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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
December 11, 1997
FMC CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 1-2376 94-0479804
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
200 East Randolph Drive, Chicago, Illinois 60601
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(Address of principal executive offices) Zip Code)
(312) 861-6000
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Registrant's telephone number,
including area code
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Item 5. Other Events
On December 11, 1997, FMC Corporation issued the following release:
FMC ANNOUNCES LOWER EXPECTATIONS FOR FOURTH QUARTER, REPORTS INCREASED GAIN ON
DEFENSE SALE AND DETAILS PLANS FOR CHARGES IN QUARTER
Chicago, December 11, 1997 -- FMC Corporation today announced that it expects
fourth quarter earnings from continuing operations, before asset impairments and
other charges, to be below expectations at $0.45 to $0.55 per share. Market
weakness in some specific agricultural products and industrial chemicals
markets, a strike at a major hydrogen peroxide customer, and continuing start-up
problems at the Authority herbicide plant account for the shortfall.
FMC also announced that the pre-tax gain from the sale of United Defense
is $318 million, or $180 million after taxes, up from the earlier pre-tax
estimate of approximately $300 million.
In addition, the company announced plans to take charges of $265 million before
taxes, or $181 million after taxes, for continuing operations, covering fourth
quarter events that include asset impairments and restructuring costs for
certain businesses. FMC also plans to take an additional charge of $45 million,
or $27 million after taxes, for environmental costs at discontinued operations.
"Results for the quarter are disappointing, but represent an operational
setback, not a change, to our long-term potential," said Robert N. Burt, FMC
chairman and chief executive. "Although weak market conditions in Industrial
Chemicals will persist in 1998, we expect a strong rebound in agricultural
products and continued growth over 1997's record performance in Machinery and
Equipment. Based on these business expectations and the impact of the charges,
we are comfortable with consensus earnings expectations for 1998. We continue
to believe FMC stock is an excellent investment and will continue our stock
repurchase program at planned levels."
Fourth Quarter Shortfalls
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Lower expected results from agricultural products reflect sales shortfalls in
Southeast Asia and Brazil, the manufacturing variances associated with decreases
in production to adjust inventory levels to compensate for these sales
shortfalls and those in the cotton pyrethroid market, as well as continuing
higher costs at the Authority herbicide plant, pending a major process change
planned in February.
The shortfall in Industrial Chemicals is the result of lower prices in
phosphorus chemicals, sodium cyanide and hydrogen peroxide, as well as a strike
at a major hydrogen peroxide customer. Hydrogen peroxide prices continue to
fall to more competitive rates as higher-priced, multi-year contracts are
renewed. Hydrogen peroxide volumes also are lower than expected, based on
reduced demand from Canadian pulp markets, as well as the strike. Phosphorus
chemicals prices are down, reflecting increased international competition,
driven by a strong dollar. In addition, the precipitous decline in gold prices
and resulting mining activity is putting pressure on margins in the sodium
cyanide business.
Asset Impairments and Other Charges
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Charges of $265 million before taxes associated with continuing operations
include asset impairments of $229 million, primarily relating to the phosphorus
chemicals and process additives businesses, as well as $36 million to cover cost
reduction and restructuring activities at several businesses, including the
agricultural products organization.
In the phosphorus chemicals business, asset impairments of $120 million before
taxes are based on recently increased environmental capital costs estimates and
difficult market conditions resulting from increased international competition.
Based on an agreement being negotiated with the U.S. government, these increased
capital costs include environmental projects to reduce air emissions and meet
waste handling and waste pond treatment requirements at our Pocatello, Idaho,
facility.
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In the process additives business, asset impairments of $46 million before taxes
reflect lower prices due to increased market competition in the flame retardant
and water treatment businesses, as well as the strength of the British pound,
which is expected to result in lower margins for the business.
Additional asset impairments of $63 million before taxes primarily relate to a
partial re-engineering of the Authority herbicide plant and the write-off of
certain impaired assets at both the lithium facility in North Carolina and at
the food ingredients facility in Ireland.
Environmental charges of $45 million before taxes provide for required
remediation efforts at a number of smaller, previously discontinued sites.
FMC Corporation is one of the world's leading producers of chemicals and
machinery for industry and agriculture. FMC employs approximately 17,000 people
at 100 manufacturing facilities and mines in 22 countries. The company divides
its businesses into three major segments: Performance Chemicals, Industrial
Chemicals and Machinery and Equipment.
Safe Harbor Statement under the Private Securities Litigation Act of 1995:
Statements in this news release that are forward-looking statements are subject
to various risks and uncertainties concerning the specific factors identified
above and in the corporation's Form 10-K report and other SEC filings. Such
information contained herein represents management's best judgment as of the
date hereof based on information currently available. The corporation does not
intend to update this information and disclaims any legal liability to the
contrary.
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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
By /S/ J. Paul McGrath
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J. Paul McGrath
Senior vice president, general
counsel and secretary
Date December 11, 1997
