<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 June 30, 1998
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
------------------------------- -------------------
(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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(Address of principal executive offices) (Zip Code)
(312) 861-6000
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(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 June 30, 1998
- --------------------------------------- ----------------------------
Common Stock, par value $0.10 per share 34,527,456
<PAGE>
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
ITEM 1. FINANCIAL STATEMENTS
FMC Corporation and Consolidated Subsidiaries
Consolidated Statements of Income (Unaudited)
- ---------------------------------------------
(In millions, except per share data)
Three Months Six Months
Ended June 30 Ended June 30
------------------ --------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue:
Sales $1,129.4 $1,134.3 $2,151.8 $2,127.2
Other revenue 25.7 18.6 42.3 28.1
-------- -------- -------- --------
Total revenue 1,155.1 1,152.9 2,194.1 2,155.3
-------- -------- -------- --------
Costs and expenses:
Cost of sales 846.1 830.3 1,620.0 1,583.6
Selling, general and
administrative expenses 150.9 169.6 316.1 317.3
Research and development 37.8 41.9 76.0 83.0
-------- -------- -------- --------
Total costs and expenses 1,034.8 1,041.8 2,012.1 1,983.9
-------- -------- -------- --------
Income from continuing operations
before minority interests,
net interest expense, income taxes
and cumulative effect of change in
accounting principle 120.3 111.1 182.0 171.4
Minority interests 0.9 2.9 1.8 5.3
Interest expense (net) 28.2 28.7 52.8 58.8
-------- -------- -------- --------
Income from continuing operations
before income taxes and
cumulative effect of change in
accounting principle 91.2 79.5 127.4 107.3
Provision for income taxes 23.6 18.9 33.0 25.4
-------- -------- -------- --------
Income from continuing operations
before cumulative effect of
change in accounting principle 67.6 60.6 94.4 81.9
Discontinued operation, net of
income taxes (Note 4) - 12.1 - 30.8
-------- -------- -------- --------
Income before cumulative effect
of change in accounting
principle 67.6 72.7 94.4 112.7
Cumulative effect of change in
accounting principle, net of
income taxes (Note 3) - - (36.1) -
-------- -------- -------- --------
Net income $ 67.6 $ 72.7 $ 58.3 $ 112.7
======== ======== ======== ========
(continued)
</TABLE>
Page 2
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FMC Corporation and Consolidated Subsidiaries
Consolidated Statements of Income (Unaudited)(Continued)
- --------------------------------------------------------
(In millions, except per share data)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
------------------ --------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Basic earnings per common share:
Continuing operations $ 1.95 $ 1.63 $ 2.72 $ 2.20
Discontinued operation - 0.32 - 0.82
Cumulative effect of change
in accounting principle - - (1.04) -
-------- -------- -------- --------
Net income per common share $ 1.95 $ 1.95 $ 1.68 $ 3.02
======== ======== ======== ========
Average number of shares used
in basic earnings per share
computations 34.6 37.2 34.7 37.2
======== ======== ======== ========
Diluted earnings per common share:
Continuing operations $ 1.89 $ 1.58 $ 2.64 $ 2.14
Discontinued operation - 0.32 - 0.81
Cumulative effect of change in
accounting principle - - (1.01) -
-------- -------- -------- --------
Net income per common share $ 1.89 $ 1.90 $ 1.63 $ 2.95
======== ======== ======== ========
Average number of shares used in
diluted earnings per share
computations 35.7 38.3 35.7 38.2
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
FMC Corporation and Consolidated Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
(In millions, except share and per share data) June 30
1998 December 31
Assets: (Unaudited) 1997
---------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 70.0 $ 62.7
Trade receivables, net of allowance for
doubtful accounts of $19.0 in 1998 and
$10.4 in 1997 814.1 834.2
Inventories 592.2 524.1
Other current assets 216.2 210.4
Deferred income taxes 73.9 84.2
-------- --------
Total current assets 1,766.4 1,715.6
Investments 36.6 35.9
Property, plant and equipment at cost 3,782.8 3,655.2
Less -- accumulated depreciation 2,084.9 1,975.9
-------- --------
Net property, plant and equipment 1,697.9 1,679.3
Goodwill and intangible assets 403.7 420.4
Other assets 144.4 174.1
Deferred income taxes 88.6 87.8
-------- --------
Total assets $4,137.6 $4,113.1
======== ========
Liabilities and Stockholders' Equity:
Current liabilities:
Short-term debt (Note 2) $ 174.3 $ 186.4
Accounts payable, trade and other 645.3 663.5
Accrued and other current liabilities 468.3 477.8
Current portion of long-term debt (Note 2) 4.8 14.0
Current portion of accrued pensions and
other postretirement benefits 17.0 17.0
Income taxes payable 48.7 105.8
-------- --------
Total current liabilities 1,358.4 1,464.5
Long-term debt, less current portion (Note 2) 1,285.2 1,140.2
Accrued pension and other postretirement
benefits, less current portion 240.9 246.5
Reserve for discontinued operations (Note 4) 200.3 231.3
Other liabilities 218.8 212.0
Minority interests in consolidated companies 57.4 58.0
Stockholders' equity:
Preferred stock, no par value, authorized
5,000,000 shares; no shares issued in
1998 or 1997 - -
Common stock, $0.10 par value, authorized
130,000,000 shares; issued 38,159,433
shares in 1998 and 37,875,549 shares
in 1997 (Note 6) 3.8 3.8
Capital in excess of par value
of common stock 156.9 141.0
Retained earnings 1,027.5 969.2
Foreign currency translation adjustment (145.0) (135.7)
Treasury stock, common, at cost;
3,631,977 shares in 1998 and 2,951,573
shares in 1997 (266.6) (217.7)
-------- --------
Total stockholders' equity 776.6 760.6
-------- --------
Total liabilities and stockholders' equity $4,137.6 $4,113.1
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
Page 4
<PAGE>
FMC Corporation and Consolidated Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
(In millions)
<TABLE>
<CAPTION>
Six Months
Ended June 30
----------------
1998 1997
------ ------
<S> <C> <C>
Reconciliation from income from continuing
operations before cumulative effect of change
in accounting principle to cash provided
by operating activities of continuing
operations:
Income from continuing operations before cumulative
effect of change in accounting principle $ 94.4 $ 81.9
Adjustments for non-cash components of
income from continuing operations:
Depreciation and amortization 102.4 119.8
Deferred income taxes 9.5 11.0
Minority interests 1.8 5.3
Other (27.6) (21.2)
(Increase) decrease in assets:
Trade receivables 20.1 (3.6)
Inventories (68.1) (51.2)
Other current assets and other assets (14.8) 33.0
(Decrease) increase in liabilities:
Accounts payable, accrued and other
current liabilities and other liabilities (20.8) 98.0
Income taxes payable (46.8) 6.8
Accrued pension and other
postretirement benefits, net (4.4) (8.8)
------ ------
Cash provided by operating activities
of continuing operations $ 45.7 $271.0
====== ======
</TABLE>
Page 4 (continued)
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FMC Corporation and Consolidated Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)(Continued)
(In millions)
<TABLE>
<CAPTION>
Six Months
Ended June 30
--------------------
1998 1997
------- -------
<S> <C>
Cash provided by operating activities
of continuing operations $ 45.7 $ 271.0
------- -------
Cash provided (required) by discontinued operations (31.0) 32.2
------- -------
Cash provided (required) by investing
activities:
Capital spending (121.2) (158.8)
Disposal of property, plant and equipment 28.5 30.6
Decrease in investments 4.2 9.0
------- -------
(88.5) (119.2)
------- -------
Cash provided (required) by financing
activities:
Net repayments of commercial paper (158.5) (281.2)
Net decrease in other short-term debt (12.1) (188.7)
Net borrowings under credit facilities 144.8 270.8
Proceeds from issuance of long-term debt 169.1 69.6
Repayment of long-term debt (23.3) (12.5)
Distributions to limited partner (2.8) (4.3)
Repurchases of common stock (48.9) (10.3)
Issuance of common stock 15.8 9.1
------- -------
84.1 (147.5)
Effect of exchange rate changes on cash
and cash equivalents (3.0) (5.7)
------- -------
Increase in cash and cash equivalents 7.3 30.8
Cash and cash equivalents, beginning
of year 62.7 74.8
------- -------
Cash and cash equivalents, end of period $ 70.0 $ 105.6
======= =======
</TABLE>
Supplemental disclosure of cash flow information:
Cash paid for interest, net of amounts capitalized, was $55.9 million and $55.0
million, and net cash paid for income taxes (including taxes paid related to
Defense Systems operations) was $65.3 million and $9.3 million for the six-month
periods ended June 30, 1998 and 1997, respectively.
The accompanying notes are an integral part of the consolidated financial
statements.
Page 6
<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
June 30, 1998, and the related consolidated statements of income and of cash
flows for the interim periods ended June 30, 1998 and 1997 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 and six-month
periods ended June 30, 1998 and 1997 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 Defense Systems segment as a discontinued operation (Note 4).
The company's accounting policies, except as described in the remainder of this
paragraph, are set forth in Note 1 to the company's consolidated 1997 financial
statements, which are incorporated by reference in the company's 1997 Annual
Report on Form 10-K. As more fully discussed in Note 3, the company adopted
AICPA Statement of Position ("SOP") No. 98-5, "Reporting on the Costs of Start-
Up Activities," effective January 1, 1998. In conjunction with the adoption, the
company began expensing all start-up costs as incurred.
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 1998
and a $450 million, five-year non-amortizing revolving credit agreement due in
December 2001. No amounts were outstanding under these facilities at either June
30, 1998 or December 31, 1997.
In November 1995, the company commenced a short-term commercial paper program
supported by the committed facilities. There were no outstanding commercial
paper borrowings at June 30, 1998. Outstanding commercial paper borrowings
totaled $155.0 million at December 31, 1997.
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, $265.0 million of borrowings
under uncommitted U.S. credit facilities have been classified as long-term debt
at June 30, 1998. At December 31, 1997, $155.0 million of outstanding commercial
paper and $120.0 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. During 1997, the company issued $70 million of medium-term notes and used
the net proceeds to retire short-term borrowings.
Page 6
<PAGE>
On May 5, 1998, the company issued $70 million of 6.75% medium-term notes due
May 5, 2005 and on May 27, 1998, the company issued $100 million of 7.0% medium-
term notes due May 15, 2008. The company has used the proceeds of $168.0 million
to retire other borrowings.
On August 3, 1998, a universal shelf registration filed by the company, under
which $500 million of debt and/or equity may be offered, became effective. This
registration incorporates $160 million of unused capacity from the company's
1995 shelf registration.
Note 3: Recent Accounting Pronouncements
SOP No. 98-5 was adopted by the company effective January 1, 1998. SOP No. 98-5
requires costs of start-up activities, including organizational costs, to be
expensed as incurred. In conjunction with the adoption, the company charged
$46.5 million ($36.1 million after tax, or $1.01 per share on a diluted basis)
to expense, which was reported as the cumulative effect of a change in
accounting principle. The expense represented the write-off of costs related to
the start-up of manufacturing at the Salar del Hombre Muerto lithium facility in
Argentina, the Baltimore sulfentrazone facility, and the Bayport, Texas hydrogen
peroxide plant expansion.
During the quarter ended March 31, 1998, the company adopted Statement of
Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income." SFAS No. 130 establishes standards for the reporting and display of
comprehensive income and its components (revenues, expenses, gains and losses)
in a full set of general-purpose financial statements, and requires a total for
comprehensive income to be provided in condensed financial statements of interim
periods. Comprehensive income includes all changes in stockholders' equity
during the period except those resulting from investments by owners and
distributions to owners. Comprehensive income for the three months and six
months ended June 30, 1998 and 1997 consisted of the following (in millions):
<TABLE>
<CAPTION>
Quarter ended Six-months ended
June 30, June 30,
--------------------- ---------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income $67.6 $ 72.7 $58.3 $112.7
Other comprehensive income (loss):
Foreign currency translation
adjustment, net of tax of $(1.4)
and $(3.8) for the quarter
ended June 30, 1998 and 1997,
respectively and $(3.3) and
$(14.8) for the six months ended
June 30, 1998 and 1997,
respectively (4.0) (12.1) (9.3) (47.6)
----- ------ ----- ------
Comprehensive income $63.6 $ 60.6 $49.0 $ 65.1
===== ====== ===== ======
</TABLE>
SFAS No. 131, "Disclosures About Segments of an Enterprise and Related
Information" is effective for financial statements for periods beginning after
December 15, 1997 but is not required to be reported in interim financial
statements in the first year of application. SFAS No. 131 establishes standards
for the way that public business enterprises report financial and descriptive
information about reportable operating segments in annual financial statements
and interim financial reports issued to stockholders. SFAS No. 131 supersedes
SFAS No. 14, "Financial Reporting for Segments of a Business Enterprise," but
retains the requirement to report
Page 8
<PAGE>
information about major customers. The company is evaluating the new statement's
provisions and will adopt SFAS No. 131, as required, in the fourth quarter of
1998.
SFAS No. 132, "Employers' Disclosures About Pensions and Other Postretirement
Benefits" is effective for fiscal years beginning after December 31, 1997. SFAS
No. 132 revises employers' disclosures about pensions and other postretirement
benefit plans. The company is evaluating the new statement's provisions and will
adopt SFAS No. 132, as required, in the fourth quarter of 1998.
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" is
effective for financial statements for fiscal years beginning after June 15,
1999. SFAS No. 133 establishes accounting and reporting standards for derivative
instruments and hedging activities. The company is evaluating the new
statement's provisions.
Note 4: Discontinued Operations
On October 6, 1997, FMC, Harsco Corporation and Harsco UDLP Corporation
(together with Harsco Corporation, "Harsco"), sold United Defense, L.P. ("United
Defense" or "UDLP") and certain other assets to The Carlyle Group ("Carlyle")
for approximately $850 million. FMC was the managing general partner and 60
percent owner of United Defense, which was formed in 1994 by combining FMC's
Defense Systems Group with Harsco's BMY Combat Systems Division. Harsco owned
the remaining 40 percent of UDLP. United Defense supplies ground combat and
naval weapons to the U.S. and military customers around the world.
The gross sale proceeds to FMC and Harsco consisted of $800 million cash, to be
adjusted based on certain closing balance sheet items as of October 6, 1997, and
a $50 million note payable to FMC by Carlyle upon finalization of certain
international joint-venture agreements. Of the estimated proceeds, FMC received
$460 million cash (subject to adjustment) and expects to collect the $50 million
note, which bears interest at 8.75%, in 1998. FMC recognized a gain on the
transaction of $318.4 million ($179.7 million after tax) during the fourth
quarter of 1997. The reported gain is subject to resolution of closing issues in
accordance with the sale contract. FMC used cash received to retire variable
rate debt and commercial paper and contribute towards its common stock
repurchase program.
Sales and net income of the discontinued operation were $321.2 million and $12.1
million, respectively, and $608.7 million and $30.8 million, respectively, for
the three-month and six-month periods ended ended June 30, 1997.
Reserves for discontinued operations at June 30, 1998 and December 31, 1997,
respectively, were $200.3 million and $231.3 million. At June 30, 1998, $22.9
million of the reserves related to liabilities associated with the sale of UDLP,
and the remainder is related to operations discontinued between 1976 and 1996.
See Note 3 to the company's December 31, 1997 consolidated financial statements
and Note 5 below.
<PAGE>
Note 5: Environmental Contingencies
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 $245.0 million and $263.8
million, before recoveries, have been provided at June 30, 1998 and December 31,
1997, respectively, of which $120.9 million and $132.7 million are included in
the reserve for discontinued operations at June 30, 1998 and December 31, 1997,
respectively. The company's total environmental reserves include approximately
$238.7 million and $247.4 million for remediation activities and $6.3 million
and $16.4 million for remedial investigation/feasibility study costs at June 30,
1998 and December 31, 1997, respectively. In addition, the company has estimated
that reasonably possible environmental loss contingencies may exceed amounts
accrued by as much as $150 million at June 30, 1998. 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 twenty years or longer.
Recoveries of $96.2 million ($29.9 million as other assets and $66.3 million as
an offset to the reserve for discontinued operations) and $104.9 million ($36.9
million as other assets and $68.0 million as an offset to the reserve for
discontinued operations), have been recorded as probable realization on claims
against third parties at June 30, 1998 and December 31, 1997, respectively. The
majority of recorded assets related to recoveries from Potentially Responsible
Parties are associated with insurance companies and with existing contractual
arrangements with U.S. government agencies and amounts due from insurance
carriers.
A more complete description of the company's environmental contingencies and the
nature of its potential obligations is included in the notes to FMC's December
31, 1997 consolidated financial statements.
An environmental inspection was conducted in July 1993 at FMC's Phosphorus
Chemicals Division ("PCD") plant in Pocatello, Idaho. In August 1994, the United
States EPA (Region 10) (the "EPA") formally notified FMC of a number of alleged
violations of the Resource Conservation and Recovery Act 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 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
has had extensive discussions with the Department of Justice and the EPA
concerning substantial proposed environmental projects involving pond closure
and remediation, changes in waste handling practices and additional air control
in an effort to settle this matter in advance of litigation. As described in
Note 4 to the company's December 31, 1997 consolidated financial statements, the
expected increase in capital costs for environmental compliance contributed to
an impairment in the value of PCD's assets during the fourth quarter of 1997.
Management believes that the ultimate resolution of this matter will not
<PAGE>
likely have a material adverse effect on FMC's liquidity, results of operations
or financial condition.
On June 6, 1998 the EPA issued its Record of Decision (ROD) for the Eastern
Michaud Flats Superfund site, which includes FMC's Pocatello phosphorus
facility. The remedy the EPA selected in the ROD is a combination of capping,
surface runoff controls and institutional controls for soils, with a contingency
for extraction and recycling for hydraulic control of groundwater. FMC expects
to negotiate a Consent Decree with the EPA in the third quarter of 1998 to
perform the remedial design and to implement the remedy selected in the ROD. FMC
believes its reserve of $62.7 million for future environmental costs at the
Eastern Michaud Flats site adequately provides for the estimated costs of the
Superfund remediation plan for the site.
Note 6: Capital Stock
On August 28, 1997, the Board of Directors authorized a $500 million open-market
stock repurchase program for FMC common stock through the end of 1999. During
1997, the company repurchased a total of 2.7 million of its common shares at a
cost of $209 million, including shares repurchased under the $500 million stock
repurchase program as well as shares repurchased throughout the first half of
1997 under a smaller, previously announced program. The company plans to
continue purchasing shares of its common stock on the open market from time to
time, depending on market conditions, and expects to repurchase approximately
$150 million of the company's common stock during both 1998 and 1999. For the
six months ended June 30, 1998 the company repurchased 679,300 of its common
shares at a cost of $48.9 million, and subsequently repurchased 670,300 common
shares at a cost of $42.9 million during the period from July 1 through August
10, 1998.
On April 24, 1998 the Restated Certificate of Incorporation of the company was
amended to increase the authorized number of FMC common shares, $0.10 par value,
to 130 million from 60 million.
At June 30, 1998, the company had 34.5 million shares outstanding and 1.0
million additional shares assuming conversion of stock options (calculated under
the treasury stock method).
Note 7: Disposition
On July 31, 1998, the company completed the sale of Crosby Valve to a subsidiary
of Tyco International Ltd. for cash and preferred stock. The preferred stock is
guaranteed by Tyco International Ltd. and can be put to either the issuer or
Tyco International Ltd., under certain circumstances, three years after its
issuance. The operations of Crosby Valve, which are included in the Machinery
and Equipment segment, were not material to FMC's business.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF CONTINUING OPERATIONS
FORWARD LOOKING STATEMENTS - SAFE HARBOR PROVISIONS
Item 2 of this report contains certain forward looking statements that are based
on management's current views and assumptions regarding future events, future
business conditions and the outlook for the company based on currently available
information. Wherever possible, the company has identified these "forward-
looking statements" (as defined in Section 27A of the Securities Act and Section
21E of the Exchange Act) by words such as "anticipates", "plans", "believes",
"estimates", "forecasts", "will continue to", "will likely result", "projects",
"expects" and similar expressions. Readers are cautioned not to place undue
reliance on these forward looking statements. These forward-looking statements
are subject to risks and uncertainties and future events, some of which cannot
be predicted or quantified, and all of which speak only as of the date hereof.
These risks and uncertainties and future events could cause the Company's actual
results, performance or achievements to differ materially from those expressed
in, or implied by, these statements. 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, 1997, 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 potential for unanticipated delays or cost overruns in connection
with introductions of new products and the development of new manufacturing
processes), freight transportation delays beyond the control of the Company,
inability of the Company or its suppliers to remedy potential information
systems problems related to the year 2000, weather patterns, risks associated
with joint ventures, partnerships or limited endeavors, future environmental
liabilities not covered by insurance or indemnity. Other important factors
include the company's ability to enforce patents, inventory risks, the
regulatory and trade environment, product demand and industry capacity, stock
market conditions, manufacturing inefficiencies, environmental liabilities in
excess of current reserves and estimated loss contingencies, unforeseen outcomes
of litigation or other contingencies, risks relating to general economic
conditions (including continued weakened market conditions in Asia), the impact
of unforeseen economic and political changes in the international markets where
the Company competes (including currency exchange rates, recessions, foreign
ownership restrictions and other external factors over which the Company has no
control), and weakness in Chemical Products markets, especially in soda ash. The
Company assumes no obligation to update publicly any forward-looking statements,
whether as a result of new information, future events or otherwise.
LIQUIDITY AND FINANCIAL CONDITION
Total cash and cash equivalents at June 30, 1998 and December 31, 1997 were
$70.0 million and $62.7 million, respectively. The increase in the allowance for
doubtful accounts to $19.0 million from $10.4 million at the end of 1997
reflects normal adjustments, as well as a $5.3 million provision made primarily
in response to increased international exposures, most notably in Southeast
Asia.
<PAGE>
As of June 30, 1998 and December 31, 1997, respectively, the company had total
borrowings of $1,464.3 million and $1,340.6 million. Decreases in commercial
paper borrowings of $155.0 million (net of discount) were offset by $170 million
of medium-term notes issued under the universal shelf registration discussed
below and a $145 million increase in borrowings under uncommitted U.S. credit
facilities. Increased borrowings provided for repurchases of FMC stock and
largely offset lower cash provided by operations, which were primarily caused by
liquidation of higher year-end 1997 payables balances and other seasonal and
working capital management factors.
The company has $750 million in committed credit facilities consisting of a $300
million, 364 day non-amortizing revolving credit agreement due in December 1998
and a $450 million, five-year non-amortizing revolving credit agreement due in
December 2001. No amounts were outstanding under these facilities at June 30,
1998 or December 31, 1997.
In January 1997, the company registered $400 million of medium-term debt
securities pursuant to a universal shelf registration under which, in 1997, the
company issued $70 million of medium-term notes. In addition, the company issued
$70 million and $100 million of medium-term notes on May 5, 1998 and May 27,
1998, respectively. See Note 2 to the June 30, 1998 consolidated financial
statements.
On August 3, 1998, a universal shelf registration filed by the company, under
which $500 million of debt and/or equity may be offered, became effective. This
registration incorporates $160 million of unused capacity from the company's
1995 shelf registration.
Capital and acquisition spending of $121.2 million for the six months ended June
30, 1998 decreased $37.6 million versus the first half of 1997. The decrease is
primarily driven by lower capital spending in the company's chemical businesses.
The first half of 1997 included capital expenditures for the development of a
new lithium production facility in Argentina and modifications to an herbicide
plant constructed to manufacture a new family of herbicides. Both projects were
substantially completed in 1997. The company continues to evaluate potential
acquisitions on an ongoing basis.
As discussed in Note 4 to the company's June 30, 1998 consolidated financial
statements, the company sold its defense operations to The Carlyle Group on
October 6, 1997 (the closing date). As a result of the transaction, all
financial disclosures included in Management's Discussion and Analysis and
elsewhere in this Form 10-Q have been restated to present FMC's Defense Systems
segment as a discontinued operation. On the closing date, the company received
its share of the net proceeds (subject to settlement of closing balance sheet
and other issues) from the sale, which included $460 million cash (approximately
$375 million after tax) and a $50 million note payable to FMC by Carlyle which
the company expects to collect in 1998 upon finalization of certain
international joint-venture agreements. FMC used the proceeds to reduce its
outstanding debt and to fund its common stock repurchase program, as discussed
below.
<PAGE>
On August 28, 1997, the Board of Directors authorized a $500 million open-market
stock repurchase program for FMC common stock through the end of 1999. In the
six months ended June 30, 1998, the company repurchased a total of 679,300
common shares at a cost of $48.9 million under this program. The repurchased
shares are recorded as treasury stock at cost in the company's June 30, 1998
consolidated balance sheet. The company plans to continue purchasing shares of
its common stock on the open market from time to time, depending on market
conditions. During the period from July 1, 1998 through August 10, 1998, the
Company repurchased 670,300 common shares at a cost of $42.9 million. The
company expects to repurchase an additional $60 million of the company's common
stock during the remainder of 1998 and $150 million during 1999.
Other expected cash requirements for the remainder of 1998 include approximately
$150 million to $175 million for planned capital expenditures (excluding
potential acquisitions), approximately $20 million for environmental remediation
expenditures and approximately $40 million for net after-tax interest payments
based on current 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.
As discussed in Note 3 to the company's June 30, 1998 consolidated financial
statements, the company adopted AICPA Statement of Position ("SOP") No. 98-5,
"Reporting on the Costs of Start-Up Activities," effective January 1, 1998. In
conjunction with the adoption, the company charged $46.5 million ($36.1 million
after tax) of previously capitalized start-up costs to expense.
The company's ratios of earnings to fixed charges were 2.8x and 2.5x for the six
months ended June 30, 1998 and 1997, respectively. The increase in 1998 resulted
primarily from the company's higher 1998 earnings from continuing operations
before income taxes and a cumulative effect of a change in accounting principle,
as well as lower net interest expense.
<PAGE>
RESULTS OF OPERATIONS
Second Quarter of 1998 Compared with Second Quarter of 1997
Industry Segment Data (Unaudited)
(In millions)
<TABLE>
<CAPTION>
Three Months Ended
June 30
------------------
1998 1997
----- -----
<S> <C> <C>
Sales
Machinery and Equipment $ 558.8 $ 504.8
Industrial Chemicals 241.2 262.6
Performance Chemicals 336.5 374.1
Eliminations (7.1) (7.2)
-------- --------
$1,129.4 $1,134.3
======== ========
Income from continuing operations
before income taxes
Machinery and Equipment $ 42.3 $ 31.2
Industrial Chemicals 32.3 41.4
Performance Chemicals 60.8 57.6
-------- --------
Operating profit from
continuing operations 135.4 130.2
Corporate (20.0) (22.9)
Other income, net 4.0 0.9
Net interest expense (28.2) (28.7)
-------- --------
$ 91.2 $ 79.5
======== ========
</TABLE>
Business segment results are presented net of minority interests, reflecting
only FMC's share of earnings. Minority interests for the three months ended June
30, 1998 and 1997 were $0.9 million and $2.9 million, respectively, the majority
of which related to the Industrial Chemicals segment. The corporate line
primarily includes corporate staff expenses, and other income (net) consists of
all other corporate items, including LIFO inventory adjustments.
As described in Note 4 to the company's June 30, 1998 consolidated financial
statements, the operations constituting FMC's Defense Systems segment have been
reclassified as a discontinued operation and results of prior periods have been
restated for comparative purposes.
Page 14
<PAGE>
General
Sales from continuing operations of $1.1 billion were essentially even with last
year's second quarter. Operating profit from continuing operations (net of
minority interests) increased to $135 million from $130 million in last year's
second quarter reflecting continued strong performance in Machinery and
Equipment as well as reduced costs in agricultural products, which more than
offset weaker Industrial Chemical markets. Income from continuing operations
increased to $68 million, or $1.89 per share on a diluted basis, in the second
quarter of 1998 from $61 million, or $1.58 per share, in the second quarter of
1997.
Earnings from discontinued operations, net of income taxes, representing the
company's defense systems operations which were sold in October 1997, were $12
million, or $0.32 per share on a diluted basis, in the second quarter of 1997.
Net income of $68 million, or $1.89 per share on a diluted basis, in the second
quarter of 1998 compared with net income of $73 million, or $1.90 per share, in
the second quarter of 1997.
Machinery and Equipment
Machinery and Equipment sales of $559 million increased 11 percent from $505
million in the second quarter of 1997, and profits of $42 million increased 35
percent from $31 million in the prior-year quarter. These results reflect the
strong market for subsea equipment and increased sales and margins for Jetway
Systems.
Petroleum equipment sales and earnings increased in the second quarter of 1998
primarily due to increased SOFEC sales to Malaysia and Canada and higher sales
and margins for subsea equipment.
Sales of airport products increased in the second quarter of 1998 due to
increased sales of cargo loaders and Jetway Systems. Earnings from airport
products increased in 1998 compared to the second quarter last year due to
manufacturing efficiencies, higher margins on Jetway Systems and lower warranty
costs related to ground support equipment.
FMC FoodTech sales and profits were up slightly from last year's quarter,
reflecting increased sales and profits of agricultural machinery, partly offset
by a decline in Frigoscandia's sales, due to the timing of orders which are
expected to close in the second half of 1998. Extractor revenues declined
slightly due to lower citrus crop production, which is expected to continue
throughout 1998. Restructuring and cost saving measures implemented in the first
quarter of 1998, however, have more than offset the impact of the reduced crops
on earnings.
<PAGE>
Industrial Chemicals
Industrial Chemicals sales of $241 million decreased $22 million from $263
million in last year's period and earnings (net of minority interests) decreased
to $32 million from $41 million in 1997, reflecting lower soda ash and hydrogen
peroxide prices and lower phosphorous volumes.
Sales and earnings of alkali products decreased compared to the second quarter
of 1997, reflecting lower prices and export volumes of soda ash to Asia and
lower sodium cyanide sales due to reduced gold mining activity.
Phosphorus sales decreased compared with the same quarter in the prior year due
to reduced volumes. Earnings were up, however, primarily as a result of lower
depreciation costs resulting from an asset impairment charge recorded in the
fourth quarter of 1997.
Peroxygen sales and earnings were lower in the second quarter as continued weak
pricing more than offset increased volumes and reduced costs. In July 1998, the
company announced that an older production line at its Bayport, Texas plant will
be mothballed effective August 15, reducing FMC's North American production
capacity by about 25 percent. The company expects to meet current demand levels
from its remaining production facilities, but can reopen the line at a future
date if demand increases.
Sales and earnings of Spain-based FMC Foret decreased from the second quarter of
1997 as improved operational results were more than offset by the strengthening
of the U.S. dollar against the Spanish peseta.
Performance Chemicals
Performance Chemicals sales of $337 million in the second quarter of 1998
decreased 10 percent from $374 million in last year's quarter as the result of
lower agricultural product sales. The company continues to sell all of the
Authority herbicide produced, but sales of Command herbicide were down due to
wet weather conditions in the Midwest and competitive pressures. In addition,
insecticide sales were lower compared to the same quarter last year as a result
of lower cotton acreage and lower distributor inventories. Earnings of $61
million in 1998 increased from $58 million in 1997 reflecting cost reductions
initiated at the beginning of the year throughout the agricultural products
business, as well as improved manufacturing performance at the Authority plant.
Specialty chemical sales were down slightly but earnings were up, reflecting
increased sales of pharmaceutical products and lower costs related to food
ingredients and process additives. Offsetting this was a decrease in lithium
sales and earnings in the second quarter as compared to the same quarter last
year due to lower lithium carbonate and hydroxide prices, reflecting increased
competition, and higher operating costs associated with the start up of the
Argentine production facility.
Corporate
Corporate expenses of $20 million in the second quarter of 1998 were 13 percent
lower than the second quarter of 1997, reflecting the timing of expenses and
certain cost reductions.
Net interest expense
Net interest expense of $28 million was down slightly in the second quarter of
1998 compared to the same quarter last year due to lower debt levels.
<PAGE>
Effective tax rates
The effective tax rates applicable to income from continuing operations before
income taxes for the quarters ended June 30, 1998 and 1997 were 26 and 24
percent, respectively.
Order backlog
FMC's backlog of unfilled orders for Machinery and Equipment increased to $1,339
million from $989 million at December 31, 1997 and $1,007 million at June 30,
1997. The increase in backlog reflects the recognition of the previously
announced subsea and floating production equipment order for the $230 million
Terra Nova Project on the Grand Banks of Newfoundland, as well as large orders
from Shell and Statoil. In July, 1998 the company received an order from Elf
Aquitaine for approximately $200 million of subsea equipment for the Girassol
project offshore Angola, which will be included in the backlog for the third
quarter of 1998. In addition, FMC FoodTech's backlog increased $47 million from
the end of 1997 driven by increases in most divisions. Backlogs are not reported
for Industrial Chemicals or Performance Chemicals due to the nature of these
businesses.
Legal contingencies
On April 14, 1998 a jury returned a verdict against the company in the amount of
$125 million in conjunction with a qui tam lawsuit against the company. (See
Part II, Item 1 of this Form 10-Q for a discussion of the lawsuit.) Although any
legal proceeding is subject to inherent uncertainty, it is the company's
position that the lawsuit is without merit and that the likelihood that any
material adverse judgment in this action will stand against the company is
remote. Accordingly, no provision for this matter has been made in the company's
consolidated financial statements.
<PAGE>
RESULTS OF OPERATIONS
Six Months of 1998 Compared with Six Months of 1997
Industry Segment Data (Unaudited)
(In millions)
<TABLE>
<CAPTION>
Six Months Ended
June 30
---------------------------
1998 1997
-------- --------
<S> <C> <C>
Sales
Machinery and Equipment $1,025.0 $ 971.8
Industrial Chemicals 478.3 498.1
Performance Chemicals 662.9 671.5
Eliminations (14.4) (14.2)
-------- --------
$2,151.8 $2,127.2
======== ========
Income from continuing operations
before income taxes and cumulative
effect of change in accounting
principle
Machinery and Equipment $ 65.2 $ 47.7
Industrial Chemicals 64.8 76.6
Performance Chemicals 95.2 87.5
-------- --------
Operating profit from
continuing operations 225.2 211.8
Corporate (43.3) (46.2)
Other income and (expense), net (1.7) 0.5
Net interest expense (52.8) (58.8)
-------- --------
$ 127.4 $ 107.3
======== ========
</TABLE>
Business segment results are presented net of minority interests, reflecting
only FMC's share of earnings. Minority interests for the six months ended June
30, 1998 and 1997 were $1.8 million and $5.3 million, respectively, the majority
of which related to the Industrial Chemicals segment. The corporate line
primarily includes staff expenses, and other income and expense consist of all
other corporate items, including LIFO inventory adjustments.
As described in Note 4 to the company's June 30, 1998 consolidated financial
statements, the operations constituting FMC's Defense Systems segment have been
reclassified as a discontinued operation and results of prior periods have been
restated for comparative purposes.
Sales of $2,152 million in the first half of 1998 were essentially even with
sales in the first half of 1997. Increases in petroleum equipment sales offset
declines in industrial chemicals due to lower pricing, and declines in
performance chemicals due to lower herbicide and insecticide sales. Segment
operating profits increased to $225 million in the first half of 1998 from $212
million in 1997 primarily as a result of increased petroleum equipment sales,
lower performance chemical costs due to restructuring
<PAGE>
initiatives in agricultural products and manufacturing process changes
implemented at the Authority herbicide plant.
Corporate expenses of $43 million decreased $3 million from the prior year
reflecting ongoing cost control efforts. Net interest expense decreased to $53
million from $59 million due to lower debt levels resulting from late 1997
operating cash flows and the use of a portion of the proceeds from the sale of
the company's defense system operations to reduce outstanding debt.
Income from continuing operations before the cumulative effect of a change in
accounting principle increased to $94 million, or $2.64 per share on a diluted
basis, in the first half of 1998 from $82 million, or $2.14 per share in the
first half of 1997. Earnings from discontinued operations, net of income taxes,
representing the Defense Systems segment, were $31 million, or $0.81 per share
on a diluted basis, in the first half of 1997. As discussed in Note 3 to the
company's June 30, 1998 consolidated financial statements, the company adopted
AICPA Statement of Position ("SOP") No. 98-5, "Reporting on the Costs of Start-
Up Activities," effective January 1, 1998. In conjunction with the adoption,
the company charged $46.5 million ($36.1 million after tax) of previously
capitalized start-up costs to expense. This change was recorded as a cumulative
effect of a change in accounting principle. In the first half of 1998, net
income was $58 million, or $1.63 per share on a diluted basis, compared to $113
million or $2.95 per share on a diluted basis in the first half of 1997.
Machinery and Equipment sales of $1,025 million in 1998 increased from $972
million in 1997 and profits of $65 million in 1998 increased from $48 million in
1997, reflecting continued improvements in the petroleum equipment business
driven by higher SOFEC sales and improvements in the airport products business
as a result of increased sales of Jetway Systems.
Industrial Chemical sales decreased to $478 million in the first half of 1998
from $498 million in 1997 and earnings decreased to $65 million in 1997 from $77
million in 1997, primarily as a result of lower soda ash and hydrogen peroxide
prices, lower phosphorous volumes and the negative impact of the strengthening
of the U.S. dollar against the Spanish peseta on FMC Foret sales and earnings.
Performance Chemical sales of $663 million in 1998 decreased from $672 million
in 1997 primarily due to lower lithium carbonate and hydroxide prices,
reflecting increased competition. Earnings in 1998 increased to $95 million
from $88 million in 1997 as a result of cost reductions initiated at the
beginning of 1998 throughout the agricultural products business and improved
manufacturing performance at the Authority plant.
The effective tax rates applicable to income from continuing operations before
income taxes and the cumulative effect of a change in accounting principle for
the six-month periods ended June 30, 1998 and 1997 were 26 percent and 24
percent, respectively.
<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 June 30, 1998
is included on page 22.
<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 June 30, 1998, and the related consolidated
statements of income for the three-month and six-month periods ended June 30,
1998 and 1997 and the consolidated statements of cash flows for the six-month
periods ended June 30, 1998 and 1997. 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
the results of discontinued operations of United Defense, L.P., for the three-
month and six-month periods ended June 30, 1997.
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 consolidated 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, 1997 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 20, 1998, 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, 1997 is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
As discussed in Note 3 to the consolidated financial statements, the Company
changed its method of accounting for costs of start-up activities in 1998.
KPMG Peat Marwick LLP
Chicago, Illinois
July 15, 1998
<PAGE>
Part II - Other Information
---------------------------
ITEM 1. LEGAL PROCEEDINGS
- ------- -----------------
As previously reported, in 1986 a former employee of FMC brought a qui tam
lawsuit against the company in the United States District Court for the Northern
District of California (United States of America, ex rel Henry Boisvert v. FMC
Corporation). The lawsuit alleges that FMC violated the False Claims Act
("FCA") in connection with the development, testing and manufacture of the
Bradley Fighting Vehicle by the company's Defense Systems Group (which was sold
during 1997 and is presently accounted for as a discontinued operation).
Following an investigation of the allegations raised by the lawsuit, the U.S.
Department of Justice declined to intervene in the action. On April 14, 1998 a
jury returned a verdict against the company in the amount of $125 million. No
judgment resulting from the verdict has been entered at this time. The court
established a schedule for post-trial motions and a hearing date of September 8,
1998 on those motions, after which the court will determine what judgment, if
any, to enter. Under the FCA, any judgment stemming from the verdict may
include, based on certain determinations to be made by the court, a doubling or
trebling of part or all of the damages reflected in the verdict, as well as
penalties and costs, including attorneys' fees.
Management believes the verdict is unjustified and intends to pursue all
available remedies to set aside the jury's decision or reverse any judgment
resulting therefrom. It is the company's position that the lawsuit is without
merit. Although any legal proceeding is subject to inherent uncertainty, based
upon an analysis of relevant factual and legal issues and consultation with
counsel, management believes that the likelihood that any material adverse
judgment in this action will stand against the company is remote. As management
does not believe that this litigation will have a material impact on the
company's earnings, liquidity or financial condition, no provision for this
matter has been made in the company's consolidated financial statements.
<PAGE>
PART II - OTHER INFORMATION (Continued)
---------------------------------------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------- ---------------------------------------------------
The Registrant's Annual Meeting of Stockholders was held on April 24, 1998. At
the meeting, stockholders voted on (i) the election of four directors; (ii)
ratification of the appointment of KPMG Peat Marwick LLP as the Registrant's
independent auditors for 1998; and (iii) amending FMC Corporation's Restated
Certificate of Incorporation to increase the number of authorized shares of
common stock, $.10 par value, from 60,000,000 to 130,000,000. Voting on each
such matter was as follows:
<TABLE>
<CAPTION>
Votes Votes Withheld/ Broker
For Against Abstentions Non-Votes
------- ------- ----------- ---------
<S> <C> <C> <C> <C>
1. Election of Directors:
B. A. Bridgewater, Jr. 32,958,792 - 524,601 -
P. L. Davies, Jr. 32,949,691 - 533,702 -
W. F. Reilly 32,966,485 - 516,908 -
J. R. Thompson 32,728,655 - 754,738 -
2. Ratification of Auditors 33,392,635 61,939 28,819 -
3. Amending Restated
Certificate of
Incorporation 27,046,457 6,363,802 73,134 -
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------- --------------------------------
(a) Exhibits
Number in
Exhibit Table Description
------------- -----------
11 Statement re: computation of diluted
earnings per share
12 Statement re: computation of ratios of
earnings to fixed charges
15 Letter re: unaudited interim financial
information
27 Financial data schedule
(b) Reports on Form 8-K
-------------------
Form 8-K dated April 15, 1998 describing the company's results for the
first quarter of 1998.
Form 8-K dated April 17, 1998 discussing the verdict of a qui tam lawsuit
brought against the company by a former employee.
<PAGE>
(b) Reports on Form 8-K (Continued)
-------------------------------
Form 8-K dated April 24, 1998 regarding the approval to amend
FMC Corporation's Restated Certificate of Incorporation to
increase the number of shares of authorized common stock.
<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: August 13, 1998 /s/ Ronald D. Mambu
--------------- -----------------------------------
Vice President, Controller and duly
authorized officer
<PAGE>
EXHIBIT INDEX
-------------
Number in
Exhibit Table Description
------------- -----------
11 Statement re: computation of diluted
earnings per share
12 Statement re: computation of ratios of
earnings to fixed charges
15 Letter re: unaudited interim financial
information
27 Financial data schedule
<PAGE>
FMC Corporation
Quarterly Report
on Form 10-Q for
June 30, 1998
Exhibit 11 Statement re:
Computation of Diluted Earnings Per Share (Unaudited)
-----------------------------------------------------
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
------------------ -------------------
1998 1997 1998 1997
------- ------- ------- --------
<S> <C> <C> <C> <C>
Earnings:
Net income $67,603 $72,748 $58,301 $112,697
======= ======= ======= ========
Shares:
Average number of shares of
common stock outstanding 34,627 37,216 34,716 37,215
Additional shares assuming
conversion of stock
options 1,071 1,037 1,030 995
------- ------- ------- --------
Pro forma shares 35,698 38,253 35,746 38,210
======= ======= ======= ========
Diluted earnings per share $ 1.89 $ 1.90 $ 1.63 $ 2.95
======= ======= ======= ========
</TABLE>
<PAGE>
FMC Corporation
Quarterly Report
on Form 10-Q for
June 30, 1998
Exhibit 12 Computation of Ratios of Earnings to Fixed Charges
(In millions, except ratio data)
--------------------------------
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-------------------
1998 1997
------ ------
<S> <C> <C>
Earnings:
Income from continuing operations
before income taxes and cumulative
effect of change in accounting
principle $127.4 $107.3
Minority interests 1.8 5.3
Undistributed earnings of
affiliates (4.8) (3.4)
Interest expense and amortization
of debt discount, fees and expenses 57.5 62.8
Amortization of capitalized interest 3.0 3.7
Interest included in rental expense 7.2 9.7
------ ------
Total earnings $192.1 $185.4
====== ======
Fixed charges:
Interest expense and amortization
of debt discount, fees and expenses $ 57.5 $ 62.8
Interest capitalized as part of
fixed assets 3.0 3.0
Interest included in rental expense 7.2 9.7
------ ------
Total fixed charges $ 67.7 $ 75.5
====== ======
Ratio of earnings to fixed charges 2.8x 2.5x
====== ======
</TABLE>
<PAGE>
FMC Corporation
SIGNATURE Quarterly Report
on Form 10-Q for
June 30, 1998
Exhibit 15 Letter re: Unaudited Interim Financial Information
--------------------------------------------------
FMC Corporation
Chicago, Illinois
Ladies and Gentlemen:
Re: Registration Statements 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, No. 33-45648 and No. 333-59543 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 July 15,
1998 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,
KPMG Peat Marwick LLP
Chicago, Illinois
August 12, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
FMC Corporation Form 10-Q for the Quarter ended June 30, 1998 and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000,000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-START> JAN-01-1998 JAN-01-1997
<PERIOD-END> JUN-30-1998 JUN-30-1997
<CASH> 70 65
<SECURITIES> 0 0
<RECEIVABLES> 833 929
<ALLOWANCES> 19 12
<INVENTORY> 592 548
<CURRENT-ASSETS> 1,766 1,803
<PP&E> 3,783 3,815
<DEPRECIATION> 2,085 1,972
<TOTAL-ASSETS> 4,138 4,481
<CURRENT-LIABILITIES> 1,358 1,533
<BONDS> 1,285 1,315
0 0
0 0
<COMMON> 4 4
<OTHER-SE> 773 916
<TOTAL-LIABILITY-AND-EQUITY> 4,138 4,481
<SALES> 2,152 2,127
<TOTAL-REVENUES> 2,194 2,155
<CGS> 1,620 1,584
<TOTAL-COSTS> 2,012 1,984
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 53 59
<INCOME-PRETAX> 127 107
<INCOME-TAX> 33 25
<INCOME-CONTINUING> 94<F1> 82<F1>
<DISCONTINUED> 0 31
<EXTRAORDINARY> 0 0
<CHANGES> (36) 0
<NET-INCOME> 58 113
<EPS-PRIMARY> 1.68 3.02
<EPS-DILUTED> 1.63 2.95
<FN>
<F1> Income from continuing operations before accounting change is net of
minority interests of 2 and 5 for June 30, 1998 and 1997. Minority
interests are primarily limited partner's share of partnership profits for
which tax has not been provided.
</FN>
</TABLE>
