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 1-16489
FMC Technologies, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 36-4412642 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| 1803 Gears Road, Houston, Texas | 77067 | |
| (Address of principal executive offices) | (Zip code) |
(281) 591-4000
(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 by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange 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 $0.01 per share | 67,213,018 |
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FMC Technologies, Inc. and Consolidated Subsidiaries
Consolidated Statements of Income (Unaudited)
(In millions, except per share data)
| Three Months Ended March 31, | |||||||
| 2004 |
2003 | ||||||
| Revenue |
$ | 562.7 | $ | 499.7 | |||
| Costs and expenses: |
|||||||
| Cost of sales and services |
450.2 | 403.1 | |||||
| Selling, general and administrative expense |
79.4 | 73.2 | |||||
| Research and development expense |
12.4 | 10.2 | |||||
| Total costs and expenses |
542.0 | 486.5 | |||||
| Income before minority interests, net interest expense and income taxes |
20.7 | 13.2 | |||||
| Minority interests |
(0.2 | ) | 0.2 | ||||
| Net interest expense |
2.0 | 2.2 | |||||
| Income before income taxes |
18.9 | 10.8 | |||||
| Provision for income taxes |
5.5 | 2.9 | |||||
| Net income |
$ | 13.4 | $ | 7.9 | |||
| Earnings per share (Note 10) |
|||||||
| Basic |
$ | 0.20 | $ | 0.12 | |||
| Diluted |
$ | 0.20 | $ | 0.12 | |||
| Weighted average shares outstanding (Note 10) |
|||||||
| Basic |
66.8 | 65.9 | |||||
| Diluted |
68.4 | 66.4 | |||||
The accompanying notes are an integral part of the consolidated financial statements.
2
FMC Technologies, Inc. and Consolidated Subsidiaries
Consolidated Balance Sheets
(In millions, except per share data)
| March 31, 2004 (Unaudited) |
December 31, 2003 |
|||||||
| Assets: |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 38.3 | $ | 29.0 | ||||
| Trade receivables, net of allowances of $10.1 million in 2004 and $10.3 in 2003 |
562.5 | 544.1 | ||||||
| Inventories (Note 3) |
303.2 | 286.8 | ||||||
| Other current assets |
79.9 | 89.5 | ||||||
| Total current assets |
983.9 | 949.4 | ||||||
| Investments |
33.6 | 31.8 | ||||||
| Property, plant and equipment, net of accumulated depreciation of $401.5 in 2004 and $391.5 in 2003 |
323.5 | 327.9 | ||||||
| Goodwill (Note 5) |
117.0 | 118.2 | ||||||
| Intangible assets, net (Note 5) |
72.0 | 71.2 | ||||||
| Other assets |
20.4 | 27.9 | ||||||
| Deferred income taxes |
88.7 | 78.2 | ||||||
| Total assets |
$ | 1,639.1 | $ | 1,604.6 | ||||
| Liabilities and stockholders’ equity: |
||||||||
| Current liabilities: |
||||||||
| Short-term debt |
$ | 44.4 | $ | 20.3 | ||||
| Current portion of long-term debt |
0.1 | 0.1 | ||||||
| Accounts payable, trade and other |
256.6 | 272.4 | ||||||
| Advance payments |
283.1 | 255.6 | ||||||
| Other current liabilities |
191.7 | 214.6 | ||||||
| Income taxes payable |
29.0 | 23.4 | ||||||
| Current portion of accrued pension and other postretirement benefits |
21.7 | 19.8 | ||||||
| Deferred income taxes |
38.0 | 38.9 | ||||||
| Total current liabilities |
864.6 | 845.1 | ||||||
| Long-term debt, less current portion (Note 7) |
201.1 | 201.1 | ||||||
| Accrued pension and other postretirement benefits, less current portion |
47.7 | 46.4 | ||||||
| Reserve for discontinued operations |
10.8 | 12.9 | ||||||
| Other liabilities |
51.4 | 49.2 | ||||||
| Minority interests in consolidated companies |
7.3 | 6.6 | ||||||
| Commitments and contingent liabilities (Note 14) |
||||||||
| Stockholders’ equity: |
||||||||
| Preferred stock, $0.01 par value, 12.0 shares authorized; no shares issued in 2004 or 2003 |
— | — | ||||||
| Common stock, $0.01 par value, 195.0 shares authorized; 67.0 and 66.1 shares issued in 2004 and 2003, respectively, 66.9 and 65.9 shares outstanding in 2004 and 2003, respectively |
0.7 | 0.7 | ||||||
| Common stock held in employee benefit trust, at cost, 0.1 and 0.2 shares in 2004 and 2003, respectively |
(2.2 | ) | (3.0 | ) | ||||
| Capital in excess of par value of common stock |
593.3 | 580.5 | ||||||
| Retained deficit |
(16.2 | ) | (29.6 | ) | ||||
| Accumulated other comprehensive loss (Note 9) |
(119.4 | ) | (105.3 | ) | ||||
| Total stockholders’ equity |
456.2 | 443.3 | ||||||
| Total liabilities and stockholders’ equity |
$ | 1,639.1 | $ | 1,604.6 | ||||
The accompanying notes are an integral part of the consolidated financial statements.
3
FMC Technologies, Inc. and Consolidated Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
(In millions)
| Three Months Ended March 31, |
||||||||
| 2004 |
2003 |
|||||||
| Cash provided (required) by operating activities of continuing operations: |
||||||||
| Net income |
$ | 13.4 | $ | 7.9 | ||||
| Adjustments to reconcile net income to cash provided (required) by operating activities of continuing operations: |
||||||||
| Depreciation |
14.2 | 10.3 | ||||||
| Amortization |
2.3 | 1.9 | ||||||
| Employee benefit plan costs |
7.7 | 6.4 | ||||||
| Deferred income taxes |
(2.4 | ) | (2.2 | ) | ||||
| Other |
1.4 | 1.0 | ||||||
| Changes in operating assets and liabilities, net of effects of acquisitions: |
||||||||
| Trade receivables, net |
(28.4 | ) | 16.4 | |||||
| Inventories |
(22.3 | ) | (34.4 | ) | ||||
| Other current assets and other assets |
6.5 | 9.3 | ||||||
| Accounts payable, other current liabilities and other liabilities |
(27.1 | ) | (9.4 | ) | ||||
| Advance payments |
27.5 | 35.9 | ||||||
| Income taxes |
(0.7 | ) | (5.3 | ) | ||||
| Accrued pension and other postretirement benefits, net |
(1.8 | ) | (1.2 | ) | ||||
| Cash provided (required) by operating activities of continuing operations |
$ | (9.7 | ) | $ | 36.6 | |||
(continued)
4
FMC Technologies, Inc. and Consolidated Subsidiaries
Consolidated Statements of Cash Flows (Unaudited) (continued)
(In millions)
| Three Months Ended March 31, |
||||||||
| 2004 |
2003 |
|||||||
| Cash provided (required) by operating activities of continuing operations |
$ | (9.7 | ) | $ | 36.6 | |||
| Cash required by discontinued operations |
(2.0 | ) | (2.0 | ) | ||||
| Cash provided (required) by investing activities: |
||||||||
| Retirement of sale-leaseback obligation (Note 11) |
— | (35.9 | ) | |||||
| Acquisitions and joint venture investments |
(2.1 | ) | — | |||||
| Capital expenditures |
(10.3 | ) | (14.0 | ) | ||||
| Proceeds from disposal of property, plant and equipment and other long-lived assets |
0.3 | 0.6 | ||||||
| Increase in investments |
(0.2 | ) | (0.2 | ) | ||||
| Cash required by investing activities |
(12.3 | ) | (49.5 | ) | ||||
| Cash provided (required) by financing activities: |
||||||||
| Net increase in short-term debt |
24.2 | 38.2 | ||||||
| Repayments of long-term debt |
— | (25.0 | ) | |||||
| Proceeds from issuance of common stock |
9.9 | 4.0 | ||||||
| Cash provided by financing activities |
34.1 | 17.2 | ||||||
| Effect of exchange rate changes on cash and cash equivalents |
(0.8 | ) | (0.1 | ) | ||||
| Increase in cash and cash equivalents |
9.3 | 2.2 | ||||||
| Cash and cash equivalents, beginning of period |
29.0 | 32.4 | ||||||
| Cash and cash equivalents, end of period |
$ | 38.3 | $ | 34.6 | ||||
The accompanying notes are an integral part of the consolidated financial statements.
5
FMC Technologies, Inc. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Note 1: Basis of Presentation
The accompanying consolidated financial statements include the accounts of FMC Technologies, Inc. and its subsidiaries (“FMC Technologies” or the “Company”).
In the opinion of management, these consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States applicable to interim period financial statements and reflect all adjustments necessary for a fair statement of the Company’s results of operations and cash flows for the interim periods ended March 31, 2004 and 2003, and of its financial position as of March 31, 2004. All such adjustments are of a normal recurring nature.
These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, which are included in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission for the year ended December 31, 2003.
The results of operations for interim periods are not necessarily indicative of the results of operations for full years.
Note 2: Stock-Based Compensation
Effective January 1, 2004, the Company adopted the fair value recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation,” using the retroactive restatement method described in SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure.” Under the fair value recognition provisions of SFAS No. 123, stock-based compensation cost is measured at the grant date based on the value of the award and is recognized as expense over the vesting period. Stock-based employee compensation expense was $1.1 million ($0.6 million after tax or $0.01 per diluted share) for the three months ended March 31, 2004.
The December 31, 2003, consolidated balance sheet has been restated for the retroactive adoption of the fair value recognition provisions of SFAS No. 123, which resulted in a $31.8 million increase in capital in excess of par value of common stock, a $17.8 million increase in retained deficit, and a $14.0 million increase in deferred income tax assets. The following table provides the effect of the restatement on net income and earnings per share:
| Three Months Ended March 31, 2003 | ||||||
| (In millions, except per share data)
|
Previously reported |
As restated | ||||
| Net income |
$ | 9.2 | $ | 7.9 | ||
| Basic earnings per share |
$ | 0.14 | $ | 0.12 | ||
| Diluted earnings per share |
$ | 0.14 | $ | 0.12 | ||
6
Note 3: Inventories
Inventories consisted of the following:
| (In millions)
|
March 31, 2004 |
December 31, 2003 |
||||||
| Raw materials |
$ | 77.6 | $ | 79.3 | ||||
| Work in process |
130.9 | 111.9 | ||||||
| Finished goods |
225.1 | 225.5 | ||||||
| Gross inventories before LIFO reserves and valuation adjustments |
433.6 | 416.7 | ||||||
| LIFO reserves and valuation adjustments |
(130.4 | ) | (129.9 | ) | ||||
| Net inventories |
$ | 303.2 | $ | 286.8 | ||||
Note 4: Assets Held for Sale
At December 31, 2003, assets held for sale included $2.5 million of net assets associated with research and development activities for one type of measurement technology included in the Energy Processing Systems business segment. During the first quarter of 2004, assets included in the group held for sale were redeployed for use within the Company. A sale is no longer deemed probable within a one-year period; consequently, the asset group has been reclassified from held for sale to held for use. As a result of these events, the Company recorded catch up depreciation amounting to $0.5 million during the three-month period ended March 31, 2004.
Note 5: Goodwill and Intangible Assets
Goodwill
The carrying amount of goodwill by business segment was as follows:
| (In millions)
|
March 31, 2004 |
December 31, 2003 | ||||
| Energy Production Systems |
$ | 76.1 | $ | 76.9 | ||
| Energy Processing Systems |
17.3 | 17.3 | ||||
| Subtotal Energy Systems |
93.4 | 94.2 | ||||
| FoodTech |
14.7 | 15.1 | ||||