PHILADELPHIA, July 25 /PRNewswire-FirstCall/ -- FMC Corporation today reported net income of $8.6 million, or $0.22 per diluted share, in the second quarter of 2007, versus net income of $46.3 million, or $1.16 per diluted share, in the second quarter of 2006. Net income in the current quarter included restructuring and other income and charges of $61.2 million after-tax, or charges of $1.57 per diluted share, versus restructuring and other income and charges of $12.2 million after-tax, or charges of $0.31 per diluted share, in the prior-year quarter. Excluding these items, the company earned $1.79 per diluted share in the current quarter, an increase of 22 percent versus $1.47 per diluted share in the second quarter of 2006. Second quarter revenue of $657.9 million increased 11 percent versus $592.3 million in the prior year.
William G. Walter, FMC chairman, president and chief executive officer, said: "We once again delivered strong results with record second quarter sales and earnings. Agricultural Products turned in exceptional performance as a result of very strong sales growth and continued supply chain productivity improvements. Specialty Chemicals' earnings benefited from good end-use demand growth and selective price increases. Industrial Chemicals continued to realize significant pricing leverage, particularly in soda ash. Our results were achieved despite continued higher energy and raw material costs."
Revenue in Agricultural Products of $219.2 million was 19 percent higher than last year's quarter, driven by particularly strong sales growth in Brazil as a result of increased planted acres in sugar cane, corn and cotton, higher sales in Europe due to increased demand for biofuel crops and the benefit of a stronger Euro. Segment earnings before interest and taxes ("segment earnings") of $65.1 million were up 46 percent versus the year ago quarter, driven by the higher sales and continued supply chain productivity improvements.
Revenue in Specialty Chemicals was $167.5 million, an increase of 7 percent versus the prior-year quarter, as a result of higher selling prices in lithium and broad-based sales growth in BioPolymer. Segment earnings of $39.5 million increased 10 percent versus the year ago quarter, as a result of the strong lithium and BioPolymer commercial performance and the benefit of continued productivity improvements.
Revenue in Industrial Chemicals was $272.2 million, an increase of 8 percent from the prior-year quarter, driven by higher volumes and selling prices for soda ash and volume growth at Foret. Segment earnings of $21.5 million decreased 14 percent versus the year ago quarter, as the revenue gains were mitigated by higher energy and raw material costs and lower electricity selling prices in Spain.
Corporate expense was $14.3 million, up from $11.2 million in the prior year quarter. Interest expense, net, was $10.0 million as compared to $9.2 million in the prior-year period. On June 30, 2007, gross consolidated debt was $598.8 million, and debt, net of cash, was $535.7 million. For the
quarter, depreciation and amortization was $33.9 million and capital expenditures were $24.2 million.
Six Months Results
Revenue was $1,332.0 million, an increase of 12 percent as compared with $1,186.4 million in the prior-year period. Net income was $54.4 million, down 35 percent from $84.0 million in the year-earlier period. Net income in the current period included restructuring and other income and charges of $87.1 million, versus restructuring and other income and charges of $43.5 million in the prior-year period. Excluding these charges, the company earned $141.5 million in the first half of 2007, an increase of 11 percent versus $127.5 million in the first half of 2006.
Revenue in Agricultural Products was $467.5 million, an increase of 20 percent versus the prior-year period. Higher sales were realized in most geographic regions, but were particularly strong in Brazil due to increased planted acres in sugar cane, corn and cotton and in Europe driven primarily by increased demand for biofuel crops. Segment earnings were $135.9 million, an increase of 37 percent from the first half of 2006 as a result of the higher sales and continued supply chain productivity improvements, which more than offset higher incremental selling and distribution costs and increased spending on growth initiatives.
Revenue in Specialty Chemicals was $333.7 million, an increase of 11 percent versus the prior-year period, driven by higher selling prices in lithium and strong commercial performance in BioPolymer. Segment earnings of $75.1 million increased 12 percent versus the year-earlier period due to higher sales and productivity improvements, which more than offset increased energy and raw material costs.
Revenue in Industrial Chemicals was $532.7 million, an increase of 7 percent versus the prior-year period, as a result of higher volumes and selling prices for soda ash. Segment earnings of $39.1 million decreased 28 percent versus the year-earlier period, as higher energy and raw material costs across the segment and lower electricity selling prices in Spain more than offset the positive impact of higher sales.
Corporate expense was $27.5 million, as compared to $22.5 million in the year-earlier period. Interest expense, net, was $18.4 million, up from $17.6 million in the prior-year period. For the period, depreciation and amortization was $68.4 million and capital expenditures were $44.6 million.
Outlook
Regarding the outlook for 2007, Walter said: "Based on our strong first half performance, we are raising our full-year 2007 outlook for earnings before restructuring and other income and charges to $6.20 to $6.40 per diluted share. Through the balance of the year, we expect to realize the ongoing benefits of continued growth in Specialty Chemicals, Agricultural Products and soda ash as well as improved energy market conditions in Foret."
Walter added: "For the third quarter of 2007, we expect earnings before restructuring and other income and charges of $1.25 to $1.35 per diluted share."
FMC will conduct its second quarter conference call and webcast at 11:00 a.m. ET on Thursday, July 26, 2007. This event will be available live and as a replay on the web at http://www.fmc.com/. Prior to the conference call, the Company will also provide supplemental information on the web including: details on the 2007 earnings outlook, definitions of non-GAAP terms and reconciliations of non-GAAP figures to the nearest available GAAP term.
FMC Corporation is a diversified chemical company serving agricultural, industrial and consumer markets globally for more than a century with innovative solutions, applications and quality products. The company employs over 5,000 people throughout the world. The company operates its businesses in three segments: Agricultural Products, Specialty Chemicals and Industrial Chemicals.
Safe Harbor Statement under the Private Securities Act of 1995: Statements in this news release that are forward-looking statements are subject to various risks and uncertainties concerning specific factors described in FMC Corporation's 2006 Form 10-K and other SEC filings. Such information contained herein represents management's best judgment as of the date hereof based on information currently available. FMC Corporation does not intend to update this information and disclaims any legal obligation to the contrary. Historical information is not necessarily indicative of future performance.
FMC CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in millions, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
Revenue $657.9 $592.3 $1,332.0 $1,186.4
Costs of sales and services 447.9 407.9 911.2 808.3
Selling, general and administrative
expenses 77.9 70.5 155.3 138.0
Research and development expenses 23.7 22.6 46.9 44.6
In-process research and development - 2.0 1.0 2.0
Restructuring and other charges 92.7 35.7 117.0 66.8
Total costs and expenses 642.2 538.7 1,231.4 1,059.7
Income from operations 15.7 53.6 100.6 126.7
Equity in (earnings) of affiliates (1.9) (0.7) (2.7) (1.3)
Minority interests 1.3 2.5 3.2 4.5
Interest expense, net 10.0 9.2 18.4 17.6
Income from continuing operations
before income taxes 6.3 42.6 81.7 105.9
Provision for income taxes (8.0) 7.3 12.3 32.3
Income from continuing operations 14.3 35.3 69.4 73.6
Discontinued operations, net of income
taxes (5.7) 11.0 (15.0) 10.4
Net income $8.6 $46.3 $54.4 $84.0
Basic earnings (loss) per common share:
Continuing operations $0.38 $0.91 $1.83 $1.91
Discontinued operations (0.15) 0.29 (0.39) 0.27
Basic earnings per common share $0.23 $1.20 $1.44 $2.18
Average number of shares used in basic
earnings per share computations 37.9 38.7 37.9 38.5
Diluted earnings (loss) per common
share:
Continuing operations $0.37 $0.88 $1.78 $1.85
Discontinued operations (0.15) 0.28 (0.39) 0.26
Diluted earnings per common share $0.22 $1.16 $1.39 $2.11
Average number of shares used in
diluted earnings per share
computations 38.9 39.9 39.0 39.8
Other Data:
Capital expenditures $24.2 $28.8 $44.6 $45.9
Depreciation and amortization expense $33.9 $33.5 $68.4 $65.6
FMC CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME FROM CONTINUING OPERATIONS,
EXCLUDING RESTRUCTURING AND OTHER INCOME AND CHARGES (NON-GAAP)*
(Unaudited, in millions, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
Revenue $657.9 $592.3 $1,332.0 $1,186.4
Costs of sales and services 447.9 407.9 911.2 808.3
Selling, general and administrative
expenses 77.9 70.5 155.3 138.0
Research and development expenses 23.7 22.6 46.9 44.6
Total costs and expenses 549.5 501.0 1,113.4 990.9
Income from operations 108.4 91.3 218.6 195.5
Equity in (earnings) of affiliates (1.9) (0.7) (2.3) (1.3)
Minority interests 2.7 2.5 4.6 4.5
Interest expense, net 10.0 9.2 18.4 17.6
Income from continuing operations
before income taxes, excluding
restructuring and other income and
charges 97.6 80.3 197.9 174.7
Provision for income taxes 27.8 21.8 56.4 47.2
After-tax income from continuing
operations, excluding restructuring
and other income and charges * $69.8 $58.5 $141.5 $127.5
Basic after-tax income from continuing
operations per share, excluding
restructuring and other income and
charges $1.84 $1.51 $3.73 $3.31
Average number of shares used in basic
after-tax income per share
computations 37.9 38.7 37.9 38.5
Diluted after-tax income from
continuing operations per share,
excluding restructuring and other
income and charges $1.79 $1.47 $3.63 $3.20
Average number of shares used in
diluted after-tax income per share
computations 38.9 39.9 39.0 39.8
* The Company believes that the Non-GAAP financial measure "After-tax
income from continuing operations, excluding restructuring and other
income and charges," and its presentation on a per share basis, provides
useful information about the Company's operating results to investors and
securities analysts. The Company also believes that excluding the effect
of restructuring and other income and charges from operating results
allows management and investors to compare more easily the financial
performance of its underlying businesses from period to period.
See attachment 3 of 6 for the reconciliation of Non-GAAP financial
measures to GAAP financial results.
FMC CORPORATION AND CONSOLIDATED SUBSIDIARIES
RECONCILIATION OF NET INCOME (GAAP) TO AFTER-TAX INCOME FROM CONTINUING
OPERATIONS, EXCLUDING RESTRUCTURING AND OTHER INCOME AND CHARGES (NON-GAAP)
(Unaudited, in millions, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
Net income (GAAP) $8.6 $46.3 $54.4 $84.0
Discontinued operations, net of
income taxes (a) 5.7 (11.0) 15.0 (10.4)
Restructuring and other charges (b) 91.3 35.7 115.2 66.8
In-process research and development (c) - 2.0 1.0 2.0
Tax effect of restructuring and other
charges and in-process research
and development (34.4) (14.5) (43.8) (14.9)
Tax adjustments (d) (1.4) - (0.3) -
After-tax income from continuing
operations, excluding
restructuring and other income and
charges (Non-GAAP) $69.8 $58.5 $141.5 $127.5
Diluted earnings per common share
(GAAP) $0.22 $1.16 $1.39 $2.11
Discontinued operations per diluted
share 0.15 (0.28) 0.39 (0.26)
Restructuring and other charges per
diluted share, before tax 2.35 0.90 2.95 1.68
In-process research and development
per diluted share, before tax - 0.05 0.03 0.05
Tax effect of restructuring and other
charges and in-process research
and development (0.89) (0.36) (1.12) (0.38)
Tax adjustments per diluted share (0.04) - (0.01) -
Diluted after-tax income from
continuing operations per share,
excluding restructuring and other
income and charges (Non-GAAP) $1.79 $1.47 $3.63 $3.20
Average number of shares used in
diluted after-tax income from
continuing operations per share
computations 38.9 39.9 39.0 39.8
(a) Discontinued operations for the three and six months ended June 30,
2007 primarily includes provision for environmental liabilities and
legal reserves related to previously discontinued operations.
Discontinued operations for the three and six months ended June 30,
2006 primarily includes gain from sale of land located in San Jose,
California to the City of San Jose partially offset by the provision
for environmental liabilities and legal reserves related to previously
discontinued operations. The land sale completed the sale of land
that was formerly used by our defense business, which we divested in
1997.
(b) Restructuring and other charges for the three months ended June 30,
2007 primarily includes charges related to the closure of Baltimore
agricultural chemicals facility ($75.2 million), charges associated
with the asset abandonment of one of our Foret co-generation
facilities which is part of Industrial Chemicals segment ($6.5 million
after minority interest) and charges associated with continuing
environmental sites in Corporate ($4.8 million). For the six months
ended June 30, 2007, restructuring and other charges also includes
charges related to the settlement of all claims with Solutia and
Astaris (now known as Siratsa) regarding our contribution of PPA
technology to the Astaris joint venture in our Industrial Chemicals
segment ($22.5 million).
Restructuring and other charges for the six months ended June 30, 2007
also includes a gain representing the difference between the carrying
value of our remaining investment in the Astaris joint venture, and
cash received from this investment representing a return of our
investment. After this cash receipt, our investment in the Astaris
joint venture is $0 at June 30, 2007. This gain included in "Equity
in (earnings) of affiliates" in the condensed consolidated statements
of operations for the six months ended June 30, 2007. In 2005,
Astaris sold substantially all of the assets of its business and the
buyers also assumed substantially all of the liabilities of Astaris.
Restructuring and other charges in the above table for the three and
six months ended June 30, 2007 also includes minority interest related
to the charges discussed above for the abandonment of one of our Foret
co-generation facilities. We own 75% of this entity and the minority
interest is included in "Minority interests" in the condensed
consolidated statements of operations.
Restructuring and other charges for the three months ended June 30,
2006 primarily includes charges related to the settlement of an
antitrust class action involving our microcrystalline cellulose
product in our Specialty Chemicals segment ($25.0 million),
abandonment of a building at one of our manufacturing locations in our
Agricultural Products segment ($6.1 million) and asset abandonment and
severance charges related to workforce reductions at our Princeton,
New Jersey R&D facility ($4.8 million) also in our Agricultural
Products segment. For the six months ended June 30, 2006, in addition
to the above, restructuring and other charges primarily includes a
charge of euro 25 million (US$30 million) related to a fine imposed on
us by the European Commission as a result of alleged violations of
competition law in the hydrogen peroxide business in Europe prior to
2000. This fine is associated with our Industrial Chemicals segment.
We have appealed the decision of the European Commission.
(c) In the second quarter of 2006, our Agricultural Products segment
entered into agreements in which we were granted an initial right to
further develop a third party's proprietary fungicide in certain
geographic markets. Under those agreements, we paid $2.0 million and
recorded the amount as a charge to "In-process research and
development" in the condensed consolidated statement of operations for
the three and six months ended June 30, 2006. In the first quarter of
2007, our Agricultural Products segment acquired further rights from
this third-party company to develop their proprietary fungicide. In
acquiring those further rights, we paid an additional $1 million and
have recorded this amount as a charge to "In-process research and
development" in the condensed consolidated statement of operations for
the six months ended June 30, 2007.
(d) Tax adjustments for the three and six months ended June 30, 2007
are related to adjustments for prior year tax matters.
FMC CORPORATION AND CONSOLIDATED SUBSIDIARIES
INDUSTRY SEGMENT DATA
(Unaudited, in millions)
Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
Revenue
Agricultural Products $219.2 $184.4 $467.5 $391.0
Specialty Chemicals 167.5 156.6 333.7 299.8
Industrial Chemicals 272.2 252.3 532.7 497.5
Eliminations (1.0) (1.0) (1.9) (1.9)
Total $657.9 $592.3 $1,332.0 $1,186.4
Income from continuing operations
before income taxes
Agricultural Products $65.1 $44.5 $135.9 $99.2
Specialty Chemicals 39.5 35.9 75.1 67.3
Industrial Chemicals 21.5 24.9 39.1 54.2
Eliminations 0.1 - (0.1) -
Segment operating profit 126.2 105.3 250.0 220.7
Corporate (14.3) (11.2) (27.5) (22.5)
Other income (expense), net (4.3) (4.6) (6.2) (5.9)
Operating profit from continuing
operations before items noted
below: 107.6 89.5 216.3 192.3
Restructuring and other charges (a) (91.3) (35.7) (115.2) (66.8)
Interest expense, net (10.0) (9.2) (18.4) (17.6)
In-process research and
development (b) - (2.0) (1.0) (2.0)
Income from continuing operations
before income taxes $6.3 $42.6 $81.7 $105.9
(a) Restructuring and other charges for the three months ended June 30,
2007 related to Agricultural Products ($75.4 million), Industrial
Chemicals ($9.5 million), Specialty Chemicals ($1.8 million) and
Corporate ($4.6 million). Restructuring and other charges for the
three months ended June 30, 2006 related to Specialty Chemicals
($24.1 million), Agricultural Products ($11.0 million) and Industrial
Chemicals ($0.6 million).
Restructuring and other charges for the six months ended June 30,
2007 related to Agricultural Products ($75.4 million), Industrial
Chemicals ($32.8 million), Specialty Chemicals ($1.8 million) and
Corporate ($5.2 million). Restructuring and other charges for the
six months ended June 30, 2006 related to Industrial Chemicals
($31.0 million), Specialty Chemicals ($24.1 million), Agricultural
Products ($11.0 million) and Corporate ($0.7 million).
(b) In the second quarter of 2006, our Agricultural Products segment
entered into agreements in which we were granted an initial right to
further develop a third party's proprietary fungicide in certain
geographic markets. Under those agreements, we paid $2.0 million and
recorded the amount as a charge to "In-process research and
development" in the condensed consolidated statement of operations for
the three and six months ended June 30, 2006. In the first quarter of
2007, our Agricultural Products segment acquired further rights from
this third-party company to develop their proprietary fungicide. In
acquiring those further rights, we paid an additional $1 million and
have recorded this amount as a charge to "In-process research and
development" in the condensed consolidated statement of operations for
the six months ended June 30, 2007.
FMC CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in millions)
June 30, December 31,
2007 2006
Cash and cash equivalents $63.2 $165.5
Trade receivables, net 683.2 537.9
Inventories 230.1 219.4
Other current assets 101.4 91.3
Deferred income taxes 71.7 53.7
Total current assets 1,149.6 1,067.8
Property, plant and equipment, net 946.9 1,025.1
Goodwill 168.0 163.6
Deferred income taxes 312.1 330.8
Other long - term assets 153.4 147.7
Total assets $2,730.0 $2,735.0
Short - term debt $68.8 $53.7
Current portion of long - term debt 89.9 52.5
Accounts payable, trade and other 289.1 301.4
Guarantees of vendor financing 14.1 25.6
Accrued pensions and other post-retirement
benefits, current 7.5 7.5
Other current liabilities 262.9 261.8
Total current liabilities 732.3 702.5
Long-term debt 440.2 523.5
Long-term liabilities 522.5 489.5
Stockholders' equity 1,035.0 1,019.5
Total liabilities and stockholders'
equity $2,730.0 $2,735.0
FMC CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited, in millions)
Six Months Ended
June 30,
2007 2006
Cash provided by operating activities $52.6 $80.6
Cash provided (required) by operating
activities of discontinued
operations (16.9) 5.1
Cash provided (required) by investing
activities:
Capital expenditures (44.6) (45.9)
Other investing activities 4.2 13.4
(40.4) (32.5)
Cash provided (required) by financing
activities:
Net borrowings under committed credit
facilities 15.0 -
Increase (decrease) in short-term debt 14.8 (14.4)
Repayment of long-term debt (66.0) (42.4)
Distributions to minority partners (4.5) (2.9)
Dividends paid (13.8) (7.0)
Repurchases of common stock (54.5) (20.8)
Issuances of common stock, net 10.0 29.8
(99.0) (57.7)
Effect of exchange rate changes on cash 1.4 1.9
Increase (decrease) in cash and cash
equivalents (102.3) (2.6)
Cash and cash equivalents, beginning
of year 165.5 206.4
Cash and cash equivalents, end of
period $63.2 $203.8
