ITEM 1. BUSINESS
Incorporated by Reference From:
(a)
General Development of Business
-
2002 Annual Report to Stockholders, pages 3-21 and inside back cover, Management’s Discussion and Analysis on pages 24-37, and Notes 1, 2 and 4 to the consolidated financial statements on pages 44-45 and 48-49
(b)
Financial Information About Segments
-
2002 Annual Report to Stockholders, Note 19 to the consolidated financial statements on pages 64-67
(c)
Narrative Description of Business
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2002 Annual Report to Stockholders, pages 8-21 and 24-37
Principal Products
See page 18 and Note 19 to the consolidated financial statements on pages 64 through 67 of the 2002 Annual Report to Stockholders for information about each business segment’s principal products.
Sources and Availability of Raw Materials
The Company purchases carbon steel, stainless steel, aluminum and steel castings and forgings both domestically and internationally.
The Company does not use single source suppliers for the majority of its raw material purchases and believes the available supplies of raw materials are adequate. Moreover, raw materials essential to the Company’s businesses are generally readily available.
Patents
The Company owns a number of U.S. and foreign patents, trademarks and licenses that are cumulatively important to its businesses. The Company has approximately 2,000 issued patents and pending patent applications worldwide. Further, the Company licenses certain intellectual property rights to or from third parties. The Company also owns numerous U.S. and foreign trademarks and trade names and has 1,020 registrations and pending applications in the United States and abroad. The Company does not believe that the loss of any one or group of related patents, trademarks or licenses would have a material adverse effect on the overall business of the Company.
Seasonality
The Company’s businesses are generally not subject to significant seasonal fluctuations, except for sales of Energy Processing Systems and sales of deicers by Airport Systems, which are typically greater in the fourth quarter of each year. In addition, due to the seasonal nature of fruit and vegetable production, sales of certain FoodTech products are typically greater in the second and fourth quarters of each year.
Product Warranties
The Company provides for estimated losses related to warranties of product performance. The balance sheet obligation is based on historical experience by product which the Company believes is a reasonable estimate of future liability. The following table details the Company’s 2002 obligations incurred and settlements made under product warranties.
Order Backlog
Although the Company provides many systems, equipment and services pursuant to long-term agreements entered into in advance of the delivery of those items to its customers, orders are not entered into order backlog until formally recognized by receipt of a confirmed customer order.
The Company projects that $243.5 million of total order backlog at December 31, 2002 will be recorded as revenue after fiscal year 2003.
Competitive Conditions
The Company markets its products primarily through its own technically-oriented sales organization and, in some cases, through independent distributors and sales representatives. The Company conducts business worldwide in more than 100 countries. Energy Production Systems competes with other companies that supply subsea systems and floating production products and with smaller companies that are focused on a specific application, technology or geographical area in the Company’s other product areas. Energy Processing Systems competes with a number of companies in the measurement and transportation industry, some of whom have access to greater resources. FoodTech and Airport Systems compete with a variety of local and regional companies typically focused on a specific application, technology or geographic area, and with a few large multinational companies.
The Company competes by leveraging its industry experience to provide advanced technology, integrated systems, high product quality and reliability and quality aftermarket service. The Energy Systems businesses differentiate themselves by the depth of their industry experience, engineering and design capabilities, product performance, integrated systems, global manufacturing capability, quality, reliability, service and price. FoodTech and Airport Systems differentiate themselves on many of the same bases as the Energy Systems businesses - the depth of their industry experience, engineering and design capabilities, product performance, integrated systems, quality, reliability, service, and price and, in the food processing industry, in particular, on the basis of yield and hygiene.
Research and Development
The objectives of the Company’s research and development programs are to discover new products and business opportunities in relevant fields and to improve existing products. Worldwide expenditures for research and development by business segment for the fiscal years ended December 31, 2002, 2001 and 2000 were as follows:
Employees
The Company employs approximately 8,500 people in its domestic and foreign operations. Approximately 300 such employees are represented by collective bargaining agreements in the United States. In 2003, two of the Company’s six collective bargaining agreements in the United States will expire, covering approximately 40 employees. The Company maintains good employee relations and has successfully concluded all of its recent negotiations without a work stoppage. The Company, however, cannot predict the outcome of future contract negotiations.
Incorporated by Reference From:
(d)
Financial Information
About Geographic Areas
-
2002 Annual Report to Stockholders, page 67
(e)
Available Information
This Form 10-K, the Company’s Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge through the Company’s website at www.fmctechnologies.com as soon as reasonably practicable after the Company electronically files such material with, or furnishes it to, the Securities and Exchange Commission.
Cautionary Note Regarding Forward-Looking Information
Statement under the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995: The Company and its representatives may from time to time make written or oral statements that are “forward-looking” and provide other than
historical information, including statements contained in the 2002 Annual Report to Stockholders, this Form 10-K, the Company’s other filings with the Securities and Exchange Commission or communications to its stockholders. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any results, levels of activity, performance or achievements expressed or implied by any forward-looking statement. These factors include, among other things, the risk factors listed below.
In some cases, the Company has identified forward-looking statements by such words or phrases as “will likely result,” “is confident that,” “expects,” “should,” “could,” “may,” “will continue to,” “believes,” “anticipates,” “predicts,” “forecasts,” “estimates,” “projects,” “potential,” “intends” or similar expressions identifying “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including the negative of those words and phrases. Such forward-looking statements are based on management’s current views and assumptions regarding future events, future business conditions and the outlook for the Company based on currently available information. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, these statements. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made and involve judgments.
In connection with the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995, the Company is hereby identifying important factors that could affect the Company’s financial performance and could cause the Company’s actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements.
Among the factors that could have an impact on the Company’s ability to achieve operating results and growth plan goals are:
•
Significant competition;
•
The impact of unforeseen economic and political changes in the international markets where the Company competes, including changes in currency exchange rates, war, terrorist attacks and activities, civil unrest, inflation rates, recessions, trade restrictions, foreign ownership restrictions and economic embargoes imposed by the United States or any of the foreign countries in which the Company does business; changes in governmental laws and regulations and the level of enforcement of these laws and regulations; other governmental actions; and other external factors over which the Company has no control;
•
The impact of significant changes in interest rates or taxation rates;
•
Increases in raw material prices compared with historical levels, or shortages of raw materials;
•
Underestimating labor or other internal costs;
•
Inherent risks in the marketplace associated with new product introductions and technologies;
•
Changes in capital spending by customers or consolidation of customers in the petroleum exploration, commercial food processing or airline or air freight industries or by the United States Government;
•
Risks associated with developing new manufacturing processes;
•
Fluctuations in the price of crude oil or natural gas;
•
The impact of freight transportation delays beyond the control of the Company;
•
The ability of the Company to integrate, operate and manage possible future acquisitions or joint ventures into our existing operations; for example, the Company owns a 37.5% interest in the MODEC joint venture, cannot control the actions of its joint venture partner and has only limited rights in controlling the actions of the joint venture;
•
Conditions affecting domestic and international capital markets;
•
Unexpected changes in the size and timing of regional and/or product markets, particularly for short lead-time products;
•
Risks derived from unforeseen developments in industries served by the Company, such as political or economic changes in the energy, food processing or airline industries, and other external factors over which the Company has no control;
•
Risks associated with litigation, including changes in applicable laws; the development of facts in individual cases; settlement opportunities; the actions of plaintiffs, judges and juries; and the possibility that current reserves relating to the Company’s ongoing litigation may prove inadequate;
•
The effect of the loss of major contracts or losses from fixed-price contracts;
•
The loss of key management or other personnel;
•
Developments in technology of competitors; and
•
Environmental and asbestos-related liabilities that may arise in the future that exceed the Company’s current reserves.
The Company wishes to caution that the foregoing list of important factors may not be all-inclusive, and specifically declines to undertake any obligation to publicly revise any forward-looking statements that have been made to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
ITEM 2.
ITEM 2. PROPERTIES
The Company leases executive offices in Chicago and maintains executive offices in its Houston facility. The Company operates 35 manufacturing facilities in 16 countries.
Most of the Company’s plant sites are owned, with an immaterial number of them being leased. The Company believes its properties and facilities meet present requirements and are in good operating condition and that each of its significant manufacturing facilities is operating at a level consistent with the requirements of the industry in which it operates.
The significant production properties for the Energy Production Systems operations currently are:
*These facilities are production properties for both Energy Production Systems and Energy Processing Systems.
The significant production properties for the Energy Processing Systems operations currently are:
The significant production properties for the FoodTech operations currently are:
The significant production properties for the Airport Systems operations currently are:
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
In August 2002, the Company initiated court action in the United Kingdom to confirm that certain components of its subsea production systems’ designs do not conflict with a patent recently issued to Cooper Cameron Corporation in Europe. In response, Cooper Cameron Corporation initiated court action alleging infringement of certain of their U.K. patents. Management believes that the ultimate resolution of these known contingencies will not materially affect the Company’s consolidated financial position, results of operations or cash flows.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
Executive Officers of the Registrant
The executive officers of the Company, together with the offices in the Company currently held by them, their business experience and their ages as of February 28, 2003, are as follows:
No family relationships exist among any of the above-listed officers, and there are no arrangements or understandings between any of the above-listed officers and any other person pursuant to which they serve as an officer. All officers are elected to hold office for one (1) year and until their successors are elected and qualified.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) Market Information - FMC Technologies, Inc. is listed on the New York Stock Exchange under the symbol FTI. High and low sales prices for the Company’s common stock is incorporated by reference from the 2002 Annual Report to Stockholders, Note 20 to the consolidated financial statements on page 68.
(b) Holders - As of February 28, 2003, there were 7,646 holders of record of the Company’s common stock.
(c) Dividends - The Company did not pay dividends on its common stock in 2002 and does not expect to pay dividends on its common stock in 2003.
PART III
Incorporated by Reference From:
ITEM 10.
DIRECTORS AND EXECUTIVE
OFFICERS OF THE REGISTRANT
-
Part I; Proxy Statement for 2003 Annual Meeting of Stockholders, pages 4-8
ITEM 11.
EXECUTIVE COMPENSATION
-
Proxy Statement for 2003 Annual Meeting of Stockholders, pages 16-23
ITEM 12.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
-
Proxy Statement for 2003 Annual Meeting of Stockholders, pages 14-15 and page 24
ITEM 13.
CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
-
Proxy Statement for 2003 Annual Meeting of Stockholders, pages 12-13
ITEM 14.
CONTROLS AND PROCEDURES
The Company’s principal executive officer and its principal financial officer, after evaluating the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c) and 15d-14(c)) as of a date within ninety days before the filing date of this report, have concluded that, based on such evaluation, the Company’s disclosure controls and procedures were effective.
There were no significant changes in the Company’s internal controls or in other factors that could significantly affect the Company’s disclosure controls and procedures subsequent to the date of their evaluation, nor were there any significant deficiencies or material weaknesses in the Company’s internal controls. As a result, no corrective actions were required or undertaken.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)
Documents filed with this Report
1.
Consolidated financial statements of the Company and its subsidiaries are incorporated by reference herein under Item 8