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[LETTERHEAD OF FMC News Release]
Item 5. Other Events
------------
On October 16, 1996 FMC Corporation issued the following news release:
FMC REPORTS THIRD QUARTER RESULTS
CHICAGO, OCTOBER 16, 1996 -- FMC Corporation today reported third quarter sales
of $1.3 billion, an increase of 11 percent from last year's third quarter of
$1.1 billion. Income from continuing operations of $59 million increased from
$54 million in the third quarter of 1995, excluding special income and expense
items. Earnings per share from continuing operations increased 9 percent to
$1.56 in the third quarter of 1996 compared with $1.43 in last year's quarter,
excluding special income and expense items in 1995.
Net income per share, including discontinued operations, was $1.44 for the
third quarter of 1996 compared with $1.51 last year. Last year's results
included the impact of the special non-recurring gain from the sale of a 20
percent equity interest in FMC's soda ash business, partially offset by
increased environmental and other reserves.
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PAGE 2/FMC REPORTS THIRD QUARTER RESULTS
According to FMC Chairman and Chief Executive Officer Robert N. Burt: "Our
third quarter results are in line with our expectations. We are seeing an
improvement in our Industrial Chemicals and Machinery and Equipment businesses,
and we are excited about the introduction of our new Authority herbicide
beginning in the fourth quarter. We continue to expect record earnings for 1996,
although only slightly above 1995 levels. We also expect that 1997 will be
another record year, with earnings increases in excess of 10 percent."
REVIEW OF OPERATIONS
Industrial Chemicals sales of $263 million increased 7 percent from $246
million in the third quarter of last year, and earnings increased 4 percent to
$45 million from $43 million last year. In the 1996 quarter, soda ash prices and
volumes were up from last year, reflecting stronger domestic and international
demand. Domestic hydrogen peroxide shipments increased from the 1996 second
quarter as demand improved from the pulp and paper industry. Compared with the
third quarter of last year, hydrogen peroxide prices were higher but volumes
were lower, causing overall hydrogen peroxide earnings to be slightly down from
last year's quarter. Phosphorus volumes increased from the 1995 third quarter,
reflecting the Rhone-Poulenc supply contract, which began in late 1995.
Operating results from FMC's European industrial chemical business were roughly
even with last year's third quarter.
-more-
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PAGE 3/FMC REPORTS THIRD QUARTER EARNINGS
Performance Chemical sales of $333 million increased 5 percent from $317
million in last year's period, but earnings of $47 million were below the 1995
third quarter of $53 million. The earnings decline was due to the agricultural
products businesses, reflecting plant start-up costs and increased marketing
expenses associated with the launch of FMC's new Authority herbicide. Increased
international sales, especially in Asia, and a strong corn rescue market offset
a cotton pyrethroid market that was weaker due to low pest pressures. Results
from the specialty chemicals businesses showed strong gains from the prior-year
quarter. Both the food ingredients and the pharmaceutical businesses are
beginning to see declines in previously high raw material costs, with further
moderation expected in the fourth quarter. Lithium sales rose, due primarily to
increases in sales to the pharmaceutical industry. The new lithium operation in
Argentina will start up in early 1997. Process additives earnings increased as
production efficiencies improved.
Machinery and Equipment sales of $434 million increased 21 percent from
$359 million in 1995, and profits of $23 million increased significantly from $8
million in the prior-year period. Financial results improved due to stronger
performance of the base businesses, as well as the impact of acquisitions.
Energy equipment reported higher sales and margins as sales of high technology
subsea systems increased from the third quarter of 1995.
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PAGE 4/FMC REPORTS THIRD QUARTER EARNINGS
Airport equipment sales of loaders and deicers also increased from the same
period last year. Food machinery sales increased, and profits improved,
reflecting stronger sales in both the United States and Europe, including the
effects of the recent acquisitions of Frigoscandia and FranRica. At the end of
the quarter, Machinery and Equipment backlog was $1.1 billion, up significantly
from $545 million at the end of 1995. The increase in backlog reflects the
recognition of a significant portion of the previously announced subsea order
from Statoil, Norway's state-owned oil company, as well as the impact of
acquisitions, including Frigoscandia.
Defense Systems sales of $238 million increased 6 percent from $225 million
in the prior-year period. Profits of $19 million, net of minority interest, were
slightly below the $20 million of profits in the 1995 quarter. Sales increased
on the continued strength of the Crusader program and higher shipments of
vertical launching systems to the Navy. Excluding the timing of the third
quarter 1995 dividend from the company's joint venture in Turkey, earnings were
up in the third quarter of 1996 versus 1995. Defense backlog was $1.7 billion at
the end of the quarter, up from $1.5 billion at the end of 1995.
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PAGE 5/FMC REPORTS THIRD QUARTER EARNINGS
Net interest expense in the quarter increased to $26 million from $22
million in last year's third quarter, reflecting higher debt levels associated
with acquisitions, increased capital spending and working capital associated
with increased sales. Corporate expenses declined $2 million from $24 million in
last year's third quarter due to continued savings from reduced staffing levels.
Precious Metals was reclassified as a discontinued operation in the second
quarter of 1996 and was divested on July 31, 1996. The operating loss from the
gold business, the gain from the sale of the gold company, and increases in
reserves for previously divested operations, primarily related to general and
product liability, resulted in a net loss from discontinued operations of $5
million in the third quarter of 1996.
NINE MONTH RESULTS
Year-to-date sales of $3.6 billion increased 10 percent from $3.3 billion
in the 1995 period, reflecting improvements across all segments, including the
benefits of acquisitions. Income from continuing operations of $174 million
declined from $189 million, before special income and expense items, in the
prior-year period. The income decline resulted from a weak first half of the
year, especially in demand for hydrogen peroxide due to a downturn in the pulp
and paper industry, and higher raw material costs in the food ingredients and
pharmaceutical businesses. Net interest expense increased to $71 million in 1996
from $57 million in 1995.
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PAGE 6/FMC REPORTS THIRD QUARTER EARNINGS
These factors have been partially offset by improved Machinery and Equipment
results in 1996. Year-to-date earnings per share from continuing operations were
$4.56 in 1996, compared with $5.02, before special income and expense items for
the same period last year. Net income per share including discontinued
operations was $4.37 for 1996 year-to-date versus $4.97, including special
items, for 1995.
FMC Corporation is one of the world's leading producers of chemicals and
machinery for industry, government and agriculture. The Chicago-based company
reported annual sales of $4.5 billion in 1995, with international sales to more
than 100 countries accounting for 48 percent of total annual revenues. FMC
employs 22,000 people at 115 manufacturing facilities and mines in 24 countries.
The company divides its businesses into four major segments: Industrial
Chemicals, Performance Chemicals, Machinery and Equipment, and Defense Systems.
# # #
Safe Harbor Statement under the Private Securities Litigation Act of 1995:
Statements in this news release that are forward-looking statements are subject
to various risks and uncertainties including but not limited to economic
conditions, product demand and industry capacity, competitive products and
pricing, manufacturing efficiencies, new product development, availability and
price of raw materials and critical manufacturing equipment, new plant startups,
the regulatory and trade environment and other risks indicated in the
corporation's 1995 Form 10-K and other SEC filings. Such information contained
herein represents management's best judgment as of the date hereof based on
information currently available. The corporation does not intend to update this
information and disclaims any legal liability to the contrary.
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FMC CORPORATION AND CONSOLIDATED SUBSIDIARIES
---------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(UNAUDITED AND IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30 Ended September 30
-------------------- ---------------------
1995 1996 1995 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Sales $1,141.2 $1,261.6 $3,266.4 $3,606.6
Other revenue 33.1 16.5 55.3 71.4
-------- -------- -------- --------
Total revenue 1,174.3 1,278.1 3,321.7 3,678.0
Operating costs and expenses 1,073.6 1,157.3 2,969.5 3,317.1
Restructuring and other charges 134.5 - 134.5 -
-------- -------- -------- --------
Total costs and expenses 1,208.1 1,157.3 3,104.0 3,317.1
-------- -------- -------- --------
(33.8) 120.8 217.7 360.9
Minority interests 17.2 12.5 42.5 48.0
Gain on sale of FMC Wyoming stock (99.7) - (99.7) -
Net interest expense 22.2 25.6 56.9 70.9
-------- -------- -------- --------
Income from continuing operations
before income taxes 26.5 82.7 218.0 242.0
Provision (benefit) for income taxes (31.1) 23.4 25.6 68.5
-------- -------- -------- --------
Income from continuing operations (Note 2) 57.6 59.3 192.4 173.5
-------- -------- -------- --------
Discontinued operations, net of taxes (0.5) (4.7) (5.2) (7.4)
-------- -------- -------- --------
Net income $ 57.1 $ 54.6 $ 187.2 $ 166.1
======== ======== ======== ========
Earnings (loss) per common share:
Continuing operations $ 1.52 $ 1.56 $ 5.11 $ 4.56
Discontinued operations (0.01) (0.12) (0.14) (0.19)
-------- -------- -------- --------
Net income $ 1.51 $ 1.44 $ 4.97 $ 4.37
======== ======== ======== ========
Average number of shares used in
earnings per share computations 37.8 38.1 37.7 38.0
======== ======== ======== ========
</TABLE>
Note 1: Prior period amounts have been reclassified to present the Precious
Metals segment as a discontinued operation.
NOTE 2: Supplemental Information
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30 Ended September 30
1995 1995
-------------------- --------------------
Income EPS Income EPS
--------- --------- ---------- --------
<S> <C> <C> <C> <C>
Income from continuing operations $ 57.6 $ 1.52 $192.4 $ 5.11
Add: Restructuring and other
charges (net of tax) 96.2 2.55 96.2 2.55
Deduct: Gain on sale of FMC Wyoming stock (99.7) (2.64) (99.7) (2.64)
------ ------ ------ ------
Income from continuing operations (excluding
special income and expense items) $ 54.1 $ 1.43 $188.9 $ 5.02
====== ====== ====== ======
</TABLE>
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FMC CORPORATION AND CONSOLIDATED SUBSIDIARIES
---------------------------------------------
INDUSTRY SEGMENT DATA
---------------------
(Unaudited and in millions)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30 Ended September 30
-------------------- -----------------------
1995 1996 1995 1996
-------- -------- -------- ------------
<S> <C> <C> <C> <C>
Sales
- -----
Industrial Chemicals $ 245.9 $ 262.6 $ 717.0 $ 768.8
Performance Chemicals 317.3 332.6 926.5 982.0
Machinery and Equipment 359.2 434.2 936.9 1,128.5
Defense Systems 225.2 237.8 702.9 747.8
Eliminations (6.4) (5.6) (16.9) (20.5)
-------- -------- -------- --------
$1,141.2 $1,261.6 $3,266.4 $3,606.6
======== ======== ======== ========
Income from continuing operations
- ---------------------------------
before income taxes
- -------------------
Industrial Chemicals $ 43.5 $ 45.4 $ 128.1 $ 116.4
Performance Chemicals 53.1 46.7 157.8 146.8
Machinery and Equipment 7.8 22.6 32.0 54.4
Defense Systems 20.1 18.8 81.0 74.0
-------- -------- -------- --------
Operating profit from continuing
operations 124.5 133.5 398.9 391.6
Restructuring and other charges (1) (150.0) - (150.0) -
Gain on sale of FMC Wyoming stock 99.7 - 99.7 -
Corporate (24.1) (21.7) (72.1) (68.0)
Net interest expense (22.2) (25.6) (56.9) (70.9)
Other income and (expense), net (1.4) (3.5) (1.6) (10.7)
-------- -------- -------- --------
Income from continuing operations
before income taxes $ 26.5 $ 82.7 $ 218.0 $ 242.0
======== ======== ======== ========
</TABLE>
(1) Restructuring and other charges consist of increased environmental
reserves ($82.5), and other charges primarily related to reserves
covering the shift of lithium-based production to Argentina ($52.0) and
write-off of acquired in-process R&D related to Moorco International Inc.
acquisition ($15.5).
FMC has modified its presentation of segment results, effective first quarter
1996, to better align them with management's evaluation of segment performance.
Accordingly, business segment results are net of minority interest, reflecting
only FMC's share of earnings. The corporate line primarily reflects staff
expenses, and other income and expense reflects all other corporate items,
including certain relatively minor amounts previously allocated to business
segments. 1995 segment results have been reclassified to be consistent with
current presentations. The company's Precious Metals segment has been
reclassified as a discontinued operation.
