36,943 36,796
Fully diluted 37,299 36,943 39,694
Primary earnings (loss) per share:
Continuing operations $ 4.66 1.11 5.23
Discontinued operations -- -- (1.99)
Extraordinary items -- (0.13) (0.31)
Cumulative effect of change in accounting principle -- -- (4.99)
------------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 4.66 0.98 (2.06)
------------------------------------------------------------------------------------------------------------------------------------
Earnings (loss) per share assuming full dilution:
Continuing operations $ 4.65 1.11 5.04
Discontinued operations -- -- (1.84)
Extraordinary items -- (0.13) (0.29)
Cumulative effect of change in accounting principle -- -- (4.63)
------------------------------------------------------------------------------------------------------------------------------------
Net income $ 4.65 0.98 *
------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL POSITION AT YEAR-END
Property, plant and equipment, at cost $3,897.5 3,498.4 3,541.7
Accumulated depreciation 2,360.1 2,108.1 2,039.6
Total assets 3,351.5 2,845.1 2,856.6
Long-term debt (less current portion) 901.2 749.9 843.6
Stockholders' equity (deficit) 416.5 216.9 219.0
OTHER DATA
Income from continuing operations
as a return on investment 17.2% 7.8 20.6
Capital expenditures $ 356.0 244.5 314.5
Provision for depreciation $ 220.5 222.4 235.0
Employees at year-end 21,344 20,696 22,097
Stockholders of record at year-end, common and preferred 12,438 13,180 14,487
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Per share amounts are antidilutive.
76
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1991 1990 1989 1988 1987 1986 1985
-------------------------------------------------------------------------------------------
3,899.4 3,722.2 3,414.5 3,286.9 3,139.1 3,002.7 3,260.8
6.6 7.0 3.8 6.5 4.7 4.4 15.4
20.8 40.5 18.8 30.7 22.7 71.8 20.1
-------------------------------------------------------------------------------------------
3,926.8 3,769.7 3,437.1 3,324.1 3,166.5 3,078.9 3,296.3
-------------------------------------------------------------------------------------------
2,930.2 2,787.8 2,497.2 2,419.4 2,344.5 2,237.0 2,448.5
495.7 476.7 431.3 414.9 393.7 371.0 424.1
134.6 157.6 149.7 143.6 132.0 145.8 149.4
-- -- -- -- -- -- --
-------------------------------------------------------------------------------------------
3,560.5 3,422.1 3,078.2 2,977.9 2,870.2 2,753.8 3,022.0
-------------------------------------------------------------------------------------------
366.3 347.6 358.9 346.2 296.3 325.1 274.3
-------------------------------------------------------------------------------------------
3.0 8.1 6.9 8.3 4.7 1.7 1.8
17.3 22.5 28.2 40.3 33.8 28.6 32.1
124.7 150.6 161.9 188.7 218.7 159.4 35.5
-- -- -- -- 94.7 -- --
-------------------------------------------------------------------------------------------
255.9 211.4 218.3 189.5 201.4 192.6 269.1
82.8 56.1 61.5 60.3 10.2 40.1 72.5
-------------------------------------------------------------------------------------------
173.1 155.3 156.8 129.2 191.2 152.5 196.6
-- -- -- -- -- -- --
-------------------------------------------------------------------------------------------
173.1 155.3 156.8 129.2 191.2 152.5 196.6
(9.2) -- (20.4) -- (10.7) -- --
-- -- -- -- -- -- --
-------------------------------------------------------------------------------------------
163.9 155.3 136.4 129.2 180.5 152.5 196.6
-------------------------------------------------------------------------------------------
-- -- -- -- -- 14.4 57.6
-------------------------------------------------------------------------------------------
36,267 36,075 36,006 35,860 42,108 92,746 146,889
37,566 36,094 36,106 35,884 42,257 94,257 151,785
4.77 4.30 4.35 3.60 4.54 1.64 1.33
-- -- -- -- -- -- --
(0.25) -- (0.56) -- (0.25) -- --
-- -- -- -- -- -- --
-------------------------------------------------------------------------------------------
4.52 4.30 3.79 3.60 4.29 1.64 1.33
-------------------------------------------------------------------------------------------
4.68 4.30 4.34 3.60 4.52 1.62 1.30
-- -- -- -- -- -- --
(0.24) -- (0.56) -- (0.25) -- --
-- -- -- -- -- -- --
-------------------------------------------------------------------------------------------
4.44 4.30 3.78 3.60 4.27 1.62 1.30
-------------------------------------------------------------------------------------------
3,389.7 3,279.8 2,908.0 2,750.2 2,628.1 2,490.9 2,347.4
1,905.4 1,772.6 1,573.1 1,482.1 1,325.9 1,145.8 1,019.7
2,774.2 2,959.2 2,819.0 2,748.8 2,595.1 2,685.8 2,806.7
929.0 1,158.6 1,325.6 1,468.0 1,380.2 1,787.3 303.2
309.8 149.6 (70.6) (223.6) (343.2) (506.6) 1,123.1
18.4 17.9 19.1 18.8 16.1 15.8 15.4
216.8 324.4 280.8 186.5 157.2 232.8 319.0
224.9 211.2 197.8 199.3 200.5 192.1 161.2
23,150 23,882 24,110 24,342 24,797 24,966 28,064
14,959 17,451 18,151 19,155 20,231 21,203 24,619
-------------------------------------------------------------------------------------------
77 Fmc Corporation and Consolidated Subidiaries
</TABLE>
<PAGE>
Directors and Officers
Board of Directors
Robert N. Burt /1/,/5/
Chairman of the Board and
Chief Executive Officer
William W. Boeschenstein /2/,/3/,/5/
Retired Chairman of the Board and
Chief Executive Officer,
Owens-Corning Fiberglas Corporation
Larry D. Brady /4/
President
B. A. Bridgewater, Jr. /1/,/2/,/3/,/5/
Chairman of the Board,
President and Chief Executive Officer,
Brown Group, Inc.
Patricia A. Buffler /4/
Dean, Professor of Epidemiology,
School of Public Health,
University of California, Berkeley
Albert J. Costello /2/
Retired Chairman of the Board and
Chief Executive Officer,
American Cyanamid
Paul L. Davies, Jr. /1/,/2/
President,
Lakeside Corporation, a private real estate
investment company
Jean A. Francois-Poncet /4/
Member of the French Senate
Robert H. Malott /1/,/5/
Chairman of the Executive Committee;
Retired Chairman of the Board and
Chief Executive Officer,
FMC Corporation
Edward C. Meyer /1/,/2/,/4/
Chairman,
GRC International, Inc.,
former Chief of Staff,
United States Army
William F. Reilly /3/,/5/
Chairman and Chief Executive Officer,
K-III Communications Corporation
James R. Thompson /4/,/5/
Former Governor of Illinois;
Chairman of the Board,
Law Firm of Winston & Strawn
Clayton Yeutter /3/,/4/
Of Counsel, Hogan & Hartson,
former U.S. Trade Representative,
and former Secretary,
U.S. Department of Agriculture
---------------------------------------
/1/Executive Committee
/2/Compensation and Organization Committee
/3/Audit Committee
/4/Public Policy Committee
/5/Nominating and Board Procedures Committee
Officers
Robert N. Burt*
Chairman of the Board and
Chief Executive Officer
Larry D. Brady*
President
William F. Beck*
Executive Vice President
Michael J. Callahan*
Executive Vice President and
Chief Financial Officer
William J. Kirby*
Senior Vice President
Alfredo Bernad
Vice President;
President, FMC Europe
Charles H. Cannon, Jr.*
Vice President;
General Manager
Food Machinery Group
Robert L. Day
Corporate Secretary and
Assistant General Counsel
Robert J. Fields
Vice President
Environment, Health, Safety
and Toxicology
Cheryl A. Francis*
Vice President and Treasurer
W. Reginald Hall*
Vice President;
General Manager
Specialty Chemicals Group
Robert I. Harries*
Vice President;
General Manager
Chemical Products Group
Patrick J. Head*
Vice President and
General Counsel
Larry P. Holleran*
Vice President
William R. Jenkins
Vice President
Communications
James A. McClung*
Vice President
Executive Marketing
Earl M. Morgan*
Vice President;
General Manager
Agricultural Products Group
Michael W. Murray
Vice President
Human Resources
Joseph H. Netherland*
Vice President;
General Manager
Energy and Transportation
Equipment Group
Thomas W. Rabaut*
Vice President;
President and
Chief Executive Officer
United Defense, L.P.
Harold S. Russell
Vice President
Government Affairs
Peter E. Weber
Vice President;
President
FMC Latin America/
Middle East/Africa
William J. Wheeler*
Vice President;
President
FMC Asia-Pacific
Scott H. Williamson*
Vice President
Corporate Development
*Executive Officer
78
<PAGE>
Major Operating Units
Performance Chemicals
Agricultural Products Group
Specialty Chemicals Group
Food Ingredients Division
Lithium Division
Pharmaceutical Division
Process Additives Division
BioProducts
Industrial Chemicals
Chemical Products Group
Alkali Chemicals Division
FMC Foret, S.A.
Peroxygen Chemicals Division
Phosphorus Chemicals Division
Machinery and Equipment
Energy and Transportation
Equipment Group
Fluid Control Division
Kongsberg Offshore Services, a.s.
SOFEC, Inc.
Wellhead Equipment Division
Airport Products and Systems
Division
Automotive Service Equipment
Division
Material Handling Systems
Division
Food Machinery Group
Agricultural Machinery Division
Food Machinery Europe
Food Processing Systems Division
Packaging and Material Handling
Division
Defense Systems
United Defense, L.P.
Armament Systems
Ground Systems
International
Steel Products
Precious Metals
FMC Gold
Executive Offices
FMC Corporation
200 E. Randolph Drive
Chicago, Illinois 60601
Subsidiaries and Affiliates in Other Nations
Argentina
FMC Argentina, S.A.
Minera Del Altiplano, S.A.
Australia
FMC (Australia), Ltd.
Austria
FMC Chemikalien
Handelsgesellschaft m.b.H.
Belgium
FMC Europe N.V.
Food Machinery Coordination
Center, S.A.
Brazil
CBV Industria Mecanica, S.A.
FMC do Brasil, Ltda.
FMC-Kramer, S.A.
Jetway Systems Equipamentos
Aeroportuarios Ltda.
Canada
FMC of Canada, Ltd.
Marine Colloids, Ltd.
Mid-Atlantic Investments, Ltd.
Chile
Minera FMC Limitada
China
FMC Asia Pacific Ltd.
Commonwealth of
Independent States
FMC Corporation
Denmark
FMC Litex, A/S
Egypt
FMC International, A.G.
France
FMC Europe, S.A.
FMC Food Machinery, S.A.
FMC Food Machinery France,
S.A.
FMC Overseas, S.A.
Gelagar, S.A.R.L.
Gabon
FMC Gabon, S.A.R.L.
Germany
Jetway Systems, G.m.b.H.
Litex, G.m.b.H.
Greece
FMC Hellas, EPE
FMC International, A.G.
Guatemala
FMC Guatemala, S.A.
Hong Kong
FMC Asia Pacific, Ltd.
FMC Hong Kong Ltd.
Friendship Minerals
and Chemicals, Ltd.
Indonesia
P.T. Bina Guna Kimia
P.T. FMC Santana Petroleum
Equipment Indonesia
Ireland
FMC International, A.G.
FMC Manufacturing Limited
Norfolk Investments, Ltd.
Italy
FMC Food Machinery Italy,
S.p.A.
FMC Packaging Machinery,
S.p.A.
Ivory Coast
FMC Overseas, Ltd.
Japan
Asia Lithium Corporation
FMC Asia Pacific, Ltd.
L.H. Company, Ltd.
Tokai Denka Kogyo, K.K.
Kenya
FMC International, A.G.
Korea
FMC International, A.G.
Malaysia
Antah FMC Supplies
and Services Sdn. Bhd.
FMC Petroleum Equipment
(Malaysia) Sdn. Bhd.
Mexico
Electro Quimica Mexicana,
S.A. de C.V.
E.M.D., S.A. de C.V.
Fabricacion, Maquinaria y Ceras,
S. A. de C.V.
FMC Agroquimica de Mexico
S. de R.L. de C.V.
FMC de Mexico S.A. de C.V.
FMC Ingrediantes Alimenticios
Minera FMC S.A. de C.V.
Netherlands
FMC Nederland, B.V.
FMC Fluid Control (Nederland) B.V.
FMC Food Machinery and Chemical
Holding Company B.V.
FMC Industrial Chemicals
(Netherlands), B.V.
Norway
Kongsberg Offshore, A.S.
Pakistan
FMC International, S.A.
FMC United (Private) Ltd.
Philippines
FMC International, S.A.
Marine Colloids (Philippines) Inc.
Poland
FMC Poland L.L.C.
Russia
A/O FMC Overseas
FMC Tyumen Petroleum
Equipment
Saudi Arabia
FMC Arabia
Singapore
FMC Southeast Asia Pte., Ltd.
Spain
FMC Airline Equipment
Europe, S.A.
FMC Spain, S.A.
FMC Foret, S.A.
Forsean, S.L.
Peroxidos Organicos, S.A.
Sibelco Espanola, S.A.
Turegano, S.A.
Valentin Herraiz, S.A.
Switzerland
FMC International, A.G.
FMC Holding, A.G.
Thailand
FMC (Thailand), Ltd.
Thai Peroxide Co., Ltd.
Turkey
FMC Nurol Savunma
Sanayii A.S.
Ukraine
FMC International, A.G.
United Arab Emirates
FMC International, S.A. (Abu Dhabi)
FMC International, A.G. (Dubai)
United Kingdom
FMC Corporation (GB), Ltd.
FMC Corporation (UK), Ltd.
FMC Litex, Ltd.
SOFEC, Ltd. (UK)
Wellhead Technology Services, Ltd.
Uruguay
Lanfor Investments, S.A.
Venezuela
Tripoliven, C.A.
FMC Wellhead de Venezuela, S.A.
Virgin Islands
FMC Gold International Sales Corp.
FMC International Sales Corporation
Independence/FMC Foreign Sales
Corporation
Stockholder Data
Annual Meeting
of Stockholders
FMC's annual meeting of
stockholders will be held at
2 p.m. on Friday, April 21,
1995, at 200 E. Randolph
Drive, Chicago.
Notice of the meeting, together
with proxy material, will be
mailed approximately 40 days
prior to the meeting to stock
holders of record as of
March 2, 1995.
Transfer Agent and
Registrar of Stock
Harris Trust and Savings Bank
P.O. Box 755
Chicago, Illinois 60690
Questions concerning FMC
common stock should be sent
to the above address.
Stock Exchange Listing
New York Stock Exchange
Pacific Stock Exchange
Chicago Stock Exchange
Stock Exchange Symbol
FMC
Form 10-K
A copy of the company's
annual report to the Securities
and Exchange Commission
on Form 10-K for 1994 is
available upon written
request to:
FMC Corporation
Communications Department
200 E. Randolph Drive
Chicago, Illinois 60601
However, most information
required under Parts II and
III of Form 10-K has been
incorporated by reference to
the annual report to
stockholders or the proxy
statement.
FMC was incorporated in
Delaware in 1928.
<PAGE>
EXHIBIT 21
LIST OF SIGNIFICANT SUBSIDIARIES OF REGISTRANT
12/31/94
<TABLE>
<CAPTION>
Percent of
Voting
Organized Under Securities
Company(1) Laws of Owned(2)
---------- --------------- ----------
<S> <C> <C>
FMC Corporation Delaware Registrant
FMC of Canada Limited Canada 100
FMC Corporation (UK) Limited England 100
FMC Europe, S.A. France 100
FMC Gold Company Delaware 80
FMC Paradise Peak Corporation Nevada 100
FMC Jerritt Canyon Corporation Delaware 100
Meridian Gold Company Montana 100
FMC Wyoming Corporation Delaware 100
Food Machinery Holding Company B.V. Spain 100
Foret, S.A. Spain 100
Intermountain Research & Development Wyoming 100
Corporation
FMC Do Brasil Ltda. Brazil 100
FMC International, A.G. Switzerland 100
Kongsberg Offshore, A/S Norway 100
Litex A/S Denmark 100
Mid-Atlantic Investments Limited Canada 100
Mid-Atlantic Acceptance Company Bermuda 100
Limited
United Defense, L.P. Delaware 60
</TABLE>
____________________
(1) The names of various active and inactive subsidiaries have been omitted.
Such subsidiaries, considered in the aggregate as a single subsidiary,
would not constitute a significant subsidiary.
(2) With respect to certain companies, qualifying shares in names of directors
are included in these percentages. Percentages shown for indirect
subsidiaries reflect the percentage of voting securities owned by the
parent subsidiary.
<PAGE>
EXHIBIT 23
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
--------------------------------------------------
We consent to the incorporation by reference in the following Registration
Statements of FMC Corporation and in the related Prospectuses of our report
dated January 23, 1995 with respect to the financial statements of United
Defense, L.P. included in this Annual Report (Form 10-K) for the year ended
December 31, 1994:
Form S-3 Registration Statement (Registration No. 33-45648)
Form S-8 Registration Statement (Registration No. 33-10661)
Form S-8 Registration Statement (Registration No. 33-7749)
ERNST & YOUNG LLP
Washington, DC
March 22, 1995
<PAGE>
The Board of Directors
FMC Corporation:
We consent to incorporation by reference in Registration Statement No. 33-7749
and Registration Statement No. 33-10661 on Forms S-8 and Registration Statement
No. 33-45648 on Form S-3 of FMC Corporation and consolidated subsidiaries of our
report dated January 23, 1995, relating to the consolidated balance sheets of
FMC Corporation and consolidated subsidiaries as of December 31, 1994 and 1993,
and the related consolidated statements of income, cash flows and changes in
stockholders' equity for each of the years in the three-year period ended
December 31, 1994, which report is incorporated by reference in the December 31,
1994 annual report on Form 10-K of FMC Corporation and consolidated
subsidiaries.
KPMG Peat Marwick LLP
Chicago, Illinois
March 24, 1995
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, FMC CORPORATION, a Delaware corporation (hereinafter referred
to as the "Company"), is a corporation with securities registered pursuant to
Section 12(b) of the Securities and Exchange Act of 1934, as Amended, (the
"Act"), and is subject to the reporting requirements of the Act including the
obligation to file an annual report on Form 10-K; and
WHEREAS, the undersigned holds and may hereafter from time to time
hold one or more positions in the Corporation whether as an Officer, a Director,
or both, such that the undersigned may be required or permitted in such capacity
or capacities, or on behalf of the Corporation, to sign such document;
NOW, THEREFORE, the undersigned hereby constitutes and appoints M.J.
Callahan, F.A. Riddick, or R.L. Day, or any of them, his attorney for him and in
his name, place and stead, and in his office and capacity in the Company, to
sign and file the Company's Annual Report on Form 10-K for the year ended
December 31, 1994, including all schedules, exhibits and amendments thereto,
hereby giving and granting to said attorneys full power and authority to do and
perform all and every act and thing whatsoever requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do if personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
10th day of February, 1995.
/s/ Alan L. Lowe
_______________________
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, FMC CORPORATION, a Delaware corporation (hereinafter referred
to as the "Company"), is a corporation with securities registered pursuant to
Section 12(b) of the Securities and Exchange Act of 1934, as Amended, (the
"Act"), and is subject to the reporting requirements of the Act including the
obligation to file an annual report on Form 10-K; and
WHEREAS, the undersigned holds and may hereafter from time to time
hold one or more positions in the Corporation whether as an Officer, a Director,
or both, such that the undersigned may be required or permitted in such capacity
or capacities, or on behalf of the Corporation, to sign such document;
NOW, THEREFORE, the undersigned hereby constitutes and appoints M.J.
Callahan, F.A. Riddick, or R.L. Day, or any of them, his attorney for him and in
his name, place and stead, and in his office and capacity in the Company, to
sign and file the Company's Annual Report on Form 10-K for the year ended
December 31, 1994, including all schedules, exhibits and amendments thereto,
hereby giving and granting to said attorneys full power and authority to do and
perform all and every act and thing whatsoever requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do if personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
10th day of February, 1995.
/s/ Robert N. Burt
_______________________
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, FMC CORPORATION, a Delaware corporation (hereinafter referred
to as the "Company"), is a corporation with securities registered pursuant to
Section 12(b) of the Securities and Exchange Act of 1934, as Amended, (the
"Act"), and is subject to the reporting requirements of the Act including the
obligation to file an annual report on Form 10-K; and
WHEREAS, the undersigned holds and may hereafter from time to time
hold one or more positions in the Corporation whether as an Officer, a Director,
or both, such that the undersigned may be required or permitted in such capacity
or capacities, or on behalf of the Corporation, to sign such document;
NOW, THEREFORE, the undersigned hereby constitutes and appoints M.J.
Callahan, F.A. Riddick, or R.L. Day, or any of them, his attorney for him and in
his name, place and stead, and in his office and capacity in the Company, to
sign and file the Company's Annual Report on Form 10-K for the year ended
December 31, 1994, including all schedules, exhibits and amendments thereto,
hereby giving and granting to said attorneys full power and authority to do and
perform all and every act and thing whatsoever requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do if personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
10th day of February, 1995.
/s/ William W. Boeschenstein
____________________________
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, FMC CORPORATION, a Delaware corporation (hereinafter referred
to as the "Company"), is a corporation with securities registered pursuant to
Section 12(b) of the Securities and Exchange Act of 1934, as Amended, (the
"Act"), and is subject to the reporting requirements of the Act including the
obligation to file an annual report on Form 10-K; and
WHEREAS, the undersigned holds and may hereafter from time to time
hold one or more positions in the Corporation whether as an Officer, a Director,
or both, such that the undersigned may be required or permitted in such capacity
or capacities, or on behalf of the Corporation, to sign such document;
NOW, THEREFORE, the undersigned hereby constitutes and appoints M.J.
Callahan, F.A. Riddick, or R.L. Day, or any of them, his attorney for him and in
his name, place and stead, and in his office and capacity in the Company, to
sign and file the Company's Annual Report on Form 10-K for the year ended
December 31, 1994, including all schedules, exhibits and amendments thereto,
hereby giving and granting to said attorneys full power and authority to do and
perform all and every act and thing whatsoever requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do if personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
10th day of February, 1995.
/s/ Larry D. Brady
_______________________
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, FMC CORPORATION, a Delaware corporation (hereinafter referred
to as the "Company"), is a corporation with securities registered pursuant to
Section 12(b) of the Securities and Exchange Act of 1934, as Amended, (the
"Act"), and is subject to the reporting requirements of the Act including the
obligation to file an annual report on Form 10-K; and
WHEREAS, the undersigned holds and may hereafter from time to time
hold one or more positions in the Corporation whether as an Officer, a Director,
or both, such that the undersigned may be required or permitted in such capacity
or capacities, or on behalf of the Corporation, to sign such document;
NOW, THEREFORE, the undersigned hereby constitutes and appoints M.J.
Callahan, F.A. Riddick, or R.L. Day, or any of them, his attorney for him and in
his name, place and stead, and in his office and capacity in the Company, to
sign and file the Company's Annual Report on Form 10-K for the year ended
December 31, 1994, including all schedules, exhibits and amendments thereto,
hereby giving and granting to said attorneys full power and authority to do and
perform all and every act and thing whatsoever requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do if personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
10th day of February, 1995.
/s/ B.A. Bridgewater, Jr.
_________________________
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, FMC CORPORATION, a Delaware corporation (hereinafter referred
to as the "Company"), is a corporation with securities registered pursuant to
Section 12(b) of the Securities and Exchange Act of 1934, as Amended, (the
"Act"), and is subject to the reporting requirements of the Act including the
obligation to file an annual report on Form 10-K; and
WHEREAS, the undersigned holds and may hereafter from time to time
hold one or more positions in the Corporation whether as an Officer, a Director,
or both, such that the undersigned may be required or permitted in such capacity
or capacities, or on behalf of the Corporation, to sign such document;
NOW, THEREFORE, the undersigned hereby constitutes and appoints M.J.
Callahan, F.A. Riddick, or R.L. Day, or any of them, his attorney for him and in
his name, place and stead, and in his office and capacity in the Company, to
sign and file the Company's Annual Report on Form 10-K for the year ended
December 31, 1994, including all schedules, exhibits and amendments thereto,
hereby giving and granting to said attorneys full power and authority to do and
perform all and every act and thing whatsoever requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do if personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
10th day of February, 1995.
/s/ Patricia A. Buffler
_______________________
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, FMC CORPORATION, a Delaware corporation (hereinafter referred
to as the "Company"), is a corporation with securities registered pursuant to
Section 12(b) of the Securities and Exchange Act of 1934, as Amended, (the
"Act"), and is subject to the reporting requirements of the Act including the
obligation to file an annual report on Form 10-K; and
WHEREAS, the undersigned holds and may hereafter from time to time
hold one or more positions in the Corporation whether as an Officer, a Director,
or both, such that the undersigned may be required or permitted in such capacity
or capacities, or on behalf of the Corporation, to sign such document;
NOW, THEREFORE, the undersigned hereby constitutes and appoints M.J.
Callahan, F.A. Riddick, or R.L. Day, or any of them, his attorney for him and in
his name, place and stead, and in his office and capacity in the Company, to
sign and file the Company's Annual Report on Form 10-K for the year ended
December 31, 1994, including all schedules, exhibits and amendments thereto,
hereby giving and granting to said attorneys full power and authority to do and
perform all and every act and thing whatsoever requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do if personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
10th day of February, 1995.
/s/ Paul L. Davies, Jr.
_______________________
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, FMC CORPORATION, a Delaware corporation (hereinafter referred
to as the "Company"), is a corporation with securities registered pursuant to
Section 12(b) of the Securities and Exchange Act of 1934, as Amended, (the
"Act"), and is subject to the reporting requirements of the Act including the
obligation to file an annual report on Form 10-K; and
WHEREAS, the undersigned holds and may hereafter from time to time
hold one or more positions in the Corporation whether as an Officer, a Director,
or both, such that the undersigned may be required or permitted in such capacity
or capacities, or on behalf of the Corporation, to sign such document;
NOW, THEREFORE, the undersigned hereby constitutes and appoints M.J.
Callahan, F.A. Riddick, or R.L. Day, or any of them, his attorney for him and in
his name, place and stead, and in his office and capacity in the Company, to
sign and file the Company's Annual Report on Form 10-K for the year ended
December 31, 1994, including all schedules, exhibits and amendments thereto,
hereby giving and granting to said attorneys full power and authority to do and
perform all and every act and thing whatsoever requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do if personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
10th day of February, 1995.
/s/ Jean A. Francois-Poncet
____________________________
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, FMC CORPORATION, a Delaware corporation (hereinafter referred
to as the "Company"), is a corporation with securities registered pursuant to
Section 12(b) of the Securities and Exchange Act of 1934, as Amended, (the
"Act"), and is subject to the reporting requirements of the Act including the
obligation to file an annual report on Form 10-K; and
WHEREAS, the undersigned holds and may hereafter from time to time
hold one or more positions in the Corporation whether as an Officer, a Director,
or both, such that the undersigned may be required or permitted in such capacity
or capacities, or on behalf of the Corporation, to sign such document;
NOW, THEREFORE, the undersigned hereby constitutes and appoints M.J.
Callahan, F.A. Riddick, or R.L. Day, or any of them, his attorney for him and in
his name, place and stead, and in his office and capacity in the Company, to
sign and file the Company's Annual Report on Form 10-K for the year ended
December 31, 1994, including all schedules, exhibits and amendments thereto,
hereby giving and granting to said attorneys full power and authority to do and
perform all and every act and thing whatsoever requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do if personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
10th day of February, 1995.
/s/ Robert H. Malott
______________________
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, FMC CORPORATION, a Delaware corporation (hereinafter referred
to as the "Company"), is a corporation with securities registered pursuant to
Section 12(b) of the Securities and Exchange Act of 1934, as Amended, (the
"Act"), and is subject to the reporting requirements of the Act including the
obligation to file an annual report on Form 10-K; and
WHEREAS, the undersigned holds and may hereafter from time to time
hold one or more positions in the Corporation whether as an Officer, a Director,
or both, such that the undersigned may be required or permitted in such capacity
or capacities, or on behalf of the Corporation, to sign such document;
NOW, THEREFORE, the undersigned hereby constitutes and appoints M.J.
Callahan, F.A. Riddick, or R.L. Day, or any of them, his attorney for him and in
his name, place and stead, and in his office and capacity in the Company, to
sign and file the Company's Annual Report on Form 10-K for the year ended
December 31, 1994, including all schedules, exhibits and amendments thereto,
hereby giving and granting to said attorneys full power and authority to do and
perform all and every act and thing whatsoever requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do if personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
10th day of February, 1995.
/s/ Edward C. Meyer
_______________________
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, FMC CORPORATION, a Delaware corporation (hereinafter referred
to as the "Company"), is a corporation with securities registered pursuant to
Section 12(b) of the Securities and Exchange Act of 1934, as Amended, (the
"Act"), and is subject to the reporting requirements of the Act including the
obligation to file an annual report on Form 10-K; and
WHEREAS, the undersigned holds and may hereafter from time to time
hold one or more positions in the Corporation whether as an Officer, a Director,
or both, such that the undersigned may be required or permitted in such capacity
or capacities, or on behalf of the Corporation, to sign such document;
NOW, THEREFORE, the undersigned hereby constitutes and appoints M.J.
Callahan, F.A. Riddick, or R.L. Day, or any of them, his attorney for him and in
his name, place and stead, and in his office and capacity in the Company, to
sign and file the Company's Annual Report on Form 10-K for the year ended
December 31, 1994, including all schedules, exhibits and amendments thereto,
hereby giving and granting to said attorneys full power and authority to do and
perform all and every act and thing whatsoever requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do if personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
10th day of February, 1995.
/s/ William F. Reilly
_______________________
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, FMC CORPORATION, a Delaware corporation (hereinafter referred
to as the "Company"), is a corporation with securities registered pursuant to
Section 12(b) of the Securities and Exchange Act of 1934, as Amended, (the
"Act"), and is subject to the reporting requirements of the Act including the
obligation to file an annual report on Form 10-K; and
WHEREAS, the undersigned holds and may hereafter from time to time
hold one or more positions in the Corporation whether as an Officer, a Director,
or both, such that the undersigned may be required or permitted in such capacity
or capacities, or on behalf of the Corporation, to sign such document;
NOW, THEREFORE, the undersigned hereby constitutes and appoints M.J.
Callahan, F.A. Riddick, or R.L. Day, or any of them, his attorney for him and in
his name, place and stead, and in his office and capacity in the Company, to
sign and file the Company's Annual Report on Form 10-K for the year ended
December 31, 1994, including all schedules, exhibits and amendments thereto,
hereby giving and granting to said attorneys full power and authority to do and
perform all and every act and thing whatsoever requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do if personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
10th day of February, 1995.
/s/ James R. Thompson
_______________________
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, FMC CORPORATION, a Delaware corporation (hereinafter referred
to as the "Company"), is a corporation with securities registered pursuant to
Section 12(b) of the Securities and Exchange Act of 1934, as Amended, (the
"Act"), and is subject to the reporting requirements of the Act including the
obligation to file an annual report on Form 10-K; and
WHEREAS, the undersigned holds and may hereafter from time to time
hold one or more positions in the Corporation whether as an Officer, a Director,
or both, such that the undersigned may be required or permitted in such capacity
or capacities, or on behalf of the Corporation, to sign such document;
NOW, THEREFORE, the undersigned hereby constitutes and appoints M.J.
Callahan, F.A. Riddick, or R.L. Day, or any of them, his attorney for him and in
his name, place and stead, and in his office and capacity in the Company, to
sign and file the Company's Annual Report on Form 10-K for the year ended
December 31, 1994, including all schedules, exhibits and amendments thereto,
hereby giving and granting to said attorneys full power and authority to do and
perform all and every act and thing whatsoever requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do if personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
10th day of February, 1995.
/s/ Clayton Yeutter
_______________________
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FMC
CORPORATION FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1994 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 98
<SECURITIES> 0
<RECEIVABLES> 654
<ALLOWANCES> 11
<INVENTORY> 404
<CURRENT-ASSETS> 1,376
<PP&E> 3,897
<DEPRECIATION> 2,360
<TOTAL-ASSETS> 3,351
<CURRENT-LIABILITIES> 1,269
<BONDS> 901
<COMMON> 4
0
0
<OTHER-SE> 413
<TOTAL-LIABILITY-AND-EQUITY> 3,351
<SALES> 4,011
<TOTAL-REVENUES> 4,051
<CGS> 2,942
<TOTAL-COSTS> 2,942
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 68
<INCOME-PRETAX> 252<F1>
<INCOME-TAX> 79
<INCOME-CONTINUING> 173
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 173
<EPS-PRIMARY> 4.66
<EPS-DILUTED> 4.65
<FN>
<F1> Income before taxes and other items includes minority interests of $61.
Minority interests are primarily limited partner's share of partnership
profits for which tax has not been provided.
</FN>
</TABLE>
<PAGE>
EXHIBIT 99
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
-------------------------------------------------
Partners
United Defense, L.P.
We have audited the balance sheet of United Defense, L.P. as of December 31,
1994 and the related statements of income, partners' capital and cash flows for
the year then ended (not presented separately herein). These financial
statements are the responsibility of the partnership'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 United Defense, L.P. at
December 31, 1994 and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Washington, DC
January 23, 1995
