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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, 2014
or
o
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  o
INDICATE BY CHECK MARK WHETHER THE REGISTRANT HAS SUBMITTED ELECTRONICALLY AND POSTED ON ITS CORPORATE WEBSITE, IF ANY, EVERY INTERACTIVE DATA FILE REQUIRED TO BE SUBMITTED AND POSTED PURSUANT TO RULE 405 OF REGULATION S-T DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO SUBMIT AND POST SUCH FILES)    YES  x    NO  o
INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS A LARGE ACCELERATED FILER, AN ACCELERATED FILER, A NON-ACCELERATED FILER OR A SMALLER REPORTING COMPANY. SEE THE DEFINITIONS OF “LARGE ACCELERATED FILER,” “ACCELERATED FILER,” AND “SMALLER REPORTING COMPANY” IN RULE 12B-2 OF THE EXCHANGE ACT. (CHECK ONE):
LARGE ACCELERATED FILER
 
x
  
ACCELERATED FILER
 
o
 
 
 
 
 
 
 
NON-ACCELERATED FILER
 
o
  
SMALLER REPORTING COMPANY
 
o
INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS A SHELL COMPANY (AS DEFINED IN RULE 12B-2 OF THE EXCHANGE ACT)    YES  o    NO  x
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, 2014
Common Stock, par value $0.10 per share
 
133,241,113



FMC CORPORATION
INDEX
 
 
Page
No.


2


PART I - FINANCIAL INFORMATION
 
ITEM 1.    FINANCIAL STATEMENTS

FMC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 
(in Millions, Except Per Share Data)
Three Months Ended June 30
 
Six Months Ended June 30
2014
 
2013
 
2014
 
2013
 
(unaudited)
 
(unaudited)
Revenue
$
987.8

 
$
876.0

 
$
1,929.6

 
$
1,786.7

Costs and Expenses
 
 
 
 
 
 
 
Costs of sales and services
630.2

 
548.5

 
1,243.5

 
1,105.6

 
 
 
 
 
 
 
 
Gross margin
357.6

 
327.5

 
686.1

 
681.1

 
 
 
 
 
 
 
 
Selling, general and administrative expenses
125.0

 
127.3

 
244.4

 
249.2

Research and development expenses
33.2

 
27.7

 
59.3

 
55.7

Restructuring and other charges (income)
2.7

 
5.9

 
9.4

 
15.2

Business separation costs
13.8

 

 
16.8

 

Total costs and expenses
804.9

 
709.4

 
1,573.4

 
1,425.7

Income from continuing operations before equity in (earnings) loss of affiliates, interest expense, net and income taxes
182.9

 
166.6

 
356.2

 
361.0

Equity in (earnings) loss of affiliates
0.2

 
0.1

 
0.2

 
0.4

Interest expense, net
15.3

 
11.1

 
28.8

 
21.6

Income from continuing operations before income taxes
167.4

 
155.4

 
327.2

 
339.0

Provision for income taxes
41.5

 
35.7

 
80.8

 
81.1

Income from continuing operations
125.9

 
119.7

 
246.4

 
257.9

Discontinued operations, net of income taxes
(12.6
)
 
1.5

 
(62.7
)
 
(1.7
)
Net income
113.3

 
121.2

 
183.7

 
256.2

Less: Net income attributable to noncontrolling interests
4.2

 
3.2

 
9.0

 
7.3

Net income attributable to FMC stockholders
$
109.1

 
$
118.0

 
$
174.7

 
$
248.9

Amounts attributable to FMC stockholders:
 
 
 
 
 
 
 
Continuing operations, net of income taxes
$
121.7

 
$
116.5

 
$
237.4

 
$
250.6

Discontinued operations, net of income taxes
(12.6
)
 
1.5

 
(62.7
)
 
(1.7
)
Net income attributable to FMC stockholders
$
109.1

 
$
118.0

 
$
174.7

 
$
248.9

Basic earnings (loss) per common share attributable to FMC stockholders:
 
 
 
 
 
 
 
Continuing operations
$
0.91

 
$
0.85

 
$
1.78

 
$
1.83

Discontinued operations
(0.09
)
 
0.01

 
(0.47
)
 
(0.01
)
Net income attributable to FMC stockholders
$
0.82

 
$
0.86

 
$
1.31

 
$
1.82

Diluted earnings (loss) per common share attributable to FMC stockholders:
 
 
 
 
 
 
 
Continuing operations
$
0.90

 
$
0.85

 
$
1.77

 
$
1.82

Discontinued operations
(0.09
)
 
0.01

 
(0.47
)
 
(0.01
)
Net income attributable to FMC stockholders
$
0.81

 
$
0.86

 
$
1.30

 
$
1.81

The accompanying notes are an integral part of these condensed consolidated financial statements.


3


FMC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 
(in Millions)
Three Months Ended June 30
 
Six Months Ended June 30
2014
 
2013
 
2014
 
2013
 
(unaudited)
 
(unaudited)
Net income
$
113.3

 
$
121.2

 
$
183.7

 
$
256.2

Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
Foreign currency translation adjustments (1)
(3.5
)
 
1.1

 
46.4

 
(13.5
)
 
 
 
 
 
 
 
 
Derivative instruments:
 
 
 
 
 
 
 
Unrealized hedging gains (losses) and other, net of tax of $1.1 and $2.4 for the three and six months ended 2014 and $(5.1) and $(1.5) for the three and six months ended 2013, respectively
2.0

 
(9.4
)
 
4.5

 
(3.2
)
Reclassification of deferred hedging (gains) losses and other, included in net income, net of tax of $0.6 and $1.0 for the three and six months ended 2014 and $(0.6) and $(1.0) for the three and six months ended 2013, respectively (3)
1.1

 
(1.4
)
 
2.2

 
(2.1
)
Total derivative instruments, net of tax of $1.7 and $3.4 for the three and six months ended 2014 and $(5.7) and $(2.5) for the three and six months ended 2013, respectively
3.1

 
(10.8
)
 
6.7

 
(5.3
)
 
 
 
 
 
 
 
 
Pension and other postretirement benefits:
 
 
 
 
 
 
 
Unrealized actuarial gains (losses) and prior service (costs) credits, net of tax of zero for the three and six months ended 2014 and zero and $0.1 for the three and six months ended 2013, respectively (2)
(0.6
)
 
(0.5
)
 
(0.1
)
 
0.1

Reclassification of net actuarial and other (gain) loss and amortization of prior service costs, included in net income, net of tax of $3.7 and $6.9 for the three and six months ended 2014 and $6.6 and $13.0 for the three and six months ended 2013, respectively (3)
6.7

 
10.7

 
12.7

 
21.5

Total pension and other postretirement benefits, net of tax of $3.7 and $6.9 for the three and six months ended 2014 and $6.6 and $13.1 for the three and six months end 2013, respectively
6.1

 
10.2

 
12.6

 
21.6

 
 
 
 
 
 
 
 
Other comprehensive income (loss), net of tax
5.7

 
0.5

 
65.7

 
2.8

Comprehensive income
$
119.0

 
$
121.7

 
$
249.4

 
$
259.0

Less: Comprehensive income attributable to the noncontrolling interest
3.4

 
3.9

 
8.5

 
7.9

Comprehensive income attributable to FMC stockholders
$
115.6

 
$
117.8

 
$
240.9

 
$
251.1

____________________ 
(1)
Income taxes are not provided on the equity in undistributed earnings of our foreign subsidiaries or affiliates since it is our intention that such earnings will remain invested in those affiliates permanently. The amount for the six months end June 30, 2014 includes reclassification to net income due to the divestiture of our FMC Peroxygens business, see Note 14 for more information. In accordance with accounting guidance, this amount was previously factored into the lower of cost or fair value test associated with the 2013 Peroxygens' asset held for sale write-down charges.
(2)
At December 31st of each year, we remeasure our pension and postretirement plan obligations at which time we record any actuarial gains (losses) and prior service (costs) credits to other comprehensive income. The interim adjustments noted above reflect the foreign currency translation impacts from the unrealized actuarial gains (losses) and prior service (costs) credits related to our foreign pension and postretirement plans.
(3)
For more detail on the components of these reclassifications and the affected line item in the Condensed Consolidated Statements of Income see Note 14.


4


FMC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in Millions, Except Share and Par Value Data)
June 30, 2014
 
December 31, 2013
ASSETS
(unaudited)
Current assets
 
 
 
Cash and cash equivalents
$
114.4

 
$
123.2

Trade receivables, net of allowance - 2014: $31.0; 2013: $30.2
1,500.0

 
1,484.3

Inventories
738.2

 
688.4

Prepaid and other current assets
183.0

 
236.8

Deferred income taxes
216.4

 
214.0

Current assets of discontinued operations held for sale

 
198.3

Total current assets
$
2,752.0

 
$
2,945.0

Investments
26.7

 
26.8

Property, plant and equipment, net
1,284.9

 
1,248.3

Goodwill
387.8

 
389.4

Other intangibles, net
265.6

 
272.3

Other assets
309.0

 
262.0

Deferred income taxes
101.3

 
91.4

Total assets
$
5,127.3

 
$
5,235.2

LIABILITIES AND EQUITY
 
 
 
Current liabilities
 
 
 
Short-term debt and current portion of long-term debt
$
544.2

 
$
697.8

Accounts payable, trade and other
393.3

 
475.2

Advance payments from customers
4.0

 
178.9

Accrued and other liabilities
298.8

 
307.0

Accrued customer rebates
350.1

 
203.7

Guarantees of vendor financing
52.5

 
27.9

Accrued pension and other postretirement benefits, current
12.7

 
12.7

Income taxes
37.3

 
35.3

Current liabilities of discontinued operations held for sale

 
48.2

Total current liabilities
$
1,692.9

 
$
1,986.7

Long-term debt, less current portion
1,153.7

 
1,154.1

Accrued pension and other postretirement benefits, long-term
49.0

 
57.8

Environmental liabilities, continuing and discontinued
170.5

 
175.2

Deferred income taxes
75.1

 
73.1

Other long-term liabilities
217.7

 
216.2

Commitments and contingent liabilities (Note 18)

 

Equity
 
 
 
Preferred stock, no par value, authorized 5,000,000 shares; no shares issued in 2014 or 2013

 

Common stock, $0.10 par value, authorized 260,000,000 shares; 185,983,792 issued shares at 2014 and 2013
18.6

 
18.6

Capital in excess of par value of common stock
435.7

 
448.3

Retained earnings
2,891.8

 
2,757.3

Accumulated other comprehensive income (loss)
(135.7
)
 
(201.9
)
Treasury stock, common, at cost - 2014: 52,742,679 shares, 2013: 53,098,103 shares
(1,499.8
)
 
(1,502.5
)
Total FMC stockholders’ equity
$
1,710.6

 
$
1,519.8

Noncontrolling interests
57.8

 
52.3

Total equity
$
1,768.4

 
$
1,572.1

Total liabilities and equity
$
5,127.3

 
$
5,235.2

The accompanying notes are an integral part of these condensed consolidated financial statements.

5


FMC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(in Millions)
Six Months Ended June 30
2014
 
2013
 
(unaudited)
Cash provided (required) by operating activities of continuing operations:
 
 
 
Net income
$
183.7

 
$
256.2

Discontinued operations
62.7

 
1.7

Income from continuing operations
$
246.4

 
$
257.9

Adjustments from income from continuing operations to cash provided (required) by operating activities of continuing operations:
 
 
 
Depreciation and amortization
65.7

 
57.5

Equity in (earnings) loss of affiliates
0.2

 
0.4

Restructuring and other charges (income)
9.4

 
15.2

Deferred income taxes
(20.8
)
 
15.0

Pension and other postretirement benefits
17.5

 
36.2

Share-based compensation
8.4

 
8.8

Excess tax benefits from share-based compensation
(4.0
)
 
(6.3
)
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:
 
 
 
Trade receivables, net
(15.2
)
 
29.9

Guarantees of vendor financing
24.6

 
(17.0
)
Inventories
(50.2
)
 
10.4

Other current assets and other assets
(8.9
)
 
(21.8
)
Accounts payable
(52.3
)
 
(71.7
)
Accrued and other current liabilities and other liabilities
(5.0
)
 
(19.8
)
Advance payments from customers
(174.9
)
 
(135.1
)
Accrued payroll
(21.8
)
 
(19.9
)
Accrued customer rebates
146.0

 
178.8

Income taxes
38.3

 
(18.1
)
Pension and other postretirement benefit contributions
(45.2
)
 
(43.0
)
Environmental spending, continuing, net of recoveries
(5.1
)
 
(2.9
)
Restructuring and other spending
(4.6
)
 
(6.5
)
Cash provided (required) by operating activities of continuing operations
$
148.5

 
$
248.0

 
 
 
 
Cash provided (required) by operating activities of discontinued operations:
 
 
 
Environmental spending, discontinued, net of recoveries
(9.9
)
 
(17.2
)
Operating activities of discontinued operations of FMC Peroxygens
(1.2
)
 
1.7

Payments of other discontinued reserves, net of recoveries
(22.3
)
 
0.6

Cash provided (required) by operating activities of discontinued operations
$
(33.4
)
 
$
(14.9
)
The accompanying notes are an integral part of these condensed consolidated financial statements.
(continued)

6


FMC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
 
(in Millions)
Six Months Ended June 30
2014
 
2013
 
(unaudited)
Cash provided (required) by investing activities of continuing operations:
 
 
 
Capital expenditures
$
(120.6
)
 
$
(85.0
)
Proceeds from disposal of property, plant and equipment
0.1

 
1.7

Acquisitions, net of cash acquired

 
(0.2
)
Investments in nonconsolidated affiliates
(0.4
)
 
(4.5
)
Other investing activities
(4.4
)
 
(13.4
)
Cash provided (required) by investing activities of continuing operations
$
(125.3
)
 
$
(101.4
)
 
 
 
 
Cash provided (required) by investing activities of discontinued operations:
 
 
 
Proceeds from FMC Peroxygens divestiture
199.1

 

       Other discontinued investing activities
0.9

 
(11.3
)
Cash provided (required) by investing activities of discontinued operations
$
200.0

 
$
(11.3
)
 
 
 
 
Cash provided (required) by financing activities of continuing operations:
 
 
 
Net borrowings (repayments) under committed credit facility

 
(130.0
)
Increase (decrease) in short-term debt
(138.0
)
 
236.6

Repayments of long-term debt
(17.3
)
 
(0.4
)
Proceeds from borrowings of long-term debt

 
0.5

Net distributions to and acquisitions of noncontrolling interests
(11.5
)
 
(86.6
)
Issuances of common stock, net
6.7

 
8.4

Excess tax benefits from share-based compensation
4.0

 
6.3

Dividends paid
(38.0
)
 
(37.1
)
Repurchases of common stock under publicly announced program

 
(109.9
)
Other repurchases of common stock
(4.1
)
 
(6.4
)
Contingent consideration paid

 
(0.5
)
Cash provided (required) by financing activities of continuing operations
$
(198.2
)
 
$
(119.1
)
Effect of exchange rate changes on cash and cash equivalents
(0.4
)
 
(1.0
)
Increase (decrease) in cash and cash equivalents
(8.8
)
 
0.3

Cash and cash equivalents, beginning of period
123.2

 
77.1

Cash and cash equivalents, end of period
$
114.4

 
$
77.4

Supplemental disclosure of cash flow information: Cash paid for interest, net of capitalized interest was $19.6 million and $22.4 million, and income taxes paid, net of refunds were $57.3 million and $89.5 million for the six months ended June 30, 2014 and 2013, respectively. Non-cash additions to property, plant and equipment were $22.6 million and $8.0 million for June 30, 2014 and 2013.
See Note 13 regarding quarterly cash dividend.

The accompanying notes are an integral part of these condensed consolidated financial statements.

7


FMC CORPORATION
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 U.S. generally accepted accounting principles (“GAAP”) applicable to interim period financial statements and reflect all adjustments necessary for a fair statement of results of operations for the three and six months ended June 30, 2014 and 2013, cash flows for the six months ended June 30, 2014 and 2013, and our financial position as of June 30, 2014 and December 31, 2013. All such adjustments included herein are of a normal, recurring nature unless otherwise disclosed in the Notes. The results of operations for the three and six months ended June 30, 2014 and 2013 are not necessarily indicative of the results of operations for the full year. The condensed consolidated balance sheets as of June 30, 2014 and December 31, 2013, and the related condensed consolidated statements of income, condensed consolidated statements of comprehensive income and condensed consolidated statements of cash flows for the three and six months ended June 30, 2014 and 2013, have been reviewed by our independent registered public 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 consolidated financial statements included with our Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2013 (the “2013 10-K”).
Certain prior year amounts have been reclassified to conform to the current year’s presentation.

Note 2: Recently Issued and Adopted Accounting Pronouncements and Regulatory Items
New accounting guidance and regulatory items
In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This new guidance will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. We are required to adopt this standard on January 1, 2017. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. We are evaluating the effect that ASU 2014-09 will have on our consolidated financial statements and related disclosures. We have not yet selected a transition method nor have we determined the effect of the standard on our ongoing financial reporting.
In April 2014, the FASB issued its updated guidance on the financial reporting of discontinued operations. This new standard changes the criteria for reporting discontinued operations while enhancing disclosures in this area. Under the new guidance, only disposals representing a strategic shift in operations should be presented as discontinued operations. Additionally, expanded disclosures about discontinued operations will be required to provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. This guidance impacts disclosures within an entity's financial statements and notes to the financial statements. We are required to adopt this guidance prospectively in the first quarter of 2015. The updated guidance will not impact existing conclusions with respect to discontinued operations classification.

Note 3: Business Separation
On March 10, 2014, we announced a plan to separate into two independent public companies. One company, initially referred to as “New FMC,” will contain our FMC Agricultural Solutions and FMC Health and Nutrition segments, while the other company, "FMC Minerals," will be comprised of our FMC Minerals segment. “New FMC” will be renamed "FMC Corporation" subsequent to the separation.
We are currently in the process of evaluating the form and structure to separate FMC Corporation into two separate independent companies. We expect the separation, which remains subject to final board approval and other customary conditions, to take the form of a tax-free distribution of shares to existing FMC Corporation shareholders.
For the three and six months ended June 30, 2014, $13.8 million and $16.8 million, respectively in expense was recognized related to this transaction and is included within "Business separation costs" on our condensed consolidated statement of income. These costs were primarily related to professional fees associated with separation activities within finance and legal functions. We expect the cost to complete the separation will approximate $100 million to $130 million.







8


FMC CORPORATION
Notes to Condensed Consolidated Financial Statements (unaudited) — (Continued)


Note 4: Goodwill and Intangible Assets
The changes in the carrying amount of goodwill by business segment for the six months ended June 30, 2014, are presented in the table below:
(in Millions)
FMC Agricultural
Solutions
 
FMC Health and Nutrition
 
FMC Minerals
 
Total
Balance, December 31, 2013
$
31.0

 
$
358.4

 
$

 
$
389.4

Foreign currency adjustments

 
(1.6
)
 

 
(1.6
)
Balance, June 30, 2014
$
31.0

 
$
356.8

 
$

 
$
387.8

Our intangible assets, other than goodwill, consist of the following:
 
June 30, 2014
 
December 31, 2013
(in Millions)
Gross
 
Accumulated Amortization
 
Net
 
Gross
 
Accumulated Amortization
 
Net
Intangible assets subject to amortization (finite-lived)
Customer relationships
$
159.8

 
$
(19.5
)
 
$
140.3

 
$
159.3

 
$
(15.2
)
 
$
144.1

Patents
1.8

 
(0.1
)
 
1.7

 
0.4

 

 
0.4

Trademarks and trade names
1.3

 
(0.5
)
 
0.8

 
1.3

 
(0.4
)
 
0.9

Purchased and licensed technologies
75.2

 
(22.2
)
 
53.0

 
75.6

 
(19.3
)
 
56.3

Other intangibles
3.6

 
(2.4
)
 
1.2

 
4.3

 
(2.8
)
 
1.5

 
$
241.7

 
$
(44.7
)
 
$
197.0

 
$
240.9

 
$
(37.7
)
 
$
203.2

Intangible assets not subject to amortization (indefinite life)
Trademarks and trade names
$
66.5

 
 
 
$
66.5

 
$
67.0

 
 
 
$
67.0

In-process research & development
2.1

 
 
 
2.1

 
2.1

 
 
 
2.1

 
$
68.6

 
 
 
$
68.6

 
$
69.1

 
 
 
$
69.1

Total intangible assets
$
310.3

 
$
(44.7
)
 
$
265.6

 
$
310.0

 
$
(37.7
)
 
$
272.3

At June 30, 2014, the finite-lived and indefinite life intangibles were allocated among our business segments as follows:
(in Millions)
Finite-lived
 
Indefinite Life
FMC Agricultural Solutions
$
104.2

 
$
35.2

FMC Health and Nutrition
91.7

 
33.4

FMC Minerals
1.1

 

Total
$
197.0

 
$
68.6


Note 5: Inventories
Inventories consisted of the following:
 (in Millions)
June 30, 2014
 
December 31, 2013
Finished goods
$
330.9

 
$
283.0

Work in process
236.8

 
276.7

Raw materials, supplies and other
341.1

 
297.8

First-in, first-out inventory
$
908.8

 
$
857.5

Less: Excess of first-in, first-out cost over last-in, first-out cost
(170.6
)
 
(169.1
)
Net inventories
$
738.2

 
$
688.4



9


FMC CORPORATION
Notes to Condensed Consolidated Financial Statements (unaudited) — (Continued)

Note 6: Property, Plant and Equipment
Property, plant and equipment consisted of the following:
(in Millions)
June 30, 2014
 
December 31, 2013
Property, plant and equipment
$
2,745.9

 
$
2,663.2

Accumulated depreciation
(1,461.0
)
 
(1,414.9
)
Property, plant and equipment, net
$
1,284.9

 
$
1,248.3





Note 7: Restructuring and Other Charges (Income)
Our restructuring and other charges (income) are comprised of restructuring, asset disposals and other charges (income) as noted below:
 
Three Months Ended June 30
 
Six Months Ended June 30
(in Millions)
2014
 
2013
 
2014
 
2013
Restructuring charges and asset disposals
$
1.4

 
$
3.8

 
$
6.7

 
$
11.6

Other charges (income), net
1.3

 
2.1

 
2.7

 
3.6

Total restructuring and other charges
$
2.7

 
$
5.9

 
$
9.4

 
$
15.2


10


FMC CORPORATION
Notes to Condensed Consolidated Financial Statements (unaudited) — (Continued)


Restructuring charges and asset disposals
Restructuring activities that commenced during 2014 are described below. For detail on the restructuring charges and asset disposals which commenced prior to 2014, see Note 7 to our consolidated financial statements included with our 2013 Form 10-K.

2014 Restructuring Activities
Health and Nutrition Restructuring:
In the first quarter of 2014 our FMC Health and Nutrition segment implemented a plan to restructure a portion of its operations. The objective of the restructuring was to better align our business and costs to macroeconomic and market realities. The restructuring decision resulted in workforce reductions at several of our FMC Health and Nutrition facilities.
 
Restructuring Charges
 
 
 
 
(in Millions)
Severance and Employee Benefits (1)
 
Other Charges (Income) (2)
 
Asset Disposal Charges (3)
 
Total
Health and Nutrition Restructuring
$
0.9

 
$

 
$

 
$
0.9

Lithium Restructuring

 
(0.1
)
 

 
(0.1
)
Other Items

 
0.6

 

 
0.6

Three months ended June 30, 2014
$
0.9

 
$
0.5

 
$

 
$
1.4

Lithium Restructuring
1.1

 
1.4

 
1.0

 
3.5

Other Items
(0.1
)
 
0.4

 

 
0.3

Three months ended June 30, 2013
$
1.0

 
$
1.8

 
$
1.0

 
$
3.8

 
 
 
 
 
 
 
 
Health and Nutrition Restructuring
5.8

 

 

 
5.8

Lithium Restructuring

 

 

 

Other Items

 
0.9

 

 
0.9

Six months ended June 30, 2014
$
5.8

 
$
0.9

 
$

 
$
6.7

Lithium Restructuring
3.7

 
3.6

 
2.0

 
9.3

Other Items
1.7

 
0.6

 

 
2.3

Six months ended June 30, 2013
$
5.4

 
$
4.2

 
$
2.0

 
$
11.6

____________________ 
(1)
Represents severance and employee benefit charges. Income represents adjustments to previously recorded severance and employee benefits.
(2)
Primarily represents costs associated with lease payments, contract terminations, and other miscellaneous exit costs. Other Income primarily represents favorable developments on previously recorded exit costs as well as recoveries associated with restructurings.
(3)
Primarily represents accelerated depreciation and impairment charges on long-lived assets, which were or are to be abandoned. To the extent incurred, the acceleration effect of re-estimating settlement dates and revised cost estimates associated with asset retirement obligations due to facility shutdowns are also included within the asset disposal charges, see Note 8.


11


FMC CORPORATION
Notes to Condensed Consolidated Financial Statements (unaudited) — (Continued)

Roll forward of restructuring reserves
The following table shows a roll forward of restructuring reserves, continuing and discontinued, that will result in cash spending. These amounts exclude asset retirement obligations, which are discussed in Note 8.
(in Millions)
Balance at
12/31/13 (4)
 
Change in
reserves (2)
 
Cash
payments
 
Other (3)
 
Balance at
6/30/14 (4)
Health and Nutrition Restructuring
$

 
$
5.8

 
$
(3.9
)
 
$

 
$
1.9

Lithium Restructuring
0.3

 

 
(0.1
)
 

 
0.2

Other Workforce Related and Facility Shutdowns (1)
2.8

 
0.9

 
(0.6
)
 

 
3.1

Restructuring activities related to discontinued operations (5)
3.0

 
1.9

 
(3.5
)
 

 
1.4

Total
$
6.1

 
$
8.6

 
$
(8.1
)
 
$

 
$
6.6

____________________ 
(1)
Primarily severance costs related to workforce reductions and facility shutdowns noted in the “Other Items” sections above.
(2)
Primarily severance, exited lease, contract termination and other miscellaneous exit costs. Any accelerated depreciation and impairment charges noted above impacted our property, plant and equipment balances and are not included in the above tables.
(3)
Primarily foreign currency translation adjustments.
(4)
Included in “Accrued and other liabilities” on the condensed consolidated balance sheets.
(5)
Cash spending associated with restructuring activities of discontinued operations is reported within Payments of other discontinued reserves, net of recoveries on the condensed consolidated statements of cash flows.
Other charges (income), net
 
Three Months Ended June 30
 
Six Months Ended June 30
(in Millions)
2014
 
2013
 
2014
 
2013
Environmental charges, net
$
1.3

 
$
1.0

 
$
2.7

 
$
2.0

Other, net

 
1.1

 

 
1.6

Other charges (income), net
$
1.3

 
$
2.1

 
$
2.7

 
$
3.6

Environmental charges, net
Environmental charges represent the net charges associated with environmental remediation at continuing operating sites. See Note 11 for additional details.

Note 8: Asset Retirement Obligations
As of June 30, 2014, the balance of our asset retirement obligations was $21.8 million compared to $22.7 million at December 31, 2013. A more complete description of our asset retirement obligations can be found in Note 8 to our 2013 consolidated financial statements in our 2013 10-K.


12


FMC CORPORATION
Notes to Condensed Consolidated Financial Statements (unaudited) — (Continued)


Note 9: Debt
Debt maturing within one year:
(in Millions)
June 30, 2014
 
December 31, 2013
Short-term foreign debt (1)
$
31.7

 
$
7.1

Commercial paper (2)
493.6

 
656.0

Total short-term debt
$
525.3

 
$
663.1

Current portion of long-term debt
18.9

 
34.7

Short-term debt and current portion of long-term debt
$
544.2

 
$
697.8

____________________
(1)
We often provide parent-company guarantees to lending institutions that extend credit to our foreign consolidated subsidiaries. Since these guarantees are provided to consolidated subsidiaries the consolidated financial position is not affected by the issuance of these guarantees.
(2)
At June 30, 2014, the average effective interest rate on the borrowings was 0.33%.
Long-term debt:
(in Millions)
June 30, 2014
 
 
 
 
Interest Rate
Percentage
 
Maturity
Date
 
June 30, 2014
 
December 31, 2013
Pollution control and industrial revenue bonds (less unamortized discounts of $0.2 and $0.2, respectively)
0.2-6.5%
 
2014-2035
 
$
158.0

 
$
174.0

Senior notes (less unamortized discount of $2.1 and $2.2, respectively)
3.95-5.2%
 
2019-2024
 
997.9

 
997.8

Credit Facility (1)
2.4%
 
2017
 

 

Foreign debt
0-9.3%
 
2014-2024
 
16.7

 
17.0

Total long-term debt

 

 
$
1,172.6

 
$
1,188.8

Less: debt maturing within one year

 

 
18.9

 
34.7

Total long-term debt, less current portion

 

 
$
1,153.7

 
$
1,154.1

____________________
(1)
Letters of credit outstanding under our Credit Facility totaled $93.0 million and available funds under this facility were $913.4 million at June 30, 2014 (which reflects borrowings under our commercial paper program).
Covenants
Among other restrictions, our Credit Facility contains financial covenants applicable to FMC and its consolidated subsidiaries related to leverage (measured as the ratio of debt to adjusted earnings) and interest coverage (measured as the ratio of adjusted earnings to interest expense). Our actual leverage for the four consecutive quarters ended June 30, 2014, was 2.5 which is below the maximum leverage of 3.5. Our actual interest coverage for the four consecutive quarters ended June 30, 2014, was 16.2 which is above the minimum interest coverage of 3.5. We were in compliance with all covenants at June 30, 2014.

Note 10: Discontinued Operations
FMC Peroxygens:
On February 28, 2014, we completed the sale of our FMC Peroxygens business for $199.1 million in cash to One Equity Partners (OEP), the private investment arm of J.P. Morgan Chase & Co. The sale resulted in approximately $193.0 million in after-tax proceeds and an additional pre-tax loss of $10.1 million ($39.0 million after-tax) for the the six months ended June 30, 2014. The net of tax loss of $39.0 million was driven by the final allocation of the $199.1 million of proceeds which was agreed to between us and OEP on February 28, 2014. The majority of the proceeds were allocated to higher taxing jurisdictions (i.e. United States) which resulted in tax expense within those jurisdictions, that were not offset by tax benefits from other taxing jurisdictions. We did not benefit the tax losses produced in those other taxing jurisdictions, as we do not expect the losses produced in those jurisdictions to be recoverable. The loss was recorded in discontinued operations, net of income taxes in our condensed consolidated income statements for the six months ended June 30, 2014.

13


FMC CORPORATION
Notes to Condensed Consolidated Financial Statements (unaudited) — (Continued)

The results of our discontinued FMC Peroxygens operations are summarized below:
(in Millions)
Three Months Ended June 30
 
Six Months Ended June 30
2014
 
2013
 
2014
 
2013
Revenue
$

 
$
83.4

 
$
55.5

 
$
162.9

 
 
 
 
 
 
 
 
(Loss) income from discontinued operations before income taxes (1)

 
1.3

 
(10.7
)
 
5.8

Provision for income taxes

 
1.2

 
29.3

 
3.3

Total discontinued operations of FMC Peroxygens, net of income taxes
$

 
$
0.1

 
$
(40.0
)
 
$
2.5

____________________
(1)
Includes allocated interest expense of zero and $0.8 million for the three and six months ended June 30, 2014, respectively and $1.2 million and $2.4 million for the three and six months ended June 30, 2013, respectively. Interest was allocated in accordance with relevant discontinued operations accounting guidance. Interest expense allocated in 2014 was prior to the completed sale. Income from discontinued operations before income taxes for the six months ended June 30, 2014 includes the pre-tax loss of $10.1 million discussed in the preceding paragraph.

The following table presents the major classes of assets and liabilities of the FMC Peroxygens business as of December 31, 2013:
(in Millions)
December 31, 2013
Assets
 
Current assets of discontinued operations held for sale
(primarily trade receivables and inventories)
$
94.8

Property, plant & equipment
61.1

Intangible assets, net
2.7

Other non-current assets
39.7

Noncurrent assets of discontinued operations held for sale
103.5

Total Assets (1)
198.3

 
 
Liabilities
 
Current liabilities of discontinued operations held for sale
43.0

Noncurrent liabilities of discontinued operations held for sale
5.2

Total Liabilities (1)
48.2

Net Assets (2)
$
150.1

____________________
(1)
Presented as "Current assets\liabilities of discontinued operations held for sale" on the condensed consolidated balance sheet as of December 31, 2013.
(2)
Excludes the net cumulative translation adjustment (CTA) losses of our foreign FMC Peroxygens operations. See Note 14 for the CTA loss recognized upon the divestiture of FMC Peroxygens.

14


FMC CORPORATION
Notes to Condensed Consolidated Financial Statements (unaudited) — (Continued)

In addition to our discontinued FMC Peroxygens business our other discontinued operations include adjustments to retained liabilities. The primary liabilities retained include environmental liabilities, other postretirement benefit liabilities, self-insurance, long-term obligations related to legal proceedings and historical restructuring activities.
Our discontinued operations comprised the following:
(in Millions)
Three Months Ended June 30
 
Six Months Ended June 30
2014
 
2013
 
2014
 
2013
Adjustment for workers’ compensation, product liability, and other postretirement benefits, net of income tax benefit (expense) of $0.6 for the three and six months ended 2014 and zero and ($0.1) for the three and six months ended 2013, respectively
$
(1.0
)
 
$

 
$
(1.1
)
 
$
0.1

Provision for environmental liabilities, net of recoveries, net of income tax benefit of $4.4 and $7.1 for the three and six months ended 2014 and $1.2 and $2.5 for the three and six months ended 2013, respectively (1)
(7.5
)
 
(2.1
)
 
(12.3
)
 
(4.1
)
Provision for legal reserves and expenses, net of recoveries, net of income tax benefit (expense) of $2.2 and $4.5 for the three and six months ended 2014 and ($2.5) and ($0.4) for the three and six months ended 2013, respectively
(3.8
)
 
4.0

 
(7.6
)
 
0.7

Provision for restructuring charges, net of income tax benefit (expense) of $0.2 for the three and six months ended 2014 and $0.1 and $0.3 for the three and six months ended 2013, respectively (2)
(0.3
)
 
(0.5
)
 
(1.7
)
 
(0.9
)
Discontinued operations of FMC Peroxygens, net of income tax benefit (expense) of zero and ($29.3) for the three and six months ended 2014 and ($1.2) and ($3.3) for the three and six months ended 2013, respectively

 
0.1

 
(40.0
)
 
2.5

Discontinued operations, net of income taxes
$
(12.6
)
 
$
1.5

 
$
(62.7
)
 
$
(1.7
)
____________________
(1)
See a roll forward of our environmental reserves as well as discussion on significant environmental issues that occurred during the 2014 in Note 11.
(2)
See roll forward of our restructuring reserves in Note 7.

Note 11: Environmental Obligations
We have reserves for potential environmental obligations, which management considers probable and for which a reasonable estimate of the obligation could be made. Accordingly, we have reserves of $228.5 million and $225.7 million, excluding recoveries, at June 30, 2014 and December 31, 2013, respectively.
The estimated reasonably possible environmental loss contingencies, net of expected recoveries, exceed amounts accrued by approximately $170 million at June 30, 2014. This reasonably possible estimate is based upon information available as of the date of the filing but the actual future losses may be higher given the uncertainties regarding the status of laws, regulations, enforcement policies, the impact of potentially responsible parties, technology and information related to individual sites. Potential environmental obligations that have not been reserved may be material to any one quarter's or year's results of operations in the future. However, we believe any such liability arising from such potential environmental obligations is not likely to have a material adverse effect on our liquidity or financial condition as it may be satisfied over many years.

15


FMC CORPORATION
Notes to Condensed Consolidated Financial Statements (unaudited) — (Continued)

The table below is a roll forward of our total environmental reserves, continuing and discontinued:
 
(in Millions)
Operating and
Discontinued
Sites Total
Total environmental reserves, net of recoveries at December 31, 2013
$
204.7

Provision
27.3

Spending, net of recoveries
(20.9
)
Net change
6.4

Total environmental reserves, net of recoveries at June 30, 2014
$
211.1

Environmental reserves, current, net of recoveries (1)
40.6

Environmental reserves, long-term continuing and discontinued, net of recoveries (2)
170.5

Total environmental reserves, net of recoveries at June 30, 2014
$
211.1

____________________
(1)
“Current” includes only those reserves related to continuing operations. These amounts are included within "Accrued and other liabilities" on the condensed consolidated balance sheets.
(2)
These amounts are included in “Environmental liabilities, continuing and discontinued” on the condensed consolidated balance sheets.
At June 30, 2014 and December 31, 2013, we have recorded recoveries representing probable realization of claims against U.S. government agencies, insurance carriers and other third parties. Recoveries are recorded as either an offset to the “Environmental liabilities, continuing and discontinued” or as “Other assets” in the condensed consolidated balance sheets. The table below is a roll forward of our total recorded recoveries from December 31, 2013 to June 30, 2014:
(in Millions)
12/31/2013
 
Increase in Recoveries
 
Cash Received
 
6/30/2014
Environmental liabilities, continuing and discontinued
$
21.0

 
$
0.9

 
$
(4.5
)
 
$
17.4

Other assets
35.5

 
5.3

 
(5.9
)
 
34.9

Total
$
56.5

 
$
6.2

 
$
(10.4
)
 
$
52.3


Our net environmental provisions relate to costs for the continued cleanup of both operating sites and for certain discontinued manufacturing operations from previous years. The net provisions are comprised as follows:
 
Three Months Ended June 30
 
Six Months Ended June 30
(in Millions)
2014
 
2013
 
2014
 
2013
Continuing operations (1)
$
1.3

 
$
1.0

 
$
2.7

 
$
2.0

Discontinued operations (2)
11.9

 
3.2

 
19.4

 
6.5

Net environmental provision
$
13.2

 
$
4.2

 
$
22.1

 
$
8.5

____________________
(1)
Recorded as a component of “Restructuring and other charges (income)” on our condensed consolidated statements of income. See Note 7.
(2)
Recorded as a component of “Discontinued operations, net of income taxes" on our condensed consolidated statements of income. See Note 10.


16


FMC CORPORATION
Notes to Condensed Consolidated Financial Statements (unaudited) — (Continued)

On our condensed consolidated balance sheets, the net environmental provisions are recorded to the following balance sheet captions:
 
Three Months Ended June 30
 
Six Months Ended June 30
(in Millions)
2014
 
2013
 
2014
 
2013
Environmental reserves (1)
$
18.4

 
$
5.0

 
$
27.3

 
$
10.3

Other assets (2)
(5.2
)
 
(0.8
)
 
(5.2
)
 
(1.8
)
Net environmental provision
$
13.2

 
$
4.2

 
$
22.1

 
$
8.5

____________________
(1)
See above roll forward of our total environmental reserves as presented on our condensed consolidated balance sheets.
(2)
Represents certain environmental recoveries.

A more complete description of our environmental contingencies and the nature of our potential obligations are included in Notes 1 and 10 to our consolidated financial statements in our 2013 Form 10-K. The following represents significant updates that occurred in 2014 related to these contingencies.
Pocatello Tribal Litigation
Following a trial on certain jurisdictional issues which occurred during April 2014, the Shoshone-Bannock Tribal Appellate Court issued a Statement of Decision finding in favor of the Tribes’ jurisdiction over FMC and awarding costs on appeal to the Tribes. The Tribal Appellate Court conducted further post-trial proceedings and on May 6, 2014 issued Finding and Conclusions and a Final Judgment consistent with its earlier Statement of Decision.
The finding by the Shoshone-Bannock Tribal Appellate Court during May 2014 does not impact our reserves for the period ended June 30, 2014. Having now exhausted the Tribal administrative and judicial process, we intend to file an action in the United States District Court seeking declaratory and injunctive relief on the grounds that the Tribes lacked jurisdiction over us.
We have estimated a reasonably possible loss for this matter and it has been reflected in our total reasonably possible loss estimate previously discussed within this note.
Middleport
In 2013 we received from the New York State Department of Environmental Conservation ("NYSDEC"), the Final Statement of Basis ("FSOB"). The FSOB includes the same Corrective Action Management Alternative (“CMA”) as the Preliminary Statement of Basis, which we continue to believe is overly conservative and is not consistent with the 1991 Administrative Order on Consent ("AOC"), which governs the remedy selection.
In order to negotiate with the NYSDEC with respect to the FSOB, we entered into a tolling agreement with the NYSDEC. The tolling agreement serves as a “standstill” agreement to the FSOB so that time spent negotiating with the NYSDEC does not go against the statute of limitations under the FSOB. The tolling agreement expired on April 30, 2014. We were not able to reach an agreement with the NYSDEC; thus, on May 1, 2014, we submitted a Notice of Dispute to the United States Environmental Protection Agency ("EPA") seeking review of the remedy chosen by the NYSDEC. On May 30, 2014, 30 days after the tolling period expired, we filed an action in the Supreme Court of New York formally challenging the NYSDEC’s FSOB. In that lawsuit, FMC is contending that NYSDEC breached the 1991 AOC by not following the procedures set forth in the AOC for remedy selection. On June 3, 2014, FMC received a letter from EPA (dated May 22, 2014) declining to review the Notice of Dispute. On June 20, 2014, FMC filed an action in the United States District Court for the Western District of New York seeking a declaratory judgment that the EPA is obligated under the 1991 AOC to hear the dispute.
The amount of the reserve for this site is $40.1 million at June 30, 2014 and $41.7 million at December 31, 2013. Our reserve continues to include the estimated liability for clean-up to reflect the costs associated with our recommended CMA. Our estimated reasonably possible environmental loss contingencies exposure reflects the additional cost of the CMA proposed in the FSOB.









17


FMC CORPORATION
Notes to Condensed Consolidated Financial Statements (unaudited) — (Continued)

Note 12: Earnings Per Share
Earnings per common share (“EPS”) is computed by dividing net income by the weighted average number of common shares outstanding during the period on a basic and diluted basis.
Our potentially dilutive securities include potential common shares related to our stock options, restricted stock and restricted stock units. Diluted earnings per share (“Diluted EPS”) considers the impact of potentially dilutive securities except in periods in which there is a loss because the inclusion of the potential common shares would have an antidilutive effect. Diluted EPS excludes the impact of potential common shares related to our stock options in periods in which the option exercise price is greater than the average market price of our common stock for the period. There were 251,000 and 354,000 potential common shares excluded from Diluted EPS for the three and six months ended June 30, 2014. There were no potential common shares excluded from Diluted EPS for the three and six months ended June 30, 2013.
Our non-vested restricted stock awards contain rights to receive non-forfeitable dividends, and thus, are participating securities requiring the two-class method of computing EPS. The two-class method determines EPS by dividing the sum of distributed earnings to common stockholders and undistributed earnings allocated to common stockholders by the weighted average number of shares of common stock outstanding for the period. In calculating the two-class method, undistributed earnings are allocated to both common shares and participating securities based on the weighted average number of shares outstanding during the period.
Earnings applicable to common stock and common stock shares used in the calculation of basic and diluted earnings per share are as follows:
(in Millions, Except Share and Per Share Data)
Three Months Ended June 30
 
Six Months Ended June 30
2014
 
2013
 
2014
 
2013
Earnings (loss) attributable to FMC stockholders:
 
 
 
 
 
 
 
Continuing operations, net of income taxes
$
121.7

 
$
116.5

 
$
237.4

 
$
250.6

Discontinued operations, net of income taxes
(12.6
)
 
1.5

 
(62.7
)
 
(1.7
)
Net income attributable to FMC stockholders
$
109.1

 
$
118.0

 
$
174.7

 
$
248.9

Less: Distributed and undistributed earnings allocable to restricted award holders
(0.3
)
 
(0.4
)
 
(0.5
)
 
(0.9
)
Net income allocable to common stockholders
$
108.8

 
$
117.6

 
$
174.2

 
$
248.0

 
 
 
 
 
 
 
 
Basic earnings (loss) per common share attributable to FMC stockholders:
 
 
 
 
 
 
 
Continuing operations
$
0.91

 
$
0.85

 
$
1.78

 
$
1.83

Discontinued operations
(0.09
)
 
0.01

 
(0.47
)
 
(0.01
)
Net income attributable to FMC stockholders
$
0.82

 
$
0.86

 
$
1.31

 
$
1.82

 
 
 
 
 
 
 
 
Diluted earnings (loss) per common share attributable to FMC stockholders:
 
 
 
 
 
 
 
Continuing operations
$
0.90

 
$
0.85

 
$
1.77

 
$
1.82

Discontinued operations
(0.09
)
 
0.01

 
(0.47
)
 
(0.01
)
Net income attributable to FMC stockholders
$
0.81

 
$
0.86

 
$
1.30

 
$
1.81

 
 
 
 
 
 
 
 
Shares (in thousands):
 
 
 
 
 
 
 
Weighted average number of shares of common stock outstanding - Basic
133,339

 
136,328

 
133,233

 
136,810

Weighted average additional shares assuming conversion of potential common shares
1,015

 
813

 
1,044

 
926

Shares – diluted basis
134,354

 
137,141

 
134,277

 
137,736



18


FMC CORPORATION
Notes to Condensed Consolidated Financial Statements (unaudited) — (Continued)

Note 13: Equity
Refer to the table below for a reconciliation of equity, equity attributable to the parent, and equity attributable to noncontrolling interest: 
(in Millions, Except Per Share Data)
FMC
Stockholders’
Equity
 
Noncontrolling
Interest
 
Total
Equity
Balance at December 31, 2013
$
1,519.8

 
$
52.3

 
$
1,572.1

Net income
174.7

 
9.0

 
183.7

Stock compensation plans
15.1

 

 
15.1

Excess tax benefits from share-based compensation
4.0

 

 
4.0

Shares for benefit plan trust
0.5

 

 
0.5

Net pension and other benefit actuarial gains/(losses) and prior service costs, net of income tax (1)
12.6

 

 
12.6

Net hedging gains/(losses) and other, net of income tax (1)
6.7

 

 
6.7

Foreign currency translation adjustments (1)
46.9

 
(0.5
)
 
46.4

Dividends ($0.30 per share)
(40.1
)
 

 
(40.1
)
Repurchases of common stock
(4.1
)
 

 
(4.1
)
Net distributions and other activities with noncontrolling interests
(25.5
)
 
(3.0
)
 
(28.5
)
Balance at June 30, 2014
$
1,710.6

 
$
57.8

 
$
1,768.4

____________________
(1)
See condensed consolidated statements of comprehensive income.
Dividends and Share Repurchases
For the six months ended June 30, 2014 and 2013, we paid $38.0 million and $37.1 million, respectively, in dividends declared in previous periods. On July 17, 2014, we paid dividends totaling $20.1 million to our shareholders of record as of June 30, 2014. This amount is included in “Accrued and other liabilities” on the condensed consolidated balance sheet as of June 30, 2014.
During the six months ended June 30, 2014, we did not repurchase any shares under the publicly announced repurchase program. At June 30, 2014, $250.0 million remained unused under our Board-authorized repurchase program. This repurchase program does not include a specific timetable or price targets and may be suspended or terminated at any time. Shares may be purchased through open market or privately negotiated transactions at the discretion of management based on its evaluation of market conditions and other factors. We also reacquire shares from time to time from employees in connection with the vesting, exercise and forfeiture of awards under our equity compensation plans.
 

19


FMC CORPORATION
Notes to Condensed Consolidated Financial Statements (unaudited) — (Continued)

Note 14: Reclassifications of Accumulated Other Comprehensive Income

The table below provides details about the reclassifications from Accumulated Other Comprehensive Income and the affected line items in the condensed consolidated statements of income for each of the periods presented.
Details about Accumulated Other Comprehensive Income Components
 
Amounts Reclassified from Accumulated Other Comprehensive Income (1)
 
Affected Line Item in the Condensed Consolidated Statements of Income
 
 
Three Months Ended June 30
 
Six Months Ended June 30
 
 
(in Millions)
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustments:
 
 
 
 
 
 
 
 
 
 
Divestiture of FMC Peroxygens (3)
 
$

 
$

 
$
(49.6
)
 
$

 
Discontinued operations, net of income taxes
 
 
 
 
 
 
 
 
 
 
 
Derivative instruments:
 
 
 
 
 
 
 
 
 
 
Foreign currency contracts
 
$
(2.4
)
 
$
0.5

 
$
(3.3
)
 
$
0.4

 
Costs of sales and services
Energy contracts
 
0.5

 
0.5

 
1.5

 
0.2

 
Costs of sales and services
Foreign currency contracts
 
0.2

 
1.1

 
(1.4
)
 
2.6

 
Selling, general and administrative expenses
Other contracts
 

 
(0.1
)
 

 
(0.1
)
 
Interest expense, net
Total before tax
 
$
(1.7
)
 
$
2.0

 
$
(3.2
)
 
$
3.1

 
 
 
 
0.6

 
(0.6
)
 
1.0

 
(1.0
)
 
Provision for income taxes
Amount included in net income
 
$
(1.1
)
 
$
1.4

 
$
(2.2
)
 
$
2.1

 
 
 
 
 
 
 
 
 
 
 
 
 
Pension and other postretirement benefits (2):
 
 
 
 
 
 
 
 
 
 
Amortization of prior service costs
 
$
(0.4
)
 
$
(0.5
)
 
$
(0.9
)
 
$
(1.0
)
 
Selling, general and administrative expenses
Amortization of unrecognized net actuarial and other gains (losses)
 
(8.0
)
 
(16.8
)
 
(15.1
)
 
(33.5
)
 
Selling, general and administrative expenses
Recognized loss due to settlement
 
$
(2.0
)
 
$

 
$
(3.6
)
 
$

 
Selling, general and administrative expenses
Total before tax
 
$
(10.4
)
 
$
(17.3
)
 
$
(19.6
)
 
$
(34.5
)
 
 
 
 
3.7

 
6.6

 
6.9

 
13.0

 
Provision for income taxes
Amount included in net income
 
$
(6.7
)
 
$
(10.7
)
 
$
(12.7
)
 
$
(21.5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Total reclassifications for the period
 
$
(7.8
)
 
$
(9.3
)
 
$
(14.9
)
 
$
(19.4
)
 
Amount included in net income
____________________
(1)
Amounts in parentheses indicate charges to the condensed consolidated statements of income.
(2)
Pension and other postretirement benefits amounts include the impact from both continuing and discontinued operations. For detail on the continuing operations components of pension and other postretirement benefits, see Note 15.
(3)
The reclassification of historical cumulative translation adjustments was the result of the divestiture of our FMC Peroxygens business during the quarter ended March 31, 2014. The loss recognized from this reclassification is considered permanent for tax purposes and therefore no tax has been provided. See Note 10 for more information. In accordance with accounting guidance, this amount was previously factored into the lower of cost or fair value test associated with the 2013 Peroxygens' asset held for sale write-down charges.



20


FMC CORPORATION
Notes to Condensed Consolidated Financial Statements (unaudited) — (Continued)

Note 15: Pensions and Other Postretirement Benefits
The following table summarizes the components of continuing net annual benefit cost (income):
(in Millions)
Three Months Ended June 30
 
Six Months Ended June 30
Pensions
 
Other Benefits
 
Pensions
 
Other Benefits
2014
 
2013
 
2014
 
2013
 
2014
 
2013
 
2014
 
2013
Components of net annual benefit cost (income):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Service cost
$
4.9

 
$
5.4

 
$

 
$

 
$
9.7

 
$
10.8

 
$

 
$

Interest cost
15.6

 
13.5

 
0.3

 
0.3

 
31.0

 
28.0

 
0.6

 
0.6

Expected return on plan assets
(21.6
)
 
(19.2
)
 

 

 
(43.2
)
 
(38.4
)
 

 

Amortization of prior service cost (credit)
0.4

 
0.6

 

 

 
0.9

 
1.1

 

 

Recognized net actuarial and other (gain) loss
7.8

 
17.5

 
(0.4
)
 
(0.5
)
 
15.7

 
35.0

 
(0.8
)
 
(0.9
)
Recognized loss due to settlement (1)
2.0

 

 

 

 
3.6

 

 

 

Net periodic benefit cost from continuing operations
$
9.1

 
$
17.8

 
$
(0.1
)
 
$
(0.2
)
 
$
17.7

 
$
36.5

 
$
(0.2
)
 
$
(0.3
)
____________________
(1)
Settlement charge is associated with the acceleration of previously deferred pension actuarial losses and was triggered by a lump-sum payout to certain former executives.

We made voluntary cash contributions to our U.S. defined benefit pension plan of $32.0 million and $27.0 million in the six months ended June 30, 2014 and 2013, respectively. We expect to make approximately $50 million in voluntary cash contributions to our U.S. defined benefit pension plan during 2014.

Note 16: Income Taxes
Provision for income taxes was $41.5 million resulting in an effective tax rate of 24.8 percent compared to a provision of $35.7 million resulting in an effective tax rate of 23.0 percent for the three months ended June 30, 2014 and 2013, respectively. Provision for income taxes was $80.8 million resulting in an effective tax rate of 24.7 percent compared to a provision of $81.1 million resulting in an effective tax rate of 23.9 percent for the six months ended June 30, 2014 and 2013, respectively. The increase in the effective tax rate was primarily the result of the change in the mix of domestic income compared to income earned outside of the U.S. A larger portion of our earnings were earned by our domestic operations which generally has a higher tax rate than that of our foreign operations.

Note 17: Financial Instruments, Risk Management and Fair Value Measurements
Our financial instruments include cash and cash equivalents, trade receivables, other current assets, certain receivables classified as other long-term assets, accounts payable, and amounts included in investments and accruals meeting the definition of financial instruments. The carrying value of these financial instruments approximates their fair value. Our other financial instruments include the following:
Financial Instrument
  
Valuation Method
Foreign exchange forward contracts
  
Estimated amounts that would be received or paid to terminate the contracts at the reporting date based on current market prices for applicable currencies.
 
 
 
Commodity forward and option contracts
  
Estimated amounts that would be received or paid to terminate the contracts at the reporting date based on quoted market prices for applicable commodities.
 
 
 
Debt
  
Our estimates and information obtained from independent third parties using market data, such as bid/ask spreads for the last business day of the reporting period.

The estimated fair value of the financial instruments in the above table have been determined using standard pricing models which take into account the present value of expected future cash flows discounted to the balance sheet date. These standard pricing models utilize inputs derived from or corroborated by observable market data such as interest rate yield curves and currency and commodity spot and forward rates. In addition, we test a subset of our valuations against valuations received from the transaction's counterparty to validate the accuracy of our standard pricing models. Accordingly, the estimates presented may not be indicative of the amounts that we would realize in a market exchange at settlement date and do not represent potential gains or losses on

21


FMC CORPORATION
Notes to Condensed Consolidated Financial Statements (unaudited) — (Continued)

these agreements. The estimated fair values of foreign exchange forward contracts and commodity forward and option contracts are included in the tables within this Note. The estimated fair value of debt is $1,801.2 million and $1,895.8 million and the carrying amount is $1,697.9 million and $1,851.9 million as of June 30, 2014 and December 31, 2013, respectively.
We enter into various financial instruments with off-balance-sheet risk as part of the normal course of business. These off-balance-sheet instruments include financial guarantees and contractual commitments to extend financial guarantees under letters of credit, and other assistance to customers (Note 18). Decisions to extend financial guarantees to customers, and the amount of collateral required under these guarantees is based on our evaluation of creditworthiness on a case-by-case basis.
Use of Derivative Financial Instruments to Manage Risk
We mitigate certain financial exposures, including currency risk, commodity purchase exposures and interest rate risk, through a program of risk management that includes the use of derivative financial instruments. A detailed description of these risks including a discussion on the concentration of credit risk is provided in Note 18 to our consolidated financial statements on our 2013 Form 10-K.
We formally document all relationships between hedging instruments and hedged items, as well as the risk management objective and strategy for undertaking various hedge transactions. This process includes relating derivatives that are designated as fair value or cash flow hedges to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. We also assess both, at the inception of the hedge and on an ongoing basis, whether each derivative is highly effective in offsetting changes in fair values or cash flows of the hedged item. If we determine that a derivative is not highly effective as a hedge, or if a derivative ceases to be a highly effective hedge, we discontinue hedge accounting with respect to that derivative prospectively.
Accounting for Derivative Instruments and Hedging Activities
Cash Flow Hedges
We recognize all derivatives on the balance sheet at fair value. On the date the derivative instrument is entered into, we generally designate the derivative as a hedge of the variability of cash flows to be received or paid related to a forecasted transaction (cash flow hedge). We record in AOCI changes in the fair value of derivatives that are designated and meet all the required criteria for a cash flow hedge. We then reclassify these amounts into earnings as the underlying hedged item affects earnings. In contrast, we immediately record in earnings changes in the fair value of derivatives that are not designated as cash flow hedges.
As of June 30, 2014, we had open foreign currency forward contracts in AOCI in a net after tax loss position of $1.2 million designated as cash flow hedges of underlying forecasted sales and purchases. Current open contracts hedge forecasted transactions until December 31, 2015. At June 30, 2014, we had open forward contracts designated as cash flow hedges with various expiration dates to buy, sell or exchange foreign currencies with a U.S. dollar equivalent of approximately $470.3 million.