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EX-32.2 - EXHIBIT 32.2 - FMC CORPfmcex322063017.htm
EX-32.1 - EXHIBIT 32.1 - FMC CORPfmcex321063017.htm
EX-31.2 - EXHIBIT 31.2 - FMC CORPfmcex312063017.htm
EX-31.1 - EXHIBIT 31.1 - FMC CORPfmcex311063017.htm
EX-15 - EXHIBIT 15 - FMC CORPfmcex15063017.htm
EX-12 - EXHIBIT 12 - FMC CORPfmcex12063017.htm
EX-10.8D - EXHIBIT 10.8D - FMC CORPfmcex108d063017.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 June 30, 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: 215-299-6000
__________________________________________________________________________
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS    YES  x    NO  o
INDICATE BY CHECK MARK WHETHER THE REGISTRANT HAS SUBMITTED ELECTRONICALLY AND POSTED ON ITS CORPORATE WEBSITE, IF ANY, EVERY INTERACTIVE DATA FILE REQUIRED TO BE SUBMITTED AND POSTED PURSUANT TO RULE 405 OF REGULATION S-T DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO SUBMIT AND POST SUCH FILES)    YES  x    NO  o
INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS A LARGE ACCELERATED FILER, AN ACCELERATED FILER, A NON-ACCELERATED FILER OR A SMALLER REPORTING COMPANY. SEE THE DEFINITIONS OF “LARGE ACCELERATED FILER,” “ACCELERATED FILER,” AND “SMALLER REPORTING COMPANY” IN RULE 12B-2 OF THE EXCHANGE ACT. (CHECK ONE):
LARGE ACCELERATED FILER
 
x
  
ACCELERATED FILER
 
o
 
 
 
 
 
 
 
NON-ACCELERATED FILER
 
o
  
SMALLER REPORTING COMPANY
 
o
 
 
 
 
 
 
 
 
 
 
 
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 June 30, 2017
Common Stock, par value $0.10 per share
 
134,128,392



FMC CORPORATION
INDEX
 
 
Page
No.


2


PART I - FINANCIAL INFORMATION
 
ITEM 1.    FINANCIAL STATEMENTS

FMC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
 
 
Three Months Ended June 30
 
Six Months Ended June 30
2017
 
2016
 
2017
 
2016
(in Millions, Except Per Share Data)
(unaudited)
 
(unaudited)
Revenue
$
656.8

 
$
615.3

 
$
1,252.8

 
$
1,221.7

Costs and Expenses
 
 
 
 
 
 
 
Costs of sales and services
422.4

 
379.9

 
802.2

 
770.3

Gross margin
234.4

 
235.4

 
450.6

 
451.4

Selling, general and administrative expenses
126.4

 
110.6

 
236.1

 
220.7

Research and development expenses
32.0

 
33.2

 
60.2

 
67.4

Restructuring and other charges (income)
6.9

 
9.1

 
15.2

 
18.6

Total costs and expenses
587.7

 
532.8

 
1,113.7

 
1,077.0

Income from continuing operations before equity in (earnings) loss of affiliates, interest expense, net and income taxes
69.1

 
82.5

 
139.1

 
144.7

Equity in (earnings) loss of affiliates
(0.1
)
 

 
(0.2
)
 

Interest expense, net
17.2

 
15.2

 
32.9

 
31.0

Income (loss) from continuing operations before income taxes
52.0

 
67.3

 
106.4

 
113.7

Provision (benefit) for income taxes
3.3

 
20.5

 
12.7

 
40.9

Income (loss) from continuing operations
48.7

 
46.8

 
93.7

 
72.8

Discontinued operations, net of income taxes
26.6

 
20.2

 
(142.2
)
 
42.9

Net income (loss)
75.3

 
67.0

 
(48.5
)
 
115.7

Less: Net income attributable to noncontrolling interests
0.6

 
1.8

 
1.0

 
2.2

Net income (loss) attributable to FMC stockholders
$
74.7

 
$
65.2

 
$
(49.5
)
 
$
113.5

Amounts attributable to FMC stockholders:
 
 
 
 
 
 
 
Continuing operations, net of income taxes
$
48.2

 
$
45.0

 
$
92.7

 
$
70.6

Discontinued operations, net of income taxes
26.5

 
20.2

 
(142.2
)
 
42.9

Net income (loss) attributable to FMC stockholders
$
74.7

 
$
65.2

 
$
(49.5
)
 
$
113.5

Basic earnings (loss) per common share attributable to FMC stockholders:
 
 
 
 

 
 
Continuing operations
$
0.36

 
$
0.34

 
$
0.69

 
$
0.52

Discontinued operations
0.20

 
0.15

 
(1.06
)
 
0.32

Net income (loss) attributable to FMC stockholders
$
0.56

 
$
0.49

 
$
(0.37
)
 
$
0.84

Diluted earnings (loss) per common share attributable to FMC stockholders:
 
 
 
 

 
 
Continuing operations
$
0.36

 
$
0.34

 
$
0.69

 
$
0.52

Discontinued operations
0.20

 
0.15

 
(1.06
)
 
0.32

Net income (loss) attributable to FMC stockholders
$
0.56

 
$
0.49

 
$
(0.37
)
 
$
0.84

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

3


FMC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 
 
Three Months Ended June 30
 
Six Months Ended June 30
2017
 
2016
 
2017
 
2016
(in Millions)
(unaudited)
 
(unaudited)
Net income (loss)
$
75.3

 
$
67.0

 
$
(48.5
)
 
$
115.7

Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
Foreign currency adjustments:
 
 
 
 
 
 
 
Foreign currency translation gain (loss) arising during the period
73.4

 
(20.1
)
 
116.6

 
32.2

Total foreign currency translation adjustments (1)
$
73.4

 
$
(20.1
)
 
$
116.6

 
$
32.2

 
 
 
 
 
 
 
 
Derivative instruments:
 
 
 
 
 
 
 
Unrealized hedging gains (losses) and other, net of tax of ($0.7) and ($2.8) for the three and six months ended June 30, 2017 and zero and ($1.7) for the three and six months ended June 30, 2016, respectively
$
(2.6
)
 
$
(1.6
)
 
$
(1.5
)
 
$
0.7

Reclassification of deferred hedging (gains) losses and other, included in net income, net of tax of $0.1 and ($0.1) for the three and six months ended June 30, 2017 and $0.9 and $2.1 for the three and six months ended June 30, 2016, respectively (3)
0.3

 
1.7

 
(0.2
)
 
4.1

Total derivative instruments, net of tax of ($0.6) and ($2.9) for the three and six months ended June 30, 2017 and $0.9 and $0.4 for the three and six months ended June 30, 2016, respectively
$
(2.3
)
 
$
0.1

 
$
(1.7
)
 
$
4.8

 
 
 
 
 
 
 
 
Pension and other postretirement benefits:
 
 
 
 
 
 
 
Unrealized actuarial gains (losses) and prior service (costs) credits, net of tax of $0.1 and $2.8 for the three and six months ended June 30, 2017 and zero for the three and six months ended June 30, 2016, respectively (2)
$
(1.8
)
 
$

 
$
2.6

 
$

Reclassification of net actuarial and other (gain) loss and amortization of prior service costs, included in net income, net of tax of $1.4 and $4.0 for the three and six months ended June 30, 2017 and $3.7 and $7.3 for the three and six months ended June 30, 2016, respectively (3)
2.9

 
7.1

 
7.8

 
13.4

Total pension and other postretirement benefits, net of tax of $1.5 and $6.8 for the three and six months ended June 30, 2017 and $3.7 and $7.3 for the three and six months ended June 30, 2016, respectively
$
1.1

 
$
7.1

 
$
10.4

 
$
13.4

 
 
 
 
 
 
 
 
Other comprehensive income (loss), net of tax
$
72.2

 
$
(12.9
)
 
$
125.3

 
$
50.4

Comprehensive income (loss)
147.5

 
54.1

 
76.8

 
166.1

Less: Comprehensive income (loss) attributable to the noncontrolling interest
0.7

 
1.7

 
1.3

 
2.2

Comprehensive income (loss) attributable to FMC stockholders
$
146.8

 
$
52.4

 
$
75.5

 
$
163.9

____________________ 
(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 six months ended June 30, 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)
June 30, 2017
 
December 31, 2016
ASSETS
(unaudited)
Current assets
 
 
 
Cash and cash equivalents
$
113.2

 
$
64.2

Trade receivables, net of allowance of $28.5 in 2017 and $17.6 in 2016
1,442.3

 
1,692.5

Inventories
546.3

 
478.9

Prepaid and other current assets
261.4

 
232.1

Current assets of discontinued operations held for sale
1,122.6

 
381.5

Total current assets
$
3,485.8

 
$
2,849.2

Investments
1.3

 
1.0

Property, plant and equipment, net
538.3

 
538.1

Goodwill
501.0

 
498.7

Other intangibles, net
763.6

 
719.9

Other assets including long-term receivables, net
457.1

 
454.7

Deferred income taxes
237.2

 
242.1

Noncurrent assets of discontinued operations held for sale

 
835.6

Total assets
$
5,984.3

 
$
6,139.3

LIABILITIES AND EQUITY
 
 
 
Current liabilities
 
 
 
Short-term debt and current portion of long-term debt
$
192.5

 
$
94.2

Accounts payable, trade and other
433.5

 
317.4

Advance payments from customers
5.6

 
239.8

Accrued and other liabilities
283.4

 
303.3

Accrued payroll
42.6

 
55.2

Accrued customer rebates
347.8

 
246.7

Guarantees of vendor financing
65.2

 
104.5

Accrued pension and other postretirement benefits, current
7.1

 
7.1

Income taxes
24.6

 
11.0

Current liabilities of discontinued operations held for sale
139.6

 
59.0

Total current liabilities
$
1,541.9

 
$
1,438.2

Long-term debt, less current portion
1,592.3

 
1,798.8

Accrued pension and other postretirement benefits, long-term
88.8

 
137.3

Environmental liabilities, continuing and discontinued
291.5

 
306.4

Deferred income taxes
151.0

 
130.4

Other long-term liabilities
292.1

 
267.5

Long-term liabilities of discontinued operations held for sale

 
67.7

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
436.7

 
418.6

Retained earnings
3,411.7

 
3,505.5

Accumulated other comprehensive income (loss)
(353.4
)
 
(478.4
)
Treasury stock, common, at cost - 2017: 51,855,400 shares, 2016: 52,293,686 shares
(1,501.7
)
 
(1,506.6
)
Total FMC stockholders’ equity
$
2,011.9

 
$
1,957.7

Noncontrolling interests
14.8

 
35.3

Total equity
$
2,026.7

 
$
1,993.0

Total liabilities and equity
$
5,984.3

 
$
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
 
 
Six Months Ended June 30
2017
 
2016
 (in Millions)
(unaudited)
Cash provided (required) by operating activities of continuing operations:
 
 
 
Net income (loss)
$
(48.5
)
 
$
115.7

Discontinued operations
142.2

 
(42.9
)
Income (loss) from continuing operations
$
93.7

 
$
72.8

Adjustments from income from continuing operations to cash provided (required) by operating activities of continuing operations:
 
 
 
Depreciation and amortization
46.1

 
49.6

Equity in (earnings) loss of affiliates
(0.2
)
 

Restructuring and other charges (income)
15.2

 
18.6

Deferred income taxes
7.4

 
(5.2
)
Pension and other postretirement benefits
(4.6
)
 
7.6

Share-based compensation
11.2

 
11.2

Excess tax benefits from share-based compensation

 
(0.4
)
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:
 
 
 
Trade receivables, net
279.3

 
237.9

Guarantees of vendor financing
(33.0
)
 
36.1

Inventories
(48.6
)
 
(96.3
)
Accounts payable, trade and other
102.8

 
24.3

Advance payments from customers
(234.4
)
 
(244.8
)
Accrued customer rebates
96.9

 
138.5

Income taxes
(0.2
)
 
6.3

Pension and other postretirement benefit contributions
(27.6
)
 
(24.8
)
Environmental spending, continuing, net of recoveries
(15.1
)
 
(11.4
)
Restructuring and other spending
(2.7
)
 
(9.9
)
Acquisition-related charges
(9.0
)
 
(12.4
)
Change in other operating assets and liabilities, net (1)
(72.2
)
 
(37.6
)
Cash provided (required) by operating activities of continuing operations
$
205.0

 
$
160.1

Cash provided (required) by operating activities of discontinued operations:
 
 
 
Environmental spending, discontinued, net of recoveries
(10.8
)
 
(10.1
)
Other discontinued spending
(12.7
)
 
(11.8
)
Operating activities of discontinued operations, net of divestiture costs
78.6

 
86.3

Cash provided (required) by operating activities of discontinued operations
$
55.1

 
$
64.4

                                        
(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)
 
 
Six Months Ended June 30
2017
 
2016
 (in Millions)
(unaudited)
Cash provided (required) by investing activities of continuing operations:
 
 
 
Capital expenditures
$
(20.9
)
 
$
(40.7
)
Proceeds from disposal of property, plant and equipment
0.8

 
1.3

Other investing activities
(31.1
)
 
(5.6
)
Cash provided (required) by investing activities of continuing operations
$
(51.2
)
 
$
(45.0
)
Cash provided (required) by investing activities of discontinued operations:
 
 
 
       Other discontinued investing activities
(12.8
)
 
(14.7
)
Cash provided (required) by investing activities of discontinued operations
$
(12.8
)
 
$
(14.7
)
Cash provided (required) by financing activities of continuing operations:
 
 
 
Increase (decrease) in short-term debt
(4.0
)
 
(59.4
)
Repayments of long-term debt
(200.7
)
 
(50.8
)
Financing fees
(11.0
)
 
(0.7
)
Proceeds from borrowings of long-term debt
97.9

 
2.8

Issuances of common stock, net
14.3

 
2.1

Excess tax benefits from share-based compensation

 
0.4

Transactions with noncontrolling interests
(0.5
)
 

Dividends paid (2)
(44.3
)
 
(44.3
)
Other repurchases of common stock
(1.5
)
 
(1.2
)
Cash provided (required) by financing activities of continuing operations
$
(149.8
)
 
$
(151.1
)
Effect of exchange rate changes on cash and cash equivalents
2.7

 
1.3

Increase (decrease) in cash and cash equivalents
49.0

 
15.0

Cash and cash equivalents, beginning of period
64.2

 
78.6

Cash and cash equivalents, end of period
$
113.2

 
$
93.6

                                               
(2)
See Note 13 regarding quarterly cash dividend.
Supplemental disclosure of cash flow information: Cash paid for interest, net of capitalized interest was $44.7 million and $39.2 million, and income taxes paid, net of refunds were $13.9 million and $37.7 million for the six months ended June 30, 2017 and 2016, respectively. Net interest payments of $10.4 million and $9.4 million and tax payments, net of refunds of $7.9 million and $5.9 million were allocated to discontinued operations for the six months ended June 30, 2017 and 2016, respectively. Non-cash additions to property, plant and equipment were $4.1 million and $24.3 million for the six months ended June 30, 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 and six months ended June 30, 2017 and 2016, cash flows for the six months ended June 30, 2017 and 2016, and our financial positions as of June 30, 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 and six months ended June 30, 2017 and 2016 are not necessarily indicative of the results of operations for the full year. The condensed consolidated balance sheets as of June 30, 2017 and December 31, 2016, and the related condensed consolidated statements of income (loss) and condensed consolidated statements of comprehensive income (loss) for the three and six months ended June 30, 2017 and 2016 and condensed consolidated statements of cash flows for the six months ended June 30, 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”).

Certain prior year amounts have been reclassified to conform to current year's presentation.

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 May 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2017-09, Stock Compensation - Scope of Modification Accounting.  This ASU provides guidance on which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. 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.

In March 2017, the FASB issued 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

8


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

(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 within our consolidated cash flow statement.

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

9


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

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 and six months ended June 30, 2017 was approximately $0.7 million and $1.3 million, respectively.

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 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 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 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 provided that, in connection with the Transactions and subject to the conditions set forth in the Commitment Letter, the Commitment Party would 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 were to be 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 were expensed in the second quarter of 2017 and presented within "Selling, general and administrative expenses" 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.

On July 27, 2017, the European Commission (“EC”) conditionally approved our pending acquisition of certain assets of DuPont’s Crop Protection business. The Acquisition is conditioned upon us divesting the portfolio of products required by the EC remedy. This remedy is expected to impact FMC Agricultural Solutions’ annual operating profit by $10 million to $15 million. Upon being notified of the EC’s ruling, we have commenced steps necessary to complete the divestiture within the required timeframe.

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.

10


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


Three Months Ended June 30

Six Months Ended June 30
(in Millions)
2017

2016

2017

2016
Acquisition-related charges - DuPont
 
 
 
 
 
 
 
Legal and professional fees (1)
$
20.7

 
$

 
$
29.9

 
$

Acquisition-related charges - Cheminova (2)











Legal and professional fees (1)


5.0




12.4

Total acquisition-related charges (3)
$
20.7


$
5.0


$
29.9


$
12.4

 
 
 
 
 
 
 
 
Restructuring charges and asset disposals









Cheminova restructuring
$


$
5.9


$


$
8.9

Total Cheminova restructuring charges (3) (4)
$


$
5.9


$


$
8.9

____________________ 
(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 FMC 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
2.3

 

 
2.3

Balance, June 30, 2017
$
501.0

 
$

 
$
501.0

There were no events or circumstances indicating that goodwill might be impaired as of June 30, 2017.

Our intangible assets, other than goodwill, consist of the following:
 
June 30, 2017
 
December 31, 2016
(in Millions)
Gross
 
Accumulated Amortization
 
Net
 
Gross
 
Accumulated Amortization
 
Net
Intangible assets subject to amortization (finite-lived)
Customer relationships
$
383.5

 
$
(55.6
)
 
$
327.9

 
$
356.9

 
$
(43.7
)
 
$
313.2

Patents
2.0

 
(0.5
)
 
1.5

 
2.2

 
(0.4
)
 
1.8

Brands (1)
14.9

 
(5.5
)
 
9.4

 
13.6

 
(4.7
)
 
8.9

Purchased and licensed technologies
56.2

 
(26.7
)
 
29.5

 
60.3

 
(30.1
)
 
30.2

Other intangibles
3.2

 
(2.3
)
 
0.9

 
2.9

 
(1.9
)
 
1.0

 
$
459.8

 
$
(90.6
)
 
$
369.2

 
$
435.9

 
$
(80.8
)
 
$
355.1

Intangible assets not subject to amortization (indefinite-lived)
Brands (1) (2)
$
392.9

 
 
 
$
392.9

 
$
363.4

 
 
 
$
363.4

In-process research & development
1.5

 
 
 
1.5

 
1.4

 
 
 
1.4

 
$
394.4

 
 
 
$
394.4

 
$
364.8

 
 
 
$
364.8

Total intangible assets
$
854.2

 
$
(90.6
)
 
$
763.6

 
$
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 June 30, 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
$
368.2

 
$
394.4

FMC Lithium
1.0

 

Total
$
369.2

 
$
394.4


11


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

 
Three Months Ended June 30
 
Six Months Ended June 30
(in Millions)
2017
 
2016
 
2017
 
2016
Amortization expense
$
5.2

 
$
6.1

 
$
10.3

 
$
12.0


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 from (to) 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
6.8

Transfer from (to) allowance for credit losses (see below)
1.1

Net recoveries and write-offs
3.0

Balance, June 30, 2017
$
28.5


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 $129.3 million as of June 30, 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 from (to) allowance for doubtful accounts (see above)
7.8

Net recoveries and write-offs

Balance, December 31, 2016
$
49.1

Additions - charged to expense
3.4

Transfer from (to) allowance for doubtful accounts (see above)
(1.1
)
Net recoveries and write-offs
(2.2
)
Balance, June 30, 2017
$
49.2



12


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

Note 6: Inventories
Inventories consisted of the following:
 (in Millions)
June 30, 2017
 
December 31, 2016
Finished goods
$
250.5

 
$
220.1

Work in process
235.7

 
219.3

Raw materials, supplies and other
187.3

 
166.7

First-in, first-out inventory
$
673.5

 
$
606.1

Less: Excess of first-in, first-out cost over last-in, first-out cost
(127.2
)
 
(127.2
)
Net inventories
$
546.3

 
$
478.9


Note 7: Property, Plant and Equipment
Property, plant and equipment consisted of the following:
(in Millions)
June 30, 2017
 
December 31, 2016
Property, plant and equipment
$
952.9

 
$
921.6

Accumulated depreciation
(414.6
)
 
(383.5
)
Property, plant and equipment, net
$
538.3


$
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 June 30
 
Six Months Ended June 30
(in Millions)
2017
 
2016
 
2017
 
2016
Restructuring charges and asset disposals
$
2.7

 
$
5.9

 
$
2.7

 
$
8.9

Other charges (income), net
4.2

 
3.2

 
12.5

 
9.7

Total restructuring and other charges (income)
$
6.9

 
$
9.1

 
$
15.2

 
$
18.6


Restructuring charges and asset disposals
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)
 
Other Charges (Income) (2)
 
Asset Disposal Charges (2)
 
Total
Other items

 

 
2.7

 
2.7

Three months ended June 30, 2017
$

 
$

 
$
2.7

 
$
2.7

 
 
 
 
 
 
 
 
Cheminova restructuring
3.2

 
1.4

 
1.3

 
5.9

Three months ended June 30, 2016
$
3.2

 
$
1.4

 
$
1.3

 
$
5.9

 
 
 
 
 
 
 
 
Other items

 

 
2.7

 
2.7

Six months ended June 30, 2017
$

 
$

 
$
2.7

 
$
2.7

 
 
 
 
 
 
 
 
Cheminova Restructuring
5.1

 
1.3

 
2.5

 
8.9

Six months ended June 30, 2016
$
5.1

 
$
1.3

 
$
2.5

 
$
8.9

____________________ 

13


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

(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
6/30/17 (3)
Cheminova restructuring
$
11.1

$

$
(2.6
)
$
(1.2
)
$
7.3

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

$
(7.6
)
$
(1.2
)
$
9.0

____________________ 
(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 are not included in the above tables.
Other charges (income), net
 
Three Months Ended June 30
 
Six Months Ended June 30
(in Millions)
2017
 
2016
 
2017
 
2016
Environmental charges, net
$
3.3

 
$
2.5

 
$
5.6

 
$
9.1

Argentina devaluation

 

 

 
4.2

Other items, net
0.9

 
0.7

 
6.9

 
(3.6
)
Other charges (income), net
$
4.2

 
$
3.2

 
$
12.5

 
$
9.7


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
On December 17, 2015, the Argentina government initiated actions to significantly devalue its currency. These actions continued into a portion of the 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 FMC Lithium and FMC 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 (income)" 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 six months ended June 30, 2017 primarily relate to exit costs resulting from the termination and de-consolidation of our interest in a variable interest entity that was previously consolidated and was part of our FMC Agricultural Solutions segment.


14


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

Note 9: Debt
Debt maturing within one year:
(in Millions)
June 30, 2017
 
December 31, 2016
Short-term foreign debt (1)
$
91.3

 
$
85.5

Commercial paper

 
6.3

Total short-term debt
$
91.3

 
$
91.8

Current portion of long-term debt
101.2

 
2.4

Short-term debt and current portion of long-term debt
$
192.5

 
$
94.2

____________________
(1)
At June 30, 2017, the average interest rate on the borrowings was 8.3%. 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.

Long-term debt:
(in Millions)
June 30, 2017
 
 
 
 
Interest Rate Percentage
 
Maturity
Date
 
June 30, 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 $1.2 and $1.4, respectively)
3.95 - 5.2%
 
2019 - 2024
 
998.8

 
998.6

2014 Term Loan Facility
2.5%
 
2020
 
550.0

 
750.0

2017 Term Loan Facility
2.5%
 
2022
 

 

Credit Facility (1)
3.7%
 
2022
 

 

Foreign debt
0 - 10.8%
 
2018 - 2024
 
107.8

 
10.7

Debt issuance cost
 
 
 
 
(14.7
)
 
(9.7
)
Total long-term debt
 
 
 
 
$
1,693.5

 
$
1,801.2

Less: debt maturing within one year
 
 
 
 
101.2

 
2.4

Total long-term debt, less current portion
 
 
 
 
$
1,592.3

 
$
1,798.8

____________________
(1)
Letters of credit outstanding under our Credit Facility totaled $135.7 million and available funds under this facility were $1,364.3 million at June 30, 2017.

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” or "2017 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, expenses and taxes 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.

15


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

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 2014 Term Loan Facility. Among other things, the amendment temporarily increased the maximum leverage ratio financial covenant 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.

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.
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 June 30, 2017, was 2.8 which is below the maximum leverage of 3.75 at June 30, 2017. Our actual interest coverage for the four consecutive quarters ended June 30, 2017, was 8.0 which is above the minimum interest coverage of 3.5. We were in compliance with all covenants at June 30, 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 began to pursue the sale of the Omega-3 business and on June 22, 2017, we signed a definitive agreement to sell the Omega-3 business to Pelagia AS. On August 1, 2017, we completed the sale of the Omega-3 business for $38 million.

16


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

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) during the three months ended March 31, 2017. The charge was revised during the three months ended June 30, 2017 as a result of signing a definitive agreement to sell the Omega-3 business. The impairment charge for the six months ended June 30, 2017 was approximately $171 million ($151 million, net of tax).

The results of our discontinued FMC Health and Nutrition operations are summarized below:
(in Millions)
Three Months Ended June 30
 
Six Months Ended June 30
2017
 
2016
 
2017
 
2016
Revenue
$
162.1

 
$
195.0

 
$
338.8

 
$
387.4

Costs of sales and services
95.9

 
129.1

 
207.3

 
256.1

Income (loss) from discontinued operations before income taxes (1)
39.7

 
37.5

 
75.2

 
76.8

Provision for income taxes (2)
13.5

 
11.5

 
40.2

 
22.0

Total discontinued operations of FMC Health and Nutrition, net of income taxes, before divestiture related costs and adjustments (3)
$
26.2

 
$
26.0

 
$
35.0

 
$
54.8

Divestiture related costs of discontinued operations of FMC Health and Nutrition, net of income taxes
(3.3
)
 

 
(9.5
)
 

Adjustment to FMC Health and Nutrition Omega-3 net assets held for sale, net of income taxes (4)
13.8

 

 
(150.9
)
 

Discontinued operations of FMC Health and Nutrition, net of income taxes
36.7

 
26.0

 
(125.4
)
 
54.8

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
$
36.6

 
$
26.0

 
$
(125.4
)
 
$
54.8

____________________
(1)
For the three months ended June 30, 2017 and 2016, amounts include $5.4 million and $4.8 million of allocated interest expense and $1.3 million and $3.2 million of restructuring and other charges (income), respectively. For the six months ended June 30, 2017 and 2016, amounts include $10.4 million and $9.8 million of allocated interest expense, $3.1 million and $6.1 million of restructuring and other charges (income), and $3.9 million and zero 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 FMC Health and Nutrition subsidiaries held for sale for the six months ended June 30, 2017. Refer to Note 15 for more information.
(3)
In accordance with US GAAP, effective March 2017 we stopped amortizing and depreciating all assets classified as held for sale.
(4)
Represents the impairment charge of approximately $171 million ($151 million, net of tax) associated with the disposal activities of the Omega-3 business to write down the carrying value to its fair value.


17


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

The following table presents the major classes of assets and liabilities of FMC Health and Nutrition:
(in Millions)
June 30, 2017
 
December 31, 2016
Assets
 
 
 
Current assets of discontinued operations held for sale (primarily trade receivables and inventories)
$
424.9

 
$
381.5

Property, plant & equipment (1)
481.4

 
464.0

Goodwill (1)
300.3

 
278.8

Other intangibles, net (1)
77.3

 
73.5

Other non-current assets (1) (3)
9.6

 
19.3

Total assets of discontinued operations held for sale (2)
$
1,293.5

 
$
1,217.1

Liabilities
 
 
 
Current liabilities of discontinued operations held for sale
(90.4
)
 
(59.0
)
Noncurrent liabilities of discontinued operations held for sale (1) (3)
(49.2
)
 
(67.7
)
Total liabilities of discontinued operations held for sale (2)
(139.6
)
 
(126.7
)
Total net assets before adjustment to Omega-3 assets held for sale
$
1,153.9

 
$
1,090.4

Adjustment to Omega-3 assets held for sale
(170.9
)
 

Total net assets
$
983.0

 
$
1,090.4

____________________
(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.
(2)
Presented as "Current assets / liabilities of discontinued operations held for sale" on the condensed consolidated balance sheet as of June 30, 2017.
(3)
Amounts related to uncertain tax positions associated with FMC Health and Nutrition of $13 million, net were reclassified to noncurrent assets / long-term liabilities of discontinued operations held for sale on the condensed consolidated balance sheet as of December 31, 2016 within this Form 10-Q.

Discontinued operations include the results of the FMC Health and Nutrition segment 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 June 30
 
Six Months Ended June 30
2017
 
2016
 
2017
 
2016
Adjustment for workers’ compensation, product liability, other postretirement benefits and other, net of income tax benefit (expense) of ($1.7) and ($0.4) for the three and six months ended June 30, 2017 and ($0.5) and $0.2 for the three and six months ended 2016, respectively (1)
$
2.1

 
$
0.3

 
$
1.7

 
$
(0.1
)
Provision for environmental liabilities, net of recoveries, net of income tax benefit (expense) of $3.5 and $4.5 for the three and six months ended June 30, 2017 and $1.2 and $2.5 for the three and six months ended 2016, respectively (2)
(7.9
)
 
(1.9
)
 
(10.7
)
 
(4.8
)
Provision for legal reserves and expenses, net of recoveries, net of income tax benefit (expense) of $2.3 and $4.2 for the three and six months ended June 30, 2017 and $2.4 and $4.1 for the three and six months ended 2016, respectively
(4.3
)
 
(4.2
)
 
(7.8
)
 
(7.0
)
Discontinued operations of FMC Health and Nutrition, net of income tax benefit (expense) of ($12.5) and ($17.6) for the three and six months ended June 30, 2017 and ($11.5) and ($22.0) for the three and six months ended 2016, respectively
36.7

 
26.0

 
(125.4
)
 
54.8

Discontinued operations, net of income taxes
$
26.6

 
$
20.2

 
$
(142.2
)
 
$
42.9

____________________
(1)
See a roll forward of our restructuring reserves in Note 8.

18


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

(2)
See a roll forward of our environmental reserves as well as discussion on significant environmental issues that occurred during 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)
21.2

 

 
21.2

(Spending)/recoveries
(27.3
)
 

 
(27.3
)
Foreign currency translation adjustments
3.9

 

 
3.9

Net change
(2.2
)
 

 
(2.2
)
Total environmental reserves at June 30, 2017
$
375.9

 
$
(11.4
)
 
$
364.5

 
 
 
 
 
 
Environmental reserves, current (1)
74.0

 
(1.0
)
 
73.0

Environmental reserves, long-term (2)
301.9

 
(10.4
)
 
291.5

Total environmental reserves at June 30, 2017
$
375.9

 
$
(11.4
)
 
$
364.5

____________________
(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 June 30, 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 including long-term receivables, net" in the condensed consolidated balance sheets.
(in Millions)
12/31/2016
 
Increase in Recoveries
 
Cash Received
 
6/30/2017
Environmental recoveries
$
27.2

 
0.4

 
(1.3
)
 
$
26.3


19


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


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 June 30
 
Six Months Ended June 30
(in Millions)
2017
 
2016
 
2017
 
2016
Environmental provisions, net - recorded to liabilities (1)
$
15.1

 
$
5.6

 
$
21.2

 
$
18.2

Environmental provisions, net - recorded to assets (2)
(0.4
)
 

 
(0.4
)
 
(1.8
)
Environmental provision, net
$
14.7

 
$
5.6

 
$
20.8

 
$
16.4

 
 
 
 
 
 
 
 
Continuing operations (3)
3.3

 
2.5

 
5.6

 
9.1

Discontinued operations (4)
11.4

 
3.1

 
15.2

 
7.3

Environmental provision, net
$
14.7

 
$
5.6

 
$
20.8

 
$
16.4

____________________
(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 the Environmental Protection Agency's failure to perform its non-discretionary duties under the 1991 Administrative Order on Consent ("AOC"). Simultaneously, FMC served the EPA with a 60-day notice letter, which is a procedural precursor to filing the citizen’s suit complaint.
On June 2, 2017, the New York State Department of Environmental Conservation ("NYSDEC") filed its appellate brief. Subsequently on June 8, 2017, FMC filed a motion to strike portions of NYSDEC's brief that were items outside the record on appeal. NYSDEC responded to the motion to strike on June 19, 2017, and we are awaiting a decision from the court on the motion. On July 19, 2017 we submitted our responsive appellate brief. NYSDEC's reply is due August 4, 2017. Oral argument is anticipated to occur this fall.
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.

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. There were no potential common shares excluded from Diluted EPS for the three months ended June 30, 2017. For the six months ended June 30, 2017, there were 0.8 million potential common shares excluded from Diluted EPS. There were 1.3 million and 1.8 million potential common shares excluded from Diluted EPS for the three and six months ended June 30, 2016, respectively.

20


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 June 30
 
Six Months Ended June 30
2017
 
2016
 
2017
 
2016
Earnings (loss) attributable to FMC stockholders:
 
 
 
 
 
 
 
Continuing operations, net of income taxes
$
48.2

 
$
45.0

 
$
92.7

 
$
70.6

Discontinued operations, net of income taxes
26.5

 
20.2

 
(142.2
)
 
42.9

Net income (loss) attributable to FMC stockholders
$
74.7

 
$
65.2

 
$
(49.5
)
 
$
113.5

Less: Distributed and undistributed earnings allocable to restricted award holders
(0.2
)
 
(0.1
)
 
(0.4
)
 
(0.2
)
Net income (loss) allocable to common stockholders
$
74.5

 
$
65.1

 
$
(49.9
)
 
$
113.3

 
 
 
 
 
 
 
 
Basic earnings (loss) per common share attributable to FMC stockholders:
 
 
 
 
 
 
 
Continuing operations
$
0.36

 
$
0.34

 
$
0.69

 
$
0.52

Discontinued operations
0.20

 
0.15

 
(1.06
)
 
0.32

Net income (loss) attributable to FMC stockholders
$
0.56

 
$
0.49

 
$
(0.37
)
 
$
0.84

 
 
 
 
 
 
 
 
Diluted earnings (loss) per common share attributable to FMC stockholders:
 
 
 
 
 
 
 
Continuing operations
$
0.36

 
$
0.34

 
$
0.69

 
$
0.52

Discontinued operations
0.20

 
0.15

 
(1.06
)
 
0.32

Net income (loss) attributable to FMC stockholders
$
0.56

 
$
0.49

 
$
(0.37
)
 
$
0.84

 
 
 
 
 
 
 
 
Shares (in thousands):
 
 
 
 
 
 
 
Weighted average number of shares of common stock outstanding - Basic
134,237

 
133,929

 
134,095

 
133,865

Weighted average additional shares assuming conversion of potential common shares
1,366

 
647

 
1,233

 
570

Shares – diluted basis
135,603

 
134,576

 
135,328

 
134,435



21


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)
(49.5
)
 
1.0

 
(48.5
)
Stock compensation plans
25.4

 

 
25.4

Shares for benefit plan trust
(0.1
)
 

 
(0.1
)
Net pension and other benefit actuarial gains (losses) and prior service costs, net of income tax (1)
10.4

 

 
10.4

Net hedging gains (losses) and other, net of income tax (1)
(1.7
)
 

 
(1.7
)
Foreign currency translation adjustments (1)
116.3

 
0.3

 
116.6

Dividends ($0.165 per share)
(44.3
)
 

 
(44.3
)
Repurchases of common stock
(1.5
)
 

 
(1.5
)
Transactions with noncontrolling interests (2)
(0.8
)
 
(21.8
)
 
(22.6
)
Balance at June 30, 2017
$
2,011.9

 
$
14.8

 
$
2,026.7

____________________
(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)
116.3

 
(1.5
)
 
2.6

 
117.4

Amounts reclassified from accumulated other comprehensive income (loss)

 
(0.2
)
 
7.8

 
7.6

Accumulated other comprehensive income (loss), net of tax at June 30, 2017
$
(77.7
)
 
$
5.4

 
$
(281.1
)
 
$
(353.4
)
(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)
32.2

 
0.7

 

 
32.9

Amounts reclassified from accumulated other comprehensive income (loss)

 
4.1

 
13.4

 
17.5

Accumulated other comprehensive income (loss), net of tax at June 30, 2016
$
(115.1
)
 
$
(1.4
)
 
$
(290.4
)
 
$
(406.9
)
____________________
(1)     See Note 16 for more information.

22


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

(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 June 30
 
Six Months Ended June 30
 
 
(in Millions)