10-Q
Table of Contents


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________________________________________
 FORM 10-Q
_______________________________________________________________________
x
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2015
or
o
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from _______ to _______
Commission File Number 1-2376
__________________________________________________________________________
FMC CORPORATION
(Exact name of registrant as specified in its charter)
__________________________________________________________________________ 
Delaware
 
94-0479804
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
 
1735 Market Street
Philadelphia, Pennsylvania
 
19103
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: 215-299-6000
__________________________________________________________________________
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS    YES  x    NO  o
INDICATE BY CHECK MARK WHETHER THE REGISTRANT HAS SUBMITTED ELECTRONICALLY AND POSTED ON ITS CORPORATE WEBSITE, IF ANY, EVERY INTERACTIVE DATA FILE REQUIRED TO BE SUBMITTED AND POSTED PURSUANT TO RULE 405 OF REGULATION S-T DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO SUBMIT AND POST SUCH FILES)    YES  x    NO  o
INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS A LARGE ACCELERATED FILER, AN ACCELERATED FILER, A NON-ACCELERATED FILER OR A SMALLER REPORTING COMPANY. SEE THE DEFINITIONS OF “LARGE ACCELERATED FILER,” “ACCELERATED FILER,” AND “SMALLER REPORTING COMPANY” IN RULE 12B-2 OF THE EXCHANGE ACT. (CHECK ONE):
LARGE ACCELERATED FILER
 
x
  
ACCELERATED FILER
 
o
 
 
 
 
 
 
 
NON-ACCELERATED FILER
 
o
  
SMALLER REPORTING COMPANY
 
o
INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS A SHELL COMPANY (AS DEFINED IN RULE 12B-2 OF THE EXCHANGE ACT)    YES  o    NO  x
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER’S CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE
Class
 
Outstanding at September 30, 2015
Common Stock, par value $0.10 per share
 
133,622,997


Table of Contents

FMC CORPORATION
INDEX
 
 
Page
No.


2

Table of Contents

PART I - FINANCIAL INFORMATION
 
ITEM 1.    FINANCIAL STATEMENTS

FMC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
 
(in Millions, Except Per Share Data)
Three Months Ended September 30
 
Nine Months Ended September 30
2015
 
2014
 
2015
 
2014
 
(unaudited)
 
(unaudited)
Revenue
$
830.7

 
$
819.1

 
$
2,377.2

 
$
2,370.9

Costs and Expenses
 
 
 
 
 
 
 
Costs of sales and services
610.4

 
535.6

 
1,600.4

 
1,478.3

 
 
 
 
 
 
 
 
Gross margin
220.3

 
283.5

 
776.8

 
892.6

 
 
 
 
 
 
 
 
Selling, general and administrative expenses
137.0

 
140.7

 
590.9

 
374.9

Research and development expenses
37.2

 
30.2

 
102.8

 
88.5

Restructuring and other charges (income)
45.6

 
35.6

 
78.2

 
44.9

Business separation costs

 
6.8

 

 
23.6

Total costs and expenses
830.2

 
748.9

 
2,372.3

 
2,010.2

Income from continuing operations before equity in (earnings) loss of affiliates, interest expense, net and income taxes
0.5

 
70.2

 
4.9

 
360.7

Equity in (earnings) loss of affiliates

 
0.1

 

 
(0.2
)
Interest expense, net
20.2

 
12.8

 
58.9

 
37.6

Income (loss) from continuing operations before income taxes
(19.7
)
 
57.3

 
(54.0
)
 
323.3

Provision (benefit) for income taxes
(25.1
)
 
3.6

 
(56.4
)
 
74.6

Income (loss) from continuing operations
5.4

 
53.7

 
2.4

 
248.7

Discontinued operations, net of income taxes
(5.0
)
 
6.4

 
698.8

 
(4.9
)
Net income (loss)
0.4

 
60.1

 
701.2

 
243.8

Less: Net income attributable to noncontrolling interests
2.8

 
3.8

 
8.1

 
12.8

Net income (loss) attributable to FMC stockholders
$
(2.4
)
 
$
56.3

 
$
693.1

 
$
231.0

Amounts attributable to FMC stockholders:
 
 
 
 
 
 
 
Continuing operations, net of income taxes
$
2.6

 
$
51.6

 
$
(5.7
)
 
$
241.1

Discontinued operations, net of income taxes
(5.0
)
 
4.7

 
698.8

 
(10.1
)
Net income (loss) attributable to FMC stockholders
$
(2.4
)
 
$
56.3

 
$
693.1

 
$
231.0

Basic earnings (loss) per common share attributable to FMC stockholders:
 
 
 
 
 
 
 
Continuing operations
$
0.02

 
$
0.39

 
$
(0.04
)
 
$
1.81

Discontinued operations
(0.04
)
 
0.03

 
5.22

 
(0.08
)
Net income (loss) attributable to FMC stockholders
$
(0.02
)
 
$
0.42

 
$
5.18

 
$
1.73

Diluted earnings (loss) per common share attributable to FMC stockholders:
 
 
 
 
 
 
 
Continuing operations
$
0.02

 
$
0.39

 
$
(0.04
)
 
$
1.80

Discontinued operations
(0.04
)
 
0.03

 
5.22

 
(0.08
)
Net income (loss) attributable to FMC stockholders
$
(0.02
)
 
$
0.42

 
$
5.18

 
$
1.72

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


3

Table of Contents

FMC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 
(in Millions)
Three Months Ended September 30
 
Nine Months Ended September 30
2015
 
2014
 
2015
 
2014
 
(unaudited)
 
(unaudited)
Net income (loss)
$
0.4

 
$
60.1

 
$
701.2

 
$
243.8

Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
Foreign currency adjustments:
 
 
 
 
 
 
 
Foreign currency translation gain (loss) arising during the period
(39.0
)
 
(34.7
)
 
(81.0
)
 
(37.9
)
Reclassification of foreign currency translation losses

 

 

 
49.6

Total foreign currency translation adjustments (1)
(39.0
)
 
(34.7
)
 
(81.0
)
 
11.7

 
 
 
 
 
 
 
 
Derivative instruments:
 
 
 
 
 
 
 
Unrealized hedging gains (losses) and other, net of tax of ($0.7) and $2.8 for the three and nine months ended 2015 and $0.8 and $3.2 for the three and nine months ended 2014, respectively
(1.5
)
 
0.8

 
3.7

 
5.3

Reclassification of deferred hedging (gains) losses and other, included in net income, net of tax of ($0.4) and ($2.0) for the three and nine months ended 2015 and ($0.2) and $0.8 for the three and nine months ended 2014, respectively (3)
(0.4
)
 
(0.3
)
 
(2.3
)
 
1.9

Total derivative instruments, net of tax of ($1.1) and $0.8 for the three and nine months ended 2015 and $0.6 and $4.0 for the three and nine months ended 2014, respectively
(1.9
)
 
0.5

 
1.4

 
7.2

 
 
 
 
 
 
 
 
Pension and other postretirement benefits:
 
 
 
 
 
 
 
Unrealized actuarial gains (losses) and prior service (costs) credits, net of tax of $0.2 and ($4.5) for the three and nine months ended 2015 and zero for three and nine months ended 2014, respectively (2)
(0.3
)
 
0.3

 
(7.4
)
 
0.2

Reclassification of net actuarial and other (gain) loss and amortization of prior service costs, included in net income, net of tax of $4.4 and $16.6 for the three and nine months ended 2015 and $3.0 and $9.9 for the three and nine months 2014, respectively (3)
8.0

 
5.2

 
29.4

 
17.9

Total pension and other postretirement benefits, net of tax of $4.6 and $12.1 for the three and nine months ended 2015 and $3.0 and $9.9 for the three and nine months ended 2014, respectively
7.7

 
5.5

 
22.0

 
18.1

 
 
 
 
 
 
 
 
Other comprehensive income (loss), net of tax
(33.2
)
 
(28.7
)
 
(57.6
)
 
37.0

Comprehensive income (loss)
$
(32.8
)
 
$
31.4

 
$
643.6

 
$
280.8

Less: Comprehensive income attributable to the noncontrolling interest
2.4

 
3.3

 
7.4

 
11.8

Comprehensive income (loss) attributable to FMC stockholders
$
(35.2
)
 
$
28.1

 
$
636.2

 
$
269.0

____________________ 
(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 nine months ended September 30, 2014 includes reclassification to net income due to the divestiture of our FMC Peroxygens business, see Note 12 for more information. In accordance with accounting guidance, this amount was previously factored into the lower of cost or fair value test associated with the 2013 Peroxygens' asset held for sale write-down charges.
(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. The interim adjustments noted above typically reflect the foreign currency translation impacts from the unrealized actuarial gains (losses) and prior service (costs) credits related to our foreign pension and postretirement plans. The amounts for the nine months September 30, 2015 includes adjustments, recorded during the three months ended March 31, 2015, to comprehensive income as the results of the disposal of our FMC Alkali Chemicals division. This disposal triggered a curtailment of our U.S. pension plans. See Note 13 for more information.
(3)
For more detail on the components of these reclassifications and the affected line item in the condensed consolidated statements of income (loss) see Note 12.


4

Table of Contents

FMC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in Millions, Except Share and Par Value Data)
September 30, 2015
 
December 31, 2014
ASSETS
(unaudited)
Current assets
 
 
 
Cash and cash equivalents
$
173.7

 
$
109.5

Trade receivables, net of allowance - 2015: $34.9; 2014: $37.2
1,689.6

 
1,602.5

Inventories
906.1

 
607.6

Prepaid and other current assets
251.3

 
188.8

Deferred income taxes
158.1

 
222.7

Current assets held for sale
59.3

 
203.3

Total current assets
$
3,238.1

 
$
2,934.4

Investments
3.7

 
5.5

Property, plant and equipment, net
1,082.8

 
930.0

Goodwill
733.5

 
352.5

Other intangibles, net
847.7

 
246.9

Other assets
333.1

 
269.6

Deferred income taxes
208.1

 
200.1

Noncurrent assets held for sale

 
401.5

Total assets
$
6,447.0

 
$
5,340.5

LIABILITIES AND EQUITY
 
 
 
Current liabilities
 
 
 
Short-term debt and current portion of long-term debt
$
121.2

 
$
525.2

Accounts payable, trade and other
484.2

 
378.3

Advance payments from customers
3.9

 
190.2

Accrued and other liabilities
349.3

 
407.2

Accrued customer rebates
357.3

 
236.0

Guarantees of vendor financing
65.7

 
50.2

Accrued pension and other postretirement benefits, current
6.6

 
12.7

Income taxes
66.6

 
22.2

Current liabilities held for sale
0.2

 
88.4

Total current liabilities
$
1,455.0

 
$
1,910.4

Long-term debt, less current portion
2,048.5

 
1,153.4

Accrued pension and other postretirement benefits, long-term
177.2

 
238.7

Environmental liabilities, continuing and discontinued
163.1

 
209.9

Deferred income taxes
235.5

 
51.3

Long-term liabilities held for sale

 
4.7

Other long-term liabilities
213.1

 
208.1

Commitments and contingent liabilities (Note 16)

 

Equity
 
 
 
Preferred stock, no par value, authorized 5,000,000 shares; no shares issued in 2015 or 2014

 

Common stock, $0.10 par value, authorized 260,000,000 shares; 185,983,792 issued shares at 2015 and 2014
18.6

 
18.6

Capital in excess of par value of common stock
415.4

 
401.9

Retained earnings
3,611.2

 
2,984.5

Accumulated other comprehensive income (loss)
(432.7
)
 
(375.8
)
Treasury stock, common, at cost - 2015: 52,360,795 shares, 2014: 52,666,121 shares
(1,498.8
)
 
(1,498.7
)
Total FMC stockholders’ equity
$
2,113.7

 
$
1,530.5

Noncontrolling interests
40.9

 
33.5

Total equity
$
2,154.6

 
$
1,564.0

Total liabilities and equity
$
6,447.0

 
$
5,340.5

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

5

Table of Contents

FMC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(in Millions)
Nine Months Ended September 30
2015
 
2014
 
(unaudited)
Cash provided (required) by operating activities of continuing operations:
 
 
 
Net income (loss)
$
701.2

 
$
243.8

Discontinued operations
(698.8
)
 
4.9

Income (loss) from continuing operations
$
2.4

 
$
248.7

Adjustments from income from continuing operations to cash provided (required) by operating activities of continuing operations:
 
 
 
Depreciation and amortization
92.2

 
70.9

Equity in (earnings) loss of affiliates

 
(0.2
)
Restructuring and other charges (income)
78.2

 
44.9

Deferred income taxes
52.4

 
(25.0
)
Pension and other postretirement benefits
30.5

 
22.8

Share-based compensation
12.2

 
11.5

Excess tax benefits from share-based compensation
(1.6
)
 
(4.4
)
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:
 
 
 
Trade receivables, net
315.5

 
(98.0
)
Guarantees of vendor financing
9.9

 
25.5

Inventories
(8.0
)
 
(73.4
)
Accounts payable
(201.1
)
 
2.6

Advance payments from customers
(186.2
)
 
(174.8
)
Accrued customer rebates
112.3

 
144.0

Income taxes
(288.8
)
 
26.6

Pension and other postretirement benefit contributions
(71.0
)
 
(65.2
)
Environmental spending, continuing, net of recoveries
(18.6
)
 
(9.1
)
Restructuring and other spending
(22.3
)
 
(6.6
)
Change in other operating assets and liabilities, net (1)
(154.8
)
 
(8.4
)
Cash provided (required) by operating activities of continuing operations
$
(246.8
)
 
$
132.4

 
 
 
 
Cash provided (required) by operating activities of discontinued operations:
 
 
 
Environmental spending, discontinued, net of recoveries
(10.4
)
 
(6.9
)
Other discontinued reserves
(15.8
)
 
(24.8
)
Operating activities of discontinued operations, net of recoveries
(37.5
)
 
101.0

Cash provided (required) by operating activities of discontinued operations
$
(63.7
)
 
$
69.3

                                        
(1)
The September 30, 2015 change is impacted by a $99.6 million reduction in the Cheminova acquisition hedge liability and the non-cash Cheminova inventory fair value amortization of $48.1 million. Total cash payments during the nine months ended September 30, 2015 associated with the Cheminova acquisition hedges were $264.8 million, which includes $165.2 million that were accrued and paid within the period.
The accompanying notes are an integral part of these condensed consolidated financial statements.
(continued)

6

Table of Contents

FMC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
 
(in Millions)
Nine Months Ended September 30
2015
 
2014
 
(unaudited)
Cash provided (required) by investing activities of continuing operations:
 
 
 
Capital expenditures
$
(87.4
)
 
$
(143.3
)
Proceeds from disposal of property, plant and equipment
1.3

 
0.3

Acquisitions, net of cash acquired
(1,205.1
)
 

Proceeds from sale of investment/business
34.5

 

Other investing activities
(25.0
)
 
(24.8
)
Cash provided (required) by investing activities of continuing operations
$
(1,281.7
)
 
$
(167.8
)
 
 
 
 
Cash provided (required) by investing activities of discontinued operations:
 
 
 
Proceeds from divestitures
1,649.8

 
199.1

       Other discontinued investing activities
(15.5
)
 
(30.7
)
Cash provided (required) by investing activities of discontinued operations
$
1,634.3

 
$
168.4

 
 
 
 
Cash provided (required) by financing activities of continuing operations:
 
 
 
Increase (decrease) in short-term debt
(537.6
)
 
(101.2
)
Repayments of long-term debt
(1,024.4
)
 
(17.7
)
Financing fees

 
(8.8
)
Proceeds from borrowings of long-term debt
1,650.1

 

Distributions to non controlling interests

 
(21.4
)
Issuances of common stock, net
5.8

 
7.5

Excess tax benefits from share-based compensation
1.6

 
4.4

Dividends paid (2)
(64.3
)
 
(58.1
)
Other repurchases of common stock
(3.2
)
 
(4.3
)
Cash provided (required) by financing activities of continuing operations
$
28.0

 
$
(199.6
)
Effect of exchange rate changes on cash and cash equivalents
(5.9
)
 
(1.6
)
Increase (decrease) in cash and cash equivalents
64.2

 
1.1

Cash and cash equivalents, beginning of period
109.5

 
123.2

Cash and cash equivalents, end of period
$
173.7

 
$
124.3

                                               
(2)
See Note 12 regarding quarterly cash dividend.
Supplemental disclosure of cash flow information: Cash paid for interest, net of capitalized interest was $61.9 million and $43.2 million, and income taxes paid, net of refunds were $270.6 million and $84.5 million for the nine months ended September 30, 2015 and 2014, respectively. Income taxes paid in the nine months ended September 30, 2015 included approximately $239 million in U.S. federal income tax payments related to the sale of our Alkali Chemicals business. Non-cash additions to property, plant and equipment were $7.7 million and $17.9 million for the nine months ended September 30, 2015 and 2014.


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

7

Table of Contents

FMC CORPORATION
Notes to Condensed Consolidated Financial Statements (unaudited)

Note 1: Financial Information and Accounting Policies
In our opinion the condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) applicable to interim period financial statements and reflect all adjustments necessary for a fair statement of results of operations for the three and nine months ended September 30, 2015 and 2014, cash flows for the nine months ended September 30, 2015 and 2014 and our financial positions as of September 30, 2015 and December 31, 2014. All such adjustments included herein are of a normal, recurring nature unless otherwise disclosed in the Notes. The results of operations for the three and nine months ended September 30, 2015 and 2014 are not necessarily indicative of the results of operations for the full year. The condensed consolidated balance sheets as of September 30, 2015 and December 31, 2014, and the related condensed consolidated statements of income (loss), condensed consolidated statements of comprehensive income (loss) and condensed consolidated statements of cash flows for the nine months ended September 30, 2015 and 2014, have been reviewed by our independent registered public accountants. The review is described more fully in their report included herein. Our accounting policies are set forth in detail in Note 1 to the consolidated financial statements included with our Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2014 (the “2014 10-K”).

FMC Alkali Chemicals Division:
In February 2015, our FMC Alkali Chemicals division ("ACD") was classified as a discontinued operation. For more information on the discontinued operations see Note 9. As a result, our FMC Minerals segment, which previously included our FMC Alkali Chemicals and FMC Lithium divisions, was renamed FMC Lithium. We have recast all the data within this filing to reflect the changes in our reportable segments to conform to the current year presentation and to present ACD as a discontinued operation retrospectively for all periods presented.

Note 2: Recently Issued and Adopted Accounting Pronouncements and Regulatory Items
New accounting guidance and regulatory items
In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory. This new standard changes the criteria by which to measure inventory. Prior to the issuance of this new standard, inventory was measured at the lower of cost or market value. This required three separate data points in order to measure inventory. The three data points were cost, market with a ceiling of net realizable value and market with a floor of net realizable value less a normal profit margin. This amendment eliminates the two data points defining "market" and replaces them with one, net realizable value. This amendment does not impact inventory measured using last-in, first-out. We are required to adopt this standard in the first quarter of 2017, early adoption is permitted. We are evaluating the effect that ASU 2015-11 will have on our consolidated financial statements. We have not yet completed the assessment to determine the effect of the standard on our ongoing financial reporting.
In April 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The amendments in this new standard require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this standard. This standard is applicable for fiscal years beginning after December 15, 2015 and for interim periods within those years and early adoption is permitted. We expect to adopt this standard in the first quarter of 2016; this amendment will be applied on a retrospective basis. The adoption of this standard is not expected to materially impact on our consolidated financial statements.
In February 2015, the FASB issued ASU 2015-02, Consolidation: Amendments to the Consolidation Analysis. This new standard changes the consolidation evaluation for entities that are required to evaluate whether they should consolidate certain legal entities. We are required to adopt this standard in the first quarter of 2016. Early adoption is permitted. The standard permits the use of a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption, or a reporting entity may also apply the amendments retrospectively. We are evaluating the effect that ASU 2015-02 will have on our consolidated financial statements. We have not yet completed the assessment to determine the effect of the standard on our ongoing financial reporting.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This new guidance will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. We intend to adopt this standard for interim and annual periods beginning after December 15, 2017. The standard permits the use of either the retrospective or cumulative effect transition method. We are evaluating the effect that ASU 2014-09 will have on our consolidated financial

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Table of Contents

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

statements and related disclosures. We have not yet selected a transition method nor have we determined the effect of the standard on our ongoing financial reporting.

Recently adopted accounting guidance
In September 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-16, Simplifying the Accounting for Measurement-Period Adjustments. This new standard eliminates the requirement to restate prior period financial statements for measurement period adjustments associated with business combinations. This new guidance does not change what constitutes a measurement period adjustment. This standard is applicable for fiscal years beginning after December 15, 2015 and for interim periods within those years and early adoption is permitted. We have adopted this guidance prospectively this quarter. For more information on the measurement period adjustments recorded during the period, see Note 3.
In April 2014, the FASB issued its updated guidance on the financial reporting of discontinued operations. This new standard changes the criteria for reporting discontinued operations while enhancing disclosures in this area. Under the new guidance, only disposals representing a strategic shift in operations should be presented as discontinued operations. Additionally, expanded disclosures about discontinued operations will be required to provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. This guidance impacts disclosures within an entity's financial statements and notes to the financial statements. We have adopted this guidance prospectively this year.

Note 3: Acquisitions
Cheminova A/S
On April 21, 2015, pursuant to the terms and conditions set forth in the Purchase Agreement, we completed the acquisition of 100 percent of the outstanding equity of Cheminova A/S, a Denmark Aktieselskab ("Cheminova") from Auriga Industries A/S, a Denmark Aktieselskab for an aggregate purchase price of $1.2 billion, excluding assumed net debt and hedged-related costs totaling $0.6 billion (the “Acquisition”). The Acquisition was funded with the October 10, 2014 term loan which was secured for the purposes of the Acquisition. See Note 8 for more information.
Cheminova is being integrated into our FMC Agricultural Solutions segment and has been included within our results of operations for the three and nine months ended September 30, 2015.

Preliminary Purchase Price Allocation
The acquisition of Cheminova has been accounted for under the GAAP business combinations accounting guidance, and as such we have applied acquisition accounting. Acquisition accounting requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The aggregate purchase price noted above was allocated to the major categories of assets acquired and liabilities assumed based upon their estimated fair values at the Acquisition date using primarily Level 2 and Level 3 inputs (see Note 15 for an explanation of Level 2 and 3 inputs). These Level 2 and Level 3 valuation inputs include an estimate of future cash flows and discount rates. Additionally, estimated fair values are based, in part, upon outside preliminary appraisals for certain assets, including specifically-identified intangible assets.
The allocation of the purchase price to the assets acquired and liabilities assumed, including the residual amount allocated to goodwill, is based upon preliminary information. The allocation is subject to change within the measurement period (up to one year from the acquisition date) as additional information concerning final asset and liability valuations is obtained. Any changes to the initial allocation are referred to as measurement-period adjustments. Measurement-period adjustment since our initial preliminary estimates reported in our second quarter 2015 Form 10-Q were primarily related to decreases in the estimated fair values of certain current assets, property, plant and equipment and income taxes payable. These decreases were offset by increases in current liabilities, intangible assets and deferred income taxes. The cumulative effect of all measurement-period adjustments resulted in an increase to recognized goodwill of approximately $5 million. Measurement-period adjustments recorded to the condensed consolidated statement of income (loss) were immaterial for the period ended September 30, 2015.
The primary areas of the preliminary purchase price allocation that are not yet finalized relate to the fair value of trade receivables, inventories, property, plant and equipment, intangible assets, legal reserves, contingent liabilities, including uncertain tax positions, deferred tax assets and liabilities as well as other assets and liabilities. During the measurement period, if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in revised estimated values of those assets or liabilities as of that date we will revise the preliminary purchase price allocation. The effect of measurement

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

period adjustments to the estimated fair values will be calculated as if the adjustments had been completed on the acquisition date. The impact of all changes that do not qualify as measurement period adjustments will be included in current period earnings.
The following table summarizes the consideration paid for Cheminova and the amounts of the assets acquired and liabilities assumed as of the acquisition date, which have been allocated on a preliminary basis.
Preliminary Purchase Price Allocation
(in Millions)
 
Trade receivables
$
508.1

Inventories (1)
397.7

Other current assets
53.6

Property, plant & equipment
188.6

Intangible assets (2)
 
Customer relationships
280.3

Brands
365.1

In-process research & development
8.6

Goodwill (3)
398.4

Other assets
58.1

Total fair value of assets acquired
2,258.5

 
 
Short-term debt
140.5

Other current liabilities
461.7

Long-term debt (4)
273.1

Deferred tax liabilities
164.1

Other liabilities
14.0

Total fair value of liabilities assumed
1,053.4

 
 
Total cash paid, less cash acquired
$
1,205.1

____________________ 
(1)
Fair value of finished goods inventory acquired included a step-up in the value of approximately $58.1 million, of which $28.8 million and $48.1 million was expensed in the three and nine months ended September 30, 2015, respectively, and included in "Cost of sales and services" on the condensed consolidated income statement.
(2)
The weighted average useful life of the acquired finite-lived intangibles, which primarily represents the customer relationships, is approximately 20 years.
(3)
Goodwill largely consists of expected cost synergies and economies of scale resulting from the business combination. None of the acquired goodwill will be deductible for income tax purposes.
(4)
Long-term debt assumed primarily consisted of mortgage debt and borrowings under existing Cheminova credit facilities. As of September 30, 2015 the principal borrowings under this assumed debt has been settled utilizing the borrowing under the October 10, 2014 term loan.

Unaudited Pro Forma Financial Information
The following unaudited pro forma results of operations assume that the Acquisition occurred at the beginning of the periods presented. The pro forma amounts include certain adjustments, including interest expense on the borrowings utilized to complete the acquisition, depreciation and amortization expense and income taxes. The pro forma amounts for the three and nine month period below exclude acquisition-related charges. The pro forma results do not include adjustments related to cost savings or other synergies that are anticipated as a result of the Acquisition. Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations would have been if the acquisition had occurred as of January 1, 2014, nor are they indicative of future results of operations.


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

 
Three Months Ended September 30
 
Nine Months Ended September 30
(in Millions)
2015
 
2014
 
2015
 
2014
Pro forma Revenue
$
830.7

 
$
1,124.5

 
$
2,739.2

 
$
3,370.0

Pro forma Diluted earnings per share
$
0.18

 
$
0.56

 
$
6.40

 
$
2.14


Acquisition-related charges
Pursuant to GAAP, costs incurred to complete the Acquisition as well as costs incurred to integrate Cheminova into our operations are expensed as incurred. The following table summarizes the costs incurred associated with these combined activities.
 
Three Months Ended September 30
 
Nine Months Ended September 30
(in Millions)
2015
 
2014
 
2015
 
2014
Acquisition-related charges
 
 
 
 
 
 
 
Legal and professional fees (1)
$
14.2

 
$
15.3

 
$
53.8

 
$
15.3

Inventory fair value amortization (2)
28.8

 

 
48.1

 

(Gain)/loss on hedging purchase price (3)

 
21.2

 
172.1

 
21.2

Total Acquisition-related charges
$
43.0

 
$
36.5

 
$
274.0

 
$
36.5

Restructuring charges and asset disposals
 
 
 
 
 
 
 
Cheminova restructuring
50.7

 

 
55.5

 

Total Cheminova restructuring charges (4)
$
50.7

 
$

 
$
55.5

 
$

____________________ 
(1)
Represents transaction costs, costs for transitional employees, other acquired employee related costs and integration related legal and professional third-party fees. On the condensed consolidated statements of income (loss), these charges are included in “Selling, general and administrative expense.”
(2)
On the condensed consolidated statements of income (loss), these charges are included in “Costs of sales and services.”
(3)
See "Cheminova Acquisition Hedge Costs" below for more information on these charges. On the condensed consolidated statements of income (loss), these charges are included in “Selling, general and administrative expense.”
(4)
See Note 7 for more information. These charges are recorded as a component of “Restructuring and other charges (income)” on the condensed consolidated statements of income (loss).

Cheminova Acquisition Hedge Costs
Pursuant to the terms and conditions set forth in the Purchase Agreement, we agreed to acquire all of the outstanding equity of Cheminova from Auriga for an aggregate purchase price of 8.5 billion Danish krone ("DKK"). At the time we entered into the Purchase Agreement, the U.S. dollar ("USD" or “$”) to DKK exchange rate was USD $1.00 to DKK 5.77, resulting in a USD purchase price of $1.47 billion, excluding assumed debt of approximately $0.3 billion. In order to minimize our exposure to adverse changes in the USD to DKK exchange rate from September 8, 2014 to April 21, 2015 (the acquisition close date), we entered into a series of foreign currency forward contracts ("FX forward contracts"). The FX forward contracts provided us the ability to fix the USD to DKK exchange rate for most of the DKK 8.5 billion purchase price, thereby limiting our exposure to foreign currency rate fluctuations. Over the period from September 2014 to April 21, 2015 the USD strengthened against the DKK by approximately 21 percent to an exchange rate of USD $1.00 to DKK 6.96. The strengthening of the USD against the DKK results in a lower USD purchase price for Cheminova. Partially offsetting this was a mark-to-market net loss settlement on the FX forward contracts of $172.1 million.


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

Note 4: Goodwill and Intangible Assets
The changes in the carrying amount of goodwill by business segment are presented in the table below:
(in Millions)
FMC Agricultural
Solutions
 
FMC Health and Nutrition
 
FMC Lithium
 
Total
Balance, December 31, 2014
$
31.0

 
$
321.5

 
$

 
$
352.5

Acquisitions
398.4

 

 

 
398.4

Foreign currency adjustments

 
(17.4
)
 

 
(17.4
)
Balance, September 30, 2015
$
429.4

 
$
304.1

 
$

 
$
733.5

We perform our goodwill impairment tests at least annually. Our fiscal year 2015 annual goodwill impairment test was performed during the three months ended September 30, 2015. As a result we determined no goodwill impairment existed. There were no events or circumstances indicating that goodwill might be impaired as of September 30, 2015.

Our intangible assets, other than goodwill, consist of the following:
 
September 30, 2015
 
December 31, 2014
(in Millions)
Gross
 
Accumulated Amortization
 
Net
 
Gross
 
Accumulated Amortization
 
Net
Intangible assets subject to amortization (finite-lived)
Customer relationships
$
416.5

 
$
(34.8
)
 
$
381.7

 
$
152.8

 
$
(22.5
)
 
$
130.3

Patents
2.2

 
(0.3
)
 
1.9

 
1.7

 
(0.1
)
 
1.6

Brands (1)
15.0

 
(2.0
)
 
13.0

 
1.2

 
(0.6
)
 
0.6

Purchased and licensed technologies
71.7

 
(28.5
)
 
43.2

 
74.3

 
(24.5
)
 
49.8

Other intangibles
3.5

 
(2.2
)
 
1.3

 
3.6

 
(2.4
)
 
1.2

 
$
508.9

 
$
(67.8
)
 
$
441.1

 
$
233.6

 
$
(50.1
)
 
$
183.5

Intangible assets not subject to amortization (indefinite life)
Brands (1)
$
398.4

 
 
 
$
398.4

 
$
63.4

 
 
 
$
63.4

In-process research & development
8.2

 
 
 
8.2

 

 
 
 

 
$
406.6

 
 
 
$
406.6

 
$
63.4

 
 
 
$
63.4

Total intangible assets
$
915.5

 
$
(67.8
)
 
$
847.7

 
$
297.0

 
$
(50.1
)
 
$
246.9

(1)
Represents trademarks, trade names and know-how.
At September 30, 2015, the finite-lived and indefinite life intangibles were allocated among our business segments as follows:
(in Millions)
Finite-lived
 
Indefinite Life
FMC Agricultural Solutions
$
366.9

 
$
380.2

FMC Health and Nutrition
73.1

 
26.4

FMC Lithium
1.1

 

Total
$
441.1

 
$
406.6

 
Three Months Ended September 30
 
Nine Months Ended September 30
(in Millions)
2015
 
2014
 
2015
 
2014
Amortization expense
$
7.3

 
$
2.7

 
$
15.4

 
$
8.4

The estimated pre-tax amortization expense for fiscal year 2015 is $24 million and is estimated to be $29 million for each fiscal year from 2016 to 2019. The estimated pre-tax amortization expense may fluctuate due to changes in foreign currency.

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


Note 5: Inventories
Inventories consisted of the following:
 (in Millions)
September 30, 2015
 
December 31, 2014
Finished goods
$
495.5

 
$
281.1

Work in process
198.1

 
248.8

Raw materials, supplies and other
379.9

 
242.1

First-in, first-out inventory
$
1,073.5

 
$
772.0

Less: Excess of first-in, first-out cost over last-in, first-out cost
(167.4
)
 
(164.4
)
Net inventories
$
906.1

 
$
607.6


Note 6: Property, Plant and Equipment
Property, plant and equipment consisted of the following:
(in Millions)
September 30, 2015
 
December 31, 2014
Property, plant and equipment
$
1,783.2

 
$
1,618.7

Accumulated depreciation
(700.4
)
 
(688.7
)
Property, plant and equipment, net
$
1,082.8

 
$
930.0


Note 7: Restructuring and Other Charges (Income)
Our restructuring and other charges (income) are comprised of restructuring, asset disposals and other charges (income) as noted below:
 
Three Months Ended September 30
 
Nine Months Ended September 30
(in Millions)
2015
 
2014
 
2015
 
2014
Restructuring charges and asset disposals
$
69.3

 
$
1.3

 
$
81.5

 
$
7.9

Other charges (income), net
(23.7
)
 
34.3

 
(3.3
)
 
37.0

Total restructuring and other charges
$
45.6

 
$
35.6

 
$
78.2

 
$
44.9


Restructuring charges and asset disposals
Detail on the 2015 restructuring charges and asset disposal activities is provided below. For detail on restructuring activities which commenced prior to 2015, see Note 7 to our consolidated financial statements included with our 2014 Form 10-K.
2015 Restructuring Activities
Cheminova Restructuring
On April 21, 2015 we completed the acquisition of Cheminova; see Note 3 for more details. As part of the integration of Cheminova into our existing FMC Agricultural Solutions segment we implemented a restructuring plan. The restructuring plan includes workforce reductions, relocation of current operating locations, lease termination fees and fixed asset accelerated depreciation as well as fixed asset disposal charges at several of our FMC Agricultural Solutions' facilities. Included within these actions was the decision to exit our generic crop protection business in Brazil, Consagro Agroquimica Ltda. (Consagro).
Consagro Crop Protection Business
On September 10, 2015, we entered into a definitive agreement to sell our generic crop protection business in Brazil, Consagro, to Atanor do Brasil Ltda., the Brazilian subsidiary of Albaugh, LLC. The sale of Consagro is part of our broad strategy to focus on our portfolio of valued-added products, especially with the addition of the Cheminova product line in Brazil. We expect the sale to occur in the fourth quarter of 2015. As a result, at September 30, 2015 we reclassified the Consagro business as an asset held for sale on the condensed consolidated balance sheet. In accordance with GAAP, assets held for sale are required to be reported at the lower of carrying value or fair value less costs to sell. During the three and

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

nine month period ended September 30, 2015 we recorded an impairment charge of $40.1 million to adjust the carrying value of the net assets of Consagro to the estimated net proceeds on the sale of the business less anticipated costs to sell.

Health and Nutrition Restructuring
In 2014 our FMC Health and Nutrition segment implemented a plan to restructure a portion of its operations. The objective of the restructuring was to better align our business and costs to macroeconomic and market realities. The restructuring decision resulted in workforce reductions at several of our FMC Health and Nutrition facilities. In 2015 these restructuring activities continued with the sale of our pectin manufacturing business.
Pectin Manufacturing Business
As part of our Health and Nutrition Restructuring we changed our strategy for pectin shifting our focus from the manufacture of standard grade pectin to concentrate on higher-value, more specialized solutions for our customers. To accomplish our goals under this new strategy on September 11, 2015, we completed the sale of our pectin manufacturing business, located in Milazzo, Italy, to Cargill, Inc (Cargill).

The sale resulted in approximately $7.0 million in proceeds and a loss on sale of $11.9 million for the three and nine months ended September 30, 2015. The proceeds from the sale are included within "Proceeds from sale of investment/business" on the Condensed Consolidated Statement of Cash Flows. The loss of $11.9 million was comprised of net assets sold of $18.9 million which primarily included property, plant and equipment and trade working capital (i.e., trade receivables and payables as well as inventory). In connection with the sale we entered into a customary transitional services agreement with Cargill to provide for the orderly separation of the business. These services will be provided by us to Cargill for up to three months after closing. We have also entered into an arm's-length supply agreement with Cargill, which provides us with more efficient and flexible sourcing on a broad range of both standard and specialty pectin grades.

 
 
Restructuring Charges
(in Millions)
 
Severance and Employee Benefits (1)
 
Other Charges (Income) (2)
 
Asset Disposal Charges (3)
 
Total
Cheminova Restructuring
 
$
7.8

 
$
2.5

 
$
40.4

 
$
50.7

Health and Nutrition Restructuring
 
4.3

 
0.4

 
11.9

 
16.6

Other Items
 
2.0

 

 

 
2.0

Three months ended September 30, 2015
 
$
14.1

 
$
2.9

 
$
52.3

 
$
69.3

 
 
 
 
 
 
 
 
 
Other Items
 
0.5

 
0.8

 

 
1.3

Three months ended September 30, 2014
 
$
0.5

 
$
0.8

 
$

 
$
1.3

 
 
 
 
 
 
 
 
 
Cheminova Restructuring
 
$
12.2

 
$
2.8

 
$
40.5

 
$
55.5

Health and Nutrition Restructuring
 
5.9

 
0.5

 
14.1

 
20.5

Other Items
 
5.6

 
(0.1
)
 

 
5.5

Nine months ended September 30, 2015
 
$
23.7

 
$
3.2

 
$
54.6

 
$
81.5

 
 
 
 
 
 
 
 
 
Health and Nutrition Restructuring
 
$
5.8

 
$

 
$

 
$
5.8

Other Items
 
0.5

 
1.6

 

 
2.1

Nine months ended September 30, 2014
 
$
6.3

 
$
1.6

 
$

 
$
7.9

____________________ 
(1)
Represents severance and employee benefit charges. Income represents adjustments to previously recorded severance and employee benefits.
(2)
Primarily represents costs associated with lease payments, contract terminations, and other miscellaneous exit costs. Other Income primarily represents favorable developments on previously recorded exit costs as recoveries associated with restructuring.
(3)
Primarily represents accelerated depreciation and impairment charges on long-lived assets, which were or are to be abandoned. To the extent incurred the acceleration effect of re-estimating settlement dates and revised cost estimates associated with asset retirement obligations due to facility shutdowns are also included within the asset disposal charges.

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

Roll forward of restructuring reserves
The following table shows a roll forward of restructuring reserves, continuing and discontinued, that will result in cash spending. These amounts exclude asset retirement obligations.
(in Millions)
Balance at
12/31/14 (4)
 
Change in
reserves (2)
 
Cash
payments
 
Other (3)
 
Balance at
9/30/15 (4)
Cheminova Restructuring
$

 
$
15.0

 
$
(9.7
)
 
$

 
$
5.3

Health and Nutrition Restructuring
4.6

 
6.4

 
(8.2
)
 
0.1

 
2.9

Other Workforce Related and Facility Shutdowns (1)
3.0

 
5.5

 
(4.5
)
 
0.5

 
4.5

Restructuring activities related to discontinued operations (5)
2.7

 
(2.2
)
 
(0.1
)
 

 
0.4

Total
$
10.3

 
$
24.7

 
$
(22.5
)
 
$
0.6

 
$
13.1

____________________ 
(1)
Primarily severance costs related to workforce reductions and facility shutdowns noted in the “Other Items” sections above.
(2)
Primarily severance, exited lease, contract termination and other miscellaneous exit costs. Any accelerated depreciation and impairment charges noted above impacted our property, plant and equipment balances and are not included in the above tables.
(3)
Primarily foreign currency translation adjustments.
(4)
Included in “Accrued and other liabilities” on the condensed consolidated balance sheets.
(5)
Cash spending associated with restructuring activities of discontinued operations is reported within "Other discontinued reserves" on the condensed consolidated statements of cash flows.
Other charges (income), net
 
Three Months Ended September 30
 
Nine Months Ended September 30
(in Millions)
2015
 
2014
 
2015
 
2014
Environmental charges, net
$
2.9

 
$
17.3

 
$
8.3

 
$
20.0

Other items, net
(26.6
)
 
17.0

 
(11.6
)
 
17.0

Other charges (income), net
$
(23.7
)
 
$
34.3

 
$
(3.3
)
 
$
37.0

Environmental charges, net
Environmental charges represent the net charges associated with environmental remediation at continuing operating sites. See Note 10 for additional details.
Other items, Net
In the three months ended September 30, 2015 we sold our remaining ownership interest in a Belgian-based pesticide distribution company, Belchim Crop Protection N.V. ("Belchim"). Prior to and subsequent to the sale, Belchim was accounted for as a cost method investment. The gain on the sale of approximately $26.6 million was recorded as "Other income, net". The cash proceeds from the sale of $27.5 million are included within "Proceeds from sale of investment/business" on the Condensed Consolidated Statement of Cash Flows.
Our FMC Agricultural Solutions segment enters 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. In most transactions, the rights and technology obtained is referred to as in-process research and development and in accordance with GAAP. The amounts paid are expensed as incurred since they were acquired outside of a business combination. During the nine months ended September 30, 2015, we entered into one such transaction, consisting of the acquisition of all global rights to a pre-development novel, proprietary broadleaf herbicide. During the three and nine months ended September 30, 2014, we entered into another similar transaction, consisting of an exclusive license, development and supply agreement for a novel crop protection product for agricultural use in the United States.


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

Note 8: Debt
Debt maturing within one year:
(in Millions)
September 30, 2015
 
December 31, 2014
Short-term foreign debt (1)
$
89.8

 
$
36.6

Commercial paper (2)
30.0

 
486.6

Total short-term debt
$
119.8

 
$
523.2

Current portion of long-term debt
1.4

 
2.0

Short-term debt and current portion of long-term debt
$
121.2

 
$
525.2

____________________
(1)
At September 30, 2015, the average interest rate on the borrowings was 10.7%. We often provide parent-company guarantees to lending institutions that extend credit to our foreign subsidiaries.
(2)
At September 30, 2015, the average interest rate on the borrowings was 0.52%.
Long-term debt:
(in Millions)
September 30, 2015
 
 
 
 
Interest Rate
Percentage
 
Maturity
Date
 
September 30, 2015
 
December 31, 2014
Pollution control and industrial revenue bonds (less unamortized discounts of $0.2 and $0.2, respectively)
0.2-6.5%
 
2021-2035
 
$
141.5

 
$
141.5

Senior notes (less unamortized discount of $1.7 and $1.9, respectively)
3.95-5.2%
 
2019-2024
 
998.3

 
998.1

Term Loan Facility
1.4%
 
2020
 
900.0

 

Credit Facility (1)
2.6%
 
2019
 

 

Foreign debt
3.3%
 
2015-2024
 
10.1

 
15.8

Total long-term debt

 

 
$
2,049.9

 
$
1,155.4

Less: debt maturing within one year

 

 
1.4

 
2.0

Total long-term debt, less current portion

 

 
$
2,048.5

 
$
1,153.4

____________________
(1)
Letters of credit outstanding under our Credit Facility totaled $50.6 million and available funds under this facility were $1,419.4 million at September 30, 2015, which reflects borrowings under our commercial paper program.

Covenants
Among other restrictions, our Credit Facility and Term Loan Facility contain financial covenants applicable to FMC and its consolidated subsidiaries related to leverage (measured as the ratio of debt to adjusted earnings) and interest coverage (measured as the ratio of adjusted earnings to interest expense). Our actual leverage for the four consecutive quarters ended September 30, 2015, was 3.8 which is below the maximum leverage of 4.5 at September 30, 2015. Our actual interest coverage for the four consecutive quarters ended September 30, 2015, was 8.2 which is above the minimum interest coverage of 3.5. We were in compliance with all covenants at September 30, 2015.

Term Loan Facility
On April 21, 2015, we borrowed $1.65 billion under our previously announced senior unsecured Term Loan Facility. The proceeds of the borrowing were used to finance the acquisition of Cheminova as well as to pay costs, fees and expenses incurred in connection with the acquisition and the term loan facility. At September 30, 2015, $900.0 million remained outstanding under the Term Loan facility, as a portion of the net proceeds from the sale of our FMC Alkali division (see Note 9) was used to pay down the initial borrowings.
The scheduled maturity of the Term Loan Facility is on April 21, 2020. The borrowings 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

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

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 plus1/2 of one percent; and the Eurocurrency rate for a one-month period plus one percent.
The Term Loan Agreement contains a cross-default provision whereby a default under our other indebtedness in excess of $50.0 million, after grace periods and absent a waiver from the lenders, would be an event of default under the Term Loan Agreement and could result in a demand for payment of all amounts outstanding under this facility.

Note 9: Discontinued Operations
FMC Alkali:
On April 1, 2015, we completed the previously disclosed sale of our FMC Alkali Chemicals division ("ACD") for $1,649.8 million to a wholly owned subsidiary of Tronox Limited ("Tronox"). The sale resulted in approximately $1,198.5 million in after-tax cash proceeds. The sale resulted in a pre-tax gain of $1,080.2 million ($702.1 million net of tax) for the three months ended September 30, 2015.
In connection with the sale we entered into a customary transitional services agreement with Tronox to provide for the orderly separation of the business and transition of various functions and processes. These services will be provided by us to Tronox for up to 12 months after closing. These services include information technology services, human resource and facility services among other services, while Tronox assumes the operations of ACD.
The results of our discontinued FMC ACD operations are summarized below:
(in Millions)
Three Months Ended September 30
 
Nine Months Ended September 30
2015
 
2014
 
2015
 
2014
Revenue
$

 
$
196.8

 
$
194.0

 
$
574.6

Costs of sales and services

 
156.5

 
149.2

 
457.4

 
 
 
 
 
 
 
 
Income (loss) from discontinued operations before income taxes (1)
7.7

 
30.7

 
1,096.4

 
91.9

Provision for income taxes
6.0

 
3.8

 
378.4

 
13.6

Total discontinued operations of FMC ACD, net of income taxes
$
1.7

 
$
26.9

 
$
718.0

 
$
78.3

Less: discontinued operations of FMC ACD attributable to noncontrolling interests
$

 
$
1.7

 
$

 
$
5.2

Discontinued operations of FMC ACD, net of income taxes, attributable to FMC Stockholders
$
1.7

 
$
25.2

 
$
718.0

 
$
73.1

____________________
(1)
For the three months ended September 30, 2015 and 2014, respectively, amounts include approximately zero and $1.9 million attributable to noncontrolling interests, zero and $2.1 million of allocated interest expense, zero and $1.0 million of divestiture related charges. For the nine months ended September 30, 2015 and 2014, respectively, amounts include approximately zero and $6.1 million attributable to noncontrolling interests, $2.2 million and $6.1 million of allocated interest expense, $15.0 million and $1.0 million of divestiture related charges and $5.3 million and zero of a pension curtailment charge. Interest was allocated in accordance with relevant discontinued operations accounting guidance.


17

Table of Contents

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

The following table presents the major classes of assets and liabilities of FMC Alkali Chemicals:
(in Millions)
December 31, 2014
Assets
 
Current assets of discontinued operations held for sale (primarily trade receivables and inventories)
$
203.3

Property, plant & equipment (1)
378.6

Other non-current assets (1)
22.9

Total assets of discontinued operations held for sale
$
604.8

Liabilities
 
Current liabilities of discontinued operations held for sale
(88.4
)
Noncurrent liabilities of discontinued operations held for sale (1)
(4.7
)
Total liabilities of discontinued operations held for sale
$
(93.1
)
Net Assets
$
511.7

____________________
(1)
Presented as "Noncurrent assets\liabilities of discontinued operations held for sale" on the condensed consolidated balance sheet as of December 31, 2014.

In addition to our discontinued FMC Alkali Chemicals division our other discontinued operations include adjustments to retained liabilities. The primary liabilities retained include environmental liabilities, other postretirement benefit liabilities, self-insurance, long-term obligations related to legal proceedings and historical restructuring activities.
Our discontinued operations comprised the following:
(in Millions)
Three Months Ended September 30
 
Nine Months Ended September 30
2015
 
2014
 
2015
 
2014
Adjustment for workers’ compensation, product liability, other postretirement benefits and other, net of income tax benefit (expense) of ($0.8) and ($1.1) for the three and nine months ended 2015 and ($0.1) and $0.8 for the three and nine months ended 2014, respectively
$
(1.5
)
 
$
(2.6
)
 
$
(1.6
)
 
$
(5.4
)
Provision for environmental liabilities, net of recoveries, net of income tax benefit of $1.7 and $6.3 for the three and nine months ended 2015 and $3.2 and $10.3 for the three and nine months ended 2014, respectively (1)
(2.9
)
 
(14.3
)
 
(10.9
)
 
(26.6
)
Provision for legal reserves and expenses, net of recoveries, net of income tax benefit (expense) of $1.5 and $3.9 for the three and nine months ended 2015 and $2.1 and $6.6 for the three and nine months ended 2014, respectively
(2.3
)
 
(3.6
)
 
(6.7
)
 
(11.2
)
Discontinued operations of FMC Alkali Chemicals, net of income tax benefit (expense) of ($6.0) and ($378.4) for the three and nine months ended 2015 and ($3.8) and ($13.6) for the three and nine months ended 2014, respectively
1.7

 
26.9

 
718.0

 
78.3

Discontinued operations of FMC Peroxygens, net of income tax benefit (expense) of zero for the three and nine months ended 2015 and zero and ($29.3) for the three and nine months ended 2014, respectively (2)

 

 

 
(40.0
)
Discontinued operations, net of income taxes
$
(5.0
)
 
$
6.4

 
$
698.8

 
$
(4.9
)
____________________
(1)
See a roll forward of our environmental reserves as well as discussion on significant environmental issues that occurred during the 2015 in Note 10.
(2)
On February 28, 2014, we completed the sale of our FMC Peroxygens business for $199.1 million in cash to One Equity Partners (OEP), the private investment arm of J.P. Morgan Chase & Co. The sale resulted in a further pre-tax loss of $10.1 million ($33.4 million net of tax). The net of tax loss was driven by the final allocation of the proceeds.


18

Table of Contents

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

Note 10: Environmental Obligations
We have reserves for potential environmental obligations, which management considers probable and which management can reasonably estimate. The table below is a roll forward of our total environmental reserves, continuing and discontinued:
 
(in Millions)
Gross
 
Recoveries (3)
 
Net
Total environmental reserves at December 31, 2014
$
296.2

 
$
(11.9
)
 
$
284.3

Provision/(benefit)
25.5

 

 
25.5

(Spending)/recoveries
(37.5
)
 
4.2

 
(33.3
)
Total environmental reserves at September 30, 2015
$
284.2

 
$
(7.7
)
 
$
276.5

 
 
 
 
 
 
Environmental reserves, current (1)
117.1

 
(3.7
)
 
113.4

Environmental reserves, long-term (2)
167.1

 
(4.0
)
 
163.1

Total environmental reserves at September 30, 2015
$
284.2

 
$
(7.7
)
 
$
276.5

____________________
(1)
These amounts are included within "Accrued and other liabilities" on the condensed consolidated balance sheets.
(2)
These amounts are included in “Environmental liabilities, continuing and discontinued” on the condensed consolidated balance sheets.
(3)
These recorded recoveries represent probable realization of claims against U.S. government agencies and are recorded as an offset to our environmental reserves in the condensed consolidated balance sheets.
The estimated reasonably possible environmental loss contingencies, net of expected recoveries, exceed amounts accrued by approximately $210 million at September 30, 2015. This reasonably possible estimate is based upon information available as of the date of the filing but the actual future losses may be higher given the uncertainties regarding the status of laws, regulations, enforcement policies, the impact of potentially responsible parties, technology and information related to individual sites. Potential environmental obligations that have not been reserved may be material to any one quarter's or year's results of operations in the future. However, we believe any such liability arising from such potential environmental obligations is not likely to have a material adverse effect on our liquidity or financial condition as it may be satisfied over many years.
The table below provides a roll forward of our environmental recoveries representing probable realization of claims against insurance carriers and other third parties. These recoveries are recorded as "Other assets" in the condensed consolidated balance sheets.
(in Millions)
12/31/2014
 
Increase in Recoveries
 
Cash Received
 
9/30/2015
Environmental recoveries
$
29.9

 

 
(4.0
)
 
$
25.9


Our net environmental provisions relate to costs for the continued cleanup of both continuing and discontinued manufacturing operations from previous years. The net provisions are comprised as follows:
 
Three Months Ended September 30
 
Nine Months Ended September 30
(in Millions)
2015
 
2014
 
2015
 
2014
Environmental provisions, net - recorded to liabilities (1)
$
7.5

 
$
34.8

 
$
25.5

 
$
62.1

Environmental provisions, net - recorded to assets (2)

 

 

 
(5.2
)
Environmental provision, net
$
7.5

 
$
34.8

 
$
25.5

 
$
56.9

 
 
 
 
 
 
 
 
Continuing operations (3)
2.9

 
17.3

 
8.3

 
20.0

Discontinued operations (4)
4.6

 
17.5

 
17.2

 
36.9

Environmental provision, net
$
7.5

 
$
34.8

 
$
25.5

 
$
56.9

____________________
(1)
See above roll forward of our total environmental reserves as presented on the condensed consolidated balance sheets.
(2)
See above roll forward of our total environmental recoveries as presented on the condensed consolidated balance sheets.

19

Table of Contents

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

(3)
Recorded as a component of “Restructuring and other charges (income)” on the condensed consolidated statements of income (loss), see Note 7. Environmental obligations for continuing operations primarily represent obligations at shut down or abandoned facilities within businesses that do not meet the criteria for presentation as discontinued operations.
(4)
Recorded as a component of “Discontinued operations, net of income taxes" on the condensed consolidated statements of income (loss), see Note 9.

A more complete description of our environmental contingencies and the nature of our potential obligations are included in Notes 1 and 10 to our consolidated financial statements in our 2014 Form 10-K. See Note 10 to our consolidated financial statements in our 2014 Form 10-K for a description of significant updates to material environmental sites. The following represents significant updates that occurred in 2015 related to these contingencies.
Middleport
We continue to litigate with the New York State Department of Environmental Conservation and United States Environmental Protection Agency over the terms of the 1991 Administrative Order on Consent among the parties that govern our remedial obligations in and around Middleport, New York. On August 20, 2015, the Supreme Court of New York dismissed our state action on procedural grounds. We have appealed that dismissal to the New York Supreme Court Appellate Division, Third Department. Our existing federal action before the United States District Court for the Western District of New York is still pending. Our reserve continues to include the estimated liability for clean-up to reflect the costs associated with our recommended Corrective Action Management Alternative.

Note 11: Earnings Per Share
Earnings per common share (“EPS”) is computed by dividing net income by the weighted average number of common shares outstanding during the period on a basic and diluted basis.
Our potentially dilutive securities include potential common shares related to our stock options, restricted stock and restricted stock units. Diluted earnings per share (“Diluted EPS”) considers the impact of potentially dilutive securities except in periods in which there is a loss because the inclusion of the potential common shares would have an antidilutive effect. Diluted EPS excludes the impact of potential common shares related to our stock options in periods in which the option exercise price is greater than the average market price of our common stock for the period. There were 1.383 million potential common shares, excluded from Diluted EPS for the three months ended September 30, 2015. For the nine months ended September 30, 2015, we had a net loss from continuing operations attributable to FMC stockholders, as such all 1.692 million potential common shares were excluded from Diluted EPS. For the three and nine months ended September 30, 2014, respectively there were 0.267 million and 0.371 million potential common shares excluded from Diluted EPS.
Our non-vested restricted stock awards contain rights to receive non-forfeitable dividends, and thus, are participating securities requiring the two-class method of computing EPS. The two-class method determines EPS by dividing the sum of distributed earnings to common stockholders and undistributed earnings allocated to common stockholders by the weighted average number of shares of common stock outstanding for the period. In calculating the two-class method, undistributed earnings are allocated to both common shares and participating securities based on the weighted average number of shares outstanding during the period.

20

Table of Contents

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

Earnings applicable to common stock and common stock shares used in the calculation of basic and diluted earnings per share are as follows:
(in Millions, Except Share and Per Share Data)
Three Months Ended September 30
 
Nine Months Ended September 30
2015
 
2014
 
2015
 
2014
Earnings (loss) attributable to FMC stockholders:
 
 
 
 
 
 
 
Continuing operations, net of income taxes
$
2.6

 
$
51.6

 
$
(5.7
)
 
$
241.1

Discontinued operations, net of income taxes
(5.0
)
 
4.7

 
698.8

 
(10.1
)
Net income (loss) attributable to FMC stockholders
$
(2.4
)
 
$
56.3

 
$
693.1

 
$
231.0

Less: Distributed and undistributed earnings allocable to restricted award holders

 
(0.2
)
 

 
(0.6
)
Net income (loss) allocable to common stockholders
$
(2.4
)
 
$
56.1

 
$
693.1

 
$
230.4

 
 
 
 
 
 
 
 
Basic earnings (loss) per common share attributable to FMC stockholders:
 
 
 
 
 
 
 
Continuing operations
$
0.02

 
$
0.39

 
$
(0.04
)
 
$
1.81

Discontinued operations
(0.04
)
 
0.03

 
5.22

 
(0.08
)
Net income (loss) attributable to FMC stockholders
$
(0.02
)
 
$
0.42

 
$
5.18

 
$
1.73

 
 
 
 
 
 
 
 
Diluted earnings (loss) per common share attributable to FMC stockholders:
 
 
 
 
 
 
 
Continuing operations
$
0.02

 
$
0.39

 
$
(0.04
)
 
$
1.80

Discontinued operations
(0.04
)
 
0.03

 
5.22

 
(0.08
)
Net income (loss) attributable to FMC stockholders
$
(0.02
)
 
$
0.42

 
$
5.18

 
$
1.72

 
 
 
 
 
 
 
 
Shares (in thousands):
 
 
 
 
 
 
 
Weighted average number of shares of common stock outstanding - Basic
133,764

 
133,409

 
133,679

 
133,288

Weighted average additional shares assuming conversion of potential common shares
611

 
936

 

 
997

Shares – diluted basis
134,375

 
134,345

 
133,679

 
134,285


Note 12: Equity
The table provides a roll forward of equity, equity attributable to FMC stockholders, and equity attributable to noncontrolling interests. 
(in Millions, Except Per Share Data)
FMC
Stockholders’
Equity
 
Noncontrolling
Interest
 
Total
Equity
Balance at December 31, 2014
$
1,530.5

 
$
33.5

 
$
1,564.0

Net income (loss)
693.1

 
8.1

 
701.2

Stock compensation plans
17.3

 

 
17.3

Excess tax benefits from share-based compensation
1.6

 

 
1.6

Shares for benefit plan trust
(2.4
)
 

 
(2.4
)
Net pension and other benefit actuarial gains/(losses) and prior service costs, net of income tax (1)
22.0

 

 
22.0

Net hedging gains/(losses) and other, net of income tax (1)
1.4

 

 
1.4

Foreign currency translation adjustments (1)
(80.3
)
 
(0.7
)
 
(81.0
)
Dividends ($0.495 per share)
(66.3
)
 

 
(66.3
)
Repurchases of common stock
(3.2
)
 

 
(3.2
)
Balance at September 30, 2015
$
2,113.7

 
$
40.9

 
$
2,154.6

____________________
(1)
See condensed consolidated statements of comprehensive income (loss).

21

Table of Contents

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


Accumulated other comprehensive income (loss)
Summarized below is the roll forward of accumulated other comprehensive income (loss), net of tax.
(in Millions)
Foreign currency adjustments
 
Derivative Instruments(1)
 
Pension and other postretirement benefits (2)
 
Total
Accumulated other comprehensive income (loss),
net of tax at December 31, 2014
$
(50.4
)
 
$
(3.9
)
 
$
(321.5
)
 
$
(375.8
)
2015 Activity
 
 
 
 
 
 
 
Other comprehensive income (loss) before reclassifications (3)
(80.3
)
 
3.7

 
(7.4
)
 
$
(84.0
)
Amounts reclassified from accumulated other comprehensive income (loss)

 
(2.3
)
 
29.4

 
$
27.1

 
 
 
 
 
 
 
 
Accumulated other comprehensive income (loss),
net of tax at September 30, 2015
$
(130.7
)
 
$
(2.5
)
 
$
(299.5
)
 
$
(432.7
)
(in Millions)
Foreign currency adjustments
 
Derivative Instruments (1)
 
Pension and other postretirement benefits (2)
 
Total
Accumulated other comprehensive income (loss),
net of tax at December 31, 2013
$
(25.3
)
 
$
(6.1
)
 
$
(170.5
)
 
$
(201.9
)
2014 Activity
 
 
 
 
 
 
 
Other comprehensive income (loss) before reclassifications (3)
(36.9
)
 
5.3

 
0.2

 
$
(31.4
)
Amounts reclassified from accumulated other comprehensive income (loss)
49.6

 
1.9

 
17.9

 
$
69.4

 
 
 
 
 
 
 
 
Accumulated other comprehensive income (loss),
net of tax at September 30, 2014
$
(12.6
)
 
$
1.1

 
$
(152.4
)
 
$
(163.9
)
____________________
(1)     See Note 15 for more information.
(2)    See Note 13 for more information.
(3)    Excludes foreign currency translation adjustments attributable to noncontrolling interests.


22

Table of Contents

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


Reclassifications of accumulated other comprehensive income (loss)

The table below provides details about the reclassifications from Accumulated Other Comprehensive Income and the affected line items in the condensed consolidated statements of income (loss) for each of the periods presented.
Details about Accumulated Other Comprehensive Income Components
 
Amounts Reclassified from Accumulated Other Comprehensive Income (1)
 
Affected Line Item in the Condensed Consolidated Statements of Income (Loss)
 
 
Three Months Ended September 30
 
Nine Months Ended September 30
 
 
(in Millions)
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustments:
 
 
 
 
 
 
 
 
 
 
Divestiture of FMC Peroxygens (3)
 
$

 
$

 
$

 
$
(49.6
)
 
Discontinued operations, net of income taxes
 
 
 
 
 
 
 
 
 
 
 
Derivative instruments:
 
 
 
 
 
 
 
 
 
 
Foreign currency contracts
 
11.1

 
(0.2
)
 
29.0

 
(3.5
)
 
Costs of sales and services