FMC CORP | 2013 | FY | 3

Discontinued Operations

FMC Peroxygens:
In April 2013, the Board of Directors authorized management to pursue the sale of our FMC Peroxygens segment. This segment was classified as a discontinued operation and an asset held for sale beginning with our September 30, 2013 condensed consolidated financial statements filed on Form 10-Q.
In December 2013, we signed a definitive agreement to sell FMC Peroxygens to One Equity Partners (OEP), the private investment arm of J.P. Morgan Chase & Co. and expect the sale to be completed in the first quarter of 2014. In addition to the definitive agreement we entered into a customary transitional services agreement with OEP to provide for the orderly separation of the business and transition of various functions and processes. These services will be provided by us to OEP for up to 18 months after closing. These services would be to provide short-term assistance to OEP, such as information technology services, while OEP assumes the operations of the Peroxygen businesses. 
The operating results of our FMC Peroxygens segment classified as discontinued operations are summarized below:
(in Millions)
Year Ended December 31,
2013
 
2012
 
2011
Revenue
$
328.8

 
$
338.4

 
$
341.6

Income from discontinued operations before income taxes (1)
24.2

 
25.5

 
23.4

Provision for income taxes
9.4

 
13.7

 
11.5

Discontinued operations of FMC Peroxygens, net of income taxes, before divestiture related costs (2)
$
14.8

 
$
11.8

 
$
11.9

Divestiture related costs of discontinued operations of FMC Peroxygens, net of income taxes
(3.8
)
 
—

 
—

Adjustment to assets held for sale, net of income taxes (3)
(122.1
)
 
—

 
—

Total Discontinued operations of FMC Peroxygens, net of income taxes
$
(111.1
)
 
$
11.8

 
$
11.9

____________________
(1)
Includes allocated interest expense $4.7 million, $4.5 million and $3.9 million for the years ended ended December 31, 2013, 2012 and 2011. Interest was allocated in accordance with relevant discontinued operations accounting guidance.
(2)
In accordance with the held for sale accounting criteria effective July 2013 we stopped amortizing and depreciating all assets classified as held for sale.
(3)
Assets held for sale be reported at the lower of carrying value or fair value less costs to sell. During the year ended December 31, 2013 we recorded an impairment charge of $156.7 million ($122.1 million after tax) to adjust the carrying value based on our evaluation.
The following table presents the major classes of assets and liabilities of discontinued FMC Peroxygens segment classified as held for sale and included as part of a disposal group in the consolidated balance sheets:
 
December 31,
(in Millions)
2013
 
2012
Assets
 
 
 
Current assets of discontinued operations held for sale (primarily trade receivables and inventories)
$
94.8

 
$
92.4

Property, plant & equipment
61.1

 
180.0

Goodwill
—

 
16.9

Intangible assets, net
2.7

 
9.9

Other non-current assets
39.7

 
37.4

Noncurrent assets of discontinued operations held for sale (1)
103.5

 
244.2

Total Assets
198.3

 
336.6

 
 
 
 
Liabilities
 
 
 
Current liabilities of discontinued operations held for sale
43.0

 
54.1

Noncurrent liabilities of discontinued operations held for sale (1)
5.2

 
3.3

Total Liabilities
48.2

 
57.4

Net Assets (2)
$
150.1

 
$
279.2

____________________
(1)Presented as "Current assets\liabilities of discontinued operations held for sale" on the consolidated balance sheet as of December 31, 2013.
(2)Excludes the accumulated net cumulative translation adjustment losses of our foreign FMC Peroxygens operations.

In addition to our discontinued FMC Peroxygens segment our other discontinued operations include adjustments to retained liabilities from previous discontinued operations. The primary liabilities retained include environmental liabilities, other postretirement benefit liabilities, self-insurance, long-term obligations related to legal proceedings and historical restructuring activities.
Our discontinued operations comprised the following:
(in Millions)
Year Ended December 31,
2013
 
2012
 
2011
Adjustment for workers’ compensation, product liability, and other postretirement benefits, net of income tax benefit (expense) of ($0.3), $0.2 and ($0.3), respectively
$
0.6

 
$
(0.3
)
 
$
0.7

Provision for environmental liabilities, net of recoveries, net of income tax benefit of $14.2, $7.8 and $9.6, respectively (1)
(23.1
)
 
(12.6
)
 
(15.8
)
Provision for legal reserves and expenses, net of recoveries, net of income tax benefit of $5.5, $10.6, and $10.3, respectively (2)
(9.0
)
 
(17.3
)
 
(16.7
)
Provision for restructuring charges, net of income tax benefit of $0.5, $1.5 and $7.9, respectively (3)
(16.7
)
 
(9.1
)
 
(18.2
)
Discontinued operations of FMC Peroxygens, net of income tax benefit (expense) of $25.1, ($13.7) and ($11.5), respectively
(111.1
)
 
11.8

 
11.9

Discontinued operations, net of income taxes
$
(159.3
)
 
$
(27.5
)
 
$
(38.1
)

____________________
(1)
See a roll forward of our environmental reserves as well as discussion on significant environmental issues that occurred during the year in Note 10.
(2)
Includes a gain of $13.9 million in 2013 associated with an insurance recovery related to previously discontinued operations legal matters. No such gain existed in 2012 or 2011.
(3)
See roll forward of our restructuring reserves in Note 7.
Reserves for Discontinued Operations at December 31, 2013 and 2012
(in Millions)
December 31,
2013
 
2012
Workers’ compensation and product liability reserve
$
6.7

 
$
4.9

Postretirement medical and life insurance benefits reserve
9.6

 
8.3

Reserves for legal proceedings
36.9

 
31.2

Reserve for discontinued operations (1)
$
53.2

 
$
44.4

____________________
(1)
Included in “Other long-term liabilities” on the consolidated balance sheets. Also refer to Note 7 for discontinued restructuring reserves and Note 10 for discontinued environmental reserves.
The discontinued postretirement medical and life insurance benefits liability equals the accumulated postretirement benefit obligation. Associated with this liability is a net pretax actuarial gain and prior service credit of $7.9 million ($3.9 million after-tax) and $11.3 million ($7.1 million after-tax) at December 31, 2013 and 2012, respectively. The estimated net pre-tax actuarial gain and prior service credit that will be amortized from accumulated other comprehensive income into discontinued operations during 2014 are $1.5 million and $0.1 million, respectively.
Net, spending in 2013, 2012 and 2011 was $0.9 million, $1.0 million and $1.3 million, respectively, for workers’ compensation, product liability and other claims; $0.9 million, $0.7 million and $1.0 million, respectively, for other postretirement benefits; and $8.8 million, $24.6 million and $20.9 million, respectively, related to reserves for legal proceedings associated with discontinued operations.

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