FMC.2012.9.30-10Q
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, 2012
or
¨
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                    to            
Commission File Number 1-16489 
________________________________________________________
FMC Technologies, Inc.
(Exact name of registrant as specified in its charter) 
________________________________________________________
Delaware
36-4412642
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
 
 
5875 N. Sam Houston Parkway W., Houston, Texas
77086
(Address of principal executive offices)
(Zip Code)
(281) 591-4000
(Registrant’s telephone number, including area code) 
________________________________________________________
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 Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨
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.
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 October 23, 2012
Common Stock, par value $0.01 per share
  
237,729,774
 

Table of Contents

TABLE OF CONTENTS
 
Page
 

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PART I—FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FMC Technologies, Inc. and Consolidated Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
(In millions, except per share data)
 
Three Months Ended
 
Nine Months Ended
 
 September 30,
 
 September 30,
 
2012
 
2011
 
2012
 
2011
Revenue:
 
 
 
 
 
 
 
Product revenue
$
1,190.3

 
$
1,082.1

 
$
3,656.0

 
$
3,044.0

Service and other revenue
228.7

 
205.1

 
654.5

 
554.5

Total revenue
1,419.0

 
1,287.2

 
4,310.5

 
3,598.5

Costs and expenses:
 
 
 
 
 
 
 
Cost of product revenue
947.3

 
850.0

 
2,935.0

 
2,409.3

Cost of service and other revenue
151.8

 
130.2

 
448.1

 
367.5

Selling, general and administrative expense
152.9

 
110.0

 
429.3

 
341.7

Research and development expense
29.8

 
23.8

 
82.9

 
62.0

Total costs and expenses
1,281.8

 
1,114.0

 
3,895.3

 
3,180.5

Other income (expense), net
4.3

 
(3.4
)
 
24.4

 
1.5

Income before net interest expense and income taxes
141.5

 
169.8

 
439.6

 
419.5

Net interest expense
(6.0
)
 
(2.4
)
 
(15.9
)
 
(6.0
)
Income before income taxes
135.5

 
167.4

 
423.7

 
413.5

Provision for income taxes
35.0

 
45.7

 
110.3

 
110.5

Net income
100.5

 
121.7

 
313.4

 
303.0

Net income attributable to noncontrolling interests
(1.6
)
 
(0.6
)
 
(3.8
)
 
(2.4
)
Net income attributable to FMC Technologies, Inc.
$
98.9

 
$
121.1

 
$
309.6

 
$
300.6

Earnings per share attributable to FMC Technologies, Inc. (Note 3):
 
 
 
 
 
 
 
Basic
$
0.41

 
$
0.50

 
$
1.29

 
$
1.24

Diluted
$
0.41

 
$
0.50

 
$
1.28

 
$
1.23

Weighted average shares outstanding (Note 3):
 
 
 
 
 
 
 
Basic
239.5

 
241.4

 
239.9

 
241.7

Diluted
240.7

 
243.3

 
241.2

 
243.6

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


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FMC Technologies, Inc. and Consolidated Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
(In millions)
 
 
Three Months Ended
 
Nine Months Ended
 
 September 30,
 
 September 30,
 
2012
 
2011
 
2012
 
2011
Net income
$
100.5

 
$
121.7

 
$
313.4

 
$
303.0

Other comprehensive income, net of tax:
 
 
 
 
 
 
 
Foreign currency translation adjustments (1)
26.8

 
(77.0
)
 
(6.9
)
 
(34.9
)
Net gains (losses) on hedging instruments:

 
 
 
 
 
 
Net gains (losses) arising during the period
17.8

 
(30.5
)
 
22.4

 
(3.9
)
Reclassification adjustment for net losses (gains) included in net income
0.9

 
(9.2
)
 
1.9

 
(16.5
)
Net gains (losses) on hedging instruments (2)
18.7

 
(39.7
)
 
24.3

 
(20.4
)
Pension and other post-retirement benefits:
 
 
 
 
 
 
 
Reclassification adjustment of settlement losses included in income
3.4

 
—

 
3.4

 
—

Reclassification adjustment for amortization of prior service cost (credit) included in net income
(0.1
)
 
(0.3
)
 
(0.5
)
 
(0.7
)
Reclassification adjustment for amortization of net actuarial loss (gain) included in net income
3.6

 
1.8

 
13.8

 
7.5

Reclassification adjustment for amortization of transition asset included in net income
(0.1
)
 
—

 
(0.1
)
 
(0.2
)
Net pension and other postretirement benefits (3)
6.8

 
1.5

 
16.6

 
6.6

Other comprehensive income, net of tax
52.3

 
(115.2
)
 
34.0

 
(48.7
)
Comprehensive income
152.8

 
6.5

 
347.4

 
254.3

Comprehensive income attributable to noncontrolling interest
(1.6
)
 
(0.6
)
 
(3.8
)
 
(2.4
)
Comprehensive income attributable to FMC Technologies, Inc.
$
151.2

 
$
5.9

 
$
343.6

 
$
251.9

_______________________  
(1)
Net of income tax (expense) benefit of $(1.0) and $11.3 for the three months ended September 30, 2012 and 2011, respectively, and $(0.1) and $4.6 for the nine months ended September 30, 2012 and 2011, respectively.
(2)
Net of income tax (expense) benefit of $(8.0) and $23.0 for the three months ended September 30, 2012 and 2011, respectively, and $(12.2) and $12.0 for the nine months ended September 30, 2012 and 2011, respectively.
(3)
Net of income tax (expense) benefit of $(6.1) and $(2.5) for the three months ended September 30, 2012 and 2011, respectively, and $(11.3) and $(5.2) for the nine months ended September 30, 2012 and 2011, respectively.
The accompanying notes are an integral part of the condensed consolidated financial statements.


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FMC Technologies, Inc. and Consolidated Subsidiaries
Condensed Consolidated Balance Sheets
(In millions, except par value data)
 
 
September 30,
2012
 
December 31, 2011
 
(Unaudited)
 
 
Assets
 
 
 
Cash and cash equivalents
$
566.2

 
$
344.0

Trade receivables, net of allowances of $5.3 in 2012 and $7.8 in 2011
1,563.5

 
1,341.6

Inventories, net (Note 5)
963.3

 
712.2

Derivative financial instruments (Note 12)
56.5

 
69.9

Prepaid expenses
34.8

 
37.2

Deferred income taxes
57.1

 
77.8

Income taxes receivable
42.9

 
21.2

Other current assets
279.0

 
184.0

Total current assets
3,563.3

 
2,787.9

Investments
37.1

 
161.4

Property, plant and equipment, net of accumulated depreciation of $606.3 in 2012 and $528.0 in 2011
992.6

 
767.9

Goodwill
511.2

 
265.8

Intangible assets, net of accumulated amortization of $63.8 in 2012 and $52.8 in 2011
296.2

 
128.0

Deferred income taxes
46.0

 
67.1

Derivative financial instruments (Note 12)
23.5

 
44.6

Other assets
66.8

 
48.3

Total assets
$
5,536.7

 
$
4,271.0

Liabilities and equity
 
 
 
Short-term debt and current portion of long-term debt
$
37.7

 
$
587.6

Accounts payable, trade
528.2

 
546.8

Advance payments and progress billings
515.0

 
450.2

Accrued payroll
170.4

 
153.5

Derivative financial instruments (Note 12)
38.2

 
66.6

Income taxes payable
143.1

 
117.7

Deferred income taxes
39.9

 
5.1

Other current liabilities
346.4

 
305.4

Total current liabilities
1,818.9

 
2,232.9

Long-term debt, less current portion (Note 6)
1,491.4

 
36.0

Accrued pension and other postretirement benefits, less current portion
258.9

 
272.4

Derivative financial instruments (Note 12)
23.1

 
37.0

Deferred income taxes
55.4

 
111.9

Other liabilities
142.8

 
143.1

Commitments and contingent liabilities (Note 14)
 
 
 
Stockholders’ equity (Note 11):
 
 
 
Preferred stock, $0.01 par value, 12.0 shares authorized; no shares issued in 2012 or 2011
—

 
—

Common stock, $0.01 par value, 600.0 shares authorized in 2012 and 2011; 286.3 shares issued in 2012 and 2011; 237.9 and 237.8 shares outstanding in 2012 and 2011, respectively
1.4

 
1.4

Common stock held in employee benefit trust, at cost; 0.2 shares in 2012 and 2011
(7.3
)
 
(5.8
)
Common stock held in treasury, at cost; 48.2 and 48.3 shares in 2012 and 2011, respectively
(1,065.3
)
 
(1,041.9
)
Capital in excess of par value of common stock
687.6

 
700.0

Retained earnings
2,524.3

 
2,214.7

Accumulated other comprehensive loss
(409.8
)
 
(443.8
)
Total FMC Technologies, Inc. stockholders’ equity
1,730.9

 
1,424.6

Noncontrolling interests
15.3

 
13.1

Total equity
1,746.2

 
1,437.7

Total liabilities and equity
$
5,536.7

 
$
4,271.0

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

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FMC Technologies, Inc. and Consolidated Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In millions)
 
 
Nine Months Ended
 September 30,
2012
 
2011
Cash provided (required) by operating activities:
 
 
 
Net income
$
313.4

 
$
303.0

Adjustments to reconcile net income to cash provided (required) by operating activities:
 
 
 
Depreciation
76.6

 
62.6

Amortization
22.7

 
16.2

(Gain) loss on disposal of assets
0.4

 
(0.9
)
Employee benefit plan and stock-based compensation costs
76.6

 
50.6

Deferred income tax provision
30.4

 
30.4

Unrealized (gain) loss on derivative instruments
13.3

 
(11.1
)
Other
16.2

 
(1.4
)
Changes in operating assets and liabilities, net of effects of acquisitions:
 
 
 
Trade receivables, net
(191.6
)
 
(162.3
)
Inventories, net
(210.7
)
 
(167.8
)
Accounts payable, trade
(35.5
)
 
118.3

Advance payments and progress billings
40.7

 
(47.9
)
Income taxes
(36.6
)
 
12.6

Accrued pension and other postretirement benefits, net
(47.9
)
 
(53.2
)
Other assets and liabilities, net
(73.2
)
 
(30.3
)
Cash provided (required) by operating activities
(5.2
)
 
118.8

Cash provided (required) by investing activities:
 
 
 
Capital expenditures
(282.7
)
 
(187.0
)
Acquisitions, net of cash and cash equivalents acquired
(328.6
)
 
—

Other
(0.1
)
 
0.3

Cash required by investing activities
(611.4
)
 
(186.7
)
Cash provided (required) by financing activities:
 
 
 
Net increase in short-term debt
1.6

 
0.8

Net increase in commercial paper
105.7

 
174.3

Proceeds from the issuance of long-term debt
1,068.8

 
—

Repayments of long-term debt
(275.0
)
 
(5.5
)
Proceeds from exercise of stock options
0.4

 
0.9

Purchase of treasury stock
(52.4
)
 
(67.9
)
Other
(11.9
)
 
(10.5
)
Cash provided by financing activities
837.2

 
92.1

Effect of exchange rate changes on cash and cash equivalents
1.6

 
(3.3
)
Increase in cash and cash equivalents
222.2

 
20.9

Cash and cash equivalents, beginning of period
344.0

 
315.5

Cash and cash equivalents, end of period
$
566.2

 
$
336.4

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


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FMC Technologies, Inc. and Consolidated Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
Note 1: Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of FMC Technologies, Inc. and its consolidated subsidiaries (“FMC”) have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) and rules and regulations of the Securities and Exchange Commission (“SEC”) pertaining to interim financial information. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP have been condensed or omitted. Therefore, these statements should be read in conjunction with the audited consolidated financial statements, and notes thereto, which are included in our Annual Report on Form 10-K for the year ended December 31, 2011.
Our accounting policies are in accordance with U.S. GAAP. The preparation of financial statements in conformity with these accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Ultimate results could differ from our estimates.
In the opinion of management, the statements reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of our financial condition and operating results as of and for the periods presented. Revenue, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the results and trends in these statements may not be representative of the results that may be expected for the year ending December 31, 2012.
On February 25, 2011, our Board of Directors approved a two-for-one stock split of our outstanding shares of common stock. The stock split was completed in the form of a stock dividend that was issued on March 31, 2011, to shareholders of record at the close of business on March 14, 2011.
Note 2: Recently Adopted Accounting Standards
Effective January 1, 2012, we adopted an amendment issued by the Financial Accounting Standards Board (“FASB”) to existing guidance on fair value measurements. This amendment clarifies the application of existing guidance and disclosure requirements, changes certain fair value measurement principles and requires additional disclosures about fair value measurements. The adoption of the update did not have a material impact on our condensed consolidated financial statements.
Effective January 1, 2012, we adopted changes issued by the FASB to disclosure requirements for comprehensive income. The changes allow management the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income in a single continuous statement of comprehensive income or in two separate but consecutive statements. This guidance eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. We elected the two-statement approach presenting other comprehensive income in a separate statement immediately following the statement of income. The updated requirements do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. The adoption of the update concerns presentation only and did not have any financial impact on our condensed consolidated financial statements.
Effective September 30, 2012, we adopted an update issued by the FASB to existing guidance on indefinite-lived intangible assets impairment testing. This update provides an entity the option, prior to performing the quantitative impairment test under existing guidance, to first assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. The adoption of the amended guidance did not have an impact on our consolidated financial position or results of operations, as we currently do not have indefinite-lived intangible assets.
Note 3: Earnings per Share
A reconciliation of the number of shares used for the basic and diluted earnings per share calculation was as follows:
 

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Three Months Ended
 
Nine Months Ended
 
 September 30,
 
 September 30,
(In millions, except per share data)
2012
 
2011
 
2012
 
2011
Net income attributable to FMC Technologies, Inc.
$
98.9

 
$
121.1

 
$
309.6

 
$
300.6

Weighted average number of shares outstanding
239.5

 
241.4

 
239.9

 
241.7

Dilutive effect of restricted stock units and stock options
1.2

 
1.9

 
1.3

 
1.9

Total shares and dilutive securities
240.7

 
243.3

 
241.2

 
243.6

Basic earnings per share attributable to FMC Technologies, Inc.
$
0.41

 
$
0.50

 
$
1.29

 
$
1.24

Diluted earnings per share attributable to FMC Technologies, Inc.
$
0.41

 
$
0.50

 
$
1.28

 
$
1.23


Note 4: Business Combinations
Schilling Robotics, LLC—On January 3, 2012, we exercised our option to purchase the remaining 55.0% of outstanding shares of Schilling Robotics, LLC (“Schilling”), a Delaware limited liability company, and closed the transaction on April 25, 2012. Schilling is a supplier of advanced robotic intervention products, including a line of remotely operated vehicle systems ("ROV"), manipulator systems and subsea control systems. The acquisition of the remaining interests in Schilling will allow us to grow in the expanding subsea environment, where demand for ROVs and the need for maintenance activities of subsea equipment is expected to increase.
Prior to April 25, 2012 we owned 45.0% of Schilling. Upon the closing of this transaction, we owned 100.0% of Schilling which is included among the consolidated subsidiaries reported in the Subsea Technologies segment. The acquisition-date fair value of our previously held equity interest in Schilling was $144.9 million with the fair value primarily estimated through an income approach valuation. We recorded a gain of $20.0 million in other income (expense), net on the condensed consolidated statement of income related to the fair value remeasurement of our previously held equity interest in Schilling.
The purchase price with respect to the remaining outstanding shares was determined by applying the multiple of our market capital relative to our earnings before interest, taxes, depreciation and amortization ("EBITDA") for the year ended December 31, 2011 (determined in accordance with the terms of the unitholders agreement), to the EBITDA generated by Schilling during the year ended December 31, 2011 (subject to certain adjustments in accordance with the terms of the unitholders agreement). The consideration for the remaining outstanding shares was paid in cash.
Control Systems International, Inc.—On April 30, 2012, we acquired Control Systems International, Inc. ("CSI") which is included among the consolidated subsidiaries reported in the Energy Infrastructure segment. Our acquisition of CSI will enhance our automation and controls technologies, supporting our long-term strategy to expand our subsea production and processing systems. Additionally, we also anticipate the acquisition of CSI to benefit other business units in our portfolio of businesses, such as measurement solutions, through comprehensive fuel terminal and pipeline automation systems.
The acquisition-date fair value of the consideration transferred consisted of the following:
(In millions)
Schilling
  
CSI
  
Total
Cash
$
282.8

  
$
49.0

(1)
$
331.8

Previously held equity interest
144.9

 
—

 
144.9

Purchase price withheld
—

 
10.0

(2)
10.0

Total
$
427.7

 
$
59.0

 
$
486.7

_______________________  

(1)     Includes anticipated recovery of negative working capital.
(2)
Represents the portion of the purchase price withheld ("holdback") by FMC pursuant to the terms of the stock purchase agreement. The holdback amount will be held and maintained by FMC as security for the payment of any and all amounts to which CSI indemnifies us, including final working capital adjustments and other indemnifications as listed in the stock purchase agreement. FMC may deduct from the holdback any eligible amounts and pay CSI the

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net amount three years after the closing date.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition dates.
(In millions)
Schilling
  
CSI
  
Total
Assets:
 
 
 
 
 
Cash
$
3.9

 
$
0.3

 
$
4.2

Accounts receivable
22.4

 
8.2

 
30.6

Inventory
50.6

 
0.1

 
50.7

Other current assets
2.1

 
0.2

 
2.3

Property, plant and equipment
21.7

 
0.2

 
21.9

Intangible assets
145.9

 
35.1

 
181.0

Other long-term assets
0.7

 
—

 
0.7

Total identifiable assets acquired
247.3

 
44.1

 
291.4

Liabilities:
 
 
 
 
 
Current liabilities
(33.4
)
 
(15.8
)
 
(49.2
)
Other long-term liabilities
(1.9
)
 
—

 
(1.9
)
Total liabilities assumed
(35.3
)
 
(15.8
)
 
(51.1
)
Net identifiable assets acquired
212.0

 
28.3

 
240.3
Goodwill
215.7

 
30.7

 
246.4
Net assets acquired
$
427.7

 
$
59.0

 
$
486.7


The goodwill recognized is primarily attributable to expected synergies and assembled workforce acquired in Schilling and CSI. As of September 30, 2012, there were no changes in the recognized amounts of goodwill resulting from either acquisition. The majority of the combined goodwill recognized for Schilling and CSI is deductible for tax purposes.
The identifiable intangible assets acquired include the following:
 
Schilling
 
CSI
(In millions)
Fair Value
 
Wgtd. Avg. Amort. Period (in years)
 
Fair Value
 
Wgtd. Avg. Amort. Period (in years)
Technology
$
38.9

 
12
 
$
17.0

 
10

Trademarks/trade name
25.4

 
20
 
2.8

 
15

Customer relationships
42.9

 
20
 
15.3

 
15

Base technology – technical know-how
38.7

 
15
 
—

 
—

Total identifiable intangible assets acquired
$
145.9

 
 
 
$
35.1

 
 

We recognized $0.4 million of acquisition-related costs that were expensed in the nine months ended September 30, 2012 related to the Schilling and CSI acquisitions. These costs were recognized as selling, general and administrative expense in the condensed consolidated statement of income. Revenue and net income (loss) of Schilling and CSI from the acquisition dates included in our condensed consolidated statements of income were $43.5 million and $11.4 million of revenue, respectively, and $(3.1) million and $1.0 million of net income (loss), respectively.
Pro Forma Impact of Acquisitions (unaudited)
The following unaudited supplemental pro forma results present consolidated information as if the acquisitions had been completed as of January 1, 2011. The 2012 pro forma results include: (i) $5.6 million of amortization for acquired intangible assets, (ii) $9.2 million in inventory fair value step-up amortization for Schilling, and (iii) $0.4 million of acquisition-related costs. The pro forma results do not include any potential synergies, cost savings or other expected benefits of the acquisitions. Accordingly, the pro forma results should not be considered indicative of the results that would have occurred if the acquisitions had been consummated as of January 1, 2011, nor are they indicative of future results.

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Nine Months Ended September 30,
(In millions)
2012 Pro Forma
2011 Pro Forma      
Revenue
$
4,348.2

$
3,698.9

Net income
$
308.0

$
312.7


Note 5: Inventories
Inventories consisted of the following:
 
(In millions)
September 30,
2012
 
December 31,
2011
Raw materials
$
185.4

 
$
138.7

Work in process
170.8

 
126.7

Finished goods
768.3

 
594.4

Gross inventories before LIFO reserves and valuation adjustments
1,124.5

 
859.8

LIFO reserves and valuation adjustments
(161.2
)
 
(147.6
)
Inventories, net
$
963.3

 
$
712.2

Note 6: Debt
Credit Facility—On March 26, 2012, we entered into a new $1.5 billion revolving credit agreement (“credit agreement”) with JPMorgan Chase Bank, N.A., as Administrative Agent. The credit agreement is a five-year, revolving credit facility expiring in March 2017. Subject to certain conditions, at our request and with the approval of the Administrative Agent, the aggregate commitments under the credit agreement may be increased by an additional $500.0 million.
Borrowings under the credit agreement bear interest at a base rate or the London interbank offered rate (“LIBOR”), at our option, plus an applicable margin. Depending on our total leverage ratio, the applicable margin for revolving loans varies (i) in the case of LIBOR loans, from 1.125% to 1.750% and (ii) in the case of base rate loans, from 0.125% to 0.750%. The base rate is the highest of (1) the prime rate announced by JPMorgan Chase Bank, N.A., (2) the Federal Funds Rate plus 0.5% or (3) one-month LIBOR plus 1.0%.
In connection with the new credit agreement, we terminated and repaid all outstanding amounts under our previously existing $600.0 million five-year revolving credit agreement and our $350.0 million three-year revolving credit agreement.
Senior Notes—On September 21, 2012, we completed the public offering of $300.0 million aggregate principal amount of 2.00% senior notes due October 2017 (the "2017 Notes") and $500.0 million aggregate principal amount of 3.45% senior notes due October 2022 (the "2022 Notes" and, collectively with the 2017 Notes, the "Senior Notes"). Interest on the Senior Notes is payable semi-annually in arrears on April 1 and October 1 of each year, beginning April 1, 2013. Net proceeds from the offering of $793.8 million were used for the repayment of outstanding commercial paper and indebtedness under our revolving credit facility.
The terms of the Senior Notes are governed by the indenture (the “Base Indenture,” and as amended and supplemented by the Supplemental Indentures (described below), dated as of September 21, 2012 between FMC and U.S. Bank National Association, as trustee (the “Trustee”), as supplemented by the First Supplemental Indenture between FMC and the Trustee (the “First Supplemental Indenture”) relating to the issuance of the 2017 Notes and the Second Supplemental Indenture between FMC and the Trustee (the “Second Supplemental Indenture”) relating to the issuance of the 2022 Notes.
At any time prior to their maturity in the case of the 2017 Notes, and at any time prior to July 1, 2022, in the case of the 2022 Notes, we may redeem some or all of the Senior Notes at the redemption prices specified in the First Supplemental Indenture and Second Supplemental Indenture, respectively. At any time on or after July 1, 2022, we may redeem some or all of the 2022 Notes at the redemption price equal to 100% of the principal amount of the 2022 Notes redeemed. The Senior Notes are our senior unsecured obligations. The Senior Notes will rank equally in right of payment with all of our existing and future unsubordinated debt, and will rank senior in right of payment to all of our future subordinated debt.
Long-term debt consisted of the following:
 

10
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(In millions)
September 30,
2012
 
December 31,
2011
Revolving credit facilities
$
100.0

 
$
100.0

Commercial paper (1)
585.8

 
480.1

2.00% Notes due 2017
299.3

 
—

3.45% Notes due 2022
499.6

 
—

Term loan
26.9

 
29.2

Property financing
7.9

 
7.3

Total long-term debt
1,519.5

 
616.6

Less: current portion
(28.1
)
 
(580.6
)
Long-term debt, less current portion
$
1,491.4

 
$
36.0

 _______________________  
(1)
At December 31, 2011, debt outstanding from our $600.0 million five-year revolving credit facility and outstanding commercial paper were classified as short-term due to the credit facility’s maturity in December 2012. At September 30, 2012, committed credit available under our new credit agreement provided the ability to refinance our commercial paper obligations on a long-term basis. As we have both the ability and intent to refinance these obligations on a long-term basis, our commercial paper borrowings were classified as long-term in the condensed consolidated balance sheet at September 30, 2012. Our commercial paper borrowings as of September 30, 2012, had a weighted average interest rate of 0.48%.
Note 7: Income Taxes
Our income tax provisions for the three months ended September 30, 2012 and 2011, reflected effective tax rates of 26.1% and 27.4%, respectively. The decrease in the effective tax rate year-over-year was primarily due to changes in our international structure during 2012 and lower charges related to unrecognized tax benefits, partially offset by an unfavorable change in the forecasted country mix of earnings year-over-year and the tax impact of the remeasurement of the MPM contingent earn-out consideration.
Our income tax provisions for the nine months ended September 30, 2012 and 2011, reflected effective tax rates of 26.3% and 26.9%, respectively. Excluding a benefit related to recognizing a retroactive tax holiday in Singapore in the first quarter of 2011, our effective rate for income taxes for the nine months ended September 30, 2011 was 28.6%. The decrease from this adjusted rate to the effective tax rate for the nine months ended September 30, 2012 was primarily due to changes in our international structure during 2012, partially offset by the tax impact of the remeasurement of the MPM contingent earn-out consideration.
Our effective tax rate can fluctuate depending on our country mix of earnings, since our foreign earnings are generally subject to lower tax rates than in the United States. In certain jurisdictions, primarily Singapore and Malaysia, our tax rate is significantly less than the relevant statutory rate due to tax holidays.
Note 8: Warranty Obligations
Warranty cost and accrual information was as follows:
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(In millions)
2012
 
2011
 
2012
 
2011
Balance at beginning of period
$
23.8

 
$
28.3

 
$
25.7

 
$
22.4

Expense for new warranties
4.2

 
10.4

 
19.8

 
27.5

Adjustments to existing accruals
0.8

 
(3.1
)
 
6.7

 
(1.7
)
Claims paid
(9.3
)
 
(9.4
)
 
(32.7
)
 
(22.0
)
Balance at end of period
$
19.5

 
$
26.2

 
$
19.5

 
$
26.2

Note 9: Pension and Other Postretirement Benefits
The components of net periodic benefit cost were as follows:
 

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Pension Benefits
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2012
 
2011
 
2012
 
2011
(In millions)
U.S.    
 
Int’l    
 
U.S.    
 
Int’l    
 
U.S.    
 
Int’l    
 
U.S.    
 
Int’l    
Service cost
$
3.7

 
$
9.2

 
$
3.0

 
$
7.4

 
$
11.0

 
$
27.8

 
$
9.0

 
$
22.3

Interest cost
6.8

 
5.3

 
6.5

 
5.2

 
20.2

 
16.0

 
19.6

 
15.4

Expected return on plan assets
(10.0
)
 
(6.5
)
 
(9.6
)
 
(6.1
)
 
(29.9
)
 
(19.6
)
 
(28.6
)
 
(18.5
)
Amortization of transition asset
—

 
(0.1
)
 
(0.1
)
 
—

 
—

 
(0.2
)
 
—

 
(0.3
)
Amortization of actuarial losses, net
6.0

 
2.0

 
3.3

 
1.3

 
17.8

 
6.0

 
9.7

 
3.8

Settlement cost
5.4

 
—

 
—

 
—

 
5.4

 
—

 
—

 
—

Net periodic benefit cost
$
11.9

 
$
9.9

 
$
3.1

 
$
7.8

 
$
24.5

 
$
30.0

 
$
9.7

 
$
22.7

 
 
Other Postretirement Benefits
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(In millions)
2012
 
2011
 
2012
 
2011
Service cost
$
—

 
$
—

 
$
0.1

 
$
0.1

Interest cost
0.1

 
0.1

 
0.3

 
0.3

Amortization of prior service benefit
(0.3
)
 
(0.3
)
 
(0.9
)
 
(0.9
)
Amortization of actuarial gains, net
—

 
(0.1
)
 
(0.1
)
 
(0.2
)
Net periodic benefit cost
$
(0.2
)
 
$
(0.3
)
 
$
(0.6
)
 
$
(0.7
)

During the first nine months of 2012, we contributed $31.1 million to our domestic benefit plans and $16.2 million to our international benefit plans.

Note 10: Stock-Based Compensation
We have granted awards primarily in the form of nonvested stock units (also known as restricted stock in the plan document) under our Amended and Restated Incentive Compensation and Stock Plan (the “Plan”). We recognize compensation expense for awards under the Plan and the corresponding income tax benefits related to the expense. Stock-based compensation expense for nonvested stock awards was $7.5 million and $6.6 million for the three months ended September 30, 2012 and 2011, respectively, and $24.3 million and $20.3 million for the nine months ended September 30, 2012 and 2011, respectively.
In the nine months ended September 30, 2012, we granted the following restricted stock awards to employees:
 
(Number of restricted stock shares in thousands)
Shares
 
Weighted-
Average Grant
Date Fair Value
Time-based
529

  
 
Performance-based
138

* 
 
Market-based
69

* 
 
Total granted
736

  
$
47.93

_______________________  
*
Assumes target payout
For current-year performance-based awards, actual payouts may vary from zero to 277 thousand shares and will be dependent upon our performance relative to a peer group of companies with respect to earnings growth and return on investment for the year ending December 31, 2012. Compensation cost is measured based on the current expected outcome of the performance conditions and may be adjusted until the performance period ends.
For current-year market-based awards, actual payouts may vary from zero to 138 thousand shares, contingent upon our performance relative to the same peer group of companies with respect to total shareholder return (“TSR”). Beginning in 2012,

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the payout for the TSR metric will continue to be determined based on our performance relative to the peer group, but a payout is possible regardless of whether our TSR for the year is positive or negative. If our TSR for the year is not positive, the payout with respect to TSR is limited to the target previously established by the Compensation Committee of the Board of Directors. Compensation cost for these awards is calculated using the grant date fair market value, as estimated using a Monte Carlo simulation, and is not subject to change based on future events.
Note 11: Stockholders’ Equity
There were no cash dividends declared during the three and nine months ended September 30, 2012 and 2011.
As of August 2007, our Board of Directors had authorized the repurchase of up to 30 million shares of our outstanding common stock through open market purchases. As a result of the two-for-one stock split on March 31, 2011, the authorization was increased to 60 million shares. In December 2011, the Board of Directors authorized an extension of our repurchase program, adding 15 million shares, for a total of 75 million shares.
Repurchase of shares of common stock under our share repurchase program was as follows:
 
 
Three Months Ended
 
Nine Months Ended
 
 September 30,
 
 September 30,
(In millions, except share data)
2012
 
2011
 
2012
 
2011
Shares of common stock repurchased
690,052

 
1,514,926

 
1,211,052

 
1,690,972

Value of common stock repurchased
$
31.0

 
$
60.7

 
$
52.0

 
$
67.9

As of September 30, 2012, approximately 16.1 million shares remained available for purchase under the current program which may be executed from time to time in the open market. We intend to hold repurchased shares in treasury for general corporate purposes, including issuances under our stock-based compensation plan. Treasury shares are accounted for using the cost method.
During the nine months ended September 30, 2012, 1.3 million shares were issued from treasury stock in connection with our stock-based compensation plan. During the year ended December 31, 2011, 975 thousand shares were issued from treasury stock.
Accumulated other comprehensive loss consisted of the following:
 
(In millions)
Foreign Currency
Translation
 
Hedging
 
Defined Pension and  Other
Post-Retirement Benefits
 
Accumulated Other
Comprehensive Loss
December 31, 2010
$
(51.7
)
 
$
6.1

 
$
(206.5
)
 
$
(252.1
)
Other comprehensive income (loss)
(51.1
)
 
(22.8
)
 
(117.8
)
 
(191.7
)
December 31, 2011
(102.8
)
 
$
(16.7
)
 
$
(324.3
)
 
$
(443.8
)
Other comprehensive income (loss)
(6.9
)
 
24.3

 
16.6

 
34.0

September 30, 2012
$
(109.7
)
 
$
7.6

 
$
(307.7
)
 
$
(409.8
)
Note 12: Derivative Financial Instruments
We hold derivative financial instruments for the purpose of hedging the risks of certain identifiable and anticipated transactions. The types of risks hedged are those relating to the variability of future earnings and cash flows caused by movements in foreign currency exchange rates and interest rates. We hold the following types of derivative instruments:
Interest rate swap instruments—The purpose of these instruments is to hedge the uncertainty of anticipated interest expense from variable-rate debt obligations and achieve a fixed net interest rate. At September 30, 2012, we held three instruments that, in the aggregate, hedged the interest expense on $100.0 million of variable-rate debt.
Foreign exchange rate forward contracts—The purpose of these instruments is to hedge the risk of changes in future cash flows of anticipated purchase or sale commitments denominated in foreign currencies. At September 30, 2012, we held the following material positions:

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Notional Amount
Bought (Sold)
(In millions)
 
 
USD Equivalent
Chinese renminbi
128.0

 
20.4

Kuwaiti dinar
(9.5
)
 
(33.9
)
Malaysian ringgit
128.7

 
42.1

Norwegian krone
2,160.2

 
378.7

Polish zloty
39.0

 
12.3

Russian ruble
(570.9
)
 
(18.4
)
Singapore dollar
231.8

 
189.1

U.S. dollar
(565.7
)
 
(565.7
)
Foreign exchange rate instruments embedded in purchase and sale contracts—The purpose of these instruments is to match offsetting currency payments and receipts for particular projects, or comply with government restrictions on the currency used to purchase goods in certain countries. At September 30, 2012, our portfolio of these instruments included the following material positions:
 
Notional Amount
Bought (Sold)
(In millions)
 
 
USD Equivalent
Australian dollar
(36.9
)
 
(38.4
)
British pound
23.7

 
38.4

Euro
34.1

 
44.1

Norwegian krone
(411.1
)
 
(72.1
)
U.S. dollar
18.4

 
18.4

The purpose of our foreign currency hedging activities is to manage the volatility associated with anticipated foreign currency purchases and sales created in the normal course of business. We primarily utilize forward exchange contracts with maturities of less than three years.
Our policy is to hold derivatives only for the purpose of hedging risks and not for trading purposes where the objective is solely to generate profit. Generally, we enter into hedging relationships such that changes in the fair values or cash flows of the transactions being hedged are expected to be offset by corresponding changes in the fair value of the derivatives. For derivative instruments that qualify as a cash flow hedge, the effective portion of the gain or loss of the derivative, which does not include the time value component of a forward currency rate, is reported as a component of other comprehensive income (“OCI”) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.
The following table of all outstanding derivative instruments is based on estimated fair value amounts that have been determined using available market information and commonly accepted valuation methodologies. Refer to Note 13 for further disclosures related to the fair value measurement process. Accordingly, the estimates presented may not be indicative of the amounts that we would realize in a current market exchange and may not be indicative of the gains or losses we may ultimately incur when these contracts settle or mature.

14
Table of Contents

 
September 30, 2012
 
December 31, 2011
(in millions)
Assets
 
Liabilities
 
Assets
 
Liabilities
Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
Foreign exchange contracts:
 
 
 
 
 
 
 
Current – Derivative financial instruments
$
18.9

 
$
15.1

 
$
60.8

 
$
58.3

Long-term – Derivative financial instruments
18.8

 
18.9

 
26.4

 
28.7

Interest rate contracts:
 
 
 
 
 
 
 
Current – Derivative financial instruments
—

 
0.4

 
—

 
1.6

Long-term – Derivative financial instruments
—

 
—

 
—

 
—

Total derivatives designated as hedging instruments
37.7

 
34.4

 
87.2

 
88.6

Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
Foreign exchange contracts:
 
 
 
 
 
 
 
Current – Derivative financial instruments
37.6

 
22.7

 
9.1

 
6.7

Long-term – Derivative financial instruments
4.7

 
4.2

 
18.2

 
8.3

Total derivatives not designated as hedging instruments
42.3

 
26.9

 
27.3

 
15.0

Total derivatives
$
80.0

 
$
61.3

 
$
114.5

 
$
103.6

We recognized gains of $2.5 million and $0.6 million on cash flow hedges for the three months ended September 30, 2012 and 2011, respectively, and gains of $3.9 million and $1.5 million for the nine months ended September 30, 2012 and 2011, respectively, due to hedge ineffectiveness as it was probable that the original forecasted transaction would not occur. Cash flow hedges of forecasted transactions, net of tax, resulted in accumulated other comprehensive gains of $7.6 million and losses of $16.7 million at September 30, 2012, and December 31, 2011, respectively. We expect to transfer an approximate $4.1 million gain from accumulated OCI to earnings during the next 12 months when the anticipated transactions actually occur. All anticipated transactions currently being hedged are expected to occur by the end of 2015.
The following tables present the impact of derivative instruments in cash flow hedging relationships and their location within the accompanying condensed consolidated statements of income.

15
Table of Contents


 
Gain (Loss) Recognized in OCI (Effective Portion)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(In millions)
2012
 
2011
 
2012
 
2011
Interest rate contracts
$
0.5

 
$
0.4

 
$
1.2

 
$
0.7

Foreign exchange contracts
25.9

 
(51.1
)
 
33.7

 
(11.1
)
Total
$
26.4

 
$
(50.7
)
 
$
34.9

 
$
(10.4
)
Location of Gain (Loss) Reclassified from Accumulated OCI into Income
Gain (Loss) Reclassified from Accumulated
OCI into Income (Effective Portion)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(In millions)
2012
 
2011
 
2012
 
2011
Foreign exchange contracts:
 
 
 
 
 
 
 
Revenue
$
0.2

 
$
10.3

 
$
3.0

 
$
22.7

Cost of sales
(0.6
)
 
1.7

 
(4.5
)
 
(1.0
)
Selling, general and administrative expense
—

 
0.2

 
(0.1
)
 
0.4

Total
$
(0.4
)
 
$
12.2

 
$
(1.6
)
 
$
22.1

 
 
 
 
 
 
 
 
Location of Gain (Loss) Recognized in Income
Gain (Loss) Recognized in Income (Ineffective Portion
and Amount Excluded from Effectiveness Testing)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(In millions)
2012
 
2011
 
2012
 
2011
Foreign exchange contracts:
 
 
 
 
 
 
 
Revenue
$
4.1

 
$
(4.2
)
 
$
12.0

 
$
4.1

Cost of sales
(6.1
)
 
9.5

 
(14.2
)
 
2.0

Total
$
(2.0
)
 
$
5.3

 
$
(2.2
)
 
$
6.1

Instruments that are not designated as hedging instruments are executed to hedge the effect of exposures in the condensed consolidated balance sheets, and occasionally, forward foreign currency contracts or currency options are executed to hedge exposures which do not meet all of the criteria to qualify for hedge accounting.
Location of Gain (Loss) Recognized in Income
Gain (Loss) Recognized in Income on Derivatives
(Instruments Not Designated
as Hedging Instruments)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(In millions)
2012
 
2011
 
2012
 
2011
Foreign exchange contracts:
 
 
 
 
 
 
 
Revenue
$
(0.1
)
 
$
2.8

 
$
1.5

 
$
13.3

Cost of sales
0.2

 
(0.6
)
 
(0.1
)
 
(1.5
)
Other income (expense), net
2.8

 
(10.9
)
 
3.9

 
(1.2
)
Total
$
2.9

 
$
(8.7
)
 
$
5.3

 
$
10.6

Note 13: Fair Value Measurements
Assets and liabilities measured at fair value on a recurring basis were as follows:
 

16
Table of Contents

 
September 30, 2012
 
December 31, 2011
(In millions)
Total
 
Level 1
 
Level 2
 
Level 3
 
Total
 
Level 1
 
Level 2
 
Level 3
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity securities
$
16.9

 
$
16.9

 
$
—

 
$
—

 
$
19.0

 
$
19.0

 
$
—

 
$
—

Fixed income
11.5

 
11.5

 
—

 
—

 
8.1

 
8.1

 
—

 
—

Stable value fund
4.0

 
—

 
4.0

 
—

 
3.3

 
—

 
3.3

 
—

Other
2.8

 
2.8

 
—

 
—

 
2.4

 
2.4

 
—

 
—

Derivative financial instruments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange contracts
80.0

 
—

 
80.0

 
—

 
114.5

 
—

 
114.5

 
—

Total assets
$
115.2

 
$
31.2

 
$
84.0

 
$
—

 
$
147.3

 
$
29.5

 
$
117.8

 
$
—

Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative financial instruments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate contracts
$
0.4

 
$
—

 
$
0.4

 
$
—

 
$
1.6

 
$
—

 
$
1.6

 
$
—

Foreign exchange contracts
60.9

 
—

 
60.9

 
—

 
102.0

 
—

 
102.0

 
—

Contingent earn-out consideration
85.4

 
—

 
—

 
85.4

 
57.5

 
—

 
—

 
57.5

Total liabilities
$
146.7

 
$
—

 
$
61.3

 
$
85.4

 
$
161.1

 
$
—

 
$
103.6

 
$
57.5

Investments—The fair value measurement of our equity securities, fixed income fund and other investment assets is based on quoted prices that we have the ability to access in public markets. Our stable value fund is valued at the net asset value of the shares held at the end of the quarter, which is based on the fair value of the underlying investments using information reported by the investment advisor at quarter-end.
Derivative financial instruments—We use the income approach as the valuation technique to measure the fair value of foreign currency derivative instruments on a recurring basis. This approach calculates the present value of the future cash flow by measuring the change from the derivative contract rate and the published market indicative currency rate, multiplied by the contract notional values. Credit risk is then incorporated by reducing the derivative’s fair value in asset positions by the result of multiplying the present value of the portfolio by the counterparty’s published credit spread. Portfolios in a liability position are adjusted by the same calculation; however, a spread representing our credit spread is used. Our credit spread, and the credit spread of other counterparties not publicly available are approximated by using the spread of similar companies in the same industry, of similar size and with the same credit rating.
At the present time, we have no credit-risk-related contingent features in our agreements with the financial institutions that would require us to post collateral for derivative positions in a liability position.
See Note 12 for additional disclosure related to derivative financial instruments.
Contingent earn-out consideration —We determined the fair value of the contingent earn-out consideration using a discounted cash flow model. The key assumptions used in applying the income approach are the expected profitability and debt, net of cash, of the acquired company during the earn-out period and the discount rate which approximates our debt credit rating. The fair value measurement is based upon significant inputs not observable in the market. Changes in the value of the contingent earn-out consideration are recorded as cost of service or other revenue in our condensed consolidated statements of income.
Changes in the fair value of our Level 3 contingent earn-out consideration obligation were as follows:
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(In millions)
2012
 
2011
 
2012
 
2011
Balance at beginning of period
$
72.1

 
$
65.3

 
$
57.5

 
$
59.0

Remeasurement adjustment
10.2

 
(1.8
)
 
24.4

 
(0.3
)
Foreign currency translation adjustment
3.1

 
(5.4
)
 
3.5

 
(0.6
)
Balance at end of period
$
85.4

 
$
58.1

 
$
85.4

 
$
58.1

Other fair value disclosures—The carrying amounts of cash and cash equivalents, trade receivables, accounts payable, short-

17
Table of Contents

term debt, commercial paper, debt associated with our term loan, revolving credit facility and Senior Notes as well as amounts included in other current assets and other current liabilities that meet the definition of financial instruments, approximate fair value.
Credit risk—By their nature, financial instruments involve risk including credit risk for non-performance by counterparties. Financial instruments that potentially subject us to credit risk primarily consist of trade receivables and derivative contracts. We manage the credit risk on financial instruments by transacting only with what management believes are financially secure counterparties, requiring credit approvals and credit limits, and monitoring counterparties’ financial condition. Our maximum exposure to credit loss in the event of non-performance by the counterparty is limited to the amount drawn and outstanding on the financial instrument. Allowances for losses on trade receivables are established based on collectability assessments. We mitigate credit risk on derivative contracts by executing contracts only with counterparties that consent to a master netting agreement, which permits the net settlement of the gross derivative assets against the gross derivative liabilities.
Note 14: Commitments and Contingent Liabilities
In the ordinary course of business with customers, vendors and others, we issue standby letters of credit, performance bonds, surety bonds and other guarantees. The majority of these financial instruments represent guarantees of our future performance. Additionally, we were the named guarantor on certain letters of credit and performance bonds issued by our former subsidiary, John Bean Technologies Corporation (“JBT”). Pursuant to the terms of the Separation and Distribution Agreement, dated July 31, 2008, between FMC and JBT (the “JBT Separation and Distribution Agreement”), we are fully indemnified by JBT with respect to certain residual obligations. Management does not expect any of these financial instruments to result in losses that, if incurred, would have a material adverse effect on our consolidated financial position, results of operations or cash flows.
Contingent liabilities associated with legal matters— We are involved in various pending or potential legal actions in the ordinary course of our business. Management is unable to predict the ultimate outcome of these actions, because of the inherent uncertainty of litigation. However, management believes that the most probable, ultimate resolution of these matters will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.
In addition, under the Separation and Distribution Agreement, dated May 31, 2001, between FMC Corporation and FMC, FMC Corporation is required to indemnify us for certain claims made prior to our spin-off from FMC Corporation, as well as for other claims related to discontinued operations. Under the JBT Separation and Distribution Agreement, JBT is required to indemnify us for certain claims made prior to the spin-off of our Airport and FoodTech businesses, as well as for certain other claims related to JBT products or business operations. We expect that FMC Corporation will bear responsibility for a majority of these claims initiated subsequent to the spin-off, and that JBT will bear most, if not substantially all, of any responsibility for certain other claims initiated subsequent to the spin-off.
Contingent liabilities associated with liquidated damages—Some of our contracts contain penalty provisions that require us to pay liquidated damages if we are responsible for the failure to meet specified contractual milestone dates and the applicable customer asserts a conforming claim under these provisions. These contracts define the conditions under which our customers may make claims against us for liquidated damages. Based upon the evaluation of our performance and other legal analysis, management believes we have appropriately accrued for probable liquidated damages at September 30, 2012, and December 31, 2011, and that the ultimate resolution of such matters will not materially affect our consolidated financial position, results of operations or cash flows.
Note 15: Business Segment Information
Segment revenue and segment operating profit were as follows:
 

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Three Months Ended
 
Nine Months Ended
 
 September 30,
 
 September 30,
(In millions)
2012
 
2011
 
2012
 
2011
Segment revenue
 
 
 
 
 
 
 
Subsea Technologies
$
929.2

 
$
833.7

 
$
2,770.0

 
$
2,324.2

Surface Technologies
362.8

 
335.5

 
1,154.4

 
937.1

Energy Infrastructure
133.2

 
129.1

 
409.6

 
352.3

Other revenue (1) and intercompany eliminations
(6.2
)
 
(11.1
)
 
(23.5
)
 
(15.1
)
Total revenue
$
1,419.0

 
$
1,287.2

 
$
4,310.5

 
$
3,598.5

Income before income taxes:
 
 
 
 
 
 
 
Segment operating profit:
 
 
 
 
 
 
 
Subsea Technologies
$
115.5

 
$
96.1

 
$
300.3

 
$
250.1

Surface Technologies
57.5

 
65.8

 
219.7

 
173.7

Energy Infrastructure
7.7

 
13.9

 
26.1

 
29.1

Total segment operating profit
180.7

 
175.8

 
546.1

 
452.9

Corporate items:
 
 
 
 
 
 
 
Corporate expense (2)
(11.5
)
 
(9.3
)
 
(30.4
)
 
(28.3
)
Other revenue (1) and other expense, net (3) 
(29.3
)
 
2.7

 
(79.9
)
 
(7.5
)
Net interest expense
(6.0
)
 
(2.4
)
 
(15.9
)
 
(6.0
)
Total corporate items
(46.8
)
 
(9.0
)
 
(126.2
)
 
(41.8
)
Income before income taxes attributable to FMC Technologies, Inc.
$
133.9

 
$
166.8

 
$
419.9

 
$
411.1

 _______________________  
(1)
Other revenue comprises certain unrealized gains and losses on derivative instruments related to unexecuted sales contracts.
(2)
Corporate expense primarily includes corporate staff expenses.
(3)
Other expense, net, generally includes stock-based compensation, other employee benefits, LIFO adjustments, certain foreign exchange gains and losses and the impact of unusual or strategic transactions not representative of segment operations.
Segment operating capital employed and assets were as follows:
 
(In millions)
September 30, 2012
 
December 31, 2011
Segment operating capital employed (1):
 
 
 
Subsea Technologies
$
1,830.2

 
$
1,218.2

Surface Technologies
850.9

 
620.5

Energy Infrastructure
491.1

 
365.5

Total segment operating capital employed
3,172.2

 
2,204.2

Segment liabilities included in total segment operating capital employed (2)
1,618.6

 
1,521.1

Corporate (3)
745.9

 
545.7

Total assets
$
5,536.7

 
$
4,271.0

Segment assets:
 
 
 
Subsea Technologies
$
3,074.0

 
$
2,377.7

Surface Technologies
1,120.1

 
879.1

Energy Infrastructure
616.5

 
488.0

Intercompany eliminations
(19.8
)
 
(19.5
)
Total segment assets
4,790.8

 
3,725.3

Corporate (3)
745.9

 
545.7

Total assets
$
5,536.7

 
$
4,271.0


19
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  _______________________  
(1)
FMC’s management views segment operating capital employed, which consists of assets, net of its liabilities, as the primary measure of segment capital. Segment operating capital employed excludes debt, pension liabilities, income taxes and LIFO inventory reserves.
(2)
Segment liabilities included in total segment operating capital employed consist of trade and other accounts payable, advance payments and progress billings, accrued payroll and other liabilities.
(3)
Corporate includes cash, LIFO inventory reserves, deferred income tax balances, property, plant and equipment not associated with a specific segment, pension assets and the fair value of derivative financial instruments.

Note 16: Subsequent Events
On October 1, 2012, we completed the acquisition of 100.0% of Pure Energy Services Ltd. ("Pure Energy") for the purchase price of $287.0 million. Based in Calgary, Alberta, Canada, and operating in multiple field locations in both Canada and the United States, Pure Energy is a provider of frac flowback services and wireline services. The acquisition of Pure Energy is expected to complement the existing products and services of our Surface Technologies segment and to create client value by providing an integrated well site solution. Purchase price accounting was not completed as of the filing date of this Quarterly Report on Form 10-Q, and as such, disclosure requirements for business combinations are not provided.
On October 5, 2012, the Compensation Committee of the Board of Directors approved the replacement of our defined benefit plan with a defined contribution plan for Norwegian employees under the age of 52. We expect to record approximately $7.3 million in expense in the fourth quarter of 2012 related to the curtailment of the defined pension plan in Norway.
 
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking statements” intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact contained in this report are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements usually relate to future events and anticipated revenues, earnings, cash flows or other aspects of our operations or operating results. Forward-looking statements are often identified by the words “believe,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could,” “may,” “estimate,” “outlook” and similar expressions, including the negative thereof. The absence of these words, however, does not mean that the statements are not forward-looking. These forward-looking statements are based on our current expectations, beliefs and assumptions concerning future developments and business conditions and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate.
All of our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. Known material factors that could cause actual results to differ materially from those contemplated in the forward-looking statements, include those set forth in Part II, Item 1A, “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q and Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011, as well as the following:
•
Demand for our systems and services, which is affected by changes in the price of, and demand for, crude oil and natural gas in domestic and international markets;
•
Potential liabilities arising out of the installation or use of our systems;
•
Continuing consolidation within our customers’ industries;
•
U.S. and international laws and regulations that may increase our costs, limit the demand for our products and services or restrict our operations;
•
Disruptions in the political, regulatory, economic and social conditions of the foreign countries in which we conduct business;
•
Fluctuations in currency markets worldwide;
•
Cost overruns that may affect profit realized on our fixed price contracts;
•
The cumulative loss of major contracts or alliances;
•
Our dependence on the continuing services of key managers and employees and our ability to attract, retain and

20
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motivate additional highly-skilled employees for the operation and expansion of our business;
•
Rising costs and availability of raw materials;
•
A failure of our information technology infrastructure or any significant breach of security;
•
Our ability to develop and implement new technologies and services, as well as our ability to protect and maintain critical intellectual property assets;
•
The outcome of uninsured claims and litigation against us;
•
Disruptions in the timely delivery of our backlog and its effect on our future sales, profitability and our relationships with our customers;
•
Disruptions in the financial and credit markets and its impact on our customers’ activity levels, spending for our products and services and ability to pay amounts owed us;
•
Deterioration in future expected profitability or cash flows and its effect on our goodwill;
•
Downgrade in the ratings of our debt could restrict our ability to access the debt capital markets; and
•
Our ability to successfully integrate Pure Energy's operations and to realize synergies from the acquisition.
We wish to caution you not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any of our forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.

CONSOLIDATED RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011
 
 
Three Months Ended September 30,
 
Change
(In millions, except %)
2012
 
2011
 
$
 
%
Revenue
$
1,419.0

 
$
1,287.2

 
131.8

 
10.2

Costs and expenses:
 
 
 
 
 
 
 
Cost of sales
1,099.1

 
980.2

 
118.9

 
12.1

Selling, general and administrative expense
152.9

 
110.0

 
42.9

 
39.0

Research and development expense
29.8

 
23.8

 
6.0

 
25.2

Total costs and expenses
1,281.8

 
1,114.0

 
167.8

 
15.1

Other income (expense), net
4.3

 
(3.4
)
 
7.7

 
*

Net interest expense
(6.0
)
 
(2.4
)
 
(3.6
)
 
150.0

Income before income taxes
135.5

 
167.4

 
(31.9
)
 
(19.1
)
Provision for income taxes
35.0

 
45.7

 
(10.7
)
 
(23.4
)
Net income
100.5

 
121.7

 
(21.2
)
 
(17.4
)
Net income attributable to noncontrolling interests
(1.6
)
 
(0.6
)
 
(1.0
)
 
166.7

Net income attributable to FMC Technologies, Inc
$
98.9

 
$
121.1

 
(22.2
)
 
(18.3
)
_______________________
*
Not meaningful
Revenue increased by $131.8 million in the third quarter of 2012 compared to the prior-year quarter and reflected revenue growth in all business segments. Revenue in the third quarter of 2012 included a $73.0 million unfavorable impact of foreign currency translation, compared to the prior-year quarter. Subsea systems and services had strong order activity during the third quarter of 2012. The impact of the higher backlog coming into the third quarter of 2012 led to increased Subsea Technologies sales year-over-year. Additionally, revenue increased year-over-year as a result of our acquisition of Schilling during the second quarter of 2012. Surface Technologies posted higher revenue during the third quarter of 2012 from our surface wellhead business in the Asia Pacific region due to conventional wellhead system sales and in North America from increased services related to hydraulic fracturing activity.
Gross profit (revenue less cost of sales) decreased as a percentage of sales to 22.5% in the third quarter of 2012, from 23.9% in the prior-year quarter. The margin decline was predominantly due to our Surface Technologies segment as our surface wellhead business realized lower margins due to pricing pressure in the North American market, partially offset by improved margins in

21
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Asia Pacific from higher margin projects in the third quarter of 2012. Additionally, margins declined year-over-year in our fluid control business due to higher staffing and expansion costs. The decline in gross profit as a percentage of sales was partially offset by improved performance and execution in our Subsea Technologies segment from the prior-year quarter. Gross profit for the third quarter of 2012 included a $16.5 million unfavorable impact of foreign currency translation.
Selling, general and administrative expense increased by $42.9 million year-over-year, driven by additional staffing to support expanding operations.
Research and development expense increased by $6.0 million year-over-year as we continued to advance new technologies in Subsea Technologies, including subsea processing capabilities.
Other income (expense), net, reflected $3.4 million in gains during the three months ended September 30, 2012 from the remeasurement of foreign currency exposures, and $3.3 million in losses during the three months ended September 30, 2011 associated with investments held in an employee benefit trust for our non-qualified deferred compensation plan.
Our income tax provisions for the third quarter of 2012 and 2011, reflected effective tax rates of 26.1% and 27.4%, respectively. The decrease in the effective tax rate year-over-year was primarily due to changes in our international structure during 2012 and lower charges related to unrecognized tax benefits, partially offset by an unfavorable change in the forecasted country mix of earnings and the tax impact of the remeasurement of the MPM contingent earn-out consideration. Our effective tax rate can fluctuate depending on our country mix of earnings, since our foreign earnings are generally subject to lower tax rates than in the United States. In certain jurisdictions, primarily Singapore and Malaysia, our tax rate is significantly less than the relevant statutory rate due to tax holidays. The cumulative balance of foreign earnings for which no provision for U.S. income taxes has been recorded was $1,142 million at September 30, 2012. The Company would need to accrue and pay U.S. tax on such undistributed earnings if these funds were repatriated. The Company has no current intention to repatriate these earnings.
Business Outlook
Overall, management remains optimistic about business activity entering into 2013. Average crude oil prices remained relatively static in the third quarter as compared to the second quarter of 2012, averaging $92 per barrel for WTI crude during the third quarter. Expectations of future energy demand are closely tied to economic activity in major world economies. Despite expectations of slow global economic growth, total world consumption of crude oil and liquid fuels is expected to slightly increase in 2013. As a result, we currently expect crude oil prices to remain at a level that supports strong exploration and production activity, especially in subsea markets.
Our strong subsea project backlog as of September 30, 2012, combined with continued strong demand for subsea services related to exploration and production activity, supports our expectations of higher subsea revenue and increasing margins during 2013, coupled with significant inbound expansion. These expectations are partly dependent upon our ability to successfully develop and advance the capacity and capabilities of our supply chain. We believe the workforce we added in 2011 and in the first nine months of 2012, including increased capacity surrounding supply chain management, is preparing us for further subsea market growth. We expect market demand to remain strong for our subsea technologies systems and service offerings worldwide.
Regarding our surface technologies portfolio, North American shale activity was strong during the first half of 2012; however, we are experiencing a slowdown in capital orders as a result of hydraulic fracturing fleets aligning with market demand. The market shift in North America had an impact on segment profits in the third quarter of 2012 and will continue through the fourth quarter of 2012 and into 2013. Despite the weakness in the North American market, we expect our international surface wellhead business to perform well. In addition, on October 1, 2012, we completed the acquisition of Pure Energy which will allow us to offer an integrated fracturing rental service, consistent with our strategy for continued expansion in the shale markets.

OPERATING RESULTS OF BUSINESS SEGMENTS
THREE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011
 

22
Table of Contents

 
Three Months Ended September 30,
 
Change
(In millions, except %)
2012
 
2011
 
$
 
%
Revenue
 
 
 
 
 
 
 
Subsea Technologies
$
929.2

 
$
833.7

 
95.5

 
11.5

Surface Technologies
362.8

 
335.5

 
27.3

 
8.1

Energy Infrastructure
133.2

 
129.1

 
4.1

 
3.2

Other revenue and intercompany eliminations
(6.2
)
 
(11.1
)
 
4.9

 
*

Total revenue
$
1,419.0

 
$
1,287.2

 
131.8

 
10.2

Segment Operating Profit
 
 
 
 
 
 
 
Subsea Technologies
$
115.5

 
$
96.1

 
19.4

 
20.2

Surface Technologies
57.5

 
65.8

 
(8.3
)
 
(12.6
)
Energy Infrastructure
7.7

 
13.9

 
(6.2
)
 
(44.6
)
Total segment operating profit
180.7

 
175.8

 
4.9

 
2.8

Corporate Items
 
 
 
 
 
 
 
Corporate expense
(11.5
)
 
(9.3
)
 
(2.2
)
 
23.7

Other revenue and other expense, net
(29.3
)
 
2.7

 
(32.0
)
 
(1,185.2
)
Net interest expense
(6.0
)
 
(2.4
)
 
(3.6
)
 
150.0

Total corporate items
(46.8
)
 
(9.0
)
 
(37.8
)
 
420.0

Income before income taxes
133.9

 
166.8


(32.9
)
 
(19.7
)
Provision for income taxes
35.0

 
45.7

 
(10.7
)
 
(23.4
)
Net income attributable to FMC Technologies, Inc.
$
98.9

 
$
121.1

 
(22.2
)
 
(18.3
)
_______________________  
*
Not meaningful
Segment operating profit is defined as total segment revenue less segment operating expenses. The following items have been excluded in computing segment operating profit: corporate staff expense, interest income and expense associated with corporate investments and debt, income taxes and other revenue and other expense, net.
Subsea Technologies
Subsea Technologies’ revenue increased $95.5 million year-over-year. Revenue for the third quarter of 2012 included a $62.3 million unfavorable impact of foreign currency translation, compared to the prior-year quarter. Excluding the impact of foreign currency translation, total revenue increased by $157.8 million year-over-year. Subsea Technologies revenue is primarily impacted by the level of backlog conversion. We entered the quarter with solid subsea backlog and continued to have strong subsea systems and service order activity during the third quarter of 2012. Additionally, revenue increased year-over-year resulting from our acquisition of Schilling during the second quarter of 2012.

Subsea Technologies’ operating profit in the third quarter of 2012 totaled $115.5 million, or 12.4% of revenue, compared to the prior-year quarter’s operating profit as a percentage of revenue of 11.5%. The year-over-year margin improvement was predominantly due to higher volumes and improved execution on projects, partially offset by increased selling, general and administrative expenses from higher costs of staffing to support expanding operations. Foreign currency translation unfavorably impacted operating profit in the third quarter of 2012 by $9.7 million compared to the prior-year quarter.
Surface Technologies
Surface Technologies’ revenue increased by $27.3 million year-over-year. Revenue for the third quarter of 2012 included a $4.9 million unfavorable impact of foreign currency translation, compared to the prior-year quarter. Excluding the impact of foreign currency translation, total revenue increased by $32.2 million year-over-year. The increase was primarily driven by our surface wellhead business in the Asia Pacific region due to conventional wellhead system sales and in North America from increased services related to hydraulic fracturing activity.
Surface Technologies’ operating profit in the third quarter of 2012 totaled $57.5 million, or 15.8% of revenue, compared to the prior-year quarter’s operating profit as a percentage of revenue of 19.6%. The margin decline was primarily driven by our surface wellhead business due to pricing pressure in the North American market and higher warranty costs in Europe, partially offset by improved margins in Asia Pacific from higher margin projects in the third quarter of 2012. Additionally, margins

23
Table of Contents

declined year-over-year in our fluid control business due to higher staffing and expansion costs.
Energy Infrastructure
Energy Infrastructure’s revenue increased by $4.1 million year-over-year. The increase was driven by demand for our measurement solutions products and services due to the strength of North American oil and gas shale activity, increased sales volumes in material handling, and our acquisition of CSI during the second quarter of 2012.
Energy Infrastructure’s operating profit in the third quarter of 2012 totaled $7.7 million, or 5.8% of revenue, compared to the prior-year quarter’s operating profit as a percentage of revenue of 10.8%. The margin decline was primarily driven by our separation systems business from higher fixed costs on lower sales volumes and higher contract completion costs and research and development expenses in direct drive systems in 2012.
Corporate Items
Our corporate items reduced earnings by $46.8 million in 2012, compared to $9.0 million in 2011. The year-over-year increase primarily reflected the following:
•
unfavorable variance in foreign currency gains and losses of $6.1 million;
•
unfavorable variance related to the remeasurement of the MPM contingent earn-out consideration of $11.9 million;
•
unfavorable variance related to higher pension expense of $8.5 million primarily due to settlement losses in our U.S. non-qualified defined benefit pension plan; and an
•
unfavorable variance related to higher interest expense of $3.6 million.
Inbound Orders and Order Backlog
Inbound orders represent the estimated sales value of confirmed customer orders received during the reporting period.
 
 
Inbound Orders
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(In millions)
2012
 
2011
 
2012
 
2011
Subsea Technologies
$
885.5

 
$
750.5

 
$
3,192.5

 
$
2,637.7

Surface Technologies
340.3

 
357.9

 
1,130.7

 
1,084.6

Energy Infrastructure
157.5

 
156.6

 
496.1

 
429.5

Intercompany eliminations and other
(5.7
)
 
(11.6
)
 
(7.1
)
 
(14.0
)
Total inbound orders
$
1,377.6

 
$
1,253.4

 
$
4,812.2

 
$
4,137.8


Order backlog is calculated as the estimated sales value of unfilled, confirmed customer orders at the reporting date. Translation positively affected backlog by $118.9 million and negatively affected backlog by $95.9 million for the three and nine months ended September 30, 2012, respectively, and negatively affected backlog by $328.3 million and $108.6 million for the three and nine months ended September 30, 2011, respectively.
 
 
Order Backlog
(In millions)
September 30, 2012
 
December 31, 2011
 
September 30, 2011
Subsea Technologies
$
4,415.9

 
$
4,090.0

 
$
3,800.8

Surface Technologies
554.6

 
577.7

 
550.2

Energy Infrastructure
312.7

 
226.9

 
255.2

Intercompany eliminations
(1.0
)
 
(18.2
)
 
(4.0
)
Total order backlog
$
5,282.2

 
$
4,876.4

 
$
4,602.2

Order backlog for Subsea Technologies at September 30, 2012, increased by $325.9 million compared to December 31, 2011, reflecting a significant order of approximately $925 million from Petrobras related to our Pre-Salt Tree award. Backlog of $4.4 billion at September 30, 2012, was composed of various subsea projects, including BG Norge’s Knarr; BP’s Block 18;

24
Table of Contents

Chevron’s Wheatstone; ExxonMobil’s Hibernia Southern Extension; Petrobras’ Tree and Manifold Frame Agreements, Congro & Corvina, and Pre-Salt Tree award; Shell’s Prelude, BC-10, and Bonga; Statoil’s Statfjord Workover System, Fram H Nord, and Gulfaks; Total’s CLOV; and Woodside’s Greater Western Flank.
Surface Technologies’ order backlog at September 30, 2012, decreased by $23.1 million compared to December 31, 2011. The decrease was due to lower inbound orders in our fluid control business and conversion of year-end 2011 backlog, partially offset by strong inbound orders in surface wellhead during the nine months ended September 30, 2012.
Energy Infrastructure’s order backlog at September 30, 2012, increased by $85.8 million compared to December 31, 2011, reflecting a significant order in our loading systems business from Shell related to the Prelude floating liquefied natural gas project. The increase was also due to strong overall inbound orders in our automation and controls business during the three months ended September 30, 2012.


CONSOLIDATED RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011
 
 
Nine Months Ended September 30,
 
Change
(In millions, except %)
2012
 
2011
 
$
 
%
Revenue
$
4,310.5

 
$
3,598.5

 
712.0

 
19.8

Costs and expenses:
 
 
 
 
 
 
 
Cost of sales
3,383.1

 
2,776.8

 
606.3

 
21.8

Selling, general and administrative expense
429.3

 
341.7

 
87.6

 
25.6

Research and development expense
82.9

 
62.0

 
20.9

 
33.7

Total costs and expenses
3,895.3

 
3,180.5

 
714.8

 
22.5

Other income (expense), net
24.4

 
1.5

 
22.9

 
*

Net interest expense
(15.9
)
 
(6.0
)
 
(9.9
)
 
165.0

Income before income taxes
423.7

 
413.5

 
10.2

 
2.5

Provision for income taxes
110.3

 
110.5

 
(0.2
)
 
(0.2
)
Net income
313.4

 
303.0

 
10.4

 
3.4

Net income attributable to noncontrolling interests
(3.8
)
 
(2.4
)
 
(1.4
)
 
58.3

Net income attributable to FMC Technologies, Inc
$
309.6

 
$
300.6

 
9.0

 
3.0

_______________________
*
Not meaningful
Revenue increased by $712.0 million in 2012 compared to the prior year and reflected revenue growth in all business segments. Revenue in 2012 included a $173.2 million unfavorable impact of foreign currency translation, compared to the prior year. Subsea systems and services had strong order activity during the nine months ended September 30, 2012. The impact of the higher backlog coming into 2012 led to increased Subsea Technologies sales year-over-year. Additionally, revenue increased year-over-year as a result of our acquisition of Schilling during the second quarter of 2012. Surface Technologies posted higher revenue from higher backlog entering the year. The higher backlog was due to increased demand for Weco®/Chiksan® equipment and well service pumps due to the ongoing strength of the North American oil and gas shale markets. Surface wellhead also posted higher revenue primarily in the North American and Asia Pacific markets.
Gross profit (revenue less cost of sales) decreased as a percentage of sales to 21.5% in 2012, from 22.8% in the prior year. The margin decline was predominantly due to the remeasurement of the MPM contingent earn-out consideration, inefficiencies of integrating a rapidly increasing workforce and higher project execution costs in the first half of 2012, partially offset by improved execution and higher volumes on projects in the third quarter of 2012 in Subsea Technologies. Gross profit in 2012 included a $36.0 million unfavorable impact of foreign currency translation.
Selling, general and administrative expense increased by $87.6 million year-over-year, driven by additional staffing to support expanding operations.
Research and development expense increased by $20.9 million year-over-year as we continued to advance new technologies in

25
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Subsea Technologies, including subsea processing capabilities.
Other income (expense), net, reflected $2.6 million in gains during the nine months ended September 30, 2012 and 2011, from the remeasurement of foreign currency exposures. We also recognized a $20.0 million gain related to the fair valuation of our previously held equity interest in Schilling during the nine months ended September 30, 2012.
Our income tax provisions for the first nine months of 2012 and 2011, reflected effective tax rates of 26.3% and 26.9%, respectively. Excluding a benefit related to recognizing a retroactive tax holiday in Singapore in the first quarter of 2011, our effective rate for income taxes for the nine months ended September 30, 2011, was 28.6%. The decrease from this adjusted rate to our effective tax rate for the nine months ended September 30, 2012, was primarily due to changes in our international structure during 2012, partially offset by the tax impact of the remeasurement of the MPM contingent earn-out consideration. Our effective tax rate can fluctuate depending on our country mix of earnings, since our foreign earnings are generally subject to lower tax rates than in the United States. In certain jurisdictions, primarily Singapore and Malaysia, our tax rate is significantly less than the relevant statutory rate due to tax holidays. The cumulative balance of foreign earnings for which no provision for U.S. income taxes has been recorded was $1,142 million at September 30, 2012. The Company would need to accrue and pay U.S. tax on such undistributed earnings if these funds were repatriated. The Company has no current intention to repatriate these earnings.

OPERATING RESULTS OF BUSINESS SEGMENTS
NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011
 
 
Nine Months Ended September 30,
 
Change
(In millions, except %)
2012
 
2011
 
$
 
%
Revenue
 
 
 
 
 
 
 
Subsea Technologies
$
2,770.0

 
$
2,324.2

 
445.8

 
19.2

Surface Technologies
1,154.4

 
937.1

 
217.3

 
23.2

Energy Infrastructure
409.6

 
352.3

 
57.3

 
16.3

Other revenue and intercompany eliminations
(23.5
)
 
(15.1
)
 
(8.4
)
 
*

Total revenue
$
4,310.5

 
$
3,598.5

 
712.0

 
19.8

Segment Operating Profit
 
 
 
 
 
 
 
Subsea Technologies
$
300.3

 
$
250.1

 
50.2

 
20.1

Surface Technologies
219.7

 
173.7

 
46.0

 
26.5

Energy Infrastructure
26.1

 
29.1

 
(3.0
)
 
(10.3
)
Total segment operating profit
546.1

 
452.9

 
93.2

 
20.6

Corporate Items
 
 
 
 
 
 
 
Corporate expense
(30.4
)
 
(28.3
)
 
(2.1
)
 
7.4

Other revenue and other expense, net
(79.9
)
 
(7.5
)
 
(72.4
)
 
965.3

Net interest expense
(15.9
)
 
(6.0
)
 
(9.9
)
 
165.0

Total corporate items
(126.2
)
 
(41.8
)
 
(84.4
)
 
201.9

Income before income taxes
419.9

 
411.1

 
8.8

 
2.1

Provision for income taxes
110.3

 
110.5

 
(0.2
)
 
(0.2
)
Net income attributable to FMC Technologies, Inc.
$
309.6

 
$
300.6

 
9.0

 
3.0

_______________________  
*
Not meaningful
Segment operating profit is defined as total segment revenue less segment operating expenses. The following items have been excluded in computing segment operating profit: corporate staff expense, interest income and expense associated with corporate investments and debt, income taxes and other revenue and other expense, net.
Subsea Technologies

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Subsea Technologies’ revenue increased $445.8 million year-over-year. Revenue for the nine months ended September 30, 2012 included an $146.4 million unfavorable impact of foreign currency translation, compared to the prior-year. Excluding the impact of foreign currency translation, total revenue increased by $592.2 million year-over-year. Subsea Technologies revenue is primarily impacted by the level of backlog conversion. We entered the year with record subsea backlog and continued to have strong order activity during the first nine months of 2012, including our Pre-Salt Tree award with Petrobras. Additionally, revenue increased year-over-year as a result of our acquisition of Schilling during the second quarter of 2012.

Subsea Technologies’ operating profit totaled $300.3 million, or 10.8% of revenue, in 2012, compared to the prior-year’s operating profit as a percentage of revenue of 10.8%. Subsea Technologies' operating profit in the nine months ended September 30, 2012 included the gain on our previously held equity interest in Schilling and other purchase price adjustments which had a combined net benefit in the period of $9.0 million. Excluding this net benefit, the year-over-year margin decline was predominantly due to inefficiencies of integrating a rapidly increasing workforce and higher project execution costs in the first half of 2012, partially offset by improved execution and higher volumes on projects in the third quarter of 2012. Foreign currency translation unfavorably impacted operating profit in 2012 by $19.9 million compared to the prior year.
Surface Technologies
Surface Technologies’ revenue increased by $217.3 million year-over-year. The increase was driven by strong demand for fluid control products, particularly Weco®/Chiksan® equipment, coupled with an increased demand for well service pumps due to the strength of North American oil and gas shale activity. In addition, surface wellhead markets in North America also led to revenue growth year-over-year primarily due to conventional wellhead system sales and increased services related to hydraulic fracturing activity, coupled with increased revenue in Asia Pacific due to conventional wellhead system sales.
Surface Technologies’ operating profit totaled $219.7 million, or 19.0% of revenue, in 2012, compared to the prior-year’s operating profit as a percentage of revenue of 18.5%. The margin improvement was driven by improved margins in surface wellhead due to increased services related to hydraulic fracturing activity and strengthening international performance, partially offset by lower margins in fluid control due to higher staffing and expansion costs.
Energy Infrastructure
Energy Infrastructure’s revenue increased by $57.3 million year-over-year. The increase was driven by strong demand for our measurement solutions products and services due to the strength of North American oil and gas shale activity, increased sales volumes in material handling, and our acquisition of CSI during the second quarter of 2012.
Energy Infrastructure’s operating profit totaled $26.1 million, or 6.4% of revenue, in 2012, compared to the prior-year’s operating profit as a percentage of revenue of 8.3%. The margin decline was primarily driven by higher costs on loading systems projects in 2012, higher margin projects in separations systems in 2011, and higher research and development expenses in direct drive systems in 2012. These declines were partially offset by margin improvements in measurement solutions and material handling businesses.
Corporate Items
Our corporate items reduced earnings by $126.2 million in 2012, compared to $41.8 million in 2011. The year-over-year increase primarily reflected the following:
•
unfavorable variance in foreign currency gains and losses of $24.0 million;
•
unfavorable variance related to the remeasurement of the MPM contingent earn-out consideration of $24.7 million;
•
unfavorable variance related to higher pension expense of $14.4 million primarily due to settlement losses in our U.S. non-qualified defined pension plan; and an
•
unfavorable variance related to higher interest expense of $9.9 million.

LIQUIDITY AND CAPITAL RESOURCES
Our cash is held in numerous locations throughout the world, with substantially all of our cash balances held outside the United States. Cash held outside the United States is generally used to meet the liquidity needs of our non-U.S. operations. Most of our cash held outside the United States could be repatriated to the United States, but under current law, any such repatriation would be subject to U.S. federal income tax, as adjusted for applicable foreign tax credits. We have provided for U.S. federal income taxes on undistributed foreign earnings where we have determined that such earnings are not indefinitely reinvested.

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We expect to meet the continuing funding requirements of our U.S. operations with cash generated by such U.S. operations, with cash from earnings generated by non-U.S. operations that are not indefinitely reinvested and through our existing credit facility. If cash held by non-U.S. operations is required for funding operations in the United States, and if the applicable U.S. tax has not previously been provided on the earnings of such operations, we would make a provision for additional U.S. tax in connection with repatriating this cash, which may be material to our cash flows and results of operations.
We were in a net debt position at September 30, 2012. Net debt, or net cash, is a non-GAAP measure reflecting debt, net of cash and cash equivalents. Management uses this non-GAAP measure to evaluate our capital structure and financial leverage. We believe that net (debt) cash is a meaningful measure of our financial leverage and can assist investors in understanding our results and recognizing underlying trends. This measure supplements disclosures required by GAAP. The following table provides details of the balance sheet classifications included in net (debt) cash.
 
(In millions)
September 30, 2012
 
December 31, 2011
Cash and cash equivalents
$
566.2

 
$
344.0

Short-term debt and current portion of long-term debt
(37.7
)
 
(587.6
)
Long-term debt, less current portion
(1,491.4
)
 
(36.0
)
Net debt
$
(962.9
)
 
$
(279.6
)
The change in our net debt position was primarily due to payments for acquisitions, capital expenditures and increased borrowings to fund working capital requirements, partially offset by higher net income during the nine months ended September 30, 2012.
Cash Flows
We used $5.2 million and generated $118.8 million in cash flows from operating activities during the nine months ended September 30, 2012 and 2011, respectively. The decrease in cash flows from operating activities year-over-year was primarily due to changes in our working capital driven by our portfolio of projects. Our working capital balances can vary significantly depending on the payment and delivery terms on key contracts. This unfavorable change was partially offset by higher net income year-over-year.
During the nine months ended September 30, 2012, cash flows required by investing activities totaled $611.4 million, consisting of amounts required to fund capital expenditures and acquisitions. Capital expenditures totaled $282.7 million, an increase of $95.7 million year-over-year, primarily reflecting our investment in capacity expansion, tooling, rental tools and equipment upgrades. Additionally, cash required, net of cash acquired, for our acquisitions of Schilling and CSI totaled $328.6 million during the nine months ended September 30, 2012.
Cash provided by financing activities was $837.2 million and $92.1 million for the nine months ended September 30, 2012 and 2011, respectively. The year-over-year increase in cash provided by financing activities was used to fund capital expenditures, acquisitions, and working capital needs. During the nine months ended September 30, 2012, we completed the public offering of $800.0 million aggregate senior notes which was used for the repayment of outstanding commercial paper and indebtedness under our revolving credit facility.
Debt and Liquidity
Senior Notes—On September 21, 2012, we completed the public offering of $300.0 million aggregate principal amount of 2.00% senior notes due October 2017 and $500.0 million aggregate principal amount of 3.45% senior notes due October 2022. Interest on the Senior Notes is payable semi-annually in arrears on April 1 and October 1 of each year, beginning April 1, 2013. Net proceeds from the offering of $793.8 million were used for the repayment of outstanding commercial paper and indebtedness under our revolving credit facility. Additional information about the Senior Notes is incorporated herein by reference from Note 6 to our condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q.
Credit Facility—The following is a summary of our credit facility at September 30, 2012:
 
(In millions)
Description
Amount
 
Debt
Outstanding
 
Commercial
Paper
Outstanding (a)
 
Letters
of
Credit
 
Unused
Capacity
 
Maturity
Five-year revolving credit facility
$
1,500.0

 
$
100.0

 
$
585.8

 
$
6.0

 
$
808.2

 
March 2017
_______________________   

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(a)
Under our commercial paper program, we have the ability to access up to $1.0 billion of financing through our commercial paper dealers. Our available capacity under our revolving credit facility is reduced by any outstanding commercial paper.
Committed credit available under our revolving credit facility provides the ability to issue our commercial paper obligations on a long-term basis. We had $585.8 million of commercial paper issued under our facility at September 30, 2012. As we had both the ability and intent to refinance these obligations on a long-term basis, our commercial paper borrowings were classified as long-term in the accompanying condensed consolidated balance sheets at September 30, 2012.
Credit Risk Analysis
Valuations of derivative assets and liabilities reflect the value of the instruments, including the values associated with counterparty risk. These values must also take into account our credit standing, thus including in the valuation of the derivative instrument the value of the net credit differential between the counterparties to the derivative contract. Our methodology includes the impact of both counterparty and our own credit standing. Additional information about credit risk is incorporated herein by reference from Note 13 to our condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q.
Outlook
Historically, we have generated our capital resources primarily through operations and, when needed, through our credit facility. The volatility in credit, equity and commodity markets creates some uncertainty for our businesses. However, management believes, based on our current financial condition, existing backlog levels and current expectations for future market conditions, that we will continue to meet our short- and long-term liquidity needs with a combination of cash on hand, cash generated from operations and access to capital markets.
We project spending approximately $400 million in 2012 for capital expenditures, largely for capacity expansion in our subsea technologies manufacturing, and tools necessary to expand offshore service capabilities. We expect to make contributions of approximately $2.0 million and $16.2 million to our domestic pension plans and international pension plans during the remainder of 2012, respectively. Actual contribution amounts are dependent upon plan investment returns, changes in pension obligations, regulatory environments and other economic factors. We update our pension estimates annually during the fourth quarter or more frequently upon the occurrence of significant events. Further, we expect to continue our stock repurchases authorized by our Board, with the timing and amounts of these repurchases dependent upon market conditions and liquidity. In conjunction with the closing of our acquisition of Pure Energy on October 1, 2012, a cash outlay of $287.0 million will be administered in the fourth quarter of 2012.
We have $808.2 million of capacity available under our credit facility that we expect to utilize if working capital needs temporarily increase in response to market demand. We also continue to evaluate acquisitions, divestitures and joint ventures that meet our strategic priorities. Our intent is to maintain a level of financing sufficient to meet these objectives.
CRITICAL ACCOUNTING ESTIMATES
Refer to our Annual Report on Form 10-K for the year ended December 31, 2011, for a discussion of our critical accounting estimates. During the nine months ended September 30, 2012, there were no material changes in our judgments and assumptions associated with the development of our critical accounting estimates.

RECENTLY ISSUED ACCOUNTING STANDARDS
In December 2011, the FASB issued an update to existing disclosure guidance for offsetting (netting) assets and liabilities. The updated guidance requires entities to disclose both gross information and net information of recognized financial instruments, derivative instruments, and transactions eligible for offset in the consolidated balance sheet and instruments and transactions subject to an agreement similar to a master netting arrangement. The updated guidance is to be applied retrospectively, effective January 1, 2013. We believe the adoption of this guidance concerns disclosure only and will not have an impact on our consolidated financial position or results of operations.
Management believes that other recently issued accounting standards, which are not yet effective, will not have a material impact on our condensed consolidated financial statements upon adoption.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
On September 21, 2012, we completed the public offering of $800 million aggregate principal amount of Senior Notes. Additional information about our Senior Notes is incorporated herein by reference from Note 6 to our condensed consolidated

29
Table of Contents

financial statements included in Item 1 of this Quarterly Report on Form 10-Q. Our Senior Notes have fixed interest rates, so consequently, we are not exposed to cash flow risk from market interest rate changes on these Senior Notes. Additionally, the fair value of our fixed-rate debt changes with movements in market interest rates.
There have been no material changes in reported market risks from the information reported in our Annual Report on Form 10-K for the year ended December 31, 2011.
ITEM 4. CONTROLS AND PROCEDURES
Under the direction of our principal executive officer and principal financial officer, we have evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2012. Our disclosure controls and procedures are designed to:

i)
ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and

ii)
ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
There were no changes in internal controls identified in the evaluation for the quarter ended September 30, 2012, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act.
PART II—OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are involved in various pending or potential legal actions in the ordinary course of our business. Management is unable to predict the ultimate outcome of these actions, because of the inherent uncertainty of litigation. However, management believes that the most probable, ultimate resolution of these matters will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.
ITEM 1A. RISK FACTORS
In addition to our risk factors previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2011, the following risk factors were identified:

A deterioration in future expected profitability or cash flows could result in an impairment of our recorded goodwill.

Reporting units with goodwill are tested for impairment by first assessing qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If after assessing the totality of events or circumstances, or based on management's judgment, we determine it is more likely than not that the fair value of a reporting unit is less than its carrying amount, a two-step quantitative impairment test is performed. The first step compares the fair value of the reporting unit (measured as the present value of expected future cash flows) to its carrying amount. If the fair value of the reporting unit is less than its carrying amount, a second step is performed. In this step, the fair value of the reporting unit is allocated to its assets and liabilities to determine the implied fair value of goodwill, which is used to measure the impairment loss.
A lower fair value estimate in the future for any of our reporting units could result in goodwill impairments. Factors that could trigger a lower fair value estimate include changes in customer demand, cost increases, regulatory or political environment changes, and other changes in market conditions, such as decreased prices in market-based transactions for similar assets, which could impact future earnings of the reporting unit. We have not recognized any impairment for the nine months ended September 30, 2012.

A downgrade in the rating of our debt could restrict our ability to access the capital markets.

Changes in the ratings assigned to our debt may ultimately impact our access to the debt capital markets and the costs we incur to borrow additional funds. If ratings for our debt fall below investment grade, our access to the debt capital markets could become restricted. Moreover, our revolving credit agreement includes an increase in interest rates if the ratings for our debt are downgraded. An increase in the level of our indebtedness and related interest costs may increase our vulnerability to adverse general economic and industry conditions and may affect our ability to obtain additional financing.


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Table of Contents

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
We had no unregistered sales of equity securities during the three months ended September 30, 2012.
The following table summarizes repurchases of our common stock during the three months ended September 30, 2012.
ISSUER PURCHASES OF EQUITY SECURITIES
 
Period
Total Number of
Shares
Purchased (a)
 
Average Price
Paid per
Share
 
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs
 
Maximum Number
of Shares That May
Yet Be Purchased
Under the Plans or
Programs (b)
July 1, 2012—July 31, 2012
288,487

 
$
40.87

 
268,687

 
16,490,231

August 1, 2012—August 31, 2012
256,865

 
$
47.02

 
231,365

 
16,258,866

September 1, 2012—September 30, 2012
190,000

 
$
48.14

 
190,000

 
16,068,866

Total
735,352

 
$
44.90

 
690,052

 
16,068,866

 _______________________  
(a)
Represents 690,052 shares of common stock repurchased and held in treasury and 45,300 shares of common stock purchased and held in an employee benefit trust established for the FMC Technologies, Inc. Non-Qualified Savings and Investment Plan. In addition to these shares purchased on the open market, we sold 66,710 shares of registered common stock held in this trust, as directed by the beneficiaries during the three months ended September 30, 2012.

(b)
In 2005, we announced a repurchase plan approved by our Board of Directors authorizing the repurchase of up to two million shares of our issued and outstanding common stock through open market purchases. The Board of Directors authorized extensions of this program, adding five million shares in February 2006 and eight million shares in February 2007 for a total of 15 million shares of common stock authorized for repurchase. As a result of the two-for-one stock splits (i) on August 31, 2007, the authorization was increased to 30 million shares; and (ii) on March 31, 2011, the authorization was increased to 60 million shares. In December 2011, the Board of Directors authorized an extension of our repurchase program, adding 15 million shares, for a total of 75 million shares. In addition to the 75 million shares, in July 2008, the Board of Directors authorized the repurchase of $95.0 million of our outstanding common stock, and as of September 2008, there was no remaining amount available for purchase under the $95.0 million authorization.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS
(a) Exhibits
 
Number in
Exhibit Table
 
Description
2.1
 
Separation and Distribution Agreement by and between FMC Corporation and FMC Technologies, Inc., dated as of May 31, 2001 (incorporated by reference from Exhibit 2.1 to the Form S-1/A filed on June 6, 2001) (Registration No. 333-55920).
 
 
 
2.2
 
Separation and Distribution Agreement by and between FMC Technologies, Inc. and John Bean Technologies Corporation, dated July 31, 2008 (incorporated by reference from Exhibit 2.1 to the Current Report on Form 8-K filed on August 6, 2008) (File No. 001-16489).
 
 
 

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2.2.a
 
Amendment, dated October 25, 2010, by and between FMC Technologies, Inc. and John Bean Technologies Corporation that amends the Separation and Distribution Agreement by and between FMC Technologies, Inc. and John Bean Technologies Corporation, dated July 31, 2008 (incorporated by reference from Exhibit 2.2.a to the Quarterly Report on Form 10-Q filed on November 3, 2010) (File No. 001-16489).
2.3
 
Arrangement Agreement dated August 17, 2012 between FMC Technologies, Inc. and Pure Energy Services Ltd. (incorporated by reference from Exhibit 2.1 to the Current Report on Form 8-K filed on August 20, 2012 (File No. 001-16489)).
 
 
 
3.1
 
Amended and Restated Certificate of Incorporation of FMC Technologies, Inc. (incorporated by reference from Exhibit 3.1 to the Quarterly Report on Form 10-Q filed on August 7, 2009) (File No. 001-16489).
 
 
 
3.1.a
 
Second Certificate of Amendment of Amended and Restated Certificate of Incorporation of FMC Technologies, Inc. (incorporated by reference from Exhibit 3.1 to the Current Report on Form 8-K filed on May 12, 2011) (File No. 001-16489).
 
 
 
3.1.b
 
Third Certificate of Amendment to the Amended and Restated Certificate of Incorporation of FMC Technologies, Inc. (incorporated by reference from Exhibit 3.1 to the Current Report on Form 8-K filed on May 4, 2012) (File No. 001-16489).
 
 
 
3.2
 
Amended and Restated Bylaws of FMC Technologies, Inc. (incorporated by reference from Exhibit 3.2 to the Quarterly Report on Form 10-Q filed on November 3, 2010) (File No. 001-16489).
 
 
 
4.1
 
Form of Specimen Certificate for the Company’s Common Stock (incorporated by reference from Exhibit 4.1 to the Form S-1/A filed on May 4, 2001) (File No. 333-55920).
 
 
 
4.2
 
Preferred Share Purchase Rights Agreement, dated as of June 5, 2001, between FMC Technologies, Inc. and Computershare Investor Services, LLC, as Rights Agent (incorporated by reference from Exhibit 4.2 to the Form S-8 filed on June 14, 2001) (File No. 333-55920)).
 
 
 
4.2.a
 
Amendment to Preferred Share Purchase Rights Agreement, dated as of September 8, 2009, between FMC Technologies, Inc. and National City Bank, as Rights Agent (incorporated by reference from Exhibit 4.1 to the Current Report on Form 8-K filed on September 14, 2009 (File No. 001-16489)).
 
 
 
4.3
 
Indenture, dated September 21, 2012 between FMC Technologies, Inc. and U.S. Bank National Association, as trustee (incorporated by reference from Exhibit 4.1 to the Current Report on Form 8-K filed on September 25, 2012) (File No. 001-16489).
 
 
 
4.3.a
 
First Supplemental Indenture, dated September 21, 2012 between FMC Technologies, Inc. and U.S. Bank National Association, as trustee (incorporated by reference from Exhibit 4.2 to the Current Report on Form 8-K filed on September 25, 2012) (File No. 001-16489).
 
 
 
4.3.b
 
Form of 2.00% Senior Notes dues 2017 (incorporated by reference from Exhibit 4.3 to the Current Report on Form 8-K filed on September 25, 2012) (File No. 001-16489).
 
 
 
4.3.c
 
Second Supplemental Indenture, dated September 21, 2012 between FMC Technologies, Inc. and U.S. Bank National Association, as trustee (incorporated by reference from Exhibit 4.4 to the Current Report on Form 8-K filed on September 25, 2012) (File No. 001-16489).
 
 
 
4.3.d
 
Form of 3.45% Senior Notes dues 2022 (incorporated by reference from Exhibit 4.5 to the Current Report on Form 8-K filed on September 25, 2012) (File No. 001-16489).
 
 
 
10.1
 
Form of Voting and Support Agreement dated August 17, 2012 between FMC Technologies, Inc. and the directors and officers of Pure Energy Services Ltd. (incorporated by reference from Exhibit 10.1 to the Current Report on Form 8-K filed on August 20, 2012) (File No. 001-16489).
 
 
 
31.1
 
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a).
 
 
 
31.2
 
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a).
 
 
 
32.1 *
 
Certification of Chief Executive Officer Under Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. 1350.
 
 
 
32.2 *
 
Certification of Chief Financial Officer Under Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. 1350.

32
Table of Contents

Number in
Exhibit Table
 
Description
101.INS
 
XBRL Instance Document.
 
 
 
101.SCH
 
XBRL Schema Document.
 
 
 
101.CAL
 
XBRL Calculation Linkbase Document.
 
 
 
101.DEF
 
XBRL Definition Linkbase Document.
 
 
 
101.LAB
 
XBRL Label Linkbase Document.
 
 
 
101.PRE
 
XBRL Presentation Linkbase Document.
 
*
Furnished with this Quarterly Report on Form 10-Q


EXHIBIT INDEX
 
Number in
Exhibit Table
Description
2.1
Separation and Distribution Agreement by and between FMC Corporation and FMC Technologies, Inc., dated as of May 31, 2001 (incorporated by reference from Exhibit 2.1 to the Form S-1/A filed on June 6, 2001) (Registration No. 333-55920).
 
 
2.2
Separation and Distribution Agreement by and between FMC Technologies, Inc. and John Bean Technologies Corporation, dated July 31, 2008 (incorporated by reference from Exhibit 2.1 to the Current Report on Form 8-K filed on August 6, 2008) (File No. 001-16489).
 
 
2.2.a
Amendment, dated October 25, 2010, by and between FMC Technologies, Inc. and John Bean Technologies Corporation that amends the Separation and Distribution Agreement by and between FMC Technologies, Inc. and John Bean Technologies Corporation, dated July 31, 2008 (incorporated by reference from Exhibit 2.2.a to the Quarterly Report on Form 10-Q filed on November 3, 2010) (File No. 001-16489).
 
 
2.3
Arrangement Agreement dated August 17, 2012 between FMC Technologies, Inc. and Pure Energy Services Ltd. (incorporated by reference from Exhibit 2.1 to the Current Report on Form 8-K filed on August 20, 2012 (File No. 001-16489)).
 
 
3.1
Amended and Restated Certificate of Incorporation of FMC Technologies, Inc. (incorporated by reference from Exhibit 3.1 to the Quarterly Report on Form 10-Q filed on August 7, 2009) (File No. 001-16489).
 
 
3.1.a
Second Certificate of Amendment of Amended and Restated Certificate of Incorporation of FMC Technologies, Inc. (incorporated by reference from Exhibit 3.1 to the Current Report on Form 8-K filed on May 12, 2011) (File No. 001-16489).
 
 
3.1.b
Third Certificate of Amendment to the Amended and Restated Certificate of Incorporation of FMC Technologies, Inc. (incorporated by reference from Exhibit 3.1 to the Current Report on Form 8-K filed on May 4, 2012) (File No. 001-16489).
 
 
3.2
Amended and Restated Bylaws of FMC Technologies, Inc. (incorporated by reference from Exhibit 3.2 to the Quarterly Report on Form 10-Q filed on November 3, 2010) (File No. 001-16489).
 
 
4.1
Form of Specimen Certificate for the Company's Common Stock (incorporated by reference from Exhibit 4.1 to the Form S-1/A filed on May 4, 2001 (File No. 333-55920)).
 
 
4.2
Preferred Share Purchase Rights Agreement, dated as of June 5, 2001, between FMC Technologies, Inc. and Computershare Investor Services, LLC, as Rights Agent (incorporated by reference from Exhibit 4.2 to the Form S-8 filed on June 14, 2001) (File No. 333-55920).
 
 
4.2.a
Amendment to Preferred Share Purchase Rights Agreement, dated as of September 8, 2009, between FMC Technologies, Inc. and National City Bank, as Rights Agent (incorporated by reference from Exhibit 4.1 to the Current Report on Form 8-K filed on September 14, 2009 (File No. 001-16489)).
 
 
4.3
Indenture, dated September 21, 2012 between FMC Technologies, Inc. and U.S. Bank National Association, as trustee (incorporated by reference from Exhibit 4.1 to the Current Report on Form 8-K filed on September 25, 2012) (File No. 001-16489).
 
 

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Table of Contents

4.3.a
First Supplemental Indenture, dated September 21, 2012 between FMC Technologies, Inc. and U.S. Bank National Association, as trustee (incorporated by reference from Exhibit 4.2 to the Current Report on Form 8-K filed on September 25, 2012) (File No. 001-16489).
 
 
4.3.b
Form of 2.00% Senior Notes dues 2017 (incorporated by reference from Exhibit 4.3 to the Current Report on Form 8-K filed on September 25, 2012) (File No. 001-16489).
 
 
4.3.c
Second Supplemental Indenture, dated September 21, 2012 between FMC Technologies, Inc. and U.S. Bank National Association, as trustee (incorporated by reference from Exhibit 4.4 to the Current Report on Form 8-K filed on September 25, 2012) (File No. 001-16489).
 
 
4.3.d
Form of 3.45% Senior Notes dues 2022 (incorporated by reference from Exhibit 4.5 to the Current Report on Form 8-K filed on September 25, 2012) (File No. 001-16489).
 
 
10.1
Form of Voting and Support Agreement dated August 17, 2012 between FMC Technologies, Inc. and the directors and officers of Pure Energy Services Ltd. (incorporated by reference from Exhibit 10.1 to the Current Report on Form 8-K filed on August 20, 2012) (File No. 001-16489).
 
 
31.1
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a).
 
 
31.2
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a).
 
 
32.1 *
Certification of Chief Executive Officer Under Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. 1350.
 
 
32.2 *
Certification of Chief Financial Officer Under Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. 1350.
Number in
Exhibit Table
Description
 
 
101.INS
XBRL Instance Document.
 
 
101.SCH
XBRL Schema Document.
 
 
101.CAL
XBRL Calculation Linkbase Document.
 
 
101.DEF
XBRL Definition Linkbase Document.
 
 
101.LAB
XBRL Label Linkbase Document.
 
 
101.PRE
XBRL Presentation Linkbase Document.
 
*
Furnished with this Quarterly Report on Form 10-Q

SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
FMC Technologies, Inc.
(Registrant)
 
 
 
/s/ Jay A. Nutt
 
Jay A. Nutt
 
Vice President and Controller
(Chief Accounting Officer and a Duly Authorized Officer)
 
Date: October 26, 2012


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