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, 2004
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
(Exact name of registrant as specified in its charter)
| Delaware | 94-0479804 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| 1735 Market Street Philadelphia, Pennsylvania |
19103 | |
| (Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code: 215/299-6000
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS YES x NO ¨
INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS AN ACCELERATED FILER (AS DEFINED IN RULE 12b-2 OF THE ACT.) 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 April 30, 2004 | |
| Common Stock, par value $0.10 per share | 36,361,981 |
FMC CORPORATION AND CONSOLIDATED SUBSIDIARIES
INDEX
| Page No. | ||
| Part I - FINANCIAL INFORMATION |
||
| Item 1. Financial Statements |
||
| 3 | ||
| Condensed Consolidated Balance Sheets – March 31, 2004 (unaudited) and December 31, 2003 |
4 | |
| 5 | ||
| Notes to Condensed Consolidated Financial Statements (unaudited) |
7 | |
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
24 | |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk |
32 | |
| Item 4. Controls and Procedures ` |
32 | |
| Part II - OTHER INFORMATION |
||
| Item 1. Legal Proceedings |
35 | |
| 35 | ||
| 37 |
2
PART I - FINANCIAL INFORMATION
FMC CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| (in Millions, Except Share and Par Value Data) | Three Months Ended March 31, | ||||||
| 2004 |
2003 | ||||||
| (unaudited) | |||||||
| Revenue |
$ | 505.7 | $ | 434.0 | |||
| Costs and Expenses |
|||||||
| Costs of sales and services |
377.6 | 325.2 | |||||
| Selling, general and administrative expenses |
64.9 | 56.8 | |||||
| Research and development expenses |
23.9 | 20.1 | |||||
| Restructuring and other charges (Note 6) |
1.3 | — | |||||
| Total costs and expenses |
467.7 | 402.1 | |||||
| Income from continuing operations before equity in loss of affiliates, minority interests, interest expense, net and income taxes |
38.0 | 31.9 | |||||
| Equity in loss of affiliates (Note 14) |
9.7 | 3.5 | |||||
| Minority interests |
0.7 | 0.7 | |||||
| Interest expense, net |
20.4 | 25.3 | |||||
| Income from continuing operations before income taxes |
7.2 | 2.4 | |||||
| Provision (benefit) for income taxes |
(0.1 | ) | 0.5 | ||||
| Income from continuing operations |
7.3 | 1.9 | |||||
| Discontinued operations, net of income taxes (See Note 8) |
(1.8 | ) | — | ||||
| Net income |
$ | 5.5 | $ | 1.9 | |||
| Basic earnings per common share (Note 10): |
|||||||
| Continuing operations |
$ | 0.20 | $ | 0.05 | |||
| Discontinued Operations |
(0.05 | ) | — | ||||
| Net income |
$ | 0.15 | $ | 0.05 | |||
| Diluted earnings per common share (Note 10): |
|||||||
| Continuing operations |
$ | 0.20 | $ | 0.05 | |||
| Discontinued Operations |
(0.05 | ) | — | ||||
| Net income |
$ | 0.15 | $ | 0.05 | |||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
FMC CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| (in Millions, Except Share and Par Value Data) |
March 31, 2004 |
December 31, 2003 |
||||||
| (unaudited) | ||||||||
| ASSETS |
||||||||
| Current assets |
||||||||
| Cash and cash equivalents |
$ | 65.1 | $ | 57.0 | ||||
| Restricted cash (Note 7) |
136.7 | 136.9 | ||||||
| Trade receivables, net of allowance of $7.8 at March 31, 2004 and $6.9 at December 31, 2003 |
550.6 | 478.2 | ||||||
| Inventories |
180.1 | 192.6 | ||||||
| Other current assets |
122.1 | 112.1 | ||||||
| Deferred income taxes |
32.7 | 32.9 | ||||||
| Total current assets |
1,087.3 | 1,009.7 | ||||||
| Investments (Notes 14 and 15) |
57.8 | 68.8 | ||||||
| Property, plant and equipment, net (Note 5) |
1,102.8 | 1,128.1 | ||||||
| Goodwill (Note 3) |
152.2 | 156.3 | ||||||
| Other assets |
140.6 | 143.7 | ||||||
| Deferred income taxes |
319.3 | 322.2 | ||||||
| Total assets |
$ | 2,860.0 | $ | 2,828.8 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities |
||||||||
| Short-term debt (Note 7) |
$ | 22.9 | $ | 13.8 | ||||
| Current portion of long-term debt (Note 7) |
3.0 | 3.0 | ||||||
| Accounts payable, trade and other |
256.7 | 299.5 | ||||||
| Accrued and other liabilities |
302.5 | 304.3 | ||||||
| Guarantees of vendor financing (Note 15) |
56.1 | 44.3 | ||||||
| Accrued pensions and other postretirement benefits, current (Note 13) |
13.2 | 13.7 | ||||||
| Income taxes |
40.3 | 48.9 | ||||||
| Total current liabilities |
694.7 | 727.5 | ||||||
| Long-term debt, less current portion (Note 7) |
1,096.3 | 1,033.4 | ||||||
| Accrued pension and other postretirement benefits, long-term (Note 13) |
132.0 | 132.1 | ||||||
| Environmental liabilities, continuing and discontinued (Note 9) |
153.6 | 156.0 | ||||||
| Reserve for discontinued operations (Note 8) |
65.5 | 65.6 | ||||||
| Other long-term liabilities |
73.3 | 77.6 | ||||||
| Minority interests in consolidated companies |
47.7 | 48.3 | ||||||
| Commitments and contingent liabilities (Note 15) |
||||||||
| Stockholders’ equity |
||||||||
| Preferred stock, no par value, authorized 5,000,000 shares; no shares issued in 2004 or 2003 |
— | — | ||||||
| Common stock, $0.10 par value, authorized 130,000,000 shares in 2004 and 2003; 43,800,495 issued shares at March 31, 2004 and 43,203,561 issued shares at December 31, 2003 |
4.4 | 4.3 | ||||||
| Capital in excess of par value of common stock |
357.0 | 338.8 | ||||||
| Retained earnings |
780.1 | 774.6 | ||||||
| Accumulated other comprehensive loss (Note 11) |
(37.0 | ) | (21.8 | ) | ||||
| Treasury stock, common, at cost: 7,939,391 shares at March 31, 2004 and 7,942,161 shares at December 31, 2003 |
(507.6 | ) | (507.6 | ) | ||||
| Total stockholders’ equity |
596.9 | 588.3 | ||||||
| Total liabilities and stockholders’ equity |
$ | 2,860.0 | $ | 2,828.8 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
FMC CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
| Three Months Ended March 31, |
||||||||
| (in Millions)
|
2004 |
2003 |
||||||
| (unaudited) | ||||||||
| Cash provided (required) by operating activities of continuing operations: |
||||||||
| Net income from continuing operations |
$ | 7.3 | $ | 1.9 | ||||
| Adjustments from net income to cash required by operating activities of continuing operations: |
||||||||
| Depreciation and amortization |
33.2 | 30.5 | ||||||
| Equity in loss of affiliates |
9.7 | 3.5 | ||||||
| Restructuring and other charges (Note 6) |
1.3 | — | ||||||
| Deferred income taxes |
(0.3 | ) | (1.6 | ) | ||||
| Minority interests |
0.7 | 0.7 | ||||||
| Other |
4.4 | 1.9 | ||||||
| Changes in operating assets and liabilities, excluding the effect of acquisitions and divestitures of businesses: |
||||||||
| Trade receivables, net |
(72.4 | ) | (42.7 | ) | ||||
| Inventories |
12.4 | (5.1 | ) | |||||
| Other current assets and other assets |
(6.0 | ) | (22.8 | ) | ||||
| Accounts payable, trade and other |
(42.8 | ) | (54.9 | ) | ||||
| Accrued and other liabilities |
(1.8 | ) | 5.8 | |||||
| Income taxes payable |
(5.8 | ) | 0.5 | |||||
| Accrued pension and other postretirement benefits, net (Note 13) |
(4.3 | ) | (5.2 | ) | ||||
| Environmental spending, continuing (Note 9) |
(0.8 | ) | (1.9 | ) | ||||
| Restructuring and other spending (Note 6) |
(4.5 | ) | (7.9 | ) | ||||
| Cash required by operating activities |
(69.7 | ) | (97.3 | ) | ||||
| Cash required by discontinued operations: |
||||||||
| Environmental spending, discontinued (Note 9) |
(4.8 | ) | (5.0 | ) | ||||
| Other reserves |
(1.7 | ) | (0.5 | ) | ||||
| Cash required by discontinued operations |
(6.5 | ) | (5.5 | ) | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
FMC CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW (CONTINUED)
| Three Months Ended March 31, |
||||||||
| (in Millions)
|
2004 |
2003 |
||||||
| (unaudited) | ||||||||
| Cash provided (required) by investing activities: |
||||||||
| Capital expenditures |
$ | (13.3 | ) | $ | (17.1 | ) | ||
| Proceeds from disposal of property, plant and equipment |
1.3 | 0.8 | ||||||
| Decrease in investments |
— | 0.7 | ||||||
| Cash required by investing activities |
(12.0 | ) | (15.6 | ) | ||||
| Cash provided (required) by financing activities: |
||||||||
| Net borrowings under committed credit facilities (Note 9) |
67.0 | 87.0 | ||||||
| Increase (decrease) in other short-term debt and commercial paper |
9.0 | (20.7 | ) | |||||
| Net decrease in restricted cash |
0.2 | 15.3 | ||||||
| Increase in guarantees of vendor financing (Note 15) |
11.8 | 20.1 | ||||||
| Repayment of long-term debt (Note 7) |
(4.5 | ) | (16.1 | ) | ||||
| Distributions to minority partners |
(1.2 | ) | (1.8 | ) | ||||
| Issuances of common stock, net |
15.5 | 3.3 | ||||||
| Cash provided by financing activities |
97.8 | 87.1 | ||||||
| Effect of exchange rate changes on cash and cash equivalents |
(1.5 | ) | 1.7 | |||||
| Increase (decrease) in cash and cash equivalents |
8.1 | (29.6 | ) | |||||
| Cash and cash equivalents, beginning of period |
57.0 | 89.6 | ||||||
| Cash and cash equivalents, end of period |
$ | 65.1 | $ | 60.0 | ||||
Supplemental disclosure of cash flow information: Cash paid for interest was $15.0 million and $17.6 million, and cash paid for income taxes, net of refunds, was net taxes paid of $6.1 million and a net refund of $3.0 million for the three months ended March 31, 2004 and 2003, respectively.
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
FMC CORPORATION AND CONSOLIDATED SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (unaudited)
Note 1: Financial Information and Accounting Policies
In our opinion the condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America applicable to interim period financial statements and reflect all adjustments necessary for a fair statement of results of operations and cash flows for the three months ended March 31, 2004 and 2003, and our financial position as of March 31, 2004. All such adjustments are of a normal recurring nature. The results of operations for the three months ended March 31, 2004 and 2003 are not necessarily indicative of the results of operations for the full year. The condensed consolidated balance sheet as of March 31, 2004 and the related condensed consolidated statement of operations for the three months ended March 31, 2004 and 2003, and condensed consolidated statement of cash flows for the three months ended March 31, 2004 and 2003, have been reviewed by our independent accountants. The review is described more fully in their report included herein.
Our accounting policies are set forth in detail in Note 1 to the 2003 consolidated financial statements on Form 10-K. Certain prior year amounts have been reclassified to conform to the current period’s presentation.
Note 2: Recently Adopted and Issued Accounting Pronouncements
Recently adopted accounting standards
We adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 46R “Consolidation of Variable Interest Entities – a modification of FASB Interpretation No. 46,”(“FIN 46R”) on March 15, 2004. FIN 46R clarifies the application of Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” for certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46R establishes standards under which a variable interest entity should be consolidated by the primary beneficiary. This standard did not have an effect on our financial condition or results of operations for the three months ended March 31, 2004.
In December 2003 the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin No. 104 “Revenue Recognition” (“SAB 104”) effective December 17, 2003. SAB 104 updates portions of the interpretive guidance included in Topic 13 of the codification of SABs to make this interpretive guidance consistent with current authoritative accounting and auditing guidance and SEC rules and regulations related to revenue recognit