10-K 1 fmc201410k.htm FORM 10-K FMC 2014 10K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________________________________________
 FORM 10-K
_______________________________________________________________________
X
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2014
or
 
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from _______ to _______
Commission File Number 1-2376
__________________________________________________________________________
FMC CORPORATION
(Exact name of registrant as specified in its charter)
__________________________________________________________________________ 
Delaware
 
94-0479804
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
 
1735 Market Street
Philadelphia, Pennsylvania
 
19103
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: 215-299-6000
__________________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act: 
Title of each class
 
Name of each exchange on which registered
Common Stock, $0.10 par value
 
New York Stock Exchange
Chicago Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None

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THE AGGREGATE MARKET VALUE OF VOTING STOCK HELD BY NON-AFFILIATES OF THE REGISTRANT AS OF JUNE 30, 2014, THE LAST DAY OF THE REGISTRANT’S SECOND FISCAL QUARTER WAS $9,430,877,574. THE MARKET VALUE OF VOTING STOCK HELD BY NON-AFFILIATES EXCLUDES THE VALUE OF THOSE SHARES HELD BY EXECUTIVE OFFICERS AND DIRECTORS OF THE REGISTRANT.
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER’S CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE
Class
 
December 31, 2014
Common Stock, par value $0.10 per share
 
133,317,671

DOCUMENTS INCORPORATED BY REFERENCE
 
DOCUMENT
 
FORM 10-K REFERENCE
Portions of Proxy Statement for
2015 Annual Meeting of Stockholders
 
Part III




FMC Corporation
2014 Form 10-K Annual Report
Table of Contents
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


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PART I
FMC Corporation (FMC) was incorporated in 1928 under Delaware law and has its principal executive offices at 1735 Market Street, Philadelphia, Pennsylvania 19103. Throughout this Annual Report on Form 10-K, except where otherwise stated or indicated by the context, “FMC”, “We,” “Us,” or “Our” means FMC Corporation and its consolidated subsidiaries and their predecessors. Copies of the annual, quarterly and current reports we file with the Securities and Exchange Commission (“SEC”), and any amendments to those reports, are available on our website at www.FMC.com as soon as practicable after we furnish such materials to the SEC.

ITEM 1.
BUSINESS
General
We are a diversified chemical company serving agricultural, consumer and industrial markets globally with innovative solutions, applications and market-leading products. We operate in three distinct business segments: FMC Agricultural Solutions, FMC Health and Nutrition and FMC Minerals. Our FMC Agricultural Solutions segment develops, markets and sells all three major classes of crop protection chemicals – insecticides, herbicides and fungicides. These products are used in agriculture to enhance crop yield and quality by controlling a broad spectrum of insects, weeds and disease, as well as in non-agricultural markets for pest control. The FMC Health and Nutrition segment focuses on food, pharmaceutical ingredients, nutraceuticals, personal care and similar markets. Our food ingredients are used to enhance texture, color, structure and physical stability. The pharmaceutical additives are used for binding, encapsulation and disintegrant applications. Some of our products are increasingly being used as an active ingredients in nutraceutical and pharmaceutical markets. Our FMC Minerals segment manufactures a wide range of inorganic materials, including soda ash and lithium. Soda ash is utilized in markets such as glass and detergents and lithium is utilized in energy storage, specialty polymers and pharmaceutical synthesis.

Discontinued Operations Presentation - FMC Alkali Chemicals
In September 2014, we announced our decision to pursue the sale of our FMC Alkali Chemicals division (“ACD”). On February 3, 2015, we signed a definitive agreement to sell ACD to a wholly owned subsidiary of Tronox Limited and we expect the sale to be completed in early 2015 subject to customary regulatory approvals and closing conditions.
We have concluded, as a result of the signing of the definitive agreement, that ACD has met the criteria to be an asset held for sale and therefore will be presented as a discontinued operation in accordance with U.S. generally accepted accounting principles ("GAAP") in future reporting periods. In accordance with GAAP, the reclassification of ACD from a continuing operation to a discontinued operation occurs in the period for which the discontinued operation criteria has been met. Therefore as of December 31, 2014, ACD is accounted for as a continuing operation of FMC and throughout this Form 10-K ACD is included in the results of continuing operations.
Beginning with the first quarter 2015 reporting on Form 10-Q, the results of operations of ACD will be reclassified to reflect the business as a discontinued operation for all periods presented and the assets and liabilities of the business will be reclassified as held for sale. Our FMC Minerals segment, which previously included our FMC Alkali Chemicals and FMC Lithium divisions, will be renamed FMC Lithium.
As of the date of this Form 10-K filing (February 27, 2015) since we have concluded that ACD is classified as a discontinued operation, the following discussion within Item 1 pertains to the continuing businesses of FMC excluding ACD.
All other sections within this Form 10-K, unless explicitly stated, include ACD as a continuing operation.

Cheminova A/S
On September 8, 2014, we entered into a definitive Share Purchase Agreement (the "Purchase Agreement") with Auriga Industries A/S, a Denmark Aktieselskab ("Aurgia") and Cheminova A/S, a Denmark Aktieselskab, a wholly owned subsidiary of Auriga ("Cheminova"). Pursuant to the terms and conditions set forth in the Purchase Agreement, we have agreed to acquire all of the outstanding equity of Cheminova from Auriga for an aggregate purchase price of 8.5 billion Danish Krone or approximately $1.4 billion, excluding net debt to be assumed of approximately $0.3 billion (the “Acquisition”) as of December 31, 2014. We expect to complete the Acquisition in early 2015.


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FMC Strategy
Over the last five years, FMC has undergone a portfolio transformation. During the first part of this year, we expect to close on two significant transactions - the divestiture of our Alkali Chemicals division and the acquisition of Cheminova - that will shape FMC into a stronger, focused company serving agriculture, health and nutrition end markets.
We expect to complete the divestiture of our Alkali Chemicals division in early 2015. The proceeds from the sale will be used to fund the acquisition of Cheminova and allow us to maintain a strong balance sheet and financial flexibility. Subsequently, our FMC Lithium division will become a standalone reporting segment. We intend to make investments that will allow FMC Lithium to take advantage of strong underlying growth potential and leading positions in a well-structured industry.
The integration of Cheminova into FMC Agricultural Solutions is an integral part of FMC’s strategy to become a more focused and global agriculture, health and nutrition company with strong competitive positions in fast-growing markets. Our combined company will have broader market access in Europe, Latin America and key Asia-Pacific markets such as India and Australia. Our complementary technologies will lead to improved formulation capabilities and a broader innovation pipeline, resulting in new and differentiated products. The integration strengthens our leadership position in crop protection chemistry and expands our position in a variety of crop segments. The combined company will benefit from deeper regulatory expertise and access to local markets. Following the acquisition, FMC will be positioned among the largest agrochemical companies in world. We will have the scale to operate with greater resources and global reach, but will retain the service, reliability and entrepreneurial spirit of a smaller company.
In Health and Nutrition, we have a portfolio of naturally-derived, functional ingredients that serve health, nutraceutical and nutrition end markets. Our focus is on providing innovative solutions  to our customers by leveraging our application know-how in the nutrition, nutraceutical and pharmaceutical markets as well as differentiating the manufacture and delivery of our market leading products through best in class Quality, Service, Reliability (QSR). With QSR at the forefront, we have recently undertaken an effort to optimize our organizational and manufacturing footprints to improve our cost competitiveness. We will continue to implement Manufacturing Excellence programs, pursue process technology improvements and develop innovative application solutions to drive the highest value for our customers.
We will maintain our commitment to enterprise sustainability, including responsible stewardship. As we grow, we will do so in a responsible way. Safety is and will remain of utmost importance. Meeting and exceeding our customers’ expectations will continue to be a primary focus. We will, as always, conduct our business in an ethical manner.






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Financial Information About Our Business Segments
(Financial Information (in Millions))
See Note 19 "Segment Information" to our consolidated financial statements included in this Form 10-K. Also see below for selected financial information related to our segments.
The following table shows the principal products produced by our three business segments and their raw materials and uses:
 
Segment
Product
Raw Materials
Uses
FMC Agricultural Solutions
Insecticides
Synthetic chemical intermediates
Protection of crops, including cotton, sugarcane, rice, corn, soybeans, cereals, fruits and vegetables from insects and for non-agricultural applications including pest control for home, garden and other specialty markets
 
Herbicides
Synthetic chemical intermediates
Protection of crops, including cotton, sugarcane, rice, corn, soybeans, cereals, fruits and vegetables from weed growth and for non-agricultural applications including turf and roadsides
 
Fungicides
Synthetic and biological chemical intermediates
Protection of crops, including fruits and vegetables from fungal disease
 
 
 
 
FMC Health and Nutrition
Microcrystalline Cellulose
Specialty pulp
Drug dry tablet binder and disintegrant, food ingredient
 
Carrageenan
Refined seaweed
Food ingredient for thickening and stabilizing, pharmaceutical and nutraceutical encapsulates
 
Alginates
Refined seaweed
Food ingredient, pharmaceutical excipient, healthcare and industrial uses
 
Natural Colorants
Plant sources, select insect species
Food, pharmaceutical and cosmetics
 
Pectin
Citrus fruit peels
Food ingredients for texture and stabilizing
 
 
 
 
 
Omega-3 EPA/DHA
Fish oils
Nutraceutical and pharmaceutical uses.
 
 
 
 
FMC Minerals (To be renamed "FMC Lithium")
Lithium
Extracted lithium
Batteries, polymers, pharmaceuticals, greases and lubricants, glass and ceramics and other industrial uses
 
Soda Ash (1)
Mined trona ore
Glass, chemicals, detergents
______________
(1)
Product of FMC Alkali Chemicals division, expected to be sold in early 2015.

With a worldwide manufacturing and distribution infrastructure, we are able to respond rapidly to global customer needs, offset downward economic trends in one region with positive trends in another and match local revenues to local costs to mitigate the impact of currency volatility. The charts below detail our sales and long-lived assets by major geographic region.



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FMC Agricultural Solutions
    
             
Overview
Our FMC Agricultural Solutions segment, which represents approximately 54 percent of our 2014 consolidated revenues, operates in the agrochemicals industry. This segment develops, manufactures and sells a portfolio of crop protection, professional pest control and lawn and garden products.

Products and Markets


FMC Agricultural Solutions' portfolio is comprised of three major pesticide categories: insecticides, herbicides and fungicides. The majority our product line consists of insecticides and herbicides, and we have a small but fast-growing portfolio of fungicides mainly used in high value crop segments. Our insecticides are used to control a wide spectrum of pests, while our herbicide portfolio primarily targets a large variety of difficult-to-control weeds.
In the Latin American region, which includes the large agricultural market of Brazil, we sell directly to large growers through our own sales and marketing organization, and we access the market through independent distributors. In North America, we access the market through several major national and regional distributors and have our own sales and marketing organization in Canada. We currently access key European markets utilizing a distributor model and through joint venture arrangements. Following the Cheminova acquisition, we will use a combination of our existing model alongside Cheminova’s direct market access positions. We access key Asian markets either through local independent distributors or our own sales and marketing organizations. Through these and other alliances, along with our own targeted marketing efforts, access to novel technologies and our innovation initiatives, we expect to maintain and enhance our access in key agricultural and non-crop markets and develop new products that will help us continue to compete effectively.

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Industry Overview
The three principal categories of agricultural and non-crop chemicals are: herbicides, insecticides and fungicides, representing approximately 40 percent, 20 percent and 20 percent of global industry revenue, respectively.
The agrochemicals industry is relatively consolidated. Leading crop protection companies, Syngenta AG, Bayer AG, Monsanto Company, BASF AG, The Dow Chemical Company and E. I. du Pont de Nemours and Company (DuPont), currently represent approximately 65 percent of the industry’s global sales. The next tier of agrochemical producers include FMC, ADAMA Agricultural Solutions, Ltd., Sumitomo Chemical Company Ltd., Nufarm Ltd., Arysta LifeScience Corp., United Phosphorous Ltd. and Cheminova AS. FMC employs various differentiated strategies and competes with unique technologies focusing on certain crops, markets and geographies, as well as supported by a low-cost manufacturing model.

Growth
The acquisition of Cheminova positions FMC among leading agrochemical producers in the world.  Our complementary technologies will lead to improved formulation capabilities and a broader innovation pipeline, resulting in new and differentiated products. We will take advantage of enhanced market access positions and an expanded portfolio to deliver near-term growth. 
We will continue to grow by obtaining new and approved uses for existing product lines and acquiring, accessing, developing, marketing, distributing and/or selling complementary chemistries and related technologies in order to strengthen our product portfolio and our capabilities to effectively service our target markets and customers.
Our growth efforts focus on developing environmentally compatible and sustainable solutions that can effectively increase farmers’ yields and provide cost-effective alternatives to chemistries which may be prone to resistance. We are committed to providing unique, differentiated products to our customers by acquiring and further developing technologies as well as investing in innovation to extend product life cycles. Our external growth efforts include product acquisitions, in-licensing of chemistries and technologies and alliances that bolster our market access, complement our existing product portfolio or provide entry into adjacent spaces. We have entered into a range of development and distribution agreements with other companies that provide us access to new technologies and products which we can subsequently commercialize.
FMC Health and Nutrition

Overview
Our FMC Health and Nutrition segment, which represents 21 percent of our 2014 consolidated revenues, is focused on high-performance food ingredients, pharmaceutical excipients and omega-3 oils. The majority of FMC Health and Nutrition sales are to customers in non-cyclical end markets. We believe our future growth in this segment will continue to be based on the value-added performance capabilities of these products and our research and development capabilities, as well as on the alliances and close working relationships we have developed with key global customers.


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Products and Markets

            
 
Our product offerings into the food markets principally provide texture, structure and physical stability ("TSPS") solutions to thicken and stabilize certain food products. Our formulation ingredients serving the pharmaceutical industry function as binders, disintegrants, suspending agents, and control-release compounds for the production of both solid and liquid pharmaceutical products. The majority of our nutraceutical product offerings are high purity omega-3.
FMC Health and Nutrition is a supplier of microcrystalline cellulose ("MCC"), carrageenan, alginates, natural colorants, pectin and omega-3, all naturally derived ingredients that have high value-added applications in the production of food, pharmaceutical, nutraceutical and other specialty consumer products. MCC, processed from specialty grades of renewable hardwood and softwood pulp, provides binding and disintegrant properties for dry tablets and capsules and has unique functionality that improves the texture and stability of many food products. Carrageenan and alginates, both processed from natural seaweed, are used in a wide variety of food, pharmaceutical and oral care applications. Natural colorants are utilized in specialty products used in the food, beverage, personal care, nutrition and pharmaceutical markets. Pectin, derived from natural citrus fruit peels, is utilized as a hydrocolloid texturant and stabilizer. Omega-3 is sourced from fish oils and utilized in other pharmaceutical and nutraceutical applications.
Industry Overview
Food Ingredients
The industry is dispersed geographically, with the majority of our sales in Europe, North America and Asia. The food ingredients market is comprised of a large number of suppliers due to the broad spectrum of chemistries employed. Segment leadership, global position and investment in technology are key factors to sustaining profitability. The top suppliers of TSPS ingredients include FMC, DuPont, J.M. Huber Corporation, Kerry Group plc and Cargill Incorporated.
Pharmaceutical & Nutraceutical Ingredients
Competitors tend to be grouped by chemistry. Our principal MCC competitors include J. Rettenmaier & Sôhne GmbH, Ming Tai Chemical Co., Ltd., Asahi Kasei Corporation and Blanver Farmoquimica Ltda. While pricing pressure from low-cost producers is a common competitive dynamic, companies look to offset that pressure by providing the most reliable and broadest range of products and services. Our customers are pharmaceutical firms who depend upon reliable therapeutic performance of their drug products.

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FMC Minerals (to be renamed FMC Lithium)
    

Overview
Our FMC Minerals segment, which in 2014 included the results of our FMC Alkali Chemicals division, represents 26 percent of our 2014 consolidated revenues, and during FY2014 participated in the alkali chemicals and lithium products markets.
Products and Markets
 
Effective February 2015, our FMC Minerals segment has been renamed FMC Lithium as the FMC Alkali Chemicals division has been classified as a discontinued operation, as FMC Alkali Chemicals is under contract to be sold, and the sale is expected to be completed in early 2015. The following discussion pertains only to the FMC Lithium business.
Lithium
Lithium is a business based on both inorganic and organic lithium chemistries. While lithium is sold into a variety of end markets, we have focused our strategy on the energy storage, polymer and pharmaceutical markets and other industrial markets.
The electrochemical properties of lithium make it an ideal material for portable energy storage in high performance applications, including smart phones, tablets, laptop computers, military devices and aerospace and other next-generation energy storage technologies. Lithium is a critical element in advanced batteries for use in hybrid electric, plug-in hybrids and all-electric vehicles.
Organolithium products are highly valued in the polymer market as initiators in the production of synthetic rubbers and elastomers. Organolithiums are also sold to fine chemical and pharmaceutical customers who use lithium's unique chemical properties to synthesize high value-added products.

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Industry Overview
FMC Lithium serves a diverse group of markets, from economically sensitive industrial sectors to technology-intensive specialty markets. Our product offerings are primarily inorganic and generally have few cost-effective substitutes. A major growth driver for lithium in the future will be the rate of adoption of electric and hybrid electric batteries in automobiles.
The markets for lithium chemicals are global with significant growth occurring outside the U.S. in Japan, China and South Korea, driven by the development and manufacture of lithium ion batteries. There are three key producers of lithium compounds: FMC, Albemarle Corporation, previously Rockwood Holdings, Inc. and Sociedad Química y Minera de Chile S.A. Spodumene ore is also converted to lithium compounds by a large number of Chinese producers. We expect a few new producers may add primary inorganics capacity to the global lithium supply in the future. FMC and Albemarle Corporation are the primary producers of lithium specialties.
Source and Availability of Raw Materials
Our raw material requirements vary by business segment and primarily include processed chemicals, seaweed, specialty wood pulps, mineral-related natural resources (lithium brines) and energy sources such as gas, coal, oil and electricity. During 2014 we encountered no significant difficulties in obtaining adequate supplies of our raw materials.
Raw materials used by FMC Agricultural Solutions, primarily processed chemicals, are obtained from a variety of suppliers worldwide. Raw materials used by FMC Health and Nutrition include various types of seaweed, specialty pulps, natural colorant raw materials and fish oils that are all sourced on a global basis and purchased from selected global producers/suppliers. We extract ores used in FMC Lithium’s manufacturing processes from lithium brines in Argentina.
Patents
We own a number of U.S. and foreign patents, trademarks and licenses that are cumulatively important to our business. We do not believe that the loss of any individual or combination of related patents, trademarks or licenses would have a material adverse effect on the overall business of FMC. The duration of our patents depends on their respective jurisdictions.
Seasonality
The seasonal nature of the crop protection market and the geographic spread of the FMC Agricultural Solutions business can result in significant variations in quarterly earnings among geographic locations. FMC Agricultural Solutions' products sold into the northern hemisphere (North America, Europe and parts of Asia) serve seasonal agricultural markets from March through September, generally resulting in earnings in the first, second and third quarters. Markets in the southern hemisphere (Latin America and parts of the Asia Pacific region, including Australia) are served from July through February, generally resulting in earnings in the third, fourth and first quarters. The remainder of our business is generally not subject to significant seasonal fluctuations.
Competition
We encounter substantial competition in each of our three business segments. We market our products through our own sales organization and through alliance partners, independent distributors and sales representatives. The number of our principal competitors varies from segment to segment. In general, we compete by providing advanced technology, high product quality and reliability, and quality customer and technical service, and by operating in a cost-efficient manner.
Our FMC Agricultural Solutions segment competes primarily in the global chemical crop protection market for insecticides, herbicides and fungicides. Industry products include crop protection chemicals and, for certain major competitors, genetically engineered (crop biotechnology) products. Competition from generic agrochemical producers is significant as a number of key product patents held industry-wide have expired in the last decade. In general, we compete as an innovator by focusing on product development, including novel formulations, proprietary mixes, and advanced delivery systems and by acquiring or licensing (mostly) proprietary chemistries or technologies that complement our product and geographic focus. We also differentiate ourselves by our global cost-competitiveness via our manufacturing strategies, establishing effective product stewardship programs and developing strategic alliances that strengthen market access in key countries and regions.
Our FMC Health and Nutrition segment has significant positions in markets that include alginate, carrageenan, and microcrystalline cellulose. We compete with both direct suppliers of cellulose and seaweed extract as well as suppliers of other hydrocolloids, which may provide similar functionality in specific applications. In microcrystalline cellulose, competitors are typically smaller than we are, while in seaweed extracts (carrageenan and alginates) and omega-3 fish oils, we compete with other broad-based chemical companies.

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The to-be-renamed FMC Lithium segment sells lithium-based products worldwide. We and our two most significant competitors in lithium extract the element from naturally occurring lithium-rich brines located in the Andes Mountains of Argentina and Chile, which are believed to be the world’s most significant and lowest cost sources of lithium.
Research and Development Expense
We perform research and development in all of our segments with the majority of our efforts focused in the FMC Agricultural Solutions segment. The development efforts in the FMC Agricultural Solutions segment focus on developing environmentally sound solutions and new product formulations that cost-effectively increase farmers’ yields and provide alternatives to existing and new chemistries. Our research and development expenses in the last three years are set forth below:
 
Year Ended December 31,
(in Millions)
2014
 
2013
 
2012
FMC Agricultural Solutions
$
111.8

 
$
100.5

 
$
95.4

FMC Health and Nutrition
10.0

 
10.5

 
9.9

FMC Minerals
6.5

 
6.7

 
6.7

Total
$
128.3

 
$
117.7

 
$
112.0

Environmental Laws and Regulations
A discussion of environmental related factors can be found in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in Note 10 “Environmental Obligations” in the notes to our consolidated financial statements included in this Form 10-K.
Employees
We employ approximately 6,000 people (including approximately 1,000 employees who currently work in our FMC Alkali Chemicals division), with about 2,500 people in our domestic operations and 3,500 people in our foreign operations.
Approximately 10 percent of our U.S.-based (excluding our FMC Alkali Chemicals division) and 35 percent of our foreign-based employees, respectively, are represented by collective bargaining agreements. We have successfully concluded most of our recent contract negotiations without any material work stoppages. In those rare instances where a work stoppage has occurred, there has been no material effect on consolidated sales and earnings. We cannot predict, however, the outcome of future contract negotiations. In 2015, two foreign collective-bargaining agreements will expire. These contracts affect about 20 percent of our foreign-based employees.
Securities and Exchange Commission Filings
Securities and Exchange Commission (SEC) filings are available free of charge on our website, www.fmc.com. Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports are posted as soon as practicable after we furnish such materials to the SEC.
In accordance with New York Stock Exchange (NYSE) rules, on May 22, 2014, we filed a certification signed by our Chief Executive Officer (CEO) that, as of the date of the certification, he was unaware of any violation by FMC of the NYSE’s corporate governance listing standards. We also file with each Form 10-Q and our Form 10-K certifications by the CEO and Chief Financial Officer under sections 302 and 906 of the Sarbanes-Oxley Act of 2002.


ITEM 1A.
RISK FACTORS

Among the factors that could have an impact on our ability to achieve operating results and meet our other goals are:
Industry Risks:
Pricing and volumes in our markets are sensitive to a number of industry specific and global issues and events including:
Capacity utilization - Our businesses are sensitive to industry capacity utilization. As a result, pricing tends to fluctuate when capacity utilization changes occur within our industry.
Competition - All of our segments face competition, which could affect our ability to maintain or raise prices, successfully enter certain markets or retain our market position. Our FMC Agricultural Solutions, competition includes not only generic suppliers of the same pesticidal active ingredient, but also alternative proprietary pesticide chemistries, crop protection technologies that are bred into or applied onto seeds, and intellectual property regarding production or use of

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pesticides. Increased generic presence in agricultural chemical markets has been driven by the number of significant product patents and product data protections that have expired in the last decade, and this trend is expected to continue.
Changes in our customer base - Our customer base has the potential to change, especially when long-term supply contracts are renegotiated. Our FMC Minerals and FMC Health and Nutrition businesses are most sensitive to this risk.
Climatic conditions - Our FMC Agricultural Solutions markets are affected by climatic conditions, which could adversely impact crop pricing and pest infestations. Adverse weather conditions can impact our ability to extract lithium efficiently from our lithium reserves in Argentina. Natural disasters can impact production at our facilities in various parts of the world. The nature of these events makes them difficult to predict.
Changing regulatory environment - Changes in the regulatory environment, particularly in the United States, Brazil, China and the European Union, could adversely impact our ability to continue producing and/or selling certain products in our domestic and foreign markets or could increase the cost of doing so. Our FMC Agricultural Solutions business is most sensitive to this general regulatory risk given the need to obtain and maintain pesticide registrations in every country in which we sell our products. Compliance with changing laws and regulations may involve significant costs or capital expenditures or require changes in business practice that could result in reduced profitability. In the European Union, the regulatory risk specifically includes chemicals regulation known as REACH (Registration, Evaluation, and Authorization of Chemicals), which affects each of our business segments to varying degrees. The fundamental principle behind the REACH regulation is that manufacturers must verify that their chemicals can be marketed safely through a special registration system.
Geographic concentration - Although we have operations in most regions throughout the globe, the majority of our FMC Agricultural Solutions sales outside the United States have principally been to customers in Brazil, Argentina and Mexico. With the acquisition of Cheminova, we will expand the reach of international sales to include Europe and key Asian countries. Accordingly, developments in those parts of the world generally have a more significant effect on our operations than developments in other places. Our operations outside the United States are subject to special risks and restrictions, including: fluctuations in currency values; exchange control regulations; changes in local political or economic conditions; governmental pricing directives; import and trade restrictions; import or export licensing requirements and trade policy; restrictions on the ability to repatriate funds; and other potentially detrimental domestic and foreign governmental practices or policies affecting U.S. companies doing business abroad.
Food and pharmaceutical regulation - Some of our manufacturing processes and facilities, as well as some of our customers, are subjected to regulation by the U.S. Food and Drug Administration (FDA) or similar foreign agencies. Regulatory requirements of the FDA are complex, and any failure to comply with them including as a result of contamination due to acts of sabotage could subject us and/or our customers to fines, injunctions, civil penalties, lawsuits, recall or seizure of products, total or partial suspension of production, denial of government approvals, withdrawal of marketing approvals and criminal prosecution. Any of these actions could adversely impact our net sales, undermine goodwill established with our customers, damage commercial prospects for our products and materially adversely affect our results of operations.
Climate change regulation - Changes in the regulation of greenhouse gases, depending on their nature and scope, could subject our manufacturing operations to significant additional costs or limits on operations.
Fluctuations in commodity prices - Our operating results could be significantly affected by the cost of commodities such as raw materials and energy, including natural gas. We may not be able to raise prices or improve productivity sufficiently to offset future increases in commodity pricing. Accordingly, increases in commodity prices may negatively affect our financial results. Where practical, we use hedging strategies to address material commodity price risks, where hedge strategies are available on reasonable terms. We also use raw material supply agreements that contain terms designed to mitigate the risk of short-term changes in commodity prices. However, we are unable to avoid the risk of medium- and long-term increases. Additionally, fluctuations in commodity prices could negatively impact our customers' ability to sell their product at previously forecasted prices resulting in reduced customer liquidity. Inadequate customer liquidity could affect our customers’ abilities to pay for our products and, therefore, affect existing and future sales or our ability to collect on customer receivables.
Supply arrangements - Certain raw materials are critical to our production process. While we have made supply arrangements to meet planned operating requirements, an inability to obtain the critical raw materials or execute under the contract manufacturing arrangements would adversely impact our ability to produce certain products. We increasingly source critical intermediates and finished products from a limited number of suppliers. An inability to obtain these products or execute under our existing contract sourcing arrangements would adversely impact our ability to sell products. In FMC Minerals geological conditions can affect production of raw materials.
Economic and political change - Our business could be adversely affected by economic and political changes in the markets where we compete including: inflation rates, recessions, trade restrictions, foreign ownership restrictions and

13


economic embargoes imposed by the United States or any of the foreign countries in which we do business; changes in laws, taxation, and regulations and the interpretation and application of these laws, taxes, and regulations; restrictions imposed by foreign governments through exchange controls or taxation policy; nationalization or expropriation of property, undeveloped property rights, and legal systems or political instability; other governmental actions; and other external factors over which we have no control. Economic and political conditions within foreign jurisdictions or strained relations between countries can cause fluctuations in demand, price volatility, supply disruptions, or loss of property. In Argentina, continued inflation and tightening of foreign exchange controls along with deteriorating economic and financial conditions could adversely affect our business.
Operational Risks:
Market access risk - Our results may be affected by changes in distribution channels, which could impact our ability to access the market. In certain FMC Agricultural Solutions segments, we access the market through joint ventures in which we do not have majority control. Where we do not have a strong product portfolio or market access relationships, we may be vulnerable to changes in the distribution model or influence of competitors with stronger product portfolios.
Business disruptions - Although historically, we have engaged in contract manufacturing and have not owned and operated its own manufacturing facilities, Cheminova (upon acquisition) owns and operates large-scale manufacturing facilities in Denmark and India. After the Cheminova acquisition is completed, our operating results will be dependent on the continued operation of its various production facilities and the ability to manufacture products on schedule. Interruptions at these facilities may materially reduce the productivity and profitability of a particular manufacturing facility, or our business as a whole, during and after the period of such operational difficulties. Although we take precautions to enhance the safety of our operations and minimize the risk of disruptions, our operations are subject to hazards inherent in chemical manufacturing and the related storage and transportation of raw materials, products and wastes. These potential hazards include, explosions, fires, severe weather and natural disasters, mechanical failure, unscheduled downtimes, supplier disruptions, labor shortages or other labor difficulties, information technology systems outages, disruption in our supply chain or manufacturing and distribution operations, transportation interruptions, chemical spills, discharges or releases of toxic or hazardous substances or gases, shipment of incorrect or off-specification product to customers, storage tank leaks, other environmental risks, or other sudden disruption in business operations beyond our control as a result of events such as acts of sabotage, terrorism or war, civil or political unrest, natural disasters, pandemic situations and large scale power outages. Some of these hazards may cause severe damage to or destruction of property and equipment or personal injury and loss of life and may result in suspension of operations or the shutdown of affected facilities.
Our manufacturing operations and those of our key contract manufacturers inherently entail hazards that require continuous oversight and control, such as leaks, ruptures, fire, explosions, chemical spills, discharges or releases of toxic or hazardous substances or gases, other environmental risks, mechanical failure or other hazards beyond our control such as acts of sabotage, terrorism or war, civil or political unrest, natural disasters, pandemic situations, large scale power outages or vehicle accidents. If operational risks materialize, they could result in loss of life, damage to the environment, or loss of production, all of which could negatively impact our ongoing operations, reputation, financial results, and cash flow.
Information technology security risks - As with all Enterprise Information systems, our information technology systems could be penetrated by outside parties intent on extracting information, corrupting information, or disrupting business processes. Our systems have in the past been, and likely will in the future be, subject to unauthorized access attempts. Unauthorized access could disrupt our business operations and could result in failures or interruptions in our computer systems and in the loss of assets and could have a material adverse effect on our business, financial condition or results of operations. In addition, breaches of our security measures or the accidental loss, inadvertent disclosure, or unapproved dissemination of proprietary information or sensitive or confidential information about us, our employees, our vendors, or our customers, could result in litigation and potential liability for us, damage our reputation, or otherwise harm our business, financial condition, or results of operations.
Capital-intensive business - With our impending acquisition of Cheminova, our business will be more capital intensive than it has been historically. We rely on cash generated from operations and external financing to fund our growth and ongoing capital needs. Limitations on access to external financing could adversely affect our operating results. Moreover, interest payments, dividends, the expansion of our business and pursuit of other business opportunities may require significant amounts of capital. We believe that our cash from operations and available borrowings under our revolving credit facility will be sufficient to meet these needs in the foreseeable future. However, if we need external financing, our access to credit markets and the cost of new capital will be dependent upon the state of the capital markets generally and the market participants’ assessment of the adequacy of our creditworthiness. There can be no assurances that we would be able to obtain equity or debt financing on acceptable terms, and it is possible that the cost of any financings could increase significantly, thereby increasing our expenses and decreasing our net income. If we are unable to generate sufficient cash flow or obtain adequate external financing, including as a result of significant disruptions in the global

14


credit markets, we could be forced to restrict our operations and growth opportunities, adversely affecting our operating results.
We may use our $1.5 billion revolving credit facility to provide for our cash needs, including supporting our commercial paper program. As of December 31, 2014, we had approximately $924 million of available credit capacity, after considering utilization for letters of credit and support for our commercial paper program. In the event of a default under our credit agreements or any of our senior notes, we could be required to repay immediately outstanding borrowings, redeem commercial paper notes outstanding, and make cash deposits as collateral for letters of credit that the facility supports, and we may not have the financial resources to do so. A default under any of our credit arrangements could cause a default under other credit agreements and debt instruments. Without waivers from lenders party to those agreements, any such default could have a materially adverse effect on our ability to continue business operations.
Litigation and environmental risks - Current reserves relating to our ongoing litigation and environmental liabilities may ultimately prove to be inadequate.
Hazardous materials - We manufacture and transport certain materials that are inherently hazardous due to their toxic or volatile nature. While we take precautions to handle and transport these materials in a safe manner, if they are mishandled or released into the environment, they could cause property damage or personal injury claims against us.
Environmental Compliance - We are subject to extensive federal, state, local, and foreign environmental and safety laws. regulations, directives, rules and ordinances concerning, among other things, emissions in the air, discharges to land and water, and the generation, handling, treatment, disposal and remediation of hazardous waste and other materials. We may face liability arising out of the normal course of business, including alleged personal injury or property damage due to exposure to chemicals or other hazardous substances at our current or former facilities or chemicals that we manufacture, handle or own. We take our environmental responsibilities very seriously, but there is a risk of environmental impact inherent in its manufacturing operations and transportation of chemicals. Any substantial liability for environmental damage could have a material adverse effect on our financial condition, results of operations and cash flows.
Inability to attract and retain key employees - The inability to recruit and retain key personnel or the unexpected loss of key personnel may adversely affect our operations. In addition, our future success depends in part on our ability to identify and develop talent to succeed senior management.
Technology Risks:
Our ability to compete successfully depends in part upon our ability to maintain a superior technological capability and to continue to identify, develop and commercialize new and innovative, high value-added products for existing and future customers.
Failure to continue to make process improvements to reduce costs could impede our competitive position.
Portfolio Management Risks:
We expect to complete the acquisition of Cheminova and the divestiture of our FMC Alkali Chemicals division in early 2015. The majority of our expected proceeds from the sale of the FMC Alkali Chemicals division will be used to settle a portion of the borrowings that will be used to complete the acquisition of Cheminova. Any significant delay in the sale of our Alkali Chemicals division or an inability to complete the sale of our Alkali Chemicals division could materially and adversely affect our financial results, as a result of the acquisition borrowings remaining outstanding longer than expected. The expected sale of the Alkali Chemicals division is subject to various conditions, complex in nature and may be affected by unanticipated developments or changes in market conditions. Completion of the divestment of our FMC Alkali Chemicals division will be contingent upon customary closing conditions, including receipt of regulatory approvals.
We continuously review our portfolio which includes the evaluation of potential business acquisitions that may strategically fit our business and strategic growth initiatives. If we are unable to successfully integrate and develop our acquired businesses, we could fail to achieve anticipated synergies which would include expected cost savings and revenue growth. Failure to achieve these anticipated synergies, could materially and adversely affect our financial results. In addition to strategic acquisitions we evaluate the diversity of our diverse portfolio in light of our objectives and alignment with its growth strategy. As part of this evaluation we may not be successful in separating underperforming or non-strategic assets and gains or losses on the divestiture of, or lost operating income from, such assets may affect the company’s earnings. Moreover, we may incur asset impairment charges related to acquisitions or divestitures that reduce its earnings.
In particular, if we are unable to successfully integrate and develop Cheminova as planned, after the acquisition has been completed, could result in our inability to achieve the synergies we have projected and could thereby cause our future results of operations to be materially and adversely worse than expected. Part of the synergies we expect to generate is the improvement of the cost-efficiency of Cheminova’s business operations. Another is to reduce the mix of Cheminova’s sales from generic, lower margin products to more differentiated and higher margin products. Yet another will be the

15


favorable rationalization of the different distribution channels used by FMC and Cheminova in overlapping European markets. There can be no assurances that we will be successful in achieving these planned synergies.
Financial Risks:
Deterioration in the global economy and worldwide credit and foreign exchange markets could adversely affect our business. A worsening of global or regional economic conditions or financial markets could adversely affect our customers' ability to meet the terms of sale or our suppliers' ability to perform all their commitments to us. A slowdown in economic growth in our international markets, particularly Latin American regions, or a deterioration of credit or foreign exchange markets could adversely affect customers, suppliers and our overall business there. Customers in weakened economies may be unable to purchase our products, or it could become more expensive for them to purchase imported products in their local currency, or sell their commodity at prevailing international prices, and we may be unable to collect receivables from such customers.
We are an international company and face foreign exchange rate risks in the normal course of our business. We are particularly sensitive to the euro, the Brazilian real and the Chinese yuan. To a lesser extent, we are sensitive to the Mexican peso, the Argentine peso, the British pound sterling and several Asian currencies, including the Japanese yen. Our acquisition of Cheminova will significantly expand our operations and sales in foreign countries and correspondingly increase our exposure to foreign exchange risks.
Our effective tax rate is favorably impacted by the fact that a portion of our earnings are taxed at more favorable rates in some jurisdictions outside the United States. Changes in tax laws or in their application with respect to matters such as transfer pricing, dividends from subsidiaries or restriction in tax relief allowed on intercompany debt could increase our effective tax rate and adversely affect our financial results.
We have significant investments in long-lived assets and continually review the carrying value of these assets for recoverability in light of changing market conditions and alternative product sourcing opportunities.
Obligations related to our pension and postretirement plans reflect certain assumptions. To the extent our plans' actual experience differs from these assumptions, our costs and funding obligations could increase or decrease significantly.


ITEM 1B.
UNRESOLVED STAFF COMMENTS

None.

ITEM 2.
PROPERTIES
FMC leases executive offices in Philadelphia, Pennsylvania and operates 30 manufacturing facilities and mines in 19 countries. Our major research and development facilities are in Ewing, New Jersey and Shanghai, China.
We have long-term mineral rights to the Salar del Hombre Muerto lithium reserves in Argentina. Our FMC Lithium division requires the lithium brine that is mined from these reserves, without which other sources of raw materials would have to be obtained.
We believe our facilities are in good operating conditions. The number and location of our owned or leased production properties for continuing operations are:
 
United
States
 
Latin
America
&
Canada
 
Western
Europe
 
Asia-
Pacific
 
Total
FMC Agricultural Solutions
2
 
1
 
1
 
3
 
7
FMC Health and Nutrition
2
 
1
 
8
 
4
 
15
FMC Minerals
2
 
2
 
1
 
3
 
8
Total
6
 
4
 
10
 
10
 
30

ITEM 3.
LEGAL PROCEEDINGS

Like hundreds of other industrial companies, we have been named as one of many defendants in asbestos-related personal injury litigation. Most of these cases allege personal injury or death resulting from exposure to asbestos in premises of FMC or to asbestos-containing components installed in machinery or equipment manufactured or sold by discontinued operations. The machinery and equipment businesses we owned or operated did not fabricate the asbestos-containing component parts at issue in the litigation,

16


and to this day, neither the U.S. Occupational Safety and Health Administration nor the Environmental Protection Agency has banned the use of these components. Further, the asbestos-containing parts for this machinery and equipment were accessible only at the time of infrequent repair and maintenance. A few jurisdictions have permitted claims to proceed against equipment manufacturers relating to insulation installed by other companies on such machinery and equipment. We believe that, overall, the claims against FMC are without merit.
As of December 31, 2014, there were approximately 11,000 premises and product asbestos claims pending against FMC in several jurisdictions. Since the 1980s, approximately 106,000 asbestos claims against FMC have been discharged, the overwhelming majority of which have been dismissed without any payment to the claimant. Since the 1980s, settlements by us with claimants have totaled approximately $63.6 million.
We intend to continue managing these asbestos-related cases in accordance with our historical experience. We have established a reserve for this litigation within our discontinued operations and believe that any exposure of a loss in excess of the established reserve cannot be reasonably estimated. Our experience has been that the overall trends in terms of the rate of filing of asbestos-related claims with respect to all potential defendants has changed over time, and that filing rates as to us in particular have varied significantly over the last several years. We are a peripheral defendant - that is, we have never manufactured asbestos or asbestos-containing components. As a result, claim filing rates against us have yet to form a predictable pattern, and we are unable to project a reasonably accurate future filing rate and thus, we are presently unable to reasonably estimate our asbestos liability with respect to claims that may be filed in the future.
See Note 1 “Principal Accounting Policies and Related Financial Information—Environmental Obligations,” Note 10 “Environmental Obligations” and Note 18 “Guarantees, Commitments and Contingencies” in the notes to our consolidated financial statements included in this Form 10-K, the content of which are incorporated by reference to this Item 3.

ITEM 4.
MINE SAFETY DISCLOSURES

Information regarding mine safety and other regulatory actions at our mine in Green River, Wyoming is included in Exhibit 95 to this Form 10-K.

ITEM 4A.
EXECUTIVE OFFICERS OF THE REGISTRANT

Information concerning directors, appearing under the caption "III. Board of Directors" in our Proxy Statement to be filed with the SEC in connection with the Annual Meeting of Stockholders scheduled to be held on April 28, 2015 (the "Proxy Statement"), information concerning the Audit Committee, appearing under the caption "IV. Information About the Board of Directors and Corporate Governance-Committees and Independence of Directors-Audit Committee" in the Proxy Statement, information concerning the Code of Ethics, appearing under the caption "IV. Information About the Board of Directors and Corporate Governance—Corporate Governance-Code of Ethics and Business Conduct Policy" in the Proxy Statement, and information about compliance with Section 16(a) of the Securities Exchange Act of 1934 appearing under the caption "VII. Other Matters—Section 16(a) Beneficial Ownership Reporting Compliance" in the Proxy Statement, is incorporated herein by reference in response to this Item 4A.


17


The executive officers of FMC Corporation, the offices they currently hold, their business experience since at least January 1, 2010 and their ages as of December 31, 2014, are as follows:

Name
 
Age on
12/31/2014
 
Office, year of election and other
information
Pierre R. Brondeau
 
57
 
President, Chief Executive Officer and Chairman of the Board (10-present); President and Chief Executive Officer of Dow Advanced Materials, a specialty materials company (08-09); President and Chief Operating Officer of Rohm and Haas Company, a predecessor of Dow Advanced Materials (07-08); Executive Vice President and Business Group Executive, Electronic Materials and Specialty Materials (03-07); Vice President and Business Group Executive, Electronic Materials, (03); President and Chief Executive Officer, Rohm and Haas Electronic Materials LLC and Regional Director, Europe, (03); Board Member, T.E. Connectivity Electronics (07 – Present), Marathon Oil Company (10-present)
Paul W. Graves
 
43
 
Executive Vice President and Chief Financial Officer (12-present); Managing Director, Goldman Sachs Group (00-12)
Andrea E. Utecht
 
66
 
Executive Vice President, General Counsel and Secretary (01-present); Senior Vice President, Secretary and General Counsel, Atofina Chemicals, Inc. (96-01)
Eric W. Norris
 
48
 
Vice President, Global Business Director, FMC Health and Nutrition (14-present); Vice President, Global Business Director, FMC Lithium (12-14); Global Commercial Director, FMC Lithium (09-12)
Edward T. Flynn
 
56
 
President, FMC Minerals (12-present); General Manager Alkali Chemicals Division, President FMC Wyoming Corp. (02-12); Chief Information Officer (00-02)
Mark A. Douglas
 
52
 
President, FMC Agricultural Solutions (12-present); President, Industrial Chemicals Group (11-12); Vice President, Global Operations and International Development (10-11); Vice President, President Asia, Dow Advanced Materials (09-10); Corporate Vice President, President Asia, Rohm and Haas Company (07-09); Board Member, Quaker Chemical (13-present)
Thomas C. Deas, Jr.
 
64
 
Vice President and Treasurer (01-present); Vice President, Treasurer and CFO, Applied Tech Products Corp. (98-01); Vice President, Treasurer and CFO, Airgas, Inc. (97-98); Vice President, Treasurer and CFO, Maritrans, Inc. (96-97); Vice President—Treasury and Assistant Treasurer, Scott Paper Company (88-96)
All officers are elected to hold office for one year or until their successors are elected and qualified. No family relationships exist among any of the above-listed officers, and there are no arrangements or understandings between any of the above-listed officers and any other person pursuant to which they serve as an officer. The above-listed officers have not been involved in any legal proceedings during the past ten years of a nature for which the SEC requires disclosure that are material to an evaluation of the ability or integrity of any such officer.

PART II
 
ITEM 5.
MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDERS MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
FMC common stock of $0.10 par value is traded on the New York Stock Exchange and the Chicago Stock Exchange (Symbol: FMC). There were 3,145 registered common stockholders as of December 31, 2014. Presented below are the 2014 and 2013 quarterly summaries of the high and low prices of the FMC common stock.
 
 
2014
 
2013
Common stock prices:
First
Quarter
 
Second
Quarter
 
Third
Quarter
 
Fourth
Quarter
 
First
Quarter
 
Second
Quarter
 
Third
Quarter
 
Fourth
Quarter
High
$
83.94

 
$
79.14

 
$
71.53

 
$
59.67

 
$
63.15

 
$
64.96

 
$
72.35

 
$
75.68

Low
$
67.31

 
$
69.50

 
$
56.98

 
$
51.04

 
$
56.26

 
$
55.18

 
$
60.57

 
$
70.01

Our Board of Directors has declared regular quarterly dividends since 2006; however, any future payment of dividends will depend on our financial condition, results of operations, conditions in the financial markets and such other factors as are deemed relevant by our Board of Directors. Total cash dividends of $78.1 million, $73.6 million and $47.8 million were paid in 2014, 2013 and 2012, respectively.
FMC’s annual meeting of stockholders will be held at 2:00 p.m. on Tuesday, April 28, 2015, at The Top of the Tower, 1717 Arch Street, 50th Floor, Philadelphia, Pennsylvania. Notice of the meeting, together with proxy materials, will be mailed approximately 30 days prior to the meeting to stockholders of record as of March 3, 2015.
 

18



Transfer Agent and Registrar of Stock:
Wells Fargo Bank, N.A.
 
 
Shareowner Services
 
 
1110 Centre Pointe Curve, Suite 101
or
P.O. Box 64874
Mendota Heights, MN 55120-4100
St. Paul, MN 55164-0856
 
 
 
Phone: 1-800-401-1957
 
 
(651-450-4064 local and outside the U.S.)
 
 
www.wellsfargo.com/shareownerservices

Stockholder Return Performance Presentation
The graph that follows shall not be deemed to be incorporated by reference into any filing made by FMC under the Securities Act of 1933 or the Securities Exchange Act of 1934.
The following Stockholder Performance Graph compares the five-year cumulative total return on FMC’s Common Stock for the period from January 1, 2010 to December 31, 2014 with the S&P 500 Index and the S&P 500 Chemicals Index. The comparison assumes $100 was invested on December 31, 2009, in FMC’s Common Stock and in both of the indices, and the reinvestment of all dividends.
 
2009
 
2010
 
2011
 
2012
 
2013
 
2014
FMC Corporation
$
100.00

 
$
144.17

 
$
156.35

 
$
214.16

 
$
278.13

 
$
212.41

S&P 500 Index
$
100.00

 
$
114.82

 
$
117.22

 
$
135.83

 
$
179.36

 
$
203.60

S&P 500 Chemicals Index
$
100.00

 
$
121.44

 
$
119.96

 
$
148.02

 
$
194.55

 
$
215.26


The following table summarizes information with respect to the purchase of our common stock during the three months ended December 31, 2014:

19


ISSUER PURCHASES OF EQUITY SECURITIES
 
 
 
 
 
 
Publicly Announced Program (1)
Period
Total Number
of Shares
Purchased (2)
 
Average
Price Paid
Per  Share
 
Total Number of
Shares Purchased
 
Total Dollar
Amount
Purchased
 
Maximum Dollar  Value of
Shares that May  Yet be
Purchased
October 1-31, 2014

 
$

 

 
$

 
$
250,000,000

November 1-30, 2014
350

 
$
57.19

 

 

 
250,000,000

December 1-31, 2014
5,669

 
$
54.99

 

 

 
250,000,000

Total Q4 2014
6,019

 
$
55.12

 

 
$

 
$
250,000,000

____________________ 
(1)
This repurchase program does not include a specific timetable or price targets and may be suspended or terminated at any time. Shares may be purchased through open market or privately negotiated transactions at the discretion of management based on its evaluation of market conditions and other factors.
(2)
Represents reacquired shares for employees exercises in connection with the vesting and forfeiture of awards under our equity compensation plans.





20


ITEM 6.
SELECTED FINANCIAL DATA
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial and other data presented below for, and as of the end of, each of the years in the five-year period ended December 31, 2014, are derived from our consolidated financial statements. The selected consolidated financial data should be read in conjunction with our consolidated financial statements for the year ended December 31, 2014.
 
 
Year Ended December 31,
(in Millions, except per share data and ratios)
2014
 
2013
 
2012
 
2011
 
2010
Income Statement Data:
 
 
 
 
 
 
 
 
 
Revenue
$
4,037.7

 
$
3,874.8

 
$
3,409.9

 
$
3,036.3

 
$
2,686.9

Income from continuing operations before equity in (earnings) loss of affiliates, interest income and expense and income taxes
545.4

 
659.0

 
639.1

 
587.4

 
492.2

Income from continuing operations before income taxes
485.0

 
615.9

 
597.7

 
553.2

 
457.6

Income from continuing operations
411.5

 
467.3

 
463.2

 
420.3

 
327.0

Discontinued operations, net of income taxes (1)
(89.4
)
 
(159.3
)
 
(27.5
)
 
(38.1
)
 
(142.1
)
Net income
322.1

 
308.0

 
435.7

 
382.2

 
184.9

Less: Net income attributable to noncontrolling interest
14.6

 
14.1

 
19.5

 
16.3

 
12.4

Net income attributable to FMC stockholders
$
307.5

 
$
293.9

 
$
416.2

 
$
365.9

 
$
172.5

Amounts attributable to FMC stockholders:
 
 
 
 
 
 
 
 
 
Continuing operations, net of income taxes
396.9

 
453.2

 
443.7

 
404.0

 
314.6

Discontinued operations, net of income taxes
(89.4
)
 
(159.3
)
 
(27.5
)
 
(38.1
)
 
(142.1
)
Net income
$
307.5

 
$
293.9

 
$
416.2

 
$
365.9

 
$
172.5

Basic earnings (loss) per common share attributable to FMC stockholders:
 
 
 
 
 
 
 
 
 
Continuing operations
$
2.97

 
$
3.34

 
$
3.21

 
$
2.83

 
$
2.17

Discontinued operations
(0.67
)
 
(1.18
)
 
(0.20
)
 
(0.26
)
 
(0.98
)
Net income
$
2.30

 
$
2.16

 
$
3.01

 
$
2.57

 
$
1.19

Diluted earnings (loss) per common share attributable to FMC stockholders:
 
 
 
 
 
 
 
 
 
Continuing operations
$
2.96

 
$
3.33

 
$
3.20

 
$
2.81

 
$
2.15

Discontinued operations
(0.67
)
 
(1.17
)
 
(0.20
)
 
(0.26
)
 
(0.97
)
Net income
$
2.29

 
$
2.16

 
$
3.00

 
$
2.55

 
$
1.18

Balance Sheet Data:
 
 
 
 
 
 
 
 
 
Total assets
$
5,340.5

 
$
5,235.2

 
$
4,373.9

 
$
3,743.5

 
$
3,319.9

Long-term debt
1,155.4

 
1,188.8

 
914.5

 
798.6

 
619.4

Other Data:
 
 
 
 
 
 
 
 
 
Ratio of earnings to fixed charges (2)
7.5x

 
12.5x

 
12.7x

 
12.7x

 
10.7x

Cash dividends declared per share
$
0.600

 
$
0.540

 
$
0.405

 
$
0.300

 
$
0.250

 ____________________
(1)
Discontinued operations, net of income taxes includes our discontinued FMC Peroxygens business and other historical discontinued gains and losses related to adjustments to our estimates of our retained liabilities for environmental exposures, general liability, workers’ compensation, postretirement benefit obligations,legal defense, property maintenance and other costs, losses for the settlement of litigation and gains related to property sales.
(2)
In calculating this ratio, earnings consist of income (loss) from continuing operations before income taxes plus interest expense, net of amortization expense related to debt discounts, fees and expenses, amortization of capitalized interest, interest included in rental expenses (assumed to be one-third of rent) and Equity in (earnings) loss of affiliates. Fixed charges consist of interest expense, amortization of debt discounts, fees and expenses, interest capitalized as part of fixed assets and interest included in rental expenses.


21


FORWARD-LOOKING INFORMATION
Statement under the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995: We and our representatives may from time to time make written or oral statements that are “forward-looking” and provide other than historical information, including statements contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations within, in our other filings with the SEC, or in reports to our stockholders.
In some cases, we have identified forward-looking statements by such words or phrases as “will likely result,” “is confident that,” “expect,” “expects,” “should,” “could,” “may,” “will continue to,” “believe,” “believes,” “anticipates,” “predicts,” “forecasts,” “estimates,” “projects,” “potential,” “intends” or similar expressions identifying “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including the negative of those words and phrases. Such forward-looking statements are based on our current views and assumptions regarding future events, future business conditions and the outlook for the company based on currently available information. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any results, levels of activity, performance or achievements expressed or implied by any forward-looking statement. These factors include, among other things, the risk factors listed in Item 1A of this Form 10-K. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made.


22


ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview
We are a diversified chemical company serving agricultural, consumer and industrial markets globally with innovative solutions, applications and market-leading products. We operate in three distinct business segments: FMC Agricultural Solutions, FMC Health and Nutrition and FMC Minerals. Our FMC Agricultural Solutions segment develops, markets and sells all three major classes of crop protection chemicals – insecticides, herbicides and fungicides. These products are used in agriculture to enhance crop yield and quality by controlling a broad spectrum of insects, weeds and disease, as well as in non-agricultural markets for pest control. The FMC Health and Nutrition segment focuses on food, pharmaceutical ingredients, nutraceuticals, personal care and similar markets. Our food ingredients are used to enhance texture, color, structure and physical stability. The pharmaceutical additives are used for binding, encapsulation and disintegrant applications. Some of our products are increasingly being used as an active ingredients in nutraceutical and pharmaceutical markets. Our FMC Minerals segment manufactures a wide range of inorganic materials, including soda ash and lithium. Soda ash is utilized in markets such as glass and detergents and lithium is utilized in energy storage, specialty polymers and pharmaceutical synthesis.

2014 Highlights
The following are the more significant developments in our businesses during the year ended December 31, 2014:
Revenue of $4,037.7 million in 2014 increased $162.9 million or four percent versus last year. Revenue increases are associated with sales growth in all segments. A more detailed review of revenues by segment are included under the section entitled “Results of Operations”. On a regional basis, sales in Latin America decreased by four percent, sales in North America were up seven percent, sales in Asia were up 14 percent and sales in Europe, Middle East and Africa (EMEA) increased by six percent.
Our gross margin, excluding acquisition/divestiture related charges, of $1,379.2 million increased approximately $34 million or approximately two percent versus last year. Gross margin as a percent of revenues of approximately 34 percent declined one hundred basis points compared to 2013. The increase in gross margin did not result in increased gross margin percent primarily due to unfavorable currency movements and product mix of sales in FMC Agricultural Solutions.
Selling, general and administrative expenses increased 20 percent from $515.8 million to $621.2 million. Selling, general and administrative expenses, excluding non-operating pension and postretirement charges and acquisition/divestiture related charges, of $469.9 million decreased $3.0 million or approximately one percent. Non-operating pension and postretirement charges and acquisition/divestiture related charges are presented in our Adjusted Earnings Non-GAAP financial measurement below under the section titled “Results of Operations”.
Research and Development expenses of $128.3 million increased $10.6 million or nine percent, largely due to spending in FMC Agricultural Solutions to fund investments in earlier stage active ingredient research, biological crop protection development projects and rapid market innovation initiatives.
Adjusted earnings after-tax from continuing operations attributable to FMC stockholders of $541.1 million increased approximately $12.7 million or two percent. See the disclosure of our Adjusted Earnings Non-GAAP financial measurement below under the section titled “Results of Operations”.

23


Other 2014 Highlights
On September 8, 2014, we announced that we will no longer proceed with the planned separation of FMC into two distinct public entities. At that time we announced the acquisition of Cheminova and divestiture of our FMC Alkali Chemicals division.
In October 2014 we purchased the remaining 6.25 percent ownership interest from the last remaining non-controlling interest holder in a legal entity within our FMC Alkali Chemicals division, which increased our ownership from 93.75 percent to 100 percent. We paid $95.7 million to the minority shareholder in 2014.
Also in October 2014, we entered into a $2.0 billion term loan facility for the purposes of funding the acquisition of Cheminova and amended our $1.5 billion revolving credit facility in conjunction with the term loan facility.

2015
During the first part of this year, we expect to close on two significant transactions - the divestiture of our Alkali Chemicals division and the acquisition of Cheminova - that will shape FMC into a stronger, focused company serving agriculture, health and nutrition end markets.
The integration of Cheminova into FMC Agricultural Solutions is an integral part of FMC’s strategy to become a more focused and global agriculture, health and nutrition company with strong competitive positions in fast-growing markets. Our combined company will have broader market access in Europe, Latin America and key Asia-Pacific markets such as India and Australia.
On February 5, 2015 we signed a definitive agreement to sell our FMC Alkali Chemicals division to Tronox Limited. We expect the sale to be completed in early 2015 subject to customary regulatory approvals and closing conditions. The proceeds from the sale will be used to fund the acquisition of Cheminova and allow us to maintain a strong balance sheet and financial flexibility.
Subsequent to the sale of our FMC Alkali Chemicals division, our FMC Lithium division will become a standalone reporting segment. We intend to make investments that will allow the business to take advantage of strong underlying growth potential and leading positions in a well-structured industry.

24


Results of Operations—2014, 2013 and 2012
Overview
The following presents a reconciliation of our segment operating profit to the net income attributable to FMC stockholders as seen through the eyes of our management. For management purposes, we report the operating performance of each of our business segments based on earnings before interest and income taxes excluding corporate expenses, other income (expense), net and corporate special income/(charges).
SEGMENT RESULTS RECONCILIATION
(in Millions)
Year Ended December 31,
2014
 
2013
 
2012
Revenue
 
 
 
 
 
FMC Agricultural Solutions
$
2,173.8

 
$
2,145.7

 
$
1,763.8

FMC Health and Nutrition
828.2

 
762.0

 
680.8

FMC Minerals
1,035.7

 
970.0

 
966.2

Eliminations

 
(2.9
)
 
(0.9
)
Total
$
4,037.7

 
$
3,874.8

 
$
3,409.9

Income (loss) from continuing operations before income taxes
 
 
 
 
 
FMC Agricultural Solutions
$
497.8

 
$
539.0

 
$
454.0

FMC Health and Nutrition
187.9

 
169.5

 
161.6

FMC Minerals
166.7

 
128.3

 
171.4

Eliminations

 

 
(0.4
)
Segment operating profit
$
852.4

 
$
836.8

 
$
786.6

Corporate and other
(72.3
)
 
(82.7
)
 
(78.6
)
Operating profit before the items listed below
780.1

 
754.1

 
708.0

 
 
 
 
 
 
Interest expense, net
(59.5
)
 
(42.2
)
 
(40.7
)
Corporate special (charges) income:
 
 
 
 
 
Restructuring and other (charges) income (1)
(56.5
)
 
(47.9
)
 
(27.5
)
Non-operating pension and postretirement charges (2)
(10.5
)
 
(38.1
)
 
(34.9
)
Business separation costs (3)
(23.6
)
 

 

Acquisition-related charges (4)
(145.0
)
 
(10.0
)
 
(7.2
)
Provision for income taxes
(73.5
)
 
(148.6
)
 
(134.5
)
Discontinued operations, net of income taxes
(89.4
)
 
(159.3
)
 
(27.5
)
Net income attributable to noncontrolling interests
(14.6
)
 
(14.1
)
 
(19.5
)
Net income attributable to FMC stockholders
$
307.5

 
$
293.9

 
$
416.2

____________________
(1)
See Note 7 to the consolidated financial statements included within this Form 10-K for details of restructuring and other charges (income). Amounts for the years ended 2014, 2013 and 2012 relate to FMC Agricultural Solutions of $(4.5) million, $32.6 million and $8.5 million; FMC Health and Nutrition of $14.1 million, $1.0 million and $0.7 million; FMC Minerals of $0.1 million, $6.4 million and $13.0 million; and Corporate of $46.8 million, $7.9 million and $5.3 million, respectively.
(2)
Our non-operating pension and postretirement costs are defined as those costs related to interest, expected return on plan assets, amortized actuarial gains and losses and the impacts of any plan curtailments or settlements. These costs are primarily related to changes in pension plan assets and liabilities which are tied to financial market performance and we consider these costs to be outside our operational performance. We exclude these non-operating pension and postretirement costs from our segments as we believe that removing them provides a better understanding of the underlying profitability of our businesses, provides increased transparency and clarity in the performance of our retirement plans and enhances period-over-period comparability. We continue to include the service cost and amortization of prior service cost in our operating segments noted above. We believe these elements reflect the current year operating costs to our businesses for the employment benefits provided to active employees.
(3)
Charges are associated with the previously planned separation of our FMC Corporation into two independent public companies. On September 8, 2014, we announced that we would no longer proceed with the planned separation of FMC into two distinct public entities. At that time we announced the acquisition of Cheminova; see Note 3 within these consolidated financial statements included within this Form 10-K for more information. These charges are included within "Business separation costs" on our consolidated income statement. These costs were primarily related to professional fees associated with separation activities within the finance and legal functions through September 8, 2014.

25


(4)
Charges related to the expensing of the inventory fair value step-up resulting from the application of acquisition purchase accounting, legal and professional fees and gains or losses on hedging purchase price associated with the planned or completed acquisitions and costs incurred associated with the divestiture of our FMC Alkali Chemicals division. Amounts represent the following:
 
Twelve Months Ended
 
December 31,
(in Millions)
2014
 
2013
 
2012
Acquisition related charges - Cheminova
 
 
 
 
 
Legal and professional fees (1)
$
32.2

 
$

 
$

Unrealized loss/(gain) on hedging purchase price (1)
99.6

 

 

Acquisition related charges
 
 
 
 
 
Legal and professional fees (1)

 
4.8

 

Inventory fair value step-up amortization (2)
4.2

 
5.2

 
7.2

Divestiture related charges - FMC Alkali Chemicals division
 
 
 
 
 
Legal and professional fees (1)
9.0

 

 

Acquisition/divestiture related charges
$
145.0

 
$
10.0

 
$
7.2

        
(1)
On the consolidated statements of income, these charges are included in “Selling, general and administrative expenses”.
(2)
On the consolidated statements of income, these charges are included in “Costs of sales and services”.
 
ADJUSTED EARNINGS RECONCILIATION

The following chart, which is provided to assist the readers of our financial statements, depicts certain charges (gains) that are excluded by us in the measures we use to evaluate business performance and determine certain performance-based compensation. These items are discussed in detail within the section that follows. Additionally, the chart below discloses our Non-GAAP financial measure “Adjusted after-tax earnings from continuing operations attributable to FMC stockholders” reconciled from the GAAP financial measure “Net income attributable to FMC stockholders”. We believe that this measure provides useful information about our operating results to investors and securities analysts. We also believe that excluding the effect of "Corporate special charges (income)" from operating results and discontinued operations allows management and investors to compare more easily the financial performance of our underlying businesses from period to period. "Corporate special charges (income)" are defined as: restructuring and other income and charges, non-operating pension and postretirement charges, acquisition/divestiture related charges, business separation charges as well as certain tax adjustments, This measure should not be considered as a substitute for net income (loss) or other measures of performance or liquidity reported in accordance with GAAP.
(in Millions)
Years Ended December 31,
2014
 
2013
 
2012
Net income attributable to FMC stockholders (GAAP)
$
307.5

 
$
293.9

 
$
416.2

Corporate special charges (income), pre-tax
235.6

 
96.0

 
69.6

Income tax expense (benefit) on Corporate special charges (income)
(87.5
)
 
(35.3
)
 
(25.1
)
Corporate special charges (income), net of income taxes
148.1

 
60.7

 
44.5

Discontinued operations, net of income taxes
89.4

 
159.3

 
27.5

Tax expenses (benefit) adjustments
(3.9
)
 
14.5

 
(18.1
)
Adjusted after-tax earnings from continuing operations attributable to FMC stockholders (Non-GAAP)
$
541.1

 
$
528.4

 
$
470.1

In the discussion below, please refer to our chart titled "Segment Results Reconciliation" within the Results of Operations section. All comparisons are between the periods unless otherwise noted.
Segment Results
For management purposes, segment operating profit is defined as segment revenue less segment operating expenses (segment operating expenses consist of costs of sales and services, selling, general and administrative expenses ("SG&A") and research and development expenses ("R&D")). We have excluded the following items from segment operating profit: corporate staff expense, interest income and expense associated with corporate debt facilities and investments, income taxes, gains (or losses) on divestitures of businesses, restructuring and other charges (income), non-operating pension and postretirement charges, investment gains and

26


losses, loss on extinguishment of debt, asset impairments, Last-in, First-out (“LIFO”) inventory adjustments, acquisition/divestiture related charges, business separation costs and other income and expense items.
Information about how each of these items relates to our businesses at the segment level and results by segment are discussed below and in Note 19 to our consolidated financial statements included in this Form 10-K.
FMC Agricultural Solutions
 
(in Millions)
Year Ended December 31,
2014
 
2013
 
2012
Revenue
$
2,173.8

 
$
2,145.7

 
$
1,763.8

Operating Profit
497.8

 
539.0

 
454.0

2014 vs. 2013
Revenue of $2,173.8 million increased approximately one percent versus the prior year period due to higher sales in North America, Asia and EMEA offset by a decline in sales in Latin America.
Sales in Latin America of $1,120.7 million decreased five percent due to weak demand conditions in Brazil, particularly in sugarcane and cotton segments, as drought and lower planted area reduced herbicide and insecticide demand.  This was partially offset by growth in other Latin American countries such as Argentina and Mexico as FMC gained market share. Sales in North America of $560.2 million increased 11 percent primarily driven by strong demand for pre-emergent herbicides into soybeans and growth from new product introductions into various crop segments. Revenue in Asia of $343.6 million increased nine percent reflecting sales growth in Australia, Pakistan, Korea and China. Sales in Europe, Middle East and Africa (EMEA) increased seven percent to $149.3 million primarily due to higher herbicide volumes.
FMC Agricultural Solutions' operating profit of $497.8 million decreased approximately eight percent compared to the year-ago period, reflecting relatively flat sales, unfavorable currency impacts, increases to SG&A as well as additional planned R&D investments and changes in product mix. SG&A costs were approximately $2 million higher and R&D costs were approximately $12 million higher than the prior year period with spending on marketing, sales and technology investments.
In 2015, we expect that earnings contributions from the Cheminova acquisition, the continued spread of weed resistance in North and Latin America, and market share gains in Asia and EMEA will drive full-year segment earnings 15 to 30 percent higher than 2014.

2013 vs. 2012
Revenue of $2,145.7 million increased approximately 22 percent versus the prior year period due to sales growth in North America, Latin America and Asia, partially offset by declines in EMEA.
Sales in Latin America of $1,184.7 million increased 23 percent driven by Brazil volume growth in herbicide and insecticide sales for soybeans, including growth from new and recently launched products. Sales in North America of $506.1 million increased 37 percent driven by strong demand for pre-emergent herbicides and at-plant insecticides as well as growth from new product introductions. Revenue in Asia of $315.4 million increased 14 percent reflecting sales growth in China, Indonesia, Australia and a number of other key countries. EMEA declined 12 percent to $139.5 million primarily due to unfavorable weather conditions and lower insecticide sales.
FMC Agricultural Solutions' operating profit of $539.0 million increased approximately 19 percent compared to the year-ago period, reflecting the sales growth described in the preceding paragraph, a favorable geographic mix and selected price increases. Selling, general and administrative costs were approximately $9 million or three percent higher compared to the prior year due to increased spending on growth initiatives and higher people-related costs to support the higher sales. Research and development costs also increased period over period by approximately $5 million due to increased spending associated with various innovation projects.

Certain Regulatory Issues
We intend to defend vigorously all our products in the U.S., EU and other countries as our pesticide products are reviewed in the ordinary course of regulatory programs during 2015 as part of the ongoing cycle of re-registration of our pesticide products around the world.


27



FMC Health and Nutrition

(in Millions)
Year Ended December 31,
2014
 
2013
 
2012
Revenue
$
828.2

 
$
762.0

 
$
680.8

Operating Profit
187.9

 
169.5

 
161.6

2014 vs. 2013
Revenue was $828.2 million, an increase of approximately nine percent versus the prior-year period. Revenue from higher volumes in health markets, including acquisitions completed in 2013, and higher volumes in overall nutrition markets increased sales by approximately six percent and two percent, respectively. Favorable pricing and mix, primarily in nutrition-related products increased sales by one percent.
Segment operating profit of $187.9 million increased by 11 percent versus the prior-year period driven by higher demand for pharmaceutical excipients and texture and stability products in North America. These were slightly offset by increased raw material costs, particularly seaweed, and reduced demand for nutrition products into the Chinese beverage market.
For 2015, full-year segment earnings are expected to increase by mid-single digit percent. Earnings growth is expected to come from moderate demand recovery in the Chinese beverage market, continued demand for pharmaceutical products, particularly excipients, and benefits from operational improvements.

2013 vs. 2012
Revenue was $762.0 million, an increase of approximately 12 percent versus the prior-year period. This increase was due to volume increases of three percent in core product lines, revenue from acquisitions which increased sales by six percent, favorable pricing and foreign currency impacts which increased sales by two and one percent, respectively.
Segment operating profit of $169.5 million increased by five percent versus the prior year period as revenue growth was partially offset by acquisition integration costs, higher raw material costs and costs associated with our Manufacturing Excellence program. Selling, general and administrative costs also increased approximately $6 million compared to the prior year due to the addition of the Epax business within the segment.
FMC Minerals
(in Millions)
Year Ended December 31,
2014
 
2013
 
2012
Revenue
$
1,035.7

 
$
970.0

 
$
966.2

Operating Profit
166.7

 
128.3

 
171.4

2014 vs. 2013
Revenue of $1,035.7 million increased by seven percent over the prior year. Volume gains in Alkali and Lithium along with improvements in soda ash pricing contributed to the higher revenue.
Alkali revenues of $779.0 million increased four percent over the prior year. Higher average prices and volume increases each contributed a 2 percent increase in revenue, respectively. The most notable price increases were realized in Asian export markets.
Lithium revenues of $256.7 million increased 15 percent compared to the prior year. Higher production volume that allowed for additional sales, particularly for energy storage applications contributed a 19 percent increase in revenue, partially offset by lower pricing which negatively impacted revenues by four percent.
Segment operating profit of $166.7 million increased approximately 30 percent versus the prior year. Operating profit was driven by higher volumes, improved pricing and lower operating costs in Alkali as well as higher volumes in Lithium . These increases were partially offset by unfavorable currency and operating costs associated with Lithium’s Argentine operations and higher energy costs in Alkali.
For 2015, reported segment earnings, which will include only our FMC Lithium business, are expected to be within the range of $15 to $25 million. We anticipate higher prices for both lithium hydroxide and carbonate driven by increased

28


demand for energy storage applications will be offset by reduced sourcing of lithium carbonate from third parties and higher operating costs in Argentina.

2013 vs. 2012
Revenue of $970.0 million, was essentially flat period over period. Volume gains of three percent driven by Alkali sales were offset by unfavorable pricing year over year. Unfavorable pricing was primarily driven by Alkali, slightly offset by favorable pricing in Lithium.
Alkali revenues of $747.0 million increased two percent over the prior year due to volume gains of six percent which were partially offset by reduced pricing of four percent.
Lithium revenues of $223.0 million decreased four percent compared to the prior year due to unfavorable sales mix. Production and sales volumes on a lithium carbonate equivalent basis were relatively flat year over year, as lower production in Argentina due to operational issues was offset by higher third party product purchases.
Segment operating profit of $128.3 million decreased approximately 25 percent versus the prior year. The decrease was primarily due to lower average export pricing in soda ash. Additionally, production factors, such as poor geological conditions at the alkali mine as well as poor weather at the lithium mine and unfavorable currency in lithium impacted the results.
Corporate and other
Corporate expenses are included as a component of the line item “Selling, general and administrative expenses” except for last in, first-out (LIFO) related charges that are included as a component of "Cost of sales and other services" on our consolidated statements of income.
2014 vs. 2013
Corporate and other expenses of $72.3 million decreased by $10.4 million from $82.7 million in the same period in 2013. The decrease period over period is primarily due to a decrease of $5.1 million in employees' incentive accruals and a decrease of $4.6 million in pension service charges. Reduced pension service charges are primarily driven by the higher discount rate utilized to calculate the 2014 expense.
2013 vs. 2012
Corporate and other expenses of $82.7 million increased by $4.1 million from $78.6 million in the same period in 2012. The increase period over period is due to increased costs of approximately $4 million primarily representing costs associated with the transformation of our finance organization. This transformation is similar to past initiatives to improve our organization.
Interest expense, net
2014 vs. 2013
Interest expense, net for 2014 of $59.5 million increased approximately 41% percent as compared to 2013 of $42.2 million. The increase is primarily driven by the issuance of $400 million in Senior Notes in November 2013. The $400 million debt issuance, with an interest rate of 4.10 percent, was utilized to fund the acquisition of Epax and to fund working capital requirements of our businesses.
2013 vs. 2012
Interest expense, net for 2013 of $42.2 million increased approximately four percent compared to 2012 of $40.7 million. The increase was primarily due to higher overall debt levels driven by funding requirements for the acquisition of Epax and our share repurchases during 2013.


29


Corporate special (charges) income
Restructuring and other (charges) income
Our restructuring and other (charges) income are comprised of restructuring, assets disposals and other charges (income) as described below:
 
Year Ended December 31,
(in Millions)
2014
 
2013
 
2012
Restructuring Charges and Asset Disposals
$
17.3

 
$
9.6

 
$
17.7

Other Charges (Income), Net
39.2

 
38.3

 
9.8

Total Restructuring and Other Charges
$
56.5

 
$
47.9

 
$
27.5


2014
Restructuring and asset disposal charges in 2014 of $17.3 million were primarily associated with our Health and Nutrition restructuring as well as other miscellaneous exit costs. Other charges (income) net in 2014 of $39.2 million were primarily related to corporate environmental charges of $43.7 million and charges of $22.1 million associated with our FMC Agricultural Solutions segment which entered into collaboration and license agreements with various third-party companies for the purpose of obtaining certain technology and intellectual property rights relating to new compounds still under development. Offsetting these charges is income from the sale of a portion of our ownership interest in a pesticide distribution company which resulted in a gain on the sale of approximately $26.6 million.
2013
Restructuring and asset disposal charges in 2013 of $9.6 million were primarily associated with the announced Lithium restructuring. Other charges (income) net in 2013 of $38.3 million primarily related to charges associated with collaboration and license agreements entered into by our FMC Agricultural Solutions segment for the purpose of obtaining certain technology and intellectual property rights relating to new compounds still under development. The rights and technology obtained is referred to as in-process research and development and in accordance with GAAP, the amounts paid were expensed as incurred since they were acquired outside of a business combination.
2012
Restructuring and asset disposal charges in 2012 primarily included charges of $13.3 million associated with the Lithium restructuring. Other charges (income) net in 2012 were primarily due to charges of $5.8 million for environmental remediation at operating sites and a $4.4 million charge related to our FMC Agricultural Solutions segment for the purpose of acquiring certain rights to a fungicide still under development.
The activity of the restructuring charges listed above are also included within Note 7 to our consolidated financial statements included in this Form 10-K. We believe the restructuring plans implemented are on schedule and the benefits and savings either have been or will be achieved.
Non-operating pension and postretirement (charges) income
Non-operating pension and postretirement (charges) income are included in “Selling, general and administrative expenses” on our consolidated statements of income.
2014 vs. 2013
The charge for 2014 was $10.5 million compared to $38.1 million for 2013. The decrease in charges was primarily attributable to lower amortization of net actuarial losses of $21.1 million compared to 2013.
2013 vs. 2012
The charge for 2013 was $38.1 million compared to $34.9 million for 2012. The increase in charges were primarily the result of a settlement charge of $7.4 million, partially offset by lower interest costs of $3.7 million. The settlement charge was associated with the acceleration of previously deferred actuarial losses triggered by the lump-sum payout to former executives in 2013.
Business Separation costs
On September 8, 2014, we announced that we would no longer proceed with the planned separation of FMC into two distinct public entities. At that time we announced the acquisition of Cheminova and divestiture of our FMC Alkali Chemicals division.

30


Acquisition-related charges
A detailed description of the acquisition/divestiture related charges is included in Note 19 to the consolidated financial statements included within this Form 10-K under the Segment Results Reconciliation above within the Results of Operations section of the Management's Discussion and Analysis.
Provision for income taxes
 
Twelve Months Ended December 31
(in Millions)
2014
 
2013
 
2012
 
Income (Expense)
Tax Provision (Benefit)
Effective Tax Rate
 
Income (Expense)
Tax Provision (Benefit)
Effective Tax Rate
 
Income (Expense)
Tax Provision (Benefit)
Effective Tax Rate
GAAP - Continuing operations
$
485.0

$
73.5

15.2
%
 
$
615.9

$
148.6

24.1
%
 
$
597.7

$
134.5

22.5
%
Corporate special charges
235.6

87.5

 
 
96.0

35.3

 
 
69.6

25.1

 
Tax adjustments (1)
 
3.9

 
 
 
(14.5
)
 
 
 
18.1

 
 
$
720.6

$
164.9

22.9
%
 
$
711.9

$
169.4

23.8
%
 
$
667.3

$
177.7

26.6
%
_______________  
(1)     Tax adjustments in 2014 were primarily associated with revisions to our tax liabilities associated with prior year tax matters. Tax
adjustments in 2013 were primarily associated with adjustments to U.S. state deferred tax balances
established prior to 2013 driven by a change in enacted tax rates and other state related items. Tax adjustments in 2012
were primarily driven by a reduction in our valuation allowance related to state net operating losses expected to be recoverable in future years.
The primary drivers for the fluctuations in the effective effective tax rate from 2012 to 2014 are provided in the table above. Excluding the items in the table above, the decrease in the effective tax rates from 2012 to 2014 was primarily due to a shift in earnings mix as it relates to domestic versus foreign income. Foreign profits are generally taxed at lower rates compared to domestic income. See Note 11 to the Consolidated Financial Statements for additional details related to the provisions for income taxes on continuing operations, as well as items that significantly impact our effective tax rate.
Discontinued operations, net of income taxes
Our discontinued operations represent our discontinued FMC Peroxygens segment results as well as adjustments to retained liabilities from previous discontinued operations. The primary liabilities retained include environmental liabilities, other postretirement benefit liabilities, self-insurance, long-term obligations related to legal proceedings and historical restructuring activities.
2014 vs 2013
Discontinued operations, net of income taxes represented a loss of $89.4 million for December 31, 2014, compared to a loss of $159.3 million for 2013. The loss in 2014 was driven by provisions for environmental liabilities of $36.7 million and legal reserves of $14.3 million and the final divestiture charge on the sale of our FMC Peroxygens business of $34.4 million. The loss in 2014 was less than the loss in 2013 due to the charge of $156.7 million ($122.1 million after-tax) in 2013 associated with our discontinued FMC Peroxygens segment. A large portion of the 2013 charge was associated with a write down of the FMC Peroxygens segment assets held for sale to fair value. See Note 9 within our consolidated financial statements included in this Form 10-K for more information.
2013 vs. 2012
Discontinued operations, net of income taxes totaled a charge of $159.3 million for 2013, compared to a charge of $27.5 million 2013. The increase was a result of a charge of $156.7 million ($122.1 million after-tax) associated with our discontinued FMC Peroxygens segment. The charge was primarily associated with a write down of the FMC Peroxygens segment assets held for sale to fair value.
Net income attributable to FMC stockholders
2014 vs 2013
Net income attributable to FMC stockholders increased to $307.5 million in 2014, from $293.9 million in 2013. The increase was driven by improvements in FMC Health and Nutrition and FMC Minerals segment operating profits, lower effective tax rate, lower non-operating pension and postretirement charges and reduced charges associated with discontinued operations. Mostly offsetting these improvements were costs associated with our previously planned

31


business separation, the acquisition of Cheminova, the divestiture of our FMC Alkali Chemicals division, lower FMC Agricultural Solutions segment earnings and higher interest expense.
2013 vs. 2012
Net income attributable to FMC stockholders decreased to $293.9 million in 2013, from $416.2 million in 2012. This fluctuation year over year is described in more detail above, however the primary driver is the $122.1 million after-tax charge associated with our discontinued FMC Peroxygens business.

Liquidity and Capital Resources
Cash and cash equivalents at December 31, 2014 and 2013, were $109.5 million and $123.2 million, respectively. Of the cash and cash equivalents balance at December 31, 2014, $84.8 million were held by our foreign subsidiaries. Our intent is to reinvest permanently the earnings of our foreign subsidiaries and therefore we have not recorded taxes that would be payable if we repatriated these earnings.
Term Loan Facility
On October 10, 2014, we entered into a term loan agreement (the “Term Loan Agreement”), that provides for a senior unsecured term loan facility of up to $2 billion (the “Term Loan Facility”) to consummate the acquisition of Cheminova (the "Acquisition"). The 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 Term Loan Facility will be available in one or more drawings on the closing date of the Term Loan Facility, which will be substantially concurrent with the closing of the Acquisition. The scheduled maturity of the Term Loan Facility is on the fifth anniversary of this closing date. The proceeds will be used to finance the Acquisition as well as to pay fees and expenses incurred in connection with the Acquisition and the other transactions contemplated by or related to the Acquisition or the Term Loan Facility.
Loans under the Term Loan Agreement will bear interest at a floating rate, which will be a base rate or a Eurocurrency rate equal to the London interbank offered rate for the relevant interest period, plus in each case an applicable margin, as determined in accordance with the provisions of the Term Loan Agreement. The base rate will be the highest of: the rate of interest announced publicly by Citibank, N.A. in New York, New York from time to time as its “base rate”; the federal funds effective rate plus 1/2 of 1 percent; and the Eurocurrency rate for a one-month period plus 1 percent.
We are required to pay a commitment fee on the average daily unused amount from October 10, 2014 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 0.125 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 financial and other covenants, including a maximum leverage ratio and minimum interest coverage ratio. Fees incurred to secure the Term Loan Facility have been deferred and will be amortized over the term of the arrangement.
Revolving Credit Facility
On October 10, 2014 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 October 10, 2019.
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 0.125 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 Term Loan Facility discussed above along with certain other changes to permit the Acquisition and the divestiture of our FMC Alkali Chemicals division.


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At December 31, 2014, we had total debt of $1,678.6 million as compared to $1,851.9 million at December 31, 2013. This included $1,153.4 million and $1,154.1 million of long-term debt (excluding current portions of $2.0 million and $34.7 million) at December 31, 2014 and 2013, respectively. Our short-term debt, consists of foreign borrowings and our commercial paper program. Foreign borrowings increased from $7.1 million at December 31, 2013 to $36.6 million at December 31, 2014 while outstanding commercial paper decreased from $656.0 million to $486.6 million at December 31, 2013 and 2014, respectively. Our commercial paper program allows us to borrow at rates generally more favorable than those available under our credit facility. At December 31, 2014, the average effective interest rate on these borrowings was 0.48%.

Statement of Cash Flows
Cash provided by operating activities was $418.9 million, $378.8 million and $422.3 million for 2014, 2013 and 2012, respectively.
The table below presents the components of net cash provided by operating activities.
(in Millions)
Twelve months ended December 31,
2014
 
2013
 
2012
Income from continuing operations before equity in (earnings) loss of affiliates, interest income and expense and income taxes
$
545.4

 
$
659.0

 
$
639.1

Significant non-cash expenses (1)
175.6

 
221.6

 
220.6

Operating income before non-cash expenses (Non-GAAP)
$
721.0

 
$
880.6

 
$
859.7

 
 
 
 
 
 
Change in trade receivables (2)
(276.9
)
 
(394.5
)
 
(191.6
)
Change in inventories (3)
33.1

 
5.1

 
(194.5
)
Change in accounts payable (4)
(21.0
)
 
40.4

 
51.4

Change in accrued rebates (5)
33.5

 
63.8

 
27.2

Change in advance payments from customers (6)
11.3

 
35.9

 
64.0

Change in all other operating assets and liabilities (7)
185.7

 
30.4

 
(3.5
)
Restructuring and other spending (8)
(9.5
)
 
(7.3
)
 
(0.9
)
Environmental spending, continuing, net of recoveries (9)
(17.5
)
 
(7.8
)
 
(7.1
)
Pension and other postretirement benefit contributions (10)
(68.3
)
 
(68.0
)
 
(77.5
)
Cash basis operating income (Non-GAAP)
$
591.4

 
$
578.6

 
$
527.2

 
 
 
 
 
 
Net interest payments (11)
(58.8
)
 
(39.4
)
 
(36.2
)
Tax payments, net of refunds (12)
(109.0
)
 
(153.3
)
 
(59.0
)
Excess tax benefits from share-based compensation (13)
(4.7
)
 
(7.1
)
 
(9.7
)
 
 
 
 
 
 
Cash provided by operating activities of continuing operations
$
418.9

 
$
378.8

 
$
422.3

____________________ 
(1)
Represents the sum of depreciation, amortization, non-cash asset write down, share-based compensation and pension charges.
(2)
Overall, the increase in trade receivables in each period is driven by revenue increases in all three of our segments as well as due to timing of payments. Trade receivable increases are primarily driven by sales in Brazil from our FMC Agricultural Solutions segment where terms are significantly longer than the rest of our business.
(3)
Inventory levels dropped slightly in 2014 as compared to 2013 primarily due to inventory management programs and lower FMC Agricultural Solutions sales in the fourth quarter. Inventory levels remained fairly consistent from 2012 to 2013 as projected demand in early 2014 was expected to be in-line with the prior year.
(4)
The decrease in accounts payable in 2014 is consistent with the slight drop in inventory levels at the end of 2014 as discussed above. The increase in accounts payable for 2012 and 2013 is primarily due to inventory build at the end of those years to satisfy projected demand for the following year.
(5)
These rebates are associated with our FMC Agricultural Solutions segment in North America and Brazil and generally settle in the fourth quarter of each year. The changes year over year are primarily associated with the mix in sales eligible for rebates and incentives in 2014 compared to 2013 and timing of rebate payments.
(6)
The advance payments from customers represent advances from our FMC Agricultural Solutions segment customers.

33


(7)
Changes in all periods presented primarily represent timing of payments associated with all other operating assets and liabilities, including guarantees issued to our vendors under our vendor finance program. The change for the twelve months ended December 31, 2014 includes an increase in an accrual of $99.6 million for the hedge on the acquisition purchase price of Cheminova.
(8)
See Note 7 in our consolidated financial statements included in this Form 10-K for further details.
(9)
Included in our results for each of the years presented are environmental charges for environmental remediation at our operating sites of $43.7 million, $6.2 million and $5.8 million. The amounts in 2014 will be spent in future years. The amounts represent environmental remediation spending at our operating sites which were recorded against pre-existing reserves, net of recoveries.
(10)
Amounts include voluntary contributions to our U.S. defined benefit plan of $50 million, $40 million and $65 million, respectively. In 2014 the amount also includes a lump-sum payout of approximately $8.5 million from our nonqualified pension plan.
(11)
Interest payments from 2012 to 2013 remained fairly constant. In November 2013 we issued $400 million of Senior Notes at an interest rate of 4.10%. Interest payments in 2014 increased over the preceding year primarily due to interest payments under the $400 million of Senior Notes as there was no interest payments under these borrowings in 2013.
(12)
The reduction in tax payments from 2013 to 2014 is due to a domestic prepaid tax balance at December 31, 2013 that was applied in first quarter of 2014, thereby reducing tax payments in 2014.
(13)
Amounts are presented as a financing activity in the statement of cash flows, from share-based compensation.

Cash required by operating activities of discontinued operations was $45.2 million, $50.1 million and $62.6 million for 2014, 2013 and 2012, respectively.
The decrease in cash required by operating activities of discontinued operations in 2014 is due to reduced net spending associated with discontinued environmental remediation sites. This reduced spending was slightly offset by increased spending associated with our other discontinued reserve which primarily includes retained legal obligations.
The decrease from 2012 to 2013 is primarily due to reduced spending associated with our discontinued restructuring activities.
Cash required by investing activities was $233.7 million, $628.5 million and $363.6 million for 2014, 2013 and 2012, respectively.
The decrease in spending in 2014, as compared to 2013 was primarily due to the Epax acquisition that was completed in third quarter 2013.
The increase in spending during the year ended December 31, 2013, as compared to the same period in 2012, was primarily due to the Epax acquisition completed in the third quarter of 2013 and higher spending on capital expenditures compared to 2012.
Cash provided (required) by investing activities of discontinued operations was $198.5 million, $(24.7) million and $(30.0) million for 2014, 2013 and 2012, respectively.
Cash provided by investing activities of discontinued operations in 2014 is directly associated with the sale of our FMC Peroxygens business which was completed on February 28, 2014. Cash required by investing activities of discontinued operations in 2013 and 2012 represents capital expenditures for our discontinued FMC Peroxygens business. For more information, see Note 9 in our consolidated financial statements included in this Form 10-K.
Cash provided (required) by financing activities was $(350.0) million, $371.2 million and $(48.2) million in 2014, 2013 and 2012, respectively.
2014 vs. 2013
The change period over period in financing activities is primarily due to significantly less short-term borrowings in 2014 compared to borrowings in 2013. In 2013, increased borrowings were approximately $889 million compared to repayments in 2014 of $171 million. Additionally during the year ended 2013 we paid approximately $367 million in share repurchases and $90 million to noncontrolling interests (primarily to acquire additional ownership in our FMC Alkali Chemicals division) compared to approximately $103 million in combined payments in 2014.

2013 vs. 2012
The change in financing activities is primarily due to borrowings under our commercial paper ("CP") program which was implemented during the second quarter of 2013 and the issuance of $400 million in senior notes in the fourth quarter of 2013. These borrowings were partially offset by repayments of borrowings under our committed credit facility, the acquisition of an additional 6.25% ownership interest in our consolidated entity FMC Wyoming and higher dividends paid and share repurchases compared to 2012.






34


Other potential liquidity needs
See the preceding Liquidity and Capital Resources section for the discussion of the financing facilities associated with the Cheminova acquisition along with the signed definitive agreement to sell the FMC Alkali Chemicals division for $1.64 billion.
Our cash needs for 2015, outside of the Cheminova acquisition and related integration expenses, include operating cash requirements, capital expenditures, scheduled mandatory payments of long-term debt, dividend payments, share repurchases, contributions to our pension plans, environmental and asset retirement obligation spending and restructuring. We plan to meet our liquidity needs through available cash, cash generated from operations, commercial paper issuances and borrowings under our committed revolving credit facility. At December 31, 2014 our remaining borrowing capacity under our credit facility was $924.0 million (which reflects borrowings under our commercial paper program).
Projected 2015 capital expenditures as well as expenditures related to contract manufacturers are expected to be lower than 2014 levels. This excludes spending on the FMC Alkali Chemicals division and includes expected spending for Cheminova subsequent to the acquisition.
Projected 2015 spending includes approximately $65 million of net environmental remediation spending. This spending does not include expected spending on capital projects relating to environmental control facilities or expected spending for environmental compliance costs, which we will include as a component of costs of sales and services in our consolidated statements of income since these amounts are not covered by established reserves. Capital spending to expand, maintain or replace equipment at our production facilities may trigger requirements for upgrading our environmental controls, which may increase our spending for environmental controls over the foregoing projections.
Our U.S. Pension Plan assets increased from $1,192.9 million at December 31, 2013 to $1,255.1 million at December 31, 2014 due primarily to additional contributions in 2014 as well as stock market performance. Our U.S. Pension Plan assets comprise approximately 93 percent of our total plan assets with the difference representing plan assets related to foreign pension plans. See Note 13 to the consolidated financial statements included within this Form 10-K for details on how we develop our long-term rate of return assumptions. We made contributions of $50 million and $40 million in 2014 and 2013, respectively, and intend to contribute $65 million in 2015. Our contributions in 2013, 2014 and our intended contribution in 2015 are all in excess of the minimum requirements. Our contributions in excess of the minimum requirement are done with the objective of reducing future funding volatility. We do not believe that the additional contribution in 2015 will have a material impact on our current and future liquidity needs. However, volatility of interest rates and equity returns may require greater contributions in the future.
During the year ended December 31, 2014, we did not repurchase any shares under the publicly announced repurchase program. At December 31, 2014, $250 million remained unused under our Board-authorized repurchase program. This repurchase program does not include a specific timetable or price targets and may be suspended or terminated at any time. Shares may be purchased through open market or privately negotiated transactions at the discretion of management based on its evaluation of market conditions and other factors. We also reacquire shares from time to time from employees in connections with vesting, exercise and forfeiture of awards under our equity compensation plans.
Dividends
On January 15, 2015, we paid dividends aggregating $20.1 million to our shareholders of record as of December 31, 2014. This amount is included in “Accrued and other liabilities” on the consolidated balance sheets as of December 31, 2014. For the years ended December 31, 2014, 2013 and 2012, we paid $78.1 million, $73.6 million and $47.8 million in dividends, respectively.

Commitments
We provide guarantees to financial institutions on behalf of certain FMC Agricultural Solutions customers, principally Brazilian customers, for their seasonal borrowing. The total of these guarantees was $118.4 million at December 31, 2014. These guarantees arise during the ordinary course of business from relationships with customers and nonconsolidated affiliates. Non-performance by the guaranteed party triggers the obligation requiring us to make payments to the beneficiary of the guarantee. Based on our experience these types guarantees have not had a material effect on our consolidated financial position or on our liquidity. Our expectation is that future payment or performance related to the non-performance of others is considered unlikely.
Short-term debt consisted of foreign credit lines and commercial paper at December 31, 2014, and 2013. We provide parent-company guarantees to lending institutions providing credit to our foreign subsidiaries.
We continually evaluate our options for divesting real estate holdings and property, plant and equipment that are no longer integral to our operating businesses. In connection with our property and asset sales and divestitures, we have agreed to indemnify the buyer for certain liabilities, including environmental contamination and taxes that occurred prior to the date of sale. Our indemnification obligations with respect to these liabilities may be indefinite as to duration and may or may not be subject to a deductible, minimum claim amount or cap. As such, it is not possible for us to predict the likelihood that a claim will be made or

35


to make a reasonable estimate of the maximum potential loss or range of loss. If triggered, we may be able to recover certain of the indemnity payments from third parties. We have not recorded any specific liabilities for these guarantees.
Our total significant committed contracts that we believe will affect cash over the next four years and beyond are as follows:
Contractual Commitments
Expected Cash Payments by Year
 (in Millions)
2015
 
2016
 
2017
 
2018
 
2019 &
beyond
 
Total
Debt maturities (1)
$
2.0

 
$
2.4

 
$
2.6

 
$
2.6

 
$
1,147.9

 
$
1,157.5

Contractual interest (2)
56.1

 
56.0

 
53.6

 
53.5

 
284.8

 
504.0

Lease obligations (3)
23.3

 
17.1

 
12.8

 
8.8

 
21.9

 
83.9

Certain long-term liabilities (4)
5.1

 
5.1

 
5.1

 
5.1

 
30.6

 
51.0

Derivative contracts
92.5

 

 

 

 

 
92.5

Purchase obligations (5)
45.6

 
21.9

 
8.0

 
4.0

 
24.3

 
103.8

Total (6)
$
224.6

 
$
102.5

 
$
82.1

 
$
74.0

 
$
1,509.5

 
$
1,992.7

 ____________________
(1)
Excluding discounts.
(2)
Contractual interest is the interest we are contracted to pay on our long-term debt obligations. We had $1.9 million of long-term debt subject to variable interest rates at December 31, 2014. The rate assumed for the variable interest component of the contractual interest obligation was the rate in effect at December 31, 2014. Variable rates are determined by the market and will fluctuate over time.
(3)
Before sub-lease rental income.
(4)
Obligations associated with our Ewing, NJ and Shanghai, China research and technology centers.
(5)
Purchase obligations consist of agreements to purchase goods and services that are enforceable and legally binding on us and specify all significant terms, including fixed or minimum quantities to be purchased, price provisions and timing of the transaction. We have entered into a number of purchase obligations for the sourcing of materials and energy where take-or-pay arrangements apply. Since the majority of the minimum obligations under these contracts are take-or-pay commitments over the life of the contract as opposed to a year by year take-or-pay, the obligations in the table related to these types of contacts are presented in the earliest period in which the minimum obligation could be payable under these types of contracts.
(6)
As of December 31, 2014, the liability for uncertain tax positions was $47.1 million and this liability is excluded from the table above. Additionally, accrued pension and other postretirement benefits and our environmental liabilities as recorded on our consolidated balance sheets are excluded from the table above. Due to the high degree of uncertainty regarding the timing of potential future cash flows associated with these liabilities, we are unable to make a reasonably reliable estimate of the amount and periods in which these liabilities might be paid.
Contingencies
See Note 18 to our consolidated financial statements included in this Form 10-K.

Climate Change
We continue to follow legislative and regulatory developments regarding climate change because the regulation of greenhouse gases, depending on their nature and scope, could subject some of our manufacturing operations to additional costs or limits on operations. Our FMC Alkali Chemicals division, which we expect to sell in early 2015, mines and refines trona ore into soda ash and related products at our Westvaco and Granger facilities near Green River, Wyoming. This activity constitutes most of FMC's greenhouse gas emissions globally. In 2014, we reported approximately 2.4 million metric tons of direct emissions from the Green River operations for 2013 as part of the EPA Greenhouse gas reporting program. Also in 2014, our FMC Alkali Chemicals division received a permit to increase the amount of greenhouse gases emitted from its facility near Granger.
A significant source of greenhouse gas emissions at the Green River operations are emissions from the beneficiation of trona ore. That is, a significant portion of the greenhouse gases released during the mining and refining of soda ash occurs naturally in the trona ore feedstock. Unlike the situation with energy efficiency, where efficiencies may result in a reduction of greenhouse gases, the amount of greenhouse gases present in the trona ore cannot be reduced. All of the companies producing natural soda ash have such refining emissions. Yet, the lower energy intensity of natural soda ash provides a favorable carbon intensity compared with synthetic soda ash produced throughout the rest of the world. Soda ash is an essential raw material in the production of glass of all kinds. Climate change, energy intensity and alternative forms of energy will drive increased production of new forms of glass (lower emissivity glass, solar panel glass, etc.) and will increase the need for this essential raw material from FMC. The soda ash industry has an interest in assuring that climate change legislation or regulation recognizes the benefits of soda ash (particularly natural soda ash) and the challenges facing this industry in controlling its greenhouse gas emissions.
Because of the many variables, it is premature to make any estimate of the costs of complying with possible future federal climate change legislation in the United States. However, we are aware of the potential impacts that could result from emissions regulations

36


in the U.S. that are more stringent than those experienced by our global competitors. These could make it more difficult for us to competitively produce natural soda ash at Green River. A reduction in natural soda ash production as a result of more stringent regulations in the U.S. would lead to more greenhouse gas emissions globally because the lost supply of natural soda ash would be replaced by the more costly and more greenhouse gas intensive synthetic soda ash.
In 2014, two U.S. plants in our FMC Health & Nutrition business also reported emissions above the EPA's reporting threshold, but each plant's emissions are substantially less than at our Green River operations, in total less than 0.1 million metric tons.
At this point our other U.S. facilities are not subject to any state or regional greenhouse gas regulation that limits or imposes fees on current emissions, and while some of our foreign operations may be subject to national or local energy management or climate change regulation, the cost to these facilities has not been and is not expected to be material to FMC.
We have considered the potential physical risks to FMC facilities and operations and the indirect consequences of regulation or business trends as a result of potential future climate change. We routinely assess our facilities for potential natural hazard exposures and do not expect material impacts based on currently available information.
Recently Adopted and Issued Accounting Pronouncements and Regulatory Items
See Note 2 "Recently Issued and Adopted Accounting Pronouncements and Regulatory Items" to our consolidated financial statements included in this Form 10-K.
Off-Balance Sheet Arrangements
See Note 18 to our consolidated financial statements included in this Form 10-K and Part I, Item 3 - Legal Proceedings for further information regarding any off-balance sheet arrangements.
Fair Value Measurements
See Note 17 to our consolidated financial statements included in this Form 10-K for additional discussion surrounding our fair value measurements.

Critical Accounting Policies
Our consolidated financial statements are prepared in conformity with U.S. generally accepted accounting principles (U.S. GAAP) . The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We have described our accounting policies in Note 1 "Principal Accounting Policies and related Financial Information" to our consolidated financial statements included in this Form 10-K. We have reviewed these accounting policies, identifying those that we believe to be critical to the preparation and understanding of our consolidated financial statements. We have reviewed these critical accounting policies with the Audit Committee of the Board of Directors. Critical accounting policies are central to our presentation of results of operations and financial condition in accordance with U.S. GAAP and require management to make estimates and judgments on certain matters. We base our estimates and judgments on historical experience, current conditions and other reasonable factors.
Environmental obligations and related recoveries
We provide for environmental-related obligations when they are probable and amounts can be reasonably estimated. Where the available information is sufficient to estimate the amount of liability, that estimate has been used. Where the information is only sufficient to establish a range of probable liability and no point within the range is more likely than any other, the lower end of the range has been used.
Estimated obligations to remediate sites that involve oversight by the United States Environmental Protection Agency (“EPA”), or similar government agencies, are generally accrued no later than when a Record of Decision (“ROD”), or equivalent, is issued, or upon completion of a Remedial Investigation/Feasibility Study (“RI/FS”), or equivalent, that is submitted by us to the appropriate government agency or agencies. Estimates are reviewed quarterly by our environmental remediation management, as well as by financial and legal management and, if necessary, adjusted as additional information becomes available. The estimates can change substantially as additional information becomes available regarding the nature or extent of site contamination, required remediation methods, and other actions by or against governmental agencies or private parties.
Our environmental liabilities for continuing and discontinued operations are principally for costs associated with the remediation and/or study of sites at which we are alleged to have released hazardous substances into the environment. Such costs principally include, among other items, RI/FS, site remediation, costs of operation and maintenance of the remediation plan, management

37


costs, fees to outside law firms and consultants for work related to the environmental effort, and future monitoring costs. Estimated site liabilities are determined based upon existing remediation laws and technologies, specific site consultants’ engineering studies or by extrapolating experience with environmental issues at comparable sites.
Included in our environmental liabilities are costs for the operation, maintenance and monitoring of site remediation plans (OM&M). Such reserves are based on our best estimates for these OM&M plans. Over time we may incur OM&M costs in excess of these reserves. However, we are unable to reasonably estimate an amount in excess of our recorded reserves because we cannot reasonably estimate the period for which such OM&M plans will need to be in place or the future annual cost of such remediation, as conditions at these environmental sites change over time. Such additional OM&M costs could be significant in total but would be incurred over an extended period of years.
Included in the environmental reserve balance, other assets balance and disclosure of reasonably possible loss contingencies are amounts from third party insurance policies, which we believe are probable of recovery.
Provisions for environmental costs are reflected in income, net of probable and estimable recoveries from named Potentially Responsible Parties (“PRPs”) or other third parties. Such provisions incorporate inflation and are not discounted to their present values.
In calculating and evaluating the adequacy of our environmental reserves, we have taken into account the joint and several liability imposed by Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) and the analogous state laws on all PRPs and have considered the identity and financial condition of the other PRPs at each site to the extent possible. We have also considered the identity and financial condition of other third parties from whom recovery is anticipated, as well as the status of our claims against such parties. Although we are unable to forecast the ultimate contributions of PRPs and other third parties with absolute certainty, the degree of uncertainty with respect to each party is taken into account when determining the environmental reserve by adjusting the reserve to reflect the facts and circumstances on a site-by-site basis. Our liability includes our best estimate of the costs expected to be paid before the consideration of any potential recoveries from third parties. We believe that any recorded recoveries related to PRPs are realizable in all material respects. Recoveries are recorded as either an offset in “Environmental liabilities, continuing and discontinued” or as “Other assets” in our consolidated balance sheets in accordance with U.S. accounting literature.
See Note 10 to our consolidated financial statements included in this Form 10-K for changes in estimates associated with our environmental obligations.

Impairments and valuation of long-lived assets
Our long-lived assets primarily include property, plant and equipment, goodwill and intangible assets. The assets and liabilities of acquired businesses are measured at their estimated fair values at the dates of acquisition. The excess of the purchase price over the estimated fair value of the net assets acquired, including identified intangibles, is recorded as goodwill. The determination and allocation of fair value to the assets acquired and liabilities assumed is based on various assumptions and valuation methodologies requiring considerable management judgment, including estimates based on historical information, current market data and future expectations. The principal assumptions utilized in our valuation methodologies include revenue growth rates, operating margin estimates and discount rates. Although the estimates were deemed reasonable by management based on information available at the dates of acquisition, those estimates are inherently uncertain.
We test for impairment whenever events or circumstances indicate that the net book value of our property, plant and equipment may not be recoverable from the estimated undiscounted expected future cash flows expected to result from their use and eventual disposition. In cases where the estimated undiscounted expected future cash flows are less than net book value, an impairment loss is recognized equal to the amount by which the net book value exceeds the estimated fair value of assets, which is based on discounted cash flows at the lowest level determinable. The estimated cash flows reflect our assumptions about selling prices, volumes, costs and market conditions over a reasonable period of time.
We perform an annual impairment test of goodwill and indefinite-lived intangible assets in the third quarter of each year, or more frequently whenever an event or change in circumstances occur that would require reassessment of the recoverability of those assets. In performing our evaluation we assess qualitative factors such as overall financial performance of our reporting units, anticipated changes in industry and market structure, competitive environments, planned capacity and cost factors such as raw material prices. Based on our assessment for 2014, we determined that no impairment charge to our continuing operations was required.
See Note 7 to our consolidated financial statements included in this Form 10-K for charges associated with long-lived asset disposal costs and the activity associated with the restructuring reserves.

38



Pension and other postretirement benefits
We provide qualified and nonqualified defined benefit and defined contribution pension plans, as well as postretirement health care and life insurance benefit plans to our employees and retirees. The costs (benefits) and obligations related to these benefits reflect key assumptions related to general economic conditions, including interest (discount) rates, healthcare cost trend rates, expected rates of return on plan assets and the rates of compensation increase for employees. The costs (benefits) and obligations for these benefit programs are also affected by other assumptions, such as average retirement age, mortality, employee turnover, and plan participation. To the extent our plans’ actual experience, as influenced by changing economic and financial market conditions or by changes to our own plans’ demographics, differs from these assumptions, the costs and obligations for providing these benefits, as well as the plans’ funding requirements, could increase or decrease. When actual results differ from our assumptions, the difference is typically recognized over future periods. In addition, the unrealized gains and losses related to our pension and postretirement benefit obligations may also affect periodic benefit costs (benefits) in future periods.
In 2014, the Society of Actuaries released new mortality tables and a mortality improvement scale for measurement of retirement program obligations. We adopted these new tables in measuring the December 31, 2014 U.S. defined benefit and post retirement obligations. This adoption has increased the benefit obligations at December 31, 2014 by approximately $95 million. The effect of this adoption will be amortized into net periodic benefit cost beginning in 2015.
We use several assumptions and statistical methods to determine the asset values used to calculate both the expected rate of return on assets component of pension cost and to calculate our plans’ funding requirements. The expected rate of return on plan assets is based on a market-related value of assets that recognizes investment gains and losses over a five-year period. We use an actuarial value of assets to determine our plans’ funding requirements. The actuarial value of assets must be within a certain range, high or low, of the actual market value of assets, and is adjusted accordingly.
We select the discount rate used to calculate pension and other postretirement obligations based on a review of available yields on high-quality corporate bonds as of the measurement date. In selecting a discount rate as of December 31, 2014, we placed particular emphasis on a discount rate yield-curve provided by our actuary. This yield-curve when populated with projected cash flows that represented the expected timing and amount of our plans' benefit payments, produced a single effective interest discount rate of 4.15 percent, which was used to measure the plan's liabilities.
The discount rates used at our December 31, 2014 and 2013 measurement dates were 4.15 percent and 4.95 percent, respectively. The effect of the change in the discount rate from 4.95 percent to 4.15 percent at December 31, 2014 resulted in a $143.2 million increase to our pension and other postretirement benefit obligations. The effect of the change in the discount rate from 4.15 percent at December 31, 2012 to 4.95 percent at December 31, 2013 resulted in a $8.8 million decrease to 2014 pension and other postretirement benefit expense.
The change in discount rate from 4.95 percent at December 31, 2013 to 4.15 percent at December 31, 2014 was attributable to a decrease in yields on high quality corporate bonds with cash flows matching the timing and amount of our expected future benefit payments between the 2013 and 2014 measurement dates. Using the December 31, 2013 yield curve, our plan cash flows produced a single weighted-average discount rate of approximately 4.95 percent. Matching our plan cash flows to a similarly constructed curve reflecting high-yielding bonds available as of December 31, 2014, resulted in a single weighted-average discount rate of approximately 4.15 percent.
In developing the assumption for the long-term rate of return on assets for our U.S. Plan, we take into consideration the technical analysis performed by our outside actuaries, including historical market returns, information on the assumption for long-term real returns by asset class, inflation assumptions, and expectations for standard deviation related to these best estimates. We also consider the historical performance of our own plan’s trust, which has earned a compound annual rate of return of approximately 10.3 percent over the last 20 years (which is in excess of comparable market indices for the same period) as well as other factors which are discussed in Note 13 to our consolidated financial statements in this Form 10-K. Our long-term rate of return for the years ended December 31, 2014, 2013 and 2012 was 7.75 percent.
For the sensitivity of our pension costs to incremental changes in assumptions see our discussion below.

39


Sensitivity analysis related to key pension and postretirement benefit assumptions.
A one-half percent increase in the assumed discount rate would have decreased pension and other postretirement benefit obligations by $89.6 million and $67.2 million at December 31, 2014 and 2013, respectively, and decreased pension and other postretirement benefit costs by $6.9 million, $5.8 million and $8.2 million for 2014, 2013 and 2012, respectively. A one-half percent decrease in the assumed discount rate would have increased pension and other postretirement benefit obligations by $99.4 million, $73.9 million at December 31, 2014 and 2013, respectively, and increased pension and other postretirement benefit net periodic benefit cost by $7.5 million, $6.2 million and $8.4 million for 2014, 2013 and 2012, respectively.
A one-half percent increase in the assumed expected long-term rate of return on plan assets would have decreased pension costs by $5.2 million, $4.8 million and $4.7 million for 2014, 2013 and 2012, respectively. A one-half percent decrease in the assumed long-term rate of return on plan assets would have increased pension costs by $5.2 million, $4.8 million and $4.7 million for 2014, 2013 and 2012, respectively.
Further details on our pension and other postretirement benefit obligations and net periodic benefit costs (benefits) are found in Note 13 to our consolidated financial statements in this Form 10-K.
Income taxes
We have recorded a valuation allowance to reduce deferred tax assets to the amount that we believe is more likely than not to be realized. In assessing the need for this allowance, we have considered a number of factors including future taxable income, the jurisdictions in which such income is earned and our ongoing tax planning strategies. In the event that we determine that we would not be able to realize all or part of our net deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to income in the period such determination was made. Similarly, should we conclude that we would be able to realize certain deferred tax assets in the future in excess of the net recorded amount, an adjustment to the deferred tax assets would increase income in the period such determination was made.
Additionally, we file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The income tax returns for FMC entities taxable in the U.S. and significant foreign jurisdictions are open for examination and adjustment. We assess our income tax positions and record a liability for all years open to examination based upon our evaluation of the facts, circumstances and information available at the reporting date. For those tax positions where it is more likely than not that a tax benefit will be sustained, we have recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. We adjust these liabilities, if necessary, upon the completion of tax audits or changes in tax law.
See Note 11 to our consolidated financial statements included in this Form 10-K for additional discussion surrounding income taxes.


40


ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our earnings, cash flows and financial position are exposed to market risks relating to fluctuations in commodity prices, interest rates and foreign currency exchange rates. Our policy is to minimize exposure to our cash flow over time caused by changes in commodity, interest and currency exchange rates. To accomplish this, we have implemented a controlled program of risk management consisting of appropriate derivative contracts entered into with major financial institutions.
The analysis below presents the sensitivity of the market value of our financial instruments to selected changes in market rates and prices. The range of changes chosen reflects our view of changes that are reasonably possible over a one-year period. Market-value estimates are based on the present value of projected future cash flows considering the market rates and prices chosen.
At December 31, 2014, our net financial instrument position was a net liability of $92.5 million compared to a net liability of $6.4 million at December 31, 2013. The change in the net financial instrument position was primarily due to higher unrealized losses in our commodity and foreign exchange portfolios.
Since our risk management programs are generally highly effective, the potential loss in value for each risk management portfolio described below would be largely offset by changes in the value of the underlying exposure.
Commodity Price Risk
Energy costs are diversified among coal, electricity and natural gas. We attempt to mitigate our exposure to increasing energy costs by hedging the cost of future deliveries of natural gas and by entering into fixed-price contracts for the purchase of coal and fuel oil. To analyze the effect of changing energy prices, we have performed a sensitivity analysis in which we assume an instantaneous 10 percent change in energy market prices from their levels at December 31, 2014 and 2013, with all other variables (including interest rates) held constant.
 
 
 
Hedged energy exposure vs. Energy market pricing
(in Millions)
Net Asset / (Liability) Position on Consolidated Balance Sheets
 
Net Asset / (Liability) Position with 10% Increase
 
Net Asset / (Liability) Position with 10% Decrease
Net asset/(liability) position at December 31, 2014
$(7.3)
 
$(5.3)
 
$(9.4)
 
 
 
 
 
 
Net asset/(liability) position at December 31, 2013
$0.1
 
$3.0
 
$(2.7)
Our FMC Agricultural Solutions segment enters into contracts with certain customers in Brazil to exchange our products for future physical delivery of soybeans. To mitigate the price risk associated with these barter contracts, we enter into offsetting derivatives to hedge our exposure. As of December 31, 2014 and 2013 our net financial instrument position was immaterial.
Foreign Currency Exchange Rate Risk
The primary currencies for which we have exchange rate exposure are the U.S. dollar versus the euro, the Chinese yuan, the Brazilian real and the Argentine peso. Foreign currency debt and foreign exchange forward contracts are used in countries where we do business, thereby reducing our net asset exposure. Foreign exchange forward contracts are also used to hedge firm and highly anticipated foreign currency cash flows.
To analyze the effects of changing foreign currency rates, we have performed a sensitivity analysis in which we assume an instantaneous 10 percent change in the foreign currency exchange rates from their levels at December 31, 2014 and 2013, with all other variables (including interest rates) held constant.
 
 
 
Hedged Currency vs. Functional Currency
(in Millions)
Net Asset / (Liability) Position on Consolidated Balance Sheets
 
Net Asset / (Liability) Position with 10% Strengthening
 
Net Asset / (Liability) Position with 10% Weakening
Net asset/(liability) position at December 31, 2014 (1)
$(85.2)
 
$91.3
 
$(261.0)
 
 
 
 
 
 
Net asset/(liability) position at December 31, 2013
$(6.5)
 
$9.1
 
$(21.0)
______________
(1)
Includes the unrealized loss on hedging the purchase price of Cheminova.
Interest Rate Risk
One of the strategies that we can use to manage interest rate exposure is to enter into interest rate swap agreements. In these agreements, we agree to exchange, at specified intervals, the difference between fixed and variable interest amounts calculated on an agreed-upon notional principal amount. As of December 31, 2014 and 2013, we had no interest rate swap agreements.

41


Our debt portfolio, at December 31, 2014, is composed of 70 percent fixed-rate debt and 30 percent variable-rate debt. The variable-rate component of our debt portfolio principally consists of borrowings under our commercial paper program, credit facility, variable-rate industrial and pollution control revenue bonds, and amounts outstanding under foreign subsidiary credit lines. Changes in interest rates affect different portions of our variable-rate debt portfolio in different ways.
Based on the variable-rate debt in our debt portfolio at December 31, 2014, a one percentage point increase in interest rates would have increased gross interest expense by $5.1 million and a one percentage point decrease in interest rates would have decreased gross interest expense by $2.5 million for the year ended December 31, 2014.

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
Page


    



42


FMC CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
 
(in Millions, Except Per Share Data)
Year Ended December 31,
2014
 
2013
 
2012
Revenue
$
4,037.7

 
$
3,874.8

 
$
3,409.9

Costs and Expenses
 
 
 
 
 
Costs of sales and services
2,662.7

 
2,534.4

 
2,141.6

 
 
 
 
 
 
Gross Margin
1,375.0

 
1,340.4

 
1,268.3

 
 
 
 
 
 
Selling, general and administrative expenses
621.2

 
515.8

 
489.7

Research and development expenses
128.3

 
117.7

 
112.0

Restructuring and other charges (income)
56.5

 
47.9

 
27.5

Business separation costs
23.6

 

 

Total costs and expenses
3,492.3

 
3,215.8

 
2,770.8

Income from continuing operations before equity in (earnings) loss of affiliates, interest income and expense and income taxes
545.4

 
659.0

 
639.1

Equity in (earnings) loss of affiliates
0.9

 
0.9

 
0.7

Interest income
(0.2
)
 
(0.2
)
 
(0.1
)
Interest expense
59.7

 
42.4

 
40.8

Income from continuing operations before income taxes
485.0

 
615.9

 
597.7

Provision for income taxes
73.5

 
148.6

 
134.5

Income from continuing operations
411.5

 
467.3

 
463.2

Discontinued operations, net of income taxes
(89.4
)
 
(159.3
)
 
(27.5
)
Net income
322.1

 
308.0

 
435.7

Less: Net income attributable to noncontrolling interests
14.6

 
14.1

 
19.5

Net income attributable to FMC stockholders
$
307.5

 
$
293.9

 
$
416.2

Amounts attributable to FMC stockholders:
 
 
 
 
 
Continuing operations, net of income taxes
$
396.9

 
$
453.2

 
$
443.7

Discontinued operations, net of income taxes
(89.4
)
 
(159.3
)
 
(27.5
)
Net income attributable to FMC stockholders
$
307.5

 
$
293.9

 
$
416.2

Basic earnings (loss) per common share attributable to FMC stockholders:
 
 
 
 
 
Continuing operations
$
2.97

 
$
3.34

 
$
3.21

Discontinued operations
(0.67
)
 
(1.18
)
 
(0.20
)
Net income attributable to FMC stockholders
$
2.30

 
$
2.16

 
$
3.01

Diluted earnings (loss) per common share attributable to FMC stockholders:
 
 
 
 
 
Continuing operations
$
2.96

 
$
3.33

 
$
3.20

Discontinued operations
(0.67
)
 
(1.17
)
 
(0.20
)
Net income attributable to FMC stockholders
$
2.29

 
$
2.16

 
$
3.00

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


43


FMC CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 
(in Millions)
Year Ended December 31,
2014
 
2013
 
2012
Net Income
$
322.1

 
$
308.0

 
$
435.7

Other comprehensive income (loss), net of tax:
 
 
 
 
 
Foreign currency adjustments:
 
 
 
 
 
Foreign currency translation gain (loss) arising during the period
(76.5
)
 
0.1

 
2.5

Reclassification of foreign currency translations losses
49.6

 

 

Total foreign currency translation adjustments (1)
(26.9
)
 
0.1

 
2.5

 
 
 
 
 
 
Derivative instruments:
 
 
 
 
 
Unrealized hedging gains (losses) and other, net of tax of ($0.8), ($2.1) and ($0.1)
3.1

 
(4.9
)
 
(0.2
)
Reclassification of deferred hedging (gains) losses and other, included in net income, net of tax of ($0.6) $0.1 and $3.0
(0.9
)
 
0.3

 
5.9

Total derivative instruments, net of tax of ($1.4), ($2.0) and $2.9
2.2

 
(4.6
)
 
5.7

 
 
 
 
 
 
Pension and other postretirement benefits:
 
 
 
 
 
Unrealized actuarial gains (losses) and prior service (costs) credits, net of tax of $70.9, $103.9 and ($30.8) (2)
(173.3
)
 
174.0

 
(57.3
)
Reclassification of net actuarial and other (gain) loss, amortization of prior service costs and settlement charges, included in net income, net of tax of $12.9, $21.8 and $18.4 (3)
22.3

 
35.9

 
30.4

Total pension and other postretirement benefits, net of tax of $83.8, $125.7 and ($12.4)
(151.0
)
 
209.9

 
(26.9
)
 
 
 
 
 
 
Other comprehensive income (loss), net of tax
(175.7
)
 
205.4

 
(18.7
)
Comprehensive income
$
146.4

 
$
513.4

 
$
417.0

Less: Comprehensive income attributable to the noncontrolling interest
12.8

 
12.5

 
19.7

Comprehensive income attributable to FMC stockholders
$
133.6

 
$
500.9

 
$
397.3

____________________ 
(1)
Income taxes are not provided on the equity in undistributed earnings of our foreign subsidiaries or affiliates since it is our intention that such earnings will remain invested in those affiliates permanently. The amount for the twelve month ended December 31, 2014 includes reclassification to net income due to the divestiture of our FMC Peroxygens business. See Note 9 within these consolidated financial statements for more informations.
(2)
At December 31st of each year, we remeasure our pension and postretirement plan obligations at which time we record any actuarial gains (losses) and prior service (costs) credits to other comprehensive income.
(3)
For more detail on the components of these reclassifications and the affected line item in the Consolidated Statements of Income see Note 15 within these consolidated financial statements.


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





44


FMC CORPORATION
CONSOLIDATED BALANCE SHEETS
 
 
December 31,
(in Millions, Except Share and Par Value Data)
2014
 
2013
ASSETS
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
109.5

 
$
123.2

Trade receivables, net of allowance of $37.6 in 2014 and $30.2 in 2013
1,751.0

 
1,484.3

Inventories
636.5

 
688.4

Prepaid and other current assets
214.7

 
236.8

Deferred income taxes
222.7

 
214.0

Current assets of discontinued operations held for sale

 
198.3

Total current assets
2,934.4

 
2,945.0

Investments
25.1

 
26.8

Property, plant and equipment, net
1,308.5

 
1,248.3

Goodwill
352.5

 
389.4

Other intangibles, net
246.9

 
272.3

Other assets
273.0

 
262.0

Deferred income taxes
200.1

 
91.4

Total assets
$
5,340.5

 
$
5,235.2

LIABILITIES AND EQUITY
 
 
 
Current liabilities
 
 
 
Short-term debt and current portion of long-term debt
$
525.2

 
$
697.8

Accounts payable, trade and other
433.5

 
475.2

Advance payments from customers
190.2

 
178.9

Accrued and other liabilities
438.8

 
307.0

Accrued customer rebates
237.6

 
203.7

Guarantees of vendor financing
50.2

 
27.9

Accrued pension and other postretirement benefits, current
12.7

 
12.7

Income taxes
22.2

 
35.3

Current liabilities of discontinued operations held for sale

 
48.2

Total current liabilities
$
1,910.4

 
$
1,986.7

Long-term debt, less current portion
1,153.4

 
1,154.1

Accrued pension and other postretirement benefits, long-term
238.7

 
57.8

Environmental liabilities, continuing and discontinued
209.9

 
175.2

Deferred income taxes
51.3

 
73.1

Other long-term liabilities
212.8

 
216.2

Commitments and contingent liabilities (Note 18)

 

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

 

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

 
18.6

Capital in excess of par value of common stock
401.9

 
448.3

Retained earnings
2,984.5

 
2,757.3

Accumulated other comprehensive income (loss)
(375.8
)
 
(201.9
)
Treasury stock, common, at cost: 52,666,121 shares in 2014 and 53,098,103 shares in 2013
(1,498.7
)
 
(1,502.5
)
Total FMC stockholders’ equity
$
1,530.5

 
$
1,519.8

Noncontrolling interests
33.5

 
52.3

Total equity
1,564.0

 
1,572.1

Total liabilities and equity
$
5,340.5

 
$
5,235.2

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

45


FMC CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(in Millions)
Year Ended December 31,
2014
 
2013
2012
Cash provided (required) by operating activities of continuing operations:
 
 
 
 
Net income
$
322.1

 
$
308.0

$
435.7

Discontinued operations
89.4

 
159.3

27.5

Income from continuing operations
$
411.5

 
$
467.3

$
463.2

Adjustments from income from continuing operations to cash provided (required) by operating activities of continuing operations:
 
 
 
 
Depreciation and amortization
131.2

 
127.2

115.9

Equity in (earnings) loss of affiliates
0.9

 
0.9

0.7

Restructuring and other charges (income)
56.5

 
47.9

27.5

Deferred income taxes
(61.0
)
 
19.6

55.1

Pension and other postretirement benefits
29.6

 
62.3

57.1

Share-based compensation
14.8

 
14.2

16.0

Excess tax benefits from share-based compensation
(4.7
)
 
(7.1
)
(9.7
)
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:
 
 
 
 
Trade receivables, net
(276.9
)