FMC Corporation Announces Third Quarter 2014 Results

FMC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in millions, except per share amounts)

Three Months Ended

Nine Months Ended

September 30

September 30

2014

2013

2014

2013

Revenue

$

1,015.9

$

957.4

$

2,945.5

$

2,744.1

Costs of sales and services

692.2

653.0

1,935.7

1,758.6

Gross margin

323.7

304.4

1,009.8

985.5

Selling, general and administrative expenses

147.4

124.9

391.8

374.1

Research and development expenses

30.6

29.0

89.9

84.7

Restructuring and other charges (income)

35.6

32.1

45.0

47.3

Business separation costs

6.8

—

23.6

—

Total costs and expenses

912.6

839.0

2,486.0

2,264.7

Income from operations

103.3

118.4

459.5

479.4

Equity in (earnings) loss of affiliates

0.4

0.1

0.6

0.5

Interest expense, net

14.9

9.8

43.7

31.4

Income from continuing operations before income taxes

88.0

108.5

415.2

447.5

Provision for income taxes

7.4

32.0

88.2

113.1

Income from continuing operations

80.6

76.5

327.0

334.4

Discontinued operations, net of income taxes

(20.5)

(56.6)

(83.2)

(58.3)

Net income

$

60.1

$

19.9

$

243.8

$

276.1

  Less: Net income attributable to noncontrolling interests

3.8

2.0

12.8

9.3

Net income attributable to FMC stockholders

$

56.3

$

17.9

$

231.0

$

266.8

Amounts attributable to FMC stockholders:

  Income from continuing operations, net of tax

$

76.8

$

74.5

$

314.2

$

325.1

  Discontinued operations, net of tax

(20.5)

(56.6)

(83.2)

(58.3)

  Net income

$

56.3

$

17.9

$

231.0

$

266.8

Basic earnings (loss) per common share attributable to FMC stockholders:

  Continuing operations

$

0.57

$

0.55

$

2.35

$

2.39

  Discontinued operations

(0.15)

(0.42)

(0.62)

(0.43)

  Basic earnings per common share

$

0.42

$

0.13

$

1.73

$

1.96

Average number of shares used in basic earnings per share computations

133.4

134.1

133.3

135.8

Diluted earnings (loss) per common share attributable to FMC
stockholders:

Continuing operations

$

0.57

$

0.55

$

2.34

$

2.38

   Discontinued operations

(0.15)

(0.42)

(0.62)

(0.43)

   Diluted earnings per common share

$

0.42

$

0.13

$

1.72

$

1.95

Average number of shares used in diluted earnings per share computations

134.3

135.0

134.3

136.7

Other Data:

Capital additions

$

52.5

$

77.5

$

145.5

$

152.6

Depreciation and amortization expense

$

32.3

$

34.2

$

98.0

$

91.7

FMC CORPORATION

SCHEDULE OF ADJUSTED EARNINGS FROM CONTINUING OPERATIONS (NON-GAAP)⁽²⁾

(Unaudited, in millions, except per share amounts)

Three Months Ended

Nine Months Ended

September 30

September 30

2014

2013

2014

2013

Revenue

$

1,015.9

$

957.4

$

2,945.5

$

2,744.1

Costs of sales and services

692.2

650.9

1,931.5

1,756.5

Gross margin

323.7

306.5

1,014.0

987.6

Selling, general and administrative expenses

108.4

114.6

345.9

339.5

Research and development expenses

30.6

29.0

89.9

84.7

Equity in (earnings) loss of affiliates

0.4

0.1

0.6

0.5

Total costs and expenses

831.6

794.6

2,367.9

2,181.2

Adjusted earnings from continuing operations, before interest, income
taxes and noncontrolling interests (Non-GAAP) ⁽¹⁾

$

184.3

$

162.8

$

577.6

$

562.9

Interest expense, net

14.9

9.8

43.7

31.4

Adjusted earnings from continuing operations, before income taxes and
noncontrolling interests

$

169.4

$

153.0

$

533.9

$

531.5

Provision for income taxes

38.1

40.8

131.0

135.1

Net income attributable to noncontrolling interests

3.8

2.0

12.8

9.3

Adjusted after-tax earnings from continuing operations, attributable to
FMC stockholders (Non-GAAP) ⁽²⁾

$

127.5

$

110.2

$

390.1

$

387.1

Diluted adjusted after-tax earnings from continuing operations per share,
attributable to FMC stockholders

$

0.95

$

0.82

$

2.90

$

2.83

Average number of shares used in diluted adjusted after-tax earnings from
continuing operations per share computations

134.3

135.0

134.3

136.7

___________________

(1)

Referred to as Adjusted Operating Profit.

(2)

The Company believes that the Non-GAAP financial measure "Adjusted After-Tax Earnings from Continuing Operations, Attributable to FMC Stockholders", and its presentation on a per share basis, provides useful information about the Company's operating results to investors and securities analysts. Adjusted earnings excludes the effects of Corporate special charges and tax related adjustments. The Company also believes that excluding the effects of these items from operating results allows management and investors to compare more easily the financial performance of its underlying businesses from period to period. Additionally, the above schedule is presented in a format which reflects the manner in which we manage our business and is not in accordance with GAAP.

Please see the reconciliation of Non-GAAP financial measures to GAAP financial results.

FMC CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

RECONCILIATION OF NET INCOME ATTRIBUTABLE TO FMC STOCKHOLDERS (GAAP)

TO ADJUSTED AFTER-TAX EARNINGS FROM CONTINUING OPERATIONS,

ATTRIBUTABLE TO FMC STOCKHOLDERS (NON-GAAP)

(Unaudited, in millions, except per share amounts)

Three Months Ended

Nine Months Ended

September 30

September 30

2014

2013

2014

2013

Net income attributable to FMC stockholders (GAAP)

$

56.3

$

17.9

$

231.0

$

266.8

Corporate special charges (income):

Restructuring and other charges (income) ^(a)

35.6

32.1

45.0

47.3

Non-operating pension and postretirement charges ^(b)

1.5

5.7

8.4

30.0

Business separation costs ^(c)

6.8

—

23.6

—

Acquisition/divestiture related charges ^(d)

37.5

6.7

41.7

6.7

Income tax expense (benefit) on Corporate special charges (income)

(28.1)

(16.2)

(41.2)

(31.1)

Discontinued operations, net of income taxes ^(e)

20.5

56.6

83.2

58.3

Tax expense (benefit) adjustments ^(f)

(2.6)

7.4

(1.6)

9.1

Adjusted after-tax earnings from continuing operations attributable to
FMC stockholders (Non-GAAP)

$

127.5

$

110.2

$

390.1

$

387.1

Diluted earnings per common share (GAAP)

$

0.42

$

0.13

$

1.72

$

1.95

Corporate special charges (income) per diluted share, before tax:

Restructuring and other charges (income)

0.27

0.24

0.33

0.34

Non-operating pension and postretirement charges

0.01

0.04

0.06

0.22

Business separation costs

0.05

—

0.18

—

Acquisition/divestiture related charges

0.28

0.05

0.31

0.05

Income tax expense (benefit) on Corporate special charges (income), per
diluted share

(0.21)

(0.12)

(0.31)

(0.23)

Discontinued operations per diluted share

0.15

0.42

0.62

0.44

Tax adjustments per diluted share

(0.02)

0.06

(0.01)

0.06

Diluted adjusted after-tax earnings from continuing operations per
share, attributable to FMC stockholders (Non-GAAP)

$

0.95

$

0.82

$

2.90

$

2.83

Average number of shares used in diluted adjusted after-tax earnings from
continuing operations per share computations

134.3

135.0

134.3

136.7

____________________

(a)

Three Months Ended September 30, 2014:

Restructuring and other charges (income) includes a charge of $17.0 million associated with a license agreement entered into by our FMC Agricultural Solutions segment for the purpose of obtaining certain technology and intellectual property rights relating to new compounds still under development. Additionally, this amount includes charges associated with continuing environmental sites treated as a Corporate charge of $17.3 million. Remaining restructuring and other charges (income) includes net miscellaneous charges of $1.3 million.

Three Months Ended September 30, 2013:

Restructuring and other charges (income) for the three months ended September 30, 2013, primarily include a charge of $30.6 million primarily related to collaboration and license agreements entered into by our FMC Agricultural Solutions segment for the purpose of obtaining certain technology and intellectual property rights relating to new fungicide compounds still under development. Additionally charges for the three months ended September 30, 2013 include charges associated with continuing environmental sites as a Corporate charge of $1.0 million. Remaining restructuring and other charges (income) include net miscellaneous charges of $0.5 million.

Nine Months Ended September 30, 2014:

Restructuring and other charges (income) includes a charge of $5.8 million associated with a reorganization of our Health and Nutrition segment, as well as a charge of $17.0 million associated a license agreement entered into by our FMC Agricultural Solutions segment for the purpose of obtaining certain technology and intellectual property rights relating to new compounds still under development. Additionally, this amount includes charges associated with continuing environmental sites treated as a Corporate charge of $20.0 million. Remaining restructuring and other charges (income) includes net miscellaneous charges of $2.2 million.

Nine Months Ended September 30, 2013:

Restructuring and other charges (income) for the nine months ended September 30, 2013, include charges of $32.1 million  primarily related to collaboration and license agreements entered into by our FMC Agricultural Solutions segment for the purpose of obtaining certain technology and intellectual property rights relating to new fungicide compounds still under development. Also included are charges of $9.6 million associated with our Lithium restructuring within our FMC Minerals segment. Additionally, charges for the nine months ended September 30, 2013 include charges associated with continuing environmental sites as a Corporate charge of $3.0 million. Remaining restructuring and other charges (income) include net miscellaneous charges of $2.6 million.

(b)

Our non-operating pension and postretirement costs are defined as those costs related to interest, expected return on plan assets, amortized actuarial gains and losses and the impacts of any plan curtailments or settlements. These costs are primarily related to changes in pension plan assets and liabilities which are tied to financial market performance and we consider these costs to be outside our operational performance. We exclude these non-operating pension and postretirement costs from our segments as we believe that removing them provides a better understanding of the underlying profitability of our businesses, provides increased transparency and clarity in the performance of our retirement plans and enhances period-over-period comparability. We continue to include the service cost and amortization of prior service cost in our Adjusted Earnings results noted above. We believe these elements reflect the current year operating costs to our businesses for the employment benefits provided to active employees.

(c)

On September 8, 2014, we announced that we will no longer proceed with the planned separation as a result of the planned acquisition of Cheminova A/S and divestiture of our FMC Alkali Chemicals division (see footnote "d" below). Business separation costs for the three and nine months ended September 30, 2014 represent charges associated with the planned separation activities through September 8, 2014. We do not expect to incur any additional charges beyond September 8, 2014. There were no charges for the three and nine months ended September 30, 2013.

(d)

Charges related to the expensing of the inventory fair value step-up resulting from the application of purchase accounting, legal and professional fees and gains or losses on hedging purchase price associated with the planned or completed acquisitions and costs incurred associated with the potential divestiture of our FMC Alkali Chemicals division. Amounts represent the following:

Three Months Ended

Nine Months Ended

September 30

September 30

(in Millions)

2014

2013

2014

2013

Acquisition related charges - Cheminova A/S

Legal and professional fees ⁽¹⁾

$

15.2

$

—

$

15.2

$

—

Unrealized loss/(gain) on hedging purchase price ⁽¹⁾

21.2

—

21.2

—

Acquisition related charges - Epax

Legal and professional fees ⁽¹⁾

—

4.6

—

4.6

Inventory fair value step-up amortization ⁽²⁾

—

2.1

4.2

2.1

Divestiture related charges - FMC Alkali Chemicals division

Legal and professional fees ⁽¹⁾

1.1

—

1.1

—

Acquisition/divestiture related charges

$

37.5

$

6.7

$

41.7

$

6.7

____________________

(1)

On the condensed consolidated statements of income, these charges are included in "Selling, general and administrative expenses."

(2)

On the condensed consolidated statements of income, these charges are included in "Costs of sales and services."

(e)

Discontinued operations includes our FMC Peroxygens business results as well as provisions, net of recoveries, for environmental liabilities and legal reserves and expenses related to previously discontinued operations. For the nine months ended September 30, 2014 the balance includes the final divestiture charge of $40.0 million associated with the sale of FMC Peroxygens business which was completed on February 28, 2014.

Discontinued operations for the three and nine months ended September 30, 2013, included a charge of $65 million ($50.8 million after tax), to adjust the FMC Peroxygens assets held for sale to fair value.

(f)

The tax adjustments in the three and nine months ended September 30, 2014 were related to revisions to our tax liabilities associated with prior year tax matters. The tax charges in the three and nine months ended September 30, 2013 were associated with the sale of our discontinued FMC Peroxygens business as well as revisions to our tax liabilities associated with prior year tax matters.

RECONCILIATION OF NET INCOME (GAAP) TO ADJUSTED EARNINGS FROM CONTINUING OPERATIONS,

BEFORE INTEREST AND INCOME TAXES (NON-GAAP)

(Unaudited, in millions)

Three Months Ended

Nine Months Ended

September 30

September 30

2014

2013

2014

2013

Net income (GAAP)

$

60.1

$

19.9

$

243.8

$

276.1

Restructuring and other charges (income)

35.6

32.1

45.0

47.3

Non-operating pension and postretirement charges

1.5

5.7

8.4

30.0

Business separation costs

6.8

—

23.6

—

Acquisition/Divestiture related charges

37.5

6.7

41.7

6.7

Discontinued operations, net of income taxes

20.5

56.6

83.2

58.3

Interest expense, net

14.9

9.8

43.7

31.4

Provision for income taxes

7.4

32.0

88.2

113.1

Adjusted earnings from continuing operations,
       before interest, income taxes and noncontrolling interests (Non-GAAP) ⁽¹⁾

$

184.3

$

162.8

$

577.6

$

562.9

___________________

(1)

Referred to as Adjusted Operating Profit.

RECONCILIATION OF PROVISION FOR INCOME TAXES (GAAP) TO

ADJUSTED EARNINGS - PROVISION FOR INCOME TAXES,

EXCLUDING DISCRETE TAX ITEMS (NON-GAAP)

(Unaudited, in millions)

Three Months Ended

Nine Months Ended

September 30

September 30

2014

2013

2014

2013

Provision
(Benefit)

Tax Rate

Provision
(Benefit)

Tax Rate

Provision
(Benefit)

Tax Rate

Provision
(Benefit)

Tax Rate

GAAP - Provision for income taxes

$

7.4

8.4

%

$

32.0

29.5

%

$

88.2

21.2

%

$

113.1

25.3

%

Adjusted earnings tax adjustments:

Income tax expense (benefit) on Corporate special
charges (income) ⁽¹⁾

(28.1)

(16.2)

(41.2)

(31.1)

Tax expense (benefit) adjustments ⁽¹⁾

(2.6)

7.4

(1.6)

9.1

Adjusted Earnings -
   Provision for income taxes (Non-GAAP)

$

38.1

22.5

%

$

40.8

26.7

%

$

131.0

24.5

%

$

135.1

25.4

%

Discrete tax items expense (benefit) ⁽²⁾

(5.2)

—

(5.2)

—

     Adjusted earnings - Provision for income taxes,
        excluding discrete tax items (Non-GAAP) (1)

$

43.3

25.5

%

$

40.8

26.7

%

$

136.2

25.5

%

$

135.1

25.4

%

___________________

(1)

Referred to the Reconciliation of Net Income Attributable to FMC Stockholders (GAAP) to Adjusted After-tax Earnings from Continuing Operations, Attributable to FMC Stockholders (Non-GAAP) for more detail.

(2)

Amount represents a discrete tax adjustment associated with fluctuations in foreign currency remeasurement of certain foreign operations.

FMC CORPORATION

INDUSTRY SEGMENT DATA

(Unaudited, in millions)

Three Months Ended

Nine Months Ended

September 30

September 30

2014

2013

2014

2013

Revenue

FMC Agricultural Solutions

$

548.8

$

530.2

$

1,546.9

$

1,468.0

FMC Health and Nutrition

203.1

190.4

636.4

572.2

FMC Minerals

264.0

237.8

762.2

706.8

Eliminations

—

(1.0)

—

(2.9)

Total

$

1,015.9

$

957.4

$

2,945.5

$

2,744.1

Income from continuing operations before income taxes

FMC Agricultural Solutions

116.7

114.2

367.5

402.2

FMC Health and Nutrition

43.7

41.1

143.7

129.1

FMC Minerals

39.2

27.7

118.8

92.1

Eliminations

—

(0.1)

—

(0.3)

Segment operating profit ^(a)

199.6

182.9

630.0

623.1

Corporate and other

(15.3)

(20.1)

(52.4)

(60.2)

Adjusted earnings from continuing operations, before interest, income
taxes and noncontrolling interests (Non-GAAP)

$

184.3

$

162.8

$

577.6

$

562.9

Interest expense, net

(14.9)

(9.8)

(43.7)

(31.4)

Corporate special (charges) income:

Restructuring and other (charges) income ^(b)

(35.6)

(32.1)

(45.0)

(47.3)

Non-operating pension and postretirement charges ^(c)

(1.5)

(5.7)

(8.4)

(30.0)

Business separation charges ^(d)

(6.8)

—

(23.6)

—

Acquisition/divestiture related charges ^(e)

(37.5)

(6.7)

(41.7)

(6.7)

Provision for income taxes

(7.4)

(32.0)

(88.2)

(113.1)

Discontinued operations, net of income taxes ^(f)

(20.5)

(56.6)

(83.2)

(58.3)

Net income attributable to noncontrolling interests

(3.8)

(2.0)

(12.8)

(9.3)

Net income attributable to FMC stockholders

$

56.3

$

17.9

$

231.0

$

266.8

____________________

(a)

Referred to as Segment Earnings.

(b)

Three Months Ended September 30, 2014: Amounts related to FMC Agricultural Solutions charges of $17.0 million, FMC Minerals charges of $0.1 million and Corporate charges of $18.5 million.

Three Months Ended September 30, 2013: Amounts related to FMC Agricultural Solutions charges of $30.7 million, FMC Health and Nutrition charges of $0.1 million, FMC Minerals charges of $0.3 million and Corporate charges of $1.0 million.

Nine Months Ended September 30, 2014: Amounts related to FMC Agricultural Solutions charges of $17.0 million, FMC Health and Nutrition charges of $5.9 million, FMC Minerals charges of $0.1 million and Corporate charges of $22.0 million.

Nine Months Ended September 30, 2013: Amounts related to FMC Agricultural Solutions charges of $32.6 million, FMC Health and Nutrition charges of $0.8 million, FMC Minerals charges of $9.6 million and Corporate charges of $4.3 million.

(c)

See Note (b) to the schedule "Reconciliation of Net Income Attributable to FMC Stockholders (GAAP) to Adjusted After-Tax Earnings from Continuing Operations, Attributable to FMC Stockholders (Non-GAAP)" for further details on the components that make up this line item.

(d)

See Note (c) to the schedule "Reconciliation of Net Income Attributable to FMC Stockholders (GAAP) to Adjusted After-Tax Earnings from Continuing Operations, Attributable to FMC Stockholders (Non-GAAP)" for further details on the components that make up this line item.

(e)

See Note (d) to the schedule "Reconciliation of Net Income Attributable to FMC Stockholders (GAAP) to Adjusted After-Tax Earnings from Continuing Operations, Attributable to FMC Stockholders (Non-GAAP)" for further details on the components that make up this line item.

(f)

See Note (e) to the schedule "Reconciliation of Net Income Attributable to FMC Stockholders (GAAP) to Adjusted After-Tax Earnings from Continuing Operations, Attributable to FMC Stockholders (Non-GAAP)" for further details on the components that make up this line item.

FMC CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in millions)

September 30, 2014

December 31, 2013

Cash and cash equivalents

$

124.3

$

123.2

Trade receivables, net

1,572.6

1,484.3

Inventories

754.5

688.4

Other current assets

210.6

236.8

Deferred income taxes

195.3

214.0

Current assets of discontinued operations held for sale

—

198.3

Total current assets

2,857.3

2,945.0

Property, plant and equipment, net

1,283.3

1,248.3

Goodwill

369.0

389.4

Deferred income taxes

119.8

91.4

Other long-term assets

621.7

561.1

Total assets

$

5,251.1

$

5,235.2

Short-term debt and current portion of long-term debt

$

580.4

$

697.8

Accounts payable, trade and other

440.0

475.2

Accrued customer rebates

347.6

203.7

Guarantees of vendor financing

53.3

27.9

Accrued pensions and other postretirement benefits, current

12.7

12.7

Other current liabilities

307.5

521.2

Current liabilities of discontinued operations held for sale

—

48.2

Total current liabilities

1,741.5

1,986.7

Long-term debt

1,151.9

1,154.1

Long-term liabilities

573.4

522.3

Equity

1,784.3

1,572.1

Total liabilities and equity

$

5,251.1

$

5,235.2

FMC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in millions)

Nine Months ended September 30

2014

2013

Cash provided (required) by operating activities of continuing operations

$

234.6

$

380.6

Cash provided (required) by operating activities of discontinued operations

(32.9)

(31.4)

Cash provided (required) by investing activities of continuing operations

(197.9)

(555.3)

Cash provided (required) by investing activities of discontinued operations

198.5

(15.2)