<PAGE>
==============================================================================
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, 1995
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. [__]
THE AGGREGATE MARKET VALUE OF VOTING STOCK HELD BY NON-AFFILIATES OF
THE REGISTRANT AS OF FEBRUARY 29, 1996, WAS $2,681,798,883. THE NUMBER OF
SHARES OF REGISTRANT'S COMMON STOCK, $0.10 PAR VALUE, OUTSTANDING AS OF THAT
DATE WAS 36,841,410.
DOCUMENTS INCORPORATED BY REFERENCE
DOCUMENT FOR 10-K REFERENCE
- -------- ------------------
Portions of Annual Report Part II; and Part IV,
to Stockholders for 1995 Item 14. (a)(1) and (2)
Portions of Proxy Part III
Statement for 1996 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. The Company recorded restructuring and other
charges of $35 million ($20 million after tax, or $0.53 per share) in the third
quarter of 1995 covering asset writedowns and related exit liabilities for the
expected shift in 1997 of lithium-based production from North Carolina to a new
lower-cost, higher quality mineral resource in Argentina. Other charges of $17
million ($10 million after tax, or $0.27 per share) related primarily to asset
write-downs, and the Company increased its environmental reserves by $82.5
million ($50.7 million after tax, or $1.34 per share), as part of its ongoing
assessment of sites with known environmental issues.
In 1993, FMC recorded restructuring and other charges of $172.3 million, net of
minority interest ($123.3 million after tax, 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 and a write-down of the investment in the Beartrack
property in the Precious Metals segment. The restructuring program was
designated to reduce costs and improve operating efficiencies.
During 1995 and 1994, approximately 1,100 employee positions were eliminated.
Additionally, 500 positions were eliminated at United Defense, L.P. that 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 $16
million and $32 million in 1995 and 1994, respectively. Approximately $34
million and $40 million of spending in 1995 and 1994, respectively, related to
the consolidation of manufacturing facilities, the exiting of unprofitable
product lines and other restructuring activities was charged to the
restructuring reserve.
<PAGE>
The aggregate restructuring reserve remaining at December 31, 1995 of $18.7
million is expected to cover residual manufacturing consolidation and remaining
lithium exit liabilities.
Acquisitions. In June 1995, FMC acquired all of the common shares of Moorco
International Inc. ("Moorco") for $28 per share, or approximately $350 million
(including acquisition costs and debt assumed). Moorco is the leading worldwide
manufacturer of meters for the petroleum industry and a leading manufacturer of
valves for the process and power generation industries. Moorco's operations are
included in the Company's Machinery and Equipment segment.
In conjunction with the acquisition of Moorco, goodwill and other intangible
assets of $218.4 million were recorded, and $15.5 million ($0.41 per share) of
acquired in-process research and development, with no associated tax benefit,
was charged to research and development expense during 1995.
On September 20, 1995, the Company acquired the assets of FR Manufacturing
Corporation, a wholly owned subsidiary of Bridge Atlantic Corporation, for $15.7
million in cash. FR Manufacturing Corporation is a full-line, global supplier
of tomato processing equipment and aseptic systems sold under the FranRica trade
name. The operations are included in the Company's Machinery and Equipment
segment.
The Company also completed two smaller acquisitions during the year ended
December 31, 1995.
B. FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS (DOLLARS IN MILLIONS):
A description of the principal products and services and the major markets
served by each industry segment is included under "Narrative description of
business."
<TABLE>
<CAPTION>
(in millions) Year ended December 31
-------------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
SALES
Performance Chemicals $1,176.5 $1,060.5 $ 973.5
Industrial Chemicals 976.8 866.8 866.7
Machinery and Equipment 1,351.0 972.7 870.9
Defense Systems 968.2 1,080.5 950.2
Precious Metals 59.0 60.9 125.0
Eliminations (21.7) (30.6) (32.4)
-------- -------- --------
Total $4,509.8 $4,010.8 $3,753.9
======== ======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INCOME (LOSS) BEFORE INCOME TAXES 1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Performance Chemicals $ 161.6 $ 154.0 $ 139.1
Industrial Chemicals(1) 161.9 119.3 58.3
Machinery and Equipment 49.8 33.3 6.7
Defense Systems(1) 160.8 159.5 161.7
Precious Metals(1) (5.7) (9.0) 9.7
-------- ------- -------
Operating profit 528.4 457.1 375.5
Restructuring and other charges(2) (150.0) -- (172.3)
Gain on sale of FMC Wyoming stock(3) 99.7 -- --
Net interest expense (72.5) (59.1) (62.6)
Corporate and other (96.2) (101.9) (110.5)
Minority interests(1) (59.1) (61.4) (2.5)
Other income and (expense), net(4) (3.4) 17.6 10.2
-------- -------- --------
Total $ 246.9 $ 252.3 $ 37.8
======== ======== ========
IDENTIFIABLE ASSETS
Performance Chemicals $ 904.6 $ 754.6 $ 696.9
Industrial Chemicals 1,048.8 883.6 824.7
Machinery and Equipment 1,166.5 619.3 522.9
Defense Systems 547.3 492.0 269.0
Precious Metals 139.1 108.9 64.8
-------- -------- --------
Subtotal 3,806.3 2,858.4 2,378.3
Corporate and other 494.8 493.1 466.8
-------- -------- --------
Total $4,301.1 $3,351.5 $2,845.1
======== ======== ========
- -----------------------------------------------------------------------
</TABLE>
- -------------------------------------
(1) Defense Systems' segment data includes 100 percent of United Defense, L.P.
in 1994 and 1995. Industrial Chemicals' segment data includes 100% of FMC
Wyoming Corporation in 1995. Precious Metals' segment data includes 100
percent of FMC Gold Company in 1993 through 1995. 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 1995, including the $15.5
million write-off of acquired in-process research and development, are
related to Industrial Chemicals ($77.5 million), Performance Chemicals
($45.0 million), Machinery and Equipment ($15.5 million) and Defense
Systems ($12.0 million). Restructuring and other charges related to 1993
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) Gain on sale of FMC Wyoming stock is attributable to the Industrial
Chemicals segment.
(4) Other income and (expense), net primarily includes LIFO inventory
adjustments and pension-related income and (expense).
<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.
<TABLE>
<CAPTION>
Business Principal Products Markets Served
-------- ------------------ --------------
<S> <C> <C>
PERFORMANCE CHEMICALS
- ---------------------
AGRICULTURAL Produces crop protection Food growers, pest
PRODUCTS and pest control control markets.
chemicals for worldwide
markets
FOOD Worldwide producer of Processed food industry,
INGREDIENTS carrageenan and Avicel personal care products.
cellulose gel.
PHARMACEUTICAL Worldwide producer of Pharmaceutical industry.
binders and
disintegrants as well as
other specialty
chemicals for
pharmaceutical markets.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Business Principal Products Markets Served
-------- ------------------ --------------
<S> <C> <C>
LITHIUM World's largest Aluminum, ceramics and
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
ester flame retardants. additives, industrial
Leading supplier of water treatment and
specialty water desalination.
treatment chemicals.
BIOPRODUCTS Worldwide producer of Life science research;
agarose and other DNA and protein analysis
products for life
science markets.
INDUSTRIAL CHEMICALS
- --------------------
ALKALI World's largest Glass-making,
CHEMICALS producer of natural detergents, food
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
peroxide, persulfates polymer synthesis,
and other peroxygen environmental clean-up,
chemicals. electronics, mining,
detergents.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Business Principal Products Markets Served
-------- ------------------ --------------
<S> <C> <C>
PHOSPHORUS A worldwide supplier Detergents, cleaning
CHEMICALS and North American compounds, metal
producer of phosphorus treatment, food
and its derivatives, products, textiles,
phosphates and pesticide intermediates,
phosphoric acid. additives,
pharmaceuticals, water
treatment.
FMC FORET, S.A. A European chemical Detergents, pulp and
producer. Products paper, textiles,
include hydrogen chemicals, tanning,
peroxide, perborates, animal feed, mining,
phosphates, zeolites, rubber, pharmaceuticals,
silicates, sulfur ceramics, paint, food,
derivatives. photography,
agriculture, water
treatment.
MACHINERY AND EQUIPMENT
- -----------------------
ENERGY AND Oil and gas wellhead Oil and gas drilling,
TRANSPORTATION completion equipment; production refining,
EQUIPMENT subsea engineering, transportation and power
procurement, generation companies.
construction and
equipment; metering
products and systems;
loading systems; marine
terminals and floating
production systems;
pressure-relief valves.
Airline equipment, Industrial
material handling manufacturing, airlines,
systems. airports, mining,
warehouses, newsprint,
publishing, chemicals,
electrical utilities.
FOOD Systems and equipment Food and beverage
MACHINERY to process food and processors; food
beverages, including canners; fruit and
harvesters, vegetable growers.
sterilizers,
extractors, fillers,
closers, evaporators
and aseptic systems and
food handling equipment.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Business Principal Products Markets Served
-------- ------------------ --------------
<S> <C> <C>
DEFENSE SYSTEMS
- ---------------
UNITED DEFENSE, L.P.
GROUND SYSTEMS Develops technology; U.S. Army, Marine Corps
including hardware and and National Guard;
software, and allied governments.
integrates into the
manufacture of tracked
vehicles for the U.S.
armed forces and allied
governments. Sole
source on major
programs.
ARMAMENT SYSTEMS Leads development team U.S. Navy, Army and
for artillery weapon Marine Corps and allied
systems for the U.S. governments.
Army, designs and
builds guns and
launching systems and
provides support
services for the U.S.
Navy and international
customers.
INTERNATIONAL Markets, manufactures Allied governments.
and oversees joint Cooperative arrangements
ventures for military with major international
products outside the companies.
United States.
STEEL PRODUCTS Produces steel and Military,
nickel alloy ingots, transportation, heavy
castings, forgings and equipment, industrial
military track. and oil field.
Upgrades and overhauls
tracked vehicles.
PRECIOUS METALS
- ---------------
FMC GOLD Focusing on exploration Precious metal
of precious metals in refineries.
Chile. Current
production at Beartrack
in Idaho and Jerritt
Canyon in Nevada.
</TABLE>
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
<PAGE>
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 foreign and domestic
sources. No one source is considered essential to any of the machinery
operations. The Company uses oil, gas, coal, coke, hydroelectric power and
nuclear power to meet its energy needs.
PATENTS
Although FMC's patents, trademarks and licenses 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 $706.5
million, $618.3 million and $768.4 million in 1995, 1994 and 1993, 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 business.
ORDER BACKLOG
<TABLE>
<CAPTION>
December 31
----------------------------
(in millions) 1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Machinery and Equipment $ 545.0 $ 480.0 $ 333.1
Defense Systems 1,495.0 1,412.3 1,105.0
-------- -------- --------
Total $2,040.0 $1,892.3 $1,438.1
======== ======== ========
</TABLE>
<PAGE>
The order backlog of the Defense Systems segment increased to $1.5 billion at
December 31, 1995 from $1.4 billion at the end of 1994. The backlog increase
results primarily from new orders for upgrading Bradley Fighting Vehicles,
cannisters for the U.S. Navy, M113 vehicles for Thailand and Amphibious Assault
Vehicle kits for Korea.
U.S. government budgetary pressures are likely to result in reduced defense
spending in the coming years, and Defense Systems results may decline as a
consequence.
The increase in Machinery & Equipment backlog primarily reflects the acquisition
of Moorco in the Machinery and Equipment segment.
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 1995 1994 1993
- --------------------------------------------------
<S> <C> <C> <C>
Performance Chemicals $109.3 $ 94.7 $ 83.0
Industrial Chemicals 16.3 17.3 15.3
Machinery and Equipment 49.1 30.8 26.1
Defense Systems 13.1 23.6 24.0
Precious Metals -- -- 0.1
Corporate -- 0.4 0.7
- --------------------------------------------------
Total $187.8 $166.8 $149.2
==================================================
</TABLE>
<PAGE>
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 1995 and included a $15.5 million write-off of acquired in-
process research and development related to the Moorco acquisition. The decrease
in expenditures for Defense Systems from 1994 reflects minor reductions across
most product lines.
Not included in these amounts are $150.4 million, $104.9 million and $208.8
million in 1995, 1994 and 1993, respectively for research and development
projects contracted directly with the U.S. government and commercial sponsors,
primarily related to Defense Systems programs.
ENVIRONMENTAL
The Company is subject to various federal, state and local environmental laws
and regulations that govern emissions of air pollutants, discharges of water
pollutants, and the manufacture, storage, handling and disposal of hazardous
substances, hazardous wastes and other toxic materials. The most significant
environmental liabilities of the Company consist of obligations relating to the
remediation and/or study of sites at which the Company is alleged to have
disposed of hazardous substances. In particular, the Company is subject to
liabilities arising under the Comprehensive Environmental Response, Compensation
and Liability Act ("CERCLA") and similar state laws that impose responsibility
on persons who arranged for the disposal of hazardous substances and on current
and previous owners and operators of a facility for the clean up of hazardous
substances released from the facility into the environment. In addition, the
Company is subject to liabilities under the corrective action provisions of the
Resource Conservation and Recovery Act ("RCRA") and analogous state laws which
require owners and operators of facilities that treat, store or dispose of
hazardous waste to clean up releases of hazardous waste constituents into the
environment associated with past or present practices. The Company has been
named a Potentially Responsible Party ("PRP") at 33 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 27 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, Remedial Investigations/Feasibility
Studies ("RI/FS") or their equivalent at most of the identified sites, with the
status of each investigation varying from site to site. At certain sites, RI/FS
have just begun, providing limited information, if any, relating to cost
estimates, timing, or the involvement of other PRPs; whereas at other sites, the
studies are complete, remedial action plans have been chosen, or Records of
Decision have been issued.
At December 31, 1995 and 1994, reserves were provided for potential
environmental obligations which management considers probable and for which a
reasonable estimate
<PAGE>
of the obligation could be made. Accordingly, reserves of $302 million and $229
million, before recoveries, have been provided at December 31, 1995 and December
31, 1994, respectively, of which $132 million and $142 million are included in
the reserve for discontinued operations at December 31, 1995 and December 31,
1994, respectively. The Company's total environmental reserves include
approximately $270 million and $183 million for remediation activities and $32
million and $46 million for RI/FS costs at December 31, 1995 and December 31,
1994, respectively. In addition, the Company has estimated reasonably possible
environmental loss contingencies may exceed amounts accrued by as much as $150
million.
The EPA issued a draft risk assessment on August 17, 1995 for the Eastern
Michaud Flats Superfund site, which includes FMC's Pocatello phosphorus
facility, identifying potential risks from contamination potentially associated
with FMC. Release of the Risk Assessment allowed FMC to complete a draft of the
Remedial Investigation documenting the nature and extent of contamination from
the site. The Company submitted its draft Remedial Investigation to the EPA on
September 28, 1995. FMC added $58 million in the third quarter of 1995 to its
existing reserves of approximately $22 million for future environmental
remediation costs at the Eastern Michaud Flats site. In addition, $25 million
was provided during the third quarter of 1995 related to other sites where
additional information became available which indicated the need for increased
accruals.
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. Approximately $140
million of recoveries ($56 million as other assets and $84 million as an offset
to the reserve for discontinued operations) and approximately $123 million of
<PAGE>
recoveries ($44 million as other assets and $79 million as an offset to the
reserve for discontinued operations), have been recorded as probable realization
on claims against insurance companies and other third parties at December 31,
1995 and 1994, respectively. The substantial majority of recorded assets
related to recoveries from PRPs are associated with existing contractual
arrangements with U.S. government agencies.
Regarding current operating sites, the Company spent approximately $22 million,
$20 million and $16 million for the years 1995, 1994 and 1993, respectively, on
capital projects relating to environmental control facilities, and expects to
spend additional capital of approximately $16 million and $21 million in 1996
and 1997, respectively. Additionally, in 1995, 1994, and 1993, FMC spent
approximately $58 million, $55 million and $63 million, respectively, for
environmental compliance costs.
Regarding current operating, previously operated and other sites for the years
1995, 1994 and 1993, FMC charged approximately $14 million, $18 million and $17
million, respectively, against established reserves for remediation spending,
and charged approximately $12 million, $13 million and $10 million,
respectively, against reserves for spending on RI/FS. Recoveries from third
parties of approximately $5 million, $5 million and $7 million, respectively,
were received in 1995, 1994 and 1993. 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 22,164 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 18% of these hourly employees
expire during 1996 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, none of
which have been material. 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) 1995 1994 1993
- ----------------------------------------------------------
<S> <C> <C> <C>
Third party sales
- ----------------------------------------------------------
United States $3,270.0 $3,084.8 $2,866.7
Latin America and Canada 179.8 159.6 140.4
Europe 947.3 693.5 697.5
Asia, Africa & others 112.7 72.9 49.3
- ----------------------------------------------------------
4,509.8 4,010.8 3,753.9
Intersegment sales
- ----------------------------------------------------------
United States 151.2 110.7 102.5
Latin America and Canada 10.1 10.9 10.9
Europe 92.2 92.3 83.2
Asia, Africa & others 22.1 11.4 23.2
Eliminations (275.6) (225.3) (219.8)
- ----------------------------------------------------------
Total Sales $4,509.8 $4,010.8 $3,753.9
==========================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
INCOME (LOSS) BEFORE
INCOME TAXES Year ended December 31
- ----------------------------------------------------------
(in millions) 1995 1994 1993
- ----------------------------------------------------------
<S> <C> <C> <C>
United States $ 390.7 $ 341.5 $ 323.8
Latin America and Canada 12.7 13.7 4.4
Europe 120.5 100.2 48.1
Asia, Africa & others 4.5 1.7 (0.8)
- ----------------------------------------------------------
Operating profit 528.4 457.1 375.5
Net interest expense (72.5) (59.1) (62.6)
Corporate & other (96.2) (101.9) (110.5)
Minority interest (59.1) (61.4) (2.5)
Gain on sale of FMC
Wyoming stock 99.7 - -
Other income and
(expense), net (3.4) 17.6 10.2
Restructuring and
other charges (1) (150.0) - (172.3)
- ----------------------------------------------------------
Total $ 246.9 $ 252.3 $ 37.8
==========================================================
</TABLE>
- ------------------
(1) See Item 1(a). Includes pretax restructuring and other charges of $134.5
million and $172.3 million in 1995 and 1994, respectively, and a write-off of
acquired in-process research and development of $15.5 million in 1995.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
IDENTIFIABLE ASSETS December 31
- --------------------------------------------------------------------
(in millions) 1995 1994 1993
- --------------------------------------------------------------------
<S> <C> <C> <C>
United States $2,609.2 $1,960.0 $1,544.3
Latin America and Canada 209.7 157.2 142.7
Europe 900.2 676.3 640.3
Asia, Africa & others 87.2 64.9 51.0
- --------------------------------------------------------------------
Subtotal 3,806.3 2,858.4 2,378.3
Corporate and other 494.8 493.1 466.8
- --------------------------------------------------------------------
Total $4,301.1 $3,351.5 $2,845.1
====================================================================
- --------------------------------------------------------------------
U.S. EXPORT SALES TO UNAFFILIATED CUSTOMERS BY DESTINATION OF SALE
- --------------------------------------------------------------------
Year ended December 31
- --------------------------------------------------------------------
(in millions) 1995 1994 1993
- --------------------------------------------------------------------
Latin America and Canada $ 212.9 $ 217.9 $ 176.8
Europe 155.9 153.3 192.2
Asia, Africa & others 588.2 668.6 415.3
- --------------------------------------------------------------------
Total $ 957.0 $1,039.8 $ 784.3
====================================================================
</TABLE>
<PAGE>
ITEM 2 PROPERTIES
FMC leases executive offices in Chicago and administrative offices in
Philadelphia. The Company operates 115 manufacturing facilities and mines in 24
countries. Major 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 del 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. FMC Gold Company 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 13 3 6 6 28
Industrial Chemicals 14 2 12 - 28
Machinery and Equipment 22 5 14 6 47
Defense Systems 11 - - - 11
Precious Metals 1 - - - 1
</TABLE>
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
Environmental Proceedings
As reported in FMC's annual report on Form 10-K for the year ended December 31,
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 RCRA and related 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.
In addition, in August 1994 EPA conducted an environmental inspection at FMC's
Green River, Wyoming facility, where trona is mined and soda ash and a number of
related chemicals are produced. In May 1995, EPA provided a copy of the
inspection report, which alleged violations of RCRA and the Emergency Planning
and Community Right to Know Act (EPCRA), and proposed to negotiate a pre-
enforcement settlement. Ultimately, FMC and EPA entered into such a settlement,
without the lodging of a formal complaint, by means of an administrative order
on consent, effective November 1, 1995. Under the terms of this order, FMC has
paid a civil penalty in the amount of $145,000 and is implementing a series of
supplemental environmental projects (SEPs) involving waste management at an
estimated cost of $298,000.
Safety
Following an emergency incident at FMC's Process Additives Division plant in
Nitro, West Virginia on December 5, 1995, when a high pressure switch failed and
phosphorus trichloride product was discharged into a containment area where
water was present, resulting in a release of a cloud of hydrogen chloride and
fumes, the U.S. Occupational Safety and Health Administration commenced an
incident and process safety investigation. This investigation is currently in
progress and no citations have issued. However, there is a potential for
citations and assertion of penalties. Management believes that the resolution
of this investigation will not likely have a material adverse effect on FMC's
liquidity, results of operations or financial condition.
<PAGE>
Beartrack Gold Property
During the third quarter of 1994, the Pacific Rivers Council and the Wilderness
Society (collectively the "PRC"), in a lawsuit filed in Federal District Court
in Idaho (Pacific Rivers Council v. Thomas), sought an injunction against all
ongoing and future forest activities including mining, which may affect
endangered salmon, within various national forests in Idaho including the Salmon
National Forest in which the Beartrack property of FMC Gold Company (the "Gold
Company") is located. In that lawsuit, the PRC sought to require the U.S.
Forest Service to consult under the Endangered Species Act (the "Act") with the
National Marine Fisheries Service ("NMFS") regarding existing land resource
management plans for the subject forests and their potential impacts on
endangered Snake River salmon. The government defendants and the plaintiffs
have subsequently negotiated a stipulated dismissal of most of the lawsuit.
Under the terms of the stipulation, the parties dismissed from this litigation
all projects which have undergone site-specific consultation. The Gold
Company's Beartrack mine was identified by the government defendants as a
project for which consultation has been completed. The Court issued an Order on
Pending Claims on December 11, 1995 regarding the remaining specified projects
(not including the Beartrack mine) which have not yet completed consultation.
Under the terms of that Order, the Court has retained jurisdiction in this
lawsuit for further proceedings regarding those projects. The Beartrack mine is
not subject to or a part of the Court's order.
In October, 1994, the Sierra Club Legal Defense Fund, Inc., ("Sierra") on behalf
of certain other organizations, filed a lawsuit in Federal District Court for
the Western District of Washington at Seattle against NMFS and other federal
agencies for violation of the Act alleging the NMFS' biological opinion failed
to satisfy the requirements of the Act. Sierra, the federal agencies and the
company, as intervenor, each filed a motion for summary judgment. In November,
1995, the Court ordered the federal agencies to reinitiate consultation under
Section 7 of the Act on the potential environmental impacts of the Beartrack
mine project on endangered salmon or the designated critical habitat for salmon.
The plaintiffs did not seek, and the Court did not impose, any injunction or
other restriction on the operation of the Beartrack mine pending completion of
such consultation. If, upon remand, the Forest Service were to determine that
an activity associated with Beartrack mine operations could preclude the
development of reasonable and prudent alternatives to the project pending
completion of the reinitiated consultation, such activities could be required to
cease pending completion of consultation. Under the Act's regulations,
consultation must be completed within 135 days of the date consultation is
initiated. An extension of 60 days can be imposed by the agencies. Under the
relevant statutory and regulatory authorities, the results of a consultation can
range from no impact on the activities under review on the one hand to modest to
significant impacts on the other. In an extreme situation, a consultation could
result in the cessation of activities altogether, a potential result the company
believes to be remote in the case of the
<PAGE>
Beartrack mine, which has been in operation and production since mid-1995. The
company believes that the ongoing operation of the Beartrack mine will not
jeopardize endangered salmon or adversely modify or destroy designated critical
habitat, and that upon completion of consultation, the mine will be permitted to
continue operation.
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, 1995, FMC Gold Company's net investment in Beartrack
was approximately $80 million.
Other
See Note 14 to the consolidated financial statements for a discussion of legal
proceedings against other Potentially Responsible Parties and insurers for
contribution and/or coverage with respect to environmental remediation costs.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
<PAGE>
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,
1991, and their ages, are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Name Age Office, year of election; and
3/14/96 other information for past 5 years
------- ----------------------------------
Robert N. Burt 58 Chairman of the Board and Chief Executive
Officer (91); President (90-93);
Executive Vice President (88)
Larry D. Brady 53 President (93) and a Director (89);
Executive Vice President (89-93) Vice
President-Corporate Development (88)
William F. Beck 57 Executive Vice President (94); Vice
President (86) and General
Manager-Chemical Products Group (86);
President of FMC Europe (91)
Michael J. Callahan 56 Executive Vice President and Chief
Financial Officer (94); Executive Vice
President and Chief Financial Officer,
Whirlpool Corporation (91-94)
William J. Kirby 58 Senior Vice President (94); Vice
President-Administration (85)
Charles H. Cannon 43 Vice President and General Manager-Food
Machinery Group (94); Manager, Food
Processing Systems Division (92-94);
Manager, Citrus Machinery Division (89-92)
W. Reginald Hall 60 Vice President (91) and General
Manager-Specialty Chemicals Group (92)
General Manager-Food Machinery Group (90)
Robert I. Harries 52 Vice President (92) and General
Manager-Chemical Products Group (94)
Patrick J. Head 63 Vice President and General Counsel (81)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Ronald D. Mambu 46 Vice President and Controller (95);
Director, Financial Planning (94-95);
Director, Strategic Planning (93-94);
Director, Financial Control (87-93)
James A. McClung 58 Vice President (91); Vice
President-International (81-91)
Joseph H. Netherland 49 Vice President (87) and General
Manager-Petroleum Equipment Group (86),
Specialized Machinery Group (89); Energy
and Transportation Equipment Group (93)
Thomas W. Rabaut 47 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 H. Schumann 45 Vice President (95) and General
Manager-Agricultural Products Group (95);
Director, North American operations,
Agricultural Products Group (93-95);
Executive Director, Corporate Development
(91-93)
William J. Wheeler 53 Vice President (91); President, FMC
Asia-Pacific (91); General Manager,
Phosphorus Chemical Division (86-91)
</TABLE>
Each of the Company's executive officers has been employed by the Company in a
managerial capacity for the past five years except for Mr. Callahan. 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>
PART II.
Item 5. Market for Registrant's Annual Report to Stockholders, Inside back
Common Equity and cover, pages 36, 42 and 51-52
Related Stockholder
Matters
Item 6. Selected Annual Report to Stockholders, pages 58-59
Financial Data
Item 7. Management's Discussion Annual Report to Stockholders,
and Analysis of Financial pages 18-19, 23, 29, 33, 34 and 35-36
Condition and Results
of Operations
Item 8. Financial Statements Annual Report to Stockholders, pages 5
and Supplementary Data and 37-56
(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 I; Proxy Statement for 1996 Annual
Officers of the Registrant Meeting of stockholders, pages 1-11
Item 11. Executive Compensation Proxy Statement for 1996 Annual Meeting of
Stockholders, pages 14-22
Item 12. Security Ownership of Proxy Statement for 1996 Annual Meeting of
Certain Beneficial Stockholders, pages 11-13
Owners and Management
Item 13. Certain Relationships and Proxy Statement for 1996 Annual Meeting of
Related Transactions Stockholders, pages 10-11
</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. Report of Independent Auditors 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 of 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
Date: March ___, 1996
<PAGE>
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
Ronald D. Mambu Vice President, Controller )
and 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 ) -------------------
Albert J. Costello Director ) Michael J. Callahan
Paul L. Davies, Jr. Director )
Jean A. Francois-Poncet Director )
Pehr G. Gyllenhammar Director )
Robert H. Malott Director )
Edward C. Meyer Director )
William F. Reilly Director )
James R. Thompson 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, 1995
<TABLE>
<CAPTION>
Exhibit No.
This
10-K Exhibit Description
- ----------- -------------------
<C> <S>
3.1 Restated Certificate of Incorporation, 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 Incorporation filed on April
30, 1987 (incorporated by reference from Exhibit 3.2)
3.3 By-Laws of the Company, as amended (incorporated by reference from
Exhibit 3.1 to the Form SE filed on March 28, 1990)
4.1 Amended and Restated Rights Agreement, 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)
4.2 Amendment to Amended and Restated Rights Agreement, dated February
9, 1996 (incorporated by reference from Exhibit 1 to the Form 8-K
filed on February 9, 1996)
4(iii)(A) Registrant undertakes to furnish to the 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
4.3 Participation Agreement, dated as of 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)
</TABLE>
<PAGE>
<TABLE>
<C> <S>
4.4 Partnership Agreement, dated as of 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)
4.5 Annex A - Definitions Relating to the Partnership Agreement and the
Participation Agreement (incorporated by reference from Exhibit 4.3
to the Form 8-K filed on February 14, 1994)
4.6 Registration Rights Agreement, dated as 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)
4.7 Management Services Agreement, dated as 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)
4.8 Form of Senior Promissory Note 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 on December 9, 1994
(incorporated by reference from Exhibit 10.1 to the Annual Report
on Form 10-K for 1994)
10.2** FMC 1981 Incentive Share Plan, as 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 (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
restated effective January 1, 1995 (incorporated by reference from
Exhibit 10.4 to the Annual Report on Form 10-K for 1994)
10.5** FMC Employees' Thrift and Stock 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)
</TABLE>
<PAGE>
<TABLE>
<C> <S>
10.6** Amendments to the FMC Employees' Thrift and Stock Purchase Plan
through December 31, 1994 (incorporated by reference from Exhibit
10.6 to the Annual Report on Form 10-K for 1994)
10.7** FMC Salaried Employees' Equivalent Retirement Plan (incorporated by
reference from Exhibit 10.4 to the Form SE filed on March 27, 1992)
10.8** FMC Deferred Compensation Equivalent Retirement and Thrift Plan
(incorporated by reference from Exhibit 10.5 to the Form SE filed
on March 27, 1992)
10.9** FMC 1995 Management Incentive Plan
10.10** FMC 1995 Stock Option Plan as amended
10.11** FMC Corporation Amended and Restated Executive Severance Plan,
(incorporated by reference from Exhibit 10.1 to the Form SE filed
on March 28, 1990)
10.12** FMC Employees' Thrift and Stock Purchase Trust dated April 1, 1982
(incorporated by reference from Exhibit 10.7 to the Form SE filed
on March 27, 1992)
10.13** Amendment to FMC Employees' Thrift and Stock Purchase Trust dated
April 1, 1988 (incorporated by reference from Exhibit 10.8 to the
Form SE filed on March 27, 1992)
10.14** FMC Master Trust Agreement between FMC and Bankers Trust Company
(incorporated by reference from Exhibit 10.9 to the Form SE filed
on March 27, 1992)
10.15 Fiscal Agency Agreement between FMC 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)
10.16** Amended and Restated FMC-Deferred Stock Plan for Non-Employee
Directors (incorporated by reference from Exhibit 10.15 to the
Annual Report on Form 10-K for 1994)
</TABLE>
<PAGE>
<TABLE>
<C> <S>
10.17** Consulting Agreement dated as of September 1, 1990 between the
Company and Edward C. Meyer (incorporated by reference from Exhibit
10.16 to Form 10-K-A filed on April 5, 1994)
12 Statement re computation of ratio of earnings to fixed charges
13 Annual Report of FMC Corporation for the year ended December 31,
1995, is included as an Exhibit to this report for the information
of the Securities and Exchange Commission and, except for those
portions thereof specifically 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 Registrant
23 Consents of Auditors
24 Powers of Attorney
27 Financial Data Schedule
99 Report of Ernst & Young LLP, Independent Auditors
</TABLE>
_______________________________
* 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>
EXHIBIT 10.9
FMC 1995 MANAGEMENT INCENTIVE PLAN
1. PURPOSE OF THE PLAN
The purpose of the FMC 1995 Management Incentive Plan is to promote the long-
term performance of FMC by (i) providing long-term incentives in cash and common
stock of FMC to key management employees of FMC and its subsidiaries, (ii)
assisting in attracting and retaining as employees persons whose abilities,
experience and judgment have contributed and will continue to contribute to the
financial success and progress of FMC, and (iii) aligning the identity of
interests of those employees and FMC's shareholders.
2. DEFINITIONS
(a) "Award" means a Three Year Incentive Award or an Incentive Benefit.
(b) "Board of Directors" means the Board of Directors of FMC as it may be
constituted from time to time.
(c) "CEO" means the Chief Executive Officer of FMC.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means the Compensation and Organization Committee of the Board
of Directors.
(f) "Common Stock" means the common stock of FMC.
(g) "Date of Grant" means the date which is designated by the Committee as the
date of grant of an Award.
(h) "Disability" means complete and permanent inability by reason of illness or
accident to perform the duties of the occupation at which a Participant was
employed when such disability commenced.
(i) "Disinterested Person" means any member of the Board of Directors who, at
the time discretion under the Plan is exercised, has not at any time within one
year prior thereto received grants or awards of equity securities under the Plan
or any other plan of FMC or any of its
<PAGE>
affiliates (as that term is used in the Exchange Act) except as provided in Rule
16b-3(c)(2)(i), and is not selected as a person to whom equity securities may be
allocated or granted pursuant to any other plan of FMC or any of its affiliates
(as that term is used in the Exchange Act) entitling the participants therein to
acquire equity securities of FMC or of any such affiliates except as provided in
Rule 16b-3(c)(2)(i).
(j) "Employee" means any person employed by the FMC Companies.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(l) "Fair Market Value" means the closing price of a share of Common Stock on a
specified date as reported in the New York Stock Exchange Composite Transactions
for such date, or such other measurement of value as may be specified by the
Committee from time to time.
(m) "Financial Objective" means Net Contribution.
(n) "FMC" means FMC Corporation.
(o) "FMC Company" or "FMC Companies" means FMC and each Subsidiary Company.
(p) "Incentive Benefit" means an Award granted pursuant to Section 8.
(q) "Net Contribution" means for a business unit, operating profit after tax
less the product of 11.5% (the capital charge) and the unit's Capital Employed
(operating working capital plus net property, plant and equipment).
(r) "Option" means an Incentive Stock Option or a Nonqualified Stock Option.
(s) "Parent Corporation" means a corporation which, with respect to another
corporation, is a parent corporation within the meaning of Section 424(e) of the
Code.
(t) "Participant" means an Employee who has received an Award which has not been
exercised, paid cancelled or forfeited and which has not expired.
(u) "Plan" means the FMC 1995 Management Incentive Plan.
(v) "Plan Year" means each calendar year commencing on or after January 1, 1995.
<PAGE>
(w) "Restricted Stock" means Common Stock payable as part of an Award which is
subject to a restriction period before it is paid to a Participant, and such
other restrictions as may be specified by the Committee at the time the Award is
granted.
(x) "Subsidiary Company" means (i) any corporation the majority of the voting
power of all classes of stock entitled to vote or the majority of the total
value of shares of all classes of stock of which is owned, directly or
indirectly, by FMC, or (ii) any trade or business other than a corporation the
majority of the profits interest, capital interest or actuarial interest of
which is owned, directly or indirectly, by FMC.
(y) "Subsidiary Corporation" means a corporation or other entity that, with
respect to another corporation, is a subsidiary corporation within the meaning
of Section 424(f) of the Code.
(z) "Three-Year Incentive Award" means an award payable in cash and either
Common Stock or Restricted Stock based on achievement of a Participant's unit's
Financial Objectives over a Three-Year Period.
(aa) "Three-Year Incentive Target Bonus" means the target bonus established for
each Participant which is the basis for the Participant's Three-Year Incentive
Award.
(ab) "Three-Year Period" means a period of three years commencing on January 1
of each Plan Year.
3. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Committee, the composition of which shall
consist of not less than two members of the Board of Directors who are
Disinterested Persons, and otherwise satisfy the provisions of Rule 16b-3 of the
General Rules and Regulations under the Exchange Act or any successor to such
rule. Except as limited by the express provisions of the Plan or by resolutions
adopted by the Board of Directors, the Committee shall have the authority and
discretion to interpret the Plan, to establish and revise rules and regulations
relating to the Plan, and to make any other determinations that it believes
necessary or advisable for the administration of the Plan. Decisions and
determinations by the Committee shall be final and binding on all persons.
Notwithstanding anything to the contrary contained in the Plan, the Board of
Directors shall also have all power and authority to
<PAGE>
perform any act granted to the Committee pursuant to the Plan.
4. PARTICIPATION
Participants shall be determined by the Committee, in its sole discretion, from
Employees who, in the Committee's judgment, have a significant opportunity to
influence the growth of FMC or whose outstanding performance or potential merit
further incentive and reward for continued employment and accomplishment.
5. SHARES OF COMMON STOCK SUBJECT TO THE PLAN
Subject to adjustment pursuant to Section 9, at no time may the sum of (a) the
number of shares of Common Stock issued in payment of Awards and subject to
outstanding Awards under this Plan and (b) the number of shares of Common Stock
issued or subject to outstanding options under the FMC 1995 Stock Option Plan
exceed 3.0 million. In the event that any outstanding Award for any reason
expires, terminates, is cancelled or forfeited, without having been exercised or
otherwise realized in full, the shares of Common Stock allocable to the expired,
terminated, cancelled or forfeited portion of such Award shall (unless the Plan
shall have been terminated) become available for subsequent grants of Awards.
6. THREE-YEAR INCENTIVE AWARDS
(a) Financial Objectives. The Committee, after consultation with the CEO, shall
establish the Financial Objective for each unit for each Three-Year Period. A
Three Year Incentive Target Bonus shall be established by the CEO for each
Participant.
(b) Individual Awards. Following the close of each Three-Year Period, the
Committee shall evaluate the performance of each unit against the unit's
Financial Objective for the Three-Year Period, and certify a rating of zero to
three for the unit. A Participant's Three-Year Incentive Award shall be the
product of the rating for the Participant's unit and Three-Year Incentive Target
Bonus.
(c) Form and Time of Payment
(i) Form. Each Three-Year Incentive Award will be paid partly in cash and
partly in either Common Stock that is
<PAGE>
not Restricted Stock or Restricted Stock, as elected by the Participant;
provided, however, that if a Participant is covered by FMC's Stock Ownership
Policy and such Participant LOGO does not own a sufficient amount of Common
Stock under the Stock Ownership Policy guidelines, such Participant shall
receive the stock portion of the Three-Year Incentive Award in Restricted
Stock. The number of shares of stock payable shall be equal to (A) the
quotient of the stock portion of the Participant's Three-Year Incentive Award
divided by the Fair Market Value on the last day of the Three-Year Period to
which the award relates plus (B) 20 percent of the quotient in (A) provided
that, if the Participant receives Common Stock that is not restricted, the
number of shares payable shall be reduced by one-sixth. The portion of the
Three-Year Incentive Award to be paid in cash and in stock shall be as
determined by the Committee at the date of grant of the Award.
(ii) Timing. Payment of the portion of each Three-Year Incentive Award
payable in cash or Common Stock that is not Restricted Stock shall be made,
without interest, as soon as practicable after the close of the Three-Year
Period to which such award relates. Payment of any portion of a Three-Year
Incentive Award payable in Restricted Stock will be made as soon as
practicable following the close of three years after the end of the Three-
Year Period to which such award relates.
(d) Special Rules for Transition Period. Each Participant in the 1995 and/or
1996 Plan Years shall receive a draw against the Three-Year Incentive Award
otherwise payable for the Three-Year Periods beginning January 1, 1995 and/or
January 1, 1996. The amount of such draw shall be paid in cash and shall equal
the target bonus amount under the BPF portion of the prior plan. Such
Participant's Three-Year Incentive Award, if any, for the Three-Year Periods
beginning in 1995 and/or in 1996 shall be reduced (but not below zero) by the
amount of such draw.
(e) Transfers Between Units. If a Participant transfers employment from one unit
to another during a Three-Year Period, the Participant's Three-Year Incentive
Award shall be prorated based on the proportion of time spent in each unit in
which the Participant has spent at least six months.
7. TERMINATION OF EMPLOYMENT
(a) During Award Period. Subject to meeting the performance goals, a Participant
shall be entitled to receive payment
<PAGE>
of a Three-Year Incentive Award only if employment with the FMC Companies
continues uninterrupted from the first day of participation in the Award to the
earlier of (i) the last day of the applicable period, (ii) normal retirement
under the FMC Salaried Employees' Retirement Plan or any successor plan, (iii)
early retirement at the request of FMC, (iv) death, or (v) Disability. Subject
to meeting the performance goals, earlier termination of employment will result
in automatic cancellation and forfeiture of the Award, provided that the
Committee may, if it believes circumstances warrant such action, authorize
payment of all or a portion of any Award that would otherwise be forfeited
pursuant to this section.
(b) During Restriction Period For Restricted Stock. Notwithstanding paragraph
(a) of this section, if a Participant receives Restricted Stock and employment
with the FMC Companies is terminated for any reason other than the reasons
contained in (ii), (iii), (iv) or (v) of paragraph (a) prior to the conclusion
of the three-year restriction period for such Restricted Stock, the Participant
shall receive a number of shares equal to the product of (i) five-sixths of the
number of shares of Restricted Stock payable under Section 7(c)(i)(B) and (ii) a
fraction the numerator of which is the number of days between the end of the
applicable Three-Year Period and the termination of employment and the
denominator of which is 1,095, and the balance of the stock portion of the Award
shall be forfeited.
8. INCENTIVE BENEFITS
In addition to Three-Year Incentive Awards, the Committee may, at its
discretion, create and grant such Incentive Benefits as it believes are
desirable (including by way of illustration and not by way of limitation, stock
appreciation rights, stock bonus and restricted stock awards), provided that:
(a) any Incentive Benefits shall be governed by the terms of the Plan as in
effect on the Date of Grant of such Incentive Benefits, and for such purpose,
notwithstanding the provisions of Section 15, the Committee may amend the
Plan to create and describe Incentive Benefits and the governing terms
thereof;
(b) the creation of Incentive Benefits may not, without stockholder approval,
(i) increase the total number of shares of Common Stock issuable under the
Plan, or (ii) materially modify the requirements as to eligibility for
participation in the Plan;
<PAGE>
(c) the Committee shall not have the power to create and grant Incentive
Benefits that would result in the grant of a prohibited tandem stock option
or other prohibited tandem arrangement, with respect to any Incentive Stock
Options, as described in applicable regulations under Section 422 of the
Code, and
(d) with respect to grants and awards to persons subject to Section 16(b) of
the Exchange Act, Incentive Benefits granted or awarded shall have such terms
and conditions as will comply with Rule 16b-3 or other similar rules.
9. DILUTION AND OTHER ADJUSTMENTS
In the event of any change in the outstanding shares of Common Stock by reason
of any stock dividend or split, recapitalization, merger, consolidation,
spinoff, reorganization, combination or exchange of shares or other similar
corporate change, the Committee shall make such adjustments, if any, as it in
its sole discretion deems equitable (a) in the number of shares of Common Stock
that may be issued under the Plan in payment of any Award, or (b) in the
Financial Objectives during any Three Year Period from which the requisite
performance levels are calculated, such adjustments to be conclusive and binding
upon all parties concerned. The Committee may also make adjustments, to the
extent it deems appropriate, in a unit's performance goals during and after any
Three-Year Period to compensate for or reflect any significant changes that may
have occurred during such Three-Year Period in accounting practices, tax laws or
other laws or regulations which alter or affect the unit's performance, actual
economic conditions, such as inflation, when contrasted with the assumptions
underlying the unit's performance goals or changes resulting from corporate
restructuring including without limitation, acquisitions and divestitures.
10. CHANGE OF CONTROL
If, while any Awards remain outstanding under the Plan_
(a) the "beneficial ownership" (as defined in Rule 13d-3 under the Exchange
Act) of securities representing more than 20 percent of the combined voting
power of FMC is acquired by a "person" as defined in Sections 13(d) and 14(d)
of the Exchange Act (other than FMC, any trustee or other fiduciary holding
securities under an employee
<PAGE>
benefit plan of FMC or an affiliate thereof, or any corporation owned,
directly or indirectly, by the stockholders of FMC in substantially the same
proportions as their ownership of stock of FMC), or
(b) the stockholders of FMC approve a definitive agreement to merge or
consolidate FMC with or into another company (other than a merger or
consolidation which would result in the voting securities of FMC outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than 80 percent of the combined voting power of the voting
securities of FMC or such surviving entity outstanding immediately after such
merger or consolidation), or to sell or otherwise dispose of all or
substantially all of its assets, or adopt a plan of liquidation, or
(c) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors any new director
(other than a director designated by a person who has entered into an
agreement with FMC to effect a transaction described in paragraph (a) or (b)
of this section) whose election by the Board of Directors or nomination for
election by FMC's stockholders was approved by a vote of at least two-thirds
of the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority
thereof,
then from and after the date on which public announcement of the acquisition of
such percentage shall have been made, or the date of any such stockholder
approval or adoption, or the date on which the change in the composition of the
Board of Directors set forth above shall have occurred, whichever is applicable,
the full value of each outstanding Award shall become exercisable and/or fully
vested and shall be paid in full to the Participant as soon as practicable
following the date of such event.
11. CANCELLATION OF AWARDS
The Committee may cancel all or any part of an Award with the written consent of
the Participant holding such Award. In the event of any cancellation, all rights
of the former Participant in respect of such cancelled Award shall terminate.
<PAGE>
12. MISCELLANEOUS PROVISIONS
(a) Assignment and Transfer. Awards shall not be transferable other than by will
or the laws of descent and distribution and Awards may be exercised or otherwise
realized, during the lifetime of the grantee, only by the grantee or by his or
her guardian or legal representative.
(b) No Right to Awards or Employment. No Employee or other person shall have any
claim or right to be granted an Award, nor shall any Participant have a right to
receive payment of an Award in any form other than as the Committee shall
approve. Neither the Plan nor any action taken hereunder shall be construed as
giving any Employee or Participant any right to be retained in the employ of any
FMC Company.
(c) Taxes. The FMC Companies shall have the right to deduct from payment of an
Award any taxes required by law to be withheld from an Employee with respect to
such payment and, in the case of Awards paid in Common Stock the Employee or
other person receiving such stock shall be required to pay to the FMC Companies
the amount of any taxes required to be withheld from an Employee with respect to
such stock.
(d) Securities Laws. Each Award shall be subject to the condition that such
Award may not be exercised or paid if the Committee determines that the sale of
securities upon exercise or payment of such Award may violate the Securities Act
of 1933 or any other law or requirement of any governmental authority. FMC shall
not be deemed by any reason of the granting of any Award to have any obligation
to register the shares subject to such Award under the Securities Act of 1933 or
to maintain in effect any registration of such shares which may be made at any
time under the Securities Act of 1933.
(e) Premature Termination. FMC shall not be obligated to make any payment of
cash or Common Stock (or have any other obligation or liability) under any Award
if the Committee shall determine that (i) the employment of the holder of such
Award with any FMC Company shall have been terminated for good cause, or (ii)
the holder of such Award shall have engaged or may engage in employment or
activities competitive with the FMC Companies or contrary, in the opinion of the
Committee, to the best interests of the FMC Companies. After any such
determination the holder of such Award shall have no right under any such Award
(regardless of whether such holder shall have delivered a notice of exercise
prior to the making of such determination) to receive any payment or purchase
any shares at any time
<PAGE>
unless such determination shall be rescinded by the Committee. Any Award may be
terminated entirely by the Committee at the time of or any time subsequent to a
determination by the Committee under this section which has the effect of
eliminating FMC's obligation to pay such Award or sell or deliver shares under
such Option.
(f) Severability. Whenever possible, each provision in the Plan and in every
Award shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Plan or any Award shall be held to
be prohibited by or invalid under applicable law then (i) such provision shall
be deemed amended to, and to have contained from the outset such language shall
be necessary to, accomplish the objectives of the provision as originally
written to the fullest extent permitted by law and (ii) all other provisions of
the Plan and every Award shall remain in full force and effect.
(g) No Strict Construction. No rule of strict construction shall be applied
against FMC, the Committee or any other person in the interpretation of any of
the terms of the Plan, any Award or any rule or procedure established by the
Committee.
(h) Stockholder Rights. A Participant shall not have any dividend, voting or
other stockholder rights by reason of an Award prior to the issuance of any
Common Stock pursuant to such Award.
(i) Governing Law. The Plan shall be governed by and construed in accordance
with the laws of the United States of America and, to the extent not
inconsistent therewith, by the laws of the State of Illinois.
13. AMENDMENT AND TERMINATION
(a) Amendment. The Board of Directors may at any time amend, suspend or
terminate the Plan, provided that no such action shall adversely affect any
rights under any Award theretofore granted or change the objectives or other
measure of performance applicable to an Award in a manner adverse to
Participants in accordance with Section 9. No amendment may, without stockholder
approval in accordance with Section 14, increase the total number of shares of
Common Stock issuable under the Plan.
(b) Termination. The right to grant further Awards shall terminate automatically
upon the granting of such Awards which, together with shares of Common Stock
previously issued and/or subject to outstanding Awards, equals the
<PAGE>
maximum authorized under the Plan, subject to additional shares of Common Stock
becoming available for Awards by reason of forfeitures or cancellations of
earlier Awards.
14. EFFECTIVE DATE OF THE PLAN
The Plan shall become effective as of January 1, 1995, subject to approval by
the affirmative vote of the holders of a majority of the securities of FMC
present, or represented, and entitled to vote at the next annual meeting of the
stockholders of FMC.
<PAGE>
EXHIBIT 10.10
FMC 1995 STOCK OPTION PLAN
(AS AMENDED)
1. PURPOSE OF THE PLAN
The purpose of the FMC 1995 Stock Option Plan is to promote the long-term
performance of FMC by (i) providing long-term incentives in common stock of FMC
to key management employees of FMC and its subsidiaries, (ii) assisting in
attracting and retaining as employees persons whose abilities, experience and
judgment have contributed and will continue to contribute to the financial
success and progress of FMC, and (iii) aligning the identity of interests of
those employees and FMC's shareholders.
2. DEFINITIONS
(a) "Award" means an Option.
(b) "Board of Directors" means the Board of Directors of FMC as it may be
constituted from time to time.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means the Compensation and Organization Committee of the Board
of Directors.
(e) "Common Stock" means the common stock of FMC.
(f) "Date of Grant" means the date which is designated by the Committee as the
date of grant of an Option.
(g) "Disability" means complete and permanent inability by reason of illness or
accident to perform the duties of the occupation at which a Participant was
employed when such disability commenced.
(h) "Disinterested Person" means any member of the Board of Directors who, at
the time discretion under the Plan is exercised, has not at any time within one
year prior thereto received grants or awards of equity securities under the Plan
or any other plan of FMC or any of its affiliates (as that term is used in the
Exchange Act) except as provided in Rule 16b-3(c)(2)(i), and is not selected as
a person to whom equity securities may be allocated or granted pursuant to
<PAGE>
any other plan of FMC or any of its affiliates (as that term is used in the
Exchange Act) entitling the participants therein to acquire equity securities of
FMC or of any such affiliates except as provided in Rule 16b-3(c)(2)(i).
(i) "Employee" means any person employed by the FMC Companies.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(k) "Fair Market Value" means the closing price of a share of Common Stock on a
specified date as reported in the New York Stock Exchange Composite Transactions
for such date, or such other measurement of value as may be specified by the
Committee from time to time.
(l) "FMC" means FMC Corporation.
(m) "FMC Company" or "FMC Companies" means FMC and its Subsidiaries.
(n) "Incentive Stock Option" means a stock option granted by the Committee to a
Participant which is an incentive stock option within the meaning of Section 422
of the Code and is designated by the Committee as an Incentive Stock Option.
(o) "Nonqualified Stock Option" means a stock option granted by the Committee to
a Participant which is not designated by the Committee as an Incentive Stock
Option.
(p) "Option" means an Incentive Stock Option or a Nonqualified Stock Option.
(q) "Parent Corporation" means a corporation which, with respect to another
corporation, is a parent corporation within the meaning of Section 424(e) of the
Code.
(r) "Participant" means an Employee who has received an Award which has not been
exercised, cancelled or forfeited and which has not expired.
(s) "Plan" means the FMC 1995 Stock Option Plan.
(t) "Plan Year" means each calendar year commencing on or after January 1, 1995.
(u) "Subsidiary Company" means (i) any corporation the majority of the voting
power of all classes of stock entitled to vote or the majority of the total
value of shares of all classes of stock of which is owned, directly or
indirectly, by FMC, or (ii) any trade or business other than a corporation the
majority of the profits interest,
<PAGE>
capital interest or actuarial interest of which is owned, directly or
indirectly, by FMC.
(v) "Subsidiary Corporation" means a corporation or other entity which, with
respect to another corporation, is a subsidiary corporation within the meaning
of Section 424(f) of the Code.
(w) "10 Percent Shareholder" means an individual who on the Date of Grant owns
directly or indirectly stock of the FMC Company employing such individual, or of
a corporation which is a Parent Corporation or Subsidiary Corporation with
respect to such FMC Company, possessing more than 10 percent of the total
combined voting power of all classes of stock of such FMC Company, Parent
Corporation, or Subsidiary Corporation.
3. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Committee, the composition of which shall
consist of not less than two members of the Board of Directors who are
Disinterested Persons, and otherwise satisfy the provisions of Rule 16b-3 of the
General Rules and Regulations under the Exchange Act or any successor to such
rule. Except as limited by the express provisions of the Plan or by resolutions
adopted by the Board of Directors, the Committee shall have the authority and
discretion to interpret the Plan, to establish and revise rules and regulations
relating to the Plan, and to make any other determinations that it believes
necessary or advisable for the administration of the Plan. Decisions and
determinations by the Committee shall be final and binding on all persons.
Notwithstanding anything to the contrary contained in the Plan, the Board of
Directors shall also have all power and authority to perform any act granted to
the Committee pursuant to the Plan.
4. PARTICIPATION
Participants shall be determined by the Committee, in its sole discretion, from
Employees who, in the Committee's judgment, have a significant opportunity to
influence the growth of FMC or whose outstanding performance or potential merit
further incentive and reward for continued employment and accomplishment.
<PAGE>
5. SHARES OF COMMON STOCK SUBJECT TO THE PLAN
Subject to adjustment pursuant to Section 7, at no time may (i) the sum of (a)
the number of shares of Common Stock issued upon exercise of Options, and (b)
the number of shares of Common Stock subject to outstanding Options, together
with all shares issued or subject to outstanding awards under the FMC 1995
Management Incentive Plan exceed 3.0 million or (ii) the number of shares of
Common Stock for which Options may be granted during a Plan Year exceed 100,000
for any Participant. In the event that any outstanding Option for any reason
expires, terminates, is cancelled or forfeited, without having been exercised,
the shares of Common Stock allocable to the expired, terminated, cancelled or
forfeited portion of such Option shall (unless the Plan shall have been
terminated) become available for subsequent grants of Options.
6. OPTIONS
(a) Grant of Options. The Committee may, in its sole discretion, at any time and
from time to time grant Options to any Participant. Each Option shall be
evidenced by a written instrument containing such terms and conditions, not
inconsistent with the Plan, as the Committee shall approve.
(b) Nonqualified Stock Options
(i) Exercise Price. The purchase price per share of Common Stock under each
Nonqualified Stock Option shall be as specified by the Committee in the
Option, provided that such purchase price shall be not less than 100 percent
of the Fair Market Value on the Date of Grant.
(ii) Exercisability. Each Nonqualified Stock Option shall become fully
exercisable by the grantee at the time designated by the Committee in the
Option.
(iii) Term. The term of each Nonqualified Stock Option shall be as specified
by the Committee in the Option. In the event no term is so specified, the
term for the Nonqualified Stock Option shall be 15 years from the Date of
Grant. The Committee may, from time to time, extend the Option Expiration
Date of any Nonqualified Stock Option upon such terms and conditions as the
Committee shall determine.
(iv) No Ordering. Nonqualified Stock Options may be exercised in any order,
regardless of the Date of Grant or the existence of any outstanding Option.
<PAGE>
(c) Incentive Stock Options
(i) Date of Grant. In no event shall any Incentive Stock Option be granted
after ten years from the date the Plan is adopted or the date the Plan is
approved by the stockholders of FMC pursuant to Section 16, whichever is
earlier.
(ii) Exercise Price. The purchase price per share of Common Stock under each
Incentive Stock Option shall be not less than 100 percent of the Fair Market
Value on the Date of Grant.
Notwithstanding the foregoing, in the case of a Ten Percent Shareholder, the
purchase price per share of Common Stock under each such Incentive Stock
Option shall be not less than 110 percent of the Fair Market Value on the
Date of Grant.
(iii) Exercisability. Each Incentive Stock Option shall become fully
exercisable by the grantee at the time designated by the Committee in the
Option.
(iv) Term. At or prior to the time an Incentive Stock Option is granted, the
Committee shall fix the term of such Option, which shall be not more than ten
years from the Date of Grant, and such term shall be stated in the Option. In
the event the Committee takes no action to fix the term, such Option shall
contain a provision that it shall expire 10 years from the Date of Grant.
Notwithstanding the foregoing, the terms of an Option granted to a 10 Percent
Shareholder shall not be more than five years from the Date of Grant.
(v) Maximum Amount. The aggregate Fair Market Value (determined as of the
date the Incentive Stock Option is granted) of the shares of Common Stock
with respect to which the Incentive Stock Options granted under the Plan and
all other FMC plans become exercisable for the first time by a Participant
during any calendar year shall not exceed $100,000. Options granted in excess
of such limitation shall be Nonqualified Options.
(vi) Notice of Disposition. A Participant or former Participant shall give
prompt notice to FMC of any disposition of shares acquired upon exercise of
an Incentive Stock Option if such disposition occurs within either two years
after the Date of Grant or one year after the receipt of such shares by the
Participant or former Participant.
(d) Payment for Stock. Payment for Common Stock purchased upon the exercise (in
whole or in part) of an Option shall
<PAGE>
be made in cash, in shares of Common Stock (valued at the then Fair Market
Value), or by a combination of cash and Common Stock. The proceeds received by
FMC from the sale or sales pursuant to the Plan will be used for general
corporate purposes.
(e) Termination of Employment.
(i) Nonqualified Stock Options. If a Participant's employment is terminated
for any reason whatsoever (including death), any Nonqualified Stock Option
granted pursuant to the Plan outstanding at the time and all rights
thereunder may, unless earlier terminated in accordance with its terms, be
exercised by the Participant or other person who acquired the right to
exercise such Option, until the following date:
(A) The Option Expiration Date if termination is due to death, Disability
or retirement under the terms of any formal retirement plan of any FMC
Company;
(B) three months after the date employment is terminated for any reason
other than death, Disability, retirement or good cause as provided in
Section 10(e); or
(C) immediately upon the date employment is terminated for good cause as
provided in Section 14(e).
(ii) Incentive Stock Options. If a Participant's employment terminates for
any reason (including death) such that the Participant is not employed by FMC
or by any corporation which is a Parent Corporation or Subsidiary Corporation
with respect to FMC, any Incentive Stock Option outstanding at the time and
all rights thereunder may, unless earlier terminated in accordance with its
terms, be exercised by the Participant or other person who acquired the right
to exercise such option until the following date:
(A) the Option Exercise Date if termination is due to death;
(B) one year after the date employment terminates if such termination is
by reason of permanent and total disability;
(C) three months after the date employment terminates for any reason other
than death or permanent and total disability or good cause as provided in
Section 14(e), provided that if employment terminates due to retirement at
the normal retirement date or to early retirement at the request of FMC,
the Option shall terminate at the Option Expiration Date subject to its
<PAGE>
becoming a Nonqualified Stock Option if not exercised within three months
of such termination of employment;
(D) immediately upon the date employment is terminated for good cause as
provided in Section 14(e),
but in all events each Incentive Stock Option shall terminate not more than
10 years (five years in the case of an Incentive Stock Option granted to a 10
Percent Shareholder) from the Date of Grant. For purposes of this section,
"permanent and total disability" means the inability to engage in any
substantial gainful activity by reason of any medically determinable physical
or mental impairment which can be expected to result in death or which has
lasted or can be expected to last for a continuous period of not less than 12
months.
(iii) Whole or Partial Exercise. If an Option may be exercised by a
Participant after his employment terminates, such Option may be exercised in
whole or in part.
(iv) Beneficiaries. In the event of the death of a Participant, the person or
persons to whom any Option shall have been transferred by will or the laws of
descent and distribution shall have the right (during the appropriate period
determined under this section) to exercise such Option in whole or in part.
(v) Committee Discretion. Notwithstanding the foregoing, the Committee may,
if it believes circumstances warrant such action, authorize the exercise of
an Option that would otherwise have terminated provided that the Committee
may not exercise such discretion if it would cause the disallowance of FMC's
tax deduction under Section 162(m) of the Code with respect to the Plan or an
Award.
7. DILUTION AND OTHER ADJUSTMENTS
In the event of any change in the outstanding shares of Common Stock by reason
of any stock dividend or split, recapitalization, merger, consolidation,
spinoff, reorganization, combination or exchange of shares or other similar
corporate change, the Committee shall make such adjustments, if any, as it in
its sole discretion deems equitable in the number of shares of Common Stock
subject to an Option held by any Participant and the exercise price thereof,
such adjustments to be conclusive and binding upon all parties concerned.
<PAGE>
8. CHANGE OF CONTROL
If, while any Options remain outstanding under the Plan_
(a) the "beneficial ownership" (as defined in Rule 13d-3 under the Exchange
Act) of securities representing more than 20 percent of the combined voting
power of FMC is acquired by a "person" as defined in Sections 13(d) and 14(d)
of the Exchange Act (other than FMC, any trustee or other fiduciary holding
securities under an employee benefit plan of FMC or an affiliate thereof, or
any corporation owned, directly or indirectly, by the stockholders of FMC in
substantially the same proportions as their ownership of stock of FMC), or
(b) the stockholders of FMC approve a definitive agreement to merge or
consolidate FMC with or into another company (other than a merger or
consolidation which would result in the voting securities of FMC outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than 80 percent of the combined voting power of the voting
securities of FMC or such surviving entity outstanding immediately after such
merger or consolidation), or to sell or otherwise dispose of all or
substantially all of its assets, or adopt a plan of liquidation, or
(c) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors any new director
(other than a director designated by a person who has entered into an
agreement with FMC to effect a transaction described in paragraph (a) or (b)
of this section) whose election by the Board of Directors or nomination for
election by FMC's stockholders was approved by a vote of at least two-thirds
of the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority
thereof,
then from and after the date on which public announcement of the acquisition of
such percentage shall have been made, or the date of any such stockholder
approval or adoption, or the date on which the change in the composition of the
Board of Directors set forth above shall have occurred, whichever is applicable,
all Options shall become exercisable on the date of such event.
<PAGE>
9. CANCELLATION OF AWARDS
The Committee may cancel all or any part of an Option with the written consent
of the Participant holding such Option. In the event of any cancellation, all
rights of the former Participant in respect of such cancelled Option shall
terminate.
10. MISCELLANEOUS PROVISIONS
(a) Assignment and Transfer. Options shall not be transferable other than by
will or the laws of descent and distribution and may be exercised or otherwise
realized, during the lifetime of the grantee, only by the grantee or by his or
her guardian or legal representative.
(b) No Right to Options or Employment. No Employee or other person shall have
any claim or right to be granted an Option. Neither the Plan nor any action
taken hereunder shall be construed as giving any Employee or Participant any
right to be retained in the employ of any FMC Company.
(c) Taxes. The FMC Companies shall have the right to deduct from payment of an
Award any taxes required by law to be withheld from an Employee with respect to
such payment and, in the case of shares of Common Stock issued upon the exercise
of an Option, the Employee or other person receiving such stock shall be
required to pay to the FMC Companies the amount of any taxes required to be
withheld from an Employee with respect to such stock.
(d) Securities Laws. Each Option shall be subject to the condition that such
Option may not be exercised if the Committee determines that the sale of
securities upon exercise of such Option may violate the Securities Act of 1933
or any other law or requirement of any governmental authority. FMC shall not be
deemed by any reason of the granting of any Option to have any obligation to
register the shares subject to such Option under the Securities Act of 1933 or
to maintain in effect any registration of such shares which may be made at any
time under the Securities Act of 1933.
(e) Premature Termination. FMC shall not be obligated to make any payment of
cash or Common Stock (or have any other obligation or liability) under any
Option if the Committee shall determine that (i) the employment of the holder of
such Option with any FMC Company shall have been terminated for good cause, or
(ii) the holder of such Option shall have engaged or may engage in employment or
activities competitive with the FMC Companies or contrary, in the opinion of the
Committee, to the best interests of the FMC
<PAGE>
Companies. After any such determination the holder of such Option shall have no
right under any such Option (regardless of whether such holder shall have
delivered a notice of exercise prior to the making of such determination) to
receive any payment or purchase any shares at any time unless such determination
shall be rescinded by the Committee. Any Option may be terminated entirely by
the Committee at the time of or any time subsequent to a determination by the
Committee under this section which has the effect of eliminating FMC's
obligation to pay such Award or sell or deliver shares under such Option.
(f) Severability. Whenever possible, each provision in the Plan and in every
Option shall be interpreted in such manner as to be effective and valid under
applicable law (including, in the case of an Incentive Stock Option,
interpretation in such manner as to not prevent such Option from meeting the
requirements of Section 422 of the Code and of other provisions applicable with
respect to incentive stock options as defined in such Section 422 (collectively,
the "ISO Requirements"), but if any provision of this Plan or any Option shall
be held to be prohibited by or invalid under applicable law, or, where
applicable, to fail to meet any ISO Requirements, then (i) such provision shall
be deemed amended to, and to have contained from the outset such language shall
be necessary to, accomplish the objectives of the provision as originally
written to the fullest extent permitted by law and (ii) all other provisions of
the Plan and every Option shall remain in full force and effect.
(g) No Strict Construction. No rule of strict construction shall be applied
against FMC, the Committee or any other person in the interpretation of any of
the terms of the Plan, any Option or any rule or procedure established by the
Committee.
(h) Stockholder Rights. A Participant shall not have any dividend, voting or
other stockholder rights by reason of an Option prior to the issuance of any
Common Stock pursuant to such Option.
(i) Governing Law. The Plan shall be governed by and construed in accordance
with the laws of the United States of America and, to the extent not
inconsistent therewith, by the laws of the State of Illinois.
11. AMENDMENT AND TERMINATION
(a) Amendment. The Board of Directors may at any time amend, suspend or
terminate the Plan, provided that no such action shall adversely affect any
rights under any Option
<PAGE>
theretofore granted or change the objectives or other measure of performance
applicable to an Option in a manner adverse to Participants in accordance with
Section 7. No amendment may, without stockholder approval in accordance with
this Section, increase the total number of shares of Common Stock issuable under
the Plan.
(b) Termination. The right to grant further Options shall terminate
automatically upon the granting of such Options which, together with shares of
Common Stock previously issued and/or subject to outstanding Options, equals the
maximum authorized under the Plan, subject to additional shares of Common Stock
becoming available for Options by reason of forfeitures or cancellations of
earlier Options or Awards under the Plan or the FMC 1995 Management Incentive
Plan.
12. EFFECTIVE DATE OF THE PLAN
The Plan shall become effective as of January 1, 1995, subject to approval by
the affirmative vote of the holders of a majority of the securities of FMC
present, or represented, and entitled to vote at the next annual meeting of the
stockholders of FMC.
<PAGE>
EXHIBIT 12
FMC CORPORATION
---------------
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
--------------------------------------------------
(Amounts in Millions)
<TABLE>
<CAPTION>
Years Ended December 31
---------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
EARNINGS:
- --------
Income from continuing
operations before
income taxes and
extraordinary items $246.9 $252.3 $ 37.8 $279.6 $255.9
Minority interests 59.1 61.4 2.5 3.6 3.0
Undistributed
(earnings) losses of
affiliates 2.0 4.1 (0.4) (6.8) (3.1)
Interest expense and
amortization of debt
discount, fees and
expenses 87.3 68.0 73.6 94.9 124.7
Amortization of
capitalized interest 8.0 7.8 7.6 7.6 7.4
Interest included in
rental expense 21.4 21.4 20.0 19.9 18.1
-------------------------------------------
Total earnings $424.7 $415.0 $141.1 $398.8 $406.0
-------------------------------------------
FIXED CHARGES:
- -------------
Interest expense and
amortization of debt
discount, fees and
expenses $ 87.3 $ 68.0 $ 73.6 $ 94.9 $124.7
Interest capitalized
as part of fixed
assets 14.5 4.6 0.7 2.1 3.5
Interest included in
rental expense 21.4 21.4 20.0 19.9 18.1
-------------------------------------------
Total fixed charges $123.2 $ 94.0 $ 94.3 $116.9 $146.3
-------------------------------------------
Ration of earnings to
fixed charges 3.4 4.4 1.5 3.4 2.8
===========================================
(A) (B)
</TABLE>
(A) The ratio of earnings to fixed charges for the year ended December 31, 1995
before the gain on sale of FMC Wyoming stock, restructuring and other charges
and write-off of acquired in-process research and development was 3.9x
(B) The ratio of earnings to fixed charges for the year ended December 31, 1993
before restructuring and other charges was 3.3x.
<PAGE>
[FMC LOGO]
FMC Corporation
1995 Annual Report
Increasing
shareholder
value
through
people,
growth
and
superb
execution
<PAGE>
As one of the world's
leading producers of
chemicals and machinery
for industry, agriculture
and government, FMC
participates on a world-
wide basis in five broad
markets: Performance
Chemicals, Industrial
Chemicals, Machinery
and Equipment, Defense
Systems and Precious
Metals. FMC operates
115 manufacturing
facilities and mines
in 24 countries.
About the cover: FMC is
building our commitment
to shareholders by growing
the company, executing
superbly and enlisting the
best people to do the job.
[GRAPH APPEARS HERE]
91 92 93/2/ 94 95/3/
---- ---- ----- ---- -----
Return on Investment/1/ 18.4 20.6 7.8 17.2 15.1
19.1
Earnings Per Share 4.77 5.23 1.11 4.66 5.63
4.45
(1) Return on investment =
net income plus after-tax
interest expense on debt
divided by the average of
stockholders' equity plus
total debt.
(2) 1993 ROI and earnings per
share were 7.8 percent and $1.11,
respectively. ROI and EPS,
excluding after-tax restructuring
and other charges of $123.3
million, or $3.34 per share, were
19.1 percent and $4.45,
respectively.
(3) 1995 ROI and EPS, which
are not displayed, were 15.3
percent and $5.72, respectively.
ROI of 15.1 percent and EPS of
$5.63, as displayed, exclude
after-tax restructuring and other
charges and a gain on the sale
of FMC Wyoming stock of $3.5
million, or $0.09 per share.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL SUMMARY
- -----------------------------------------------------------------------------
(In millions, except common stock, 1995 1994 Change
employee and stockholder data)
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
SALES
In the United States $ 2,313.0 $2,045.0 13%
Outside the United States 2,196.8 1,965.8 12%
- -----------------------------------------------------------------------------
TOTAL SALES $ 4,509.8 $4,010.8 12%
=============================================================================
INCOME (AFTER TAX)
Income before restructuring
and other charges and gain
on sale of FMC Wyoming stock/(1)(2)/ $ 212.1 $ 173.4 22%
- -----------------------------------------------------------------------------
Net income $ 215.6 $ 173.4 24%
- -----------------------------------------------------------------------------
FINANCIAL DATA
Common stock price range $79 1/2-57 3/8 $65-45 1/2
- -----------------------------------------------------------------------------
Capital expenditures
excluding acquisitions $ 494.1 $ 314.6
- -----------------------------------------------------------------------------
Research and development expenditures/(3)/ $ 172.3 $ 166.8
- -----------------------------------------------------------------------------
At December 31 Operating working capital $ 184.9 $ (36.1)
Number of employees 22,164 21,344
Number of stockholders 11,844 12,438
- -----------------------------------------------------------------------------
</TABLE>
(1)Supplemental financial information. Income before restructuring and other
charges and gain on sale of FMC Wyoming stock should not be considered in
isolation nor as an alternative for net income or as the sole measure of the
company's profitability.
(2)Restructuring and other charges consist of increased environmental reserves
($82.5 million), charges related to the shift of lithium-based production to
Argentina ($35 million), asset write-downs and other charges ($17 million)
and write-off of acquired in-process research and development related to the
Moorco International Inc. acquisition ($15.5 million), net of income taxes
($53.8 million) (Note 3 to consolidated financial statements). The non-
taxable gain on sale of FMC Wyoming stock was $99.7 million (Note 2 to
consolidated financial statements).
(3)Excludes 1995 write-off of acquired in-process research and development of
$15.5 million (Note 2 to consolidated financial statements).
- ------------------------------------------------------------------------------
1
<PAGE>
FMC Investor Highlights
. Our cash flow from operations*
is more than $760 million.
. In 1995, we significantly
increased capital spending
to close to $500 million, made
acquisitions of more than $360
million and spent $172 million
on research and development
- all investments to fuel future
growth at returns above
our cost of capital.
. We continue to have a
strong return on investment
at 15.1 percent (before special
income and expense items),
even as we significantly step
up investment spending.
Robert N. Burt Larry D. Brady
Our performance in 1995 added another positive milestone to our plan to create
shareholder value. We achieved that milestone through our successful efforts to
add growth to our tradition of superb execution.
. Sales were up 12 percent to $4.5 billion - the first
significant top-line growth we've seen in five years.
. Net income before special income and expense items was
$212 million - up 22 percent from last year, which means
we increased margins even as we were increasing sales.
. Earnings per share were $5.63 (before special income
and expense items) - up 21 percent from 1994.
In the past four years, we've identified opportunities and made investments that
will allow us to continue these trends.
. Between 1992 and 1996, we expect to invest more than
$1.7 billion in capital - up 45 percent, or $110 million a
year over the previous five years.
. In the last four years, we have acquired more than $650 million worth of
businesses - $360 million in 1995.
. We've also maintained our focus on research and development, and
accelerated our introduction of new products and new technologies.
. We continue to optimize our portfolio of businesses. We're
in a process to extract the highest value from our precious metals
business. We sold 20 percent equity interest in our soda ash busi-
ness for $150 million and divested non-core machinery businesses.
. And we've maintained our strong financial structure and
investment-grade rating on outstanding debt.
The strategies timeline later in this report highlights our progress.
* Segment profits before tax plus depreciation
2
<PAGE>
Driving this best year in FMC's history were improving markets and cost
improvements in Industrial Chemicals; market share gains, restructuring efforts,
and the benefits of acquisitions in Machinery and Equipment; and continued
growth in Performance Chemicals. This strong operating performance - combined
with the cultural changes we're implementing - demonstrates that our strategy of
adding growth to our tradition of superb execution is taking hold. We are
strengthening the base of our existing businesses, expanding our markets and
increasing revenues. The operating review and management's discussion and
analysis later in this report provide greater detail on the state of our
businesses.
Maximizing Shareholder Returns
Our top priority is maximizing shareholder value. Accordingly, in 1995, we did
an in-depth study to determine if maintaining our mix of chemical, machinery and
defense businesses was likely to result in continuing our historical record of
generating superior shareholder returns. Our study showed that over the past 15
years, diversified companies have produced returns above those of non-
diversified companies - by 2 percent a year. Based on this study, we are
convinced that our strategy of increasing our growth rate while maintaining our
commitment to superb execution, continuous improvement and a rigorous,
analytical approach to decision-making will result in superior shareholder
returns between now and the turn of the century.
Changing Our Culture
As we are more deeply involved in implementing our strategies, it becomes
clearer that our most important task is to get, develop and keep more than our
fair share of the best people. Achieving that goal involves a change in culture
by:
. refocusing our working relationships, with more dialogue and more exchange
of new ideas;
. emphasizing stretch objectives for our businesses, reinforced by our new
incentive plan;
. creating a work environment where we value diversity, encourage people
development, develop teamwork, and build trust and effective communications;
. streamlining decision-making, with more emphasis on line-to-line
communications;
. putting in place new operating systems, including our balanced scorecard
approach that focuses on the key success factors, such as customer
satisfaction, productivity and innovation, in addition to financial measures;
. integrating more external focus into operations, with senior managers and
operating managers spending more time with customers.
These changes in culture supplement our traditional values of maintaining the
highest ethical standards; protecting health, safety and the environment; and
acting as a responsible corporate citizen.
3
<PAGE>
. We are focused on optimizing
the mix of FMC's businesses,
including the sale of 20 percent
equity interest in our soda ash
business for $150 million cash
and the divestiture of
non-core businesses.
. We have a strong financial
structure and investment-grade
ratings on outstanding debt.
. We are focused on diversified
global growth, with international
sales totaling 48 percent**
of sales.
. FMC managers and employees
are focused on increasing
shareholder returns given our
significant internal ownership
- 24 percent of FMC's
outstanding stock.
Management Changes
We elected three new vice presidents in 1995 - all of whom earned their
promotions based on outstanding performance in their previous jobs with the
company.
. Bill Schumann was elected vice president and head of our Agricultural
Products business, succeeding Earl Morgan, who retired in 1995, leaving
the legacy of an organization committed to excellence.
. Ron Mambu also was elected vice president and continues as controller.
. Pat Brozowski was elected vice president of communications.
There are other changes in management and in our board of directors.
. For more than 20 years, Larry Holleran, former vice president, human
resources, has provided outstanding service to FMC. His insights and
contributions have positively influenced countless FMC employees and
the fortunes of our company. As he retires in February, we thank him for a
super job and wish him well in meeting the challenges of his well-earned
retirement.
. We are pleased to welcome Pehr Gyllenhammar to our board of directors.
Perhaps best known as the former head of AB Volvo, Pehr brings us broad-
ranging experience in international business and finance. Pehr currently
is a senior adviser to Lazard Freres.
. Bill Boeschenstein is retiring from our board at our 1995 annual meeting.
Personally and professionally, we all will miss his sage counsel, his
business acumen and his willingness to offer his perspective.
Outlook
We believe the 1996 outlook for our Industrial Chemicals, Performance Chemicals
and Machinery and Equipment segments is positive. These businesses will have to
overcome a downturn in defense and higher interest expense driven by our
significant capital investments and acquisitions. However, at this point, we
believe that we can achieve another record performance in sales and earnings.
Robert N. Burt Larry D. Brady
Chairman of the Board and President
Chief Executive Officer
February 29, 1996
** Excludes sales of Precious Metals
4
<PAGE>
<TABLE>
<CAPTION>
Industry Segment Data
- -------------------------------------------------------------------------------------------
(In millions) Year ended December 31
----------------------------------------------------
1995 1994 1993 1992 1991
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales
Performance Chemicals $1,176.5 $1,060.5 $ 973.5 $ 912.3 $ 764.1
Industrial Chemicals 976.8 866.8 866.7 925.9 933.3
Machinery and Equipment 1,351.0 972.7 870.9 876.7 891.5
Defense Systems 968.2 1,080.5 950.2 1,111.8 1,171.6
Precious Metals 59.0 60.9 125.0 170.6 157.5
Eliminations (21.7) (30.6) (32.4) (23.6) (18.6)
- -------------------------------------------------------------------------------------------
Total $4,509.8 $4,010.8 $3,753.9 $3,973.7 $3,899.4
===========================================================================================
Income (loss) before income taxes
Performance Chemicals $ 161.6 $ 154.0 $ 139.1 $ 133.4 $ 116.4
Industrial Chemicals(1) 161.9 119.3 58.3 79.8 86.8
Machinery and Equipment 49.8 33.3 6.7 32.1 46.2
Defense Systems(1) 160.8 159.5 161.7 167.2 160.2
Precious Metals(1) (5.7) (9.0) 9.7 36.4 28.7
- -------------------------------------------------------------------------------------------
Operating profit 528.4 457.1 375.5 448.9 438.3
Restructuring and other charges(2) (150.0) - (172.3) - -
Gain on sale of FMCWyoming stock(3) 99.7 - - - -
Net interest expense (72.5) (59.1) (62.6) (82.7) (107.4)
Corporate and other (96.2) (101.9) (110.5) (112.3) (89.6)
Minority interests(1) (59.1) (61.4) (2.5) (3.6) (3.0)
Other income and (expense), net(4) (3.4) 17.6 10.2 29.3 17.6
- -------------------------------------------------------------------------------------------
Total $ 246.9 $ 252.3 $ 37.8 $ 279.6 $ 255.9
===========================================================================================
Identifiable assets
Performance Chemicals $ 904.6 $ 754.6 $ 696.9 $ 662.2 $ 546.1
Industrial Chemicals 1,048.8 883.6 824.7 872.2 908.4
Machinery and Equipment 1,166.5 619.3 522.9 473.0 503.3
Defense Systems 547.3 492.0 269.0 277.7 367.6
Precious Metals 139.1 108.9 64.8 131.8 145.1
- -------------------------------------------------------------------------------------------
Subtotal 3,806.3 2,858.4 2,378.3 2,416.9 2,470.5
Corporate and other 494.8 493.1 466.8 439.7 303.7
- -------------------------------------------------------------------------------------------
Total $4,301.1 $3,351.5 $2,845.1 $2,856.6 $2,774.2
===========================================================================================
</TABLE>
(1) Defense Systems' segment data includes 100 percent of United Defense, L.P.
in 1994 and 1995. Industrial Chemicals' segment data includes 100 percent of
FMC Wyoming Corporation in 1995. Precious Metals' segment data includes 100
percent of FMC Gold Company in 1991 through 1995. 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 1995 are described in Note 3 to
the consolidated financial statements and are related to Industrial
Chemicals ($77.5 million), Performance Chemicals ($45.0 million), Machinery
and Equipment ($15.5 million) and Defense Systems ($12.0 million).
Restructuring and other charges related to 1993 are described in Note 3 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) Gain on sale of FMC Wyoming stock (Note 2 to the consolidated financial
statements) is attributable to the Industrial Chemicals segment.
(4) Other income and (expense), net primarily includes LIFO inventory
adjustments and pension-related income and (expense).
- --------------------------------------------------------------------------------
5
<PAGE>
Products
and Markets
Performance Chemicals Description
................................................................................
Agricultural Produces crop protection and pest control chemicals for
Products worldwide markets. More than 50 percent of sales
outside of United States.
________________________________________________________________________________
Food Ingredients Largest worldwide producer of carrageenan and Avicel
cellulose gel. Leading specialist in providing texture,
structure and physical stability for food systems.
________________________________________________________________________________
Pharmaceutical Largest worldwide producer of binders and disintegrants,
as well as other specialty chemicals for pharmaceutical
markets.
________________________________________________________________________________
Lithium World's largest producer of lithium-based products.
________________________________________________________________________________
Process World's largest producer of phosphate ester flame
Additives retardants. Leading supplier of specialty water treatment
chemicals.
________________________________________________________________________________
BioProducts Largest worldwide producer of agarose. Leading supplier
of proprietary products for life science markets.
Industrial Chemicals Description
................................................................................
Alkali World's largest producer of natural soda ash and market
Chemicals leader in North America. Downstream products include
sodium bicarbonate, sodium cyanide, sodium
sesquicarbonate, caustic soda.
________________________________________________________________________________
Peroxygen Major worldwide producer of hydrogen peroxide,
Chemicals persulfates and other peroxygen chemicals.
________________________________________________________________________________
Phosphorus Major worldwide supplier and leading North American pro-
Chemicals ducer of phosphorus and its derivatives, phosphates and
phosphoric acid.
________________________________________________________________________________
FMC Foret, S.A. Major European chemical producer. Products include
hydrogen peroxide, perborates, phosphates, silicates,
zeolites, sulfur derivatives. Leading share in Spanish
peroxygen and phosphate markets.
6
<PAGE>
Markets Served
................................................................................
Food growers, pest control markets.
- --------------------------------------------------------------------------------
Processed food industry, personal care products.
- --------------------------------------------------------------------------------
Pharmaceutical industry.
- --------------------------------------------------------------------------------
Aluminum, ceramics and glass, lubricating greases, swimming pools, textiles,
aluminum alloys, batteries, rubber and plastic,air conditioning,
pharmaceuticals.
- --------------------------------------------------------------------------------
Plastics, hydraulic fluids, lubricant additives, industrial water treatment and
desalination.
- --------------------------------------------------------------------------------
Life science research; DNA and protein analysis.
FMC Market Strengths
................................................................................
Strong global position in both developed and developing countries. Strong
insecticide portfolio. Successful efforts in developing a new class of
herbicides.
- --------------------------------------------------------------------------------
Proprietary products. Advanced applications technology. Worldwide manufacturing
capabilities.
- --------------------------------------------------------------------------------
Brand recognition. Proprietary technology. Advanced applications technology.
Strong manufacturing capabilities. Product quality and versatility.
- --------------------------------------------------------------------------------
Diverse, high value-added products. Strong manufacturing capabilities.
- --------------------------------------------------------------------------------
Global manufacturing and technical sales capabilities. Diverse products.
Applications know-how.
- --------------------------------------------------------------------------------
Advanced applications technology. Product quality. Proprietary technology.
Worldwide brand recognition.
Growth and Global Development
................................................................................
Rapid expansion of new and existing products to markets in Latin America, Europe
and Asia. Building new manufacturing plant to produce new family of herbicides.
- --------------------------------------------------------------------------------
Opened new R&D laboratories; sales, marketing push in Europe, Asia-Pacific and
Latin America. Dedicated teams in place for developing meat, seafood, poultry
applications.
- --------------------------------------------------------------------------------
Working with customers to tailor FMC's AviSphere time-release technology.
Launched new line of vitamin specialty excipients and a new chewable tablet
excipient. Opened new technical service laboratory in Brussels and signed new
agreement to sell excipients to multinational customers in Asia.
- --------------------------------------------------------------------------------
Developing new, low-cost lithium reserves in South America using new proprietary
lithium extraction technology. Accelerated research efforts in pharmaceutical
reagents, polymer initiators and battery materials.
- --------------------------------------------------------------------------------
Opened new R&D laboratory in Princeton, New Jersey, increasing capabilities to
serve the plastics market. Continuing R&D investments. Increasing technology
focus on process improvement. Increasing growth in Asia-Pacific region.
- --------------------------------------------------------------------------------
Introduced new products for conducting DNA separations, sequencing and
detection. Continuing R&D investments. Acquired AT Biochem to expand into DNA
sequencing and mutation detection markets.
Outlook
................................................................................
Growing markets for pesticides in developing countries. Growing portfolio of
pest control products and herbicides, with substantial market share gains.
Expect to bring to market new herbicides for use in U.S. and international
markets.
- --------------------------------------------------------------------------------
Continued growth in global food ingredients markets. Increasing output from
regional food labs and field organizations around the world.
- --------------------------------------------------------------------------------
Strong pharmaceutical customer base. Expanding through value-added technology.
- --------------------------------------------------------------------------------
Growing specialty applications. New products introduced for lithium ion
batteries, specialty polymers and synthetic intermediates for polymers.
- --------------------------------------------------------------------------------
Increased profitability from improved manufacturing performance and gains from
process technology. Continuing gains from new, state-of-the-art process control
equipment.
- --------------------------------------------------------------------------------
Increasing demand for DNA and protein-related analysis in research and
diagnostics.
Markets Served
................................................................................
Glass-making, chemicals, detergents, food products, animal feed additives,
mining, air/water treatment, pulp and paper.
- --------------------------------------------------------------------------------
Pulp and paper, textiles, chemical and polymer synthesis, environmental clean-
up, electronics, mining, detergents.
- --------------------------------------------------------------------------------
Detergents, cleaning compounds, metal treatment, food products, textiles,
pesticide intermediates, additives, pharmaceuticals, water treatment.
- --------------------------------------------------------------------------------
Detergents, pulp and paper, textiles, chemicals, tanning, animal feed, mining,
rubber, pharmaceuticals, ceramics, paint, food, photography, agriculture, water
treatment.
FMC Market Strengths
................................................................................
Proprietary solution mining technology. 100+ years raw material supply. Low
production costs. Largely self-sufficient in energy. Excellent distribution
system.
- --------------------------------------------------------------------------------
Strong applications research. High level of service, reliability, product
quality and safety.
- --------------------------------------------------------------------------------
Low production costs. Diverse products. High level of service and reliable
delivery. Strong technical support to customers.
- --------------------------------------------------------------------------------
Excellent cost positions. Strong manufacturing capabilities. Strong technical
support to customers. Worldwide market knowledge.
Growth and Global Development
................................................................................
Focusing on new proprietary mining technology, reducing costs. Expansion under
way. Multi-year cost improvement programs. Assessing potential trona source in
Turkey. Strong export growth opportunities.
- --------------------------------------------------------------------------------
Pursuing new markets and new applications in Asia and North America.
- --------------------------------------------------------------------------------
With FMC Foret, servicing customers on a worldwide basis.
- --------------------------------------------------------------------------------
New hydrogen peroxide plant in Delfzijl, Netherlands. Exports to more than 30
countries.
Outlook
................................................................................
High capacity utilization. Improving pricing. Strong export growth. Continued
cost improvement.
- --------------------------------------------------------------------------------
Continued high capacity utilization in North America. Improving pricing.
Continued high growth due to products' environmental desirability and
versatility.
- --------------------------------------------------------------------------------
Market position diversified to reduce dependence on laundry products. Worldwide
anti-phosphate sentiment diminishing, with stable growth expected.
- --------------------------------------------------------------------------------
Access to new markets from the Netherlands.
7
<PAGE>
Products
and Markets
Machinery and Equipment Description
................................................................................
Energy and
Transportation
Equipment
Oil and gas wellhead completion equipment; subsea engineering, procurement,
construction and equipment; metering products and systems; loading systems;
marine terminals and floating production systems; pressure-relief valves.
- --------------------------------------------------------------------------------
Airline equipment, material handling systems.
- --------------------------------------------------------------------------------
Food Machinery
Systems and equipment to process food and beverages, including harvesters,
sterilizers, extractors, fillers, closers, evaporators and aseptic systems, and
food handling equipment.
Defense Systems
United Defense, L.P. Description
................................................................................
Ground Systems
Develops technology, including hardware and software, and integrates into the
manufacture of tracked vehicles for the U.S. armed forces and allied
governments. Sole source on major programs.
- --------------------------------------------------------------------------------
Armament Systems
Leads development team for artillery weapon systems 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
Markets, manufactures and over-sees joint ventures for military products outside
the United States.
- --------------------------------------------------------------------------------
Steel Products
Produces steel and nickel alloy ingots, castings, forgings and military track.
Upgrades and overhauls tracked vehicles.
Precious Metals Description
................................................................................
FMC Gold
Focusing on exploration of precious metals in Chile. Current production at
Beartrack in Idaho and Jerritt Canyon in Nevada.
8
<PAGE>
Markets Served
................................................................................
Oil and gas drilling, production, refining, transportation and power generation
companies.
- --------------------------------------------------------------------------------
Industrial manufacturing, airlines, airports, mining, warehouses, newsprint,
publishing, chemicals, electrical utilities.
- --------------------------------------------------------------------------------
Food and beverage processors; food canners; fruit and vegetable growers.
FMC Market Strengths
................................................................................
Total-capabilities source for supplying global customers with an integrated
package for the life of their subsea oil fields. Leading positions for major
products. 80 percent of business outside United States.
- --------------------------------------------------------------------------------
Proprietary technology. Strong manufacturing capabilities. A market leader in
several key segments. Leading positions for major products.
- --------------------------------------------------------------------------------
Advanced applications technology and process knowledge. Global manufacturing,
service and marketing capabilities. Leading worldwide positions
for major products.
Growth and Global Development
................................................................................
Acquired Smith Meter, Inc., manufacturer of state-of-the-art metering products
and systems, and Crosby Valve, manufacturer of world-class Crosby pressure-
relief valves. Won key alliances for subsea systems in Gulf of Mexico and North
Sea.
- --------------------------------------------------------------------------------
Jetway Systems focusing on key international contracts and global sourcing.
- --------------------------------------------------------------------------------
Acquired FranRica, a leading supplier of tomato processing systems. Expanded
sales of non-carbonated beverage processing systems in Asia-Pacific. Integrated
Log-Tec process technology across the sterilizer line.
Outlook
................................................................................
Acquisitions position business for future growth, especially internationally.
Alliances with customers position us well around the world.
- --------------------------------------------------------------------------------
Acquisitions position our businesses for future international growth.
- --------------------------------------------------------------------------------
FranRica acquisition extends fruit and vegetable product offerings and better
positions us to serve global customers. Continued rapid growth in Asia-Pacific,
slow improvement in Europe.
Markets Served
................................................................................
U.S. Army, Marine Corps and National Guard; allied governments.
- --------------------------------------------------------------------------------
U.S. Navy, Army, Marine Corps and allied governments.
- --------------------------------------------------------------------------------
Allied governments. Cooperative arrangements with major international
companies.
- --------------------------------------------------------------------------------
Military, transportation, heavy equipment, industrial and oil field.
FMC Market Strengths
................................................................................
Advanced system integration capabilities and applications technology. Strong,
competitive manufacturing capabilities. Proven products. Innovative work-share
partnership program with U.S. Army depot.
- --------------------------------------------------------------------------------
Advanced systems applications technology. Strong manufacturing capabilities.
Proven products.
- --------------------------------------------------------------------------------
Leading technology. Multi-system availability. Proven deal structuring.
- --------------------------------------------------------------------------------
Development and commercialization of engineering materials, competitive
manufacturing and vehicle upgrade capabilities.
Growth and Global Development
................................................................................
Prime contractor for integrating high-tech systems into the Bradley Fighting
Vehicle and across other U.S. Army programs. Won contracts to continue as major
supplier of new and re-manufactured tracked combat vehicles.
- --------------------------------------------------------------------------------
Prime contractor for Crusader, a technically superior field artillery system.
Developing new products and services for the U.S. Navy. Ongoing international
sales.
- --------------------------------------------------------------------------------
Operating major co-production facility in Turkey. FMC Arabia obtained
substantial funding for programs. Signed cooperation agreement with Taiwan.
- --------------------------------------------------------------------------------
Growth of performance alloy and components business. Increasing sales of track
to allied governments.
Outlook
................................................................................
Business moving toward technology integration as production volumes decline.
Flexible manufacturing and engineering contracts offer good position for the
future.
- --------------------------------------------------------------------------------
Focus on engineering and technology development for future U.S. Navy/Army
armament systems.
- --------------------------------------------------------------------------------
Aggressively pursuing international opportunities, enhanced by partnership.
Intense competition for new contracts will continue.
- --------------------------------------------------------------------------------
Declining demand from U.S. Army. Increasing international track sales. Growing
vehicle up-grade business. Increased growth of commercial business in high-
performance materials.
Markets Served
................................................................................
Precious metal refineries.
FMC Market Strengths
................................................................................
Proven exploration and development expertise.
Growth and Global Development
................................................................................
Promising exploration work in Chile and Nevada.
Outlook
................................................................................
Beartrack production began in mid-1995. Beartrack and Jerritt Canyon properties
combined will produce approximately 200,000 gold equivalent ounces annually.
Pursuing possible sale of the company or its assets.
9
<PAGE>
1990
. Acquired remaining 51 percent of Electro Quimica Mexicana, a producer of
hydrogen peroxide and persulfates
. Spent $324 million on capital projects:
. three new chemical plants for sodium bicarbonate, sodium cyanide and caustic
soda in Green River, Wyoming
. a new hydrogen peroxide plant in Prince George, British Columbia
. new capacity for food ingredients and pharmaceutical products in Cork,
Ireland
. expanded hydrogen peroxide capacity at FMC Foret
. Cash flow from operations (before tax payments) exceeded $600 million
. R&D at $158 million
. Reduced debt by $177 million
. Sales: $3.7 billion; net income: $155 million; EPS: $4.30
1991
. Elected Bob Burt as chairman and CEO
. Acquired industrial- and food-grade phosphorus business of Occidental Chemical
. Won $67 million, sole-source advanced development contract for the Advanced
Field Artillery System
. Won $1.1 billion contract for production of the Bradley Fighting Vehicle
. Created new regional organizations in Europe, Latin America, Asia
. Spent $217 million on capital projects:
. a new butyllithium plant in Texas
. a new zeolite facility in Spain
. upgraded, realigned chemical production facilities
. R&D at $135 million
. Reduced debt by $267 million
. Sales: $3.9 billion; net income: $164 million; EPS: $4.52
1992
. Studied and defined growth strategies to increase shareholder returns
. Acquired Ciba-Geigy flame retardant and water treatment businesses
. FMC and Harsco announce combination of defense businesses
. Won contract for the Armored Gun System
. Rugby insecticide/nematicide registered for use on imported bananas
. Fury pyrethroid insecticide registered for use on cotton
. Completed $700 million revolving credit agreement
. Spent $220 million on capital projects:
. expanding Avicel capacity in Newark, Delaware
. developing Dry Valley mine in Idaho for phosphorus shale
. expanded capacity at lithium plant in Bessemer City, North Carolina
. R&D at $145 million
. Reduced debt by $76 million
. Sales: $4 billion; income from continuing operations: $193 million; EPS from
continuing operations: $5.23
10
<PAGE>
1993
. Elected Larry Brady as president
. Completed purchase of Kongsberg Offshore
. Completed purchase of SOFEC, Inc.
. Increased sodium bicarbonate capacity
. Formed FMC Arabia joint-venture defense company
. Began operating joint-venture energy equipment company in Russia
. Formed energy alliances with Brown and Root, Halliburton
. Won U.S. Army contract for the Paladin self-propelled howitzer
. Won Amoco contract for offshore China petroleum project
. Finalized Agricultural Products joint venture in Indonesia
. Opened new food ingredients R&D labs in Brussels, Singapore and Princeton
. Announced $123 million (after tax) restructuring charge to cover reductions in
functional staffs and downsizing and consolidating facilities
. Moody's raised debt rating; Senior to Baa3; FMC returns to investment-grade
status
. Issued $200 million of senior debt
. Spent $215 in capital projects, including maintaining, upgrading chemical
facilities
. R&D at $149 million
. Reduced debt by $65 million
. Sales: $3.8 billion; net income: $164 million before restructuring and
extraordinary charges; EPS: $4.32 before restructuring and extraordinary
charges
1994
. United Defense, L.P., created by combining defense businesses of FMC and
Harsco
. Purchased Caterpillar Automated Systems Group
. Acquired Jetway Systems
. Acquired National-Oilwell's fluid control system
. Licensed technology from TechniCal for food preservation
. Invested in new soda ash technology
. Announced lithium resource development in Argentina
. Announced investment of $88 million in new herbicide plant
. Agricultural Products formed new joint venture in China
. Divested non-core Food Machinery businesses
. Spent $315 million in capital projects, including soda ash cost reductions,
initial spending on a new hydrogen peroxide plant in Delfzijl, Netherlands,
and a cogeneration project at FMC Foret
. R&D at $167 million
. Sales: $4 billion; net income: $173 million; EPS: $4.66
1995
. Acquired Moorco International
. Acquired FranRica
. Acquired AT Biochem to expand into DNA sequencing and mutation detection
markets
. Expanding soda ash production based on new, low-cost, proprietary technology
. Formed soda ash joint venture with Nippon Sheet Glass and Sumitomo
. FMC and Shell Offshore, Inc. formed subsea alliance
. FMC and Statoil signed $450 million agreement for subsea production systems in
Norway
. Expanded subsea capacity in Houston
. Began expansion of hydrogen peroxide production in Bayport, Texas
. Introduced new technology to speed development and cut costs at Argentine
lithium resource
. New hydrogen peroxide facility in Delfzijl, Netherlands, came on stream
. Jetway Systems won contracts for Kuala Lumpur and Penang airports
. Submitted U.S. registration package for Authority, new pre-emergent soybean
herbicide; gained registrations in Brazil, Paraguay
. Study of industrial companies reinforced benefit of diversification on
shareholder returns
. FMC Gold exploring possible sale
. Moody's upgraded debt to Baa2
. Spent $494 million in capital projects
. R&D at $172 million
. Sales: $4.5 billion; and, before special income and expense items, net
income: $212 million; EPS: $5.63
11
<PAGE>
Performance Chemicals
FMC's Performance Chemicals segment, producer of a wide variety of value-added
products -- including agricultural chemicals, pharmaceutical products, food
ingredients, water additives, flame retardants and lithium-based chemicals --
delivered another solid performance in 1995. Sales increased 11 percent to $1.2
billion, and profits edged up 5 percent to $162 million, even with significantly
higher investments in research and development and marketing.
Taking Command: U.S. cotton farmers who used FMC's Command herbicide enjoyed
better weed control, lower weed control costs and better crop quality.
Safety First: With the introduction of Rugby insecticide/nematicide for Latin
American banana crops, FMC provided comprehensive product stewardship measures
- -- such as reusable product containers, more precise applicators, safety apparel
and extensive training -- to minimize exposure to workers and the environment.
12
<PAGE>
Agricultural Products' dedicated internal development efforts of recent years
spell global opportunities for the future. With the introduction of two new
herbicides, sulfentrazone in late 1996 and carfentrazone-ethyl in 1998, FMC will
emerge as a strong player in the worldwide herbicide market. Sulfentrazone, used
to prevent weeds like nutsedge and morning glory from inhibiting soybean,
sugarcane and tobacco crops, will increase FMC's presence in North and South
America. Carfentrazone-ethyl, particularly effective at controlling Galium, the
bedstraw weed, will enhance our presence in Europe, the world's largest small
grains market, and play an important role in controlling velvetleaf on corn and
soybeans in the United States.
Record results for our Agricultural Products business in 1995 represent the
fifth consecutive year of sales and earnings growth--even with the highest
level of research and development spending to date. We had gains across a range
of product lines worldwide.
In North America, we gained share in the cotton pyrethroid market with Ammo
and Fury insecticides and in the corn rootworm market with Furadan 4F
insecticide/nematicide. We had record sales in the Asia-Pacific region, where we
achieved a label registration for Biflex termiticide in Australia and saw
increased use of Talstar insecticide/miticide on cotton in Pakistan. We had
continued success with Rugby insecticide/nematicide on banana crops in Latin
America.
On Familiar Turf: FMC continues to make strong gains in providing specialty
products for pest control and turf and ornamental markets.
Sales of Command herbicide continued to grow worldwide: The product now claims
the number-one market position for pre-emergence use on oil seed rape in Poland,
the Czech Republic, Belgium and France. In Brazil, where the herbicide is known
as Gamit, heightened use on sugarcane helped increase volumes by 25 percent.
Our Indonesian joint venture, started up in 1994, turned in a strong
performance. Construction began on a production facility for our new Chinese
joint venture, and that operation should be on stream and producing positive
results in 1996.
In the United States, we continued to make strong gains in products for pest
control and turf and ornamental markets. We'll expand our presence in the
professional horticultural market in 1996 with a new distribution alliance with
the Scotts Company, the world's leading producer of turf and horticultural
products for home use.
Our strategic focus on internal development will result in several new
herbicide products coming to market over the next three years. A
microencapsulation formulation of Command, to debut in the United States in
1996, will extend application while controlling the potential for product drift.
Awaiting sulfentrazone in Brazil.
13
<PAGE>
Two new herbicides, sulfentrazone and carfentrazone-ethyl, will dramatically
enhance our business over the next few years. Sulfentrazone, which inhibits weed
growth in soybean, sugarcane and tobacco crops, received registration in Brazil
and Paraguay in 1995, and we expect to receive registration in the United States
in 1996. Our new production facility in Baltimore is scheduled to be on stream
by the end of the third quarter. This pre-emergent herbicide will be marketed as
Authority in the United States, Boral in Brazil and Capaz in Argentina and
Paraguay. In 1998, carfentrazone-ethyl, a post-emergent herbicide, will be
introduced to combat weeds in the small-grains market of Europe, the second
largest herbicide market and the largest small-grains cereal market in the
world.
Our increased focus on herbicides, a strategic step toward growth, will
strengthen FMC's participation in the $13 billion worldwide herbicide market.
New herbicide sales are expected to help our Agricultural Products business grow
significantly by the turn of the century.
Taking Flight: Given its new technology and low-cost production in Argentina,
FMC is the leading, vertically integrated producer of lithium and derivative
products. Here at a Reynolds Metals plant, lithium is used to produce an
advanced aluminum alloy plate for the aerospace industry. The alloy was
developed jointly by Martin Marietta Corporation (a Lockheed Martin company) and
Reynolds Metals Company.
Health Conscious: FMC is the market leader in supplying binders and
disintegrants and other specialty chemicals to the pharmaceutical industry.
14
<PAGE>
Globalization efforts are producing better-than-expected results for our Lithium
business. The remote, FMC-owned lithium salar in the Argentine Andes holds even
greater concentrations of lithium at higher quality levels than we had expected.
And superb execution at "Project Fenix" will result in lower-cost, more
immediate production. FMC engineers have devised an advanced, proprietary
technology for extracting lithium from the salty brines of the Argentine salar
- -- technology that will yield 45 million pounds of lithium carbonate equivalent
annually. Because the new purification technology streamlines processing and is
engineered in modular units that are transported to the site, construction of
the on-site processing facility is proceeding quickly. Project Fenix will begin
production in early 1997.
Good Medicine: Pharmaceutical customers like Glaxo Wellcome are relying on
suppliers like FMC for technical expertise, product quality and customer support
around the world.
Sales were up for our Pharmaceutical business, stemming from several new
pharmaceutical product launches and a strengthened pharmaceutical world share
position. The continuing consolidation of the pharmaceutical industry has had a
positive impact on our business. As our customers continue to cut costs, they're
looking to suppliers to provide value-added products, services and technical
support around the world. And they're anxious to speed the introduction of new
products.
We're working closely with customers and expanding our internal development
efforts. Late in 1994, our Pharmaceutical business introduced two faster-flowing
versions of Avicel cellulose gel that work to speed our customers' tableting
production process, and sales were strong throughout 1995. Last year, we
continued to work closely with key customers to use our know-how to convert the
traditional tableting process to a more streamlined, highly efficient operation.
Several of our customers will launch the process in 1996, and we should realize
sales gains as a result.
In 1995, we introduced tablet binders Endurance and Endurance Plus and super-
disintegrant Accelerate, which will strengthen our position in the vitamin
category. Our new Avicel CE is the industry's breakthrough in chewable
excipients targeted for pediatric and geriatric markets. And Celphere, licensed
from our Asian partner Asahi Chemical for worldwide sales, will be introduced
for controlled-release dosage forms.
Early in 1996, we took steps to expand our presence in Asia by revising our
agreement with Asahi to allow us to sell Avicel to our multinational customers
in Asia, including the fast-growing China segment. We expect sales to continue
to be strong in Europe, where we grew significantly in 1995. Today, more than
half of our global customers have committed to long-term contracts for our
products through 1997.
New technology at work in Argentina.
15
<PAGE>
Food Ingredients sales outside the United States grew substantially as our new
field organizations, backed by new developmental applications and technical
service laboratories around the world, gained new customers. Our research teams
introduced a number of new applications for our products in 1995, and we
anticipate expanded activity with these labs operating at full capacity in 1996.
In North America, however, our food processing customers continued to trim the
cost of their products, and sales slowed in 1995 as customers reduced inventory
and reformulated their products. Our Princeton research and development center,
meanwhile, made significant progress on new technology for fat replacement and
stabilization of ingredients.
With dramatically rising costs of Philippines-harvested seaweed, the key raw
material in our product, carrageenan, we accelerated development of alternate
sources of supply off the coasts of Indonesia, Malaysia and Tanzania.
Our outlook for 1996 is positive. We're already seeing improvement in North
America, and we expect significant growth to continue throughout the world.
Cool, Clear Water: FMC's Belgard anti-scalants help this desalination plant in
Curacao transform salt water into safe drinking water.
A Strong Identity: FMC is the only U.S.-based company that produces the type of
agarose used in DNA analysis for general scientific study and in crime analysis.
16
<PAGE>
Food for Thought: In our new food ingredients developmental applications
laboratory in Singapore, scientists are working to meet the needs of a region
that encompasses China and Japan, Australia and New Zealand, and India and
Pakistan.
Our strategy for global growth for the Process Additives business, our United-
Kingdom-based producer of flame retardants and water additives, showed signs of
success in 1995. Price increases and higher volumes in Europe and Asia drove
higher sales. Earnings declined, however, as operating difficulties limited
production at a new facility for our flame retardant, Reofos RDP, and slowed
production at our phosphate ester plant.
We continued to focus on growing the business worldwide, reducing costs, and
instituting a restructuring with personnel reductions and new operating programs
and investments to improve manufacturing efficiencies.
Our Lithium business posted strong gains in 1995. Sales were up, assisted by
higher volumes and prices in Europe, and profits were strong.
In the last quarter of 1995, we announced that we are increasing capital
spending to $68 million to accelerate and expand development and production at
our new lithium resource in Argentina. For at least the next 75 years, we will
source our lithium from a salar - a dried salt lake - in Argentina's northern
Andes region. New, high-yielding, proprietary extraction technology will enable
us to begin low-cost production early in 1997. We will also close our existing
lithium mine and shut down some processing operations in North Carolina.
In the marketplace, we are experiencing continuing success in two key areas,
polymer initiators and synthetic intermediates for pharmaceuticals. In the first
quarter of 1996, we announced plans to build two small-scale production
facilities to provide customers with specialty organometalics and synthetic
intermediates for use in these specialty areas. And to expand our worldwide
presence in another strategic area, lithium batteries, we formed Honjo-FMC
Energy Systems to market our product in Japan.
The outlook for Lithium in 1996 remains strong, with continuing gains expected
in Europe and Asia.
Performance Chemicals will be an even stronger contributor to FMC in the
coming years. Our Agricultural Products business is expected to begin realizing
the benefits of our strategic herbicide investments and our global expansions.
Ongoing research in our Pharmaceutical and Food Ingredients businesses and the
beginning of low-cost lithium production in Argentina will support strong
positions for our specialty chemicals operations.
17
<PAGE>
Performance Chemicals
Management's Discussion
and Analysis
[CHART APPEARS HERE]
91 92 93 94 95
---- ---- ---- ---- ----
Return on Sales 15.2% 14.6% 14.3% 14.5% 13.7%
Return on Assets 21.1% 22.1% 20.5% 21.2% 19.5%
1995 Compared with 1994
Performance Chemicals 1995 sales of $1.2 billion increased 11 percent from sales
of $1.1 billion in 1994, reflecting the continued worldwide growth in these
businesses. Operating profits improved to $162 million from $154 million in the
prior year as a result of increased volume and pricing and a favorable mix of
products, partially offset by unfavorable raw material prices, higher
distribution and marketing costs, and record expenditures for research and
development.
Sales of insecticides, herbicides and agricultural intermediates increased
from 1994. Sales gains across a range of products worldwide accounted for the
improvement. Insecticides were the principal contributor in North America and in
Asia-Pacific. A variety of products accounted for the sales increases in the
European, Middle Eastern and South American markets. Operating profits improved
in 1995, but not in proportion to the increase in sales. Profit margins were
lowered as a result of increased expenditures for research and development and
higher marketing expenses associated with preparing for new herbicide
introductions. The company continues to take actions to offset the effects of
the continued weakening of the Mexican peso against the U.S. dollar, including
tightening credit policies, implementing price increases for certain products
and adjusting the Mexican company's borrowing structure.
Sales of water additives and flame retardant products improved in 1995. Nearly
all of this improvement was achieved in the flame retardant line, primarily from
price increases and volume gains. Operating profits from these products declined
in 1995, however, due to operating difficulties at the company's phosphate
esters plant and price competition in the Middle East desalination market.
Food ingredient and pharmaceutical sales increased in 1995 primarily as the
result of price increases for most products and increased pharmaceutical sales
in Europe. Operating profits were lower, however, due to higher prices of key
raw materials, primarily wood pulp and Philippine-harvested seaweed, partially
offset by manufacturing efficiencies. Higher marketing and research and
development costs associated with the launch of five new pharmaceutical products
late in 1995 also affected earnings.
Lithium product sales increased in 1995 from higher volumes in products used
in specialty applications, offset to some extent by declines in sales of basic
products. Operating profits also increased due to favorable sales volumes and
pricing, offset partially by increased spending on research and development.
18
<PAGE>
1994 Compared with 1993
Sales of $1.1 billion in 1994 represented an increase of 9 percent over 1993
sales, and profits increased 11 percent to $154 million. Performance chemicals
showed strong worldwide growth in all businesses.
Sales of insecticides, herbicides and agricultural intermediates increased in
1994 as a result of improvements in both the domestic and export markets. The
domestic increase was primarily due to sales of insecticides, while the export
increase was due to greater sales of herbicides and insecticides in various
foreign markets. Operating profits also increased from the improvement in sales.
Sales of food ingredients and pharmaceutical products increased versus 1993
due to growth in demand for water dessert gel, confectionery, and low-fat cookie
and cracker applications. Pharmaceutical volumes increased in emerging markets
due to improved customer relations, and in the European and North American
markets due to Europe's economic recovery and applications development. Higher
volumes and a favorable sales mix in North America drove higher profits for the
year.
Sales of lithium products increased versus 1993 as the worldwide markets for
the products rebounded. Operating profits increased due to the increased volume
and lower manufacturing costs. These factors were partially offset by higher
exploration spending associated with FMC's new lithium resource in Argentina.
Although sales of water additives and flame retardant products were up from
1993, operating profits declined. Flame retardant volume and revenue increased
due to strong sales, but water additives volume was down due to intensified
competition in the Middle East desalination market. Increased raw material
prices contributed to the reduced profitability.
Outlook for Performance Chemicals
FMC's focus on developing specialty products and herbicides will result in new
applications and products over the next several years. A manufacturing facility
to produce a new family of herbicides is scheduled to be completed in the third
quarter of 1996. Registration of these products was completed in Paraguay and
Brazil and is proceeding in the United States and other foreign markets.
The water additives and flame retardant business is expected to benefit in
1996 from the restructuring effort that began in the fourth quarter of 1995 and
from investments to improve manufacturing efficiencies. However, price
competition in the desalination market in the Middle East is expected to
continue as a challenge for the water additives business.
The outlook for food ingredients and pharmaceutical products in 1996 is
positive. A number of new food product applications were developed in 1995, and
this process is expected to continue in 1996. Alternative sources for the supply
of seaweed are being sought in order to reduce the high cost of this key raw
material. Growth in sales of pharmaceutical products is expected to continue as
the result of the introduction of five new products in 1995 and from long-term
commitments from global customers.
The outlook for lithium products in 1996 remains strong, with continuing sales
gains expected in Europe and Asia. A new, low-cost source for lithium production
is expected to be completed in early 1997 in Argentina.
19
<PAGE>
Industrial Chemicals
Our Industrial Chemicals segment delivered strong results in 1995. Sales of $977
million were up 13 percent, and profits of $162 million were up 36 percent. The
segment, which includes our soda ash, hydrogen peroxide, phosphorus, sulfur
derivatives and silicates operations, improved performance with particular
attention to a key strategy: superb execution. In 1995, we achieved higher
pricing, operated at higher capacity and realized the benefits of cost
improvements.
Our European industrial chemicals business, FMC Foret, recorded a year of
strong sales and earnings. Demand remained high for FMC Foret products, which
include phosphates, hydrogen peroxide, perborates, zeolites, silicates, sodium
sulfate and sulfur derivatives. The trend to avoid using phosphates in home
laundry detergents has abated. As European demand stabilized, the industry
consolidated and exports continued to grow, we were able to improve pricing on
most products. Our business also continued to benefit from cost reduction
strategies.
A Clean Sweep (top): Oakite Products in Houston, part of the Chemetall Group,
relies on FMC phosphoric acid as a key ingredient in its phosphate coatings and
cleaning compounds.
The Paper Chase (bottom): Pulp and paper mills like MacMillan Bloedel in British
Columbia, Canada, continue to choose hydrogen peroxide as an environmentally
sound product to brighten paper pulp.
20
<PAGE>
Serving soda ash customers.
Through superb execution, Alkali Chemicals is reducing costs and enhancing
manufacturing efficiencies at our soda ash facility in Green River, Wyoming.
Reaffirming FMC's position as the technology leader in the soda ash industry,
FMC engineers devised a method of injecting a solution into mined-out portions
of our mine to retrieve previously unrecoverable deposits of trona ore. At our
new processing facility completed in 1995, the trona-saturated water is
converted to sodium carbonate and then processed into high-quality soda ash. In
addition to recovering ore from abandoned sections of the mine, this solution
mining technique will be employed for our 1996 expansion, adding 700,000 tons of
annual production -- and reducing manufacturing costs by more than 30 percent
compared with traditional dry mining.
Early in the fourth quarter of 1995, FMC Foret opened a new hydrogen peroxide
facility in Delfzijl, Netherlands, to meet the growing needs of our Northern and
Eastern European customers. This added capacity, at a strategically located
site, has strengthened considerably our position in the European market.
Our Phosphorus Chemicals business registered slightly higher sales, but
profits were down in 1995 due to a major loss of profitable export business,
higher raw material prices and manufacturing disruptions during the fourth
quarter.
We're diversifying our product portfolio to reduce dependence on the home
laundry detergent market, and we expect to benefit from new, higher-
performing grades of phosphates to meet our customers' changing requirements. In
1995, we entered into a long-term supply agreement to provide elemental
phosphorus to Rhone-Poulenc. We began shipments of our product late in the year,
and a full year of sales to Rhone-Poulenc in 1996 will significantly increase
our volumes and profits.
Sales and profits increased for our Peroxygen Chemicals business as demand
continued to grow and supply was tight. The pulp and paper industry continues to
choose hydrogen peroxide as an environmentally sound alternative to chlorine,
the traditional brightening agent for pulp. Higher volumes and tight capacity
resulted in price increases in 1995.
We are expanding hydrogen peroxide production capacity at our Bayport, Texas,
facility using a new, higher-efficiency technology. This $65 million investment
will add 140 million pounds of capacity, raising FMC's total North American
annual hydrogen peroxide capacity to 450 million pounds. Bayport's additional
capacity is scheduled to come on stream late in 1996. We also signed a joint-
venture agreement in China to manufacture a key raw material for the production
of hydrogen peroxide.
A Brighter World: FMC's new hydrogen peroxide plant in Delfzijl, Netherlands,
meets the growing demand of European paper producers like Haindl in Duisburg,
Germany, for high-quality product and faster, more efficient deliveries.
21
<PAGE>
Our Alkali Chemicals business, producer of sodium-based chemicals, posted
higher sales and profits in 1995 with improved volumes and pricing in all
product lines. Volumes were higher for soda ash, used by glass, detergent,
chemical and pulp and paper manufacturers, as demand grew in the U.S. flat glass
and chemical markets and export sales increased. Tight market conditions enabled
us to secure price increases.
This business continued to benefit from long-term cost improvement programs
that focused on improving process efficiencies and raising mining productivity
at our Green River, Wyoming, site. A key project is using new proprietary
technology to replace the conventional dry mining process with lower-cost
solution mining. This new technology will allow us to recover ore from
previously mined-out sections of the mine, thereby extending the life of the
reserve. We completed a new surface processing facility for this project in
1995 -- ahead of schedule and below capital estimates.
We are also in the final phase of a $45 million expansion of our Green River
soda ash facility that will incorporate the new low-cost solution technology --
a move that will reduce our manufacturing costs by more than 30 percent on the
expansion volume. The expansion will add 700,000 tons of production by mid-1996,
raising our total annual soda ash capacity to 3.55 million tons. This additional
capacity will be needed to supply a major new domestic application and meet the
growing requirements of Asian and Latin American markets.
To further expand our presence in Asia, we sold a 20 percent equity interest
in the soda ash business to Tokyo-based Nippon Sheet Glass Co., Ltd., and
Sumitomo Corporation. Their affiliation should bolster long-term sales of our
product in Japan.
The outlook for Industrial Chemicals remains positive. While certain chemical
markets may be softening, we don't expect that any slowing in demand will have a
significant impact on capacity utilization. Our major capital projects are ahead
of schedule and under budget, price increases are holding, and our cost
improvement programs will continue to have a favorable impact on earnings. .
[GRAPH APPEARS HERE]
91 92 93 94 95
---- ---- ---- ---- ----
Return on Sales 9.3% 8.6% 6.7% 13.8% 16.6%
Return on Assets 9.5% 9.0% 6.9% 14.0% 16.8%
22
<PAGE>
Industrial Chemicals
Management's Discussion and Analysis
1995 Compared with 1994
Industrial Chemicals 1995 sales of $977 million increased 13 percent from $867
million in 1994, and operating profits of $162 million were up 36 percent,
reflecting improved pricing, higher capacity utilization across key product
lines and the benefits of cost improvements throughout manufacturing operations.
Alkali chemicals recorded an increase in sales from the prior year. Increased
volumes for all product lines, particularly soda ash and cyanide, as well as
price increases for soda ash, were the drivers of improved sales and
profitability. Export sales increased 22 percent, particularly to Latin American
and Asian markets. Sales increases, combined with cost improvement efforts,
resulted in a significant improvement in operating profit. In July 1995, FMC
sold a 20 percent interest in its soda ash business to Nippon Sheet Glass Co.,
Ltd., and Sumitomo Corporation for $150 million in cash. The nontaxable gain of
$100 million on this transaction is not reflected in 1995 segment earnings (Note
2 to consolidated financial statements).
Sales of peroxygen products increased from 1994, and operating earnings
increased as well. Volume improvements in most products accounted for the
increases. The persulfates manufacturing process was interrupted by a fire in
the company's Tonawanda, New York, warehouse in August 1995. The impact on 1995
earnings was not material. The continued decline in the peso did not have a
significant impact on FMC's Mexican peroxygen operations, primarily due to
actions taken to mitigate the exchange rate impact. These actions included
tightening credit policies and adjusting the company's local borrowing
structure.
Sales of phosphorus chemicals increased in 1995, but operating profits
declined. The sales increase occurred despite a loss of export business in
Mexico. Profits were adversely affected by raw material price increases and
manufacturing issues in the fourth quarter of 1995.
FMC Foret, FMC's European industrial chemicals subsidiary, reported a
significant improvement in sales in 1995, and profits increased correspondingly.
Pricing improvements in most product lines were driven by earlier restructuring
of the European industry and overall market conditions. Volumes were favorably
affected by strong demand for pulp and paper and for conventional solid
detergents in Europe, North Africa and the Middle East. Revenue increases and a
gain of $3 million from the sale of a sulfuric acid plant were partially offset
by hydrogen peroxide plant start-up costs in Delfzijl, Netherlands, and a
decrease in equity earnings from Foret's Venezuelan affiliate, largely due to
the devaluation of the bolivar.
1994 Compared with 1993
Sales of $867 million were the same as in 1993. Operating profits, however,
doubled to $119 million. This increase in profits was the result of significant
cost improvement programs.
Alkali sales declined from 1993 as the result of lower soda ash volume and
prices in the domestic market, offset to some extent by increased export sales.
Although sales declined, operating profits improved considerably in 1994 as a
result of strong manufacturing performance.
Sales of phosphorus chemicals were down slightly from 1993 as the result of
lower domestic sales volume, partially offset by increased exports into the
Mexican market. Favorable manufacturing performance resulted in improvements to
operating profits during 1994.
Peroxygen chemicals sales increased in 1994 and operating profits also
improved. This was achieved by an increase of domestic sales, which was
partially diminished by overall sales price decreases. The domestic hydrogen
peroxide industry experienced growth and high capacity utilization as the pulp
and paper industry continued to move toward hydrogen peroxide as a replacement
for chlorine.
FMC Foret sales decreased slightly in 1994 due to the effects of currency
translations, although overall domestic and export volume increased.
Outlook for Industrial Chemicals
FMC continues to expand its industrial chemical capacity to meet expected strong
demand in domestic and international markets. The company's soda ash investments
are expected to result in a more than 30 percent reduction in soda ash cash
manufacturing costs at operations that use the new lower-cost, proprietary
solution mining technique, and to increase the company's soda ash capacity by
700,000 tons to 3.55 million tons. In addition, soda ash price increases
announced in 1995 are expected to significantly increase 1996 revenues.
In 1995, peroxygen sales and profits were favorably affected by the strength
of the North American pulp and paper market. Any significant reduction in this
market in 1996 could have a negative impact on peroxygen revenues. FMC's $65
million expansion at Bayport, Texas, is expected to begin production in late
1996 using higher-efficiency technology. Continued instability in the Mexican
economy could affect future earnings from the company's Mexican peroxygen
operation.
In anticipation of additional demand, FMC Foret continues to expand its
hydrogen peroxide manufacturing capacity. The Delfzijl plant came on stream in
October 1995.
Significant growth is expected in 1996 in the phosphorus business primarily as
a result of FMC's efforts to diversify away from home laundry detergent
applications plus the full year impact of the supply contract with Rhone-
Poulenc.
23
<PAGE>
Machinery & Equipment
Welcoming HOST (top): FMC's Kongsberg Offshore unit is designing and engineering
HOST -- Hinge-Over Subsea Template -- for Statoil, Norway's state-owned oil
company, for use in oil fields in the North Sea.
Measure for Measure (bottom): In 1995 FMC acquired Moorco International's Smith
Meter, the metering standard-bearer for fluid measurement in the oil industry.
Smith meters have a near-perfect -- 99-percent plus -- accuracy rate.
FMC's Machinery and Equipment segment had a strong year in 1995, with sales up
39 percent to $1.4 billion and profits up 50 percent to $50 million. These
results reflect the acquisition of Moorco International Inc., market share gains
in the oil field business, strong airline equipment markets and the benefits of
restructuring in our Food Machinery business.
Our energy equipment operations contributed to improved segment performance.
Several years ago, our energy equipment business set out to become the
industry's total-capabilities supplier of integrated oil field services, from
engineering to manufacturing to servicing. We focused on a strategy: acquiring
key businesses that would expand FMC's capabilities.
In 1995, our energy equipment business completed its fifth acquisition in two
years. In the second quarter, FMC acquired Moorco International Inc., the
world's leading manufacturer of meters for the petroleum industry and a leading
manufacturer of valves for the process and power generation industries, for
approximately $350 million, including the assumption of debt.
24
<PAGE>
Pursuing opportunities for acquisition, our Energy and Transportation Equipment
business continued its crusade for growth with the 1995 purchase of Moorco
International, adding two key businesses, Smith Meter and Crosby Valve, to our
diversifying energy portfolio. Smith is the oil industry's metering standard for
accuracy to verify quantities of oil as it is transferred from platform to
tanker to storage. Crosby is a leader in pressure-relief valves, serving
customers in the oil and gas, petrochemical, refining, chemical and power
industries. Smith and Crosby broaden our capabilities to global energy
customers.
Into the Deep: FMC has formed an exclusive subsea strategic alliance with Shell
Offshore, Inc., to provide deep-water subsea drilling and completion equipment
and services for such projects as the Auger platform in the Gulf of Mexico.
Our Petroleum Equipment and Systems business, which encompasses our wellhead
equipment and fluid control lines, had continuing success in subsea business and
announced new alliances that will have a long-term impact on growth. Our
Kongsberg, Norway, operation signed a five-year agreement worth up to $450
million with Statoil, Norway's state oil company, for the delivery of new-
technology subsea systems we designed in concert with Statoil. We also achieved
large share growth in the Gulf of Mexico subsea market, where we formed an
exclusive strategic alliance with Shell Offshore, Inc., to provide a complete
range of deep-water subsea drilling and completion services over the next five
years. The alliance agreement, to supply all of Shell's Gulf of Mexico projects,
is expected to represent approximately $100 million in subsea business to FMC.
Performance of our fluid control line also improved with a full year of sales
stemming from our 1994 acquisition of National-Oilwell's lightweight ball
valves.
Moorco's Smith Meter subsidiary boosted volumes for our new Energy
Transportation and Measurement business. Moorco's Crosby Valve's inbound order
rate increased late in 1995, and we expect that trend will continue in 1996.
A Crosby pressure-relief valve.
25
<PAGE>
SOFEC, our producer of marine terminals and turret moorings for floating
production storage and offloading systems, also had a successful year. We
completed the internal turret mooring for the floating production storage and
offloading system for Amoco's Liuhua project in the South China Sea. Also in
1995, SOFEC was awarded a $35 million contract for the internal turret mooring
system for the Petrobras Barracuda project off the coast of Brazil -- at nearly
3,000 feet, the deepest floating production storage and offloading system in the
world. Early in 1996, we were awarded a $44 million contract from Petrobras to
provide the internal turret mooring system for the Albacora field, with delivery
scheduled for mid-1997.
Aided by our 1994 acquisition of Jetway Systems, the world's leading producer
of passenger boarding bridges, our Airline Equipment business posted market
share gains. In 1995, Jetway won an important order to provide the Kuala Lumpur
and Penang airports in Malaysia with 38 glass-walled passenger boarding bridges,
expected to become the product choice of the future. United Airlines' order for
17 Commander cargo loaders secured our position as United's sole source for
loaders.
Jetway Propelled: Jetway Systems, the world's leading producer of passenger
boarding bridges, will provide Malaysian airports with 38 glass-walled bridges,
expected to be the product of choice in the future.
Safe Harbor: Engineers at FMC's SOFEC are analyzing the configuration of an
internal turret mooring system to be installed off the coast of Brazil for the
Brazilian national oil company, Petrobras. This project -- the deepest system to
date -- will safely and efficiently transfer petroleum to tankers from 11 subsea
wells at 835 meters (nearly 3,000 feet) below the surface.
26
<PAGE>
Sales for our Food Machinery business were down slightly, reflecting the 1994
divestiture of three low-margin product lines, and profits were up with
continuing attention to cost improvements. We built on our strategy to grow the
business by acquisition with the third-quarter purchase of FranRica, one of the
world's leading manufacturers of equipment for tomato processing, bulk aseptic
processing and citrus juice storage. This acquisition will allow our Food
Processing Systems business to offer a more complete line of equipment and
technologies capable of meeting the needs of our worldwide customers.
Work in Process: In 1995 FMC acquired FranRica, a leading manufacturer of
tomato processing equipment and bulk aseptic systems for the citrus industry --
businesses that expand our existing leadership positions in attractive markets.
FranRica's aseptic system.
In a move to expand capabilities via acquisition, in 1995 our Food Machinery
business bought FranRica, the California-based global supplier of tomato
processing equipment and aseptic systems. This acquisition strengthens FMC's
position in the fruit and vegetable processing industry. With the addition of
FranRica, FMC now offers a comprehensive line of tomato processing equipment,
including evaporators, peelers, can fillers and closers, aseptic bulk fillers,
sterilizers and aseptic processing systems. And FranRica's leadership in aseptic
sterilization and tank-filling systems extends our leading capabilities in
citrus processing equipment.
27
<PAGE>
Automatic Response: Nestle worked with FMC's Food Machinery operations to
develop this integrated, automated retort system for Nestle's Maggie plant in
Singen, Germany.
With the addition of fourth-quarter sales by FranRica, a full year of sales of
LogTec process controls licensed from TechniCal in 1994 and strong performance
in citrus processing lines, our Food Processing Systems business posted higher
sales in 1995. Our citrus systems unit introduced a range of new products,
including a premium pulp recovery system featuring a new citrus pulp
pasteurizer. We made significant inroads into Asia's growing market for non-
carbonated beverages, installing two beverage-filling lines in Korea and one in
China. Despite lower sales due to 1994 divestitures, our Packaging and Food
Handling business registered improved profitability in 1995.
Our Agricultural Machinery business also reported higher sales and returned to
profitability following several years of operating at a loss. We maintained our
leadership position in pea and tomato harvesters with strong performance in
Europe and the United States. Our restructuring efforts contributed to earnings.
Our Machinery and Equipment businesses will continue to perform well in the
coming years. We will benefit from our strategic acquisitions, growing worldwide
presence and strong market positions across our product lines. .
[GRAPH APPEARS HERE]
91 92 93 94 95
---- ---- ---- ---- ----
Return on Sales 5.2% 3.7% 0.8% 3.4% 3.7%
Return on Assets 9.3% 6.6% 1.3% 5.8% 5.6%
28
<PAGE>
Machinery & Equipment
Management's Discussion
and Analysis
1995 Compared with 1994
Sales of FMC's Machinery and Equipment segment increased to $1.4 billion in
1995 from $973 million in 1994, and operating profits were up 50 percent to $50
million. These results reflect the performance of a number of newly acquired
businesses, market share gains in oil field systems and ongoing cost
improvements.
A significant increase in sales of energy equipment in 1995 included full-year
sales of businesses acquired in 1994 and sales of Moorco International Inc.
since June 30, 1995. In addition to the increased sales resulting from the
acquired businesses, significant gains occurred in petroleum equipment and
systems, primarily from continued growth in subsea business in the North Sea
region. SOFEC also realized sales gains arising from additional volume in the
floating production and storage and offloading vessel markets. Operating profits
of energy equipment businesses increased only slightly from 1994, reflecting
increasing price competition in certain markets and the amortization of costs
related to the acquisitions.
Transportation equipment operations benefited from the inclusion of full-year
results of Jetway Systems, acquired in May 1994, as well as increased shipments
of the Commander 30 main deck loader. Operating profits of the transportation
equipment operations improved from 1994 primarily due to increased sales
volumes.
Sales of food processing systems, packaging and material handling equipment,
and agricultural machinery decreased in 1995 due to the absence of sales of
product lines divested in 1994. Operating profits of the food machinery
operations improved from 1994 primarily as a result of favorable mix and
manufacturing cost savings.
1994 Compared with 1993
Machinery and Equipment sales were up 12 percent in 1994 to $973 million, and
operating profits also rose substantially to $33 million. Most of the
improvement in sales resulted from the businesses acquired in 1993 and 1994 and
from improved operating results for some product lines.
Sales of airport products and systems increased significantly in 1994 due to
the 1994 acquisition of Jetway Systems and the successful introduction of a new
main-deck cargo loader. Sales of energy equipment increased from 1993 due to
increased demand and the 1993 acquisition of Kongsberg Offshore, partially
offset by declines in orders for fluid control products. Sales of food machinery
operations improved slightly from 1993 despite the strategic divestiture in 1994
of three non-core product lines with annual sales of approximately $40 million.
Operating profits were favorably affected by the Kongsberg acquisition, other
sales growth and the benefits of restructuring and cost reduction programs.
Partially offsetting these improvements were costs of acquisitions and new
project development and higher research and development expenditures.
Outlook for Machinery and Equipment
The order backlog for Machinery and Equipment was $545 million at December 31,
1995 compared with $480 million at the end of the prior year. Most of the
increase reflects the backlog for businesses acquired from Moorco International
Inc. Significant increases were also recorded by SOFEC for floating production
storage and offloading vessels and for boarding bridges in the airport products
business. Not included in backlog at December 31, 1995, is a five-year agreement
with Statoil for the delivery of up to $450 million of subsea systems.
Increasing competition in many markets and resulting pricing pressures could
affect future earnings. However, with lower product costs resulting from cost
reduction and restructuring actions and from improvements in market positions as
the result of strategic acquisitions, growth in the Machinery and Equipment
segment is expected to continue.
29
<PAGE>
Defense Systems
High-tech Options: Despite pressures on the U.S. defense budget, FMC is
confident that its technological expertise and manufacturing efficiencies will
maintain its solid position in the defense industry.
Peace-keepers: The Bradley Fighting Vehicle is a key element in the U.S. Army's
efforts to keep peace in war-torn Bosnia.
Our Defense Systems segment has operated for the past two years as United
Defense, L.P., a joint venture managed by FMC, which holds a 60 percent
interest. In 1995, sales declined 10 percent to $968 million on reduced
production volumes. Profits (net of minority interest) increased 7 percent to
$107 million, reflecting stronger international results and good cost
performance.
Ground Systems sales and earnings were lower in 1995, primarily due to reduced
volumes on the Bradley Fighting Vehicle. In February 1995, we built the last new
Bradley and furnished 24 units to the U.S. Army. Also that month, we delivered
the first upgraded version of older models to the A2. We upgraded 107 vehicles
to the A2 model and will continue this upgrade work through 1997. The Bradley
A3, an upgrade with the systems integration of high-tech electronics and
computers, is the focus of our current product development efforts, and our
contract for engineering systems continues through September 1999. We also
restarted the M113 armored personnel carrier line for sales to Thailand, and we
re-opened the Armored Combat Earthmover line to serve the Marine Corps.
30
<PAGE>
Several years ago, our Ground Systems business and our customer, the U.S. Army,
began planning how best to upgrade the Bradley Fighting Vehicle to maintain its
war-fighting capabilities. Our defense business embarked on an independent
research and development initiative that is continuing to unfold as the Bradley
A3 -- an upgrade harnessing next-generation electronic and software architecture
to enhance command-and-control, lethality, survivability, mobility and
sustainability features. With this version, operators will be able to visualize
regional terrain, travel with greater visibility at night and in poor weather
conditions, assess enemy and friendly locations, track two targets
simultaneously, pinpoint targets more accurately and test the vehicle's own
systems. Our independent internal development work resulted in a $280 million
contract from the Army in 1994 for development work continuing through 1999.
Initial, low-rate production may begin by the late 1990s.
Have Gun, Will Travel: A trainload of United Defense-produced Paladin self-
propelled howitzers leaves Chambersburg, Pennsylvania, for delivery to the U.S.
Army. The Paladin offers increased performance and reliability.
In 1995, Ground Systems continued the strategic drive for superb execution
with the continuing consolidation of the business. We created "centers of
excellence" for engineering and program management in San Jose, California, for
manufacturing in York, Pennsylvania, and for components in Aiken, South
Carolina. We moved final assembly and testing of the Bradley vehicles to York
from San Jose -- and maintained quality production and delivery schedules in the
process.
With higher vehicle deliveries, our Paladin production operation contributed
higher sales and earnings. We sold the initial seven Paladin self-propelled
howitzers to the U.S. Army in the fourth quarter of 1994, and we delivered 105
units in 1995, ahead of schedule. We'll produce 180 vehicles during 1996 as we
move forward on our four-year contract to produce a total of 650 howitzers. The
Army may elect an option early in 1996 to purchase 48 additional vehicles, and
our military customer is considering a follow-on, multi-year contract to
modernize the National Guard. These contracts could extend production past the
year 2000. Also during 1995, our Paladin production business received additional
contracts for engineering support and to provide upgrade parts kits for an
ammunition resupply vehicle.
Sales and profits increased for our Armament Systems business, based largely
on our work as prime contractor on the early-phase development of the Crusader,
the Army's howitzer and resupply vehicle of the future. The engineering
expertise and technology demonstrators we are providing today will give Armament
Systems an edge in winning full-scale production contracts at the turn of the
century.
Enhancing the Bradley.
31
<PAGE>
Meanwhile, demand for our Vertical Launching Systems and gun systems was down
in 1995. We delivered 159 Vertical Launching System canisters in 1995, compared
with 439 the previous year. We sold a total of seven Mk45 gun systems to the
navies of the United States, Australia and Japan, down from a total of nine
sales to the U.S. and international navies the previous year. We have begun
production on 27 Mk41 Vertical Launching Systems to be delivered to the U.S.
Navy over the next four years.
We continue to pursue international opportunities. FMC-Nurol, our Turkish
joint venture, increased deliveries to 474 armored vehicles to the Turkish
government in 1995. Our production agreement extends through August 1999. FMC
Arabia, our joint venture in Saudi Arabia, completed its second year of a four-
year contract to train the Royal Land Forces of Saudi Arabia in military
tactics. We reached co-production agreements with Nissan Aerospace of Japan for
80 Multiple Launch Rocket Systems and with Samsung Aerospace for amphibious
assault vehicles. We added to our global presence with offices in Korea, Taiwan
and Malaysia.
The next few years will be difficult for the defense industry. Budgetary
pressures in Washington are having a chilling effect on the U.S. defense budget,
and there are few opportunities for new starts. There are indications that the
Armored Gun System, a development program we had worked on since 1984 and
considered by the U.S. Army to be a model development program, will be
cancelled. International customers remain interested in the system.
We continue as prime supplier for the engineering and pre-production work on
the Army's Crusader program. There are opportunities for expanded uses of the
Bradley as a battle command vehicle and command and control vehicle. While our
segment results are likely to diminish somewhat in 1996, we're confident that
our technological expertise, our diverse product line offerings and our
manufacturing efficiencies will enable us to maintain a strong position in the
global defense industry.
Looking Brand New: In Anniston, Alabama, United Defense has launched an
upgrade/overhaul program for personnel carriers for the U.S. Army and Saudi
Arabia.
32
<PAGE>
Defense Systems
Management's
Discussion
and Analysis
[GRAPH APPEARS HERE]
91 92 93 94 95
---- ---- ---- ---- ----
Return on Sales 13.7% 15.0% 17.0% 14.8% 16.6%
Return on Assets 39.4% 51.8% 59.2% 41.9% 30.9%
1995 Compared with 1994
Sales of the Defense Systems segment declined to $968 million in 1995 from $1.1
billion in 1994 while operating profits, after deducting minority interest,
improved to $107 million from approximately $100 million in 1994. The sales
decline resulted primarily from lower volumes of Bradley Fighting Vehicles and
naval weapons systems, partially offset by $84 million of increased revenue from
the Crusader development contract and increases of $53 million in deliveries of
Paladin self-propelled vehicles. The increase in operating profits primarily
resulted from favorable cost performance throughout the business, strong
international results, including an increase in royalty and dividend income from
the Turkish joint venture, and the recognition in the second quarter of 1995 of
a significant portion of a $17.8 million judgment against a subcontractor.
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 (Note 2 to
consolidated financial statements). The combined company, United Defense, L.P.,
operates as a limited partnership. FMC is the general partner with a 60 percent
equity interest and responsibility for managing the operation. Sales in 1994
included sales of the former Harsco BMY Combat Division and sales of the Paladin
self-propelled howitzer business. Sales of FMC businesses alone were $950
million in 1993. Segment profits, net of minority interest, were approximately
$100 million in 1994. In 1993, profits of FMC's Defense Systems Group were $162
million.
Sales of the businesses Harsco contributed to the partnership more than offset
declines in Bradley Fighting Vehicle deliveries, Vertical Launching Systems and
an engineering contract for the Armored Gun System in 1994. Other product sales
were generally flat from 1993 to 1994, and segment profits were down in 1994 due
to the lower volume, a favorable insurance settlement in 1993, and start-up
costs relating to overhaul and conversion of armored personnel carriers.
International defense sales and operating profits were up in 1994. The sales
increase was driven largely by the deliveries of M113 upgrade kits to Singapore.
An increase in international operating profits was largely the result of
increased royalties and dividends from the Turkish joint venture.
Outlook for Defense Systems
The order backlog of the Defense Systems segment increased to $1.5 billion at
December 31, 1995, from $1.4 billion at the end of 1994. The backlog increase
results primarily from new orders for upgrading Bradley Fighting Vehicles,
cannisters for the U.S. Navy, M113 vehicles for Thailand and Amphibious Assault
Vehicle kits for Korea.
U.S. government budgetary pressures are likely to result in reduced defense
spending in the coming years, and lower-margin research programs are replacing
some production. As a result, Defense Systems' earnings may decline. In early
1996, United Defense was notified that its contract with the U.S. Army for the
Armored Gun System may be terminated. While Defense Systems would be affected by
such a cancellation, no immediate material impact is likely to occur to FMC's
financial position or results of operations. Because Defense Systems is the
prime supplier for the early-phase developmental work on the U.S. Army's
Crusader and Bradley A3 programs, the business is in a key position to benefit
from follow-on production contract awards. Defense Systems also continues to
pursue international opportunities and system upgrades.
33
<PAGE>
Precious Metals
Our Precious Metals segment operated at a loss for a second consecutive year.
Segment sales of $59 million in 1995 remained even with the previous year, and
a 1995 loss of $5.7 million shows an improvement over the previous year's $9
million loss. Total annual production was 151,000 gold equivalent ounces.
The improved results reflect the beginning of production at our Beartrack mine
near Salmon, Idaho, in the third quarter. The Beartrack deposit, containing
approximately 1 million ounces of proven and probable gold reserves, will be
processed by lower-cost, heap-leaching methods. We also benefited from the sale
of our Paradise Peak mine and mill, shut down in 1994, to Arimetco, Inc.
FMC Gold announced that it was beginning a process for the possible sale of
the company or its assets. .
[GRAPH APPEARS HERE]
91 92 93 94 95
---- ---- ---- ----- ----
Return on Sales 18.2% 21.3% 7.8% -14.8% -9.7%
Return on Assets 19.0% 26.3% 9.9% -10.4% -4.6%
Management's Discussion and Analysis
1995 Compared with 1994
Precious Metals sales in 1995 were $59 million, approximately level with 1994.
The operating loss declined to $5.7 million compared with a $9 million loss in
the prior year. Lower cash production costs at the Jerritt Canyon operations and
the start-up of the Beartrack mine were the primary contributors to the
improvement. Gold production declined to 151,000 ounces from 163,000 ounces in
1994. Silver production, at 27,000 ounces, was only 15 percent of 1994's output.
The increasing output from the Beartrack mine, which began production in the
third quarter of 1995, did not offset elimination of production from the
company's Royal Mountain King and Paradise Peak mines.
In the fourth quarter of 1995, the company sold its 100 percent interest in
Paradise Peak Corporation to Arimetco, Inc. for $4 million. In addition,
Arimetco assumed all site reclamation liabilities. A pretax gain of $1.7 million
was recognized on the sale, and $4.5 million of reclamation reserves were
reversed to cost of sales.
Net exploration expense of $11 million, approximately even with 1994, was
focused primarily on development projects at the El Penon property in northern
Chile and the Rossi property in Nevada.
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. 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.
Decreased production resulted from the closure of the Paradise Peak mine in May
1993 and the Royal Mountain King mine in July 1994. This reduction in sales, as
well as disappointing ore grades and recoveries at Jerritt Canyon, and spending
on exploration, resulted in an operating loss of $9 million for the year.
Beartrack Legal Proceedings
See Note 15 to FMC's consolidated financial statements for a description of
legal proceedings related to the Beartrack mine.
Outlook for Precious Metals
Continued operation of the Beartrack mine should increase gold production,
further reduce cash costs and improve the segment's profitability in 1996.
Exploration at both the Chilean and Rossi properties has been successful in
delineating mineralization and is expected to continue in 1996. As discussed in
Note 15 to the company's consolidated financial statements, FMC Gold Company is
pursuing the possible sale of the company or its assets.
34
<PAGE>
Management's Discussion and Analysis
GENERAL
Management's Discussion and Analysis should be read in conjunction with the
company's consolidated financial statements and accompanying notes, segment data
and other supplemental information. Additional background information on the
company's operations is provided in the segment discussions on pages 12 through
34.
1995 Compared with 1994
Sales in 1995 were $4.5 billion, an increase of 12 percent from 1994. Sales in
the United States increased 13 percent during the year, while sales outside the
United States increased 12 percent from 1994.
Before restructuring and other charges of $80 million after tax (discussed
further below), a $100 million non-taxable gain on the sale of FMC Wyoming stock
and a $15.5 million write-off of acquired in-process research and development
costs, consolidated net income of $212 million, or $5.63 per share, increased 22
percent. Including these items, the company earned $216 million, or $5.72 per
share.
Results for 1995 were the best in FMC's history. On an overall basis,
improving markets and the benefits of the company's restructuring programs, as
well as strategic acquisitions, more than offset significantly higher interest
expense related to acquisition and expansion efforts.
1994 Compared with 1993
Sales increased 7 percent in 1994 to $4 billion, mainly due to increases in
the Defense Systems, Machinery and Equipment, and Performance Chemicals
segments. 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. Net income in 1994 was $173 million, or $4.66 per share.
Net income in 1993 included after-tax restructuring and other charges, net of
minority interest, of $123 million, or $3.34 per share. An after-tax
extraordinary charge of about $5 million was also recorded in 1993 for debt
restructuring. After these charges, net income for 1993 was $36 million, or
$0.98 per share.
INDUSTRY SEGMENTS
Results on a segment basis for the five years ended December 31, 1995 are
presented on page 5. Segment operating profits exclude 1995 and 1993
restructuring and other charges (Note 3 to consolidated financial statements),
the 1995 gain on the sale of FMC Wyoming stock (Note 2 to consolidated financial
statements), net interest expense, and other income and expense. Management's
Discussion and Analysis of segment operating performance appears on these pages
following the Operating Review Summary for each segment: Performance Chemicals
on pages 18 and 19; Industrial Chemicals on page 23; Machinery and Equipment on
page 29; Defense Systems on page 33; and Precious Metals on page 34.
OTHER INFORMATION
Taxes
The effective tax rate in 1995 was 13 percent. This rate reflects the tax-free
gain on sale of a minority interest in FMC's soda ash business as well as
depletion and foreign sales corporation benefits. The company's effective tax
rate, excluding the impact of restructuring and other charges (Note 3) and the
gain on the sale of FMC Wyoming stock (Note 2), was 29 percent. The effective
tax rate for 1994 was 31 percent, primarily reflecting depletion and foreign
sales corporation benefits. Income from foreign operations taxed at rates lower
than the U.S. statutory rate also contributed to lower effective rates in 1995,
1994 and 1993. In 1993, the company reported a credit for income taxes of $3
million on pretax income of $38 million. This unusually low rate was driven
primarily by the low level of pretax income in 1993.
Restructuring and Other Charges
FMC recorded restructuring and other charges of $35 million ($20 million after
tax) in the third quarter of 1995 covering asset writedowns and related exit
liabilities for the expected shift in 1997 of lithium-based production from
North Carolina to a new lower-cost, higher quality mineral resource in
Argentina. Other charges of $17 million ($10 million after tax) related
primarily to asset write-downs. In addition, the company increased its
environmental reserves by $83 million, or $51 million after tax, as part of its
ongoing assessment of sites with known environmental issues. See Note 14 to the
consolidated financial statements for a discussion of FMC's environmental
reserves.
In 1993, FMC recorded restructuring and other charges of $172 million, net of
minority interest ($123 million after tax). These charges primarily related to
restructuring costs associated with the Machinery and Equipment and Industrial
Chemical segments, expenses to restructure companywide functional support staffs
and a write-down of the investment in the Beartrack property in the Precious
Metals segment.
During 1995 and 1994, approximately 1,100 employee positions were eliminated.
(Additionally, 500 positions were eliminated at United Defense, L.P., that were
not covered
35
<PAGE>
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 $16 million and
$32 million in 1995 and 1994, respectively. Approximately $34 million and $40
million of spending in 1995 and 1994, respectively, related to the consolidation
of manufacturing facilities, the exiting of unprofitable product lines and other
restructuring activities was charged to the restructuring reserve.
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 issues arise, including notices
from the Environmental Protection Agency or other government agencies
identifying FMC as a Potentially Responsible Party, the company utilizes
multifunctional advisory teams comprising 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 to
employees and shareholders.
Additional information regarding the company's environmental accounting
policies and its potential environmental liability (including additional amounts
recorded in 1995) is included in Note 1 and Note 14, respectively, to the
company's consolidated financial statements. Information regarding environmental
obligations associated with the company's discontinued operations is included in
Note 3 to the consolidated financial statements. Estimates of 1996 environmental
spending are included under Liquidity and Capital Resources below.
LIQUIDITY AND CAPITAL RESOURCES
Cash generated from operations and available credit facilities provided the
resources to meet 1995 operating needs and fund capital expenditures and
acquisitions. Debt levels increased by $416 million in 1995 as a result of
higher capital and acquisition spending. Interest expense increased by $19
million in 1995, primarily due to higher debt levels. Capital expenditures
excluding acquisitions approximated $494 million.
At December 31, 1995, the company had borrowed $272 million (net of a $3
million discount) under a commercial paper program that began in November 1995.
The company borrowed an additional $125 million under uncommitted bank
facilities during 1995.
In 1995, the company filed a universal shelf registration under which $500
million of debt and/or equity securities may be publicly offered. At December
31, 1995, no securities had been offered under this registration.
Cash generated from operations in 1996 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 1996 include approximately $500 million to $600 million for
planned capital expenditures and acquisitions, including approximately $16
million for capital projects related to environmental control facilities.
Projected 1996 spending also includes approximately $50 million for
environmental compliance at current operating sites, plus approximately $35
million of remediation spending and $10 million for study costs at current
operating, previously operated and other sites.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
Working capital December 31
- ----------------------------------------------------------------
(In millions) 1995 1994 1993
- ----------------------------------------------------------------
<S> <C> <C> <C>
Operating working capital:
Trade receivables $ 837.8 $ 642.8 $ 573.2
Inventories 615.0 403.9 268.1
Accounts payable (848.5) (676.9) (501.2)
Accrued payroll and other
current liabilities (419.4) (405.9) (390.9)
- ----------------------------------------------------------------
Total operating working capital 184.9 (36.1) (50.8)
Cash and cash equivalents 70.9 98.4 77.5
Other (256.5) 45.1 12.9
- ----------------------------------------------------------------
Total working capital $ (0.7) $ 107.4 $ 39.6
================================================================
</TABLE>
Operating working capital increased by $221 million in 1995 compared with
1994. The increases in the components of operating working capital are primarily
due to higher sales volumes and the acquisition of Moorco. The decrease in net
other current assets and liabilities ("Other") of $302 million is primarily due
to higher short-term debt levels.
Dividends
No dividends were paid in 1995, 1994 and 1993, and no dividends are expected to
be paid in 1996.
36
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Income
- --------------------------------------------------------------------------------------
(In millions, except per share data) Year ended December 31
-------------------------------
1995 1994 1993
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue
Sales $4,509.8 $4,010.8 $3,753.9
Other revenue 56.8 40.5 35.0
- --------------------------------------------------------------------------------------
Total revenue 4,566.6 4,051.3 3,788.9
- --------------------------------------------------------------------------------------
Costs and expenses
Cost of sales 3,332.1 2,941.6 2,835.3
Selling, general and administrative expenses 630.0 587.7 539.4
Research and development 187.8 166.8 149.2
Restructuring and other charges (Note 3) 134.5 - 172.3
Other (income) and expense, net 3.4 (17.6) (10.2)
- --------------------------------------------------------------------------------------
Total costs and expenses 4,287.8 3,678.5 3,686.0
- --------------------------------------------------------------------------------------
Income from operations 278.8 372.8 102.9
- --------------------------------------------------------------------------------------
Minority interests 59.1 61.4 2.5
Interest income 14.8 8.9 11.0
Interest expense 87.3 68.0 73.6
Gain on sale of FMC Wyoming stock (Note 2) 99.7 - -
- --------------------------------------------------------------------------------------
Income before income taxes and extraordinary item 246.9 252.3 37.8
Provision (benefit) for income taxes (Note 9) 31.3 78.9 (3.2)
- --------------------------------------------------------------------------------------
Income before extraordinary item 215.6 173.4 41.0
Extraordinary item, net of taxes (Note 8) - - (4.7)
- --------------------------------------------------------------------------------------
Net income $ 215.6 $ 173.4 $ 36.3
======================================================================================
Earnings per common share (Note 1)
Income before extraordinary item $ 5.72 $ 4.66 $ 1.11
Extraordinary item - - (0.13)
- --------------------------------------------------------------------------------------
Net income $ 5.72 $ 4.66 $ 0.98
======================================================================================
</TABLE>
See notes to consolidated financial statements.
37
<PAGE>
<TABLE>
<CAPTION>
Consolidated Balance Sheets
- ---------------------------------------------------------------------------------------------------------------
(In millions, except share and per share data) December 31
----------------------
1995 1994
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 70.9 $ 98.4
Trade receivables, net of allowances of $11.6 in 1995 and $11.0 in 1994 837.8 642.8
Inventories (Note 4) 615.0 403.9
Other current assets 182.6 137.6
Deferred income taxes (Note 9) 98.5 93.6
- ---------------------------------------------------------------------------------------------------------------
Total current assets 1,804.8 1,376.3
Investments 99.1 141.7
Property, plant and equipment, net (Note 7) 1,829.6 1,537.4
Goodwill and intangible assets (Note 2) 345.6 121.6
Other assets 150.9 87.3
Deferred income taxes (Note 9) 71.1 87.2
- ---------------------------------------------------------------------------------------------------------------
Total assets $4,301.1 $3,351.5
===============================================================================================================
Liabilities and Stockholders' Equity
Current liabilities
Short-term debt (Note 8) $ 420.8 $ 66.9
Accounts payable, trade and other 848.5 676.9
Accrued payroll 110.4 98.5
Other current liabilities 309.0 307.4
Current portion of long-term debt (Note 8) 29.8 41.3
Current portion of accrued pension and other postretirement benefits (Notes 12 and 13) 36.4 22.8
Income taxes payable (Note 9) 37.8 55.1
- ---------------------------------------------------------------------------------------------------------------
Total current liabilities 1,792.7 1,268.9
Long-term debt, less current portion (Note 8) 974.4 901.2
Accrued pension and other postretirement benefits, less current portion
(Notes 12 and 13) 284.6 306.5
Reserve for discontinued operations (Note 3) 168.3 189.9
Other liabilities 270.3 169.0
Minority interests in consolidated companies 157.4 99.5
Commitments and contingent liabilities (Notes 14 and 15)
- ---------------------------------------------------------------------------------------------------------------
Stockholders' equity (Note 11)
Preferred stock, no par value, authorized 5,000,000 shares;
no shares issued in 1995 or 1994 - -
Common stock, $0.10 par value, authorized 60,000,000 shares;
issued 37,024,187 shares in 1995 and 36,813,530 shares in 1994 3.7 3.7
Capital in excess of par value of capital stock 99.7 90.4
Retained earnings 596.1 380.5
Foreign currency translation adjustment (Note 5) (36.9) (49.0)
Treasury stock, common, at cost; 300,447 shares in 1995 and
298,226 shares in 1994 (9.2) (9.1)
- ---------------------------------------------------------------------------------------------------------------
Total stockholders' equity 653.4 416.5
- ---------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $4,301.1 $3,351.5
===============================================================================================================
</TABLE>
See notes to consolidated financial statements.
38
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements Of Cash Flows
- ------------------------------------------------------------------------------------------------------------
(In millions) Year ended December 31
--------------------------
1995 1994 1993
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Reconciliation from income before extraordinary item
to cash provided by operating activities
Income before extraordinary item $ 215.6 $ 173.4 $ 41.0
Adjustments to reconcile income from continuing operations to cash provided by
operating activities:
Restructuring and other charges (Note 3) 134.5 - 172.3
Gain on sale of FMC Wyoming stock (Note 2) (99.7) - -
Depreciation and amortization 248.9 229.0 226.6
Deferred income taxes (3.7) 30.3 (38.9)
Minority interests 59.1 61.4 2.5
Other (0.9) (14.1) 3.3
Changes in operating assets and liabilities excluding the effects of the
formation of United Defense, L.P. (Note 2):
Trade receivables (190.2) (61.9) (40.1)
Inventories (217.9) (46.2) 37.5
Other current assets and other assets (348.4) (33.7) (18.1)
Accounts payable, accrued payroll, other current liabilities and other
liabilities 189.5 97.5 24.7
Income taxes payable (15.2) (31.4) (21.2)
Restructuring reserve (48.5) (72.2) (2.4)
Accrued pension and other postretirement benefits, net (10.5) (6.4) (16.9)
- ------------------------------------------------------------------------------------------------------------
Cash provided (required) by operating activities (87.4) 325.7 370.3
- ------------------------------------------------------------------------------------------------------------
Cash required by discontinued operations (16.0) (20.2) (26.5)
- ------------------------------------------------------------------------------------------------------------
Cash provided (required) by investing activities:
Capital spending (566.3) (356.0) (244.5)
Disposal of property, plant and equipment 31.2 19.0 7.7
Decrease (increase) in investments 49.5 (55.8) 23.6
- ------------------------------------------------------------------------------------------------------------
Cash required by investing activities (485.6) (392.8) (213.2)
- ------------------------------------------------------------------------------------------------------------
Cash provided (required) by financing activities:
Net increase (decrease) in short-term debt 79.5 (1.9) 14.0
Net proceeds from issuance of commercial paper 272.3 - -
Net borrowings (repayments) under credit facilities 89.0 161.0 (10.0)
Increase in other long-term debt 18.5 142.6 206.4
Proceeds from sale of FMC Wyoming stock (Note 2) 171.8 - -
Repayment of other long-term debt (49.5) (130.0) (285.1)
Distributions to limited partner (37.8) (70.0) -
Premium on early retirement of debt - - (3.4)
Issuance of capital stock, net 9.2 10.5 7.3
- ------------------------------------------------------------------------------------------------------------
Cash provided (required) by financing activities 553.0 112.2 (70.8)
- ------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash and cash equivalents 8.5 (4.0) (6.6)
- ------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents (27.5) 20.9 53.2
- ------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, beginning of year 98.4 77.5 24.3
- ------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year $ 70.9 $ 98.4 $ 77.5
============================================================================================================
</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 $29.4 million, $63.1 million and $41.8 million for
1995, 1994 and 1993, respectively. Interest payments, net of amounts
capitalized, for 1995, 1994 and 1993 were $72.0 million, $66.4 million and $60.1
million, respectively.
See notes to consolidated financial statements.
39
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Changes in Stockholders' Equity
- ------------------------------------------------------------------------------------------------------
(In millions) Common Capital Foreign
stock, $0.10 in excess Retained currency Treasury
par value of par earnings translation stock
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance December 31, 1992 $3.6 $72.0 $170.8 $(19.0) $(8.4)
Net income 36.3
Stock options exercised (Note 10) 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 10) 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)
Net income 215.6
Stock options exercised (Note 10) 9.3
Purchase of treasury shares (0.1)
Translation adjustment (Note 5) 12.1
- ------------------------------------------------------------------------------------------------------
Balance December 31, 1995 $3.7 $99.7 $596.1 $(36.9) $(9.2)
======================================================================================================
</TABLE>
See notes to consolidated financial statements.
40
<PAGE>
<TABLE>
<CAPTION>
Geographic Segment Information
- --------------------------------------------------------------------------------
Sales Year ended December 31
- --------------------------------------------------------------------------------
(In millions) 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Third party sales
- --------------------------------------------------------------------------------
United States $3,270.0 $3,084.8 $2,866.7
Latin America and Canada 179.8 159.6 140.4
Europe 947.3 693.5 697.5
Asia, Africa & others 112.7 72.9 49.3
- --------------------------------------------------------------------------------
4,509.8 4,010.8 3,753.9
- --------------------------------------------------------------------------------
Intersegment sales
- --------------------------------------------------------------------------------
United States 151.2 110.7 102.5
Latin America and Canada 10.1 10.9 10.9
Europe 92.2 92.3 83.2
Asia, Africa & others 22.1 11.4 23.2
Eliminations (275.6) (225.3) (219.8)
- --------------------------------------------------------------------------------
Total sales $4,509.8 $4,010.8 $3,753.9
================================================================================
Income (loss) before income taxes Year ended December 31
- --------------------------------------------------------------------------------
(In millions) 1995 1994 1993
- --------------------------------------------------------------------------------
United States $ 390.7 $ 341.5 $ 323.8
Latin America and Canada 12.7 13.7 4.4
Europe 120.5 100.2 48.1
Asia, Africa & others 4.5 1.7 (0.8)
- --------------------------------------------------------------------------------
Operating profit 528.4 457.1 375.5
Restructuring and other charges (Note 3) (150.0) - (172.3)
Gain on sale of FMC Wyoming stock (Note 2) 99.7 - -
Net interest expense (72.5) (59.1) (62.6)
Corporate and other (96.2) (101.9) (110.5)
Minority interest (59.1) (61.4) (2.5)
Other income and (expense), net (3.4) 17.6 10.2
- --------------------------------------------------------------------------------
Total $ 246.9 $ 252.3 $ 37.8
================================================================================
Identifiable assets December 31
- --------------------------------------------------------------------------------
(In millions) 1995 1994 1993
- --------------------------------------------------------------------------------
United States $2,609.2 $1,960.0 $1,544.3
Latin America and Canada 209.7 157.2 142.7
Europe 900.2 676.3 640.3
Asia, Africa and others 87.2 64.9 51.0
- --------------------------------------------------------------------------------
Subtotal 3,806.3 2,858.4 2,378.3
Corporate and other 494.8 493.1 466.8
- --------------------------------------------------------------------------------
Total $4,301.1 $3,351.5 $2,845.1
================================================================================
U.S. Export Sales to Unaffiliated Customers by
Destination of Sale Year ended December 31
- --------------------------------------------------------------------------------
(In millions) 1995 1994 1993
- --------------------------------------------------------------------------------
Latin America and Canada $ 212.9 $ 217.9 $ 176.8
Europe 155.9 153.3 192.2
Asia, Africa and others 588.2 668.6 415.3
- --------------------------------------------------------------------------------
Total $ 957.0 $1,039.8 $ 784.3
================================================================================
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
Other Supplemental Information
- --------------------------------------------------------------------------------------------------------------------
Quarterly financial information (unaudited)
- --------------------------------------------------------------------------------------------------------------------
(In millions, except per share 1995 1994
and common stock data)
- --------------------------------------------------------------------------------------------------------------------
1st 2nd 3rd 4th 1st 2nd 3rd 4th
Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr.
A--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales $1,015.5 $1,128.4 $1,156.0 $1,209.9 $908.3 $1,053.8 $1,009.6 $1,039.1
Income (loss) from operations $ 107.1 $ 134.5 $ (37.5) $ 74.7 $ 97.5 $ 133.9 $ 79.8 $ 61.6
- --------------------------------------------------------------------------------------------------------------------
Net income $ 52.4 $ 77.7 $ 57.1 $ 28.4 $ 46.1 $ 67.3 $ 34.7 $ 25.3
Net income per share $ 1.40 $ 2.06 $ 1.51 $ 0.75 $ 1.24 $ 1.82 $ 0.93 $ 0.68
- --------------------------------------------------------------------------------------------------------------------
Common stock prices:
High $ 60 5/8 $ 67 1/4 $ 79 1/2 $ 75 3/8 $ 50 $ 54 1/8 $ 62 1/4 $ 65
Low $ 57 3/8 $ 59 $ 67 $ 67 1/4 $ 47 $ 45 1/2 $ 54 1/4 $ 56 1/4
=====================================================================================================================
</TABLE>
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>
Other Industry Segment Information and Backlog
- ----------------------------------------------------------------------------------------------------------------------------
Depreciation Research and
Capital expenditures and amortization development expenditures
- ----------------------------------------------------------------------------------------------------------------------------
Year ended December 31 Year ended December 31 Year ended December 31
- ----------------------------------------------------------------------------------------------------------------------------
(In millions) 1995 1994 1993 1995 1994 1993 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Performance Chemicals $143.3 $ 66.1 $ 53.1 $ 59.4 $ 56.1 $ 52.9 $109.3 $ 94.7 $ 83.0
Industrial Chemicals 205.1 129.0 78.6 75.9 72.3 76.1 16.3 17.3 15.3
Machinery and Equipment 132.3 77.0 70.7 45.7 35.3 31.1 49.1 30.8 26.1
Defense Systems 24.5 19.3 19.2 32.0 35.4 26.0 13.1 23.6 24.0
Precious Metals 36.9 56.1 18.5 21.3 15.3 25.7 - - 0.1
Corporate 24.2 8.5 4.4 14.6 14.6 14.8 - 0.4 0.7
- ----------------------------------------------------------------------------------------------------------------------------
Total $566.3 $356.0 $244.5 $248.9 $229.0 $226.6 $187.8 $166.8 $149.2
============================================================================================================================
</TABLE>
Descriptions of the company's industry segments are on pages 12 through 34 of
this annual report. Sales, income (loss) before income taxes and identifiable
assets by industry segment are on page 5.
Research and development expenditures in 1995 for the Machinery and Equipment
segment include a $15.5 million write-off of acquired in-process research and
development related to the Moorco International Inc. acquisition (Note 2).
Sales to various agencies of the U.S. government aggregated $706.5 million,
$618.3 million and $768.4 million in 1995, 1994 and 1993, respectively. These
sales were made primarily by the Defense Systems segment.
<TABLE>
<CAPTION>
Order backlog (unaudited) Year ended December 31
- ----------------------------------------------------------------------------------------------------------------------------
(In millions) 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Machinery and Equipment $ 545.0 $ 480.0 $ 333.1
Defense Systems 1,495.0 1,412.3 1,105.0
- ----------------------------------------------------------------------------------------------------------------------------
Total $2,040.0 $1,892.3 $1,438.1
============================================================================================================================
</TABLE>
Backlogs are not reported for Industrial Chemicals, Performance Chemicals and
Precious Metals due to the nature of these businesses.
42
<PAGE>
Notes to
Consolidated Financial
Statements
Note 1 Principal Accounting Policies
Nature of operations. FMC Corporation ("FMC" or "the company") is a
diversified producer of chemicals, machinery and other products for industry,
government and agriculture. Further descriptions of FMC's products, its
principal markets and the relative significance of its operations are included
in this annual report in Products and Markets on pages 6 through 9 and in the
Industry Segment Data on page 5.
Use of estimates. 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 are likely to differ from those estimates, but
management does not believe such differences will materially affect the
company's financial position, results of operations or cash flows.
Consolidation. The consolidated financial statements include the accounts of
FMC and all significant majority-owned subsidiaries and partnerships 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 exercises significant influence over operating and
financial policies are accounted for using the equity method after eliminating
the effects of any material intercompany transactions. All other investments are
carried at their fair values or at cost if appropriate.
Dividends received from affiliates were $5.3 million in 1995 ($9.4 million in
1994 and $6.0 million in 1993). Dividends included in other revenue from other
investments were $21.7 million, $13.0 million and $9.7 million in 1995, 1994 and
1993, respectively.
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 those directly attributable to products, as well as
all manufacturing overhead.
43
<PAGE>
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. Losses are provided for production costs incurred for contracts-in-
progress for which such losses are probable.
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.
Capitalized interest. Interest costs of $14.5 million ($4.6 million in 1994
and $0.7 million in 1993) 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.
Goodwill and intangible assets. Goodwill and identifiable intangible assets
(such as trademarks) are amortized on a straight-line basis over their estimated
useful or legal lives, not exceeding 40 years. At each balance sheet date, the
company evaluates the recoverability of goodwill based upon expectations of
undiscounted cash flows for each operation having a significant goodwill
balance. Based upon its analyses, the company believes that no material
impairment of recorded goodwill existed at December 31, 1995 or 1994.
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 ($254.5 million at December 31, 1995 and $236.6 million at December 31,
1994).
Income taxes. Current income taxes are provided on income reported for
financial statement purposes adjusted for transactions that do not enter into
the computation of income taxes payable. Deferred tax liabilities and assets are
recognized for the expected future tax consequences of temporary differences
between the carrying amounts and the 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.
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 monthly exchange rates prevailing
during the year. These translation gains and losses are accumulated in a
separate component of stockholders' equity until the foreign entity is sold or
liquidated. For operations in highly inflationary countries and where the local
currency is not the functional currency, 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. Earnings per common share are computed by dividing
net income by the weighted average number of shares of common stock outstanding
during the year (37,721,000 in 1995, 37,195,000 in 1994 and 36,943,000 in 1993).
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, significant gains or losses on abnormal retirements of
assets, restructuring and other charges, the 1995 gain on the sale of FMC
Wyoming stock and other income and expense items. Identifiable assets by
industry segment are those assets that are used by or attributable to 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 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.
44
<PAGE>
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 Remedial Investigation/Feasibility Study
("RI/FS") that is accepted by FMC and the appropriate government agency or
agencies. Estimates are reviewed quarterly by the company's Environment, 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 or against governmental agencies or private parties.
The company's continuing and discontinued operations' environmental liability
is principally for costs associated with the remediation and/or study of sites
at which the company is alleged to have disposed of hazardous substances. Such
costs include, among other items, remedial investigations and feasibility
studies, site remediation, costs of operation and maintenance of the remediation
plan, fees to outside law firms and consultants for work related to the
environmental effort, and future monitoring costs. Estimated site liabilities
are determined based upon existing remediation technology, specific site
consultants/engineering studies or by extrapolating experience with
environmental issues at comparable sites.
Provisions for environmental costs are reflected in income, net of probable
and reasonably estimable recoveries from named Potentially Responsible Parties
("PRPs") or other third parties. Such provisions incorporate inflation and are
not discounted to their present values.
In calculating and evaluating the adequacy of its environmental reserves, the
company has taken into account the joint and several liability imposed by the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA")
and the analogous state laws on all PRPs and has considered the identity and
financial condition of each of the other PRPs at each site to the extent
possible. The company has also considered the identity and financial condition
of other third parties from whom recovery is anticipated, as well as the status
of the company's claims against such parties. In general, the company is aware
of a certain degree of uncertainty in disputes regarding the financial
contribution by certain named PRPs, which is common to most multiparty sites.
Although the company is unable to forecast the ultimate contributions of PRPs
and other third parties with absolute certainty, the degree of uncertainty with
respect to each party is taken into account when determining the environmental
reserve by adjusting the reserve to reflect the facts and circumstances on a
site-by-site basis. The company believes that recorded recoveries related to
PRPs are realizable in all material respects. Recoveries, excluding those
relating to discontinued operations, are recorded as an asset and those relating
to discontinued operations are recorded in the reserve for discontinued
operations.
Accounting standards not adopted. Statement of Financial Accounting Standards
("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" was issued by the Financial Accounting
Standards Board ("FASB") in March 1995.
This standard, which establishes criteria for recognizing, measuring and
disclosing impairments of long-lived assets, is effective for fiscal years
beginning after December 15, 1995. The company plans to adopt the new standard
on January 1, 1996 but does not expect a significant impact on its consolidated
financial position or results of operations at the date of adoption.
In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation," also effective for fiscal years beginning after December 15,
1995. Upon adoption of SFAS No. 123, the company plans to continue its current
accounting for employee stock-based compensation plans in accordance with
Accounting Principles Board Opinion No. 25, as permitted under SFAS No. 123,
and, if material, to disclose the pro forma effect of the fair value accounting
method in the notes to its consolidated financial statements.
Accounting standards adopted. AICPA Statement of Position ("SOP") 94-6,
"Disclosure of Certain Significant Risks and Uncertainties and Financial
Flexibility" was adopted by the company for the 1995 annual report to
shareholders. The disclosures required by this 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. The required disclosures are
included in this note under the captions Nature of operations and Use of
estimates, elsewhere in the Notes to Consolidated Financial Statements and in
Management's Discussion and Analysis.
Reclassifications. Certain prior-year amounts have been reclassified to
conform with the current year's presentation.
Note 2 Business Combinations
Acquisitions. In June 1995, FMC acquired all of the common shares of Moorco
International Inc. ("Moorco") for $28 per share, or approximately $350 million
(including acquisition costs and debt assumed). Moorco is the leading worldwide
manufacturer of meters for the petroleum industry and a leading manufacturer of
valves for the process and power generation industries. Moorco's operations are
included in the company's Machinery and Equipment segment.
45
<PAGE>
In conjunction with the acquisition of Moorco, goodwill and other intangible
assets of $218.4 million were recorded, and $15.5 million of acquired in-process
research and development was charged to research and development expense during
1995.
The following unaudited pro forma information is intended to show the results
of FMC's operations as if the acquisition of Moorco had occurred on January 1,
1995 and 1994, respectively, after giving effect to certain adjustments,
including the increased amortization of goodwill and other intangible assets,
decreased depreciation, cost savings from certain synergies created under the
combined operations, the exclusion of non-recurring acquisition related expenses
($17.8 million after tax), the exclusion of the non-recurring write-off of
acquired in-process research and development, additional interest expense on
incremental acquisition indebtedness, and the related income tax effects of
these adjustments:
<TABLE>
<CAPTION>
- --------------------------------------------------------------
(In millions, except per share data) Year ended December 31
- --------------------------------------------------------------
(unaudited) 1995 1994
- --------------------------------------------------------------
<S> <C> <C>
Sales $4,610 $4,207
Net income 228 174
Earnings per common share 6.05 4.68
==============================================================
</TABLE>
The unaudited pro forma results of operations are not necessarily indicative
of the results that would have occurred had the acquisition actually been
consummated on January 1, 1995 or 1994, respectively, and are not intended to be
a projection of future results or trends.
On September 20, 1995, the company acquired the assets of FR Manufacturing
Corporation, a wholly owned subsidiary of Bridge Atlantic Corporation, for $15.7
million in cash. FR Manufacturing Corporation is a full-line, global supplier of
tomato processing equipment and aseptic systems sold under the FranRica trade
name. The operations are included in the company's Machinery and Equipment
segment.
During 1994, the company acquired the Fluid Controls Systems product line from
National-Oilwell and the Jetway Systems Division of Pneumo-Abex Inc., both of
which are included in the company's Machinery and Equipment segment. The Fluid
Controls 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. Jetway Systems is a leader in the design,
production and installation of passenger boarding bridges and other aircraft
support systems.
During 1993, the company acquired the assets of Kongsberg Offshore a.s., a
wholly owned subsidiary of Siemens a.s., and the shares of SOFEC Inc., an
engineering and construction company. Both operations are included in the
company's Machinery and Equipment segment.
The company also completed a number of other smaller acquisitions and joint
ventures during the years ended December 31, 1995, 1994 and 1993.
The purchase prices for all the aforementioned acquisitions were satisfied
from cash flow from operations and short-term and long-term financing. Other
than Moorco, the company's acquisitions did not have a material pro forma impact
on the company's consolidated results of operations.
These acquisitions were accounted for using the purchase method of accounting
and, accordingly, the purchase price has been allocated to the assets acquired
and liabilities assumed based on the estimated fair values of such assets and
liabilities at the date of acquisition. The excess of the purchase price over
the fair value of the net tangible assets acquired has been recorded as
intangible assets, primarily goodwill, which will be amortized over periods
ranging from 15 to 40 years.
Results of operations of the acquired companies have been included in the
company's consolidated statements of income from the respective dates of
acquisition.
Joint venture. In July 1995, FMC completed a joint venture agreement involving
the sale of 20 percent of its soda ash business, FMC Wyoming Corporation, to
Sumitomo Corporation and Nippon Sheet Glass Company, Ltd. for $150 million,
resulting in a nontaxable gain of $99.7 million ($2.64 per share). The company
retains management control of the joint venture. In conjunction with the
agreement, the company's joint venture partners also contributed approximately
$22 million, representing their share of preformation funding of capital
projects intended to reduce costs and expand capacity at FMC Wyoming
Corporation's soda ash facilities.
Formation of United Defense, L.P. Effective January 1, 1994, FMC and Harsco
Corporation ("Harsco") combined certain assets and liabilities of FMC's Defense
Systems Group and Harsco's BMY Combat Systems Division ("BMY"). 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
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. All of the
assets and liabilities of UDLP are also consolidated in the balance sheet at
December 31, 1995 and 1994.
The limited partnership agreement between the partners of UDLP provides
options under which FMC may purchase, or Harsco may require the purchase of,
Harsco's ownership interest based on an appraised value as provided in the
agreement. These options are exercisable at any time after February 1, 1996.
46
<PAGE>
Note 3 Restructuring and
Discontinued Operations
Restructuring and other charges. FMC recorded pretax restructuring and other
charges of $35 million ($20 million after tax, or $0.53 per share) in the third
quarter of 1995 covering asset writedowns and related exit liabilities for the
expected shift in 1997 of lithium-based production from North Carolina to a new
lower-cost, higher-quality mineral resource in Argentina. Charges of $17 million
($10 million after tax, or $0.27 per share) related primarily to asset write-
downs, and the company recorded $82.5 million ($50.7 million after tax, or $1.34
per share) of additional environmental reserves (Note 14). In addition, FMC
wrote off $15.5 million ($0.41 per share) of acquired in-process research and
development costs with no associated tax benefit (Note 2), which was charged to
research and development expense.
In 1993, FMC recorded pretax restructuring and other charges of $172.3
million, net of $12.7 million of minority interest ($123.3 million after tax, 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, and 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.
During 1995, FMC substantially completed the remaining workforce reductions
and continued downsizing and other related activities in the business segments.
The aggregate restructuring reserve remaining at December 31, 1995 of $18.7
million is expected to be adequate to cover residual manufacturing consolidation
and the lithium exit liabilities.
Discontinued operations. Disposal of all assets related to discontinued
operations has been completed in accordance with plans adopted within one year
of the measurement dates. Measurement dates and residual liabilities relate to
operations discontinued between 1976 and 1984--primarily Film, Fiber, Power
Transmission and the Construction Equipment businesses. Residual liabilities are
of a long-term nature and will be settled over a number of years. Liabilities
remaining with FMC total approximately $168 million at December 31, 1995 ($190
million at December 31, 1994) and are comprised of: $48 million (net of
approximately $84 million in anticipated third party recoveries) for
environmental remediation and investigation obligations, most of which relate to
former chemical plant sites; $44 million for product liability and other
potential claims principally related to the discontinued construction equipment
group; and $76 million for retiree benefits provided to employees of former
chemical businesses and the construction equipment group.
Except for the environmental liabilities, the company uses actuarial methods,
to the extent practicable, to monitor the adequacy of the reserves on an ongoing
basis. The environmental liabilities are subject to the environmental accounting
and review practices described in Notes 1 and 14. While the amounts required to
settle the company's liabilities for discontinued operations could ultimately
differ materially from the estimates used as a basis for recording these
liabilities, management believes that changes in estimates or required
expenditures for any individual cost component will not have a material adverse
impact on the company's liquidity or financial condition in any single year and
that, in any event, such costs will be satisfied over a period of approximately
15 years. Spending in 1995, 1994 and 1993, respectively, includes $11 million,
$15 million and $22 million for environmental; $5 million, $14 million and $5
million for product liability; and approximately $6 million in each year for
retiree benefits.
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
$300.1 million at December 31, 1995 and $249.3 million at December 31, 1994.
Inventories at December 31, 1995 included approximately $221.9 million ($149.7
million at December 31, 1994) of inventoried costs relating to contracts-in-
progress.
During 1995, there was no reduction in LIFO inventories that were carried at
lower than prevailing costs. LIFO inventory reductions increased pretax income
by $3.7 million in 1994 and $2.6 million in 1993.
Note 5 Foreign Currency
Net income for 1995, 1994 and 1993 included aggregate foreign currency gains of
$0.2 million and losses of $11.1 million and $1.0 million, respectively. The
Mexican peso continued to weaken against the U.S. dollar throughout most of
1995. There were no other major trends in the exchange rates that impacted 1995
earnings. The primary component of the 1994 loss of $11.1 million relates to the
devaluation of the Mexican peso.
The 1995 and 1994 increases in the foreign currency translation adjustment
component of stockholders' equity were primarily attributable to a weaker U.S.
dollar in relation to the European currencies, particularly the Spanish peseta,
and the 1993 decrease was primarily attributable to the stronger U.S. dollar in
relation to the European currencies, particularly the Spanish peseta.
The following table presents the foreign currency adjustments to key balance
sheet categories and the offsetting adjustment to the foreign currency
translation
47
<PAGE>
adjustment or to income. Interest earned on foreign cash and cash equivalents
and debt service costs are classified as interest income and interest expense,
respectively, and are not included 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.
<TABLE>
<CAPTION>
- ----------------------------------------------------------
Gains (Losses)
(In millions) 1995 1994 1993
- ----------------------------------------------------------
<S> <C> <C> <C>
Cash and cash equivalents $ 8.5 $(4.0) $ (6.6)
Debt (3.1) (5.9) 7.7
Other working capital 2.1 4.0 (24.1)
Property, plant & equipment, net 15.1 12.7 (33.3)
Investments (3.6) 4.4 6.4
Other (6.7) (6.6) 3.2
- ----------------------------------------------------------
$12.3 $ 4.6 $(46.7)
==========================================================
Foreign currency
translation adjustment $12.1 $ 15.7 $(45.7)
Gain (loss) in income 0.2 (11.1) (1.0)
- ----------------------------------------------------------
$12.3 $ 4.6 $(46.7)
==========================================================
</TABLE>
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:
<TABLE>
<CAPTION>
- ----------------------------------------------------------
December 31, 1995
- ----------------------------------------------------------
(In millions) Carrying Estimated
Amount Fair Value
- ----------------------------------------------------------
<S> <C> <C>
Assets
- ----------------------------------------------------------
Foreign exchange forward contracts $ - $ -
Foreign currency swap agreements $ - $ (1.8)
- ----------------------------------------------------------
Liabilities
- ----------------------------------------------------------
Total debt $1,425.0 $1,447.6
==========================================================
</TABLE>
Fair values of debt have been determined through a combination of management
estimates and information obtained from independent third parties using market
data, such as bid/ask spreads, available on the last business day of the year.
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, 1995.
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.
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 financing while limiting both foreign exchange risk and exposure to
floating interest rates on U.S. borrowings.
As of December 31, 1995 and 1994, the company had approximately $318 million
and $149 million, respectively, of outstanding foreign exchange and foreign
currency swap contracts in which foreign currencies (primarily Belgium franc,
British pound and Singapore dollar) were purchased, and approximately $459
million and $312 million, respectively, of outstanding foreign exchange and
foreign currency swap contracts in which foreign currencies (primarily Canadian
dollar, German mark, French franc, and Japanese yen) were sold.
Cross-currency contracts at December 31, 1995 and December 31, 1994 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 $82 million of British pounds, which mature annually through 2001,
and the sale of $13 million of Japanese yen with various maturities through
2003.
At December 31, 1995, 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.
48
<PAGE>
<TABLE>
<CAPTION>
Note 7 Property, Plant and Equipment
Property, plant and equipment consists of the following:
- ----------------------------------------------------------------
December 31
- ----------------------------------------------------------------
(In millions) 1995 1994
- ----------------------------------------------------------------
<S> <C> <C>
Land and land improvements $ 290.6 $ 275.7
Buildings 553.5 510.1
Machinery and equipment 2,953.7 2,894.6
Construction in progress 373.4 217.1
- ----------------------------------------------------------------
Total cost 4,171.2 3,897.5
Accumulated depreciation 2,341.6 2,360.1
- ----------------------------------------------------------------
Net property, plant and equipment $1,829.6 $1,537.4
================================================================
Depreciation expense was $232.8 million, $220.5 million and $222.4 million in
1995, 1994 and 1993, respectively.
Note 8 Debt
Long-term debt. Long-term debt consists of the following:
- -------------------------------------------------------------------
December 31
- -------------------------------------------------------------------
(In millions) 1995 1994
- -------------------------------------------------------------------
Revolving credit facility, effective rate
(1995-6.5%; 1994-6.1%)/(1)/ $ 95.0 $ 85.0
Commercial paper, effective rate
(1995-5.9%)/(2)/ 155.0 -
Uncommitted facilities, effective rate
(1995-6.1%; 1994-4.5%)/(2)/ - 76.0
Notes payable to banks, various rates,
due 1996 to 2042 49.6 75.3
Pollution control and industrial
revenue bonds, 3.8% to 7.1%,
due 1997 to 2024 178.9 181.2
Senior debt, 8-3/4%, due 1999,
less unamortized discount (1995-$0.5;
1994-$0.7), effective rate 8.8% 249.5 249.3
Senior debt, 6-3/8%, due 2003,
less unamortized discount (1995-$0.9;
1994-$1.0), effective rate 6.4% 199.1 199.0
Exchangeable senior subordinated
debentures, 6-3/4%, due 2005 75.0 75.0
Other 2.1 1.7
- -------------------------------------------------------------------
Total 1,004.2 942.5
Less current portion 29.8 41.3
- -------------------------------------------------------------------
Long-term portion $ 974.4 $901.2
===================================================================
</TABLE>
(1) The effective rate on the revolving credit facility is based on average
balances outstanding during the year and includes facility fees.
(2) The effective rate is based on average balances outstanding during the year.
In December 1994, the company entered into a $250 million, five-year non-
amortizing revolving credit agreement and a $250 million, 364-day non-
amortizing revolving credit agreement, which was amended in December 1995 to
extend the maturity date to December 1996. These agreements replaced the
company's previous credit agreements and provide the company with $500 million
in committed credit facilities. At December 31, 1995, no amounts were
outstanding under the 364-day revolving credit agreement. Among other
restrictions, the credit agreements contain covenants relating to dividends,
liens, consolidated net worth and cash flow coverage and leverage ratios (as
defined in the agreements). The company is in compliance with all financial
debt covenants.
In November 1995, the company entered into a commercial paper program supported
by the committed facilities. Committed credit available under the revolving
credit facilities provides management with the ability to refinance a portion of
its debt on a long-term basis and, as it is management's intent to do so, $155
million of the total $274.8 million in outstanding commercial paper has been
classified as long-term debt at December 31, 1995.
In June 1994 and September 1994, the company borrowed $45 million at 7.0%
interest and $45 million at 6.9% interest, respectively, maturing in 2024, from
the proceeds of Sweetwater County, Wyoming's Solid Waste Disposal Revenue Bonds.
Proceeds of $13.0 million and $64.0 million at December 31, 1995 and 1994,
respectively, from these bonds are included in investments and are being used to
fund a soda ash business capital project.
During 1993, with funds obtained through its revolving credit agreement, the
company repurchased debt with an aggregate face value of $706 million, less
unamortized discount of $481 million. 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.
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): 1996--$29.8, 1997--$22.5, 1998--$20.7, 1999--$523.7,
2000--$18.7, and thereafter--$388.8.
Short-term debt and compensating balance agreements. At December 31, 1995,
components of short-term debt were commercial paper borrowings, advances under
uncommitted facilities and foreign short-term borrowings.
In November 1995, the company commenced a short-term commercial paper program,
providing for the
49
<PAGE>
issuance of up to $500 million in aggregate maturity value of commercial paper
at any given time. Fourteen-day to 30-day commercial paper with an aggregate
maturity value of $274.8 million and an effective interest rate of 5.9 percent
was outstanding at December 31, 1995, the proceeds of which were used to retire
other short-term borrowings. As described above, $155 million of the outstanding
balance at December 31, 1995 was classified as long-term debt.
Advances under uncommitted facilities were $201 million and $76 million in
1995 and 1994, respectively. In 1994, committed credit available under the
revolving credit facility provided management with the ability to refinance this
debt on a long-term basis and, therefore, the entire $76 million of advances was
classified as long-term debt. In 1995, the advances under uncommitted facilities
were classified as short-term debt.
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. Outstanding foreign
short-term borrowings totaled $100 million and $66.9 million at December 31,
1995 and 1994, respectively. The weighted average interest rates on outstanding
foreign short-term borrowings at December 31, 1995 and 1994 were 12.1% and 8.2%,
respectively. The average interest rates have been adjusted for currency
devaluation associated with borrowing in hyperinflationary countries.
Note 9 Income taxes
Domestic and foreign components of income (loss) before income taxes are shown
below:
<TABLE>
<CAPTION>
- ----------------------------------------------
Year ended December 31
- ----------------------------------------------
(In millions) 1995 1994 1993
- ----------------------------------------------
<S> <C> <C> <C>
Domestic $137.2 $173.1 $(17.2)
Foreign 109.7 79.2 55.0
- ----------------------------------------------
Total $246.9 $252.3 $ 37.8
==============================================
</TABLE>
The provision (benefit) for income taxes consists of:
<TABLE>
<CAPTION>
- ----------------------------------------------
Year ended December 31
- ----------------------------------------------
(In millions) 1995 1994 1993
- ----------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ 19.5 $ 24.7 $ 23.7
Foreign 14.4 21.6 8.3
State and local 1.1 2.3 3.7
- ----------------------------------------------
Total current 35.0 48.6 35.7
Deferred (3.7) 30.3 (38.9)
- ----------------------------------------------
Total income taxes $ 31.3 $ 78.9 $ (3.2)
==============================================
</TABLE>
Total income tax provisions (benefits) for the years ended December 31 were
allocated as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
(In millions) 1995 1994
- ---------------------------------------------------------------
<S> <C> <C>
Net income $ 31.3 $ 78.9
Items charged directly to stockholders'
equity (3.7) (2.9)
- ----------------------------------------------------------------
Income tax expense $ 27.6 $ 76.0
===============================================================
</TABLE>
Significant components of the deferred income tax provision (benefit)
attributable to income before income taxes are as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
(In millions) 1995 1994
- ---------------------------------------------------------------
<S> <C> <C>
Deferred tax (exclusive of the effects of
other components listed below) $ (7.4) $ 28.5
Increase in the valuation allowance
for deferred tax assets 3.7 1.8
- ---------------------------------------------------------------
Deferred income tax expense (benefit) $ (3.7) $ 30.3
===============================================================
</TABLE>
Significant components of the company's deferred tax assets and liabilities as
of December 31 are as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
(In millions) 1995 1994
- ---------------------------------------------------------------
<S> <C> <C>
Accrued pension and other postretirement
benefits $109.9 $119.2
Reserves for discontinued operations
and restructuring 105.4 94.0
Other reserves 107.2 111.1
Net operating loss carryforwards 33.0 25.0
Alternative minimum tax credit carryforwards 51.0 31.8
Capitalized research and development
costs (6.5) (2.3)
Other 22.4 16.8
- ---------------------------------------------------------------
Deferred tax assets 422.4 395.6
Valuation allowance (42.8) (39.1)
- ---------------------------------------------------------------
Deferred tax assets, net of valuation
allowance $379.6 $356.5
===============================================================
Property, plant and equipment $204.3 $170.2
Other 5.7 5.5
- ---------------------------------------------------------------
Deferred tax liabilities $210.0 $175.7
===============================================================
Net deferred tax assets $169.6 $180.8
===============================================================
</TABLE>
As of December 31, 1995, the company has prepaid $51.0 million of alternative
minimum tax. These prepayments represent credits that are available in future
years to offset regular taxes to the extent regular taxes exceed alternative
minimum tax.
The effective income tax rate applicable to income before income taxes is less
than the statutory U.S. federal income tax rate due to the various factors
listed in the following table:
50
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
(Percent of income
before income taxes) Year ended December 31
- --------------------------------------------------------------------------
1995 1994 1993
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory U.S. tax rate 35% 35% 35%
- --------------------------------------------------------------------------
Net increase (decrease):
Foreign sales corporation income not
subject to U.S. tax (3) (3) (30)
Percentage depletion (5) (6) (51)
State and local income taxes, less
federal income tax benefit 1 3 (6)
Foreign earnings subject to different
tax rates (2) (1) (15)
Tax on intercompany dividends
and deemed dividends for
tax purposes 2 3 54
Sale of a minority interest
in FMC Wyoming not taxed (15) - -
Adjustment to deferred tax
assets for enacted changes
in tax rates - - (13)
Equity in earnings of affiliates
not taxed (2) (2) (9)
Minority interest on FMC Gold
restructuring charge - - (11)
Change in valuation allowance - - 44
Other 2 2 (6)
- --------------------------------------------------------------------------
Total decrease (22) (4) (43)
- --------------------------------------------------------------------------
Effective tax rate 13% 31% (8)%
============================================================================
</TABLE>
FMC'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 ($367.2 million and $299.7 million
at December 31, 1995 and 1994, respectively) or unconsolidated subsidiaries and
affiliates ($49.5 million and $53.4 million at December 31, 1995 and 1994,
respectively). Restrictions on the distribution of these earnings are not
significant. Foreign earnings taxable to the company as dividends were $24.3
million, $66.2 million and $131.0 million in 1995, 1994 and 1993, respectively.
Note 10 Incentive Compensation Plans
The 1995 Management Incentive Plan (the Incentive Plan) and the 1995 Stock
Option Plan (the Option Plan)(approved by the stockholders on April 21, 1995)
provide certain incentives and awards to key employees. The plans are
administered by the Compensation and Organization Committee of the Board of
Directors (the Committee) which, subject to the provisions of the plans, reviews
and approves financial targets, times and conditions for payment.
The Incentive Plan provides for the grant of multi-year incentive awards
payable partly in cash and partly in stock. The Option Plan (and its predecessor
plans) provide for regular grants of stock options which may be incentive and/or
nonqualified stock options. The exercise price for options is not less than the
fair market value of the stock at the date of grant. Options are exercisable at
the time designated by the Committee in the option (four years for grants prior
to 1995). Incentive options expire not later than 10 years from grant date.
Nonqualified options expire not later than 15 years from the grant date (10
years for grants prior to 1990), although the Committee may extend the
expiration date of any nonqualified stock option upon such terms and conditions
as the Committee shall determine.
Under the plans adopted in 1995, 3 million shares became available for awards
and options granted in 1995 and later years. These shares are in addition to the
384,250 shares remaining from the 1990 plan. Cancellation (through expiration,
forfeiture or otherwise) of outstanding awards and options granted after 1989
increases the shares available for future awards or grants. At December 31,
1995, 3,001,950 shares were available for future use under these plans.
The following summary shows stock option activity for the two years ended
December 31, 1995:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
Shares optioned
(In thousands, except but not Option price
per share data) exercised per share
- ------------------------------------------------------------------------
<S> <C> <C>
December 31, 1993 2,466 $10.43-$46.375
Granted 851 $46.25
Exercised (340) $10.43-$31.25
Cancelled (89) $29.50-$46.375
- ------------------------------------------------------------------------
December 31, 1994 2,888 $17.625-$46.375
Granted 372 $46.25-$79.00
Exercised (210) $17.625-$31.125
Cancelled (66) $29.50-$59.625
- ------------------------------------------------------------------------
December 31, 1995 2,984 $17.625-$79.00
========================================================================
</TABLE>
At December 31, 1995, 1,091,767 of the optioned shares are exercisable at
prices ranging from $17.625 to $31.125 per share, with expiration dates from
July 8, 1996 to January 9, 2006. On January 2, 1996, an additional 562,700
shares became exercisable at a price of $46.375 with an expiration date of March
12, 2007.
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,
1995, stock units representing an aggregate of 16,130 shares of stock were
credited to the nonemployee directors' accounts.
51
<PAGE>
Note 11 Stockholders' Equity
The following is a summary of FMC's capital stock activity over the past three
years:
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Common Treasury
(In thousands) stock stock
- -----------------------------------------------------------
<S> <C> <C>
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
Stock options exercised 210 2
Stock repurchases
- -----------------------------------------------------------
Balance December 31, 1995 37,024 300
===========================================================
</TABLE>
At December 31, 1995, 6,025,567 shares of unissued FMC common stock were
reserved for stock options and awards.
Covenants of the revolving credit facility agreement (Note 8) restrict
aggregate payment of dividends on the company's common stock and contain minimum
net worth and other requirements. No dividends are expected to be paid on the
company's common stock in 1996.
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 related to a change in control of the company, one one-hundredth
of a share of Junior Participating Preferred Stock, Series A, without par value,
at a price of $300 per share (subject to adjustment), subject to the terms and
conditions of a Rights Agreement dated February 22, 1986 as amended through
February 9, 1996. The rights expire on March 7, 2006, 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 Participating Preferred Stock for
possible issuance under the plan.
Note 12 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.
As a result of acquisitions (described in Note 2), the 1995 net pension cost
and plan funded amounts include salaried and hourly retirement plans of Moorco
International Inc. and Jetway Systems. 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.
The following table summarizes the assumptions used and the components of the
domestic net cost (benefit):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
Year ended December 31
Assumptions: 1995 1994 1993
- --------------------------------------------------------------------
<S> <C> <C> <C>
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 of benefits earned $ 25.0 $ 25.5 $ 22.6
Interest cost on projected benefit
obligation 60.2 55.5 50.2
Actual return on plan assets--
investment (gains) losses (210.5) 2.6 (105.9)
Net amortization and deferral:
Net transition asset
amortization (23.7) (23.7) (23.0)
Prior service cost
amortization 5.0 5.2 3.9
Net gain amortization 3.1 (2.3) (1.9)
Net asset gain (loss)
deferred 143.1 (72.8) 46.5
- --------------------------------------------------------------------
Net pension (benefit) cost $ 2.2 $(10.0) $ (7.6)
====================================================================
</TABLE>
During 1994 and 1995, 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 were adjusted for certain
employees affected by the company's restructuring, downsizing or consolidation
activities.
52
<PAGE>
Net pension (benefit) cost for 1995 and 1994 includes charges of $4.7 million
and $2.4 million, respectively, 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.
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) 1995 1994
- -----------------------------------------------------------------------
<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 $663.8 in 1995 and
$581.8 in 1994 $(708.3) $(611.6)
Additional benefits based on
estimated future salary levels (117.6) (145.4)
- -----------------------------------------------------------------------
Projected benefit obligation (825.9) (757.0)
Plan assets at fair value(1) 920.4 727.4
- -----------------------------------------------------------------------
Projected benefit obligation (in excess of)
or less than plan assets 94.5 (29.6)
Unrecognized net (gain) loss (94.5) 55.7
Unrecognized prior service cost 20.7 25.5
Unrecognized net transition asset (126.0) (149.6)
- -----------------------------------------------------------------------
Accrued pension cost $(105.3) $ (98.0)
=======================================================================
</TABLE>
(1) Primarily equities, bonds and participating annuities.
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 $8.6 million in
1995, $6.3 million in 1994 and $6.7 million in 1993.
Employees' Thrift and Stock Purchase Plans. The FMC Employees' Thrift and
Stock Purchase 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 by contributing a portion of their compensation.
The company matches contributions up to specified percentages of each employee's
compensation depending on profits and fund elections. In addition, the company
also matched the contributions in the UDLP Salaried Employees' Plan, the UDLP
York Plan and the Moorco International Savings Plan, which have provisions
similar to the FMC plan. Charges against income for FMC's matching
contributions, net of forfeitures, were $20.3 million in 1995, $18.8 million in
1994 and $17.1 million in 1993.
Note 13 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 conformity with Federal Cost Accounting Standards.
The effect of 1995 and 1994 business combinations on the company's net
periodic postretirement benefit or cost and on accrued postretirement benefits
was not significant.
For measurement purposes, the assumed rate of future increases in per capita
cost of health care benefits was 10 percent in 1995 and 1994, 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 $9.9 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
- -----------------------------------------------------------------------
Assumptions: 1995 1994 1993
<S> <C> <C> <C>
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 $ 4.2 $ 4.7
Interest cost on accumulated
postretirement benefit
obligation 13.5 13.3 14.3
Actual return on plan assets-
investment (gain) losses (4.5) 0.4 (1.2)
Net amortization and deferral:
Plan amendment amortization (15.2) (7.7) (6.1)
Net gain amortization (0.6) (0.6) -
Net asset gain (loss) deferred 2.1 (2.5) (0.3)
- -----------------------------------------------------------------------
Net periodic postretirement
(benefit) cost $ (0.5) $7.1 $11.4
=======================================================================
</TABLE>
53
<PAGE>
The accrued postretirement benefits 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) 1995 1994
- -------------------------------------------------------------
<S> <C> <C>
Accumulated postretirement
benefit obligation (APBO):
Retirees $ (98.4) $(110.4)
Fully eligible active participants (24.0) (24.5)
Other active participants (59.1) (53.8)
- -------------------------------------------------------------
APBO (181.5) (188.7)
Plan assets at fair value(1) 32.2 24.5
- -------------------------------------------------------------
APBO obligation in excess of plan assets (149.3) (164.2)
Unamortized plan amendments (58.0) (62.8)
Unrecognized net gain (8.4) (4.3)
- -------------------------------------------------------------
Accrued postretirement benefits $(215.7) $(231.3)
=============================================================
</TABLE>
(1) Primarily equities and fixed income securities
As part of restructuring and downsizing, the company recognized a one-time
curtailment gain of $7.6 million in 1995 which is included in plan amendment
amortization ($7.0 million) and in net gain amortization ($0.6 million).
Note 14 Environmental
FMC is subject to various federal, state and local environmental laws and
regulations that govern emissions of air pollutants, discharges of water
pollutants, and the manufacture, storage, handling and disposal of hazardous
substances, hazardous wastes and other toxic materials. The most significant
environmental liabilities of the company consist of obligations relating to the
remediation and/or study of sites at which the company is alleged to have
disposed of hazardous substances. In particular, the company is subject to
liabilities arising under CERCLA and similar state laws that impose
responsibility on persons who arranged for the disposal of hazardous substances
and on current and previous owners and operators of a facility for the clean up
of hazardous substances released from the facility into the environment. In
addition, the company is subject to liabilities under the corrective action
provisions of the Resource Conservation and Recovery Act ("RCRA") and analogous
state laws that require owners and operators of facilities that treat, store or
dispose of hazardous waste to clean up releases of hazardous waste constituents
into the environment associated with past or present practices. The company has
been named a PRP at 33 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 27 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,
RI/FS or their equivalent at most of the identified sites, with the status of
each investigation varying from site to site. At certain sites, RI/FS have just
begun, providing limited information, if any, relating to cost estimates,
timing, or the involvement of other PRPs; whereas, at other sites, the studies
are complete, remedial action plans have been chosen, or Records of Decision
have been issued.
At December 31, 1995 and 1994, reserves were provided for potential
environmental obligations which management considers probable and for which a
reasonable estimate of the obligation could be made. Accordingly, reserves of
$302 million and $229 million, before recoveries, have been provided at December
31, 1995 and December 31, 1994, respectively, of which $132 million and $142
million are included in the reserve for discontinued operations at December 31,
1995 and December 31, 1994, respectively. The company's total environmental
reserves include approximately $270 million and $183 million for remediation
activities and $32 million and $46 million for remedial
investigation/feasibility study costs at December 31, 1995 and December 31,
1994, respectively. In addition, the company has estimated reasonably possible
environmental loss contingencies may exceed amounts accrued by as much as $150
million.
The EPA issued a draft risk assessment on August 17, 1995 for the Eastern
Michaud Flats Superfund site, which includes FMC's Pocatello phosphorus
facility, identifying potential risks from contamination potentially associated
with FMC. Release of the Risk Assessment allowed FMC to complete a draft of the
Remedial Investigation documenting the nature and extent of contamination from
the site. The company submitted its draft Remedial Investigation to the EPA on
September 28, 1995. FMC added $58 million in the third quarter of 1995 to its
existing reserves of approximately $22 million for future environmental
remediation costs at the Eastern Michaud Flats site. In addition, $25 million
was provided during the third quarter of 1995 related to other sites where
additional information became available which indicated the need for increased
accruals.
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
54
<PAGE>
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. Approximately $140
million of recoveries ($56 million as other assets and $84 million as an offset
to the reserve for discontinued operations) and approximately $123 million of
recoveries ($44 million as other assets and $79 million as an offset to the
reserve for discontinued operations), have been recorded as probable realization
on claims against insurance companies and other third parties at December 31,
1995 and 1994, respectively. The substantial majority of recorded assets related
to recoveries from PRPs are associated with existing contractual arrangements
with U.S government agencies.
Regarding current operating sites, the company spent approximately $22
million, $20 million and $16 million for the years 1995, 1994 and 1993,
respectively, on capital projects relating to environmental control facilities,
and expects to spend additional capital of approximately $16 million and $21
million in 1996 and 1997, respectively. Additionally, in 1995, 1994, and 1993,
FMC spent approximately $58 million, $55 million and $63 million, respectively,
for environmental compliance costs.
Regarding current operating, previously operated and other sites for the years
1995, 1994 and 1993, FMC charged approximately $14 million, $18 million and $17
million, respectively, against established reserves for remediation spending,
and charged approximately $12 million, $13 million and $10 million,
respectively, against reserves for spending on RI/FS. Recoveries from third
parties of approximately $5 million, $5 million and $7 million, respectively,
were received in 1995, 1994 and 1993. FMC anticipates that the expenditures for
current operating, previously operated and other sites will continue to be
significant for the foreseeable future.
Note 15 Commitments and Contingent Liabilities
FMC leases office space, plants and facilities, and various types of
manufacturing, data processing and transportation equipment. Capital leases are
not significant. Total rent expense under operating leases amounted to $64.1
million, $64.1 million and $60 million in 1995, 1994 and 1993, respectively.
Minimum future rentals under noncancellable leases aggregated approximately $314
million as of December 31, 1995 and are estimated to be payable as follows: $44
million in 1996, $39 million in 1997, $35 million in 1998, $31 million in 1999,
$30 million in 2000 and $135 million thereafter. The real estate leases
generally provide for payment of property taxes, insurance and repairs by FMC.
In September 1995, FMC Gold Company, an 80-percent-owned subsidiary of FMC,
announced that it had engaged the investment banking firm of Wood Gundy Inc.,
Toronto, to act as its financial advisor in connection with the possible sale of
FMC Gold Company. On February 9, 1996, FMC Gold Company determined that it will
augment its previously announced sale process to include a range of options
based on current gold equity market conditions and interest in individual
properties. FMC Gold Company is retaining J. P. Morgan & Co., Inc. to join Wood
Gundy Inc. as financial advisors for this process. At this time, there can be no
assurance as to whether any transaction will result from FMC Gold Company's work
with Wood Gundy and J.P. Morgan & Co., Inc. or as to the value, timing or
structure of any such transaction. FMC Gold Company management's decisions with
respect to the value or structure of a potential sale could have a material
impact on the valuation of FMC Gold Company and its assets.
In 1994, a lawsuit was filed against the National Marine Fisheries Service
("NMFS") and other federal agencies for violation of the Endangered Species Act
(the "Act") alleging that NMFS' biological opinion relating to FMC Gold
Company's Beartrack property failed to satisfy the requirements of the Act. On
November 9, 1995, the court ordered the federal agencies to reinitiate
consultation under Section 7 of the Act on the potential environmental impacts
of the Beartrack mine on endangered salmon or the designated critical habitat
for salmon. The plaintiffs did not seek, and the court did not impose, any
injunction or other restriction on the operation of the Beartrack mine pending
completion of such consultation. If the consulting agencies were to determine
that an activity associated with the Beartrack mine would jeopardize and/or
adversely modify or destroy designated critical habitat, such activities could
be required to cease pending completion of consultation. Under the Act's
regulations, consultation must be completed within 135 days of initiation. The
company continues to believe that operation of the Beartrack mine will not
jeopardize endangered salmon or the critical habitat and that, upon completion
of consultation, the agencies will agree with the company's position.
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.
55
<PAGE>
Independent Auditors' Report
The Board of Directors and Stockholders,
FMC Corporation:
We have audited the accompanying consolidated balance sheets of FMC Corporation
and consolidated subsidiaries as of December 31, 1995 and 1994, 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, 1995.
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 years ended December 31, 1995 and 1994, we did not audit the financial
statements of United Defense, L.P., which statements reflect total assets
constituting 13% and 13% and total revenues constituting 22% and 27% in 1995 and
1994, respectively, of the related consolidated totals. 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 the other auditors provide a
reasonable basis for our opinion.
In our opinion, based upon our audits and the report of the other auditors,
the accompanying consolidated financial statements referred to above present
fairly, in all material respects, the financial position of FMC Corporation and
consolidated subsidiaries as of December 31, 1995 and 1994, and the results of
their operations and their cash flows for each of the years in the three-year
period ended December 31, 1995 in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Chicago, Illinois
January 17, 1996
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. Where appropriate, they reflect estimates based on judgments of
management. The statements have been prepared in conformity with accounting
principles generally accepted in the United States and are generally consistent
with standards issued by the International Accounting Standards Committee.
Financial information included elsewhere in this annual report is consistent
with that contained in the consolidated financial statements.
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 that 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.
Michael J. Callahan Ronald D. Mambu
Executive Vice President Vice President
and Chief Financial Officer and Controller
Chicago, Illinois
January 17, 1996
56
<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/
Retired Chairman of the Board and
Chief Executive Officer,
Owens-Corning Fiberglas Corporation
Larry D. Brady/4/
President
B. A. Bridgewater, Jr./1,3,5/
Chairman of the Board,
President and Chief Executive Officer,
Brown Group, Inc.
Patricia A. Buffler/3,4/
Dean, Professor of Epidemiology,
School of Public Health,
University of California, Berkeley
Albert J. Costello/2/
Chairman, President and
Chief Executive Officer,
W.R. Grace &Co.
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
Pehr G. Gyllenhammar/3/
Senior Adviser,
Lazard Freres & Co., Inc.,
former Managing Director and
Chief Executive Officer,
AB Volvo
Robert H. Malott/1,5/
Chairman of the Executive Committee;
Retired Chairman of the Board and
Chief Executive Officer,
FMC Corporation
Edward C. Meyer/1,4,5/
Chairman,
GRC International, Inc.,
former Chief of Staff,
United States Army
William F. Reilly/2,3/
Chairman and Chief Executive Officer,
K-III Communications Corporation
James R. Thompson/4,5/
Former Governor of Illinois;
Chairman, Chairman of the Executive Committee
and Partner,
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
Patrick J. Head*
Vice President and
General Counsel
Alfredo Bernad
Vice President;
President, FMC Europe
Patricia D. Brozowski
Vice President
Communications
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
W. Reginald Hall*
Vice President;
General Manager
Specialty Chemicals Group
Robert I. Harries*
Vice President;
General Manager
Chemical Products Group
Ronald D. Mambu*
Vice President and
Controller
James A. McClung*
Vice President
Worldwide Marketing
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
William H. Schumann*
Vice President;
General Manager
Agricultural Products Group
Peter E. Weber
Vice President;
President
FMC Latin America/
Middle East/Africa
William J. Wheeler*
Vice President;
President
FMC Asia-Pacific
*Executive Officer
57
<PAGE>
<TABLE>
<CAPTION>
Ten-Year Financial Summary
================================================================================
<S> <C> <C> <C>
(In millions, except per share,
employee and stockholder data) 1995 1994 1993
- --------------------------------------------------------------------------------
Summary of earnings
- --------------------------------------------------------------------------------
Total revenue $4,566.6 4,051.3 3,788.9
- --------------------------------------------------------------------------------
Restructuring and other
charges/(1)/ $ 150.0 - 172.3
- --------------------------------------------------------------------------------
Total costs and expenses/(1)/ $4,287.8 3,678.5 3,686.0
- --------------------------------------------------------------------------------
Income from continuing
operations before interest,
minority interest, gain on sales of
FMC Gold Company and
FMC Wyoming stock and taxes/(1)/ $ 278.8 372.8 102.9
- --------------------------------------------------------------------------------
Gain on sale of FMC Wyoming
Corporation stock $ 99.7 - -
- --------------------------------------------------------------------------------
Gain on sale of FMC Gold
Company stock $ - - -
- --------------------------------------------------------------------------------
Income from continuing
operations before income
taxes/(1)(2)/ $ 246.9 252.3 37.8
Provision (benefit) for income
taxes 31.3 78.9 (3.2)
- --------------------------------------------------------------------------------
Income from continuing
operations/(3)/ 215.6 173.4 41.0
Discontinued operations, net of
taxes - - -
- --------------------------------------------------------------------------------
Income before extraordinary
items and cumulative
effect of change in accounting
principle/(3)/ 215.6 173.4 41.0
Extraordinary items, net of
taxes - - (4.7)
Cumulative effect of change in
accounting principle, net of
taxes - - -
- --------------------------------------------------------------------------------
Net income (loss)/(3)/ $ 215.6 173.4 36.3
- --------------------------------------------------------------------------------
Total dividends $ - - -
- --------------------------------------------------------------------------------
Share data
Average number of shares used
in earnings per share
computations (thousands) 37,721 37,195 36,943
Earnings (loss) per share:
Continuing operations/(3)/ $ 5.72 4.66 1.11
Discontinued operations - - -
Extraordinary items - - (0.13)
Cumulative effect of change in
accounting principle - - -
- --------------------------------------------------------------------------------
Net income (loss)/(3)/ $ 5.72 4.66 0.98
- --------------------------------------------------------------------------------
Financial position at year-end
Total assets $4,301.1 3,351.5 2,845.1
Long-term debt (less current
portion) $ 974.4 901.2 749.9
Stockholders' equity (deficit) $ 653.4 416.5 216.9
Other data
Income from continuing
operations as a return on
investment 15.3% 17.2 7.8
Capital expenditures $ 566.3 356.0 244.5
Provision for depreciation $ 232.8 220.5 222.4
Employees at year-end 22,164 21,344 20,696
Stockholders of record at
year-end 11,844 12,438 13,180
- --------------------------------------------------------------------------------
</TABLE>
(1)Includes pretax restructuring and other charges of $134.5 million in 1995 and
$172.3 million in 1993, and a write-off of acquired in-process research and
development of $15.5 million in 1995.
(2)Includes a nontaxable gain on the sale of FMC Wyoming Corporation stock of
$99.7 million in 1995 and a nontaxable gain on the sale of FMC Gold Company
stock of $94.7 million in 1987.
(3)Includes after-tax restructuring and other charges, a write-off of acquired
in-process research and development and a gain on the sale of FMC Wyoming
Corporation stock of $3.5 million, net, after tax in 1995 ($0.09 per share);
restructuring and other charges of $(123.3) million after tax in 1993
($(3.34) per share); and a nontaxable gain on the sale of FMC Gold Company
stock of $94.7 million in 1987 ($2.00 per share).
===============================================================================
58
<PAGE>
<TABLE>
<CAPTION>
========================================================================
<S> <C> <C> <C> <C> <C> <C>
1992 1991 1990 1989 1988 1987 1986
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
4,003.5 3,926.8 3,769.7 3,437.1 3,324.1 3,166.5 3,078.9
- ------------------------------------------------------------------------
- - - - - - -
- ------------------------------------------------------------------------
3,637.6 3,560.5 3,422.1 3,078.2 2,977.9 2,870.2 2,753.8
- ------------------------------------------------------------------------
365.9 366.3 347.6 358.9 346.2 296.3 325.1
- ------------------------------------------------------------------------
- - - - - - -
- ------------------------------------------------------------------------
- - - - - 94.7 -
- ------------------------------------------------------------------------
279.6 255.9 211.4 218.3 189.5 201.4 192.6
87.0 82.8 56.1 61.5 60.3 10.2 40.1
- ------------------------------------------------------------------------
192.6 173.1 155.3 156.8 129.2 191.2 152.5
(73.2) - - - - - -
- ------------------------------------------------------------------------
119.4 173.1 155.3 156.8 129.2 191.2 152.5
(11.4) (9.2) - (20.4) - (10.7) -
(183.7) - - - - - -
- ------------------------------------------------------------------------
(75.7) 163.9 155.3 136.4 129.2 180.5 152.5
- ------------------------------------------------------------------------
- - - - - - 14.4
- ------------------------------------------------------------------------
36,796 36,267 36,075 36,006 35,860 42,108 92,746
5.23 4.77 4.30 4.35 3.60 4.54 1.64
(1.99) - - - - - -
(0.31) (0.25) - (0.56) - (0.25) -
(4.99) - - - - - -
- ------------------------------------------------------------------------
(2.06) 4.52 4.30 3.79 3.60 4.29 1.64
- ------------------------------------------------------------------------
2,856.6 2,774.2 2,959.2 2,819.0 2,748.8 2,595.1 2,685.8
843.6 929.0 1,158.6 1,325.6 1,468.0 1,380.2 1,787.3
219.0 309.8 149.6 (70.6) (223.6) (343.2) (506.6)
20.6 18.4 17.9 19.1 18.8 16.1 15.8
314.5 216.8 324.4 280.8 186.5 157.2 232.8
235.0 224.9 211.2 197.8 199.3 200.5 192.1
22,097 23,150 23,882 24,110 24,342 24,797 24,966
14,487 14,959 17,451 18,151 19,155 20,231 21,203
- ------------------------------------------------------------------------
</TABLE>
========================================================================
59
<PAGE>
Major Operating Units
Performance Chemicals
Agricultural Products
Specialty Chemicals
Food Ingredients
Lithium
Pharmaceutical
Process Additives
BioProducts
Industrial Chemicals
Chemical Products
Alkali Chemicals
FMC Foret, S.A.
Peroxygen Chemicals
Phosphorus Chemicals
Machinery and Equipment
Energy and Transportation
Equipment
Crosby Valve
Energy Transportation
and Measurement
Petroleum Equipment
and Systems
Smith Meter
SOFEC
Airport Products and Systems
Material Handling Systems
Food Machinery
Agricultural Machinery
Food Machinery Europe
Food Processing Systems
Packaging and Food Handling
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.
Bangladesh
FMC International A.G.
Barbados
Moorco Foreign Sales Corp.
UD United Defense International
Sales Corporation
Belgium
FMC Europe N.V.
Brazil
CBV Industria Mecanica, S.A.
Crosby Valve & Gage Participacoes
Ltda.
FMC do Brasil, Ltda.
Jetway Systems Equipamentos
Aeroportuarios Ltda.
Canada
FMC of Canada, Ltd.
Chile
FMC Corporation, Inc. Chile
Limitada
Minera FMC Limitada
China
FMC Asia Pacific Inc.
FMC Hong Kong Limited
Fu Mei-Shi Crop Care Company, Ltd.
Huzhou FMC Chemical Company,
Ltd.
Colombia
FMC Latino America, S.A.
Denmark
FMC A/S
Egypt
FMC International, A.G.
France
FMC Europe, S.A.
FMC Food Machinery, S.A.
FMC France S.A.
FMC Overseas, S.A.
Gabon
FMC Gabon, S.A.R.L.
Germany
FMC G.m.b.H.
Jetway Systems, G.m.b.H.
F.A. Sening G.m.b.H.
Smith Meter G.m.b.H.
Greece
FMC Hellas, EPE
FMC International, A.G.
Guatemala
FMC Guatemala, S.A.
Hong Kong
FMC Asia Pacific, Inc.
FMC Hong Kong Ltd.
Friendship Minerals and Chemicals,
Ltd.
India
Moorco (India)Limited
FMC Asia Pacific, Inc.
Indonesia
FMC Hong Kong Limited
P.T. Bina Guna Kimia
P.T. FMC Santana Petroleum
Equipment Indonesia
Ireland
FMC International, A.G.
Italy
FMC Food Machinery Italy, S.p.A.
FMC Packaging Machinery, S.p.A.
Japan
Asia Lithium Corporation
FMC Asia Pacific, Inc.
Honjo-FMC Energy Systems, Inc.
L.H. Company, Ltd.
Tokai Denka Kogyo, K.K.
Kenya
FMC International, A.G.
Korea
FMC International, A.G.
FMCKorea Limited
UDLP International, Inc.
Malaysia
Antah FMC Supplies
and Services Sdn. Bhd.
FMC Petroleum Equipment
(Malaysia) Sdn. Bhd.
UDLPInternational, Inc.
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 Ingrediantes Alimenticios
Minera FMC S.A. de C.V.
Netherlands
FMC Fluid Control (Nederland)
B.V.
FMC Industrial Chemicals
(Netherlands), B.V.
Norway
Kongsberg Offshore, a.s.
Oman
FMC ETEG & Partners LLC
Pakistan
FMC International, S.A.
FMC United (Private) Ltd.
Philippines
FMC International, S.A.
Marine Colloids (Philippines) Inc.
Poland
FMC Corporation Poland
Russia
A/O FMC Overseas
A/O FMC Siberia Petroleum
Equipment
Saudi Arabia
FMC Arabia
Singapore
Crosby Valve Pte. Ltd.
FMC Southeast Asia Pte., Ltd.
Spain
FMC Airline Equipment Europe,
S.A.
FMC Spain, S.A.
FMC Foret, S.A.
Forel S.L.
Forsean, S.L.
Peroxidos Organicos, S.A.
Sibelco Espanola, S.A.
Valentin Herraiz, S.A.
Switzerland
FMC International, A.G.
Taiwan
UDLP International, Inc.
Thailand
Thai Peroxide Company, Ltd.
Turkey
FMC-Nurol Savunma Sanayii A.S.
Ukraine
FMC International, A.G.
United Arab Emirates
FMC International, S.A. (Dubai)
United Kingdom
FMC Corporation (GB), Ltd.
FMC Corporation (UK), Ltd.
Crosby Services International
Limited
Crosby Valve and Engineering
Company, Limited
SOFEC, Ltd. (UK)
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
60
<PAGE>
Stockholder Data
Annual Meeting
of Stockholders
FMC's annual meeting of
stockholders will be held at
2 p.m. on Friday, April 19,
1996, 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
stockholders of record as of
February 29, 1996.
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 1995 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>
[FMC LOGO]
FMC Corporation
200 East Randolph Drive
Chicago, Illinois 60601
<PAGE>
EXHIBIT 21
LIST OF SIGNIFICANT SUBSIDIARIES OF REGISTRANT
12/31/95
<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 Jerritt Canyon Corporation Delaware 100
Meridian Gold Company Montana 100
FMC Wyoming Corporation Delaware 80
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
Moorco International Inc. Delaware 100
FMC Industrial Chemical B.V. Netherlands 100
FMC Asia Pacific Inc. Delaware 100
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 KPMG Peat Marwick LLP
The Board of Directors
FMC Corporation:
We consent to incorporation by reference in Registration Statement Nos. 33-7749
and 33-10661 on Form S-8 and Registration Statement Nos. 33-45648 and 33-62415
on Form S-3 of FMC Corporation and consolidated subsidiaries of our report dated
January 17, 1996, relating to the consolidated balance sheets of FMC Corporation
and consolidated subsidiaries as of December 31, 1995 and 1994, 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, 1995,
which report is incorporated by reference in the December 31, 1995 annual report
on Form 10-K of FMC Corporation and consolidated subsidiaries.
KPMG Peat Marwick LLP
Chicago, Illinois
March 11, 1996
<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 16, 1996 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, 1995:
Form S-3 Registration Statement (Registration No. 33-62415)
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 14, 1996
<PAGE>
FMC CORPORATION EXHIBIT 24
Executive Offices
200 East Randolph Drive
Chicago Illinois 60601
312 861 6000
[LOGO OF FMC]
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, R.D. Mambu, 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, 1995, 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 9th
day of February, 1996.
_________________________
<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, 1995 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-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 71
<SECURITIES> 0
<RECEIVABLES> 849
<ALLOWANCES> 12
<INVENTORY> 615
<CURRENT-ASSETS> 1805
<PP&E> 4172
<DEPRECIATION> 2342
<TOTAL-ASSETS> 4301
<CURRENT-LIABILITIES> 1793
<BONDS> 974
<COMMON> 4
0
0
<OTHER-SE> 650
<TOTAL-LIABILITY-AND-EQUITY> 4301
<SALES> 4510
<TOTAL-REVENUES> 4567
<CGS> 3332
<TOTAL-COSTS> 4288
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 87
<INCOME-PRETAX> 247<F1><F2>
<INCOME-TAX> 31
<INCOME-CONTINUING> 216<F3>
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 216<F3>
<EPS-PRIMARY> 5.72<F3>
<EPS-DILUTED> 0
<FN>
<F1> INCOME BEFORE TAXES INCLUDES MINORITY INTERESTS OF 59 AND 61 FOR DECEMBER
31, 1995 AND 1994, RESPECTIVELY. MINORITY INTERESTS ARE PRIMARILY LIMITED
PARTNER'S SHARE OF PARTNERSHIP PROFITS FOR WHICH TAX HAS NOT BEEN PROVIDED.
<F2> INCOME BEFORE TAXES IN 1995 INCLUDES RESTRUCTURING AND OTHER CHARGES OF
$135, A WRITE-OFF OF ACQUIRED IN-PROCESS RESEARCH AND DEVELOPMENT OF
$15 AND A GAIN ON THE SALE OF FMC WYOMING STOCK OF $98.
<F3> SEE FOOTNOTE 2. THE AFTER-TAX IMPACT OF THESE ITEMS WAS A FAVORABLE $3.5,
OR $0.09 PER SHARE.
</FN>
</TABLE>
<PAGE>
EXHIBIT 99
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Partners
United Defense, L.P.
We have audited the balance sheets of United Defense, L.P. as of December 31,
1995 and 1994 and the related statements of income, partners' capital and cash
flows for the years 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 audits.
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 provide 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, 1995 and 1994 and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Washington, DC
January 16, 1996
