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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
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 (I.R.S. Employer
incorporation or organization) Identification No.)
200 East Randolph Drive, Chicago, Illinois 60601
- ------------------------------------------ -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 312/861-6000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
- ------------------- ----------------------
Common Stock, $0.10 par value New York Stock Exchange
Midwest Stock Exchange
Pacific Stock Exchange
Preferred Share Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL
REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS, AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS.
YES [X] NO [ ]
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO
ITEM 405 OF REGULATION S-K IS NOT CONTAINED HEREIN AND WILL NOT BE CONTAINED, TO
THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION
STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY
AMENDMENT TO THIS FORM 10-K. [__]
THE AGGREGATE MARKET VALUE OF VOTING STOCK HELD BY NON-AFFILIATES OF
THE REGISTRANT AS OF FEBRUARY 29, 1996, WAS $2,681,798,883. THE NUMBER OF
SHARES OF REGISTRANT'S COMMON STOCK, $0.10 PAR VALUE, OUTSTANDING AS OF THAT
DATE WAS 36,841,410.
DOCUMENTS INCORPORATED BY REFERENCE
DOCUMENT FOR 10-K REFERENCE
- -------- ------------------
Portions of Annual Report Part II; and Part IV,
to Stockholders for 1995 Item 14. (a)(1) and (2)
Portions of Proxy Part III
Statement for 1996 Annual
Meeting of Stockholders
_____________________________________________________________________
PART I
ITEM 1. BUSINESS.
A. GENERAL DEVELOPMENT OF BUSINESS.
FMC Corporation was incorporated in 1928 under Delaware law and has its
principal executive offices at 200 East Randolph Drive, Chicago, Illinois
60601. As used in this report, except where otherwise stated or indicated by
the context, "FMC", "the Company" or "the Registrant" means FMC Corporation and
its consolidated subsidiaries and their predecessors.
Restructuring and other charges. The Company recorded restructuring and other
charges of $35 million ($20 million after tax, or $0.53 per share) in the third
quarter of 1995 covering asset writedowns and related exit liabilities for the
expected shift in 1997 of lithium-based production from North Carolina to a new
lower-cost, higher quality mineral resource in Argentina. Other charges of $17
million ($10 million after tax, or $0.27 per share) related primarily to asset
write-downs, and the Company increased its environmental reserves by $82.5
million ($50.7 million after tax, or $1.34 per share), as part of its ongoing
assessment of sites with known environmental issues.
In 1993, FMC recorded restructuring and other charges of $172.3 million, net of
minority interest ($123.3 million after tax, or $3.34 per share). These charges
primarily related to restructuring costs associated with the Machinery and
Equipment and Industrial Chemical segments, expenses to restructure companywide
functional support staffs and a write-down of the investment in the Beartrack
property in the Precious Metals segment. The restructuring program was
designated to reduce costs and improve operating efficiencies.
During 1995 and 1994, approximately 1,100 employee positions were eliminated.
Additionally, 500 positions were eliminated at United Defense, L.P. that were
not covered by the 1993 restructuring program. FMC's programs to reorganize
functional support staffs throughout the company to align their activities more
closely with the company's growth initiatives, as well as severance programs
within the Industrial Chemical and Machinery and Equipment segments designed to
improve operating performance, resulted in the majority of the eliminated
positions. Cash payments related to these separations were approximately $16
million and $32 million in 1995 and 1994, respectively. Approximately $34
million and $40 million of spending in 1995 and 1994, respectively, related to
the consolidation of manufacturing facilities, the exiting of unprofitable
product lines and other restructuring activities was charged to the
restructuring reserve.
The aggregate restructuring reserve remaining at December 31, 1995 of $18.7
million is expected to cover residual manufacturing consolidation and remaining
lithium exit liabilities.
Acquisitions. In June 1995, FMC acquired all of the common shares of Moorco
International Inc. ("Moorco") for $28 per share, or approximately $350 million
(including acquisition costs and debt assumed). Moorco is the leading worldwide
manufacturer of meters for the petroleum industry and a leading manufacturer of
valves for the process and power generation industries. Moorco's operations are
included in the Company's Machinery and Equipment segment.
In conjunction with the acquisition of Moorco, goodwill and other intangible
assets of $218.4 million were recorded, and $15.5 million ($0.41 per share) of
acquired in-process research and development, with no associated tax benefit,
was charged to research and development expense during 1995.
On September 20, 1995, the Company acquired the assets of FR Manufacturing
Corporation, a wholly owned subsidiary of Bridge Atlantic Corporation, for $15.7
million in cash. FR Manufacturing Corporation is a full-line, global supplier
of tomato processing equipment and aseptic systems sold under the FranRica trade
name. The operations are included in the Company's Machinery and Equipment
segment.
The Company also completed two smaller acquisitions during the year ended
December 31, 1995.
B. FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS (DOLLARS IN MILLIONS):
A description of the principal products and services and the major markets
served by each industry segment is included under "Narrative description of
business."
(in millions) Year ended December 31
-------------------------------
1995 1994 1993
--------- --------- ---------
SALES
Performance Chemicals $1,176.5 $1,060.5 $ 973.5
Industrial Chemicals 976.8 866.8 866.7
Machinery and Equipment 1,351.0 972.7 870.9
Defense Systems 968.2 1,080.5 950.2
Precious Metals 59.0 60.9 125.0
Eliminations (21.7) (30.6) (32.4)
-------- -------- --------
Total $4,509.8 $4,010.8 $3,753.9
======== ======== ========
INCOME (LOSS) BEFORE INCOME TAXES 1995 1994 1993
-------- -------- --------
Performance Chemicals $ 161.6 $ 154.0 $ 139.1
Industrial Chemicals(1) 161.9 119.3 58.3
Machinery and Equipment 49.8 33.3 6.7
Defense Systems(1) 160.8 159.5 161.7
Precious Metals(1) (5.7) (9.0) 9.7
-------- ------- -------
Operating profit 528.4 457.1 375.5
Restructuring and other charges(2) (150.0) -- (172.3)
Gain on sale of FMC Wyoming stock(3) 99.7 -- --
Net interest expense (72.5) (59.1) (62.6)
Corporate and other (96.2) (101.9) (110.5)
Minority interests(1) (59.1) (61.4) (2.5)
Other income and (expense), net(4) (3.4) 17.6 10.2
-------- -------- --------
Total $ 246.9 $ 252.3 $ 37.8
======== ======== ========
IDENTIFIABLE ASSETS
Performance Chemicals $ 904.6 $ 754.6 $ 696.9
Industrial Chemicals 1,048.8 883.6 824.7
Machinery and Equipment 1,166.5 619.3 522.9
Defense Systems 547.3 492.0 269.0
Precious Metals 139.1 108.9 64.8
-------- -------- --------
Subtotal 3,806.3 2,858.4 2,378.3
Corporate and other 494.8 493.1 466.8
-------- -------- --------
Total $4,301.1 $3,351.5 $2,845.1
======== ======== ========
- -----------------------------------------------------------------------
- -------------------------------------
(1) Defense Systems' segment data includes 100 percent of United Defense, L.P.
in 1994 and 1995. Industrial Chemicals' segment data includes 100% of FMC
Wyoming Corporation in 1995. Precious Metals' segment data includes 100
percent of FMC Gold Company in 1993 through 1995. Minority shareholder
interests are included in Minority interests, except the portion related to
1993 restructuring and other charges.
(2) Restructuring and other charges related to 1995, including the $15.5
million write-off of acquired in-process research and development, are
related to Industrial Chemicals ($77.5 million), Performance Chemicals
($45.0 million), Machinery and Equipment ($15.5 million) and Defense
Systems ($12.0 million). Restructuring and other charges related to 1993
are related to Machinery and Equipment ($66.0 million). Precious Metals
($47.9 million, net of minority interest), Industrial Chemicals ($29.7
million), Performance Chemicals ($3.2 million), and Corporate ($25.5
million).
(3) Gain on sale of FMC Wyoming stock is attributable to the Industrial
Chemicals segment.
(4) Other income and (expense), net primarily includes LIFO inventory
adjustments and pension-related income and (expense).
C. NARRATIVE DESCRIPTION OF BUSINESS.
Principal Products
- ------------------
FMC manufactures and sells a broad range of machinery and chemical products.
FMC's machinery products are marketed principally to industrial, agricultural
and defense users. Its chemical products are mainly industrial and agricultural
chemicals. The Company conducts its business within the five industry segments
identified in b. above. Generally, in all of the segments, FMC competes on the
basis of price and product performance.
Information regarding principal products produced and sold by each industry
segment and principal markets served by each segment is presented in the columns
so designated in the segment table presented below. These products are sold
directly to customers from plants and warehouses, as well as being sold in some
cases (particularly in markets outside the United States) to and through
distributors.
Business Principal Products Markets Served
-------- ------------------ --------------
PERFORMANCE CHEMICALS
- ---------------------
AGRICULTURAL Produces crop protection Food growers, pest
PRODUCTS and pest control control markets.
chemicals for worldwide
markets
FOOD Worldwide producer of Processed food industry,
INGREDIENTS carrageenan and Avicel personal care products.
cellulose gel.
PHARMACEUTICAL Worldwide producer of Pharmaceutical industry.
binders and
disintegrants as well as
other specialty
chemicals for
pharmaceutical markets.
Business Principal Products Markets Served
-------- ------------------ --------------
LITHIUM World's largest Aluminum, ceramics and
producer of glass, lubricating
lithium-based products. greases, swimming pools,
textiles, aluminum
alloys, batteries,
rubber and plastic, air
conditioning,
pharmaceuticals.
PROCESS A leading world Plastics, hydraulic
ADDITIVES producer of phosphate fluids, lubricant
ester flame retardants. additives, industrial
Leading supplier of water treatment and
specialty water desalination.
treatment chemicals.
BIOPRODUCTS Worldwide producer of Life science research;
agarose and other DNA and protein analysis
products for life
science markets.
INDUSTRIAL CHEMICALS
- --------------------
ALKALI World's largest Glass-making,
CHEMICALS producer of natural detergents, food
soda ash. Downstream products, animal feed
products include sodium additives, mining,
bicarbonate, sodium air/water treatment,
cyanide, sodium pulp and paper.
sesquicarbonate and
caustic soda.
PEROXYGEN A leading worldwide Pulp and paper,
CHEMICALS producer of hydrogen textiles, chemical and
peroxide, persulfates polymer synthesis,
and other peroxygen environmental clean-up,
chemicals. electronics, mining,
detergents.
Business Principal Products Markets Served
-------- ------------------ --------------
PHOSPHORUS A worldwide supplier Detergents, cleaning
CHEMICALS and North American compounds, metal
producer of phosphorus treatment, food
and its derivatives, products, textiles,
phosphates and pesticide intermediates,
phosphoric acid. additives,
pharmaceuticals, water
treatment.
FMC FORET, S.A. A European chemical Detergents, pulp and
producer. Products paper, textiles,
include hydrogen chemicals, tanning,
peroxide, perborates, animal feed, mining,
phosphates, zeolites, rubber, pharmaceuticals,
silicates, sulfur ceramics, paint, food,
derivatives. photography,
agriculture, water
treatment.
MACHINERY AND EQUIPMENT
- -----------------------
ENERGY AND Oil and gas wellhead Oil and gas drilling,
TRANSPORTATION completion equipment; production refining,
EQUIPMENT subsea engineering, transportation and power
procurement, generation companies.
construction and
equipment; metering
products and systems;
loading systems; marine
terminals and floating
production systems;
pressure-relief valves.
Airline equipment, Industrial
material handling manufacturing, airlines,
systems. airports, mining,
warehouses, newsprint,
publishing, chemicals,
electrical utilities.
FOOD Systems and equipment Food and beverage
MACHINERY to process food and processors; food
beverages, including canners; fruit and
harvesters, vegetable growers.
sterilizers,
extractors, fillers,
closers, evaporators
and aseptic systems and
food handling equipment.
Business Principal Products Markets Served
-------- ------------------ --------------
DEFENSE SYSTEMS
- ---------------
UNITED DEFENSE, L.P.
GROUND SYSTEMS Develops technology; U.S. Army, Marine Corps
including hardware and and National Guard;
software, and allied governments.
integrates into the
manufacture of tracked
vehicles for the U.S.
armed forces and allied
governments. Sole
source on major
programs.
ARMAMENT SYSTEMS Leads development team U.S. Navy, Army and
for artillery weapon Marine Corps and allied
systems for the U.S. governments.
Army, designs and
builds guns and
launching systems and
provides support
services for the U.S.
Navy and international
customers.
INTERNATIONAL Markets, manufactures Allied governments.
and oversees joint Cooperative arrangements
ventures for military with major international
products outside the companies.
United States.
STEEL PRODUCTS Produces steel and Military,
nickel alloy ingots, transportation, heavy
castings, forgings and equipment, industrial
military track. and oil field.
Upgrades and overhauls
tracked vehicles.
PRECIOUS METALS
- ---------------
FMC GOLD Focusing on exploration Precious metal
of precious metals in refineries.
Chile. Current
production at Beartrack
in Idaho and Jerritt
Canyon in Nevada.
SOURCE AND AVAILABILITY OF RAW MATERIALS
FMC's natural resource requirements are primarily mineral-oriented rather than
oil or natural gas-oriented. Substantial portions of requirements for ores and
other raw materials, especially trona and phosphate rock, are produced from
mines in the United
States on property held by FMC under long-term leases which are subject to
periodic adjustments of royalty rates. Machinery operations obtain raw
materials, principally steel and castings, from many foreign and domestic
sources. No one source is considered essential to any of the machinery
operations. The Company uses oil, gas, coal, coke, hydroelectric power and
nuclear power to meet its energy needs.
PATENTS
Although FMC's patents, trademarks and licenses are cumulatively important to
its business, FMC does not believe that the loss of any one or group of related
patents, trademarks or licenses would have a material adverse effect on the
overall business of FMC or on any of its business segments.
PRINCIPAL CUSTOMER
Sales to various agencies of the United States government aggregated $706.5
million, $618.3 million and $768.4 million in 1995, 1994 and 1993, respectively.
These sales were made primarily by the Defense Systems segment. Contracts with
various agencies of the United States government and subcontracts with other
prime contractors are subject to a profusion of procurement regulations, with
noncompliance found by any one agency possibly resulting in fines, penalties,
debarment or suspension from receiving additional government contracts.
Moreover, these contracts may be terminated at the government's convenience,
although contractors are normally protected by provisions covering reimbursement
for costs incurred as well as the payment of any applicable fees or profits.
SEASONALITY
FMC's businesses are not generally considered to be seasonal, although there has
been a bias in the Performance Chemicals segment towards lower profitability in
the fourth quarter primarily due to seasonality in the markets served by the
Agricultural Products business.
ORDER BACKLOG
December 31
----------------------------
(in millions) 1995 1994 1993
-------- -------- --------
Machinery and Equipment $ 545.0 $ 480.0 $ 333.1
Defense Systems 1,495.0 1,412.3 1,105.0
-------- -------- --------
Total $2,040.0 $1,892.3 $1,438.1
======== ======== ========
The order backlog of the Defense Systems segment increased to $1.5 billion at
December 31, 1995 from $1.4 billion at the end of 1994. The backlog increase
results primarily from new orders for upgrading Bradley Fighting Vehicles,
cannisters for the U.S. Navy, M113 vehicles for Thailand and Amphibious Assault
Vehicle kits for Korea.
U.S. government budgetary pressures are likely to result in reduced defense
spending in the coming years, and Defense Systems results may decline as a
consequence.
The increase in Machinery & Equipment backlog primarily reflects the acquisition
of Moorco in the Machinery and Equipment segment.
Backlogs are not reported for Industrial Chemicals, Performance Chemicals and
Precious Metals due to the nature of these businesses.
COMPETITIVE CONDITIONS
FMC competes on the basis of price and product performance and is among the
market leaders in most products it manufactures. FMC is the world's largest
producer of natural soda ash, a leading North American producer of hydrogen
peroxide, a leading North American producer of industrial phosphorus chemicals
and a world leader in the mining and processing of lithium products. FMC
manufactures Furadan, one of the largest selling insecticides in the world. FMC
is also the largest worldwide producer of carrageenan, microcrystalline
cellulose, and phosphate ester flame retardants. United Defense, L.P. is a
world leader in the production of tracked, armored personnel carriers. FMC
also participates in many machinery businesses, including food processing,
material handling and energy equipment, where FMC has a significant market
share. Products are sold in highly competitive markets worldwide.
RESEARCH AND DEVELOPMENT EXPENDITURES
Year ended December 31
-----------------------
in millions 1995 1994 1993
- --------------------------------------------------
Performance Chemicals $109.3 $ 94.7 $ 83.0
Industrial Chemicals 16.3 17.3 15.3
Machinery and Equipment 49.1 30.8 26.1
Defense Systems 13.1 23.6 24.0
Precious Metals -- -- 0.1
Corporate -- 0.4 0.7
- --------------------------------------------------
Total $187.8 $166.8 $149.2
==================================================
Expenditures for research and development increased in Performance Chemicals
primarily due to continued development of herbicides and insecticides.
Expenditures also increased in Machinery & Equipment primarily related to
acquisitions in 1995 and included a $15.5 million write-off of acquired in-
process research and development related to the Moorco acquisition. The decrease
in expenditures for Defense Systems from 1994 reflects minor reductions across
most product lines.
Not included in these amounts are $150.4 million, $104.9 million and $208.8
million in 1995, 1994 and 1993, respectively for research and development
projects contracted directly with the U.S. government and commercial sponsors,
primarily related to Defense Systems programs.
ENVIRONMENTAL
The Company is subject to various federal, state and local environmental laws
and regulations that govern emissions of air pollutants, discharges of water
pollutants, and the manufacture, storage, handling and disposal of hazardous
substances, hazardous wastes and other toxic materials. The most significant
environmental liabilities of the Company consist of obligations relating to the
remediation and/or study of sites at which the Company is alleged to have
disposed of hazardous substances. In particular, the Company is subject to
liabilities arising under the Comprehensive Environmental Response, Compensation
and Liability Act ("CERCLA") and similar state laws that impose responsibility
on persons who arranged for the disposal of hazardous substances and on current
and previous owners and operators of a facility for the clean up of hazardous
substances released from the facility into the environment. In addition, the
Company is subject to liabilities under the corrective action provisions of the
Resource Conservation and Recovery Act ("RCRA") and analogous state laws which
require owners and operators of facilities that treat, store or dispose of
hazardous waste to clean up releases of hazardous waste constituents into the
environment associated with past or present practices. The Company has been
named a Potentially Responsible Party ("PRP") at 33 sites on the government's
National Priority List. In addition, the Company also has received notice from
the EPA or other regulatory agencies that the Company may be a PRP, or PRP
equivalent, at other sites, including 27 sites at which the Company has
determined that it has a reasonably possible environmental liability. The
Company, in cooperation with appropriate government agencies, is currently
participating in, or has participated in, Remedial Investigations/Feasibility
Studies ("RI/FS") or their equivalent at most of the identified sites, with the
status of each investigation varying from site to site. At certain sites, RI/FS
have just begun, providing limited information, if any, relating to cost
estimates, timing, or the involvement of other PRPs; whereas at other sites, the
studies are complete, remedial action plans have been chosen, or Records of
Decision have been issued.
At December 31, 1995 and 1994, reserves were provided for potential
environmental obligations which management considers probable and for which a
reasonable estimate
of the obligation could be made. Accordingly, reserves of $302 million and $229
million, before recoveries, have been provided at December 31, 1995 and December
31, 1994, respectively, of which $132 million and $142 million are included in
the reserve for discontinued operations at December 31, 1995 and December 31,
1994, respectively. The Company's total environmental reserves include
approximately $270 million and $183 million for remediation activities and $32
million and $46 million for RI/FS costs at December 31, 1995 and December 31,
1994, respectively. In addition, the Company has estimated reasonably possible
environmental loss contingencies may exceed amounts accrued by as much as $150
million.
The EPA issued a draft risk assessment on August 17, 1995 for the Eastern
Michaud Flats Superfund site, which includes FMC's Pocatello phosphorus
facility, identifying potential risks from contamination potentially associated
with FMC. Release of the Risk Assessment allowed FMC to complete a draft of the
Remedial Investigation documenting the nature and extent of contamination from
the site. The Company submitted its draft Remedial Investigation to the EPA on
September 28, 1995. FMC added $58 million in the third quarter of 1995 to its
existing reserves of approximately $22 million for future environmental
remediation costs at the Eastern Michaud Flats site. In addition, $25 million
was provided during the third quarter of 1995 related to other sites where
additional information became available which indicated the need for increased
accruals.
Although potential environmental remediation expenditures in excess of the
current reserves and estimated loss contingencies could be significant, the
impact on the Company's future financial results is not subject to reasonable
estimation due to numerous uncertainties concerning the nature and scope of
contamination at many sites, identification of remediation alternatives under
constantly changing requirements, selection of new and diverse clean-up
technologies to meet compliance standards, the timing of potential expenditures,
and the allocation of costs among PRPs as well as other third parties.
The liability arising from potential environmental obligations that have not
been reserved for at this time may be material to any one quarter's or year's
results of operations in the future. Management, however, believes the
liability arising from the potential environmental obligations is not likely to
have a material adverse effect on the Company's liquidity or financial condition
and may be satisfied over the next 20 years or longer.
To ensure FMC is held responsible only for its equitable share of site
remediation costs, FMC has initiated, and will continue to initiate, legal
proceedings for contributions from other PRPs, and for a determination of
coverage against its comprehensive general liability insurance carriers. The
Supreme Court of California has determined that FMC's clean-up costs are insured
damages under its liability insurance policies, subject to a determination of
the application of certain policy exclusions and conditions. Approximately $140
million of recoveries ($56 million as other assets and $84 million as an offset
to the reserve for discontinued operations) and approximately $123 million of
recoveries ($44 million as other assets and $79 million as an offset to the
reserve for discontinued operations), have been recorded as probable realization
on claims against insurance companies and other third parties at December 31,
1995 and 1994, respectively. The substantial majority of recorded assets
related to recoveries from PRPs are associated with existing contractual
arrangements with U.S. government agencies.
Regarding current operating sites, the Company spent approximately $22 million,
$20 million and $16 million for the years 1995, 1994 and 1993, respectively, on
capital projects relating to environmental control facilities, and expects to
spend additional capital of approximately $16 million and $21 million in 1996
and 1997, respectively. Additionally, in 1995, 1994, and 1993, FMC spent
approximately $58 million, $55 million and $63 million, respectively, for
environmental compliance costs.
Regarding current operating, previously operated and other sites for the years
1995, 1994 and 1993, FMC charged approximately $14 million, $18 million and $17
million, respectively, against established reserves for remediation spending,
and charged approximately $12 million, $13 million and $10 million,
respectively, against reserves for spending on RI/FS. Recoveries from third
parties of approximately $5 million, $5 million and $7 million, respectively,
were received in 1995, 1994 and 1993. FMC anticipates that the expenditures for
current operating, previously operated and other sites will continue to be
significant for the foreseeable future.
EMPLOYEES.
FMC has 22,164 employees in its domestic and foreign operations. At most of its
plants in the United States and Canada, the majority of these employees are
members of labor unions, primarily unions which are affiliated with national
labor organizations. Contracts covering about 18% of these hourly employees
expire during 1996 and certain of these contracts are under negotiation at the
present time. Occasionally, FMC experiences strikes at one or more of its
plants which adversely affect sales and earnings to varying degrees, none of
which have been material. FMC considers its employee relations to be good;
however, it cannot predict the outcome of contract negotiations.
D. FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
SALES:
GEOGRAPHIC SEGMENT INFORMATION
- ----------------------------------------------------------
SALES Year ended December 31
- ----------------------------------------------------------
(in millions) 1995 1994 1993
- ----------------------------------------------------------
Third party sales
- ----------------------------------------------------------
United States $3,270.0 $3,084.8 $2,866.7
Latin America and Canada 179.8 159.6 140.4
Europe 947.3 693.5 697.5
Asia, Africa & others 112.7 72.9 49.3
- ----------------------------------------------------------
4,509.8 4,010.8 3,753.9
Intersegment sales
- ----------------------------------------------------------
United States 151.2 110.7 102.5
Latin America and Canada 10.1 10.9 10.9
Europe 92.2 92.3 83.2
Asia, Africa & others 22.1 11.4 23.2
Eliminations (275.6) (225.3) (219.8)
- ----------------------------------------------------------
Total Sales $4,509.8 $4,010.8 $3,753.9
==========================================================
- ----------------------------------------------------------
INCOME (LOSS) BEFORE
INCOME TAXES Year ended December 31
- ----------------------------------------------------------
(in millions) 1995 1994 1993
- ----------------------------------------------------------
United States $ 390.7 $ 341.5 $ 323.8
Latin America and Canada 12.7 13.7 4.4
Europe 120.5 100.2 48.1
Asia, Africa & others 4.5 1.7 (0.8)
- ----------------------------------------------------------
Operating profit 528.4 457.1 375.5
Net interest expense (72.5) (59.1) (62.6)
Corporate & other (96.2) (101.9) (110.5)
Minority interest (59.1) (61.4) (2.5)
Gain on sale of FMC
Wyoming stock 99.7 - -
Other income and
(expense), net (3.4) 17.6 10.2
Restructuring and
other charges (1) (150.0) - (172.3)
- ----------------------------------------------------------
Total $ 246.9 $ 252.3 $ 37.8
==========================================================
- ------------------
(1) See Item 1(a). Includes pretax restructuring and other charges of $134.5
million and $172.3 million in 1995 and 1994, respectively, and a write-off of
acquired in-process research and development of $15.5 million in 1995.
- --------------------------------------------------------------------
IDENTIFIABLE ASSETS December 31
- --------------------------------------------------------------------
(in millions) 1995 1994 1993
- --------------------------------------------------------------------
United States $2,609.2 $1,960.0 $1,544.3
Latin America and Canada 209.7 157.2 142.7
Europe 900.2 676.3 640.3
Asia, Africa & others 87.2 64.9 51.0
- --------------------------------------------------------------------
Subtotal 3,806.3 2,858.4 2,378.3
Corporate and other 494.8 493.1 466.8
- --------------------------------------------------------------------
Total $4,301.1 $3,351.5 $2,845.1
====================================================================
- --------------------------------------------------------------------
U.S. EXPORT SALES TO UNAFFILIATED CUSTOMERS BY DESTINATION OF SALE
- --------------------------------------------------------------------
Year ended December 31
- --------------------------------------------------------------------
(in millions) 1995 1994 1993
- --------------------------------------------------------------------
Latin America and Canada $ 212.9 $ 217.9 $ 176.8
Europe 155.9 153.3 192.2
Asia, Africa & others 588.2 668.6 415.3
- --------------------------------------------------------------------
Total $ 957.0 $1,039.8 $ 784.3
====================================================================
ITEM 2 PROPERTIES
FMC leases executive offices in Chicago and administrative offices in
Philadelphia. The Company operates 115 manufacturing facilities and mines in 24
countries. Major research facilities are in Santa Clara, CA, and Princeton, NJ.
FMC holds mining leases on shale and ore deposits in Idaho to supply its
phosphorus plant in Pocatello, and owns substantial phosphatic ore deposits in
Rich County, Utah. Trona ore, used for soda ash production in Green River, WY,
is mined primarily from property held under long-term lease. FMC also owns half
of a lithium mine located near Cherryville, NC, and has long-term lease
commitments for the remaining portion and in Argentina FMC owns the land and
mineral rights to the Salar del Hombre Muerto lithium reserves. FMC Gold
Company owns mineral rights to gold and silver ore bodies at its wholly-owned
Beartrack property in Idaho, as well as the right to 30 percent of the gold ore
reserves at the Jerritt Canyon mine in Elko, NV, operated by its joint-venture
partner, Independence Mining Company Inc., a wholly-owned subsidiary of Minorco
(USA) Inc. FMC Gold Company leases its administrative headquarters in Reno,
Nevada. Mining operations provide basic raw materials to many of FMC's chemical
plants, without which other sources would have to be obtained. FMC's mining
properties are operated under numerous long-term leases with no single lease or
related group of leases material to the businesses of the Company as a whole.
United Defense, L.P. leases its administrative offices in Arlington, Virginia.
Most of FMC's plant sites are owned, with an immaterial number of them being
leased. FMC believes its properties and facilities meet present requirements
and are in good operating condition. FMC believes that each of its significant
manufacturing facilities is operating at a level consistent with the industry in
which it operates. FMC's production properties for continuing operations are:
Latin
America
United and Western Total
States Canada Europe Other
- -----------------------------------------------------------------
Performance Chemicals 13 3 6 6 28
Industrial Chemicals 14 2 12 - 28
Machinery and Equipment 22 5 14 6 47
Defense Systems 11 - - - 11
Precious Metals 1 - - - 1
ITEM 3. LEGAL PROCEEDINGS
Environmental Proceedings
As reported in FMC's annual report on Form 10-K for the year ended December 31,
1994, an environmental inspection was conducted in July 1993 at FMC's Phosphorus
Chemicals Division plant in Pocatello, Idaho. In August 1994, the United States
EPA (Region 10) (the "EPA") formally notified FMC of a number of alleged
violations of the RCRA and related environmental regulations governing the
management of hazardous waste generated by the plant, including the operations
of hazardous waste storage and treatment units without required permits, the
failure to implement an adequate groundwater monitoring program and to comply
with related reporting requirements and the existence of several other improper
treatment and disposal practices. There are no legal proceedings pending at
this time; however, the EPA has stated that the alleged violations may subject
FMC to enforcement action under RCRA, including possible actions for monetary
sanctions, injunctive relief or other available remedies. Management believes
that the resolution of these matters will not likely have a material adverse
effect on FMC's liquidity, results of operations or financial condition.
In addition, in August 1994 EPA conducted an environmental inspection at FMC's
Green River, Wyoming facility, where trona is mined and soda ash and a number of
related chemicals are produced. In May 1995, EPA provided a copy of the
inspection report, which alleged violations of RCRA and the Emergency Planning
and Community Right to Know Act (EPCRA), and proposed to negotiate a pre-
enforcement settlement. Ultimately, FMC and EPA entered into such a settlement,
without the lodging of a formal complaint, by means of an administrative order
on consent, effective November 1, 1995. Under the terms of this order, FMC has
paid a civil penalty in the amount of $145,000 and is implementing a series of
supplemental environmental projects (SEPs) involving waste management at an
estimated cost of $298,000.
Safety
Following an emergency incident at FMC's Process Additives Division plant in
Nitro, West Virginia on December 5, 1995, when a high pressure switch failed and
phosphorus trichloride product was discharged into a containment area where
water was present, resulting in a release of a cloud of hydrogen chloride and
fumes, the U.S. Occupational Safety and Health Administration commenced an
incident and process safety investigation. This investigation is currently in
progress and no citations have issued. However, there is a potential for
citations and assertion of penalties. Management believes that the resolution
of this investigation will not likely have a material adverse effect on FMC's
liquidity, results of operations or financial condition.
Beartrack Gold Property
During the third quarter of 1994, the Pacific Rivers Council and the Wilderness
Society (collectively the "PRC"), in a lawsuit filed in Federal District Court
in Idaho (Pacific Rivers Council v. Thomas), sought an injunction against all
ongoing and future forest activities including mining, which may affect
endangered salmon, within various national forests in Idaho including the Salmon
National Forest in which the Beartrack property of FMC Gold Company (the "Gold
Company") is located. In that lawsuit, the PRC sought to require the U.S.
Forest Service to consult under the Endangered Species Act (the "Act") with the
National Marine Fisheries Service ("NMFS") regarding existing land resource
management plans for the subject forests and their potential impacts on
endangered Snake River salmon. The government defendants and the plaintiffs
have subsequently negotiated a stipulated dismissal of most of the lawsuit.
Under the terms of the stipulation, the parties dismissed from this litigation
all projects which have undergone site-specific consultation. The Gold
Company's Beartrack mine was identified by the government defendants as a
project for which consultation has been completed. The Court issued an Order on
Pending Claims on December 11, 1995 regarding the remaining specified projects
(not including the Beartrack mine) which have not yet completed consultation.
Under the terms of that Order, the Court has retained jurisdiction in this
lawsuit for further proceedings regarding those projects. The Beartrack mine is
not subject to or a part of the Court's order.
In October, 1994, the Sierra Club Legal Defense Fund, Inc., ("Sierra") on behalf
of certain other organizations, filed a lawsuit in Federal District Court for
the Western District of Washington at Seattle against NMFS and other federal
agencies for violation of the Act alleging the NMFS' biological opinion failed
to satisfy the requirements of the Act. Sierra, the federal agencies and the
company, as intervenor, each filed a motion for summary judgment. In November,
1995, the Court ordered the federal agencies to reinitiate consultation under
Section 7 of the Act on the potential environmental impacts of the Beartrack
mine project on endangered salmon or the designated critical habitat for salmon.
The plaintiffs did not seek, and the Court did not impose, any injunction or
other restriction on the operation of the Beartrack mine pending completion of
such consultation. If, upon remand, the Forest Service were to determine that
an activity associated with Beartrack mine operations could preclude the
development of reasonable and prudent alternatives to the project pending
completion of the reinitiated consultation, such activities could be required to
cease pending completion of consultation. Under the Act's regulations,
consultation must be completed within 135 days of the date consultation is
initiated. An extension of 60 days can be imposed by the agencies. Under the
relevant statutory and regulatory authorities, the results of a consultation can
range from no impact on the activities under review on the one hand to modest to
significant impacts on the other. In an extreme situation, a consultation could
result in the cessation of activities altogether, a potential result the company
believes to be remote in the case of the
Beartrack mine, which has been in operation and production since mid-1995. The
company believes that the ongoing operation of the Beartrack mine will not
jeopardize endangered salmon or adversely modify or destroy designated critical
habitat, and that upon completion of consultation, the mine will be permitted to
continue operation.
The Beartrack property encompasses approximately 30 square miles of mining
claims and contains approximately one million ounces of proven and probable
reserves. At December 31, 1995, FMC Gold Company's net investment in Beartrack
was approximately $80 million.
Other
See Note 14 to the consolidated financial statements for a discussion of legal
proceedings against other Potentially Responsible Parties and insurers for
contribution and/or coverage with respect to environmental remediation costs.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT
The Executive Officers of FMC Corporation, together with the offices in FMC
Corporation presently held by them, their business experience since January 1,
1991, and their ages, are as follows:
Name Age Office, year of election; and
3/14/96 other information for past 5 years
------- ----------------------------------
Robert N. Burt 58 Chairman of the Board and Chief Executive
Officer (91); President (90-93);
Executive Vice President (88)
Larry D. Brady 53 President (93) and a Director (89);
Executive Vice President (89-93) Vice
President-Corporate Development (88)
William F. Beck 57 Executive Vice President (94); Vice
President (86) and General
Manager-Chemical Products Group (86);
President of FMC Europe (91)
Michael J. Callahan 56 Executive Vice President and Chief
Financial Officer (94); Executive Vice
President and Chief Financial Officer,
Whirlpool Corporation (91-94)
William J. Kirby 58 Senior Vice President (94); Vice
President-Administration (85)
Charles H. Cannon 43 Vice President and General Manager-Food
Machinery Group (94); Manager, Food
Processing Systems Division (92-94);
Manager, Citrus Machinery Division (89-92)
W. Reginald Hall 60 Vice President (91) and General
Manager-Specialty Chemicals Group (92)
General Manager-Food Machinery Group (90)
Robert I. Harries 52 Vice President (92) and General
Manager-Chemical Products Group (94)
Patrick J. Head 63 Vice President and General Counsel (81)
Ronald D. Mambu 46 Vice President and Controller (95);
Director, Financial Planning (94-95);
Director, Strategic Planning (93-94);
Director, Financial Control (87-93)
James A. McClung 58 Vice President (91); Vice
President-International (81-91)
Joseph H. Netherland 49 Vice President (87) and General
Manager-Petroleum Equipment Group (86),
Specialized Machinery Group (89); Energy
and Transportation Equipment Group (93)
Thomas W. Rabaut 47 Vice President (94), President and Chief
Executive Officer, United Defense, L.P.
(94); General Manager, Defense Systems
Group (93); Manager, Ground Systems
Division (90-93)
William H. Schumann 45 Vice President (95) and General
Manager-Agricultural Products Group (95);
Director, North American operations,
Agricultural Products Group (93-95);
Executive Director, Corporate Development
(91-93)
William J. Wheeler 53 Vice President (91); President, FMC
Asia-Pacific (91); General Manager,
Phosphorus Chemical Division (86-91)
Each of the Company's executive officers has been employed by the Company in a
managerial capacity for the past five years except for Mr. Callahan. No family
relationships exist between any of the above-listed officers and there are no
arrangements or understandings between any of them and any other person pursuant
to which they are selected as an officer. All officers are elected to hold
office for one year and until their successors are elected and qualify.
10-K Item No. Incorporated by Reference From:
- ------------- ------------------------------
PART II.
Item 5. Market for Registrant's Annual Report to Stockholders, Inside back
Common Equity and cover, pages 36, 42 and 51-52
Related Stockholder
Matters
Item 6. Selected Annual Report to Stockholders, pages 58-59
Financial Data
Item 7. Management's Discussion Annual Report to Stockholders,
and Analysis of Financial pages 18-19, 23, 29, 33, 34 and 35-36
Condition and Results
of Operations
Item 8. Financial Statements Annual Report to Stockholders, pages 5
and Supplementary Data and 37-56
(including all Schedules
required under Item 14
of Part IV)
Item 9. Changes in and (Not Applicable)
Disagreements with
Accountants on Accounting
and Financial Disclosure
PART III.
Item 10. Directors and Executive Part I; Proxy Statement for 1996 Annual
Officers of the Registrant Meeting of stockholders, pages 1-11
Item 11. Executive Compensation Proxy Statement for 1996 Annual Meeting of
Stockholders, pages 14-22
Item 12. Security Ownership of Proxy Statement for 1996 Annual Meeting of
Certain Beneficial Stockholders, pages 11-13
Owners and Management
Item 13. Certain Relationships and Proxy Statement for 1996 Annual Meeting of
Related Transactions Stockholders, pages 10-11
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Documents filed with this Report
1. Consolidated financial statements of FMC Corporation and its
subsidiaries are incorporated under Item 8 of this Form 10-K.
2. All required financial statement schedules are included in the
consolidated financial statements or notes thereto as
incorporated under Item 8 of this Form 10-K.
3. Report of Independent Auditors from Ernst & Young LLP for United
Defense, L.P. (Exhibit 99).
4. Exhibits: See attached exhibit index, page 25
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the last quarter of the
period covered by this report.
(c) Exhibits
See Index of Exhibits.
SIGNATURES
Pursuant to the requirements of Section 13 of 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
FMC CORPORATION
(Registrant)
By Michael J. Callahan
-------------------
Michael J. Callahan
Executive Vice President and
Chief Financial Officer
Date: March ___, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the date indicated.
Signature Title
- --------- -----
Michael J. Callahan Executive Vice President Michael J. Callahan
and Principal Financial ----------------------
Officer Michael J. Callahan
Ronald D. Mambu Vice President, Controller )
and Principal )
Accounting Officer )
Robert N. Burt Chairman of the Board )
and Chief Executive )
Officer )
William W. Boeschenstein Director )
Larry D. Brady Director )
B.A. Bridgewater, Jr. Director )By: Michael J. Callahan
Patricia A. Buffler Director ) -------------------
Albert J. Costello Director ) Michael J. Callahan
Paul L. Davies, Jr. Director )
Jean A. Francois-Poncet Director )
Pehr G. Gyllenhammar Director )
Robert H. Malott Director )
Edward C. Meyer Director )
William F. Reilly Director )
James R. Thompson Director )
PAGE 1
INDEX OF EXHIBITS FILED WITH OR
INCORPORATED BY REFERENCE INTO
FORM 10-K OF FMC CORPORATION
FOR YEAR ENDED DECEMBER 31, 1995
Exhibit No.
This
10-K Exhibit Description
- ----------- -------------------
3.1 Restated Certificate of Incorporation, as filed on July 1, 1986
(incorporated by reference from Exhibit 3.1 to the form SE filed on
March 25, 1993)
3.2 Amendment to Restated Certificate of Incorporation filed on April
30, 1987 (incorporated by reference from Exhibit 3.2)
3.3 By-Laws of the Company, as amended (incorporated by reference from
Exhibit 3.1 to the Form SE filed on March 28, 1990)
4.1 Amended and Restated Rights Agreement, dated as of February 19,
1988, between Registrant and Harris Trust and Savings Bank
(incorporated by reference from Exhibit 4 to the Form SE filed on
March 25, 1993)
4.2 Amendment to Amended and Restated Rights Agreement, dated February
9, 1996 (incorporated by reference from Exhibit 1 to the Form 8-K
filed on February 9, 1996)
4(iii)(A) Registrant undertakes to furnish to the Commission upon request, a
copy of any instrument defining the rights of holders of long-term
debt of the Registrant and all of its subsidiaries for which
consolidated or consolidated financial statements are required to
be filed
4.3 Participation Agreement, dated as of January 1, 1994, by and among
FMC Corporation, Harsco Corporation, Harsco Defense Holding, Inc.
and United Defense, L.P.* (incorporated by reference from Exhibit
4.1 to the Form 8-K filed on February 14, 1994)
4.4 Partnership Agreement, dated as of January 1, 1994, by and among
FMC Corporation, Harsco Defense Holding, Inc. and United Defense,
L.P.* (incorporated by reference from Exhibit 4.2 to the Form 8-K
filed on February 14, 1994)
4.5 Annex A - Definitions Relating to the Partnership Agreement and the
Participation Agreement (incorporated by reference from Exhibit 4.3
to the Form 8-K filed on February 14, 1994)
4.6 Registration Rights Agreement, dated as of January 1, 1994, by and
among FMC Corporation, Harsco Defense Holding, Inc. and United
Defense, L.P. (incorporated by reference from Exhibit 4.4 to the
Form 8-K filed on February 14, 1994)
4.7 Management Services Agreement, dated as of January 1, 1994, by and
between FMC Corporation and United Defense, L.P.* (incorporated by
reference from Exhibit 4.6 to the Form 8-K filed on February 14,
1994)
4.8 Form of Senior Promissory Note Agreement by and between Harsco
Defense Holding, Inc. and United Defense, L.P. (incorporated by
reference from Exhibit 4.6 to the Form 8-K filed on February 14,
1994)
10.1** Directors' Retirement Plan as amended on December 9, 1994
(incorporated by reference from Exhibit 10.1 to the Annual Report
on Form 10-K for 1994)
10.2** FMC 1981 Incentive Share Plan, as amended, effective May 28, 1986
(incorporated by reference from Exhibit 10.1 to the Form SE filed
on March 25, 1993)
10.3** FMC 1990 Incentive Share Plan (incorporated by reference from
Exhibit 10.1. to the Form SE filed on March 26, 1991)
10.4** FMC Corporation Salaried Employees' Retirement Plan, as amended and
restated effective January 1, 1995 (incorporated by reference from
Exhibit 10.4 to the Annual Report on Form 10-K for 1994)
10.5** FMC Employees' Thrift and Stock Purchase Plan, as revised and
restated as of April 1, 1991 (incorporated by reference from
Exhibit 10.3 to the Form SE filed on March 27, 1992)
10.6** Amendments to the FMC Employees' Thrift and Stock Purchase Plan
through December 31, 1994 (incorporated by reference from Exhibit
10.6 to the Annual Report on Form 10-K for 1994)
10.7** FMC Salaried Employees' Equivalent Retirement Plan (incorporated by
reference from Exhibit 10.4 to the Form SE filed on March 27, 1992)
10.8** FMC Deferred Compensation Equivalent Retirement and Thrift Plan
(incorporated by reference from Exhibit 10.5 to the Form SE filed
on March 27, 1992)
10.9** FMC 1995 Management Incentive Plan
10.10** FMC 1995 Stock Option Plan as amended
10.11** FMC Corporation Amended and Restated Executive Severance Plan,
(incorporated by reference from Exhibit 10.1 to the Form SE filed
on March 28, 1990)
10.12** FMC Employees' Thrift and Stock Purchase Trust dated April 1, 1982
(incorporated by reference from Exhibit 10.7 to the Form SE filed
on March 27, 1992)
10.13** Amendment to FMC Employees' Thrift and Stock Purchase Trust dated
April 1, 1988 (incorporated by reference from Exhibit 10.8 to the
Form SE filed on March 27, 1992)
10.14** FMC Master Trust Agreement between FMC and Bankers Trust Company
(incorporated by reference from Exhibit 10.9 to the Form SE filed
on March 27, 1992)
10.15 Fiscal Agency Agreement between FMC Corporation and Union Bank of
Switzerland, Fiscal Agent, dated as of January 16, 1990
(incorporated by reference from Exhibit 10.4 to the Form SE filed
on March 28, 1990)
10.16** Amended and Restated FMC-Deferred Stock Plan for Non-Employee
Directors (incorporated by reference from Exhibit 10.15 to the
Annual Report on Form 10-K for 1994)
10.17** Consulting Agreement dated as of September 1, 1990 between the
Company and Edward C. Meyer (incorporated by reference from Exhibit
10.16 to Form 10-K-A filed on April 5, 1994)
12 Statement re computation of ratio of earnings to fixed charges
13 Annual Report of FMC Corporation for the year ended December 31,
1995, is included as an Exhibit to this report for the information
of the Securities and Exchange Commission and, except for those
portions thereof specifically incorporated by reference elsewhere
herein, such Annual Report should not be deemed filed as a part of
this report.
21 List of Significant Subsidiaries of Registrant
23 Consents of Auditors
24 Powers of Attorney
27 Financial Data Schedule
99 Report of Ernst & Young LLP, Independent Auditors
_______________________________
* The Registrant has omitted the schedule and certain exhibits to the
Participation Agreement, the Partnership Agreement and the Management Services
Agreement and agrees to furnish supplementally a copy of such scheduled and
exhibits to the Commission upon request.
** Indicates a management contract or compensatory plan or arrangement.