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, 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)
200 East Randolph Drive, Chicago, Illinois 60601
(Former address of principal executive offices)
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 July 31, 2004 | |
| Common Stock, par value $0.01 per share | 67,481,941 |
PART I—FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FMC Technologies, Inc. and Consolidated Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
(In millions, except per share data)
| Three Months Ended June 30, |
Six Months Ended June 30, | ||||||||||||
| 2004 |
2003 |
2004 |
2003 | ||||||||||
| Revenue |
$ | 671.5 | $ | 609.9 | $ | 1,234.2 | $ | 1,109.6 | |||||
| Costs and expenses: |
|||||||||||||
| Cost of sales and services |
541.7 | 489.2 | 991.9 | 892.3 | |||||||||
| Selling, general and administrative expense |
83.1 | 77.9 | 162.5 | 151.1 | |||||||||
| Research and development expense |
10.9 | 10.8 | 23.3 | 21.0 | |||||||||
| Total costs and expenses |
635.7 | 577.9 | 1,177.7 | 1,064.4 | |||||||||
| Income before minority interests, net interest expense and income taxes |
35.8 | 32.0 | 56.5 | 45.2 | |||||||||
| Minority interests |
0.1 | 0.2 | (0.1 | ) | 0.4 | ||||||||
| Net interest expense |
1.8 | 2.5 | 3.8 | 4.7 | |||||||||
| Income before income taxes |
33.9 | 29.3 | 52.8 | 40.1 | |||||||||
| Provision for income taxes |
9.8 | 8.2 | 15.3 | 11.1 | |||||||||
| Net income |
$ | 24.1 | $ | 21.1 | $ | 37.5 | $ | 29.0 | |||||
| Earnings per share (Note 10) |
|||||||||||||
| Basic |
$ | 0.36 | $ | 0.32 | $ | 0.56 | $ | 0.44 | |||||
| Diluted |
$ | 0.35 | $ | 0.32 | $ | 0.55 | $ | 0.44 | |||||
| Weighted average shares outstanding (Note 10) |
|||||||||||||
| Basic |
67.2 | 66.1 | 67.0 | 66.0 | |||||||||
| Diluted |
69.0 | 66.8 | 68.7 | 66.6 | |||||||||
The accompanying notes are an integral part of the consolidated financial statements.
- 2 -
FMC Technologies, Inc. and Consolidated Subsidiaries
Condensed Consolidated Balance Sheets
(In millions, except per share data)
| June 30, 2004 |
December 31, 2003 |
|||||||
| (Unaudited) | ||||||||
| Assets: |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 101.5 | $ | 29.0 | ||||
| Trade receivables, net of allowances of $10.1 in 2004 and $10.3 in 2003 |
561.9 | 544.1 | ||||||
| Inventories (Note 3) |
288.6 | 286.8 | ||||||
| Other current assets |
67.2 | 89.5 | ||||||
| Total current assets |
1,019.2 | 949.4 | ||||||
| Investments |
34.5 | 31.8 | ||||||
| Property, plant and equipment, net of accumulated depreciation of $411.7 in 2004 and $391.5 in 2003 |
319.7 | 327.9 | ||||||
| Goodwill (Note 5) |
115.2 | 118.2 | ||||||
| Intangible assets, net (Note 5) |
70.8 | 71.2 | ||||||
| Other assets |
115.4 | 106.1 | ||||||
| Total assets |
$ | 1,674.8 | $ | 1,604.6 | ||||
| Liabilities and stockholders’ equity: |
||||||||
| Current liabilities: |
||||||||
| Short-term debt and current portion of long-term debt |
$ | 40.6 | $ | 20.4 | ||||
| Accounts payable, trade and other |
275.1 | 272.4 | ||||||
| Advance payments |
283.7 | 255.6 | ||||||
| Other current liabilities |
205.8 | 214.6 | ||||||
| Income taxes payable |
59.3 | 23.4 | ||||||
| Current portion of accrued pension and other postretirement benefits |
40.2 | 19.8 | ||||||
| Deferred income taxes |
8.6 | 38.9 | ||||||
| Total current liabilities |
913.3 | 845.1 | ||||||
| Long-term debt, less current portion (Note 7) |
172.9 | 201.1 | ||||||
| Accrued pension and other postretirement benefits, less current portion |
32.9 | 46.4 | ||||||
| Reserve for discontinued operations |
7.3 | 12.9 | ||||||
| Other liabilities |
56.8 | 55.8 | ||||||
| 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; 67.4 and 66.4 shares issued in 2004 and 2003, respectively; 67.3 and 66.2 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 |
(2.0 | ) | (3.0 | ) | ||||
| Capital in excess of par value of common stock |
603.3 | 580.5 | ||||||
| Retained earnings (deficit) |
7.9 | (29.6 | ) | |||||
| Accumulated other comprehensive loss (Note 9) |
(118.3 | ) | (105.3 | ) | ||||
| Total stockholders’ equity |
491.6 | 443.3 | ||||||
| Total liabilities and stockholders’ equity |
$ | 1,674.8 | $ | 1,604.6 | ||||
The accompanying notes are an integral part of the consolidated financial statements.
- 3 -
FMC Technologies, Inc. and Consolidated Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In millions)
| Six Months Ended June 30, |
||||||||
| 2004 |
2003 |
|||||||
| Cash provided (required) by operating activities of continuing operations: |
||||||||
| Net income |
$ | 37.5 | $ | 29.0 | ||||
| Adjustments to reconcile net income to cash provided (required) by operating activities of continuing operations: |
||||||||
| Depreciation |
26.5 | 22.7 | ||||||
| Amortization |
4.5 | 4.0 | ||||||
| Net increase in advance payments |
28.0 | 32.4 | ||||||
| Other |
(4.6 | ) | (15.2 | ) | ||||
| Cash provided by operating activities of continuing operations |
91.9 | 72.9 | ||||||
| Cash required by discontinued operations |
(5.5 | ) | (4.6 | ) | ||||
| Cash provided (required) by investing activities: |
||||||||
| Capital expenditures |
(22.8 | ) | (27.7 | ) | ||||
| Retirement of sale-leaseback obligations (Note 11) |
— | (35.9 | ) | |||||
| Other |
2.4 | 1.5 | ||||||
| Cash required by investing activities |
(20.4 | ) | (62.1 | ) | ||||
| Cash provided (required) by financing activities: |
||||||||
| Net increase (decrease) in short-term debt |
20.3 | (39.6 | ) | |||||
| Net increase in commercial paper |
21.8 | 185.0 | ||||||
| Repayments of long-term debt |
(50.0 | ) | (124.9 | ) | ||||
| Proceeds from issuance of common stock |
15.2 | 4.0 | ||||||
| Cash provided by financing activities |
7.3 | 24.5 | ||||||
| Effect of exchange rate changes on cash and cash equivalents |
(0.8 | ) | 0.2 | |||||
| Increase in cash and cash equivalents |
72.5 | 30.9 | ||||||
| Cash and cash equivalents, beginning of period |
29.0 | 32.4 | ||||||
| Cash and cash equivalents, end of period |
$ | 101.5 | $ | 63.3 | ||||
| Supplemental disclosures of cash flow information: |
||||||||
| Cash paid for interest (net of capitalized interest) |
$ | 4.3 | $ | 5.3 | ||||
| Cash paid for income taxes (net of refunds received) |
$ | 13.7 | $ | 13.1 | ||||
The accompanying notes are an integral part of the consolidated financial statements.
- 4 -
FMC Technologies, Inc. and Consolidated Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
Note 1: Basis of Presentation
The accompanying condensed 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 June 30, 2004 and 2003, and of its financial position as of June 30, 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.
Certain prior period amounts have been reclassified to conform to the current period’s presentation.
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 $3.1 million ($1.9 million after tax or $0.03 per diluted share) for the three months ended June 30, 2004, and $5.8 million ($3.5 million after tax or $0.05 per diluted share) for the six months ended June 30, 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 June 30, 2003 |
Six Months Ended June 30, 2003 | |||||||||||
| (In millions, except per share data)
|
Previously reported |
As restated |
Previously reported |
As restated | ||||||||
| Net income |
$ | 22.9 | $ | 21.1 | $ | 32.1 | $ | 29.0 | ||||
| Basic earnings per share |
$ | 0.35 | $ | 0.32 | $ | 0.49 | $ | 0.44 | ||||
| Diluted earnings per share |
$ | 0.34 | $ | 0.32 | $ | 0.48 | $ | 0.44 | ||||
- 5 -
Note 3: Inventories
Inventories consisted of the following:
| (In millions)
|
June 30, 2004 |
December 31, 2003 |
||||||
| Raw materials |
$ | 76.4 | $ | 79.3 | ||||
| Work in process |
124.3 | 111.9 | ||||||
| Finished goods |
221.8 | 225.5 | ||||||
| Gross inventories before LIFO reserves and valuation adjustments |
422.5 | 416.7 | ||||||
| LIFO reserves and valuation adjustments |
(133.9 | ) | (129.9 | ) | ||||
| Net inventories |
$ | 288.6 | $ | 286.8 | ||||
Note 4: Assets Held for Sale
MODEC International LLC. MODEC International LLC is a joint venture between the Company and a subsidiary of MODEC, Inc. Subsequent to June 30, 2004, the Company agreed to divest its 37.5% interest in the joint venture. The divestiture is pursuant to an agreement with MODEC, Inc. which provided the Company with the right, beginning May 2004, to convert its joint venture interest into shares of common stock of MODEC, Inc. The agreement states that the amount of consideration to be received by the Company is based on the relative contribution of the operating results of MODEC International LLC to the income of MODEC, Inc. for the precedin