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EX-32.2 - EXHIBIT 32.2 - FMC CORPfmcex322033117.htm
EX-32.1 - EXHIBIT 32.1 - FMC CORPfmcex321033117.htm
EX-31.2 - EXHIBIT 31.2 - FMC CORPfmcex312033117.htm
EX-31.1 - EXHIBIT 31.1 - FMC CORPfmcex311033117.htm
EX-15 - EXHIBIT 15 - FMC CORPfmcex15033117.htm
EX-12 - EXHIBIT 12 - FMC CORPfmcex12033117.htm
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, 2017
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.)
 
 
 
2929 Walnut Street
Philadelphia, Pennsylvania
 
19104
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: 215-299-6668
__________________________________________________________________________
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
 
 
 
 
 
 
 
 
 
 
 
EMERGING GROWTH COMPANY
 
o
 
 
 
 
 
 
 
IF AN EMERGING GROWTH COMPANY, INDICATE BY CHECK MARK IF THE REGISTRANT HAS ELECTED NOT TO USE THE EXTENDED TRANSITION PERIOD FOR COMPLYING WITH ANY NEW OR REVISED FINANCIAL ACCOUNTING STANDARDS PROVIDED PURSUANT TO SECTION 13(A) OF THE EXCHANGE ACT.

 
 
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

Class
 
Outstanding at March 31, 2017
Common Stock, par value $0.10 per share
 
134,001,527



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
2017
 
2016
 
(unaudited)
Revenue
$
596.0

 
$
606.4

Costs and Expenses
 
 
 
Costs of sales and services
379.8

 
390.4

Gross margin
216.2

 
216.0

Selling, general and administrative expenses
109.7

 
110.1

Research and development expenses
28.2

 
34.2

Restructuring and other charges (income)
8.3

 
9.5

Total costs and expenses
526.0

 
544.2

Income from continuing operations before equity in (earnings) loss of affiliates, interest expense, net and income taxes
70.0

 
62.2

Equity in (earnings) loss of affiliates
(0.1
)
 

Interest expense, net
15.7

 
15.8

Income (loss) from continuing operations before income taxes
54.4

 
46.4

Provision (benefit) for income taxes
9.4

 
20.4

Income (loss) from continuing operations
45.0

 
26.0

Discontinued operations, net of income taxes
(168.8
)
 
22.7

Net income (loss)
(123.8
)
 
48.7

Less: Net income attributable to noncontrolling interests
0.4

 
0.4

Net income (loss) attributable to FMC stockholders
$
(124.2
)
 
$
48.3

Amounts attributable to FMC stockholders:
 
 
 
Continuing operations, net of income taxes
$
44.5

 
$
25.6

Discontinued operations, net of income taxes
(168.7
)
 
22.7

Net income (loss) attributable to FMC stockholders
$
(124.2
)
 
$
48.3

Basic earnings (loss) per common share attributable to FMC stockholders:
 
 
 
Continuing operations
$
0.33

 
$
0.19

Discontinued operations
(1.26
)
 
0.17

Net income (loss) attributable to FMC stockholders
$
(0.93
)
 
$
0.36

Diluted earnings (loss) per common share attributable to FMC stockholders:
 
 
 
Continuing operations
$
0.33

 
$
0.19

Discontinued operations
(1.25
)
 
0.17

Net income (loss) attributable to FMC stockholders
$
(0.92
)
 
$
0.36

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
2017
 
2016
 
(unaudited)
Net income (loss)
$
(123.8
)
 
$
48.7

Other comprehensive income (loss), net of tax:
 
 
 
Foreign currency adjustments:
 
 
 
Foreign currency translation gain (loss) arising during the period
43.2

 
52.3

Total foreign currency translation adjustments (1)
43.2

 
52.3

 
 
 
 
Derivative instruments:
 
 
 
Unrealized hedging gains (losses) and other, net of tax of ($2.1) and ($0.8) for the three months ended March 31, 2017 and 2016, respectively
1.1

 
2.3

Reclassification of deferred hedging (gains) losses and other, included in net income, net of tax of ($0.2) and $1.2 for the three months ended March 31, 2017 and 2016, respectively (3)
(0.5
)
 
2.4

Total derivative instruments, net of tax of ($2.3) and $0.4 for the three months ended March 31, 2017 and 2016, respectively
0.6

 
4.7

 
 
 
 
Pension and other postretirement benefits:
 
 
 
Unrealized actuarial gains (losses) and prior service (costs) credits, net of tax of $2.7 and zero for the three months ended March 31, 2017 and 2016, respectively (2)
4.4

 

Reclassification of net actuarial and other (gain) loss and amortization of prior service costs, included in net income, net of tax of $2.6 and $3.6 for the three months ended March 31, 2017 and 2016, respectively (3)
4.9

 
6.3

Total pension and other postretirement benefits, net of tax of $5.3 and $3.6 for the three months ended March 31, 2017 and 2016, respectively
9.3

 
6.3

 
 
 
 
Other comprehensive income (loss), net of tax
53.1

 
63.3

Comprehensive income (loss)
$
(70.7
)
 
$
112.0

Less: Comprehensive income (loss) attributable to the noncontrolling interest
0.6

 
0.5

Comprehensive income (loss) attributable to FMC stockholders
$
(71.3
)
 
$
111.5

____________________ 
(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 indefinitely, however, see Note 15 regarding the impact from the expected sale of our discontinued FMC Health and Nutrition segment on certain of these foreign subsidiaries.
(2)
At December 31 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, 2017 due to the announced plans to divest of FMC Health and Nutrition business, 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 14 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 13.

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


4


FMC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in Millions, Except Share and Par Value Data)
March 31, 2017
 
December 31, 2016
ASSETS
(unaudited)
Current assets
 
 
 
Cash and cash equivalents
$
96.1

 
$
64.2

Trade receivables, net of allowance of $24.8 in 2017 and $17.6 in 2016
1,630.6

 
1,692.5

Inventories
526.4

 
478.9

Prepaid and other current assets
248.0

 
232.1

Current assets of discontinued operations held for sale
1,053.1

 
381.5

Total current assets
$
3,554.2

 
$
2,849.2

Investments
1.0

 
1.0

Property, plant and equipment, net
535.1

 
538.1

Goodwill
500.8

 
498.7

Other intangibles, net
734.6

 
719.9

Other assets including long-term receivables, net
475.2

 
461.1

Deferred income taxes
235.4

 
242.1

Noncurrent assets of discontinued operations held for sale

 
829.2

Total assets
$
6,036.3

 
$
6,139.3

LIABILITIES AND EQUITY
 
 
 
Current liabilities
 
 
 
Short-term debt and current portion of long-term debt
$
217.3

 
$
94.2

Accounts payable, trade and other
390.9

 
317.4

Advance payments from customers
30.1

 
239.8

Accrued and other liabilities
258.0

 
303.3

Accrued payroll
39.9

 
55.2

Accrued customer rebates
321.5

 
246.7

Guarantees of vendor financing
85.8

 
104.5

Accrued pension and other postretirement benefits, current
7.1

 
7.1

Income taxes
19.1

 
11.0

Current liabilities of discontinued operations held for sale
119.1

 
59.0

Total current liabilities
$
1,488.8

 
$
1,438.2

Long-term debt, less current portion
1,790.4

 
1,798.8

Accrued pension and other postretirement benefits, long-term
122.4

 
137.3

Environmental liabilities, continuing and discontinued
293.9

 
306.4

Deferred income taxes
137.0

 
130.4

Other long-term liabilities
312.4

 
287.1

Long-term liabilities of discontinued operations held for sale

 
48.1

Commitments and contingent liabilities (Note 17)


 

Equity
 
 
 
Preferred stock, no par value, authorized 5,000,000 shares; no shares issued in 2017 or 2016

 

Common stock, $0.10 par value, authorized 260,000,000 shares; 185,983,792 issued shares at 2017 and 2016
18.6

 
18.6

Capital in excess of par value of common stock
428.9

 
418.6

Retained earnings
3,359.1

 
3,505.5

Accumulated other comprehensive income (loss)
(425.5
)
 
(478.4
)
Treasury stock, common, at cost - 2017: 51,982,265 shares, 2016: 52,293,686 shares
(1,503.8
)
 
(1,506.6
)
Total FMC stockholders’ equity
$
1,877.3

 
$
1,957.7

Noncontrolling interests
14.1

 
35.3

Total equity
$
1,891.4

 
$
1,993.0

Total liabilities and equity
$
6,036.3

 
$
6,139.3


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
2017
 
2016
 
(unaudited)
Cash provided (required) by operating activities of continuing operations:
 
 
 
Net income (loss)
$
(123.8
)
 
$
48.7

Discontinued operations
168.8

 
(22.7
)
Income (loss) from continuing operations
$
45.0

 
$
26.0

Adjustments from income from continuing operations to cash provided (required) by operating activities of continuing operations:
 
 
 
Depreciation and amortization
23.6

 
24.9

Equity in (earnings) loss of affiliates
(0.1
)
 

Restructuring and other charges (income)
8.3

 
9.5

Deferred income taxes
4.8

 
(2.5
)
Pension and other postretirement benefits
(2.3
)
 
3.8

Share-based compensation
6.3

 
6.2

Excess tax benefits from share-based compensation

 
(0.3
)
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:
 
 
 
Trade receivables, net
78.8

 
103.1

Guarantees of vendor financing
(2.6
)
 
29.7

Inventories
(37.9
)
 
(62.5
)
Accounts payable, trade and other
68.0

 
103.9

Advance payments from customers
(209.9
)
 
(199.2
)
Accrued customer rebates
72.3

 
79.8

Income taxes
1.1

 
15.2

Pension and other postretirement benefit contributions
(0.9
)
 
(1.1
)
Environmental spending, continuing, net of recoveries
(9.6
)
 
(2.7
)
Restructuring and other spending
(2.1
)
 
(6.0
)
Change in other operating assets and liabilities, net (1)
(112.8
)
 
(65.5
)
Cash provided (required) by operating activities of continuing operations
$
(70.0
)
 
$
62.3

Cash provided (required) by operating activities of discontinued operations:
 
 
 
Environmental spending, discontinued, net of recoveries
(5.1
)
 
(3.6
)
Other discontinued reserves
(9.5
)
 
(5.4
)
Operating activities of discontinued operations
49.7

 
46.7

Cash provided (required) by operating activities of discontinued operations
$
35.1

 
$
37.7

                                        
(1)
Changes in all periods primarily represent timing of payments associated with all other operating assets and liabilities.


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
2017
 
2016
 
(unaudited)
Cash provided (required) by investing activities of continuing operations:
 
 
 
Capital expenditures
$
(8.7
)
 
$
(34.9
)
Proceeds from disposal of property, plant and equipment
0.8

 

Other investing activities
(17.0
)
 
(2.8
)
Cash provided (required) by investing activities of continuing operations
$
(24.9
)
 
$
(37.7
)
Cash provided (required) by investing activities of discontinued operations:
 
 
 
       Other discontinued investing activities
(6.2
)
 
(6.5
)
Cash provided (required) by investing activities of discontinued operations
$
(6.2
)
 
$
(6.5
)
Cash provided (required) by financing activities of continuing operations:
 
 
 
Increase (decrease) in short-term debt
120.1

 
2.4

Repayments of long-term debt
(0.7
)
 
(50.3
)
Financing fees
(8.5
)
 
(0.7
)
Issuances of common stock, net
9.6

 
0.6

Excess tax benefits from share-based compensation

 
0.3

Transactions with noncontrolling interests
(0.5
)
 

Dividends paid (2)
(22.1
)
 
(22.1
)
Other repurchases of common stock
(1.4
)
 
(1.2
)
Cash provided (required) by financing activities of continuing operations
$
96.5

 
$
(71.0
)
Effect of exchange rate changes on cash and cash equivalents
1.4

 
0.9

Increase (decrease) in cash and cash equivalents
31.9

 
(14.3
)
Cash and cash equivalents, beginning of period
64.2

 
78.6

Cash and cash equivalents, end of period
$
96.1

 
$
64.3

                                               
(2)
See Note 13 regarding quarterly cash dividend.
Supplemental disclosure of cash flow information: Cash paid for interest, net of capitalized interest was $22.0 million and $23.7 million, and income taxes paid, net of refunds were $3.4 million and $8.0 million for the three months ended March 31, 2017 and 2016, respectively. Net interest payments of $5.3 million and $5.7 million and tax payments, net of refunds of $1.4 million and $0.7 million were allocated to discontinued operations for the three months ended March 31, 2017 and 2016, respectively. Non-cash additions to property, plant and equipment were $3.1 million and $7.1 million for the three months ended March 31, 2017 and 2016.


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 months ended March 31, 2017 and 2016, cash flows for the three months ended March 31, 2017 and 2016, and our financial positions as of March 31, 2017 and December 31, 2016. 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, 2017 and 2016 are not necessarily indicative of the results of operations for the full year. The condensed consolidated balance sheets as of March 31, 2017 and December 31, 2016, 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, 2017 and 2016, 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, 2016 (the “2016 10-K”).

FMC Health and Nutrition:
In March 2017, as a result of the expected transaction with E. I. du Pont de Nemours and Company (“DuPont") and further discussed in Note 3, our FMC Health and Nutrition segment was classified as a discontinued operation. For more information on our discontinued operations see Note 10. We have recast all the data within this filing to present FMC Health and Nutrition 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 March 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.  This ASU provides requirements for presentation and disclosure of service and other components of net benefit cost on the financial statements. The new standard is effective for fiscal years beginning after December 15, 2017 (i.e. a January 1, 2018 effective date).  We believe the adoption will not have a material impact on our consolidated financial statements other than potential disclosure requirements.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.  This ASU changes the subsequent measurement of goodwill impairment by eliminating Step 2 from the impairment test. Under the new guidance, an entity will measure impairment using the difference between the carrying amount and the fair value of the reporting unit. The new standard is effective for fiscal years beginning after December 15, 2019 (i.e. a January 1, 2020 effective date), with early adoption permitted for goodwill impairment tests with measurement dates after January 1, 2017.  We believe the adoption will not have a material impact on our consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations. This new ASU clarified the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The new standard is effective for fiscal years beginning after December 15, 2017 (i.e. a January 1, 2018 effective date) and will be applied prospectively. At this time we do not intend on early adopting this ASU and will continue to assess the effects the amendments will have on future transactions of acquisitions or disposals.

In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740), Intra-Entity Transfers of Assets Other Than Inventory. Under the new guidance, an entity will recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The new standard is effective for fiscal years beginning after December 15, 2017 (i.e. a January 1, 2018 effective date), with early adoption permitted only in the first quarter of a fiscal year. Based on an initial assessment, we believe the adoption will not have a material impact on our consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, Statements of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments. This ASU addresses eight specific cash flow issues with the goal of reducing the existing diversity in practice in how certain cash receipts and cash payments are both presented and classified in the statement of cash flows. The new standard is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years (i.e. a January 1, 2018 effective date), with early adoption permitted. We have reviewed the eight cash flow issues and do not believe there will be any significant changes to FMC and our presentation of certain cash receipts and payments with the consolidated cash flow statement.

8


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


In June 2016, the FASB issued No. ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments” ("ASU 2016-13"). ASU 2016-13 replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses. The update is intended to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The new standard is effective for fiscal years beginning after December 15, 2019 (i.e. a January 1, 2020 effective date), with early adoption permitted for fiscal years beginning after December 15, 2018. We are evaluating the effect the guidance will have on our consolidated financial statements.

In February 2016, the FASB issued its new lease accounting guidance in ASU No. 2016-02, Leases (Topic 842).  Under the new guidance, lessees will be required to recognize for all leases (with the exception of short-term leases) a lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis and a right-of-use asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term.  The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years (i.e. a January 1, 2019 effective date).  We are in the process of determining the transition plan and evaluating the effect the guidance will have on our consolidated financial statements.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments--Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which amends the guidance in U.S. GAAP on the classification and measurement of financial instruments. Changes to the current guidance primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017 (i.e. a January 1, 2018 effective date), and upon adoption, an entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income.  We are evaluating the effect the guidance will have on our consolidated financial statements. 

In May 2014, the FASB issued ASU No. 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 guidance will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. We intend to adopt this standard for interim and annual periods beginning after December 15, 2017 (i.e. a January 1, 2018 effective date). The standard permits the use of either the retrospective or cumulative effect transition method. We expect to apply the modified retrospective adoption method. While, we are still evaluating the effect that ASU 2014-09 will have on our consolidated financial statements and related disclosures, in the fourth quarter of 2016, we performed an initial impact assessment by analyzing certain of our existing material revenue transactions and arrangements, and do not expect material changes to our current policies related to the timing of revenue recognition and the accounting for costs; however the standard will impact our disclosures by potentially requiring further disaggregation of revenue. Also, due to the recently announced agreement with DuPont, we expect to perform further impact assessments subsequent to the closing of the expected transaction.

Recently adopted accounting guidance
In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718) ("ASU 2016-09"). ASU 2016-09 identifies areas for simplification involving several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. The new standard was effective for annual reporting periods beginning after December 15, 2016, including interim periods within those years (i.e. a January 1, 2017 effective date).  We adopted this standard prospectively beginning in 2017. The adoption impacted our recognition of excess tax benefit, which is recorded within provision for income taxes on the condensed consolidated statements of income. Additionally, the presentation of excess tax benefit on our condensed consolidated statements of cash flows was impacted as it is now shown within cash flows from operating activities. The excess tax benefit recognized within provision for income taxes for the three months ended March 31, 2017 was approximately $0.6 million.

In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory. This standard changes the criteria by which to measure inventory. Prior to the issuance of this new standard, inventory was measured at the lower of cost or market value. This required three separate data points in order to measure inventory. The three data points were cost, market with a ceiling

9


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

of net realizable value and market with a floor of net realizable value less a normal profit margin. This amendment eliminates the two data points defining "market" and replaces them with one, net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This amendment does not impact inventory measured using last-in, first-out. This standard was effective for annual reporting periods beginning after December 15, 2016, (i.e. a January 1, 2017 effective date). We have adopted this standard beginning in 2017. The adoption did not have an impact on the condensed consolidated financial statements.

Note 3: Acquisitions
DuPont Crop Protection
On March 31, 2017, we entered into a definitive Transaction Agreement (the “Transaction Agreement”) with E. I. du Pont de Nemours and Company (“DuPont”). Pursuant to the terms and conditions set forth in the Transaction Agreement, (1) we have agreed to purchase certain assets relating to DuPont’s Crop Protection business and research and development organization (the"Acquisition") and (2) DuPont has agreed to purchase FMC Health and Nutrition, excluding our Omega-3 business. Additionally, we will pay DuPont $1.2 billion in cash (subject to certain adjustments set forth in the Transaction Agreement), which reflects the difference in negotiated value between the divested businesses. We expect to complete the transactions in the fourth quarter of 2017. Refer to Note 10.
Also, on March 27, 2017, in connection with the Transaction Agreement, we entered into a commitment letter (the “Commitment Letter”) with Citigroup Global Markets Inc. (collectively with certain of its affiliates, the “Commitment Party”). The Commitment Letter provides that, in connection with the Transactions and subject to the conditions set forth in the Commitment Letter, the Commitment Party will commit to provide to the Company, among other things, a $1.5 billion 364-day bridge term loan and, in certain circumstances, a $1.5 billion revolving credit facility and a $750 million term loan facility. Fees incurred to secure these commitments of approximately $8.5 million have been deferred and are being amortized over the term of the applicable arrangements.

On May 2, 2017, the financing available under the Commitment Letter was terminated and replaced by a $1.5 billion term loan facility and an amended and restated $1.5 billion revolving credit facility. Approximately $3.8 million of the deferred fees associated with the Commitment Letter will be expensed in the second quarter of 2017 and presented within selling, general and administrative within our condensed consolidated statements of income (loss) consistent with other acquisition-related costs. The remaining fees have been capitalized in combination with the term loan facility. The details of the term loan facility and the revolving credit facility are provided in Note 9 within these condensed consolidated financial statements.
Acquisition-related charges
Pursuant to US GAAP, costs incurred associated with the planned or completed acquisitions are expensed as incurred. The following table summarizes the costs incurred associated with these combined activities.

Three Months Ended March 31
(in Millions)
2017

2016
Acquisition-related charges - DuPont
 
 
 
Legal and professional fees (1)
$
9.2

 
$

Acquisition-related charges - Cheminova (2)





Legal and professional fees (1)


7.4

Total acquisition-related charges (3)
$
9.2


$
7.4

 
 
 
 
Restructuring charges and asset disposals



Cheminova restructuring


3.0

Total Cheminova restructuring charges (3) (4)
$


$
3.0


10


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

____________________ 
(1)
Represents transaction costs, costs for transitional employees, other acquired employees related costs and integration-related legal and professional third-party fees. These charges are recorded as a component of “Selling, general and administrative expense" on the condensed consolidated statements of income (loss).
(2)
For more information on the acquisition-related charges for Cheminova, refer to Note 3 to the consolidated financial statements included with our 2016 Form 10-K.
(3)
Acquisition-related charges and restructuring charges to integrate Cheminova with Agricultural Solutions were completed at the end of 2016.
(4)
See Note 8 for more information. These charges are recorded as a component of “Restructuring and other charges (income)” on the condensed consolidated statements of income (loss).

Note 4: Goodwill and Intangible Assets
The changes in the carrying amount of goodwill by business segment are presented in the table below:
(in Millions)
FMC Agricultural
Solutions
 
FMC Lithium
 
Total
Balance, December 31, 2016
$
498.7

 
$

 
$
498.7

Acquisitions

 

 

Foreign currency adjustments
2.1

 

 
2.1

Balance, March 31, 2017
$
500.8

 
$

 
$
500.8

There were no events or circumstances indicating that goodwill might be impaired as of March 31, 2017.

Our intangible assets, other than goodwill, consist of the following:
 
March 31, 2017
 
December 31, 2016
(in Millions)
Gross
 
Accumulated Amortization
 
Net
 
Gross
 
Accumulated Amortization
 
Net
Intangible assets subject to amortization (finite-lived)
Customer relationships
$
366.5

 
$
(49.1
)
 
$
317.4

 
$
356.9

 
$
(43.7
)
 
$
313.2

Patents
2.2

 
(0.5
)
 
1.7

 
2.2

 
(0.4
)
 
1.8

Brands (1)
14.1

 
(5.0
)
 
9.1

 
13.6

 
(4.7
)
 
8.9

Purchased and licensed technologies
55.7

 
(25.9
)
 
29.8

 
60.3

 
(30.1
)
 
30.2

Other intangibles
2.8

 
(2.0
)
 
0.8

 
2.9

 
(1.9
)
 
1.0

 
$
441.3

 
$
(82.5
)
 
$
358.8

 
$
435.9

 
$
(80.8
)
 
$
355.1

Intangible assets not subject to amortization (indefinite-lived)
Brands (1) (2)
$
374.4

 
 
 
$
374.4

 
$
363.4

 
 
 
$
363.4

In-process research & development
1.4

 
 
 
1.4

 
1.4

 
 
 
1.4

 
$
375.8

 
 
 
$
375.8

 
$
364.8

 
 
 
$
364.8

Total intangible assets
$
817.1

 
$
(82.5
)
 
$
734.6

 
$
800.7

 
$
(80.8
)
 
$
719.9

(1)     Represents brand portfolios, trademarks, trade names and know-how.
(2)
The majority of the Brands intangible asset in the table above relates to our proprietary brand portfolio.

At March 31, 2017, the finite-lived and indefinite life intangibles were allocated among our business segments as follows:
(in Millions)
Finite-lived
 
Indefinite-lived
FMC Agricultural Solutions
$
357.8

 
$
375.8

FMC Lithium
1.0

 

Total
$
358.8

 
$
375.8


11


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

 
Three Months Ended March 31
(in Millions)
2017
 
2016
Amortization expense
$
5.1

 
$
5.9

The full year estimated pre-tax amortization expense for each of the five years ending December 31, 2017 to 2021 is $22.1 million, $22.0 million, $21.8 million, $21.7 million and $20.8 million, respectively.

Note 5: Receivables

The following table displays a roll-forward of the allowance for doubtful trade receivables.
(in Millions)
 
Balance, December 31, 2015
$
13.9

Additions - charged to expense
9.8

Transfer (to) from allowance for credit losses (see below)
(7.8
)
Net recoveries and write-offs
1.7

Balance, December 31, 2016
17.6

Additions - charged to expense
1.8

Transfer (to) from allowance for credit losses (see below)
3.1

Net recoveries and write-offs
2.3

Balance, March 31, 2017
$
24.8


The company has non-current receivables that represent long-term customer receivable balances related to past due accounts which are not expected to be collected within the current year. The net long-term customer receivables were $143.4 million as of March 31, 2017. These long-term customer receivable balances and the corresponding allowance are included in "Other assets" on the condensed consolidated balance sheet.

A portion of these long-term receivables have payment contracts. We have no reason to believe payments will not be made based upon the credit quality of these customers.  Additionally, we also hold significant collateral against these customers including rights to property or other assets as a form of credit guarantee. If the customer does not pay or gives indication that they will not pay, these guarantees allow us to start legal action to block the sale of the customer’s harvest. On an ongoing basis, we continue to evaluate the credit quality of our non-current receivables using aging of receivables, collection experience and write-offs, as well as evaluating existing economic conditions, to determine if an additional allowance is necessary.

The following table displays a roll forward of the allowance for credit losses related to long-term customer receivables.

(in Millions)
 
Balance, December 31, 2015
$
29.2

Additions - charged to expense
12.1

Transfer (to) from allowance for doubtful accounts (see above)
7.8

Net Recoveries and write-offs

Balance, December 31, 2016
$
49.1

Additions - charged to expense
1.8

Transfer (to) from allowance for doubtful accounts (see above)
(3.1
)
Net Recoveries and write-offs
0.1

Balance, March 31, 2017
$
47.9



12


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

Note 6: Inventories
Inventories consisted of the following:
 (in Millions)
March 31, 2017
 
December 31, 2016
Finished goods
$
223.5

 
$
220.1

Work in process
249.4

 
219.3

Raw materials, supplies and other
180.7

 
166.7

First-in, first-out inventory
$
653.6

 
$
606.1

Less: Excess of first-in, first-out cost over last-in, first-out cost
(127.2
)
 
(127.2
)
Net inventories
$
526.4

 
$
478.9


Note 7: Property, Plant and Equipment
Property, plant and equipment consisted of the following:
(in Millions)
March 31, 2017
 
December 31, 2016
Property, plant and equipment
$
934.7

 
$
921.6

Accumulated depreciation
(399.6
)
 
(383.5
)
Property, plant and equipment, net
$
535.1


$
538.1


Note 8: 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)
2017
 
2016
Restructuring charges and asset disposals
$

 
$
3.0

Other charges (income), net
8.3

 
6.5

Total restructuring and other charges
$
8.3

 
$
9.5


13


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

Restructuring charges and asset disposals
There were no restructuring charges or asset disposal activities in our continuing operations during the three months ended March 31, 2017. For detail on restructuring activities which commenced prior to 2017, see Note 7 to our consolidated financial statements included with our 2016 Form 10-K.
 
Restructuring Charges
(in Millions)
Severance and Employee Benefits (1)
 
Asset Disposal Charges (2)
 
Total
Cheminova restructuring
$
1.8

 
$
1.2

 
$
3.0

Three months ended March 31, 2016
$
1.8

 
$
1.2

 
$
3.0

____________________ 
(1)
Represents severance and employee benefit charges. Income represents adjustments to previously recorded severance and employee benefits.
(2)
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
12/31/16 (3)
 
Change in
reserves (4)
 
Cash
payments
 
Other
 
Balance at
3/31/17 (3)
Cheminova restructuring
$
11.1

 
$

 
$
(2.0
)
 
$
0.2

 
$
9.3

Other workforce related and facility shutdowns (1)
1.4

 

 
(0.1
)
 

 
1.3

Restructuring activities related to discontinued operations (2)
3.4

 
1.9

 
(4.9
)
 

 
0.4

Total
$
15.9

 
$
1.9

 
$
(7.0
)
 
$
0.2

 
$
11.0

____________________ 
(1)
Primarily severance costs related to workforce reductions and facility shutdowns.
(2)
Cash spending associated with restructuring activities of discontinued operations is reported within "Other discontinued reserves" on the condensed consolidated statements of cash flows.
(3)
Included in "Accrued and other liabilities" on the condensed consolidated balance sheets.
(4)
Primarily severance, exited lease, contract termination and other miscellaneous exit costs. Any accelerated depreciation and impairment charges noted above that impacted our property, plant and equipment balances or other long term assets and are not included in the above tables.
Other charges (income), net
 
Three Months Ended March 31
(in Millions)
2017
 
2016
Environmental charges, net
$
2.3

 
$
6.6

Argentina devaluation

 
4.2

Other items, net
6.0

 
(4.3
)
Other charges (income), net
$
8.3

 
$
6.5

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

14


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

On December 17, 2015, the Argentina government initiated actions to significantly devalue its currency. These actions continued into a portion of first quarter of 2016. These actions created an immediate loss associated with the impacts of the remeasurement of our local balance sheet. The loss was attributable to our Lithium and Agricultural Solutions operations. Because of the severity of the event and its immediate impact to our operations in the country, the charge associated with the remeasurement was included within restructuring and other charges in our condensed consolidated income statement during the period.  We believe these actions have ended and do not expect further charges for remeasurement to be included within restructuring and other charges. 
Other items, Net
Other items, net for the three months ended March 31, 2017 primarily relate to exit costs resulting from the termination and deconsolidation of our interest in a variable interest entity that was previously consolidated and was part of our our FMC Agricultural Solutions segment.

Note 9: Debt
Debt maturing within one year:
(in Millions)
March 31, 2017
 
December 31, 2016
Short-term foreign debt (1)
$
91.1

 
$
85.5

Commercial paper (2)
123.8

 
6.3

Total short-term debt
$
214.9

 
$
91.8

Current portion of long-term debt
2.4

 
2.4

Short-term debt and current portion of long-term debt
$
217.3

 
$
94.2

____________________
(1)
At March 31, 2017, the average interest rate on the borrowings was 8.6%. We often provide parent-company guarantees to lending institutions that extend credit to our foreign subsidiaries. Since these guarantees are provided to consolidated subsidiaries the consolidated financial position is not affected by the issuance of these guarantees.
(2)    At March 31, 2017, the average effective interest rate on the borrowings was 1.17%.

Long-term debt:
(in Millions)
March 31, 2017
 
 
 
 
Interest Rate Percentage
 
Maturity
Date
 
March 31, 2017
 
December 31, 2016
Pollution control and industrial revenue bonds (less unamortized discounts of $0.2 and $0.2, respectively)
1.1 - 6.5%
 
2021 - 2032
 
$
51.6

 
$
51.6

Senior notes (less unamortized discount of $1.3 and $1.4, respectively)
3.95 - 5.2%
 
2019 - 2024
 
998.7

 
998.6

Term Loan Facility
2.2%
 
2020
 
750.0

 
750.0

Credit Facility (1)
3.4%
 
2019
 

 

Foreign debt
0 - 4.0%
 
2018 - 2024
 
10.0

 
10.7

Debt issuance cost
 
 
 
 
(17.5
)
 
(9.7
)
Total long-term debt
 
 
 
 
$
1,792.8

 
$
1,801.2

Less: debt maturing within one year
 
 
 
 
2.4

 
2.4

Total long-term debt, less current portion
 
 
 
 
$
1,790.4

 
$
1,798.8

____________________
(1)
Letters of credit outstanding under our Credit Facility totaled $128.8 million and available funds under this facility were $1,247.3 million at March 31, 2017.

15


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


Commitment Letter
On March 27, 2017, we entered into a commitment letter, that provide for a $1.5 billion 364-day bridge term loan and, in certain circumstances, a $1.5 billion revolving credit facility and a $750 million term loan facility in connection with the Transaction Agreement with DuPont. The proceeds will be used to finance the Acquisition associated with the Transaction Agreement as well as to pay fees and expenses incurred in connection with the Acquisition and the other expected transactions contemplated by or related to the Acquisition.
Subsequent Events
New Term Loan Facility
On May 2, 2017, we entered into a term loan agreement (the “Term Loan Agreement”), that provides for a senior unsecured term loan facility of up to $1.5 billion (the “New Term Loan Facility”) to fund the Transaction Agreement with DuPont. The New Term Loan Facility is a senior unsecured obligation that ranks equally with our other senior unsecured obligations. The proceeds of the loans to be made pursuant to the New Term Loan Facility will be available in one or more drawings on the closing date of the New Term Loan Facility, which will be substantially concurrent with the closing of the expected transaction with DuPont. The scheduled maturity of the New Term Loan Facility is on the fifth anniversary of this closing date. The proceeds will be used to finance the expected transaction with DuPont as well as to pay fees and expenses incurred in connection with the expected transaction and the other expected transactions contemplated by or related to the expected transaction with DuPont or the New Term Loan Facility.
Loans 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 plus 1/2 of 1 percent; and the Eurocurrency rate for a one-month period plus 1 percent.
We are required to pay a commitment fee on the average daily unused amount from May 2, 2017 until the date on which all commitments are terminated, payable quarterly, at a rate per annum equal to an applicable percentage in effect from time to time for commitment fees. The initial commitment fee is 0.15 percent per annum. The applicable margin and the commitment fee are subject to adjustment as provided in the Term Loan Agreement.
The Term Loan Agreement contains customary financial and other covenants, including a maximum leverage ratio and minimum interest coverage ratio. Fees incurred to secure the New Term Loan Facility have been deferred and will be amortized over the term of the arrangement.
On May 2, 2017, we amended our existing Term Loan Facility. Among other things, the amendment amended the maximum leverage ratio financial covenant.
Revolving Credit Facility
On May 2, 2017 we entered into an amended and restated credit agreement (the "Revolving Credit Agreement"). The unsecured Revolving Credit Agreement provides for a $1.5 billion revolving credit facility, with an option, subject to certain conditions and limitations, to increase the aggregate amount of the revolving credit commitments to $2.25 billion (the "Revolving Credit Facility"). The current termination date of the Revolving Credit Facility is May 2, 2022.
Revolving loans under the Revolving Credit Facility 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 Revolving Credit 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 plus 1/2 of 1 percent; and the Eurocurrency rate for a one-month period plus 1 percent. We are also required to pay a facility fee on the average daily amount (whether used or unused) at a rate per annum equal to an applicable percentage in effect from time to time for the facility fee, as determined in accordance with the provisions of the Revolving Credit Agreement. The initial facility fee is 0.15 percent per annum. The applicable margin and the facility fee are subject to adjustment as provided in the Revolving Credit Agreement.

16


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

The Revolving Credit Agreement contains customary financial and other covenants, including a maximum leverage ratio and minimum interest coverage ratio. The financial covenant levels have been amended in order to permit the debt incurred under the contemplated New Term Loan Facility discussed above along with certain other changes to permit the expected transaction.
Fees incurred to secure the Revolving Credit Facility have been deferred and will be amortized over the term of the arrangement.

Covenants
Among other restrictions, our Credit Facility and Term Loan Facility contain 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, 2017, was 3.2 which is below the maximum leverage of 4.0 at March 31, 2017. Our actual interest coverage for the four consecutive quarters ended March 31, 2017, was 8.2 which is above the minimum interest coverage of 3.5. We were in compliance with all covenants at March 31, 2017.

Note 10: Discontinued Operations
FMC Health and Nutrition:
On March 31, 2017, we signed a definitive agreement to sell FMC Health and Nutrition, excluding the Omega-3 business, as part of the Transaction Agreement with DuPont. Refer to Note 3 for more details. We expect the sale to be completed in the fourth quarter of 2017, subject to the closing of the merger between DuPont and Dow Corporation and customary regulatory approvals and closing conditions. We have concluded, as a result of the signing of the Transaction Agreement, that FMC Health and Nutrition, excluding the Omega-3 business, has met the criteria to be an asset held for sale. Due to the strategic shift as a result of exiting the Health and Nutrition business, FMC Health and Nutrition has been presented as a discontinued operation in accordance with U.S. GAAP.
As part of the strategic shift to exit the Health and Nutrition business, we are pursuing the sale of the Omega-3 business and believe it is probable it will be sold within one year. We have concluded that the Omega-3 business also met the criteria to be an asset held for sale and therefore has been presented as a discontinued operation in accordance with U.S. GAAP.
Assets held for sale under U.S. GAAP are required to be reported at the lower of carrying value or fair value, less costs to sell.  We expect a significant gain on the FMC Health and Nutrition assets to be sold to DuPont and therefore these assets held for sale are reported at their carrying value.  However, the fair value of the Omega-3 business, which was previously part of the broader FMC Health and Nutrition reporting unit, is significantly less than its carrying value, which includes accumulated foreign currency translation adjustments that would be reclassified to earnings upon completion of sale.  As a result, we recorded an impairment charge of approximately $185 million ($165 million, net of tax).

17


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

The results of our discontinued FMC Health and Nutrition operations are summarized below:
(in Millions)
Three Months Ended March 31
2017
 
2016
Revenue
$
176.7

 
$
192.4

Costs of sales and services
111.4

 
127.0

Income (loss) from discontinued operations before income taxes (1)
35.5

 
39.3

Provision for income taxes (2)
26.7

 
10.5

Total discontinued operations of FMC Health and Nutrition, net of income taxes, before divestiture related costs and adjustments
$
8.8

 
$
28.8

Divestiture related costs of discontinued operations of FMC Health and Nutrition, net of income taxes
(6.2
)
 

Adjustment to FMC Health and Nutrition Omega-3 net assets held for sale, net of income taxes (3)
(164.7
)
 

Discontinued operations of FMC Health and Nutrition, net of income taxes
(162.1
)
 
28.8

Less: Discontinued operations of FMC Health and Nutrition attributable to noncontrolling interests
(0.1
)
 

Discontinued operations of FMC Health and Nutrition, net of income taxes, attributable to FMC Stockholders
$
(162.0
)
 
$
28.8

____________________
(1)
For the three months ended March 31, 2017 and 2016, amounts include $5.0 million and $5.0 million of allocated interest expense, $1.8 million and $2.9 million of restructuring and other charges (income), and $3.9 million and $0.0 million of a pension curtailment charge, respectively. See Note 14 for more information of the pension curtailment charge. Interest was allocated in accordance with relevant discontinued operations accounting guidance.
(2)
Includes the accrual for income taxes of $17.8 million associated with unremitted earnings of foreign H&N subsidiaries held for sale. Refer to Note 15 for more information.
(3)
Represents the impairment charge of approximately $185 million ($165 million, net of tax) associated with the disposal activities of the Omega-3 business to write down the carrying value to its fair value.

The following table presents the major classes of assets and liabilities of FMC Health and Nutrition:
(in Millions)
March 31, 2017
 
December 31, 2016
Assets
 
 
 
Current assets of discontinued operations held for sale (primarily trade receivables and inventories)
$
403.9

 
$
381.5

Property, plant & equipment (1)
467.1

 
464.0

Goodwill (1)
286.7

 
278.8

Other intangibles, net (1)
74.1

 
73.5

Other non-current assets (1)
6.0

 
12.9

Total assets of discontinued operations held for sale (2)
$
1,237.8

 
$
1,210.7

Liabilities
 
 
 
Current liabilities of discontinued operations held for sale
(108.6
)
 
(59.0
)
Noncurrent liabilities of discontinued operations held for sale (1)
(10.5
)
 
(48.1
)
Total liabilities of discontinued operations held for sale (2)
$
(119.1
)
 
$
(107.1
)
Total net assets before adjustment to Omega-3 assets held for sale
$
1,118.7

 
$
1,103.6

Adjustment to Omega-3 assets held for sale
(184.7
)
 

Total net assets
$
934.0

 
$
1,103.6

____________________
(1)
Presented as "Noncurrent assets / Long-term liabilities of discontinued operations held for sale" on the condensed consolidated balance sheet as of December 31, 2016.

18


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

(2)
Presented as "Current assets / liabilities of discontinued operations held for sale" on the condensed consolidated balance sheet as of March 31, 2017.

Discontinued operations include the results of FMC Health and Nutrition as well as provisions, net of recoveries, for environmental liabilities and legal reserves and expenses related to previously discontinued operations and 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
2017
 
2016
Adjustment for workers’ compensation, product liability, other postretirement benefits and other, net of income tax benefit (expense) of $1.3 and $0.9 for the three months ended March 31, 2017 and 2016, respectively (1)
$
(0.4
)
 
$
(0.4
)
Provision for environmental liabilities, net of recoveries, net of income tax benefit of $1.0 and $1.2 for the three months ended March 31, 2017 and 2016, respectively (2)
(2.8
)
 
(3.0
)
Provision for legal reserves and expenses, net of recoveries, net of income tax benefit (expense) of $1.9 and $1.6 for the three months ended March 31, 2017 and 2016, respectively
(3.5
)
 
(2.7
)
Discontinued operations of FMC Health and Nutrition, net of income tax benefit (expense) of ($5.1) and $10.5 for the three months ended March 31, 2017 and 2016, respectively
(162.1
)
 
28.8

Discontinued operations, net of income taxes
$
(168.8
)
 
$
22.7

____________________
(1)
See a roll forward of our restructuring reserves in Note 8.
(2)
See a roll forward of our environmental reserves, as well as, discussion on significant environmental issues that occurred during the 2017 in Note 11.

Note 11: Environmental Obligations
We have reserves for potential environmental obligations which management considers probable and which management can reasonably 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, 2016
$
378.1

 
$
(11.4
)
 
$
366.7

Provision/(benefit)
6.1

 

 
6.1

(Spending)/recoveries
(15.7
)
 

 
(15.7
)
Foreign currency translation adjustments
1.3

 

 
1.3

Net change
(8.3
)
 

 
(8.3
)
Total environmental reserves at March 31, 2017
$
369.8

 
$
(11.4
)
 
$
358.4

 
 
 
 
 
 
Environmental reserves, current (1)
65.3

 
(0.8
)
 
64.5

Environmental reserves, long-term (2)
304.5

 
(10.6
)
 
293.9

Total environmental reserves at March 31, 2017
$
369.8

 
$
(11.4
)
 
$
358.4

____________________
(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 $240 million at March 31, 2017. 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.
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)
12/31/2016
 
Increase in Recoveries
 
Cash Received
 
3/31/2017
Environmental recoveries
$
27.2

 

 
(1.0
)
 
$
26.2


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)
2017
 
2016
Environmental provisions, net - recorded to liabilities (1)
$
6.1

 
$
12.6

Environmental provisions, net - recorded to assets (2)

 
(1.8
)
Environmental provision, net
$
6.1

 
$
10.8

 
 
 
 
Continuing operations (3)
2.3

 
6.6

Discontinued operations (4)
3.8

 
4.2

Environmental provision, net
$
6.1

 
$
10.8

____________________
(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 8. 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 10.

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 2016 Form 10-K. See Note 10 to our consolidated financial statements in our 2016 Form 10-K for a description of significant updates to material environmental sites.  There have been no significant updates since the information included in our 2016 Form 10-K other than the update provided below.

Middleport
In the federal court action before the United States District Court for the Western District of New York, FMC responded to the Court’s dismissal of FMC’s action by filing a Motion to Vacate Judgment and For Leave to Amend Complaint on March 2, 2017. The purpose of this motion is to allow FMC to amend its Complaint to add a citizen’s suit under RCRA against the United States for EPA’s failure to perform its non-discretionary duties under the 1991 Administrative Order on Consent ("AOC"). Simultaneously, FMC served EPA with a 60-day notice letter, which is a procedural precursor to filing the citizen’s suit complaint.
As disclosed in our 2016 Form 10-K, our reserve continues to include the estimated liability for clean-up to reflect the costs associated with our recommended Corrective Action Management Alternatives ("CMA").

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 from continuing operations 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, 2017 and 2016 there were 0.7 million and 1.9 million potential common shares excluded from Diluted EPS, respectively.

19


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

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 March 31
2017
 
2016
Earnings (loss) attributable to FMC stockholders:
 
 
 
Continuing operations, net of income taxes
$
44.5

 
$
25.6

Discontinued operations, net of income taxes
(168.7
)
 
22.7

Net income (loss) attributable to FMC stockholders
$
(124.2
)
 
$
48.3

Less: Distributed and undistributed earnings allocable to restricted award holders
(0.2
)
 
(0.1
)
Net income (loss) allocable to common stockholders
$
(124.4
)
 
$
48.2

 
 
 
 
Basic earnings (loss) per common share attributable to FMC stockholders:
 
 
 
Continuing operations
$
0.33

 
$
0.19

Discontinued operations
(1.26
)
 
0.17

Net income (loss) attributable to FMC stockholders
$
(0.93
)
 
$
0.36

 
 
 
 
Diluted earnings (loss) per common share attributable to FMC stockholders:
 
 
 
Continuing operations
$
0.33

 
$
0.19

Discontinued operations
(1.25
)
 
0.17

Net income (loss) attributable to FMC stockholders
$
(0.92
)
 
$
0.36

 
 
 
 
Shares (in thousands):
 
 
 
Weighted average number of shares of common stock outstanding - Basic
133,966

 
133,802

Weighted average additional shares assuming conversion of potential common shares
1,116

 
502

Shares – diluted basis
135,082

 
134,304



20


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

Note 13: Equity
The table provides a roll forward of equity, equity attributable to FMC stockholders, and equity attributable to noncontrolling interests. 
(in Millions, Except Per Share Data)
FMC
Stockholders’
Equity
 
Noncontrolling
Interest
 
Total
Equity
Balance at December 31, 2016
$
1,957.7

 
$
35.3

 
$
1,993.0

Net income (loss)
(124.2
)
 
0.4

 
(123.8
)
Stock compensation plans
15.8

 

 
15.8

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)
9.3

 

 
9.3

Net hedging gains (losses) and other, net of income tax (1)
0.6

 

 
0.6

Foreign currency translation adjustments (1)
43.0

 
0.2

 
43.2

Dividends ($0.165 per share)
(22.1
)
 

 
(22.1
)
Repurchases of common stock
(1.4
)
 

 
(1.4
)
Transactions with noncontrolling interests (2)
(0.9
)
 
(21.8
)
 
(22.7
)
Balance at March 31, 2017
$
1,877.3

 
$
14.1

 
$
1,891.4

____________________
(1)
See condensed consolidated statements of comprehensive income (loss).
(2)
During the first quarter 2017, we terminated our interest in a variable interest entity. See Note 8 for more information.


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, 2016
$
(194.0
)
 
$
7.1

 
$
(291.5
)
 
$
(478.4
)
2017 Activity
 
 
 
 
 
 
 
Other comprehensive income (loss) before reclassifications (3)
43.0

 
1.1

 
4.4

 
$
48.5

Amounts reclassified from accumulated other comprehensive income (loss)

 
(0.5
)
 
4.9

 
$
4.4

Accumulated other comprehensive income (loss), net of tax at March 31, 2017
$
(151.0
)
 
$
7.7

 
$
(282.2
)
 
$
(425.5
)
(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, 2015
$
(147.3
)
 
$
(6.2
)
 
$
(303.8
)
 
$
(457.3
)
2016 Activity
 
 
 
 
 
 
 
Other comprehensive income (loss) before reclassifications (3)
52.2

 
2.3

 

 
$
54.5

Amounts reclassified from accumulated other comprehensive income (loss)

 
2.4

 
6.3

 
$
8.7

Accumulated other comprehensive income (loss), net of tax at March 31, 2016
$
(95.1
)
 
$
(1.5
)
 
$
(297.5
)
 
$
(394.1
)
____________________

21


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

(1)     See Note 16 for more information.
(2)    See Note 14 for more information.
(3)    Excludes foreign currency translation adjustments attributable to noncontrolling interests.

Reclassifications of accumulated other comprehensive income (loss)

The table below provides details about the reclassifications from Accumulated Other Comprehensive Income (Loss) 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 (Loss) (1)
 
Affected Line Item in the Condensed Consolidated Statements of Income (Loss)
 
 
Three Months Ended March 31
 
 
(in Millions)
 
2017
 
2016
 
 
Foreign currency translation adjustments:
 
 
 
 
 
 
Derivative instruments:
 
 
 
 
 
 
Foreign currency contracts
 
$
(2.5
)
 
$
(0.9
)
 
Costs of sales and services
Energy contracts
 
0.9

 
(0.6
)
 
Costs of sales and services
Foreign currency contracts
 
2.3

 
(2.1
)
 
Selling, general and administrative expenses
Total before tax
 
0.7

 
(3.6
)
 
 
 
 
(0.2
)
 
1.2

 
Provision for income taxes
Amount included in net income
 
$
0.5

 
$
(2.4
)
 
 
 
 
 
 
 
 
 
Pension and other postretirement benefits (2):
 
 
 
 
 
 
Amortization of prior service costs
 
$
(0.2
)
 
$
(0.2
)
 
Selling, general and administrative expenses
Amortization of unrecognized net actuarial and other gains (losses)
 
(3.4
)
 
(9.7
)
 
Selling, general and administrative expenses
Recognized loss due to curtailment
 
(3.9
)
 

 
Selling, general and administrative expenses (3)
Total before tax
 
$
(7.5
)
 
$
(9.9
)
 
 
 
 
2.6

 
3.6

 
Provision for income taxes
Amount included in net income
 
(4.9
)
 
(6.3
)
 
 
Total reclassifications for the period
 
$
(4.4
)
 
$
(8.7
)
 
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 14.
(3)
The loss due to curtailment for the three months ended March 31, 2017 related to the expected disposal of our FMC Health and Nutrition and was recorded to "Discontinued operations, net of income taxes" on the condensed consolidated statements of income (loss).

Dividends and Share Repurchases
For the three months ended March 31, 2017 and 2016, we paid dividends of $22.1 million and $22.1 million, respectively. On April 20, 2017, we paid dividends totaling $22.2 million to our shareholders of record as of March 31, 2017. This amount is included in “Accrued and other liabilities” on the condensed consolidated balance sheet as of March 31, 2017.
 
During the three months ended March 31, 2017, no shares were repurchased under the publicly announced repurchase program. At March 31, 2017, $238.8 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.


22


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

Note 14: Pensions and Other Postretirement Benefits
The following table summarizes the components of net annual benefit cost (income):
(in Millions)
Three Months Ended March 31
Pensions
 
Other Benefits
2017
 
2016
 
2017
 
2016
Service cost
$
2.1

 
$
2.4

 
$

 
$

Interest cost
11.4

 
12.4

 
0.2

 
0.2

Expected return on plan assets
(19.9
)
 
(21.4
)
 

 

Amortization of prior service cost (credit)
0.2

 
0.2

 

 

Recognized net actuarial and other (gain) loss
4.0

 
10.3

 
(0.3
)
 
(0.3
)
Net periodic benefit cost
$
(2.2
)
 
$
3.9

 
$
(0.1
)
 
$
(0.1
)

In the three months ended March 31, 2017 we recognized a curtailment loss of $3.9 million associated with the expected disposal of our FMC Health and Nutrition business, which was recorded within "Discontinued operations, net of income taxes" within the condensed consolidated statements of income (loss).
We did not make any voluntary cash contributions to our U.S. defined benefit pension plan in the three months ended March 31, 2017 and 2016. We expect to make approximately $40 million in voluntary cash contributions to our U.S. defined benefit pension plan during 2017.

Note 15: 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. As our projections of ordinary income change throughout the year, the EAETR will change period-to-period. The tax effects of discrete items are recognized in the tax provision in the period 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.
In the first quarter of 2017, we changed our assertion on unremitted earnings for certain foreign subsidiaries as a result of our expected sale of our discontinued FMC Health and Nutrition segment. Therefore, as part of March 31, 2017, we provided deferred tax liabilities of approximately $17.8 million attributable to outside basis differences within the FMC Health and Nutrition segment. We have not provided income taxes on undistributed earnings of our other foreign subsidiaries or affiliates since our intention remains that such earnings will be indefinitely reinvested. Refer to Note 10 for more information.
The below chart provides a reconciliation between our reported effective tax rate and the EAETR of our continuing operations.

23


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

 
Three Months Ended March 31
 
2017
 
2016
(in Millions)
Before Tax
Tax
Effective Tax Rate %
 
Before Tax
Tax
Effective Tax Rate %
Continuing operations
$
54.4

$
9.4

17.3
%
 
$
46.4

$
20.4

44.0
%
Discrete items:
 
 
 
 
 
 
 
Acquisition-related charges (1)
9.2

2.6

 
 


 
Currency remeasurement (2)
5.1

2.6

 
 
2.1


 
Other discrete items (3)
38.1

2.1

 
 
46.9

0.2

 
Tax only discrete items (4)

(4.0
)
 
 

(2.5
)
 
Total discrete items
$
52.4

$
3.3

 
 
$
49.0

$
(2.3
)
 
Continuing operations, before discrete items
$
106.8

$
12.7

 
 
$
95.4

$
18.1

 
Estimated Annualized Effective Tax Rate (EAETR) (5)
 
 
11.9
%
 
 
 
19.0
%
___________________ 
(1)
See Note 3 for more information on acquisition-related charges.
(2)
Represents transaction gains or losses for currency remeasurement offset by associated hedge gains or losses, which are accounted for discretely in accordance with GAAP. Certain transaction gains or losses for currency remeasurement are not taxable, while offsetting hedge gains or losses are taxable.
(3)
GAAP generally requires subsidiaries for which a full a valuation allowance has been provided to be excluded from the EAETR. For the three months ended March 31, 2017 and March 31, 2016, the other discrete items component of the EAETR reconciliation primarily relates to the discrete accounting for these pretax losses.
(4)
For the three months ended March 31, 2017, tax only discrete items is comprised primarily of the tax effect of changes in valuation allowances of historical deferred tax assets. For the three months ended March 31, 2016, this component was comprised primarily of currency remeasurement associated with foreign statutory operations.
(5)
The primary drivers for the decrease in the first quarter effective tax rate for 2017 compared to 2016 are shown in the table above. The remaining change was due to reduced domestic earnings in our FMC Agricultural Solutions business and the impact of the full integration of Cheminova into our global supply chain.

Note 16: 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 $2,087.7 million and $1,964.9 million and the carrying amount is $2,007.7 million and $1,893.0 million as of March 31, 2017 and December 31, 2016, respectively.

24


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

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 see Note 17 for more information. 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. 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 2016 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, 2017, we had open foreign currency forward contracts in AOCI in a net after tax gain position of $6.7 million designated as cash flow hedges of underlying forecasted sales and purchases. Current open contracts hedge forecasted transactions until December 31, 2017. At March 31, 2017, 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 $302 million.
As of March 31, 2017, we had current open commodity contracts in AOCI in a net after tax gain position of $0.0 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, 2017. At March 31, 2017, we had an equivalent of 1.5 million mmBTUs (millions of British Thermal Units) in aggregate notional volume of outstanding natural gas commodity forward contracts to hedge forecasted purchases.
Approximately all of the $6.7 million of net gains after-tax, representing both open foreign currency exchange contracts and commodity contracts, will be realized in earnings during the twelve months ending March 31, 2018 if spot rates in the future are consistent with forward rates as of March 31, 2017. 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 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 $1,722 million at March 31, 2017.

25


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.
 
March 31, 2017
 
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
$
8.3

 
$
3.3

 
$
11.6

 
$
(4.1
)
 
$
7.5

Energy contracts
0.3

 

 
0.3

 

 
0.3

Total derivative assets (1)
8.6

 
3.3

 
11.9

 
(4.1
)
 
7.8

 
 
 
 
 
 
 
 
 
 
Foreign exchange contracts
$
(5.4
)
 
$
(1.0
)
 
$
(6.4
)
 
$
4.1

 
$
(2.3
)
Energy contracts
(0.2
)
 

 
(0.2
)
 

 
(0.2
)
Total derivative liabilities (2)
(5.6
)
 
(1.0
)
 
(6.6
)
 
4.1

 
(2.5
)
 
 
 
 
 
 
 
 
 
 
Net derivative assets (liabilities)
$
3.0

 
$
2.3

 
$
5.3

 
$

 
$
5.3

 
 
 
 
 
 
 
 
 
 
 
December 31, 2016
 
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
$
9.8

 
$
0.8

 
$
10.6

 
$
(6.2
)
 
$
4.4

Energy contracts
2.0

 

 
2.0

 

 
2.0

Total derivative assets (1)
11.8

 
0.8

 
12.6

 
(6.2
)
 
6.4

 
 
 
 
 
 
 
 
 
 
Foreign exchange contracts
$
(5.5
)
 
$
(9.6
)
 
$
(15.1
)
 
$
6.2

 
$
(8.9
)
Energy contracts

 

 

 

 

Total derivative liabilities (2)
(5.5
)
 
(9.6
)
 
(15.1
)
 
6.2

 
(8.9
)
 
 
 
 
 
 
 
 
 
 
Net derivative assets (liabilities)
$
6.3

 
$
(8.8
)
 
$
(2.5
)
 
$

 
$
(2.5
)
____________________
(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.

The tables below summarize the gains or losses related to our cash flow hedges and derivatives not designated as hedging instruments.

Derivatives in Cash Flow Hedging Relationships
 
Three Months Ended March 31
 
Contracts
 
 
Foreign Exchange
 
Energy
 
Total
(in Millions)
2017
 
2016