<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 1997
or
( ) Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from-------- to---------
Commission File Number 1-2376
FMC Corporation
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(Exact name of registrant as specified in its charter)
Delaware 94-0479804
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 East Randolph Drive, Chicago, Illinois 60601
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(312) 861-6000
------------------------------------
(Registrant's telephone number,
including area code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest
practicable date.
Class Outstanding at March 31, 1997
------------------------- -----------------------------
Common Stock, 37,260,065
par value $0.10 per share
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- -----------------------------------------------
FMC Corporation and Consolidated Subsidiaries
- -----------------------------------------------
Consolidated Statements of Income (Unaudited)
- -----------------------------------------------
(In millions, except per share data)
<TABLE>
<CAPTION>
Three Months
Ended March 31
----------------------
1997 1996
---- ----
<S> <C> <C>
Revenue:
Sales $1,280.4 $1,094.3
Other revenue 17.3 38.8
-------- --------
Total revenue 1,297.7 1,133.1
-------- --------
Costs and expenses:
Cost of sales 978.0 800.3
Selling, general and
administrative expenses 170.6 162.8
Research and development 43.6 43.9
-------- --------
Total costs and expenses 1,192.2 1,007.0
-------- --------
Income from continuing operations
before minority interests, net
interest expense and income taxes 105.5 126.1
Minority interests 19.1 23.5
Interest expense (net) 30.1 22.6
-------- --------
Income from continuing operations
before income taxes 56.3 80.0
Provision for income taxes 16.4 23.2
-------- --------
Income from continuing operations 39.9 56.8
Discontinued operation, net of
income taxes (Note 4) - (1.6)
-------- --------
Net income $ 39.9 $ 55.2
======== ========
Average number of shares 38.1 38.0
======== ========
Earnings (loss) per common share:
Continuing operations $ 1.05 $ 1.49
Discontinued operation - (0.04)
======== ========
Net income per common share $ 1.05 $ 1.45
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
FMC Corporation and Consolidated Subsidiaries
- ---------------------------------------------
Consolidated Balance Sheets
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(In millions, except share and per share data)
<TABLE>
<CAPTION>
March 31
1997 December 31
Assets: (Unaudited) 1996
----------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 52.0 $ 74.8
Trade receivables, net of allowances
of $10.9 in 1997 and 1996 1,013.3 1,001.9
Inventories 851.8 835.3
Other current assets 166.9 194.3
Deferred income taxes 84.4 86.8
------- -------
Total current assets 2,168.4 2,193.1
Investments 54.5 59.4
Property, plant and equipment at cost 4,277.8 4,284.2
Less -- accumulated depreciation 2,336.5 2,324.9
-------- --------
Net property, plant and equipment 1,941.3 1,959.3
Goodwill and intangible assets 476.3 498.8
Other assets 216.8 204.0
Deferred income taxes 69.5 75.2
-------- --------
Total assets $4,926.8 $4,989.8
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Short-term debt (Note 2) $ 462.8 $ 555.6
Accounts payable, trade and other 898.6 886.0
Accrued and other current liabilities 476.3 500.5
Current portion of long-term debt (Note 2) 21.9 10.4
Current portion of accrued pension
and other postretirement benefits 17.9 17.9
Income taxes payable 57.4 51.0
-------- --------
Total current liabilities 1,934.9 2,021.4
Long-term debt, less current portion (Note 2) 1,293.3 1,268.4
Accrued pension and other postretirement
benefits, less current portion 272.7 276.5
Reserve for discontinued operations (Note 4) 183.1 191.4
Other liabilities 232.9 236.9
Minority interests in consolidated companies 145.6 139.4
Stockholders' equity:
Preferred stock, no par value, authorized
5,000,000 shares; no shares issued in
1997 or 1996 - -
Common stock, $0.10 par value, authorized
60,000,000 shares; issued 37,564,892
shares in 1997 and 37,480,854 shares
in 1996 3.8 3.7
Capital in excess of par value 124.4 120.1
Retained earnings 846.7 806.8
Foreign currency translation adjustment (101.0) (65.5)
Treasury stock, common, at cost;
304,827 shares in 1997 and 300,427
shares in 1996 (9.6) (9.3)
-------- --------
Total stockholders' equity 864.3 855.8
-------- --------
Total liabilities and stockholders' equity $4,926.8 $4,989.8
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
FMC Corporation and Consolidated Subsidiaries
- ---------------------------------------------
Consolidated Statements of Cash Flows (Unaudited)
- -------------------------------------------------
(In millions)
<TABLE>
<CAPTION>
Three Months
Ended March 31
-----------------
1997 1996
------ ------
<S> <C> <C>
Reconciliation from income from continuing
operations to cash provided (required) by
operating activities of continuing operations:
Income from continuing operations $ 39.9 $ 56.8
Adjustments for non-cash components of income from
continuing operations:
Depreciation and amortization 63.5 59.8
Deferred income taxes 8.1 7.3
Minority interests 19.1 23.5
Other (14.5) 6.1
(Increase) decrease in assets:
Trade receivables (11.4) 5.9
Inventories (12.5) (83.9)
Other current assets and other assets 31.6 (54.2)
(Decrease) increase in liabilities:
Accounts payable, accrued and other current
liabilities and other liabilities (14.7) (84.8)
Income taxes payable 6.4 5.5
Restructuring reserve (0.9) (3.8)
Accrued pension and other postretirement
benefits, net (6.6) (2.9)
------ ------
Cash provided (required) by operating activities of
continuing operations $108.0 $(64.7)
====== ======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
FMC Corporation and Consolidated Subsidiaries
- ---------------------------------------------
Consolidated Statements of Cash Flows (Unaudited)
- -------------------------------------------------
(In millions)
<TABLE>
<CAPTION>
Three Months
Ended March 31
------------------
1997 1996
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<S> <C> <C>
Cash provided (required) by operating activities of
continuing operations $ 108.0 $ (64.7)
------- -------
Cash (required) by discontinued operations (8.3) (7.9)
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Cash provided (required) by investing activities:
Capital spending (78.4) (119.2)
Disposal of property, plant and equipment 20.0 22.9
Decrease in investments 10.1 4.4
------- -------
(48.3) (91.9)
------- -------
Cash provided (required) by financing activities:
Net (redemption of) proceeds from issuance of
commercial paper (176.4) 104.1
(Decrease) increase in other short-term debt (92.8) 116.1
Proceeds from issuance of long-term debt 44.7 -
Repayment of long-term debt (8.3) (29.0)
Net borrowings under credit facilities 170.8 5.0
Distributions to limited partner (13.7) (3.3)
Issuance of capital stock, net 4.1 9.4
------- -------
(71.6) 202.3
------- -------
Effect of exchange rate changes on cash and cash
equivalents (2.6) (1.1)
------- -------
(Decrease) increase in cash and cash equivalents (22.8) 36.7
Cash and cash equivalents, beginning of year 74.8 70.9
------- -------
Cash and cash equivalents, end of period $ 52.0 $ 107.6
======= =======
</TABLE>
Supplemental disclosure of cash flow information:
Cash paid for interest, net of amounts capitalized, was $34.0 million and $25.6
million, and net cash (received) paid for income taxes was $(9.0) million and
$0.7 million for the three-month periods ended March 31, 1997 and 1996,
respectively.
See accompanying notes to consolidated financial statements.
<PAGE>
FMC Corporation and Consolidated Subsidiaries
- ---------------------------------------------
Notes to Consolidated Financial Statements (Unaudited)
- ------------------------------------------------------
Note 1: Financial Information and Accounting Policies
- ------------------------------------------------------
The consolidated balance sheet of FMC Corporation ("FMC" or "the company") as of
March 31, 1997, and the related consolidated statements of income and cash flows
for the interim periods ended March 31, 1997 and 1996 have been reviewed by
FMC's independent accountants. The review is discussed more fully in their
report included herein. In the opinion of management, such financial statements
have been prepared in conformity with generally accepted accounting principles
and reflect all adjustments necessary for a fair statement of the results of
operations for the interim periods. All such adjustments are of a normal
recurring nature. The results of operations for the three-month periods ended
March 31, 1997 and 1996 are not necessarily indicative of the results of
operations for the full year.
Prior period balances have been reclassified to conform with the current
period's presentation, including the reclassification of operations constituting
the Precious Metals segment as a discontinued operation (Note 4).
The company's accounting policies are set forth in Note 1 to the company's 1996
financial statements which are incorporated by reference in the company's 1996
Annual Report on Form 10-K.
Note 2: Debt
- -------------
The company has $750 million in committed credit facilities consisting of a $300
million, 364-day non-amortizing revolving credit agreement due in December 1997
and a $450 million, five-year non-amortizing revolving credit agreement due in
December 2001. As of March 31, 1997, the company had advances under the five-
year revolving credit agreement of $120 million. No amounts were outstanding
under these facilities at December 31, 1996.
In November 1995, the company commenced a short-term commercial paper program
supported by the committed facilities. Outstanding commercial paper borrowings
totaled $219.9 million at March 31, 1997 ($390.6 million at December 31, 1996).
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, $219.9 million of outstanding
commercial paper and $110.1 million of borrowings under uncommitted U.S. credit
facilities have been classified as long-term debt at March 31, 1997. At
December 31, 1996, $390.6 million of outstanding commercial paper and $59.4
million of borrowings under uncommitted U.S. credit facilities were classified
as long-term debt.
In January 1997, the company registered $400 million of medium-term debt
securities pursuant to a $500 million universal shelf registration filed in 1995
under which, on January 29, 1997, the company issued $45 million of 7.32% notes
due in 2007. The net proceeds totaled $44.7 million and were used to retire
short-term borrowings. Additionally, on May 2, 1997, the company issued $25
million of notes due in 2002 at rates of 7.20% and 7.21%. The net proceeds of
$24.9 million were also used to retire short-term debt.
In July 1996, the company issued $100 million of 7.75% Senior Debentures due in
2011 under the 1995 universal shelf registration. The net proceeds totaled
$98.2 million and were used to reduce variable rate short-term debt.
Short-term debt at March 31, 1997 includes $235 million of advances under
uncommitted U.S. credit facilities. The remaining amount of short-term debt
consists of borrowings by FMC's foreign subsidiaries.
<PAGE>
Note 3: Recent Accounting Pronouncements
- -----------------------------------------
AICPA Statement of Position ("SOP") 96-1, "Environmental Remediation
Liabilities" was adopted by the company effective January 1, 1997. SOP 96-1
provides guidance on the recognition, measurement and display and disclosure of
environmental remediation liabilities. The adoption of SOP 96-1 did not have a
material impact on the company's consolidated financial position, results of
operations, cash flows or disclosure practices (see Note 6).
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per
Share" is effective for financial statements issued for periods ending after
December 15, 1997. SFAS No. 128 replaces Accounting Principles Board Opinion
("APB") No. 15 and simplifies the computation of earnings per share ("EPS") by
replacing the presentation of primary EPS with a presentation of basic EPS.
Basic EPS includes no dilution and is computed by dividing income available to
common stockholders by the weighted-average number of common shares outstanding
for the period. Diluted EPS reflects the potential dilution of securities that
could share in the earnings of the company, similar to fully diluted EPS under
APB No. 15. The Statement requires dual presentation of basic and diluted EPS
by entities with complex capital structures. FMC will adopt SFAS No. 128 for
the financial statements for the year ended December 31, 1997. Had the company
calculated earnings per share under the new Statement, basic EPS and diluted EPS
would have been $1.07 and $1.05, respectively, for the quarter ended March 31,
1997.
Note 4: Discontinued Operations
- --------------------------------
On July 15, 1996, FMC's management approved a plan to dispose of shares of FMC
Gold Company through a secondary offering of substantially all of FMC's interest
following a reincorporation of FMC Gold Company in Canada. In connection with
the approval of the plan of disposal, beginning in the second quarter of 1996,
the operations constituting the Precious Metals segment have been accounted for
as a discontinued operation. Prior period consolidated financial statements
presented herein have been restated for comparative purposes.
Upon completion of the reincorporation and offering in the third quarter of 1996
and the sale of outstanding rights to receive installment payments, FMC received
gross cash proceeds, including a dividend of $0.02 per share, of $210.7 million.
Amounts owing to FMC Gold Company totaling $79.2 million, and transaction and
other related costs aggregating $23.3 million were paid from proceeds or accrued
pending payment. FMC recorded a pretax gain of $9.4 million on the disposal of
FMC Gold Company during the third quarter of 1996.
The sale is subject to recourse (not to exceed Cdn$42.7 million) to the extent
the final installment payments of Cdn$2.50 per share, due July 31, 1997, are not
paid to Bank of Nova Scotia by the purchasers of the shares. Such installment
obligations are secured by stock of Meridian Gold Inc. The closing price of
Meridian Gold Inc. stock on April 16, 1997 was Cdn$6.12.
Sales and net losses of the Precious Metals segment for the three-month period
ended March 31, 1996 were as follows:
<TABLE>
<CAPTION>
Three Months
Ended March 31, 1996
---------------------
<S> <C>
Sales $17.8
Net loss $(1.6)
</TABLE>
Reserves for discontinued operations at March 31, 1997 and December 31, 1996,
respectively, were $183 million and $191 million. At March 31, 1997, $4 million
of the reserves related to liabilities associated with the sale of FMC Gold
Company, and the remainder related to operations discontinued between 1976 and
1984. See Note 3 to the company's December 31, 1996 financial statements and
Note 6 below.
<PAGE>
Note 5: Business Combinations and Divestitures
- -----------------------------------------------
Acquisition of Frigoscandia Equipment Holding AB. In June 1996, FMC acquired
all of the common shares of Frigoscandia Equipment Holding AB ("Frigoscandia"),
a wholly-owned subsidiary of ASG AB, for approximately $165 million plus
acquisition costs and debt assumed. Frigoscandia is a leading worldwide
manufacturer of freezers, ovens, fryers and other equipment for the food
processing industry. Frigoscandia's operations are included in the company's
Machinery and Equipment segment.
The acquisition was accounted for under the purchase method of accounting and,
accordingly, the purchase price was allocated to the assets acquired and
liabilities assumed based on the estimated fair value of such assets and
liabilities at the date of acquisition. In conjunction with the acquisition of
Frigoscandia, goodwill and other intangible assets of $164.4 million were
recorded during 1996.
Sale of Automotive Service Equipment Division. Effective March 31, 1996, FMC
sold its Automotive Service Equipment Division to Snap-on Incorporated. The
gain on the sale, net of 1996 operating losses, resulted in an immaterial pretax
gain for the quarter ended March 31, 1996. The Automotive Service Equipment
Division was included in the company's Machinery and Equipment segment.
Note 6: 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 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 the
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 provided reserves for potential environmental obligations which
management considers probable and for which a reasonable estimate of the
obligation could be made. Accordingly, reserves of $256 million and $264
million, before recoveries, have been provided at March 31, 1997 and December
31, 1996, respectively, of which $111 million and $117 million are included in
the reserve for discontinued operations at March 31, 1997 and December 31, 1996,
respectively. The company's total environmental reserves include approximately
$234 million and $242 million for remediation activities and $22 million and $22
million for remedial investigation/feasibility study costs at March 31, 1997 and
December 31, 1996, respectively. In addition, the company has estimated that
reasonably possible environmental loss contingencies may exceed amounts accrued
by as much as $150 million at March 31, 1997.
<PAGE>
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 Potentially Responsible Parties ("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.
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 interim status, the
failure to submit timely closure plans, the failure to implement an adequate
groundwater monitoring program, failure to comply with related reporting
requirements and the existence of several other improper treatment and disposal
practices. Although there are no legal proceedings pending at this time, FMC
has been advised that the matter has been referred to the United States
Department of Justice for an evaluation of whether to file a civil enforcement
action. If such a civil action is filed, the government is likely to demand
both injunctive relief and civil penalties. FMC is seeking to settle this
matter in advance of litigation. Management believes that the ultimate
resolution of this matter will not likely have a material adverse effect on
FMC's liquidity, results of operations or financial condition.
In a separate matter, 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 documenting the nature and extent of contamination from the site
on September 28, 1995. On April 21, 1997, the EPA issued for public comment its
proposed remediation plan for the site. The EPA's preferred remediation
alternative is a combination of capping, surface runoff controls and
institutional controls for soils, and extraction and recycling for hydraulic
control of groundwater. While the company is still reviewing the EPA's proposed
plans, FMC believes its existing reserve of approximately $73 million for future
environmental costs at the Eastern Michaud Flats site adequately provides for
the estimated costs of all known site environmental issues.
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.
Approximately $115 million of recoveries ($45 million as other assets and $70
million as an offset to the reserve for discontinued operations) have been
recorded as probable realization on claims against third parties at March 31,
1997 and December 31, 1996. The majority of recorded assets related to
recoveries from PRPs are associated with insurance companies and with existing
contractual arrangements with U.S. government agencies.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------ ---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
LIQUIDITY AND FINANCIAL CONDITION
---------------------------------
Total cash and cash equivalents at March 31, 1997 and December 31, 1996 were
$52.0 million and $74.8 million, respectively. As of March 31, 1997 and December
31, 1996, the company had total borrowings of $1,778.0 million and $1,834.4
million, respectively. Decreases in commercial paper borrowings of $171 million
(net of discount) were partially offset by $120 million of new advances under
the five-year revolving credit agreement. The company has $750 million in
committed credit facilities consisting of a $300 million, 364-day non-amortizing
revolving credit agreement due in December 1997 and a $450 million, five-year
non-amortizing revolving credit agreement due in December 2001. As of March 31,
1997, the company had advances under the five-year revolving credit agreement of
$120 million and commercial paper borrowings (supported by committed credit
facilities) of $219.9 million.
In 1995, the company filed a universal shelf registration under which $500
million of debt and/or equity securities may be offered. As discussed in Note 2,
in July 1996, the company issued $100 million of 7.75% Senior Debentures due in
2011 for net proceeds of $98.2 million. The net proceeds were used to reduce
variable rate short-term debt. In January 1997, the company registered $400
million of medium-term debt securities pursuant to the universal shelf
registration under which, on January 29, 1997, the company issued $45 million of
7.32% notes due in 2007. The net proceeds of $44.7 million were used to retire
short-term borrowings. Also under the medium-term debt registration, the company
issued $25 million of notes due in 2002 at rates of 7.20% and 7.21% on May 2,
1997. The net proceeds of $24.9 million were also used to retire short-term
debt.
Capital spending of $78.4 million for the three months ended March 31, 1997
decreased $40.8 million versus the first three months of 1996. The decrease is
primarily driven by lower spending in the company's chemical businesses. During
1996, FMC substantially completed an expansion of the Green River soda ash
facility and construction of a plant to manufacture a new family of herbicides.
Development of a new lithium resource in Argentina continues. The company
continues to evaluate potential acquisitions on an ongoing basis.
Expected cash requirements for the remainder of 1997 include approximately $250
million to $350 million for planned capital expenditures, excluding potential
acquisitions, and net after-tax interest payments of approximately $60 million
based on expected debt levels and interest rates. Cash to meet these
requirements will be provided primarily by the company's operations and, if
necessary, by existing cash balances and available short- or long-term credit
facilities.
During the second quarter of 1997, the company began a stock repurchase program.
The company will use the repurchased stock to cover stock options that may be
exercised during the year.
The company's ratios of earnings to fixed charges were 2.9x and 4.1x for the
three months ended March 31, 1997 and 1996, respectively. The decrease in the
three-month ratio from 1996 to 1997 primarily reflects the decrease in income
from continuing operations and higher interest charges resulting from increased
borrowings.
The company's foreign currency translation adjustment increased from $65.5
million at December 31, 1996 to $101.0 million at March 31, 1997 primarily as a
result of the weakening of the Spanish peseta, Belgian franc and Norwegian
krone.
<PAGE>
RESULTS OF OPERATIONS
First quarter 1997 compared to first quarter 1996
Industry Segment Data (Unaudited)
(In millions)
<TABLE>
<CAPTION>
Three Months Ended
March 31
-------------------
1997 1996
-------- ---------
<S> <C> <C>
Sales
Performance Chemicals $ 297.4 $ 304.1
Industrial Chemicals 235.5 241.9
Machinery and Equipment 467.0 322.9
Defense Systems 287.5 233.1
Eliminations (7.0) (7.7)
-------- --------
$1,280.4 $1,094.3
======== ========
Income from continuing
operations before income taxes (1)
Performance Chemicals $ 29.9 $ 38.9
Industrial Chemicals 35.2 38.4
Machinery and Equipment 16.5 13.5
Defense Systems 31.0 36.9
-------- --------
Operating profit 112.6 127.7
Corporate (23.3) (23.5)
Net interest expense (30.1) (22.6)
Other income and (expense), net (2.9) (1.6)
-------- --------
$ 56.3 $ 80.0
======== ========
</TABLE>
Business segment results are presented net of minority interest, reflecting only
FMC's share of earnings. The corporate line primarily includes staff expenses,
and other income and expense consists of all other corporate items.
(1) Results for all segments are net of minority interests in 1997 and 1996 of
$19.1 million and $23.5 million, respectively, of which $17.1 million and
$22.1 million, respectively, pertain to Defense Systems.
<PAGE>
General
- -------
Sales of $1.3 billion increased 17 percent from last year's quarter, driven by
growth in Machinery and Equipment (primarily due to higher sales of petroleum
equipment and to the acquisition of Frigoscandia Equipment Holding AB) and in
Defense. Operating profit from segment operations (net of minority interests)
totaled $113 million, compared with $128 million in last year's quarter,
reflecting lower dividend income from the company's joint venture in Turkey,
weakness in certain industrial chemical markets, a decline in sales of
agricultural products and higher pre-launch costs associated with Authority. Net
interest expense of $30 million increased from $23 million in last year's
period, reflecting higher debt levels associated with recent acquisitions and
capital expenditures, as well as working capital requirements related to
increased sales. Income from continuing operations decreased from $57 million,
or $1.49 per share, in the first quarter of 1996 to $40 million, or $1.05 per
share, in the first quarter of 1997. In the first quarter of 1997, net income
was $40 million and earnings per share were $1.05, compared with $55 million and
$1.45, respectively, in last year's period.
Performance Chemicals
- ---------------------
Performance Chemicals sales of $297 million decreased 2 percent compared with
sales of $304 million in last year's period. Agricultural products sales were
down in 1997 due to unusually high early purchases of product in North America
in the 1996 first quarter. Earnings also decreased from $39 million in last
year's period to $30 million in the 1997 quarter. The lower results were due
primarily to the decline in sales and higher pre-launch costs associated with
Authority. At the new Authority plant, major corrosion problems have been
resolved, and production rates continue to improve.
Sales of food ingredients, lithium, and bioproducts increased in the first
quarter 1997 due to higher volumes in North America, Europe and Asia. Earnings
of food ingredients increased due to higher sales, lower-cost product
introductions and moderating seaweed costs. Lithium profits were also ahead of
last year when weather-related manufacturing difficulties slowed production. The
company expects the initial start-up of the new lithium carbonate plant to begin
in the third quarter of 1997. The company expects the new plant technology to
result in cost reduction; however, the recent market price decline for lithium
carbonate, which was driven by increased foreign competition, will continue to
adversely affect FMC's upstream business for at least the short term.
Sales of pharmaceutical products increased in first quarter 1997 due to higher
volumes offset slightly by decreases related to foreign currency factors due to
the strengthening dollar impact on foreign sales. However, earnings decreased
slightly from the first quarter 1996 primarily due to costs associated with
implementing the SAP software system.
Industrial Chemicals
- --------------------
During the first quarter of 1997, Industrial Chemicals sales of $236 million
decreased 3 percent compared with 1996 sales of $242 million, primarily
reflecting lower sales volume of phosphorus products, as well as pricing
pressures on peroxygen products due to continuing weakness in the pulp and paper
market and overcapacity in the industry. The decline in earnings (net of
minority interest) from $38 million in the first quarter of 1996 to $35 million
in the 1997 quarter reflects lower sales of hydrogen peroxide partially offset
by improved earnings from the company's phosphorus products.
First quarter 1997 sales of alkali products increased over first quarter 1996
sales due to an increase in domestic and foreign soda ash volumes, partly offset
by lower prices. Soda ash earnings were down from the first quarter of 1996,
reflecting competitive pressure from low caustic soda prices, partially offset
by higher volumes from FMC's new capacity.
<PAGE>
Phosphorus sales decreased in the first quarter of 1997 compared with the 1996
period due to lower volumes. However, earnings increased from last year's
quarter due to sales mix and favorable raw material supply conditions.
Peroxygen sales and earnings decreased from the year-ago period due to lower
prices reflecting continuing weakness in the pulp and paper market. The company
will continue its efforts to improve its cost structure and increase
profitability in the hydrogen peroxide business.
FMC Foret sales were up slightly in the 1997 first quarter and earnings were
substantially unchanged.
Machinery and Equipment
- -----------------------
Machinery and Equipment sales of $467 million increased from $323 million in the
1996 first quarter, and profits of $17 million increased compared with $14
million in the prior-year period. These results reflect improvements in the
petroleum equipment business and the addition of Frigoscandia, which was
acquired at the end of the 1996 second quarter. Partially offsetting these
increases was the absence of sales of FMC's Automotive Service Equipment
Division, the sale of which resulted in a minor gain in the first quarter of
1996.
Petroleum equipment sales increased in the first quarter of 1997 primarily due
to increased sales to Statoil, Norway's state-owned oil company. Earnings also
increased as a result of the higher sales.
Sales of airline products increased in the first quarter of 1997 on continued
market strength. Earnings from airline products decreased from the 1996 first
quarter primarily as a result of lower margins on Jetway projects and also one-
time higher manufacturing costs from using a subcontractor to support increased
shipments of deicers.
Sales of energy and transportation measurement equipment in the first quarter of
1997 also increased from the 1996 period due to the timing of several large
orders; however, earnings decreased slightly due to costs associated with the
commercialization of technology acquired in late 1996.
Food processing systems sales decreased slightly from the year-ago period due to
the non-recurrence of certain large 1996 European equipment deliveries; however,
results increased slightly in the first quarter of 1997 due to improved sales
margins.
Defense Systems
- ---------------
Defense Systems sales of $288 million were up 23 percent from the first quarter
of 1996, driven primarily by higher vehicle sales, higher shipments on the
Paladin program and increased sales volumes for certain other products.
Operating profits (net of minority interest) of $31 million declined from $37
million in the prior year. The decrease in operating profits reflects an $11
million (net of minority interest) reduction in the dividend from the company's
joint venture in Turkey due to delayed sales caused by a plant fire in 1996,
partially offset by increased sales in other areas. Income from the Turkish
joint venture is recognized as dividends and royalties are received.
Ground Systems sales for the first quarter of 1997 remained relatively flat with
sales in the year-ago period. Earnings decreased in the first quarter of 1997
primarily due to contract settlements which benefited the first quarter of 1996.
Armament sales increased significantly during the first quarter of 1997 compared
to 1996. This increase was driven by higher sales volumes as well as higher
Crusader program revenues, which also positively impacted earnings during the
quarter.
<PAGE>
The Paladin production operation experienced a rise in sales reflecting higher
vehicle deliveries in the first quarter of 1997 compared with the same period in
1996. Earnings also increased during 1997 on the strength of higher sales.
First quarter 1997 sales of steel products increased significantly from 1996 due
to increased vehicle sales. Earnings decreased slightly in 1997 as a result of
higher manufacturing expenses related to vehicle rebuilds.
For the year ended December 31, 1997, sales in the defense segment are expected
to increase modestly compared with 1996 sales, and 1997 earnings are expected to
decline from 1996 as a result of lower margins and reduced dividends from the
company's Turkish joint venture.
Corporate and Other
- -------------------
Certain corporate income and expense items are not allocated to specific
business segments due to their nature. During the 1997 quarter, corporate
expenses remained flat at $23 million compared with the 1996 period. Net
interest expense increased due to higher debt levels associated with recent
acquisitions and capital expenditures, as well as higher working capital
requirements supporting increased sales. Additionally, the increase in interest
expense reflects reduced capitalization of interest in 1997 as a number of the
company's capital projects were completed.
The effective tax rate for the quarters ended March 31, 1997 and 1996 was 29
percent.
Order Backlog
- -------------
FMC's backlog of unfilled orders as of March 31, 1997 and December 31, 1996 was
$2.5 billion.
Machinery and Equipment backlog of $982 million increased from $923 million at
the end of 1996. The increase in backlog reflects the recognition of a portion
of the previously announced subsea order from Statoil, Norway's state-owned oil
company, and seasonal strength in the agricultural machinery and food
businesses. Defense backlog was $1.5 billion at the end of the quarter, slightly
down from $1.6 billion at December 31, 1996. Backlogs are not reported for
Industrial Chemicals or Performance Chemicals due to the nature of these
businesses.
Forward Looking Statements - Safe Harbor Provisions
- ---------------------------------------------------
This report contains certain forward looking statements which are based on
management's current views and assumptions regarding future events and financial
performance. These statements are qualified by reference to the section "Forward
Looking Statements -- Safe Harbor Provisions" in Item 1 of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996, which lists
important factors, including risks associated with significant price
competition, higher ingredient and raw material prices or shortages of such
commodities, risks associated with new product introductions, including the
development of new manufacturing processes, and risks relating to general
economic conditions, that could cause actual results to differ materially from
those discussed in this report.
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORTS
--------------------------------
A report by KPMG Peat Marwick LLP, FMC's independent accountants, on the
financial statements included in Form 10-Q for the quarter ended March 31, 1997
is included on page 16.
A report by Ernst and Young LLP, UDLP's independent accountants, on the
financial statements referred to by KPMG Peat Marwick LLP in its report noted
above is included on page 17.
<PAGE>
Independent Accountants' Report
-------------------------------
The Board of Directors
FMC Corporation:
We have reviewed the accompanying consolidated balance sheet of FMC Corporation
and consolidated subsidiaries as of March 31, 1997, and the related consolidated
statements of income and cash flows for the three-month periods ended March 31,
1997 and 1996. These consolidated financial statements are the responsibility of
the company's management.
We were furnished with the report of other accountants on their review of the
interim financial information of United Defense, L.P., whose total assets as of
March 31, 1997 and December 31, 1996 constituted 13% and whose total revenues
for the three month periods ended March 31, 1997 and 1996 constituted 23% of the
related consolidated totals.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review and the report of other accountants, we are not aware of any
material modifications that should be made to the accompanying financial
statements referred to above for them to be in conformity with generally
accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of FMC Corporation and consolidated
subsidiaries as of December 31, 1996 and the related consolidated statements of
income, cash flows and changes in stockholders' equity for the year then ended
(not presented herein); and in our report dated January 17, 1997, we expressed
an unqualified opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying consolidated balance
sheet as of December 31, 1996 is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
/s/ KPMG Peat Marwick LLP
Chicago, Illinois
April 16, 1997
<PAGE>
Independent Accountants' Review Report
--------------------------------------
Partners
United Defense, L.P.
Arlington, Virginia
We have reviewed the balance sheet of United Defense, L.P., as of March 31,
1997, and the related statements of income and cash flows for the three-month
periods ended March 31, 1997 and 1996, and the statement of partners' equity for
the three-month period ended March 31, 1997. These financial statements (not
presented separately in the FMC Corporation Form 10-Q for the quarter ended
March 31, 1997) are the responsibility of the Partnership's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data, and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, which will be performed
for the full year with the objective of expressing an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such an
opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the Partnership's financial statements referred to above for them to
be in conformity with generally accepted accounting principles.
/s/ Ernst and Young LLP
Washington, D.C.
April 14, 1997
<PAGE>
Part II - Other Information
---------------------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------ --------------------------------
(a) Exhibits
<TABLE>
<CAPTION>
Number in
Exhibit Table Description
- ------------- -----------
<S> <C>
10.1 FMC 1997 Compensation Plan for
Non-Employee Directors, as amended
April 18, 1997
10.3.a Amendment dated April 18, 1997 to
FMC 1990 Incentive Plan
10.10 FMC 1995 Stock Option Plan, as
amended April 18, 1997
11 Statement re: computation
of per share earnings
assuming full dilution
12 Statement re: computation of
ratios of earnings to fixed
charges
15 Letters re: unaudited
interim financial information
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K
-------------------
Form 8-K dated January 21, 1997 describing the company's results for the
fourth quarter of 1996 and the year ended December 31, 1996.
Form 8-K dated January 24, 1997 to file conformed copies of a U.S.
Distribution Agreement executed in connection with the proposed issuance
of Medium-Term Notes, Series A, together with a conformed copy of an
executed Indenture, a conformed copy of an executed Officers'
Certificate, forms of the Notes, the Opinion of Winston & Strawn and the
consent of Winston & Strawn for incorporation into the Registration
Statement.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FMC CORPORATION
---------------
(Registrant)
Date: May 15, 1997 /s/ Ronald D. Mambu
------------ ---------------------------------
Vice President, Controller and
duly authorized officer
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Number in
Exhibit Table Description
- ------------- -----------
<S> <C>
10.1 FMC 1997 Compensation Plan for
Non-Employee Directors, as amended
April 18, 1997
10.3.a Amendment dated April 18, 1997 to
FMC 1990 Incentive Plan
10.10 FMC 1995 Stock Option Plan, as
amended April 18, 1997
11 Statement re: computation
of per share earnings
assuming full dilution
12 Statement re: computation of
ratios of earnings to fixed
charges
15.1 Letter re: unaudited
interim financial
information (KPMG Peat Marwick LLP)
15.2 Letter re: unaudited
interim financial
information (Ernst & Young LLP)
27 Financial Data Schedule
</TABLE>
<PAGE>
EXHIBIT 10.1
FMC CORPORATION
1997 COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
-------------------------------------------------
(As amended April 18, 1997)
PART I. GENERAL PROVISIONS
---------------------------
1. Purpose. The purpose of the FMC Corporation 1997 Compensation Plan for
Non-Employee Directors is to provide a compensation program which will attract
and retain qualified individuals not employed by FMC Corporation or its
subsidiaries to serve on the Board of Directors of FMC Corporation and to
further align the interests of those directors with those of stockholders by
providing that a substantial portion of compensation will be linked directly to
increases in stockholder value.
2. Definitions. Except as otherwise defined herein, terms used herein in
capitalized form shall have the meanings attributed to them in Annex A to this
Plan.
3. Transition Rights. This Plan supersedes and replaces the Deferred Stock
Plan and the Retirement Plan. Participant rights and benefits accrued as of
December 31, 1996, under the Deferred Stock Plan and the Retirement Plan shall
remain in effect as provided in this Plan but no new rights or benefits shall
accrue pursuant to such plans.
4. Effective Date. This Plan shall be effective as of January 1, 1997.
PART II. CASH COMPENSATION
---------------------------
1. Annual Retainer. Each Participant shall be entitled to receive an Annual
Retainer in such amount as shall be determined from time to time by the Board of
Directors. Until changed by resolution of the Board of Directors the Annual
Retainer shall be $40,000 of which the Deferred Amount shall be paid in the form
of Common Stock Units as set forth in Part III and the remainder, if any, shall
be paid in cash in quarterly installments at the end of each calendar year
quarter. For purposes of this Plan, the Deferred Amount shall mean,
<PAGE>
with respect to each Participant, an amount equal to (i) $15,000, or such
greater amount as the Participant may have elected, through April 30, 1997 and
(ii) $25,000, or such greater amount as the Participant shall have elected in
accordance with the following sentence, after April 30, 1997. Not less than 60
days prior to the close of any Plan Year, a Participant may elect to increase
his or her Deferred Amount by providing written notice of such election to the
Corporate Secretary of the Company. Any such election shall be deemed to be
effective on the first day of the next succeeding Plan Year; provided that if
and to the extent Company, in its sole discretion, determines that the approval
of such election by the Board is necessary to assure that such election conforms
with Rule 16b-3, the effectiveness of such election shall be deferred until such
later date, if any, as such approval has been obtained.
2. Meeting Fees. Each Participant shall be entitled to receive a Meeting Fee,
in such amount as shall be determined from time to time by the Board of
Directors, for attending each meeting of the Board of Directors or a committee
of the Board of Directors, including extraordinary and/or special Board of
Directors and committee meetings. Until changed by resolution of the Board of
Directors the Meeting Fee shall be $1,000 per meeting, payable in cash at the
end of each calendar year quarter.
3. Committee Chairman Fees. Each Participant who serves as Chairman of a
committee of the Board of Directors shall be entitled to receive a Committee
Chairman Fee for the tenure of such service. Until changed by resolution of the
Board of Directors, the Committee Chairman Fee shall be paid in cash at an
annualized rate of $4,000 in equal installments at the end of each calendar year
quarter.
4. Retirement Benefits. Unless a Participant who was a non-employee director
on December 31, 1996, elects to convert his or her Accrued Retirement Benefits
to Common Stock Units pursuant to Section 1b. of Part III of this Plan, that
Participant shall be entitled to receive the following benefits upon the
termination of his or her service as a member of the Board of Directors:
a. Benefits. Benefits shall be paid to the Participant in quarterly
installments of $7,500 each. Payment of benefits will begin the quarter
following the Termination Date and will continue for the number of full years of
the Participant's service as a non-employee member of the Board of Directors
from the time of his or her first election as a director to and including April
30, 1997.
<PAGE>
b. Lump Sum Benefit. At the option of the Participant, which option
is exercisable by written notice to the Corporate Secretary of the Company, the
Participant may elect to receive in a lump sum the Actuarial Equivalent of
benefits otherwise payable. For purposes of this Plan, the term "Actuarial
Equivalent" means an amount equal to the amount expected to be received under
paragraph a., above, based on the following actuarial assumptions:
Interest - 6.5% or such other rate as
the Board may from time to
time prescribe
Mortality - Joint Mortality Group Annuity
Table 1983
c. Surviving Spouse Benefit. In the event of the death of a
Participant who is receiving benefits under this Plan, those benefits that would
otherwise have been payable to the Participant will be paid to the Participant's
surviving spouse. Such payments to a surviving spouse will terminate on the
earlier of the death of the surviving spouse or the date that benefit payments
to the Participant would have terminated had he/she not died.
PART III. STOCK COMPENSATION
-----------------------------
1. Deferred Stock Awards.
a. Annual Grant. Effective as of the first day of May of each Plan
Year, each Participant's Common Stock Account shall be credited with a number of
Common Stock Units equal to the number obtained by dividing the Deferred Amount
for the Plan Year beginning on such first day of May by the Fair Market Value of
the Common Stock on such date.
b. Conversion of Retirement Plan Benefits. By election dated not
later than February 14, 1997, each person who was a non-employee director of the
Company on December 31, 1996, may choose to have his or her Accrued Retirement
Benefits under the Retirement Plan converted into Common Stock Units. Such
conversions shall be made by calculating as of April 30, 1997 the lump-sum
present value of $2,500 per month times the number of months of Board service as
of April 30, 1997, assuming benefits commence upon retirement from the Board at
age 70, and using a discount rate of 6.5%. The number of Common Stock Units
shall be determined by dividing the lump-sum
<PAGE>
present value by $71.275, the Fair Market Value of the Common Stock on December
31, 1996.
2. Non-Qualified Stock Options.
a. Grant of Options. On the first day of May of each year (the
"Date of Grant") beginning in 1997, each Participant shall be granted an option
(the "Option") to purchase 900 shares of Common Stock, the intention being that
such Option should have an approximate present value of $24,000. The number of
shares to be subject to a grant of an Option may be increased or decreased by
the Board of Directors if it determines by any reasonable option valuation
methodology that the present value of such proposed Option exceeds or is less
than $24,000 by more than ten percent (10%). All Options granted under the Plan
shall have the terms set forth in this Section 2 of Part III and be non-
statutory options not entitled to special tax treatment under Section 422 of the
Internal Revenue Code of 1986, as amended.
b. Option Exercise Price. The per share price to be paid by each
Participant at the time an Option is exercised shall be 100% of the Fair Market
Value of the Common Stock on the Date of Grant.
c. Term of Option. Subject to subsection d., each option shall
expire on (i) the tenth anniversary of its Date of Grant or (ii) the fifth
anniversary of the termination of the Participant's service on the Board of
Directors, whichever is earlier.
d. Exercise and Vesting of Option. Each Option will vest on the
date of the annual stockholder's meeting next following the date the Option is
granted. Except as provided in the next sentence, if, for any reason, a
Participant ceases to serve on the Board of Directors prior to the date an
Option vests, such Option shall be forfeited and all further rights of the
Participant to or with respect to such Option shall terminate. If a Participant
should die while serving as a director of the Company, any vested Option may be
exercised by the person designated in such participant's last will and testament
or, in the absence of such designation, by the Participant's estate, in either
case on or before the expiration of the Option, and any unvested Option shall
vest and become exercisable in a proportionate amount, based on the full months
of service completed during the vesting period of the Option from the date of
grant to the date of death.
e. Method of Exercise and Tax Obligations. An Option may be
exercised at any time after it vests
<PAGE>
and before it expires by written notice of exercise to the Corporate Secretary
of FMC. Each notice of exercise shall be accompanied by the full purchase price
of the shares being purchased. Such payment may be made, at the election of the
Participant, in cash, check or shares of Common Stock, or in Common Stock Units,
valued using the Fair Market Value as of the exercise date or a combination
thereof. The Company may also require payment of the amount of any applicable
withholding tax attributable to the exercise of an Option or the delivery of
shares of Common Stock.
f. Nontransferability. An Option may be assignable and transferable
by a Participant by will or the laws of descent and distribution, and otherwise
only at the discretion of the Board of Directors.
3. Dividend Equivalent Rights. Outstanding Common Stock Units shall be
credited with Dividend Equivalent Rights based upon dividends paid on
outstanding shares of Common Stock between the date such Common Stock Units are
granted and the date of payment in respect of such Common Stock Units. Such
Dividend Equivalent Rights, once credited, shall be converted into an equivalent
number of Common Stock Units (including fractional Common Stock Units). If a
dividend is paid in cash, each Participant's Common Stock Account shall be
credited, as of each dividend payment date, in accordance with the following
formula:
(A x B)/C
in which "A" equals the number of Common Stock Units held by the Director on the
dividend payment date, "B" equals the cash dividend per share and "C" equals the
Fair Market Value per share of Common Stock on the dividend payment date. If a
dividend is paid in property other than cash, Dividend Equivalent Rights shall
be credited, as of the dividend payment date, in accordance with the formula set
forth above, except that "B" shall equal the fair market value per share of the
property which the director would have received in respect of the number of
shares of Common Stock equal to the number of Common Stock Units held by the
director as of the dividend payment date, had such shares been owned as of the
record date for such dividend.
4. Form of Payment.
a. Except as described in subsection b., payment in respect of
Common Stock Units shall be made in shares of Common Stock.
<PAGE>
b. Any payment made upon an occurrence of a Change in Control, shall
be made in a single lump sum cash payment. For purposes of the preceding, the
amount of cash delivered in full or partial payment of Common Stock Units shall
equal the Change in Control Price of the number of shares of Common Stock
relating to the Common Stock Units with respect to which such cash payment is
being made.
c. Except as described in section 4b. and in Section 6 of Part IV,
payments with respect to Common Stock Units shall be paid in annual installments
over a specified period of time or in a lump sum, all as the Participant may
elect and subject to change from time to time; provided, however, that no such
election, change or revocation will be given effect if it is made less than one
year in advance of the Participant's Termination Date.
d. The Company shall not issue fractions of shares. Whenever, under
the terms of the Plan, a fractional share would otherwise be required to be
issued, the Director shall be paid in cash for such fractional share.
5. Change in Capital Structure. In the event of any change in the Common
Stock by reason of any stock dividend, split, combination of shares, exchange of
shares, warrants or rights offering to purchase Common Stock at a price below
its fair market value, reclassification, recapitalization, merger, consolidation
or other change in capitalization, appropriate adjustment shall be made by the
Board of Directors in the number and kind of shares subject to the Plan and any
other relevant provisions of the Plan, whose determination shall be binding and
conclusive on all persons.
6. Nontransferability. Common Stock Units may be transferable by a
Participant by will or the laws of descent and distribution and otherwise only
at the discretion of the Board of Directors.
7. Rights. Except to the extent otherwise set forth herein, Participants
shall not have any of the rights of a stockholder with respect to the Common
Stock Units.
8. Common Stock Subject to the Plan. Common Stock to be issued under this
Plan may be made available from shares of Common Stock held in the treasury,
from Common Stock purchased in the open market and, provided they have been
reserved for issuance and listed on the New York Stock Exchange and all other
exchanges on which the
<PAGE>
Common Stock are listed, as appropriate, from authorized but unissued Common
Stock.
PART IV. ADDITIONAL PROVISIONS
-------------------------------
1. Administration. The Plan shall be administered by the Board of Directors.
A quorum of the Board of Directors for the purposes hereof shall consist of a
majority of its members who may act by vote of a majority of the members present
at a meeting at which a quorum is present or without a meeting by written
consent to the action taken. The Board of Directors shall have full power to
interpret the Plan, formulate additional details and regulations for carrying
out the Plan and amend or modify the Plan as from time to time it deems proper
and in the best interest of the Company, provided that after a Change in Control
no amendment, modification of or action to terminate the Plan may be made which
would affect compensation earned or accrued prior to such amendments,
modification or termination without the written consent of a majority of
Participants determined as of the day before a Change in Control. Any decision
or interpretation adopted by the Board of Directors shall be final and
conclusive.
2. Participation. All directors of the Company who are not employees of the
Company or any subsidiary or affiliate of the Company are Participants in the
Plan.
3. Statement of Account. Each Participant shall receive an annual statement
showing the number and status of and essential terms applicable to Common Stock
Units and Options that have been awarded to the Participant under the Plan.
4. Unsegregated Funds. The Company shall not segregate any funds or
securities during the Deferral Period and service as a non-employee director of
the Company shall constitute an acknowledgment and agreement by the Participant
that any interests of such Participant shall remain a part of the Company's
general funds and are subject to the claims of the Company's general creditors
during the Deferral Period. Nothing herein contained shall be construed as
creating any trust, express or implied, for the benefit of any Participant.
5. Payment of Certain Costs of the Participant. If a dispute arises regarding
the interpretation or enforcement of this Plan and the Participant (or in the
event of his or her death, his beneficiary) obtains a final judgment in his or
her favor from a court of competent jurisdiction from which no appeal may be
<PAGE>
taken, whether because the time to do so has expired or otherwise, or his or her
claim is settled by the Company prior to the rendering of such a judgment, all
reasonable legal and other professional fees and expenses incurred by the
Participant in contesting or disputing any such claim or in seeking to obtain or
enforce any right or benefit provided for in this Plan or in otherwise pursuing
his or her claim will be promptly paid by the Company with interest thereon at
the highest Illinois statutory rate for interest on judgments against private
parties from the date of payment thereof by the Participant to the date of
reimbursement by the Company.
6. Payments of Stock Upon Death. In the event of a Director's death, payments
with respect to any Common Stock Units shall be made in a single lump sum
payment in Common Stock to the beneficiary designated by the Director or, in the
absence of an executed beneficiary form, to the person legally entitled thereto,
as designated under his or her will, or to such heirs as determined under the
laws of intestacy for the jurisdiction of his or her domicile.
7. Reservation of Rights. Nothing in this Plan shall be construed to (a) give
any Participant any right to defer compensation received for services as a
director of the Company other than as expressly authorized and permitted in this
Plan or in any other plan or arrangement approved by the Board of Directors, (b)
create any obligation on the part of the Board of Directors to nominate any
Participant for reelection by the Company's stockholders or (c) limit in any way
the right of the Company's Board of Directors to remove a Participant as a
director of the Company.
8. Amendment or Termination. The Company's Board of Directors may, at any
time, terminate or amend this Plan provided that no such termination or
amendment shall adversely affect the rights of Participants or beneficiaries of
Participants, including rights with respect to Common Stock Units or shares of
Common Stock credited prior to such termination or amendment, without the
consent of the Participant or, if applicable, the Participant's beneficiaries.
9. Regulatory Compliance and Listing. The issuance or delivery of any shares
of Common Stock deliverable hereunder may be postponed by the Company for such
period as may be required to comply with any applicable requirements under the
federal securities laws, any applicable listing requirements of any national
securities exchange and requirements under any other law or regulation
applicable to the issuance or delivery of
<PAGE>
such shares, and the Company shall not be obligated to issue or deliver any such
shares if the issuance or delivery of such shares shall constitute a violation
of any provision of any law or of any regulation of any governmental authority
or any national securities exchange.
10. Withholding. The Company shall have the right to deduct or withhold from
all payments of compensation any taxes required by law to be withheld with
respect to such payments.
11. Pooling of Interests. Notwithstanding any other provision of the Plan to
the contrary, in the event that the consummation of a Change in Control is
contingent on using pooling of interests accounting methodology, the Board may
take any action necessary to preserve the use of pooling of interest accounting.
12. Change in Law. If, for any reason, the anticipated benefits of the
deferral of any Deferred Compensation pursuant to this Plan or any provision
hereof are frustrated by reason of any interpretation of or change in law,
policy or regulation, the Board of Directors may, at its discretion, terminate
the deferral arrangement or delete or suspend the operation of such provision.
13. Governing Law. This Plan shall be governed by the laws of the State of
Delaware without regard to its choice of law or conflict of law provisions.
<PAGE>
ANNEX A
TO
1997 COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
--------------------------
The following terms when used in the FMC Corporation 1997 Compensation Plan for
Non-Employee Directors shall have the meaning set forth opposite the term:
a. "Accrued Retirement Benefits" means the payment or payments to which a
Participant would be entitled at his or her Termination Date under the
Retirement Plan for service as a director through April 30, 1997.
b. "Annual Retainer" means the retainer fee established by the Board of
Directors, and paid to a director for services on the Board of Directors for a
Plan Year.
c. "Board of Directors" or "Board" means the Board of Directors of FMC
Corporation as it may be constituted from time to time.
d. A "Change in Control" means:
(1) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the "1934 Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the 1934 Act) of voting
securities of the Company where such acquisition causes such Person to own
20% or more of the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided, however,
that for purposes of this subsection (1), the following acquisitions shall
not be deemed to result in a Change of Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company or
(iv) any acquisition by any corporation pursuant to a transaction that
complies with clauses (i), (ii) and (iii) of subsection (3) below; and
provided, further, that if any Person's beneficial ownership of the
Outstanding Company Voting Securities reaches or
<PAGE>
exceeds 20% as a result of a transaction described in clause (i) or (ii)
above, and such Person subsequently acquires beneficial ownership of
additional voting securities of the Company, such subsequent acquisition
shall be treated as an acquisition that causes such Person to own 20% or
more of the Outstanding Company Voting Securities; or
(2) Individuals who, as of the date hereof, constitute the Board
of Directors (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board of Directors; provided, however, that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's stockholders, was
approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board; or
(3) The approval by the stockholders of the Company of a
reorganization, merger, consolidation, sale or other disposition of all or
substantially all of the assets of the Company ("Business Combination") or,
if consummation of such Business Combination is subject, at the time of
such approval by stockholders, to the consent of any government or
governmental agency, the obtaining of such consent (either explicitly or
implicitly by consummation); excluding, however, such a Business
Combination pursuant to which (i) all or substantially all of the
individuals and entities who were the beneficial owners of the Outstanding
Company Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of, respectively,
the then outstanding shares of common stock and the combined voting power
of the then outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting
from such Business Combination (including, without limitation, a
corporation that as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or through one or
more subsidiaries) in
<PAGE>
substantially the same proportions as their ownership, immediately prior to
such Business Combination of the Outstanding Company Voting Securities,
(ii) no Person (excluding any employee benefit plan (or related trust) of
the Company or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of, respectively,
the then outstanding shares of common stock of the corporation resulting
from such Business Combination or the combined voting power of the then
outstanding voting securities of such corporation except to the extent that
such ownership existed prior to the Business Combination and (iii) at least
a majority of the members of the board of directors of the corporation
resulting from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement, or of the
action of the Board of Directors, providing for such Business Combination;
or
(4) Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
e. "Change in Control Price" means the higher of (i) if applicable, the
price paid for the Common Stock in the transaction constituting Change in
Control and (ii) the reported closing price of the Common Stock on the New York
Stock Exchange on the last trading day preceding the date of the Change in
Control.
f. "Committee Chairman Fee" means the fee established by the Board of
Directors and paid to a director for service as Chairman of any committee of the
Board of Directors.
g. "Common Stock" means (i) the common stock of the Company, par value
$.10 per share, adjusted as provided in Section 6 of Part III or (ii) if there
is a merger or consolidation and the Company is not the surviving corporation,
the capital stock of the surviving corporation given in exchange for such common
stock of the Company.
h. "Common Stock Account" means the account to which a Participant's
Common Stock Units are credited from time to time.
i. "Common Stock Unit" means a right to receive one share of Common
Stock.
j. "Company" means FMC Corporation.
<PAGE>
k. "Deferred Compensation" means the portion of the Annual Retainer
payable to a Participant in the form of Common Stock Units as determined in
accordance with Section 1 of Part II of the Plan.
l. "Deferral Period" means the time during which a person is a non-
employee director of the Company.
m. "Deferred Amount" has the meaning given it in Section 1 of Part II of
the Plan.
n. "Deferred Stock Plan" means the FMC Deferred Stock Plan for Non-
Employee Directors as amended and restated as of December 6, 1996.
o. "Dividend Equivalent Rights" shall mean a right, described in Section
3 of Part III hereof, of a holder of Common Stock Units with respect to
dividends paid on outstanding shares of Common Stock.
p. "Fair Market Value" means the average closing price for a share of
Common Stock as reported in the New York Stock Exchange Composite Transactions
on the last ten trading days immediately preceding the date on which the Fair
Market Value is to be determined.
q. "Meeting Fees" shall mean the fees, established by the Board of
Directors, paid to a director for attending a meeting of the Board of Directors
or a committee of the Board of Directors including extraordinary or special
Board of Directors and/or committee meetings.
r. "Participant" or "Participants" means all members of the Board of
Directors who are not employees of the Company or any subsidiary or affiliates
of the Company.
s. "Plan" means the FMC 1997 Compensation Plan for Non-Employee
Directors.
t. "Plan Year" means May 1 to April 30.
u. "Retirement Plan" means the FMC Directors' Retirement Plan, as
amended.
v. "Rule 16b-3" means Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended and any successor statutes or regulations of
similar purpose or effect.
w. "Termination Date" shall mean the date the Participant's service on
the Board of Directors terminates for any reason.
<PAGE>
Exhibit 10.3.a
Amendment dated April 18, 1997 to FMC 1990 Incentive Share Plan
(incorporated by reference from Exhibit 10.1 to the Form SE filed on March 26,
1991).
- -------------------------------------------------------------------------------
Section 7(f)(i) be and it hereby is amended by deleting the parenthetical
phrase "(to the extent otherwise exercisable)" and substituting in place thereof
the words ",whether or not then exercisable".
<PAGE>
EXHIBIT 10.10
FMC 1995 STOCK OPTION PLAN
--------------------------
(As Amended 4/18/97)
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
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
'95 Stock Option Plan
Page 1
<PAGE>
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) "Option Expiration Date" means the date on which an Option ultimately
becomes unexercisable either by reason of the lapse of time or otherwise.
(r) "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.
(s) "Participant" means an Employee who has received an Award which has not
been exercised, cancelled or forfeited and which has not expired.
(t) "Plan" means the FMC 1995 Stock Option Plan.
(u) "Plan Year" means each calendar year commencing on or after January 1,
1995.
(v) "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
'95 Stock Option Plan
Page 2
<PAGE>
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.
(w) "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.
(x) "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.
'95 Stock Option Plan
Page 3
<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.
'95 Stock Option Plan
Page 4
<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.
'95 Stock Option Plan
Page 5
<PAGE>
(d) Payment for Stock. Payment for Common Stock purchased upon the exercise
(in whole or in part) of an Option shall 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, any Nonqualified Stock Option granted
pursuant to the Plan outstanding at the time, whether or not then
exercisable, 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) Five years after termination or the Option Expiration Date,
whichever is earlier, if termination is due to Disability or
retirement under the terms of any formal retirement plan of any FMC
Company;
(B) One year after the date of termination or the Option
Expiration Date, whichever is earlier, if termination is due to death;
or
(C) Three months after the date of termination or the Option
Expiration Date, whichever is earlier, if employment is terminated for
any reason other than death, Disability or retirement under the terms
of any formal retirement plan of any FMC Company;
provided that no Option may be exercised before it becomes fully
exercisable at the time designated by the Committee in the Option.
(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;
'95 Stock Option Plan
Page 6
<PAGE>
(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 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.
'95 Stock Option Plan
Page 7
<PAGE>
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.
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 and 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
'95 Stock Option Plan
Page 8
<PAGE>
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.
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.
'95 Stock Option Plan
Page 9
<PAGE>
(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 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
'95 Stock Option Plan
Page 10
<PAGE>
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 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.
'95 Stock Option Plan
Page 11
<PAGE>
FMC Corporation
Quarterly Report
on Form 10-Q for
March 31, 1997
Exhibit 11 Statement re:
-------------
Computation of Per Share Earnings Assuming
------------------------------------------
Full Dilution (Unaudited)
-------------------------
(In thousands, except per share data)
-------------------------------------
<TABLE>
<CAPTION>
Three Months
Ended March 31
------------------
1997 1996
------- -------
<S> <C> <C>
Earnings:
Net income $39,949 $55,213
======= =======
Shares:
Average number of shares of
common stock and common
stock equivalents
outstanding 38,135 37,993
Additional shares assuming
conversion of stock options 7 85
------- -------
Pro forma shares 38,142 38,078
======= =======
Earnings per common share
assuming full dilution $ 1.05 $ 1.45
======= =======
</TABLE>
<PAGE>
FMC Corporation
Quarterly Report
on Form 10-Q for
March 31, 1997
Exhibit 12 Computation of Ratios of Earnings to Fixed Charges
(In millions, except ratio data)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------
1997 1996
--------- ---------
<S> <C> <C>
Earnings:
Income from continuing operations
before income taxes $ 56.3 $ 80.0
Minority interests 19.1 23.5
Undistributed (earnings) losses of
affiliates (5.2) (2.9)
Interest expense and amortization
of debt discount, fees and expenses 31.9 24.0
Amortization of capitalized interest 1.8 1.8
Interest included in rental expense 4.2 3.7
------ ------
Total earnings $108.1 $130.1
====== ======
Fixed charges:
Interest expense and amortization
of debt discount, fees and expenses $ 31.9 $ 24.0
Interest capitalized as part of
fixed assets 0.6 3.7
Interest included in rental expense 4.2 3.7
------ ------
Total fixed charges $ 36.7 $ 31.4
====== ======
Ratio of earnings to fixed charges 2.9x 4.1x
====== ======
</TABLE>
<PAGE>
FMC Corporation
Quarterly Report
on Form 10-Q for
March 31, 1997
Exhibit 15.1 Letter re: Unaudited Interim Financial Information
FMC Corporation
Chicago, Illinois
Ladies and Gentlemen:
Re: Registration Statement No. 33-10661, No. 33-7749, No. 33-41745, No. 33-
48984, No. 333-18383 and No. 333-24039 on Form S-8 and Registration Statement
No. 33-62415 and No. 33-45648 on Form S-3.
With respect to the subject registration statements, we acknowledge our
awareness of the incorporation by reference therein of our report dated April
16, 1997 related to our review of interim financial information.
Pursuant to Rule 436(c) under the Securities Act of 1933, such report is not
considered part of a registration statement prepared or certified by an
accountant or a report prepared or certified by an accountant within the meaning
of Sections 7 and 11 of the Act.
Very truly yours,
/s/ KPMG Peat Marwick LLP
Chicago, Illinois
May 9, 1997
<PAGE>
FMC Corporation
Quarterly Report
on Form 10-Q for
March 31, 1997
Exhibit 15.2 Letter re: Unaudited Interim Financial Information
May 9, 1997
Partners
United Defense, L.P.
We are aware of the incorporation by reference in the Registration Statements
(Form S-3 No. 33-62415, Form S-3 No. 33-45648, Form S-8 No. 33-10661, Form S-8
No. 33-7749, Form S-8 No. 33-41745, Form S-8 No. 33-48984, Form S-8 No. 333-
18383 and Form S-8 333-24039) of FMC Corporation for the registration of its
debt and equity securities of our report dated April 14, 1997 relating to the
unaudited interim financial statements of United Defense, L.P. which is included
in the Form 10-Q of FMC Corporation for the quarter ended March 31, 1997.
Pursuant to Rule 436(c) of the Securities Act of 1933, our report is not a part
of the registration statements prepared or certified by accountants within the
meaning of Section 7 or 11 of the Securities Act of 1933.
/s/ Ernst & Young LLP
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
FMC Corporation Form 10-Q for the quarter ended March 31, 1997 and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 52
<SECURITIES> 0
<RECEIVABLES> 1024
<ALLOWANCES> 11
<INVENTORY> 852
<CURRENT-ASSETS> 2168
<PP&E> 4278
<DEPRECIATION> 2337
<TOTAL-ASSETS> 4927
<CURRENT-LIABILITIES> 1935
<BONDS> 1293
0
0
<COMMON> 4
<OTHER-SE> 861
<TOTAL-LIABILITY-AND-EQUITY> 4927
<SALES> 1280
<TOTAL-REVENUES> 1298
<CGS> 978
<TOTAL-COSTS> 978
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 32
<INCOME-PRETAX> 56
<INCOME-TAX> 16
<INCOME-CONTINUING> 40<F1>
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 40
<EPS-PRIMARY> 1.05
<EPS-DILUTED> 0
<FN>
<F1> Income from continuing operations before income taxes is net of minority
interest of 19 for March 31, 1997. Minority interests are primarily limited
partner's share of partnership profits for which tax has not been provided.
</FN>
</TABLE>
