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EXCEL - IDEA: XBRL DOCUMENT - FMC CORPFinancial_Report.xls


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, 2015
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 March 31, 2015
Common Stock, par value $0.10 per share
 
133,534,165



FMC CORPORATION
INDEX
 
 
Page
No.


2


PART I - FINANCIAL INFORMATION
 
ITEM 1.    FINANCIAL STATEMENTS

FMC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
 
(in Millions, Except Per Share Data)
Three Months Ended March 31
2015
 
2014
 
(unaudited)
Revenue
$
659.4

 
$
756.9

Costs and Expenses
 
 
 
Costs of sales and services
408.7

 
463.9

 
 
 
 
Gross margin
250.7

 
293.0

 
 
 
 
Selling, general and administrative expenses
297.9

 
114.6

Research and development expenses
26.6

 
25.8

Restructuring and other charges (income)
22.3

 
6.7

Business separation costs

 
3.0

Total costs and expenses
755.5

 
614.0

Income from continuing operations before equity in (earnings) loss of affiliates, interest expense, net and income taxes
(96.1
)
 
142.9

Equity in (earnings) loss of affiliates
0.1

 
(0.3
)
Interest expense, net
14.0

 
11.6

Income (loss) from continuing operations before income taxes
(110.2
)
 
131.6

Provision for income taxes
(49.1
)
 
34.6

Income (loss) from continuing operations
(61.1
)
 
97.0

Discontinued operations, net of income taxes
15.6

 
(26.6
)
Net income (loss)
(45.5
)
 
70.4

Less: Net income attributable to noncontrolling interests
1.3

 
4.8

Net income (loss) attributable to FMC stockholders
$
(46.8
)
 
$
65.6

Amounts attributable to FMC stockholders:
 
 
 
Continuing operations, net of income taxes (benefit)
$
(62.4
)
 
$
93.8

Discontinued operations, net of income taxes
15.6

 
(28.2
)
Net income (loss) attributable to FMC stockholders
$
(46.8
)
 
$
65.6

Basic earnings (loss) per common share attributable to FMC stockholders:
 
 
 
Continuing operations
$
(0.47
)
 
$
0.70

Discontinued operations
0.12

 
(0.21
)
Net income (loss) attributable to FMC stockholders
$
(0.35
)
 
$
0.49

Diluted earnings (loss) per common share attributable to FMC stockholders:
 
 
 
Continuing operations
$
(0.47
)
 
$
0.70

Discontinued operations
0.12

 
(0.21
)
Net income (loss) attributable to FMC stockholders
$
(0.35
)
 
$
0.49

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


3


FMC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 
(in Millions)
Three Months Ended March 31
2015
 
2014
 
(unaudited)
Net income (loss)
$
(45.5
)
 
$
70.4

Other comprehensive income (loss), net of tax:
 
 
 
Foreign currency adjustments:
 
 
 
Foreign currency translation gain (loss) arising during the period
(39.7
)
 
0.3

Reclassification of foreign currency translation losses

 
49.6

Total foreign currency translation adjustments (1)
(39.7
)
 
49.9

 
 
 
 
Derivative instruments:
 
 
 
Unrealized hedging gains (losses) and other, net of tax of $0.4 and $1.3 for the three months ended March 31, 2015 and 2014, respectively
2.3

 
2.5

Reclassification of deferred hedging (gains) losses and other, included in net income, net of tax of ($1.2) and $0.4 for the three months ended March 31, 2015 and 2014, respectively (3)
(1.8
)
 
1.1

Total derivative instruments, net of tax of ($0.8) and $1.7 for the three months ended March 31, 2015 and 2014, respectively
0.5

 
3.6

 
 
 
 
Pension and other postretirement benefits:
 
 
 
Unrealized actuarial gains (losses) and prior service (costs) credits, net of tax of ($4.7) and zero for the three months ended March 31, 2015 and 2014, respectively (2)
(5.9
)
 
0.5

Reclassification of net actuarial and other (gain) loss and amortization of prior service costs, included in net income, net of tax of $6.7 and $3.2 for the three months ended March 31, 2015 and 2014, respectively (3)
11.7

 
6.0

Total pension and other postretirement benefits, net of tax of $2.0 and $3.2 for the three months ended March 31, 2015 and 2014, respectively
5.8

 
6.5

 
 
 
 
Other comprehensive income (loss), net of tax
(33.4
)
 
60.0

Comprehensive income (loss)
$
(78.9
)
 
$
130.4

Less: Comprehensive income attributable to the noncontrolling interest
1.3

 
5.1

Comprehensive income (loss) attributable to FMC stockholders
$
(80.2
)
 
$
125.3

____________________ 
(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 2014 includes reclassification to net income due to the divestiture of our FMC Peroxygens business, see Note 12 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 typically 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. During the three months ended March 31, 2015, due to the disposal of our FMC Alkali Chemicals division, we triggered a curtailment of our U.S. pension plans. As a result we revalued our pension plans which resulted in adjustments to comprehensive income. See Note 13 for more information.
(3)
For more detail on the components of these reclassifications and the affected line item in the condensed consolidated statements of income (loss) see Note 12.


4


FMC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in Millions, Except Share and Par Value Data)
March 31, 2015
 
December 31, 2014
ASSETS
(unaudited)
Current assets
 
 
 
Cash and cash equivalents
$
105.2

 
$
109.5

Trade receivables, net of allowance - 2015: $34.9; 2014: $37.2
1,537.4

 
1,602.5

Inventories
640.8

 
607.6

Prepaid and other current assets
287.3

 
188.8

Deferred income taxes
147.1

 
222.7

Current assets of discontinued operations held for sale
611.8

 
203.3

Total current assets
$
3,329.6

 
$
2,934.4

Investments
4.7

 
5.5

Property, plant and equipment, net
902.6

 
930.0

Goodwill
324.1

 
352.5

Other intangibles, net
233.5

 
246.9

Other assets
281.5

 
269.6

Deferred income taxes
235.7

 
200.1

Noncurrent assets of discontinued operations held for sale

 
401.5

Total assets
$
5,311.7

 
$
5,340.5

LIABILITIES AND EQUITY
 
 
 
Current liabilities
 
 
 
Short-term debt and current portion of long-term debt
$
907.3

 
$
525.2

Accounts payable, trade and other
316.5

 
378.3

Advance payments from customers
24.2

 
190.2

Accrued and other liabilities
271.2

 
407.2

Accrued customer rebates
323.0

 
236.0

Guarantees of vendor financing
67.4

 
50.2

Accrued pension and other postretirement benefits, current
6.6

 
12.7

Income taxes
19.6

 
22.2

Current liabilities of discontinued operations held for sale
79.8

 
88.4

Total current liabilities
$
2,015.6

 
$
1,910.4

Long-term debt, less current portion
1,150.9

 
1,153.4

Accrued pension and other postretirement benefits, long-term
227.9

 
238.7

Environmental liabilities, continuing and discontinued
190.9

 
209.9

Deferred income taxes
55.6

 
51.3

Noncurrent liabilities of discontinued operations held for sale

 
4.7

Other long-term liabilities
201.4

 
208.1

Commitments and contingent liabilities (Note 16)

 

Equity
 
 
 
Preferred stock, no par value, authorized 5,000,000 shares; no shares issued in 2015 or 2014

 

Common stock, $0.10 par value, authorized 260,000,000 shares; 185,983,792 issued shares at 2015 and 2014
18.6

 
18.6

Capital in excess of par value of common stock
407.6

 
401.9

Retained earnings
2,915.5

 
2,984.5

Accumulated other comprehensive income (loss)
(409.2
)
 
(375.8
)
Treasury stock, common, at cost - 2015: 52,449,627 shares, 2014: 52,666,121 shares
(1,497.6
)
 
(1,498.7
)
Total FMC stockholders’ equity
$
1,434.9

 
$
1,530.5

Noncontrolling interests
34.5

 
33.5

Total equity
$
1,469.4

 
$
1,564.0

Total liabilities and equity
$
5,311.7

 
$
5,340.5

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

5


FMC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(in Millions)
Three Months Ended March 31
2015
 
2014
 
(unaudited)
Cash provided (required) by operating activities of continuing operations:
 
 
 
Net income (loss)
$
(45.5
)
 
$
70.4

Discontinued operations
(15.6
)
 
26.6

Income (loss) from continuing operations
$
(61.1
)
 
$
97.0

Adjustments from income from continuing operations to cash provided (required) by operating activities of continuing operations:
 
 
 
Depreciation and amortization
22.8

 
23.9

Equity in (earnings) loss of affiliates
0.1

 
(0.2
)
Restructuring and other charges (income)
22.3

 
6.7

Deferred income taxes
29.3

 
1.3

Pension and other postretirement benefits
10.7

 
8.5

Share-based compensation
4.5

 
3.8

Excess tax benefits from share-based compensation
(1.7
)
 
(3.4
)
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:
 
 
 
Trade receivables, net
52.5

 
(80.3
)
Guarantees of vendor financing
17.3

 
28.9

Inventories
(50.0
)
 
(9.5
)
Accounts payable
(35.6
)
 
(77.7
)
Advance payments from customers
(165.9
)
 
(148.4
)
Accrued customer rebates
87.6

 
87.4

Income taxes
(78.1
)
 
9.3

Pension and other postretirement benefit contributions
(27.4
)
 
(23.8
)
Environmental spending, continuing, net of recoveries
(3.0
)
 
(1.6
)
Restructuring and other spending
(3.0
)
 
(1.9
)
Change in other operating assets and liabilities, net (1)
(126.2
)
 
(26.0
)
Cash provided (required) by operating activities of continuing operations
$
(304.9
)
 
$
(106.0
)
 
 
 
 
Cash provided (required) by operating activities of discontinued operations:
 
 
 
Environmental spending, discontinued, net of recoveries

 
(3.7
)
Operating activities of discontinued operations, net of recoveries
7.7

 
12.9

Cash provided (required) by operating activities of discontinued operations
$
7.7

 
$
9.2

                                        
(1)
The March 31, 2015 change is impacted by a $93.8 million reduction in the Cheminova A/S hedge liability. Total cash payments during the three months ended March 31, 2015 associated with the Cheminova A/S hedges were $273.8 million, which includes $180.1 million that were accrued and paid within the period.
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)
Three Months Ended March 31
2015
 
2014
 
(unaudited)
Cash provided (required) by investing activities of continuing operations:
 
 
 
Capital expenditures
$
(36.9
)
 
$
(63.3
)
Proceeds from disposal of property, plant and equipment
0.3

 

Other investing activities
(17.6
)
 
(1.1
)
Cash provided (required) by investing activities of continuing operations
$
(54.2
)
 
$
(64.4
)
 
 
 
 
Cash provided (required) by investing activities of discontinued operations:
 
 
 
Proceeds from FMC Peroxygens divestiture

 
199.1

       Other discontinued investing activities
(15.6
)
 
(11.1
)
Cash provided (required) by investing activities of discontinued operations
$
(15.6
)
 
$
188.0

 
 
 
 
Cash provided (required) by financing activities of continuing operations:
 
 
 
Increase (decrease) in short-term debt
383.0

 
(39.6
)
Repayments of long-term debt
(0.4
)
 
(0.7
)
Distributions to non controlling interests

 
(3.0
)
Issuances of common stock, net
3.5

 
5.2

Excess tax benefits from share-based compensation
1.7

 
3.4

Dividends paid (2)
(20.1
)
 
(18.0
)
Other repurchases of common stock
(2.9
)
 
(4.0
)
Cash provided (required) by financing activities of continuing operations
$
364.8

 
$
(56.7
)
Effect of exchange rate changes on cash and cash equivalents
(2.1
)
 
(0.8
)
Increase (decrease) in cash and cash equivalents
(4.3
)
 
(30.7
)
Cash and cash equivalents, beginning of period
109.5

 
123.2

Cash and cash equivalents, end of period
$
105.2

 
$
92.5

                                               
(2)
See Note 12 regarding quarterly cash dividend.
Supplemental disclosure of cash flow information: Cash paid for interest, net of capitalized interest was $18.0 million and $11.2 million, and income taxes paid, net of refunds were $11.1 million and $25.3 million for the three months ended March 31, 2015 and 2014, respectively. Non-cash additions to property, plant and equipment were $5.5 million and $21.4 million for March 31, 2015 and 2014.


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 and cash flows for the three months ended March 31, 2015 and 2014, and our financial position as of March 31, 2015. All such adjustments included herein are of a normal, recurring nature unless otherwise disclosed in the Notes. The results of operations for the three months ended March 31, 2015 and 2014 are not necessarily indicative of the results of operations for the full year. The condensed consolidated balance sheets as of March 31, 2015 and December 31, 2014, and the related condensed consolidated statements of income (loss), condensed consolidated statements of comprehensive income (loss) and condensed consolidated statements of cash flows for the three months ended March 31, 2015 and 2014, 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, 2014 (the “2014 10-K”).

FMC Alkali Chemicals Division:

In February 2015, our FMC Alkali Chemicals division ("ACD") was classified as a discontinued operation. For more information on the discontinued operations see Note 9. As a result, our FMC Minerals segment, which previously included our FMC Alkali Chemicals and FMC Lithium divisions, was renamed FMC Lithium. We have recast all the data within this filing to reflect the changes in our reportable segments to conform to the current year presentation and to present ACD as a discontinued operation retrospectively for all periods presented.

Note 2: Recently Issued and Adopted Accounting Pronouncements and Regulatory Items
New accounting guidance and regulatory items
In April 2015, the Financial Accounting Standards Board ("FASB") issued ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The amendments in this new standard require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this standard. We are required to adopt this standard in the first quarter of 2016. Early adoption is permitted. The amendments should be applied on a retrospective basis. ASU 2015-03 will impact our consolidated balance sheet.
In February 2015, the FASB issued ASU 2015-02, Consolidation: Amendments to the Consolidation Analysis. This new standard changes the consolidation evaluation for entities that are required to evaluate whether they should consolidate certain legal entities. We are required to adopt this standard in the first quarter of 2016. Early adoption is permitted. The standard permits the use of a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption, or a reporting entity may also apply the amendments retrospectively. We are evaluating the effect that ASU 2015-02 will have on our consolidated financial statements. We have not yet completed the assessment to determine the effect of the standard on our ongoing financial reporting.
In May 2014, the 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; however, in April 2015 the FASB voted to propose to defer the effective date of the new revenue recognition standard by one year. If deferred, the provisions of this standard would be effective for interim and annual periods beginning after December 15, 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.

Recently adopted accounting guidance
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

8


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

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 have adopted this guidance prospectively this quarter.

Note 3: Acquisitions
Cheminova A/S
On September 8, 2014, we entered into a definitive Share Purchase Agreement (the "Purchase Agreement") with Auriga Industries A/S, a Denmark Aktieselskab ("Auriga") and Cheminova A/S, a Denmark Aktieselskab, a wholly owned subsidiary of Auriga ("Cheminova"). On April 21, 2015, pursuant to the terms and conditions set forth in the Purchase Agreement, we completed the acquisition of 100 percent of the outstanding equity of Cheminova from Auriga for an aggregate purchase price of $1.2 billion, excluding net debt to be assumed and hedged-related costs totaling $0.6 billion (the “Acquisition”). Beginning in the second quarter of 2015, Cheminova will be integrated into our FMC Agricultural Solutions segment and included within our results of operations. The Acquisition was funded with the October 10, 2014 term loan which was secured for the purposes of the Acquisition, see Note 8 for more information.
Cheminova is a business under the U.S. GAAP business combinations accounting guidance, and therefore we will apply acquisition accounting. Acquisition accounting requires, among other things, that assets and liabilities assumed be recognized at their fair values as of the acquisition date. The net assets of the Cheminova acquisition will be recorded at the estimated fair values using primarily Level 2 and Level 3 inputs (see Note 15 for an explanation of Level 2 and 3 inputs). In valuing acquired assets and liabilities, valuation inputs include an estimate of future cash flows and discount rates based on the internal rate of return and the weighted average rate of return.
We have not completed the detailed valuation work necessary to determine the estimates of the fair value of the acquired assets and assumed liabilities. As a result we have not determined the preliminary allocation of the purchase price. We also have not completed the detailed analysis to present the pro forma financial information for the combined companies. As such, both the preliminary allocation of the purchase price as well as the pro forma financial information will be included in our future filings.
Acquisition related costs
Pursuant to the terms and conditions set forth in the Purchase Agreement, we agreed to acquire all of the outstanding equity of Cheminova from Auriga for an aggregate purchase price of 8.5 billion Danish krone ("DKK"). At the time we entered into the Purchase Agreement, the U.S. dollar ("USD" or “$”) to DKK exchange rate was USD $1.00 to DKK 5.77, resulting in a USD purchase price of $1.47 billion, excluding assumed debt of approximately $0.3 billion. In order to minimize our exposure to adverse changes in the USD to DKK exchange rate from September 8, 2014 to April 21, 2015, (the acquisition close date) we entered into a series of foreign currency forward contracts ("FX forward contracts"). The FX forward contracts provided us the ability to fix the USD to DKK exchange rate for most of the DKK 8.5 billion purchase price, thereby limiting our exposure to foreign currency rate fluctuations. Over the period from September 2014 to March 2015 the USD strengthened against the DKK by 19 percent to an exchange rate of USD $1.00 to DKK 6.88 at March 31, 2015. The strengthening of the USD against the DKK results in a lower USD purchase price for Cheminova. Partially offsetting this was a mark-to-market loss on the FX forward contracts of $180.1 million during the three months ended March 31, 2015.
The loss on the FX forward contracts pursuant to GAAP is required to be expensed immediately. As a result, during the three months ended March 31, 2015, a $180.1 million loss associated with these FX forward contracts was recognized. The FX forward contract loss recognized in 2014 was $99.6 million. These losses are included in "Selling, general and administrative expenses" within the condensed consolidated statements of income (loss) and included them within Acquisition related charges within Note 17. In addition to the FX forward contract charges, additional legal and professional fees were incurred for the three months ended March 31, 2015 associated with this Acquisition as described in Note 17.

Note 4: Goodwill and Intangible Assets
The changes in the carrying amount of goodwill by business segment for the three months ended March 31, 2015, are presented in the table below:
(in Millions)
FMC Agricultural
Solutions
 
FMC Health and Nutrition
 
FMC Lithium
 
Total
Balance, December 31, 2014
$
31.0

 
$
321.5

 
$

 
$
352.5

Foreign currency adjustments

 
(28.4
)
 

 
(28.4
)
Balance, March 31, 2015
$
31.0

 
$
293.1

 
$

 
$
324.1


9


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

Our intangible assets, other than goodwill, consist of the following:
 
March 31, 2015
 
December 31, 2014
(in Millions)
Gross
 
Accumulated Amortization
 
Net
 
Gross
 
Accumulated Amortization
 
Net
Intangible assets subject to amortization (finite-lived)
Customer relationships
$
147.8

 
$
(24.6
)
 
$
123.2

 
$
152.8

 
$
(22.5
)
 
$
130.3

Patents
1.7

 
(0.2
)
 
1.5

 
1.7

 
(0.1
)
 
1.6

Brands (1)
1.2

 
(0.7
)
 
0.5

 
1.2

 
(0.6
)
 
0.6

Purchased and licensed technologies
71.7

 
(25.4
)
 
46.3

 
74.3

 
(24.5
)
 
49.8

Other intangibles
3.6

 
(2.1
)
 
1.5

 
3.6

 
(2.4
)
 
1.2

 
$
226.0

 
$
(53.0
)
 
$
173.0

 
$
233.6

 
$
(50.1
)
 
$
183.5

Intangible assets not subject to amortization (indefinite life)
Brands (1)
$
60.5

 
 
 
$
60.5

 
$
63.4

 
 
 
$
63.4

Total intangible assets
$
286.5

 
$
(53.0
)
 
$
233.5

 
$
297.0

 
$
(50.1
)
 
$
246.9

(1)
Represents trademarks, trade names and know how.

At March 31, 2015, the finite-lived and indefinite life intangibles were allocated among our business segments as follows:
(in Millions)
Finite-lived
 
Indefinite Life
FMC Agricultural Solutions
$
97.4

 
$
35.2

FMC Health and Nutrition
74.4

 
25.3

FMC Lithium
1.2

 

Total
$
173.0

 
$
60.5


Note 5: Inventories
Inventories consisted of the following:
 (in Millions)
March 31, 2015
 
December 31, 2014
Finished goods
$
287.8

 
$
281.1

Work in process
243.9

 
248.8

Raw materials, supplies and other
274.5

 
242.1

First-in, first-out inventory
$
806.2

 
$
772.0

Less: Excess of first-in, first-out cost over last-in, first-out cost
(165.4
)
 
(164.4
)
Net inventories
$
640.8

 
$
607.6


Note 6: Property, Plant and Equipment
Property, plant and equipment consisted of the following:
(in Millions)
March 31, 2015
 
December 31, 2014
Property, plant and equipment
$
1,580.9

 
$
1,618.7

Accumulated depreciation
(678.3
)
 
(688.7
)
Property, plant and equipment, net
$
902.6

 
$
930.0





10


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

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 March 31
(in Millions)
2015
 
2014
Restructuring charges and asset disposals
$
5.4

 
$
5.3

Other charges (income), net
16.9

 
1.4

Total restructuring and other charges
$
22.3

 
$
6.7


Restructuring charges and asset disposals
There were no significant restructuring activities that commenced during 2015. For detail on the restructuring charges and asset disposals which commenced prior to 2015, see Note 7 to our consolidated financial statements included with our 2014 Form 10-K.
 
Restructuring Charges
 
 
 
 
(in Millions)
Severance and Employee Benefits (1)
 
Other Charges (Income) (2)
 
Asset Disposal Charges (3)
 
Total
Health and Nutrition Restructuring
$
0.8

 
$
0.1

 
$
1.2

 
$
2.1

Lithium Restructuring
0.3

 

 

 
0.3

Other Items
3.3

 
(0.3
)
 

 
3.0

Three months ended March 31, 2015
$
4.4

 
$
(0.2
)
 
$
1.2

 
$
5.4

Health and Nutrition Restructuring
4.9

 

 

 
4.9

Lithium Restructuring

 
0.1

 

 
0.1

Other Items

 
0.3

 

 
0.3

Three months ended March 31, 2014
$
4.9

 
$
0.4

 
$

 
$
5.3

____________________ 
(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 recoveries associated with restructuring.
(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.
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.
(in Millions)
Balance at
12/31/14 (4)
 
Change in
reserves (2)
 
Cash
payments
 
Other (3)
 
Balance at
3/31/15 (4)
Health and Nutrition Restructuring
$
4.6

 
$
0.9

 
$
(1.8
)
 
$
0.2

 
$
3.9

Lithium Restructuring
0.2

 
0.3

 
(0.1
)
 

 
0.4

Other Workforce Related and Facility Shutdowns (1)
2.8

 
3.0

 
(1.1
)
 
0.4

 
5.1

Restructuring activities related to discontinued operations (5)
2.7

 

 
(0.1
)
 
(0.3
)
 
2.3

Total
$
10.3

 
$
4.2

 
$
(3.1
)
 
$
0.3

 
$
11.7

____________________ 
(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.

11


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

(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 March 31
(in Millions)
2015
 
2014
Environmental charges, net
$
1.9

 
$
1.4

Other items, net
15.0

 

Other charges (income), net
$
16.9

 
$
1.4

Environmental charges, net
Environmental charges represent the net charges associated with environmental remediation at continuing operating sites. See Note 10 for additional details.
Other items, Net
Our FMC Agricultural Solutions segment enters into collaboration and license agreements with various third-party companies for the purpose of obtaining certain technology and intellectual property rights relating to new compounds still under development. In most transactions the rights and technology obtained is referred to as in-process research and development and in accordance with GAAP, the amounts paid are expensed as incurred since they were acquired outside of a business combination. During the three months ended March 31, 2015, we entered into one such transaction, consisting of the acquisition of all global rights to a pre-development novel, proprietary broadleaf herbicide.

Note 8: Debt
Debt maturing within one year:
(in Millions)
March 31, 2015
 
December 31, 2014
Short-term foreign debt (1)
$
40.5

 
$
36.6

Commercial paper (2)
865.1

 
486.6

Total short-term debt
$
905.6

 
$
523.2

Current portion of long-term debt
1.7

 
2.0

Short-term debt and current portion of long-term debt
$
907.3

 
$
525.2

____________________
(1)
At March 31, 2015, the average interest rate on the borrowings was 4.50%. We often provide parent-company guarantees to lending institutions that extend credit to our foreign subsidiaries.
(2)
At March 31, 2015, the average interest rate on the borrowings was 0.62%.

12


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

Long-term debt:
(in Millions)
March 31, 2015
 
 
 
 
Interest Rate
Percentage
 
Maturity
Date
 
3/31/2015
 
12/31/2014
Pollution control and industrial revenue bonds (less unamortized discounts of $0.2 and $0.2, respectively)
0.2-6.5%

 
2021-2035
 
$
141.6

 
$
141.5

Senior notes (less unamortized discount of $1.9 and $1.9, respectively)
3.95-5.2%

 
2019-2024
 
998.1

 
998.1

Credit Facility (1)
2.6
%
 
2019
 

 

Foreign debt
0-9.3%

 
2015-2024
 
12.9

 
15.8

Total long-term debt

 

 
$
1,152.6

 
$
1,155.4

Less: debt maturing within one year

 

 
1.7

 
2.0

Total long-term debt, less current portion

 

 
$
1,150.9

 
$
1,153.4

____________________
(1)
Letters of credit outstanding under our Credit Facility totaled $100.1 million and available funds under this facility were $534.8 million at March 31, 2015 (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 March 31, 2015, was 3.2 which is below the maximum leverage of 3.5. Our actual interest coverage for the four consecutive quarters ended March 31, 2015, was 11.7 which is above the minimum interest coverage of 3.5. We were in compliance with all covenants at March 31, 2015. Following the acquisition of Cheminova A/S (see Note 3), the maximum leverage covenant increased to 4.5 and will step down in accordance with the provisions of the Credit Facility.

Term Loan Facility
On April 21, 2015, we borrowed $1.65 billion under our previously announced senior unsecured Term Loan Facility. The proceeds of the borrowing were used to finance the acquisition of Cheminova A/S as well as to pay costs, fees and expenses incurred in connection with the acquisition and the term loan facility.

The scheduled maturity of the Term Loan Facility is on the fifth anniversary of this closing date. The borrowings under the Term Loan Agreement will bear interest at a floating rate, which will be a base rate or a Eurocurrency rate equal to the London interbank offered rate for the relevant interest period, plus in each case an applicable margin, as determined in accordance with the provisions of the Term Loan Agreement. The base rate will be the highest of: the rate of interest announced publicly by Citibank, N.A. in New York, New York from time to time as its “base rate”; the federal funds effective rate plus1/2 of one percent; and the Eurocurrency rate for a one-month period plus one percent.

The Term Loan Agreement contains financial and other covenants, including a maximum leverage ratio of 4.5 and minimum interest coverage ratio 3.5 immediately following the acquisition. The Term Loan Agreement also contains a cross-default provision whereby a default under our other indebtedness in excess of $50.0 million, after grace periods and absent a waiver from the lenders, would be an event of default under the Term Loan Agreement and could result in a demand for payment of all amounts outstanding under this facility.

Note 9: Discontinued Operations
FMC Alkali:
On February 3, 2015, we signed a stock and asset purchase agreement ( the "Definitive Agreement") to sell our FMC Alkali Chemicals division ("ACD") to a wholly owned subsidiary of Tronox Limited ("Tronox"). The sale of ACD to Tronox was completed on April 1, 2015 resulting in approximately $1.6 billion in pre-tax proceeds ($1.2 billion after-tax).
ACD meets the criteria to be an asset held for sale and we have also presented ACD as a discontinued operation in accordance with GAAP. In addition to the definitive agreement we entered into a customary transitional services agreement with Tronox to provide for the orderly separation of the business and transition of various functions and processes. These services will be provided

13


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

by us to Tronox for up to 12 months after closing. These services include information technology services, human resource and facility services among other services, while Tronox assumes the operations of ACD.
Additionally, FMC is providing certain financial guarantees to third parties on behalf of ACD. These financial guarantees include payment guarantees to the lessors of various transportation equipment leases, subleases of certain transportation equipment leases and a self-bonding guarantee for several environmental reclamation obligations assumed by Tronox, which were previously treated as an asset retirement obligation by FMC. In accordance with the Definitive Agreement, Tronox is provided 90 days to secure FMC's release from such guarantees after which FMC is entitled to receive compensation from Tronox based on the outstanding amount of guarantees until such release is obtained.
The results of our discontinued FMC ACD operations are summarized below:
(in Millions)
Three Months Ended March 31
2015
 
2014
Revenue
$
194.0

 
$
184.9

Costs of sales and services
149.2

 
149.5

 
 
 
 
Income (loss) from discontinued operations before income taxes (1)
19.0

 
28.2

Provision for income taxes
0.4

 
4.7

Total discontinued operations of FMC ACD, net of income taxes
$
18.6

 
$
23.5

Less: discontinued operations of FMC ACD attributable to noncontrolling interests
$

 
$
1.6

Discontinued operations of FMC ACD, net of income taxes, attributable to FMC Stockholders
$
18.6

 
$
21.9

____________________
(1)
Amounts include approximately zero and $1.9 million attributable to noncontrolling interests, allocated interest expense of $2.2 million and $1.9 million, divestiture related charges of $11.3 million and zero and a pension curtailment charge of $5.3 million and zero for the three months ended March 31, 2015 and 2014, respectively. Interest was allocated in accordance with relevant discontinued operations accounting guidance.

The following table presents the major classes of assets and liabilities of FMC Alkali Chemicals:
(in Millions)
March 31, 2015
 
December 31, 2014
Assets
 
 
 
Current assets of discontinued operations held for sale (primarily trade receivables and inventories)
$
205.7

 
$
203.3

Property, plant & equipment (1)
383.2

 
378.6

Other non-current assets (1)
22.9

 
22.9

Total assets of discontinued operations held for sale (2)
$
611.8

 
$
604.8

Liabilities
 
 
 
Current liabilities of discontinued operations held for sale
(70.7
)
 
(88.4
)
Noncurrent liabilities of discontinued operations held for sale (1)
(9.1
)
 
(4.7
)
Total liabilities of discontinued operations held for sale (2)
$
(79.8
)
 
$
(93.1
)
Net Assets
$
532.0

 
$
511.7

____________________
(1)     Presented as "Noncurrent assets\liabilities of discontinued operations held for sale" on the condensed consolidated balance sheet as
of December 31, 2014.
(2)    Presented as "Current assets\liabilities of discontinued operations held for sale" on the condensed consolidated balance sheet as of
March 31, 2015.


14


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

In addition to our discontinued FMC Alkali Chemicals division 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 March 31
2015
 
2014
Adjustment for workers’ compensation, product liability, other postretirement benefits and other, net of income tax benefit (expense) of ($0.3) and zero for the three months ended March 31, 2015 and 2014, respectively
$
(2.5
)
 
$
(1.5
)
Provision for environmental liabilities, net of recoveries, net of income tax benefit of $1.9 and $2.7 for the three months ended March 31, 2015 and 2014, respectively (1)
(0.6
)
 
(4.8
)
Provision for legal reserves and expenses, net of recoveries, net of income tax benefit (expense) of ($0.1) and $2.3 for the three months ended March 31, 2015 and 2014, respectively
0.1

 
(3.8
)
Discontinued operations of FMC Alkali Chemicals, net of income tax benefit (expense) of ($0.4) and ($4.7) for the three months ended March 31, 2015 and 2014, respectively
18.6

 
21.9

Discontinued operations of FMC Peroxygens, net of income tax benefit (expense) of zero and ($29.3) for the three months ended March 31, 2015 and 2014, respectively (2)

 
(40.0
)
Discontinued operations, net of income taxes
$
15.6

 
$
(28.2
)
____________________
(1)
See a roll forward of our environmental reserves as well as discussion on significant environmental issues that occurred during the 2015 in Note 10.
(2)
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 a further pre-tax loss of $10.1 million ($33.4 million net of tax). The net of tax loss was driven by the final allocation of the $199.1 million of proceeds.

Note 10: Environmental Obligations
We have reserves for potential environmental obligations, which management considers probable and for which management can reasonable estimate. The table below is a roll forward of our total environmental reserves, continuing and discontinued:
 
(in Millions)
Gross
 
Recoveries (3)
 
Net
Total environmental reserves at December 31, 2014
$
296.2

 
$
(11.9
)
 
$
284.3

Provision/(benefit)
4.4

 

 
4.4

(Spending)/recoveries
(7.7
)
 
1.0

 
(6.7
)
Total environmental reserves at March 31, 2015
$
292.9

 
$
(10.9
)
 
$
282.0

 
 
 
 
 
 
Environmental reserves, current (1)
96.4

 
(5.3
)
 
91.1

Environmental reserves, long-term (2)
196.5

 
(5.6
)
 
190.9

Total environmental reserves at March 31, 2015
$
292.9

 
$
(10.9
)
 
$
282.0

____________________
(1)
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.
(3)
These recorded recoveries represent probable realization of claims against U.S. government agencies and are recorded as an offset to our environmental reserves in the condensed consolidated balance sheets.
The estimated reasonably possible environmental loss contingencies, net of expected recoveries, exceed amounts accrued by approximately $210 million at March 31, 2015. 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 provides a roll forward of our environmental recoveries representing probable realization of claims against insurance carriers and other third parties. These recoveries are recorded as "Other assets" in the condensed consolidated balance sheets.
(in Millions)
12/31/2014
 
Increase in Recoveries
 
Cash Received
 
3/31/2015
Environmental Recoveries
$
29.9

 

 
(3.6
)
 
$
26.3


Our net environmental provisions relate to costs for the continued cleanup of both continuing and discontinued manufacturing operations from previous years. The net provisions are comprised as follows:
 
Three Months Ended March 31
(in Millions)
2015
 
2014
Environmental provisions, net - recorded to liabilities (1)
$
4.4

 
$
8.9

Environmental provisions, net - recorded to assets (2)

 

Environmental provision, net
$
4.4

 
$
8.9

 
 
 
 
Continuing operations (3)
1.9

 
1.4

Discontinued operations (4)
2.5

 
7.5

Environmental provision, net
$
4.4

 
$
8.9

____________________
(1)     See above roll forward of our total environmental reserves as presented on the condensed consolidated balance sheets.
(2)     See above roll forward of our total environmental recoveries as presented on the condensed consolidated balance sheets.
(3)     Recorded as a component of “Restructuring and other charges (income)” on the condensed consolidated statements of income (loss). See
Note 7. Environmental obligations for continuing operations primarily represent obligations at shut down or abandoned facilities within businesses that do not meet the criteria for presentation as discontinued operations.
(4)     Recorded as a component of “Discontinued operations, net of income taxes" on the condensed consolidated statements of income
(loss). See Note 9.

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 2014 Form 10-K. See Note 10 to our consolidated financial statements in our 2014 Form 10-K for a description of significant updates to material environmental sites.

Note 11: 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. For the three months ended March 31, 2015 we had a net loss attributable to FMC stockholders and as such all 1,635 thousand potential common shares were excluded from Diluted EPS. There were 312 thousand potential common shares excluded from Diluted EPS for the three months ended March 31, 2014.
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.

16


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

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 March 31
2015
 
2014
Earnings (loss) attributable to FMC stockholders:
 
 
 
Continuing operations, net of income taxes
$
(62.4
)
 
$
93.8

Discontinued operations, net of income taxes
15.6

 
(28.2
)
Net income (loss) attributable to FMC stockholders
$
(46.8
)
 
$
65.6

Less: Distributed and undistributed earnings allocable to restricted award holders

 
(0.2
)
Net income (loss) allocable to common stockholders
$
(46.8
)
 
$
65.4

 
 
 
 
Basic earnings (loss) per common share attributable to FMC stockholders:
 
 
 
Continuing operations
$
(0.47
)
 
$
0.70

Discontinued operations
0.12

 
(0.21
)
Net income (loss) attributable to FMC stockholders
$
(0.35
)
 
$
0.49

 
 
 
 
Diluted earnings (loss) per common share attributable to FMC stockholders:
 
 
 
Continuing operations
$
(0.47
)
 
$
0.70

Discontinued operations
0.12

 
(0.21
)
Net income (loss) attributable to FMC stockholders
$
(0.35
)
 
$
0.49

 
 
 
 
Shares (in thousands):
 
 
 
Weighted average number of shares of common stock outstanding - Basic
133,577

 
133,139

Weighted average additional shares assuming conversion of potential common shares

 
1,114

Shares – diluted basis
133,577

 
134,253


Note 12: Equity
Refer to the table below for a reconciliation of equity, equity attributable to the parent, and equity attributable to noncontrolling interests for the three months ended March 31, 2015: 
(in Millions, Except Per Share Data)
FMC
Stockholders’
Equity
 
Noncontrolling
Interest
 
Total
Equity
Balance at December 31, 2014
$
1,530.5

 
$
33.5

 
$
1,564.0

Net income (loss)
(46.8
)
 
1.3

 
(45.5
)
Stock compensation plans
8.1

 

 
8.1

Excess tax benefits from share-based compensation
1.7

 

 
1.7

Shares for benefit plan trust
(0.2
)
 

 
(0.2
)
Net pension and other benefit actuarial gains/(losses) and prior service costs, net of income tax (1)
5.8

 

 
5.8

Net hedging gains/(losses) and other, net of income tax (1)
0.5

 

 
0.5

Foreign currency translation adjustments (1)
(39.7
)
 
(0.3
)
 
(40.0
)
Dividends ($0.165 per share)
(22.1
)
 

 
(22.1
)
Repurchases of common stock
(2.9
)
 

 
(2.9
)
Balance at March 31, 2015
$
1,434.9

 
$
34.5

 
$
1,469.4

____________________
(1)
See condensed consolidated statements of comprehensive income (loss).

17


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


Accumulated other comprehensive income (loss)
Summarized below is the roll forward of accumulated other comprehensive income (loss), net of tax.
(in Millions)
Foreign currency adjustments
 
Derivative Instruments(1)
 
Pension and other postretirement benefits (2)
 
Total
Accumulated other comprehensive income (loss),
net of tax at December 31, 2014
$
(50.4
)
 
$
(3.9
)
 
$
(321.5
)
 
$
(375.8
)
2015 Activity
 
 
 
 
 
 
 
Other comprehensive income (loss) before reclassifications
(39.7
)
 
2.3

 
(5.9
)
 
$
(43.3
)
Amounts reclassified from accumulated other comprehensive income (loss)

 
(1.8
)
 
11.7

 
$
9.9

 
 
 
 
 
 
 
 
Accumulated other comprehensive income (loss),
net of tax at March 31, 2015
$
(90.1
)
 
$
(3.4
)
 
$
(315.7
)
 
$
(409.2
)
(in Millions)
Foreign currency adjustments
 
Derivative Instruments (1)
 
Pension and other postretirement benefits (2)
 
Total
Accumulated other comprehensive income (loss),
net of tax at December 31, 2013
$
(25.3
)
 
$
(6.1
)
 
$
(170.5
)
 
$
(201.9
)
2014 Activity
 
 
 
 
 
 
 
Other comprehensive income (loss) before reclassifications

 
2.5

 
0.5

 
$
3.0

Amounts reclassified from accumulated other comprehensive income (loss)
49.6

 
1.1

 
6.0

 
$
56.7

 
 
 
 
 
 
 
 
Accumulated other comprehensive income (loss),
net of tax at March 31, 2014
$
24.3

 
$
(2.5
)
 
$
(164.0
)
 
$
(142.2
)
____________________
(1)     See Note 15 for more information.
(2)    See Note 13 for more information.

18


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


Reclassifications of accumulated other comprehensive income (loss)

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 (loss) 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 (Loss)
 
 
Three Months Ended March 31
 
 
(in Millions)
 
2015
 
2014
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustments:
 
 
 
 
 
 
Divestiture of FMC Peroxygens (3)
 

 
(49.6
)
 
Discontinued operations, net of income taxes
 
 
 
 
 
 
 
Derivative instruments:
 
 
 
 
 
 
Foreign currency contracts
 
$
8.7

 
$
(0.9
)
 
Costs of sales and services
Energy contracts
 
$
(1.3
)
 
$
1.0

 
Costs of sales and services
Foreign currency contracts
 
$
(4.4
)
 
$
(1.6
)
 
Selling, general and administrative expenses
Total before tax
 
$
3.0

 
$
(1.5
)
 
 
 
 
$
(1.2
)
 
$
0.4

 
Provision for income taxes
Amount included in net income
 
$
1.8

 
$
(1.1
)
 
 
 
 
 
 
 
 
 
Pension and other postretirement benefits (2):
 
 
 
 
 
 
Amortization of prior service costs
 
$
(0.4
)
 
$
(0.4
)
 
Selling, general and administrative expenses
Amortization of unrecognized net actuarial and other gains (losses)
 
$
(12.7
)
 
$
(7.2
)
 
Selling, general and administrative expenses
Recognized loss due to settlement and curtailment
 
$
(5.3
)
 
$
(1.6
)
 
Selling, general and administrative expenses (4)
Total before tax
 
$
(18.4
)
 
$
(9.2
)
 
 
 
 
$
6.7

 
$
3.2

 
Provision for income taxes
Amount included in net income
 
$
(11.7
)
 
$
(6.0
)
 
 
 
 
 
 
 
 
 
Total reclassifications for the period
 
$
(9.9
)
 
$
(56.7
)
 
Amount included in net income
____________________
(1)
Amounts in parentheses indicate charges to the condensed consolidated statements of income (loss).
(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 13.
(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 9 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.
(4)
The $5.3 million loss due to curtailment for the three months ended March 31, 2015 related to the disposal of our FMC Alkali Chemicals division and was recorded to Discontinued operations, net of income taxes in the condensed statements of income (loss).
                                                                                  
Dividends and Share Repurchases
For the three months ended March 31, 2015 and 2014, we paid $20.1 million and $18.0 million, respectively, in dividends declared in previous periods. On April 16, 2015, we paid dividends totaling $22.1 million to our shareholders of record as of March 31, 2015. This amount is included in “Accrued and other liabilities” on the condensed consolidated balance sheet as of March 31, 2015.
 



19


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

During the three months ended March 31, 2015, we did not repurchase any shares under the publicly announced repurchase program. At March 31, 2015, $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.

Note 13: Pensions and Other Postretirement Benefits
The following table summarizes the components of net annual benefit cost (income) for the three months ended March 31, 2015 and 2014:
(in Millions)
Three Months Ended March 31
Pensions
 
Other Benefits
2015
 
2014
 
2015
 
2014
Components of net annual benefit cost (income):
 
 
 
 
 
 
 
Service cost
$
4.1

 
$
4.9

 
$

 
$

Interest cost
15.4

 
15.5

 
0.3

 
0.3

Expected return on plan assets
(22.2
)
 
(21.6
)
 

 

Amortization of prior service cost (credit)
0.3

 
0.4

 
0.1

 

Recognized net actuarial and other (gain) loss
12.9

 
7.8

 
(0.2
)
 
(0.4
)
Recognized loss due to curtailment (1)
4.8

 

 
0.5

 

Recognized loss due to settlement (2)

 
1.6

 

 

Net periodic benefit cost (3)
$
15.3

 
$
8.6

 
$
0.7

 
$
(0.1
)
____________________
(1)
Curtailment loss is associated with the disposal of our FMC Alkali Chemicals division and was recorded to discontinued operations within the condensed consolidated statements of income (loss).
(2)
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.
(3)
Net periodic benefit cost represent both continuing and discontinued operations.

We made voluntary cash contributions to our U.S. defined benefit pension plan of $25.0 million and $17.0 million in the three months ended March 31, 2015 and March 31, 2014. We expect to make approximately $65 million in voluntary cash contributions to our U.S. defined benefit pension plan during 2015.

Note 14: Income Taxes
We determine our interim tax provision using an Estimated Annual Effective Tax Rate methodology (“EAETR”) in accordance with GAAP. The EAETR is applied to the year-to-date ordinary income, exclusive of discrete items. The tax effects of discrete items are then included to arrive at the total reported interim tax provision.
The determination of the EAETR is based upon a number of estimates, including the estimated annual pretax ordinary income in each tax jurisdiction in which we operate. The tax effects of discrete items are recognized in the tax provision in the quarter they occur in accordance with GAAP. Depending on various factors such as the item’s significance in relation to total income and the rate of tax applicable in the jurisdiction to which it relates, discrete items in any quarter can materially impact the reported effective tax rate. As a global enterprise, our tax expense can be impacted by changes in tax rates or laws, the finalization of tax audits and reviews, as well as other factors. As such, there can be significant volatility in interim tax provisions.

20


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

The below chart provides reconciliation between our reported effective tax rates and the EAETR.
 
Three Months Ended March 31
 
2015
 
2014
(in Millions)
Before Tax
Tax
Effective Tax Rate % Impact
 
Before Tax
Tax
Effective Tax Rate % Impact
Continuing operations
(110.2
)
(49.1
)
44.6
%
 
131.6

34.6

26.3
%
 
 
 
 
 
 
 
 
Discrete items:
 
 
 
 
 
 
 
Acquisition related charges (1)
190.7

70.3

 
 
3.1

0.8

 
Currency remeasurement (2)
6.3

(2.8
)
 
 


 
Other discrete items
21.8

7.3

 
 
9.9

3.4

 
Tax only discrete items (3)

3.0

 
 


 
Total discrete items
$
218.8

$
77.8

 
 
$
13.0

$
4.2

 
 
 
 
 
 
 
 
 
Continuing operations, before discrete items
108.6

28.7

 
 
144.6

38.8

 
Estimated Annualized Effective Tax Rate (EAETR)
 
 
26.4
%
 
 
 
26.8
%
___________________ 
(1)
Acquisition related charges for the three months ended March 31, 2015 are primarily taxed at domestic tax rates resulting in material tax benefit. Charges include a $180.1 million loss on the hedge of the acquisition purchase price of Cheminova A/S, as noted in footnote (2) below hedge gains or losses are treated discretely for tax purposes. For more information on the hedge loss refer to Note 3.
(2)
Represents transactions gains or losses on currency remeasurement, offset by the associated hedge gains or losses. Transaction gains or losses are considered non-taxable permanent items and their associated hedge gain or losses are treated discretely for tax purposes.
(3)
Includes the tax effect of currency remeasurement associated with our foreign statutory operations that in accordance with GAAP income tax accounting guidance shall be treated discretely for tax purposes.

Note 15: 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 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 $2,170.6 million and $1,773.2 million and the carrying amount is $2,058.2 million and $1,678.6 million as of March 31, 2015 and December 31, 2014, 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 16). 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.

21


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

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. We enter into foreign exchange contracts, including forward and purchased options contracts, to reduce the effects of fluctuating foreign currency exchange rates. A detailed description of these risks including a discussion on the concentration of credit risk is provided in Note 17 to our consolidated financial statements on our 2014 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 as 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 March 31, 2015, we had open foreign currency forward contracts in AOCI in a net after tax loss position of $2.9 million designated as cash flow hedges of underlying forecasted sales and purchases. Current open contracts hedge forecasted transactions until December 31, 2015. At March 31, 2015, 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 $404.9 million.
As of March 31, 2015, we had current open commodity contracts in AOCI in a net after tax loss position of $1.8 million designated as cash flow hedges of underlying forecasted purchases, primarily related to natural gas. Current open commodity contracts hedge forecasted transactions until December 31, 2016. At March 31, 2015, we had an equivalent of 1.4 million mmBTUs (millions of British Thermal Units) in aggregate notional volume of outstanding natural gas commodity forward contracts to hedge forecasted purchases.
Of the $4.7 million of net losses after-tax, representing both open foreign currency exchange contracts and commodity contracts, approximately $4.5 million of these losses would be realized in earnings during the twelve months ending March 31, 2016 and $0.2 million of net losses will be realized subsequent to March 31, 2016, if spot rates in the future are consistent with forward rates as of March 31, 2015. The actual effect on earnings will be dependent on the actual spot rates when the forecasted transactions occur.

Derivatives Not Designated As Hedging Instruments
We hold certain forward contracts that have not been designated as cash flow hedging instruments for accounting purposes. Contracts used to hedge the exposure to foreign currency fluctuations associated with certain monetary assets and liabilities are not designated as cash flow hedging instruments, and changes in the fair value of these items are recorded in earnings. We occasionally hold call options that are effective as economic hedges of a portion of our natural gas exposure and the change in fair value of this instrument is also recorded in earnings. We periodically hold soybean barter contracts which qualify as derivatives and we have entered into offsetting commodity contracts to hedge our exposure. Both the change in fair value of the soybean barter contracts and the offsetting commodity contracts are recorded in earnings.
We had open forward contracts not designated as cash flow hedging instruments for accounting purposes with various expiration dates to buy, sell or exchange foreign currencies with a U.S. dollar equivalent of approximately $3.5 billion at March 31, 2015, which included approximately $2.6 billion associated with the derivative contracts to hedge the purchase of Cheminova A/S.

22


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


Fair Value of Derivative Instruments
The following tables provide the gross fair value and net balance sheet presentation of our derivative instruments as of March 31, 2015 and December 31, 2014.
 
March 31, 2015
 
Gross Amount of Derivatives
 
 
 
 
 
 
(in Millions)
Designated as Cash Flow Hedges
 
Not Designated as Hedging Instruments
 
Total Gross Amounts
 
Gross Amounts Offset in the Consolidated Balance Sheet (3)
 
Net Amounts
Derivatives
 
 
 
 
 
 
 
 
 
Foreign exchange contracts
$
22.8

 
$
32.4

 
$
55.2

 
$
(28.1
)
 
$
27.1

Total derivative assets (1)
22.8

 
32.4

 
55.2

 
(28.1
)
 
27.1

 
 
 
 
 
 
 
 
 
 
Foreign exchange contracts
(26.1
)
 
(6.2
)
 
(32.3
)
 
28.1

 
(4.2
)
Energy contracts
(2.8
)
 

 
(2.8
)
 

 
(2.8
)
Total derivative liabilities (2)
(28.9
)
 
(6.2
)
 
(35.1
)
 
28.1

 
(7.0
)
 
 
 
 
 
 
 
 
 
 
Net derivative assets/(liabilities)
$
(6.1
)
 
$
26.2

 
$
20.1

 
$

 
$
20.1

 
 
 
 
 
 
 
 
 
 
 
December 31, 2014
 
Gross Amount of Derivatives
 
 
(in Millions)
Designated as Cash Flow Hedges
 
Not Designated as Hedging Instruments
 
Total Gross Amounts
 
Gross Amounts Offset in the Consolidated Balance Sheet (3)
 
Net Amounts
Derivatives
 
 
 
 
 
 
 
 
 
Foreign exchange contracts
$
17.1

 
$
15.1

 
$
32.2

 
$
(3.6
)
 
$
28.6

Energy contracts
0.3

 

 
0.3

 
(0.3
)
 

Total derivative assets (1)
17.4

 
15.1

 
32.5

 
(3.9
)
 
28.6

 
 
 
 
 
 
 
 
 
 
Foreign exchange contracts
(17.4
)
 
(100.0
)
 
(117.4
)
 
3.6

 
(113.8
)
Energy contracts
(7.6
)
 

 
(7.6
)
 
0.3

 
(7.3
)
Total derivative liabilities (2)
(25.0
)
 
(100.0
)
 
(125.0
)
 
3.9

 
(121.1
)
 
 
 
 
 
 
 
 
 
 
Net derivative assets/(liabilities)
$
(7.6
)
 
$
(84.9
)
 
$
(92.5
)
 
$

 
$
(92.5
)
____________________
(1)
Net balance is included in “Prepaid and other current assets” in the condensed consolidated balance sheets.
(2)
Net balance is included in “Accrued and other liabilities” in the condensed consolidated balance sheets.
(3)
Represents net derivatives positions subject to master netting arrangements.




23


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

The tables below summarizes the gains or losses related to our cash flow hedges and derivatives not designated as hedging instruments for the three months ended March 31, 2015 and 2014.

Derivatives in Cash Flow Hedging Relationships

 
Three Months Ended March 31
 
Contracts
 
 
 
Foreign Exchange
 
Energy
 
Other
 
Total
(in Millions)
2015
 
2014
 
2015
 
2014
 
2015
 
2014
 
2015
 
2014
Unrealized hedging gains (losses) and other, net of tax
$
0.3

 
$
1.1

 
$
2.0

 
$
1.4

 
$

 
$

 
$
2.3

 
$
2.5

Reclassification of deferred hedging (gains) losses, net of tax
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective portion (1)
(2.6
)
 
1.8

 
0.8

 
(0.7
)
 

 

 
(1.8
)
 
1.1

Total derivative instrument impact on comprehensive income
$
(2.3
)
 
$
2.9

 
$
2.8

 
$
0.7

 
$

 
$

 
$
0.5

 
$
3.6

___________________
(1)
See Note 12 for classification of amounts within the condensed consolidated statements of income (loss).


Derivatives Not Designated as Hedging Instruments
 
 
Location of Gain or (Loss)
Recognized in Income on Derivatives
Amount of Pre-tax Gain or (Loss) 
Recognized in Income on Derivatives (1)
 
 
Three Months Ended March 31
(in Millions)
 
2015
 
2014
Foreign exchange contracts
Cost of sales and services
$
(4.5
)
 
$
4.9

 
Selling, general & administrative (2)
(180.1
)
 

Total
 
$
(184.6
)
 
$
4.9

___________________
(1)
Amounts in the columns represent the gain or loss on the derivative instrument offset by the gain or loss on the hedged item.
(2)
Charges represent a loss on hedging the purchase price of the Cheminova A/S acquisition. See Note 3 within these condensed consolidated financial statements for more information.

Fair-Value Measurements
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Market participants are defined as buyers or sellers in the principle or most advantageous market for the asset or liability that are independent of the reporting entity, knowledgeable and able and willing to transact for the asset or liability.

Fair-Value Hierarchy
We have categorized our assets and liabilities that are recorded at fair value, based on the priority of the inputs to the valuation technique, into a three-level fair-value hierarchy. The fair-value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the assets and liabilities fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair-value measurement of the instrument.

Recurring Fair Value Measurements
The following tables present our fair-value hierarchy for those assets and liabilities measured at fair-value on a recurring basis in the condensed consolidated balance sheets as of March 31, 2015 and December 31, 2014. During the periods presented there were no transfers between fair-value hierarchy levels.