FMC US Equity☆

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

We are an agricultural sciences company, providing innovative solutions to growers around the world with a robust product portfolio fueled by a market-driven discovery and development pipeline in crop protection, plant health, precision agriculture and professional pest and turf management. We operate in a single distinct business segment and develop, market and sell all three major classes of crop protection chemicals: insecticides, herbicides and fungicides. These products are used in agriculture to enhance crop yield and quality by controlling a broad spectrum of insects, weeds and disease, as well as in non-agricultural markets for pest control. This powerful combination of advanced technologies includes leading insect control products based on Rynaxypyr® and Cyazypyr® active ingredients; Authority®, Boral®, Centium®, Command® and Gamit® branded herbicides; IsoflexTM active herbicide ingredient; Talstar® and Hero® branded insecticides; and flutriafol-based fungicides. The FMC portfolio also includes ArcTM farm intelligence and biologicals such as Quartzo® and Presence® bionematicides.

COVID-19 Pandemic

In March 2020, the World Health Organization characterized COVID-19 as a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency. The rapid spread of the outbreak has caused significant disruptions in the U.S. and global economies.

As an agricultural sciences company, we are considered an "essential" industry in the countries in which we operate; we have avoided significant plant closures and all our manufacturing facilities and distribution warehouses remain operational and fully staffed. However, we did have a third party U.S. toller that was disrupted in the fourth quarter because of COVID-related staffing issues, which signifies one of the ongoing business risks that the pandemic creates. We do not yet know the full extent of the disruptions on either our business and operations or the global economy nor the duration of the pandemic and its adverse effects.

We have implemented new procedures to support the health and safety of our employees and we are following all U.S. Centers for Disease Control and Prevention, as well as state and regional health department guidelines. The well-being of our employees is FMC's top priority. Although most FMC office-based employees around the world have been working remotely during this period, we have implemented procedures to safely return to the workplace in regions where the pandemic is controlled and local health officials have deemed this to be safe in compliance with any government regulations. In addition, we have thousands of employees who continue operating our manufacturing sites and distribution warehouses. In all our facilities, we are using a variety of best practices to address COVID-19 risks, following the protocols and procedures recommended by leading health authorities. We are monitoring the situation in regions where the pandemic continues to escalate and in such regions will remain in a remote working environment until it is safe to return to the workplace. During 2020 we have made significant investments in our employees as a result of the COVID-19 pandemic, including through enhanced dependent care pay policies, recognition bonuses, increased flexibility of work schedules and hours of work to accommodate remote working arrangements, and investment in IT infrastructure to promote remote work. Through these efforts we have successfully avoided any COVID-19 related furloughs or workforce reductions to date.

In addition to addressing the needs of the Company and our employees, FMC has been a leader in supporting the needs of the communities in which FMC has operations and those generally in need as a result of the pandemic. Since the advent of the pandemic, we have donated in excess of 233,000 personal protective equipment supplies, including N95 masks, surgical masks, protective cover suits, goggles and similar items. We have also donated more than 1,800 containers and canisters used to transport alcohol-based disinfecting solution. Additional efforts include financial contributions to hunger-relief organizations; assisting with disinfecting schools and other public spaces in villages; and supporting various community initiatives.

In our supply chain, sourcing of raw materials and intermediates was not a significant issue, although we continued to see some logistics challenges and related higher costs. We are conscious of the potential downside risks in future periods and expect to continue to experience disruption caused by COVID-19 in our supply chain and logistics. We have also seen some pockets of reduced demand as a result of COVID-19, primarily related to disruptions of farm worker labor required for planting, harvesting and packing crops (especially fruits, vegetables and other specialty crops) which may continue going forward. As discussed in our 2020 quarterly reports, we implemented price increases and cost-saving measures across the company to offset impacts of the COVID-19 pandemic and related foreign currency headwinds. We amended our debt covenants with our banks on April 22, 2020 (see Note 11 for more details) to provide significant additional headroom above any of the COVID-19 related scenarios assessed by the company. We will continue to monitor the economic environment related to the pandemic on an ongoing basis and assess the impacts on our business.

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2020 Highlights

The following are the more significant developments in our businesses during the year ended December 31, 2020:

•Revenue of $4,642.1 million in 2020 increased $32.3 million or approximately 1 percent versus last year. A more detailed review of revenues is included under the section entitled "Results of Operations". On a regional basis, sales in North America decreased 8 percent, driven primarily by timing of shipments and supply chain disruptions, including COVID related factors, sales in Latin America increased by 1 percent, sales in Europe, Middle East and Africa increased by 4 percent and sales in Asia increased 6 percent, primarily by volume growth.

•Our gross margin of $2,052.0 million decreased $31.6 million or approximately 2 percent versus last year. The decrease in gross margin was primarily driven by unfavorable foreign currency impacts primarily in Latin America. Gross margin as a percent of revenue of 44 percent decreased slightly from 45 percent in the prior year period, primarily due to unfavorable foreign currency headwinds.

•Selling, general and administrative expenses decreased from $792.9 million to $729.7 million. Selling, general and administrative expenses, excluding transaction-related charges, of $676.4 million decreased $38.7 million or approximately 5 percent. These decreases were a result of cost-saving measures implemented in response to the pandemic. Transaction-related charges are presented in our Adjusted Earnings Non-GAAP financial measurement below under the section titled "Results of Operations".

•Research and development expenses of $287.9 million decreased $10.2 million or 3 percent. The decrease was primarily due to cost-saving measures taken in response to the COVID-19 pandemic. We did not cancel any research and development projects, but we phased some differently to allow lower costs this year in response to the pandemic without fundamentally impacting long-term timelines. We maintain our commitment to invest resources to discover new active ingredients and formulations that support resistance management and sustainable agriculture.

•Net income (loss) attributable to FMC stockholders of $551.5 million increased $74.1 million or approximately 16 percent from $477.4 million in the prior year period. The higher results were driven by cost-saving measures of a combined $73.4 million in selling, general, and administrative and research and development expenses combined in response to the pandemic. Restructuring and other charges were $38.8 million lower versus prior year and discontinued operations expense decreased $35 million compared to the prior year. These increases to income were slightly offset by higher tax expense and higher provision for income taxes of $39.4 million and higher non-operating pension and postretirement charges of $13.1 million. Adjusted after-tax earnings from continuing operations attributable to FMC stockholders of $809.0 million increased $5.3 million or approximately 1 percent. See the disclosure of our Adjusted Earnings Non-GAAP financial measurement under the section titled "Results of Operations".

Other 2020 Highlights

In November 2020, we successfully completed the implementation of our new SAP system. We now have a single, modern system across the entire company for the first time in our history.

On October 2, 2020, we closed on the previously disclosed transaction with Isagro S.p.A ("Isagro") for a purchase price of approximately $65 million, which resulted in a charge in the fourth quarter of 2020. The Fluindapyr acquisition has been treated as an asset acquisition for accounting purposes as it does not meet the definition of a business. Therefore, any acquired in-process research and development was immediately expensed. See Note 9 in the consolidated financial statements included within this Form 10-K for further details.

In June 2020, we launched FMC Ventures, our new venture capital arm targeting strategic investments in start-ups and early-stage companies that are developing and applying emerging technologies in the agricultural industry. The group will be making small, seed type investments.

In May 2020, we announced the launch of our ArcTM farm intelligence platform, a proprietary precision agriculture platform that enables growers and advisors to more accurately predict pest pressure before it becomes a problem.

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2021 Outlook

Our 2021 expectation for the overall global crop protection market growth is that it will be up low-single digits on a percentage basis in U.S. dollars. Commodity prices for many of the major crops are higher and stock-to-use ratios have improved compared to this time last year. All regions are seeing some benefit from better crop commodity prices, while the impacts from COVID on crop demand appear to be lessening.

We expect 2021 revenue will be in the range of approximately $4.9 billion to $5.1 billion, up approximately 8 percent at the midpoint versus 2020. We also expect adjusted EBITDA(1) of $1.32 billion to $1.42 billion, which represents 10 percent growth at the midpoint versus 2020 results. 2021 adjusted earnings are expected to be in the range of $6.65 to $7.35 per diluted share(1), up 13 percent at the midpoint versus 2020, excluding any impact from potential share repurchases in 2021. For cash flow outlook, refer to the liquidity and capital resources section below.

(1)Although we provide forecasts for adjusted earnings per share and adjusted EBITDA (Non-GAAP financial measures), we are not able to forecast the most directly comparable measures calculated and presented in accordance with U.S. GAAP. Certain elements of the composition of the U.S. GAAP amounts are not predictable, making it impractical for us to forecast. Such elements include, but are not limited to, restructuring, acquisition charges, and discontinued operations. As a result, no U.S. GAAP outlook is provided.

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Results of Operations — 2020, 2019 and 2018

Overview

The following charts provide a reconciliation of Adjusted EBITDA, Adjusted Earnings and Organic Revenue Growth, all of which are Non-GAAP financial measures, from the most directly comparable GAAP measure. Adjusted EBITDA is provided to assist the readers of our financial statements with useful information regarding our operating results. Our operating results are presented based on how we assess operating performance and internally report financial information. For management purposes, we report operating performance based on earnings before interest, income taxes, depreciation and amortization, discontinued operations, and corporate special charges. Our Adjusted Earnings measure excludes corporate special charges, net of income taxes, discontinued operations attributable to FMC stockholders, net of income taxes, and certain Non-GAAP tax adjustments. These are excluded by us in the measure we use to evaluate business performance and determine certain performance-based compensation. Organic Revenue Growth excludes the impacts of foreign currency changes, which we believe is a meaningful metric to evaluate our revenue changes. These items are discussed in detail within the "Other Results of Operations" section that follows. In addition to providing useful information about our operating results to investors, we also believe that excluding the effect of corporate special charges, net of income taxes, and certain Non-GAAP tax adjustments from operating results and discontinued operations allows management and investors to compare more easily the financial performance of our underlying business from period to period. These measures should not be considered as substitutes for net income (loss) or other measures of performance or liquidity reported in accordance with U.S. GAAP.

(in Millions) Year Ended December 31,

Costs and Expenses

Selling, general and administrative expenses 729.7 792.9 790.0

Restructuring and other charges (income) 132.2 171.0 61.2

Equity in (earnings) loss of affiliates — — (0.1)

Non-operating pension and postretirement charges (income) 21.2 8.1 (0.5)

Interest income (0.1) (1.9) (1.4)

Income from continuing operations before income taxes $ 729.8 $ 655.0 $ 608.4

Income (loss) from continuing operations $ 578.9 $ 543.5 $ 537.6

Discontinued operations, net of income taxes (28.3) (63.3) (26.1)

Adjustments to arrive at Adjusted EBITDA:

Corporate special charges (income):

Restructuring and other charges (income) (3) $ 132.2 $ 171.0 $ 61.2

Non-operating pension and postretirement charges (income) (4) 21.2 8.1 (0.5)

Discontinued operations, net of income taxes 28.3 63.3 26.1

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(1)Referred to as operating profit.

(2)Adjusted EBITDA is defined as operating profit excluding corporate special charges (income) and depreciation and amortization expense.

(3)See Note 9 to the consolidated financial statements included within this Form 10-K for details of restructuring and other charges (income).

(4)Our non-operating pension and postretirement charges (income) are defined as those costs (benefits) related to interest, expected return on plan assets, amortized actuarial gains and losses and the impacts of any plan curtailments or settlements. These are excluded from our operating results and are primarily related to changes in pension plan assets and liabilities which are tied to financial market performance and we consider these costs to be outside our operational performance. We continue to include the service cost and amortization of prior service cost in our operating results noted above. These elements reflect the current year operating costs to our businesses for the employment benefits provided to active employees.

(5)Charges relate to the expensing of the inventory fair value step-up resulting from the application of purchase accounting, transaction costs, costs for transitional employees, other acquired employee related costs, integration related legal and professional third-party fees. Except for the completion of certain in-flight initiatives, primarily associated with the finalization of our worldwide ERP system, we completed the integration of the DuPont Crop Protection Business as of June 30, 2020. The TSA is now terminated and the last phase of the ERP system transition went live in November 2020 with a stabilization period that will go into the first quarter of 2021. Estimated remaining costs are expected to be less than $5 million for the completion of these defined in-flight initiatives during the remaining time period. Amounts represent the following:

Year Ended December 31,

DuPont Crop Protection Business Acquisition (1)

Legal and professional fees (2) $ 53.3 $ 77.8 $ 86.9

Inventory fair value amortization (3) — — 69.6

Total transaction-related charges $ 53.3 $ 77.8 $ 156.5

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(1)As previously disclosed, in November 2017, we acquired certain assets relating to the crop protection business of E. I. du Pont de Nemours and Company, and the related research and development organization (the "DuPont Crop Protection Business").

(2)Represents transaction costs, costs for transitional employees, other acquired employees related costs, and transactional-related costs such as legal and professional third-party fees. These charges are recorded as a component of "Selling, general and administrative expense" on the consolidated statements of income (loss).

(3)These charges are included in "Costs of sales and services" on the consolidated statements of income (loss).

ADJUSTED EARNINGS RECONCILIATION

(in Millions) Year Ended December 31,

Corporate special charges (income), net of income taxes $ 182.9 $ 207.7 $ 164.4

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(1) Represents restructuring and other charges (income), non-operating pension and postretirement charges (income) and transaction-related charges.

(2) The income tax expense (benefit) on Corporate special charges (income) is determined using the applicable rates in the taxing jurisdictions in which the Corporate special charge or income occurred and includes both current and deferred income tax expense (benefit) based on the nature of the non-GAAP performance measure.

(3) We exclude the GAAP tax provision, including discrete items, from the Non-GAAP measure of income, and instead include a Non-GAAP tax provision based upon the annual Non-GAAP effective tax rate. The GAAP tax provision includes certain discrete tax

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items including, but not limited to: income tax expenses or benefits that are not related to current year ongoing business operations; tax adjustments associated with fluctuations in foreign currency remeasurement of certain foreign operations; certain changes in estimates of tax matters related to prior fiscal years; certain changes in the realizability of deferred tax assets; and changes in tax law which includes the impact of the Tax Cuts and Jobs Act ("the Act") enacted on December 22, 2017. Management believes excluding these discrete tax items assists investors and securities analysts in understanding the tax provision and the effective tax rate related to ongoing operations thereby providing investors with useful supplemental information about FMC's operational performance.

ORGANIC REVENUE GROWTH RECONCILIATION

Total Revenue Change (GAAP) 1 %

Less: Foreign Currency Impact (6%)

Organic Revenue Change (Non-GAAP) 7 %

Results of Operations

In the discussion below, all comparisons are between the periods unless otherwise noted.

Revenue

2020 vs. 2019

Revenue of $4,642.1 increased $32.3 million, or approximately 1 percent versus the prior year period. The increase was driven by higher volumes, primarily in Latin America and Asia, which accounted for an approximate 4 percent increase, as well as favorable pricing which accounted for an approximate 3 percent increase. Foreign currency headwinds had an unfavorable impact of approximately 6 percent on revenue. Excluding foreign currency impacts, revenue increased approximately 7 percent.

2019 vs. 2018

Revenue of $4,609.8 million increased $324.5 million, or approximately 8 percent versus the prior year period. The increase was driven by higher volumes, primarily in Latin America, and pricing which accounted for an approximate 8 percent and 3 percent increase, respectively, slightly offset by unfavorable foreign currency fluctuations of approximately 3 percent.

See below for a discussion of revenue by region.

Total Revenue by Region

Year Ended December 31,

2020 vs. 2019

North America: Revenue decreased approximately 8 percent in the year ended December 31, 2020. Sales were impacted due to supply chain disruptions, including COVID-related factors associated with logistics and a tolling partner in the fourth quarter. Additionally, we had channel destocking in the first half of the year. We continued market expansion of the Lucento® fungicide, which had a strong second year, and ElevestTM insect control had a good launch year.

Latin America: Revenue increased approximately 1 percent, or approximately 17 percent excluding foreign currency headwinds, for the year ended December 31, 2020 compared to the prior year period due primarily to high-single digit volume growth and solid price increases. Brazil had robust demand for our products for soybeans and sugarcane, while there was reduced acreage for cotton.

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EMEA: Revenue increased approximately 4 percent versus the prior year period, or approximately 6 percent excluding foreign currency headwinds. Demand was driven by diamides on specialty crops, Battle® Delta herbicide on cereals and Spotlight® Plus herbicide on potatoes.

Asia: Revenue increased approximately 6 percent versus the prior year period, or approximately 9 percent excluding foreign currency headwinds, primarily driven by market expansion and share gains in India and the very strong market rebound in Australia. Our diamides were in high demand throughout the region in 2020, as we continue to grow on specialty crops like rice and fruit and vegetables.

2019 vs. 2018

North America: Revenue increased approximately 3 percent in the year ended December 31, 2019, primarily driven by volume growth and strength of Rynaxypyr® and Cyazypyr® actives on specialty crops, the launch of Lucento® fungicide, and strong herbicide sales in Canada.

Latin America: Revenue increased approximately 19 percent, or approximately 23 percent excluding foreign currency headwinds, for the year ended December 31, 2019 compared to the prior year period due primarily to strong demand in Brazil for insecticides on cotton, herbicides on sugarcane, and insecticides in soybean applications. Strong growth in Argentina, due to improved market access and strength of herbicides in soybean applications also contributed to the significant growth in the region.

EMEA: Revenue increased approximately 4 percent versus the prior year period, or approximately 10 percent excluding foreign currency headwinds, primarily due to the successful launch of Battle® Delta herbicides and Cyazypyr® insect control registrations across the region. Favorable weather, demand for our diamide products, and higher pricing throughout the region also contributed to the increase. These increases were partially offset by unfavorable foreign currency impacts.

Asia: Revenue increased approximately 3 percent versus the prior year period, or approximately 8 percent excluding foreign currency headwinds, primarily driven by continued strong growth in India and new products across the region. Partially offsetting the increases were adverse weather conditions in Australia and challenged rice markets in China.

In late March 2019, there was an explosion within an industrial park in China which impacted one plant operated by one of our contract manufacturing tollers. The local government had temporarily shut down the entire park to investigate the cause of the explosion. During 2020, our toller received approval for a phased re-opening that began during the fourth quarter and will continue through 2021. Our global manufacturing network provides significant supply chain flexibility. Due to the strength of our partnerships and our alternate sourcing options, we have been able to secure supply of the active ingredients normally manufactured at this location.

Gross margin

2020 vs. 2019

Gross margin of $2,052.0 million decreased $31.6 million, or approximately 2 percent versus the prior year period. The decrease was primarily due to unfavorable foreign currency impacts.

Gross margin percent of approximately 44 percent slightly decreased from 45 percent in the prior year period, primarily due to unfavorable foreign currency headwinds.

2019 vs. 2018

Gross margin of $2,083.6 million increased $203.8 million, or approximately 11 percent versus the prior year period. Gross margin, excluding transaction-related charges, increased versus the prior year period by $134.2 million. The increase was primarily due to higher revenues driven by increased volume and pricing, partially offset by higher costs, primarily raw material costs.

Gross margin percent of approximately 45 percent slightly increased from approximately 44 percent in the prior year period. The increase from higher pricing was nearly offset by higher costs, primarily raw material costs. Gross margin percent, excluding transaction-related charges, of approximately 45 percent remained relatively flat compared to the prior year period.

Selling, general, and administrative expenses

2020 vs. 2019

Selling, general and administrative expenses of $729.7 million decreased by $63.2 million, or approximately 8.0 percent versus the prior year period. Selling, general and administrative expenses, excluding transaction-related charges, decreased $38.7 million, or approximately 5 percent, versus the prior year period due to cost-saving measures implemented in response to the pandemic.

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2019 vs. 2018

Selling, general and administrative expenses of $792.9 million slightly increased by $2.9 million versus the prior year period. Selling, general and administrative expenses, excluding transaction-related charges, increased $12.0 million, or approximately 2 percent, versus the prior year period.

Research and development expenses

2020 vs. 2019

Research and development expenses of $287.9 million decreased $10.2 million, or approximately 3 percent versus the prior year period due to cost-saving measures taken in response to the COVID-19 pandemic, but we did not cancel any research and development projects. We phased some projects differently to allow lower costs this year in response to the pandemic without fundamentally impacting long-term timelines.

2019 vs. 2018

Research and development expenses of $298.1 million increased $10.4 million, or approximately 4 percent versus the prior year period primarily due to investments in our global discovery and product development.

Adjusted EBITDA (Non-GAAP)

2020 vs. 2019

Adjusted EBITDA of $1,250.4 million increased $29.9 million, or approximately 2 percent versus the prior year period. The increase was due to higher volumes, higher pricing, and strong cost management which accounted for approximately 9 percent, 9 percent, and 6 percent increases respectively. These factors offset foreign currency fluctuations which had an unfavorable impact of approximately 22 percent on Adjusted EBITDA.

2019 vs. 2018

Adjusted EBITDA of $1,220.5 million increased $111.6 million, or approximately 10 percent versus the prior year period. The increase was due to the strong demand which led to higher volumes and higher pricing as discussed above which contributed approximately 18 percent and 12 percent to the increase, respectively. The price increases were primarily seen in Latin America. These factors more than offset the higher costs, primarily driven by higher raw material costs, and unfavorable foreign currency fluctuations which impacted the change in Adjusted EBITDA by approximately 15 percent and 5 percent, respectively.

Other Results of Operations

Depreciation and amortization

2020 vs. 2019

Depreciation and amortization of $162.7 million increased $12.6 million, or approximately 8 percent, as compared to 2019 of $150.1 million. The increase was mostly driven by the impacts of the amortization effects of the completion of various phases of our ERP implementation which increased amortization expense by approximately $10 million.

2019 vs. 2018

Depreciation and amortization of $150.1 million remained relatively flat as compared to 2018 of $150.2 million.

Interest expense, net

2020 vs. 2019

Interest expense, net of $151.2 million decreased by $7.3 million, or approximately 5 percent, compared to $158.5 million in 2019. The decrease was driven by lower term loan balances which decreased interest expense by approximately $17 million, lower LIBOR rates which decreased interest expense by approximately $20 million and partially offset by the impacts of our third quarter 2019 debt offering which increased interest expense by approximately $30 million.

2019 vs. 2018

Interest expense, net of $158.5 increased by $25.4 million, or approximately 19 percent compared to $133.1 million in 2018. The increase was driven by the issuance of the Senior Notes discussed further below, which increased interest expense by approximately $7 million, and higher average foreign debt balances throughout the year, which increased interest expense by approximately $17 million.

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Corporate special charges (income)

Restructuring and other charges (income)

Our restructuring and other charges (income) are comprised of restructuring, assets disposals and other charges (income) as described below:

Year Ended December 31,

Total restructuring and other charges (income) (1) $ 132.2 $ 171.0 $ 61.2

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(1) See Note 9 to the consolidated financial statements included in this Form 10-K for more information.

2020

Restructuring charges in 2020 primarily consisted of $40.2 million of charges associated with the integration of the DuPont Crop Protection Business which was completed during the second quarter of 2020 except for certain in-flight initiatives. These charges included severance, accelerated depreciation on certain fixed assets, and other costs (benefits). There were other miscellaneous restructuring charges $2.4 million.

Other charges (income), net in 2020 includes $65.6 million of charges related to our acquisition of the remaining rights for Fluindapyr active ingredient assets from Isagro. See Note 9 for further information regarding this matter. Additional charges of $24.9 million consists of charges of environmental sites.

2019

Restructuring charges in 2019 primarily consisted of $34.1 million of charges related to our decision to exit sales of all carbofuran formulations globally and $26.4 million of charges associated with the integration of the DuPont Crop Protection Business. These charges included severance, accelerated depreciation on certain fixed assets, and other costs (benefits). There were other miscellaneous restructuring charges $1.7 million.

Other charges (income), net in 2019 primarily consists of charges of environmental sites. During the fourth quarter of 2019, we recorded a charge of $72.8 million a result of an unfavorable court ruling we received in relation to the Pocatello Tribal Litigation at one of our environmental sites. See Note 12 for further information regarding this matter.

2018

Restructuring charges in 2018 were primarily associated with restructuring charges associated with the integration of the DuPont Crop Protection Business. These charges primarily consisted of approximately $59 million of charges related to the change in our market access model in India and approximately $28 million of charges due to our decision to exit the Ewing R&D center. Refer to Note 9 for more information. Other restructuring charges related to the integration of the acquired DuPont Crop Protection Business totaled approximately $22 million.

Other charges (income), net in 2018 primarily consists of income from the gain on sales of $87.2 million from the divestment of a portion of FMC's European herbicide portfolio to Nufarm Limited and certain products of our India portfolio to Crystal Crop Protection Limited. These divestitures satisfied FMC's commitment to the European Commission and the Competition Commission of India, respectively, for regulatory requirements in order to complete the DuPont Crop Protection Acquisition. Additionally, there were environmental related charges of $21.7 million for remediation activities and $2.6 million of other charges.

Non-operating pension and postretirement (charges) income

2020 vs. 2019

The charge for 2020 was $21.2 million compared to $8.1 million in 2019. The increase in non-operating pension and post retirement charges (income) is attributable to the continued approach of using the smoothed market related value of assets (MRVA) as opposed to the actual fair value of plan assets in the determination of 2020 expense. This continued approach will create some volatility in our non-operating periodic pension cost since our qualified pension plan is 100 percent fixed income securities.

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2019 vs. 2018

The charge for 2019 was $8.1 million compared to income of $0.5 million in 2018. The change was due to lower expected return on plan assets of approximately $10 million resulting from the full shift to a fixed income investment portfolio for the full year of 2019 versus the shift to a primarily fixed income investment portfolio for only a portion of the year in 2018. See Note 15 for more information.

Transaction-related charges

A detailed description of the transaction related charges is included in Note 5 to the consolidated financial statements included within this Form 10-K.

Provision for income taxes

Provision for income taxes for 2020 was expense of $150.9 million resulting in an effective tax rate of 20.7 percent. Provision for income taxes for 2019 was expense of $111.5 million resulting in an effective tax rate of 17.0 percent. Provision for income taxes for 2018 was expense of $70.8 million resulting in an effective tax rate of 11.6 percent. Note 13 to the consolidated financial statements included in this Form 10-K includes more details on the drivers of the GAAP effective rate and year-over-year changes. We believe showing the reconciliation below of our GAAP to Non-GAAP effective tax rate provides investors with useful supplemental information about our tax rate on the core underlying business.

Year Ended December 31,

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(1)Tax adjustments in 2020, 2019, and 2018 are materially attributable to the effects of certain changes in prior year tax matters and the realizability of deferred tax assets in certain jurisdictions. Tax adjustments in 2018 also include the effects of the Act, primarily related to the one-time transition tax and the decrease in the U.S. federal tax rate. See Note 13 to the consolidated financial statements included within this Form 10-K for additional discussion.

The primary drivers for the fluctuations in the effective tax rate for each period are provided in the table above. Excluding the items in the table above, the changes in the non-GAAP effective tax rate were primarily due to the impact of geographic mix of earnings among our global subsidiaries. See Note 13 to the consolidated financial statements for additional details related to the provisions for income taxes on continuing operations, as well as items that significantly impact our effective tax rate.

Discontinued operations, net of income taxes

Our discontinued operations, in periods up to its disposition, represent our discontinued FMC Lithium and FMC Health and Nutrition business results as well as adjustments to retained liabilities from other previously 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. See Note 11 to the consolidated financial statements for additional details on our discontinued operations.

2020 vs. 2019

Discontinued operations, net of income taxes represented a loss of $28.3 million in 2020 compared to a loss of $63.3 million in 2019. The loss during both periods was primarily due to adjustments related to the retained liabilities from our previously discontinued operations. Offsetting the loss in both 2019 and 2020 were the gain on sale of two parcels of land in our discontinued site in Newark, California of $21 million and $24 million, net of taxes, respectively. Additionally, during 2019, we included the net loss from our discontinued FMC Lithium segment, primarily due to separation-related costs, up to its separation date on March 1, 2019.

2019 vs. 2018

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Discontinued operations, net of income taxes represented a loss of $63.3 million in 2019 compared to a loss of $26.1 million in 2018. 2019 included the net loss from our discontinued FMC Lithium segment, primarily due to separation-related costs, up to its separation date on March 1, 2019, compared to income for the full year in 2018. Offsetting the loss was the gain on sale from the sale of the first of two parcels of land of our discontinued site in Newark, California in 2019. During 2018, we recorded a charge of approximately $106 million as a result of active negotiations for a settlement agreement primarily to address discontinued operations at our Middleport, New York plant which was the subject of an Administrative Order on Consent entered into with the EPA and NYSDEC in 1991. The charge consisted of incremental estimated costs of remediation for certain offsite operable units associated with historic site operations as we engaged in settlement discussions with NYSDEC to resolve the path forward regarding remediation. Refer to Note 12 for further details.

Net income (loss) attributable to FMC stockholders

2020 vs. 2019

Net income (loss) attributable to FMC stockholders increased to $551.5 million from $477.4 million. The higher results were driven by a slight increase in revenue as well as cost-saving measures in selling, general, and administrative and research and development expenses in response to the pandemic. Restructuring and other charges were $38.8 million lower versus prior year and discontinued operations expense decreased $35 million compared to the prior year. These increases to income were partially offset by higher tax expense and higher provision for income taxes of $39.4 million and higher non-operating pension and postretirement charges of $13.1 million.

2019 vs. 2018

Net income (loss) attributable to FMC stockholders decreased to $477.4 million from $502.1 million. The decrease was primarily due to higher costs and expenses, particularly restructuring and other charges associated with environmental remediation at our decommissioned plant near Pocatello, higher tax provisions, and higher net interest expense. This was partially offset by higher adjusted EBITDA from higher volumes and pricing.

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Liquidity and Capital Resources

Cash and cash equivalents at December 31, 2020 and 2019, were $568.9 million and $339.1 million, respectively. We held more cash on the balance sheet as a result of significantly increased cash from operations year over year and held it in advance of a seasonal working capital build in the first quarter. Of the cash and cash equivalents balance at December 31, 2020, $560.5 million was held by our foreign subsidiaries. The cash held by foreign subsidiaries for permanent reinvestment is generally used to finance the subsidiaries’ operating activities and future foreign investments. We have not provided income taxes for other outside basis differences inherent in our investments in subsidiaries because the investments and related unremitted earnings are essentially permanent in duration or we have concluded that no additional tax liability will arise upon disposal or remittance. See Note 13 to the consolidated financial statements included within this Form 10-K for more information.

At December 31, 2020, we had total debt of $3,267.8 million as compared to $3,258.8 million at December 31, 2019. Total debt included $2,929.5 million and $3,031.1 million of long-term debt (excluding current portions of $93.6 million and $82.8 million) at December 31, 2020 and 2019, respectively. Early in the second quarter of 2020 we amended the Revolving Credit Facility and 2017 Term Loan Agreements to increase the maximum leverage ratio, in order to address potential liquidity constraints that might arise due to the COVID-19 pandemic. Although we had not then, and have not since, experienced any liquidity issues as a result of the economic impacts of the pandemic, we determined that it would be prudent to take this step, as the higher leverage ratio provides significant headroom above any of the COVID-19 related scenarios assessed by the company. Additionally, during the second quarter we fully repaid the $500 million revolver draw made late in the first quarter at the height of the pandemic’s impact on short-term financing markets. As of December 31, 2020, we were in compliance with all of our debt covenants. See Note 14 in the consolidated financial statements included in this Form 10-K for further details. We remain committed to solid investment grade credit metrics, and expect full-year average leverage to be in line with this commitment in 2020.

The decrease in long-term debt was primarily due to paydowns on the 2017 Term Loan Facility, which is scheduled to mature on November 1, 2022. The borrowings under the 2017 Term Loan Facility will bear interest at a floating rate, which will be a base rate or a Eurocurrency rate equal to the London interbank offered rate for the relevant interest period, plus in each case an applicable margin, as determined in accordance with the provisions of the 2017 Term Loan Facility. The decrease in long-term debt was offset by the increase in short-term debt.

Our short-term debt consists of foreign borrowings and our commercial paper program. Foreign borrowings decreased from $144.9 million at December 31, 2019 to $98.4 million at December 31, 2020 while outstanding commercial paper increased from zero at December 31, 2019 to $146.3 million at December 31, 2020. We provide parent-company guarantees to lending institutions providing credit to our foreign subsidiaries.

Our commercial paper program allows us to borrow at rates generally more favorable than those available under our credit facility. At December 31, 2020, we had $146.3 million borrowings outstanding under the commercial paper program at an average borrowing rate of 0.5 percent. Our commercial paper balances fluctuate from year to year depending on working capital needs and status on receivables collections.

Revolving Credit Facility and 2017 Term Loan Agreement Amendment

On April 22, 2020, we amended both our Revolving Credit Agreement and 2017 Term Loan Agreement which, among other things, increased the maximum leverage ratio financial covenant and added a negative covenant restricting purchases of the Company’s stock if at any time the maximum leverage ratio exceeds 3.5 through the period ending June 30, 2021. See Note 14 for further details.

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Statement of Cash Flows

Cash provided (required) by operating activities was $736.8 million, $555.6 million and $362.7 million for 2020, 2019 and 2018, respectively.

The table below presents the components of net cash provided (required) by operating activities. For comparability, the prior period amounts for "Change in all other operating assets and liabilities" have been recast to reflect the current period presentation.

(in Millions) Year ended December 31,

Change in guarantees of vendor financing 64.8 8.6 15.4

Change in advance payments from customers (2) (145.5) 34.1 80.2

Change in accrued customer rebates (3) 17.2 (85.8) 104.1

Change in all other operating assets and liabilities (6) (68.2) (208.5) (187.5)

Restructuring and other spending (7) (17.9) (18.6) (25.2)

Environmental spending, continuing, net of recoveries (8) (1.9) (18.3) (20.3)

Pension and other postretirement benefit contributions (9) (4.6) (13.4) (37.5)

____________________

(1)The change in trade receivables in all periods include the impacts of seasonality and the receivable build intrinsic in our business. The change in cash flows related to trade receivables in 2020 was driven by timing of collections as well as higher sales. Collection timing is more pronounced in certain countries such as Brazil where there may be terms significantly longer than the rest of our business. Additionally, timing of collection is impacted as amounts for all periods include carry-over balances remaining to be collected in Latin America, where collection periods are measured in months rather than weeks. During 2020, we collected approximately $931 million of receivables in Brazil.

(2)Advance payments are typically received in the fourth quarter of each year, primarily in our North America operations as revenue associated with advance payments is recognized, generally in the first half of each year following the seasonality of that business, as shipments are made and title, ownership and risk of loss pass to the customer. The change in 2020 was primarily related to lower overall payments received and higher application of funds to accounts receivable balances year over year.

(3)These rebates are primarily associated within North America, and to a lesser extent Brazil, and in North America generally settle in the fourth quarter of each year given the end of the respective crop cycle. The changes year over year are associated with the mix in sales eligible for rebates and incentives in 2020 compared to 2019 and 2018 and timing of certain rebate payments.

(4)Changes in inventory in 2020 are a result of significant market impacts during the fourth quarter related to logistics and supply chain constraints in the U.S., reduced demand in the U.S., Brazil and Argentina, and products held by foreign customs. Changes in inventory in 2019 and 2018 are a result of inventory levels being adjusted to take into consideration the change in market conditions.

(5)The change in cash flows related to accounts payable in 2020, 2019 and 2018 is primarily due to timing of payments made to suppliers and vendors. 2019 was partially impacted during portions of 2019 from global supply chain issues, primarily in China, which required us to obtain raw materials on payment terms shorter than normal.

(6)Changes in all periods presented primarily represent timing of payments associated with all other operating assets and liabilities. Additionally, the 2020 and 2019 period includes the effects of the unfavorable contracts amortization of approximately $120 million and $116 million, respectively.

(7)See Note 9 to the consolidated financial statements included in this Form 10-K for further details.

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(8)Included in our results for each of the years presented are environmental charges for environmental remediation of $24.9 million, $108.7 million and $21.7 million, respectively. The amounts in 2020 will be spent in future years. The amounts represent environmental remediation spending which were recorded against pre-existing reserves, net of recoveries. Environmental obligations for continuing operations primarily represent obligations at shut down or abandoned facilities within businesses that do not meet the criteria for presentation as discontinued operations. Additionally, during the first quarter of 2020, we entered into a confidential insurance settlement pertaining to coverage at a legacy environmental site, which settlement resulted in a cash payment to FMC in the amount of $20.0 million. Refer to Note 12 for more details.

(9)There were no voluntary contributions to our U.S. qualified defined benefit plan in 2020. Amounts in 2019 and 2018 include voluntary contributions to our U.S. qualified defined benefit plan of $7.0 million and $30.0 million, respectively.

(10)Interest payments were basically flat versus prior year.

(11)Amounts shown in the chart represent net tax payments of our continuing operations. The decrease in net tax payments in 2020 as compared to prior periods is primarily attributable to the deferral of income tax payments in various jurisdictions as a result of the COVID-19 pandemic. Tax payments in 2019 primarily represent the payments of tax attributable to the Nufarm Limited sale, transition tax, and tax payments related to the acquired DuPont Crop Protection Business. Tax payments in 2018 primarily represent the payments of tax attributable to the FMC Health and Nutrition segment disposition, transition tax and full year tax payments related to the acquired DuPont Crop Protection Business.

(12)Represents payments for legal and professional fees associated with the DuPont Crop Protection Business Acquisition in addition to costs related to integrating the DuPont Crop Protection Business. Except for the completion of certain in-flight initiatives, primarily associated with the finalization of our worldwide ERP system, we completed the integration of the DuPont Crop Protection Business as of June 30, 2020. The TSA is now terminated and the last phase of the ERP system transition went live in November 2020 with a stabilization period that will go into the first quarter of 2021. Estimated remaining cash outflows are expected to be approximately $15 million for the completion of these defined in-flight initiatives during the remaining time period. See Note 5 to the consolidated financial statements for more information.

Cash provided (required) by operating activities of discontinued operations was $(89.0) million, $(67.1) million and $5.7 million for 2020, 2019 and 2018, respectively.

Cash required by operating activities of discontinued operations is directly related to environmental, other postretirement benefit liabilities, self-insurance, long-term obligations related to legal proceedings and historical restructuring activities.

Amounts in 2019 and 2018 also include the operating activities of our discontinued FMC Lithium segment, which was separated on March 1, 2019

Cash provided (required) by investing activities of continuing operations was $(200.4) million, $(195.9) million and $(37.5) million for 2020, 2019 and 2018, respectively.

Cash required in 2020 primarily due to capital expenditures and spending related to our contract manufacturing arrangements, as well as continued spending associated with the final stages of our new SAP system implementation. 2020 also includes payments of $65.6 million to acquire the remaining rights for Fluindapyr from Isagro S.p.A ("Isagro") in an asset acquisition.

Cash required in 2019 is primarily due to capital expenditures and spending related to our contract manufacturing arrangements, as well as continued spending during that period associated with the implementation of a new SAP system.

Cash required in 2018 is primarily due to higher capital expenditure spending as well as incremental capitalizable corporate level spending associated with the implementation of a new SAP system, partially offset by the sale of product portfolios of approximately $88 million that were required to complete the DuPont Crop Protection Business Acquisition.

Cash provided (required) by investing activities of discontinued operations was $31.1 million, $9.2 million and $(93.4) million for 2020, 2019 and 2018, respectively.

Cash provided by investing activities of discontinued operations in 2020 and 2019 represents the proceeds of approximately $31 million and $26 million from the sale of our two parcels of land of our discontinued site in Newark, California. These sales resulted in a gain recognized within discontinued operations in each period of approximately $24 million and $21 million, net of taxes, respectively. In 2019, this was partially offset by capital expenditures of our discontinued FMC Lithium segment. Cash required by investing activities of discontinued operations in 2018 represents the working capital payment associated with the divestiture of FMC Health and Nutrition as well as the capital expenditures of our discontinued FMC Lithium segment.

Cash provided (required) by financing activities was $(250.3) million, $(87.0) million and $(397.3) million in 2020, 2019 and 2018, respectively.

The change in cash required by financing activities in 2020 is primarily driven by the prior year proceeds from the Senior Notes and higher dividend payments offset by a reduction in the payment of long term debt and a reduction of repurchases of common stock under our publicly announced program.

The change in cash required by financing activities in 2019 is primarily due to the proceeds from the Senior Notes offset by cash outflows including higher repurchases of common stock, repayment of long-term debt, and higher dividend payments in

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2019 as compared to the prior period. 2018 included the net proceeds from the IPO of FMC Lithium which were more than offset by repayments of long-term debt, dividend payments and repurchases of common stock.

Cash provided (required) by financing activities of discontinued operations was zero , $(37.2) million and $34.0 million in 2020, 2019 and 2018, respectively.

Cash required by financing activities of discontinued operations in 2019 represents debt repayments on FMC Lithium's external debt as well as cash payments associated with its separation. Cash provided by financing activities of discontinued operations in 2018 represents the proceeds from borrowing of long-term debt of our discontinued FMC Lithium segment.

Free Cash Flow

We define free cash flow, a Non-GAAP financial measure, as all cash inflows and outflows excluding those related to financing activities (such as debt repayments, dividends, and share repurchases) and acquisition related investing activities. Free cash flow is calculated as all cash from operating activities reduced by spending for capital additions and other investing activities as well as legacy and transformation spending. Therefore, our calculation of free cash flow will almost always result in a lower amount than cash from operating activities from continuing operations, the most directly comparable U.S. GAAP measure. However, the free cash flow measure is consistent with management's assessment of operating cash flow performance and we believe it provides a useful basis for investors and securities analysts about the cash generated by routine business operations, including capital expenditures, in addition to assessing our ability to repay debt, fund acquisitions and return capital to shareholders through share repurchases and dividends.

Our use of free cash flow has limitations as an analytical tool and should not be considered in isolation or as a substitute for an analysis of our results under U.S. GAAP. First, free cash flow is not a substitute for cash provided (required) by operating activities of continuing operations, as it is not a measure of cash available for discretionary expenditures since we have non-discretionary obligations, primarily debt service, that are not deducted from the measure. Second, other companies may calculate free cash flow or similarly titled Non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of free cash flow as a tool for comparison. Additionally, the utility of free cash flow is further limited as it does not reflect our future contractual commitments and does not represent the total increase or decrease in our cash balance for a given period. Because of these and other limitations, free cash flow should be considered along with cash provided (required) by operating activities of continuing operations and other comparable financial measures prepared and presented in accordance with U.S. GAAP.

The table below presents a reconciliation of free cash flow from the most directly comparable U.S. GAAP measure.

FREE CASH FLOW RECONCILIATION

(in Millions) Year ended December 31,

Capital additions and other investing activities $ (87.6) $ (147.9) $ (96.6)

Transaction and integration costs (1) (63.9) (77.1) (101.1)

Investment in Enterprise Resource Planning system (3) (47.2) (48.0) (48.5)

___________________

(1) Represents payments for legal and professional fees associated with the DuPont Crop Protection Business Acquisition in addition to costs related to integrating the DuPont Crop Protection Business. See Note 5 to the consolidated financial statements for more information.

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(2) Adjusted cash from operations is defined as cash provided (required) by operating activities of continuing operations excluding the effects of transaction-related cash flows, which are included within Legacy and transformation.

(3) Components of cash provided (required) by investing activities of continuing operations. Refer to the below discussion for further details.

(4) Cash spending associated with contract manufacturers was $17.4 million, $51.7 million and $13.1 million for the years ended December 31, 2020, 2019 and 2018, respectively.

(5) Refer to the above discussion for further details.

(6) Includes our legacy liabilities such as environmental remediation and other legal matters that are reported in discontinued operations as well as business integration costs associated with the DuPont Crop Protection Business Acquisition and the implementation of our new SAP system.

2021 Cash Flow Outlook

Our cash needs for 2021 include operating cash requirements (which are impacted by contributions to our pension plan, as well as environmental, asset retirement obligation, and restructuring spending), capital expenditures, and legacy and transformation spending, as well as mandatory payments of debt, dividend payments, and share repurchases. We plan to meet our liquidity needs through available cash, cash generated from operations, commercial paper issuances and borrowings under our committed revolving credit facility. At December 31, 2020 our remaining borrowing capacity under our credit facility was $1,139.6 million.

We expect 2021 free cash flow (Non-GAAP) to increase to a range of approximately $530 million to $620 million, driven by growth in adjusted cash from operations and reduced legacy and transformation spending which is forecasted to be partially offset by a significant year over year increase in capital additions. This increase in capital additions primarily relates to resuming or advancing projects that were delayed or deferred in 2020 due to the pandemic.

Although we provide a forecast for free cash flow, a Non-GAAP financial measure, we are not able to forecast the most directly comparable measure calculated and presented in accordance with U.S. GAAP, which is cash provided (required) by operating activities of continuing operations. Certain elements of the composition of the U.S. GAAP amount are not predictable, making it impractical for us to forecast. Such elements include, but are not limited to, restructuring, acquisition charges, and discontinued operations. As a result, no U.S. GAAP outlook is provided.

Cash from operating activities of continuing operations

We expect higher cash from operating activities, excluding the effects of transaction-related cash flows, primarily driven by higher forecasted Adjusted EBITDA as well as continued improvement in working capital, to be in the range of approximately $790 million to $950 million. Transaction-related cash flows are included within Legacy and transformation, which is consistent with how we evaluate our business operations from a cash flow standpoint. See below for further discussion. Cash from operating activities includes cash requirements related to our pension plans, environmental sites, restructuring and asset retirement obligations, taxes and interest on borrowings.

Pension

We do not expect to make any voluntary cash contributions to our U.S. qualified defined benefit pension plan in 2021. The plan is fully funded and our portfolio is comprised of 100 percent fixed income securities and cash. Our investment strategy is a liability hedging approach with an objective of maintaining the funded status of the plan such that the funded status volatility is minimized and the likelihood that we will be required to make significant contributions to the plan is limited.

Environmental

Projected 2021 spending includes approximately $58 million to $68 million of net environmental remediation spending for our sites accounted for within continuing operations. Environmental obligations for continuing operations primarily represent obligations at shut down or abandoned facilities within businesses that do not meet the criteria for presentation as discontinued operations. This spending includes approximately $43 million related to our environmental remediation site near Pocatello, Idaho, primarily as a result of a litigation judgment against us in the Pocatello Tribal litigation described in Note 12. Of the total 2021 projected spend at this site, $20.5 million was paid in the first quarter of 2021 and an additional $11.7 million payment for past years' permit fees plus interest associated with these payments will also be made in 2021.

Total projected 2021 environmental spending, inclusive of both sites accounted for within continuing operations and discontinued sites (discussed within Legacy and transformation below), is expected to be in the range of $115 million to $125 million.

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Restructuring and asset retirement obligations

We expect to make payments of approximately $25 to $35 million in 2021, of which approximately $10 million is related to exit and disposal costs as a result of our decision to exit sales of all carbofuran formulations (including Furadan® insecticide/nematicide, as well as Curaterr® insecticide/nematicide and any other brands used with carbofuran products). See Note 9 for more information.

Capital additions and other investing activities

Projected 2021 capital expenditures and expenditures related to contract manufacturers are expected to be in the range of approximately $160 million to $200 million. The spending is mainly driven by continuing progress on projects delayed or deferred in 2020 due to the pandemic, primarily for diamide capacity expansion and new active ingredient capacity. Expenditures related to contract manufacturers are included within "other investing activities".

Legacy and transformation

Projected 2021 legacy and transformation spending are expected to be in the range of approximately $100 million to $130 million. This is primarily driven by environmental remediation spending and legacy liabilities. Except for the completion of certain in-flight initiatives, primarily associated with the finalization of our worldwide ERP system, we completed the integration of the DuPont Crop Protection Business as of June 30, 2020. As noted, the TSA is now terminated and the last phase of the ERP system transition went live in November 2020 with a stabilization period that will go into the first quarter of 2021. Cash outflows for these initiatives are expected to be approximately $15 million in 2021.

Projected 2021 spending includes approximately $53 million to $63 million of net environmental remediation spending for our discontinued sites. These projections include spending as a result of a settlement reached in the second quarter of 2019 at our Middleport, New York site. The settlement will result in spending of approximately $25 million in 2021.

Total projected 2021 environmental spending, inclusive of both sites accounted for within continuing operations (discussed within Cash from operating activities of continuing operations above) and discontinued sites, is expected to be in the range of $115 million to $125 million.

Share repurchases

During the year ended December 31, 2020, 0.4 million shares were repurchased under the publicly announced repurchase program for approximately $50 million. At December 31, 2020, approximately $550 million remained unused under our Board-authorized repurchase program. We intend to purchase between $400 million to $500 million of our common shares in 2021. This repurchase program does not include a specific timetable or price targets and may be suspended or terminated at any time. Shares may be purchased through open market or privately negotiated transactions at the discretion of management based on its evaluation of market conditions and other factors. We also reacquire shares from time to time from employees in connections with vesting, exercise and forfeiture of awards under our equity compensation plans.

Dividends

On January 21, 2021, we paid dividends aggregating $62.3 million to our shareholders of record as of December 31, 2020. This amount is included in "Accrued and other liabilities" on the consolidated balance sheet as of December 31, 2020. For the years ended December 31, 2020, 2019 and 2018, we paid $228.5 million, $210.3 million and $89.2 million in dividends, respectively. We expect to continue to make quarterly dividend payments. Future cash dividends, as always, will depend on a variety of factors, including earnings, capital requirements, financial condition, general economic conditions and other factors considered relevant by us and is subject to final determination by our Board of Directors.

Commitments

We provide guarantees to financial institutions on behalf of certain customers, principally customers in Brazil, for their seasonal borrowing. The total of these guarantees was $140.6 million at December 31, 2020. These guarantees arise during the ordinary course of business from relationships with customers and nonconsolidated affiliates. Non-performance by the guaranteed party triggers the obligation requiring us to make payments to the beneficiary of the guarantee. Based on our experience these types of guarantees have not had a material effect on our consolidated financial position or on our liquidity. Our expectation is that future payment or performance related to the non-performance of others is considered unlikely.

In connection with certain of our property and asset sales and divestitures, we have agreed to indemnify the buyer for certain liabilities, including environmental contamination and taxes that occurred prior to the date of sale. Our indemnification obligations with respect to these liabilities may be indefinite as to duration and may or may not be subject to a deductible, minimum claim amount or cap. In cases where it is not possible for us to predict the likelihood that a claim will be made or to make a reasonable estimate of the maximum potential loss or range of loss, no specific liability has been recorded. If triggered, we may be able to recover certain of the indemnity payments from third parties. In cases where it is possible, we have recorded a specific liability within our Reserve for Discontinued Operations. Refer to Note 11 for further details.

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Our total significant committed contracts that we believe will affect cash over the next four years and beyond are as follows:

Contractual Commitments Expected Cash Payments by Year

____________________

(1) Excluding discounts.

(2) Contractual interest is the interest we are contracted to pay on our long-term debt obligations. We had $700.0 million of long-term debt subject to variable interest rates at December 31, 2020. The rate assumed for the variable interest component of the contractual interest obligation was the rate in effect at December 31, 2020. Variable rates are determined by the market and will fluctuate over time.

(3) Obligations associated with operating leases, before sub-lease rental income.

(4) Purchase obligations consist of agreements to purchase goods and services that are enforceable and legally binding and specify all significant terms, including fixed or minimum quantities to be purchased, price provisions and timing of the transaction. We have entered into a number of purchase obligations for the sourcing of materials and energy where take-or-pay arrangements apply. Since the majority of the minimum obligations under these contracts are take-or-pay commitments over the life of the contract and not a year by year take-or-pay, the obligations in the table related to these types of contacts are presented in the earliest period in which the minimum obligation could be payable under these types of contracts.

(5) As of December 31, 2020, the liability for uncertain tax positions was $83.1 million. This liability is excluded from the table above. Additionally, accrued pension and other postretirement benefits and our environmental liabilities as recorded on our consolidated balance sheets are excluded from the table above. Due to the high degree of uncertainty regarding the timing of potential future cash flows associated with these liabilities, we are unable to make a reasonably reliable estimate of the amount and periods in which these liabilities might be paid. Also excluded from the table above is the liability attributable to the transition tax on deemed repatriated foreign earnings incurred as a result of the Act of $107.8 million.

Contingencies

See Note 20 to our consolidated financial statements included in this Form 10-K.

Climate Change

As a global corporate citizen, we are concerned about the consequences of climate change and will take prudent and cost effective actions that reduce Green House Gas (GHG) emissions to the atmosphere.

FMC is committed to continuing to do its part to address climate change and its impacts. Our 2030 intensity reduction targets for energy and greenhouse gas emissions are both 25 percent from our 2018 baseline year. FMC has been reporting its GHG emissions and mitigation strategy to CDP (formerly Carbon Disclosure Project) since 2016. FMC detailed the business risks and opportunities we have due to climate change and its impacts in our CDP climate change reports. FMC received a "B" in the CDP Climate Change questionnaire in 2020. In 2021, FMC will begin conducting climate related scenario analyses in line with the Taskforce for Climate-Related Financial Disclosures recommendations to better understand our risks and opportunities with respect to climate change.

Even as we take action to control the release of GHGs, additional warming is anticipated. Long-term, higher average global temperatures could result in induced changes in natural resources, growing seasons, precipitation patterns, weather patterns, species distributions, water availability, sea levels, and biodiversity. These impacts could cause changes in supplies of raw materials used to maintain FMC’s production capacity and could lead to possible increased sourcing costs. Depending on how pervasive the climate impacts are in the different geographic locations experiencing changes in natural resources, FMC’s customers could be impacted. Demand for FMC’s products could increase if our products meet our customers’ needs to adapt to climate change impacts or decrease if our products do not meet their needs. Within our own operations, we continually assess our manufacturing sites worldwide for risks and opportunities to increase our preparedness for climate change. We are continuing to evaluate sea level rise and storm surge at our plants to understand timing of potential impacts and proactive responses that may need to be taken. To lessen FMC’s overall environmental footprint, we have taken actions to increase the energy efficiency in our manufacturing sites. We have also committed to new 2030 goals to reduce our water use intensity in

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high-risk areas by 20 percent and to maintain our 2018 waste disposed intensity which otherwise would increase by 55 percent due to expected growth and shifts in production mix.

In our product portfolio, we see market opportunities for our products to address climate change and its impacts. For example, FMC's agricultural products can help customers increase yield, energy and water efficiency, and decrease greenhouse gas emissions. Our products can also help growers adapt to more unpredictable growing conditions and the effects these types of threats have on crops. FMC has committed to invest 100 percent of our innovation budget to developing sustainable products and solutions for future use.

We are improving existing products and developing new platforms and technologies that help mitigate impacts of climate change. FMC is developing products with a lighter environmental footprint in its biologicals products. These opportunities could lead to new products and services for our existing and potential customers. Beyond our products and operations, FMC recognizes that energy consumption throughout our supply chain can impact climate change and product costs. Therefore, we will actively work with our entire value chain - suppliers, contractors, and customers - to improve their energy efficiencies and to reduce their GHG emissions.

We continue to follow legislative and regulatory developments regarding climate change because the regulation of greenhouse gases, depending on their nature and scope, could subject some of our manufacturing operations to additional costs or limits on operations. In December 2015, 195 countries at the United Nations Climate Change Conference in Paris reached an agreement to reduce GHGs. It remains to be seen how and when each of these countries will implement this agreement.

FMC will actively manage climate risks and incorporate them in our decision making as indicated in our responses to the CDP Climate Change Module. The United States Climate Alliance, a coalition of 24 states (governing 55 percent of the population) and unincorporated self-governing territories in the United States have expressed their commitment to upholding the objectives of the 2015 Paris Agreement on climate change within their borders. Several of our manufacturing and R&D sites fall within this alliance territory. FMC remains deeply committed to reducing our GHG emissions and energy consumption at all our facilities around the world.

Some of our foreign operations are subject to national or local energy management or climate change regulation, such as our plant in Denmark that is subject to the EU Emissions Trading Scheme. At present, that plant’s emissions are below its designated cap.

In December 2019, the European Commission approved the European Green Deal, with the goal of making the EU carbon neutral by 2050. The Green Deal includes investment plans and a roadmap to fight against climate change. FMC is closely following updates and the discussion surrounding the Green Deal. The costs of complying with possible future requirements are difficult to estimate at this time.

Future GHG regulatory requirements may result in increased costs of energy, additional capital costs for emissions control or new equipment, and/or costs associated with cap and trade or carbon taxes. We are currently monitoring regulatory developments. The costs of complying with possible future climate change requirements are difficult to estimate at this time.

Recently Adopted and Issued Accounting Pronouncements and Regulatory Items

See Note 2 "Recently Issued and Adopted Accounting Pronouncements and Regulatory Items" to our consolidated financial statements included in this Form 10-K.

Off-Balance Sheet Arrangements

See Note 20 to our consolidated financial statements included in this Form 10-K and Part I, Item 3 - Legal Proceedings for further information regarding any off-balance sheet arrangements.

Fair Value Measurements

See Note 19 to our consolidated financial statements included in this Form 10-K for additional discussion surrounding our fair value measurements.

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Critical Accounting Policies

Our consolidated financial statements are prepared in conformity with U.S. generally accepted accounting principles ("U.S. GAAP"). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We have described our accounting policies in Note 1 "Principal Accounting Policies and Related Financial Information" to our consolidated financial statements included in this Form 10-K. We have reviewed these accounting policies, identifying those that we believe to be critical to the preparation and understanding of our consolidated financial statements. We have reviewed these critical accounting policies with the Audit Committee of the Board of Directors. Critical accounting policies are central to our presentation of results of operations and financial condition in accordance with U.S. GAAP and require management to make estimates and judgments on certain matters. We base our estimates and judgments on historical experience, current conditions and other reasonable factors.

Revenue recognition and trade receivables

We recognize revenue when (or as) we satisfy our performance obligation which is when the customer obtains control of the good or service. Rebates due to customers are accrued as a reduction of revenue in the same period that the related sales are recorded based on the contract terms. Refer to Note 3 to our consolidated financial statements included in this Form 10-K for more information.

We record amounts billed for shipping and handling fees as revenue. Costs incurred for shipping and handling are recorded as costs of sales and services. Amounts billed for sales and use taxes, value-added taxes, and certain excise and other specific transactional taxes imposed on revenue-producing transactions are presented on a net basis and excluded from sales in the consolidated income statements. We record a liability until remitted to the respective taxing authority.

We periodically enter into prepayment arrangements with customers and receive advance payments for product to be delivered in future periods. These advance payments are recorded as deferred revenue and classified as "Advance payments from customers" on the consolidated balance sheet. Revenue associated with advance payments is recognized as shipments are made and transfer of control to the customer takes place.

Trade receivables consist of amounts owed to us from customer sales and are recorded when revenue is recognized. The allowance for trade receivables represents our best estimate of the probable losses associated with potential customer defaults. In developing our allowance for trade receivables, we use a two stage process which includes calculating a general formula to develop an allowance to appropriately address the uncertainty surrounding collection risk of our entire portfolio and specific allowances for customers where the risk of collection has been reasonably identified either due to liquidity constraints or disputes over contractual terms and conditions.

Our method of calculating the general formula consists of estimating the recoverability of trade receivables based on historical experience, current collection trends, and external business factors such as economic factors, including regional bankruptcy rates, and political factors. Our analysis of trade receivable collection risk is performed quarterly, and the allowance is adjusted accordingly.

We also hold long-term receivables that represent long-term customer receivable balances related to past-due accounts which are not expected to be collected within the current year. Our policy for the review of the allowance for these receivables is consistent with the discussion in the preceding paragraph above on trade receivables. Therefore on an ongoing basis, we continue to evaluate the credit quality of our long-term receivables utilizing aging of receivables, collection experience and write-offs, as well as existing economic conditions, to determine if an additional allowance is necessary.

Environmental obligations and related recoveries

We provide for environmental-related obligations when they are probable and amounts can be reasonably estimated. Where the available information is sufficient to estimate the amount of liability, that estimate has been used. Where the information is only sufficient to establish a range of probable liability and no point within the range is more likely than any other, the lower end of the range has been used.

Estimated obligations to remediate sites that involve oversight by the United States Environmental Protection Agency ("EPA"), or similar government agencies, are generally accrued no later than when a Record of Decision ("ROD"), or equivalent, is issued, or upon completion of a Remedial Investigation/Feasibility Study ("RI/FS"), or equivalent, that is submitted by us to the appropriate government agency or agencies. Estimates are reviewed quarterly by our environmental remediation management, as well as by financial and legal management and, if necessary, adjusted as additional information becomes available. The estimates can change substantially as additional information becomes available regarding the nature or extent of site contamination, required remediation methods, and other actions by or against governmental agencies or private parties.

Our environmental liabilities for continuing and discontinued operations are principally for costs associated with the remediation and/or study of sites at which we are alleged to have released hazardous substances into the environment. Such costs principally include, among other items, RI/FS, site remediation, costs of operation and maintenance of the remediation

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plan, management costs, fees to outside law firms and consultants for work related to the environmental effort, and future monitoring costs. Estimated site liabilities are determined based upon existing remediation laws and technologies, specific site consultants’ engineering studies or by extrapolating experience with environmental issues at comparable sites.

Included in our environmental liabilities are costs for the operation, maintenance and monitoring of site remediation plans (OM&M). Such reserves are based on our best estimates for these OM&M plans. Over time we may incur OM&M costs in excess of these reserves. However, we are unable to reasonably estimate an amount in excess of our recorded reserves because we cannot reasonably estimate the period for which such OM&M plans will need to be in place or the future annual cost of such remediation, as conditions at these environmental sites change over time. Such additional OM&M costs could be significant in total but would be incurred over an extended period of years.

Included in the environmental reserve balance, other assets balance and disclosure of reasonably possible loss contingencies are amounts from third party insurance policies, which we believe are probable of recovery.

Provisions for environmental costs are reflected in income, net of probable and estimable recoveries from named Potentially Responsible Parties ("PRPs") or other third parties. In the fourth quarter of 2019, we increased our reserves for the Pocatello Tribal Matter by $72.8 million, which represents both the historical and discounted present value of future annual use permit fees as well as the associated legal costs. See Note 12 for further information. All other environmental provisions incorporate inflation and are not discounted to their present value.

In calculating and evaluating the adequacy of our environmental reserves, we have taken into account the joint and several liability imposed by Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") and the analogous state laws on all PRPs and have considered the identity and financial condition of the other PRPs at each site to the extent possible. We have also considered the identity and financial condition of other third parties from whom recovery is anticipated, as well as the status of our claims against such parties. Although we are unable to forecast the ultimate contributions of PRPs and other third parties with absolute certainty, the degree of uncertainty with respect to each party is taken into account when determining the environmental reserve by adjusting the reserve to reflect the facts and circumstances on a site-by-site basis. Our liability includes our best estimate of the costs expected to be paid before the consideration of any potential recoveries from third parties. We believe that any recorded recoveries related to PRPs are realizable in all material respects. Recoveries are recorded as either an offset in "Environmental liabilities, continuing and discontinued" or as "Other assets" in our consolidated balance sheets in accordance with U.S. accounting literature.

See Note 12 to our consolidated financial statements included in this Form 10-K for changes in estimates associated with our environmental obligations.

Impairments and valuation of long-lived and indefinite-lived assets

Our long-lived assets primarily include property, plant and equipment, goodwill and intangible assets. The assets and liabilities of acquired businesses are measured at their estimated fair values at the dates of acquisition. The excess of the purchase price over the estimated fair value of the net assets acquired, including identified intangibles, is recorded as goodwill. The determination and allocation of fair value to the assets acquired and liabilities assumed is based on various assumptions and valuation methodologies requiring considerable management judgment, including estimates based on historical information, current market data and future expectations. The principal assumptions utilized in our valuation methodologies include revenue growth rates, operating margin estimates and discount rates. Although the estimates were deemed reasonable by management based on information available at the dates of acquisition, those estimates are inherently uncertain.

We test for impairment whenever events or circumstances indicate that the net book value of our property, plant and equipment may not be recoverable from the estimated undiscounted expected future cash flows expected to result from their use and eventual disposition. In cases where the estimated undiscounted expected future cash flows are less than net book value, an impairment loss is recognized equal to the amount by which the net book value exceeds the estimated fair value of assets, which is based on discounted cash flows at the lowest level determinable. The estimated cash flows reflect our assumptions about selling prices, volumes, costs and market conditions over a reasonable period of time.

We perform an annual impairment test of goodwill and indefinite-lived intangible assets in the third quarter of each year, or more frequently whenever an event or change in circumstances occurs that would require reassessment of the recoverability of those assets. In performing our evaluation we assess qualitative factors such as overall financial performance of our reporting units, anticipated changes in industry and market structure, competitive environments, planned capacity and cost factors such as raw material prices. Based on our assessment for 2020, we determined that no goodwill and indefinite-lived intangible assets impairment charge to our continuing operations was required.

See Note 9 to our consolidated financial statements included in this Form 10-K for charges associated with long-lived asset disposal costs and the activity associated with the restructuring reserves.

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Pension and other postretirement benefits

We provide qualified and nonqualified defined benefit and defined contribution pension plans, as well as postretirement health care and life insurance benefit plans to our employees and retirees. The costs (benefits) and obligations related to these benefits reflect key assumptions related to general economic conditions, including interest (discount) rates, healthcare cost trend rates, expected rates of return on plan assets and the rates of compensation increase for employees. The costs (benefits) and obligations for these benefit programs are also affected by other assumptions, such as average retirement age, mortality, employee turnover, and plan participation. To the extent our plans’ actual experience, as influenced by changing economic and financial market conditions or by changes to our own plans’ demographics, differs from these assumptions, the costs and obligations for providing these benefits, as well as the plans’ funding requirements, could increase or decrease. When actual results differ from our assumptions, the difference is typically recognized over future periods. In addition, the unrealized gains and losses related to our pension and postretirement benefit obligations may also affect periodic benefit costs (benefits) in future periods.

We use several assumptions and statistical methods to determine the asset values used to calculate both the expected rate of return on assets component of pension cost and to calculate our plans’ funding requirements. The expected rate of return on plan assets is based on a market-related value of assets that recognizes investment gains and losses over a five-year period. We use an actuarial value of assets to determine our plans’ funding requirements. The actuarial value of assets must be within a certain range, high or low, of the actual market value of assets, and is adjusted accordingly.

We select the discount rate used to calculate pension and other postretirement obligations based on a review of available yields on high-quality corporate bonds as of the measurement date. In selecting a discount rate as of December 31, 2020, we placed particular emphasis on a discount rate yield-curve provided by our actuary. This yield-curve, when populated with projected cash flows that represent the expected timing and amount of our plans' benefit payments, produced an effective discount rate of 2.49 percent for our U.S. qualified plan, 1.62 percent for our U.S. nonqualified, and 1.91 percent for our U.S. other postretirement benefit plans.

The discount rates used to determine projected benefit obligation at our December 31, 2020 and 2019 measurement dates for the U.S. qualified plan were 2.49 percent and 3.22 percent, respectively. The effect of the change in the discount rate from 3.22 percent to 2.49 percent at December 31, 2020 resulted in a $105.9 million increase to our U.S. qualified pension benefit obligations. The effect of the change in the discount rate used to determine net annual benefit cost (income) from 4.36 percent at December 31, 2019 to 3.22 percent at December 31, 2020 resulted in a $0.1 million decrease to the 2020 U.S. qualified pension expense.

The change in discount rate from 3.22 percent at December 31, 2019 to 2.49 percent at December 31, 2020 was attributable to a decrease in yields on high quality corporate bonds with cash flows matching the timing and amount of our expected future benefit payments between the 2019 and 2020 measurement dates. Using the December 31, 2020 and 2019 yield curves, our U.S. qualified plan cash flows produced a single weighted-average discount rate of approximately 2.49 percent and 3.22 percent, respectively.

In developing the assumption for the long-term rate of return on assets for our U.S. Plan, we take into consideration the technical analysis performed by our outside actuaries, including historical market returns, information on the assumption for long-term real returns by asset class, inflation assumptions, and expectations for standard deviation related to these best estimates. Our long-term rate of return for the fiscal year ended December 31, 2020, 2019 and 2018 was 3.00 percent, 4.25 percent and 5.00 percent, respectively.

For the sensitivity of our pension costs to incremental changes in assumptions see our discussion below.

Sensitivity analysis related to key pension and postretirement benefit assumptions.

A one-half percent increase in the assumed discount rate would have decreased pension and other postretirement benefit obligations by $72.6 million and $72.1 million at December 31, 2020 and 2019, respectively, and decreased pension and other postretirement benefit costs by zero, $0.6 million and $0.4 million for 2020, 2019 and 2018, respectively. A one-half percent decrease in the assumed discount rate would have increased pension and other postretirement benefit obligations by $79.3 million and $79.4 million at December 31, 2020 and 2019, respectively, and increased pension and other postretirement benefit cost by $0.1 million, $0.5 million and $0.1 million for 2020, 2019 and 2018, respectively.

A one-half percent increase in the assumed expected long-term rate of return on plan assets would have decreased pension costs by $6.2 million, $6.3 million and $6.4 million for 2020, 2019 and 2018, respectively. A one-half percent decrease in the assumed long-term rate of return on plan assets would have increased pension costs by $6.2 million, $6.3 million and $6.4 million for 2020, 2019 and 2018, respectively.

Further details on our pension and other postretirement benefit obligations and net periodic benefit costs (benefits) are found in Note 15 to our consolidated financial statements in this Form 10-K.

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Income taxes

We have recorded a valuation allowance to reduce deferred tax assets in certain jurisdictions to the amount that we believe is more likely than not to be realized. In assessing the need for this allowance, we have considered a number of factors including future taxable income, the jurisdictions in which such income is earned and our ongoing tax planning strategies. In the event that we determine that we would not be able to realize all or part of our net deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to income in the period such determination was made. Similarly, should we conclude that we would be able to realize certain deferred tax assets in the future in excess of the net recorded amount, an adjustment to the deferred tax assets would increase income in the period such determination was made.

Additionally, we file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. Certain income tax returns for FMC entities taxable in the U.S. and significant foreign jurisdictions are open for examination and adjustment. We assess our income tax positions and record a liability for all years open to examination based upon our evaluation of the facts, circumstances and information available at the reporting date. For those tax positions where it is more likely than not that a tax benefit will be sustained, we have recorded the largest amount of tax benefit with a greater than 50 percent likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. We adjust these liabilities, if necessary, upon the completion of tax audits or changes in tax law.

On December 22, 2017, the Act was enacted in the United States. The Act reduced the U.S. federal corporate tax rate from 35 percent to 21 percent, required companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and created new taxes on certain foreign sourced earnings. At December 31, 2018, the Company had completed its accounting for the impacts of the enactment of the Act.

See Note 13 to our consolidated financial statements included in this Form 10-K for additional discussion surrounding income taxes.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our earnings, cash flows and financial position are exposed to market risks relating to fluctuations in commodity prices, interest rates and foreign currency exchange rates. Our policy is to minimize exposure to our cash flow over time caused by changes in commodity, interest and currency exchange rates. To accomplish this, we have implemented a controlled program of risk management consisting of appropriate derivative contracts entered into with major financial institutions.

The analysis below presents the sensitivity of the market value of our financial instruments to selected changes in market rates and prices. The range of changes chosen reflects our view of changes that are reasonably possible over a one-year period. Market value estimates are based on the present value of projected future cash flows considering the market rates and prices chosen.

At December 31, 2020, our net financial instrument position was a net liability of $25.3 million compared to a net liability of $8.9 million at December 31, 2019. The change in the net financial instrument position was primarily due to exchange rate fluctuations in our foreign exchange portfolio.

Since our risk management programs are generally highly effective, the potential loss in value for each risk management portfolio described below would be largely offset by changes in the value of the underlying exposure.

Foreign Currency Exchange Rate Risk

The primary currencies for which we have exchange rate exposure are the U.S. dollar versus the euro, the Chinese yuan, the Brazilian real, Mexican peso, Indian rupee and the Argentine peso. Foreign currency debt and foreign exchange forward contracts are used in countries where we do business, thereby reducing our net asset exposure. Foreign exchange forward contracts are also used to hedge firm and highly anticipated foreign currency cash flows.

To analyze the effects of changing foreign currency rates, we have performed a sensitivity analysis in which we assume an instantaneous 10 percent change in the foreign currency exchange rates from their levels at December 31, 2020 and 2019, with all other variables (including interest rates) held constant.

Hedged Currency vs. Functional Currency

Net asset/(liability) position at December 31, 2020 $ (24.5) $ 8.4 $ (9.6)

Interest Rate Risk

One of the strategies that we can use to manage interest rate exposure is to enter into interest rate swap agreements. In these agreements, we agree to exchange, at specified intervals, the difference between fixed and variable interest amounts calculated on an agreed-upon notional principal amount. In the quarter ended December 31, 2020, we had outstanding interest rate swap contracts in place with an aggregate notional value of $100.0 million.

To analyze the effects of changing interest rates, we have performed a sensitivity analysis in which we assume an instantaneous one percent change in the interest rates from their levels at December 31, 2020 and 2019, with all other variables held constant.

Net asset/(liability) position at December 31, 2020 $ (0.8) $ 8.8 $ (10.4)

Net asset/(liability) position at December 31, 2019 (0.9) — (1.9)

Our debt portfolio at December 31, 2020 is composed of 72 percent fixed-rate debt and 28 percent variable-rate debt. The variable-rate component of our debt portfolio principally consists of borrowings under our 2017 Term Loan Facility, Credit Facility, Commercial Paper program, variable-rate industrial and pollution control revenue bonds, and amounts outstanding under foreign subsidiary credit lines. Changes in interest rates affect different portions of our variable-rate debt portfolio in different ways.

Based on the variable-rate debt in our debt portfolio at December 31, 2020, a one percentage point increase in interest rates would have increased gross interest expense by $9.3 million and a one percentage point decrease in interest rates would have decreased gross interest expense by $2.6 million for the year ended December 31, 2020.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Page

Consolidated Balance Sheets as of December 31, 2020 and 2019 50

Notes to Consolidated Financial Statements 55

Report of Independent Registered Public Accounting Firm 107

Management's Annual Report on Internal Control Over Financial Reporting 109

Report of Independent Registered Public Accounting Firm 110

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FMC CORPORATION

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(in Millions, Except Per Share Data) Year Ended December 31,

Costs and Expenses

Selling, general and administrative expenses 729.7 792.9 790.0

Restructuring and other charges (income) 132.2 171.0 61.2

Equity in (earnings) loss of affiliates — — (0.1)

Non-operating pension and postretirement charges (income) 21.2 8.1 (0.5)

Interest income (0.1) (1.9) (1.4)

Income (loss) from continuing operations $ 578.9 $ 543.5 $ 537.6

Discontinued operations, net of income taxes (28.3) (63.3) (26.1)

Less: Net income (loss) attributable to noncontrolling interests (0.9) 2.8 9.4

Net income (loss) attributable to FMC stockholders $ 551.5 $ 477.4 $ 502.1

Amounts attributable to FMC stockholders:

Continuing operations, net of income taxes $ 579.8 $ 540.7 $ 531.4

Discontinued operations, net of income taxes (28.3) (63.3) (29.3)

Net income (loss) attributable to FMC stockholders $ 551.5 $ 477.4 $ 502.1

Basic earnings (loss) per common share attributable to FMC stockholders:

Net income (loss) attributable to FMC stockholders $ 4.24 $ 3.64 $ 3.72

Diluted earnings (loss) per common share attributable to FMC stockholders:

Net income (loss) attributable to FMC stockholders $ 4.22 $ 3.62 $ 3.69

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

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FMC CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in Millions) Year Ended December 31,

Other comprehensive income (loss), net of tax:

Foreign currency adjustments:

Total foreign currency adjustments (1) $ 102.0 $ (18.5) $ (100.8)

Derivative instruments:

Pension and other postretirement benefits:

Other comprehensive income (loss), net of tax $ 130.1 $ (92.3) $ (74.1)

____________________

(1)Income taxes are not provided for other outside basis differences inherent in our investments in subsidiaries because the investments and related unremitted earnings are essentially permanent in duration or we have concluded that no additional tax liability will arise upon disposal or remittance.

(2)At December 31 of each year, we remeasure our pension and postretirement plan obligations at which time we record any actuarial gains (losses) and prior service (costs) credits to other comprehensive income. During the year ended December 31, 2018, due to the announced plan to separate FMC Lithium, we triggered a curtailment of our U.S. pension plans. As a result, we revalued our pension plans as of October 31, 2018, in addition to the normal December 31st remeasurement, which resulted in adjustments to comprehensive income. See Note 15 for more information.

(3)For more detail on the components of these reclassifications and the affected line item in the consolidated statements of income (loss) see Note 17 within these consolidated financial statements.

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

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FMC CORPORATION

CONSOLIDATED BALANCE SHEETS

December 31,

(in Millions, Except Share and Par Value Data) 2020 2019

ASSETS

Current assets

Cash and cash equivalents $ 568.9 $ 339.1

Prepaid and other current assets 380.8 487.5

Property, plant and equipment, net 771.7 758.0

Other assets including long-term receivables, net 712.3 685.3

LIABILITIES AND EQUITY

Current liabilities

Short-term debt and current portion of long-term debt $ 338.3 $ 227.7

Accounts payable, trade and other 946.7 900.1

Advance payments from customers 347.1 492.7

Accrued and other liabilities 674.7 680.6

Guarantees of vendor financing 140.6 75.7

Accrued pension and other postretirement benefits, current 4.2 4.3

Long-term debt, less current portion 2,929.5 3,031.1

Accrued pension and other postretirement benefits, long-term 46.4 44.2

Environmental liabilities, continuing and discontinued 443.5 470.5

Commitments and contingent liabilities (Note 20)

Equity

Capital in excess of par value of common stock 860.2 829.7

Accumulated other comprehensive income (loss) (282.2) (412.0)

Noncontrolling interests 22.4 29.1

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

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FMC CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in Millions) Year Ended December 31,

Cash provided (required) by operating activities of continuing operations:

Discontinued operations, net of income taxes 28.3 63.3 26.1

Income (loss) from continuing operations $ 578.9 $ 543.5 $ 537.6

Equity in (earnings) loss of affiliates — — (0.1)

Restructuring and other charges (income) 132.2 171.0 61.2

Pension and other postretirement benefits 25.8 12.6 6.1

Guarantees of vendor financing 64.8 8.6 15.4

Pension and other postretirement benefit contributions (4.6) (13.4) (37.5)

Environmental spending, continuing, net of recoveries (1.9) (18.3) (20.3)

Restructuring and other spending (1) (17.9) (18.6) (25.2)

Transaction and integration costs (63.9) (77.1) (101.1)

Change in other operating assets and liabilities, net (2) (30.0) (183.7) 23.7

Cash provided (required) by operating activities of discontinued operations:

Other discontinued spending (29.9) (24.4) (27.8)

____________________

(1)The restructuring and other spending amount includes spending of $3.6 million related to the Furadan® asset retirement obligations. For additional detail on restructuring activities, see Note 9 to our consolidated financial statements included within this Form 10-K.

(2)Changes in all periods represent timing of payments associated with all other operating assets and liabilities.

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

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FMC CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(in Millions) Year Ended December 31,

Cash provided (required) by investing activities of continuing operations:

Capital expenditures $ (67.2) $ (93.9) $ (83.0)

Proceeds from sale of product portfolios — — 88.0

Investment in Enterprise Resource Planning system (47.2) (48.0) (48.5)

Other investing activities (4) (20.4) (54.0) (13.6)

Cash provided (required) by investing activities of discontinued operations:

Proceeds from disposal of property, plant and equipment $ 31.1 $ 26.2 $ —

Other discontinued investing activities — (17.0) (93.4)

Cash provided (required) by financing activities of continuing operations:

Increase (decrease) in short-term debt $ 97.0 $ (11.9) $ 79.5

Proceeds from borrowing of long-term debt 27.1 1,500.0 —

Financing fees and interest rate swap settlements (3.5) (97.4) (3.1)

Acquisitions of noncontrolling interests (7.4) — —

Distributions to noncontrolling interests (1.3) — —

Net proceeds received from initial public offering of FMC Lithium (5) — — 363.6

Other repurchases of common stock (8.4) (16.2) (6.8)

Cash provided (required) by financing activities of discontinued operations:

Proceeds from borrowing of long-term debt $ — $ — $ 34.0

Payment of Livent external debt — (27.0) —

Cash transfer to Livent due to spin — (10.2) —

Effect of exchange rate changes on cash and cash equivalents 1.6 (0.2) 4.5

Increase (decrease) in cash and cash equivalents $ 229.8 $ 177.4 $ (121.3)

Cash and cash equivalents, beginning of period $ 339.1 $ 161.7 $ 283.0

Cash and cash equivalents, end of period $ 568.9 $ 339.1 $ 134.4

____________________

(3) The acquisitions, net amount in 2020 represents payments made on October 2, 2020 to acquire the remaining rights for Fluindapyr from Isagro S.p.A ("Isagro") in an asset acquisition. For additional detail on this transaction, see Note 9 to our consolidated financial statements included within this Form 10-K.

(4) Cash spending associated with contract manufacturers was $17.4 million, $51.7 million and $13.1 million for the years ended December 31, 2020, 2019 and 2018, respectively.

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

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(5) Pursuant to the terms of the separation and distribution agreement, we received a net distribution of approximately $364 million from the public offering of Livent representing the proceeds from the sale of its common stock and the underwriters' exercise to purchase additional shares as part of the initial public offering ("IPO"), net of underwriting discounts and commissions, financing fees and other offering related expenses.

(6) See Note 17 regarding our quarterly cash dividend.

(7) Reflected within "Current assets of discontinued operations" on the consolidated balance sheets.

Supplemental disclosure of cash flow information: Cash paid for interest, net of capitalized interest was $141.8 million, $140.9 million and $133.4 million, and income taxes paid, net of refunds was $82.1 million, $130.9 million and $135.3 million in December 31, 2020, 2019 and 2018, respectively. Net interest payments of zero and tax payments, net of refunds of $10.0 million were allocated to discontinued operations for the year ended December 31, 2018. Accrued additions to property, plant and equipment and other assets at December 31, 2020, 2019 and 2018 were $14.7 million, $18.2 million and $3.1 million, respectively.

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

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FMC CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FMC Stockholders’ Equity

Shares for benefit plan trust 0.1 0.1

Net hedging gains (losses) and other, net of income tax 6.0 6.0

Foreign currency translation adjustments (95.3) (5.5) (100.8)

Repurchases of common stock (206.8) (206.8)

Transactions with noncontrolling interests (1)(2) 299.0 60.1 359.1

Adoption of accounting standards (Note 2) 55.5 (53.1) 2.4

Shares for benefit plan trust (1.0) (1.0)

Net hedging gains (losses) and other, net of income tax (77.2) (77.2)

Foreign currency translation adjustments (15.2) (3.3) (18.5)

Repurchases of common stock (414.3) (414.3)

Shares for benefit plan trust (0.4) (0.4)

Net hedging gains (losses) and other, net of income tax (6.8) (6.8)

Foreign currency translation adjustments 101.7 0.3 102.0

Repurchases of common stock (58.4) (58.4)

Acquisition of noncontrolling interests (1) (2.6) (4.8) (7.4)

Distributions to noncontrolling interests (1.3) (1.3)

____________________

(1) See Note 17 for more detail on transactions with noncontrolling interest.

(2) Primarily represents the noncontrolling interest of our FMC Lithium as a result of the IPO. Refer to Note 1 for further information.

(3) Represents the effects of the distribution of FMC Lithium. Refer to Note 1 for further information.

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

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Note 1: Principal Accounting Policies and Related Financial Information

Nature of operations. We are an agricultural sciences company providing innovative solutions to growers around the world with a robust product portfolio fueled by a market-driven discovery and development pipeline in crop protection, plant health, and professional pest and turf management. We operate in a single distinct business segment and develop, market and sell all three major classes of crop protection chemicals: insecticides, herbicides and fungicides. These products are used in agriculture to enhance crop yield and quality by controlling a broad spectrum of insects, weeds and disease, as well as in non-agricultural markets for pest control.

In March 2017, we announced our intention to separate our FMC Lithium segment (subsequently renamed Livent Corporation, or "Livent") into a publicly traded company. The initial step of the separation, the initial public offering ("IPO") of Livent, closed on October 15, 2018. In connection with the IPO, Livent had granted the underwriters an option to purchase additional shares of common stock to cover over-allotments at the IPO price, less the underwriting discount. On November 8, 2018, the underwriters exercised in full their option to purchase additional shares. After completion of the IPO and the underwriters' exercise to purchase additional shares of common stock, FMC owned 123 million shares of Livent's common stock, representing approximately 84 percent of the total outstanding shares of Livent's common stock. On March 1, 2019, we completed the previously announced distribution of 123 million shares of common stock of Livent as a pro rata dividend on shares of FMC common stock outstanding at the close of business on the record date of February 25, 2019. We have recast all the data within this filing to present FMC Lithium as a discontinued operation retrospectively for all periods presented.

COVID-19. Given the COVID-19 pandemic, many countries, including the United States, subsequently imposed restrictions on both travel and business closures in an effort to mitigate the spread of COVID-19. As an agricultural sciences company, we are considered an "essential" industry in the countries in which we operate and have avoided significant plant closures and all our facilities are operational. While we have maintained business continuity and sustained our operations, we do not yet know the full extent of the disruptions on either our business and operations or the global economy nor the duration of the pandemic and its adverse effects.

Basis of consolidation and basis of presentation. The accompanying consolidated financial statements of FMC Corporation and its subsidiaries were prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). Our consolidated financial statements include the accounts of FMC and all entities that we directly or indirectly control. All significant intercompany accounts and transactions are eliminated in consolidation.

Certain prior year amounts have been reclassified to conform to current year's presentation.

Estimates and assumptions. In preparing the financial statements in conformity with U.S. GAAP we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results are likely to differ from those estimates, but we do not believe such differences will materially affect our financial position, results of operations or cash flows.

Cash equivalents. We consider investments in all liquid debt instruments with original maturities of 3 months or less to be cash equivalents.

Trade receivables, net of allowance. Trade receivables consist of amounts owed to us from customer sales and are recorded when revenue is recognized. The allowance for trade receivables represents our best estimate of the probable losses associated with potential customer defaults. In developing our allowance for trade receivables, we use a two-stage process which includes calculating a general formula to develop an allowance to appropriately address the uncertainty surrounding collection risk of our entire portfolio and specific allowances for customers where the risk of collection has been reasonably identified either due to liquidity constraints or disputes over contractual terms and conditions.

Our method of calculating the general formula consists of estimating the recoverability of trade receivables based on historical experience, current collection trends, and external business factors such as economic factors, including regional bankruptcy rates, and political factors. Our analysis of trade receivable collection risk is performed quarterly, and the allowance is adjusted accordingly.

We also hold long-term receivables that represent long-term customer receivable balances related to past-due accounts which are not expected to be collected within the current year. Our policy for the review of the allowance for these receivables is

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FMC CORPORATION

Notes to Consolidated Financial Statements — (Continued)

consistent with the discussion in the preceding paragraph above on trade receivables. Therefore on an ongoing basis, we continue to evaluate the credit quality of our long-term receivables utilizing aging of receivables, collection experience and write-offs, as well as existing economic conditions, to determine if an additional allowance is necessary.

The allowance for trade receivables was $27.9 million and $26.3 million as of December 31, 2020 and 2019, respectively. The allowance for long-term receivables was $24.7 million and $61.1 million at December 31, 2020 and 2019, respectively. The provision to the allowance for receivables charged against operations was $4.7 million, $21.2 million and $71.4 million for the years ended December 31, 2020, 2019 and 2018, respectively. See Note 10 for more information. The provision in 2018 includes the effects of the stranded accounts receivables written off as part of the restructuring in India.

Investments. Investments in companies in which our ownership interest is 50 percent or less and in which we exercise significant influence over operating and financial policies are accounted for using the equity method. Under the equity method, original investments are recorded at cost and adjusted by our share of undistributed earnings and losses of these investments. Majority owned investments in which our control is restricted are also accounted for using the equity method. All other investments are carried at their fair values or at cost, as appropriate. We are party to several joint venture investments throughout the world, which individually and in the aggregate are not significant to our financial results.

Inventories. Inventories are stated at the lower of cost or net realizable value. Inventory costs include those costs directly attributable to products before sale, including all manufacturing overhead but excluding distribution costs. All domestic inventories, excluding materials and supplies, are determined on a last-in, first-out ("LIFO") basis and our remaining inventories are recorded on either a first-in, first-out ("FIFO") basis or average cost. See Note 7 for more information.

Property, plant and equipment. We record property, plant and equipment, including capitalized interest, at cost. We recognize acquired property, plant and equipment, from acquisitions at its estimated fair value. Depreciation is provided principally on the straight-line basis over the estimated useful lives of the assets (land improvements — 20 years, buildings and building equipment — 15 to 40 years, and machinery and equipment — three to 18 years). Gains and losses are reflected in income upon sale or retirement of assets. Expenditures that extend the useful lives of property, plant and equipment or increase productivity are capitalized. Ordinary repairs and maintenance are expensed as incurred through operating expense.

Capitalized interest. We capitalized interest costs of $3.5 million, $4.7 million, and $4.1 million in 2020, 2019, and 2018, respectively. These costs were primarily associated with the construction of certain long-lived assets and have been capitalized as part of the cost of those assets. We amortize capitalized interest over the assets’ estimated useful lives.

Impairments of long-lived assets. We review the recovery of the net book value of long-lived assets whenever events and circumstances indicate that the net book value of an asset may not be recoverable from the estimated undiscounted future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the net book value, we recognize an impairment loss equal to an amount by which the net book value exceeds the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.

Asset retirement obligations. We record asset retirement obligations ("AROs") at fair value at the time the liability is incurred if we can reasonably estimate the settlement date. The associated AROs are capitalized as part of the carrying amount of related long-lived assets. In future periods, the liability is accreted to its present value and the capitalized cost is depreciated over the useful life of the related asset. We also adjust the liability for changes resulting from the passage of time and/or revisions to the timing or the amount of the original estimate. Upon retirement of the long-lived asset, we either settle the obligation for its recorded amount or incur a gain or loss.

We have obligations at the majority of our manufacturing facilities in the event of permanent plant shutdown. For certain AROs not already accrued, we have calculated the fair value of these AROs and concluded that the present value of these obligations was inconsequential at December 31, 2020 and 2019.

The carrying amounts for the AROs for the years ended December 31, 2020 and 2019 are $30.7 million and $35.7 million, respectively. These amounts are included in "Accrued and other liabilities" and "Other long-term liabilities" on the consolidated balance sheet. During 2019, we recorded a charge to recognize the acceleration of asset retirement obligations associated with our decision to exit sales of all carbofuran formulations (including Furadan® insecticide/nematicide, Curaterr® insecticide/nematicide and any other brands used with carbofuran products) globally effective December 31, 2019. Refer to Note 9 for more information.

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Restructuring and other charges. We continually perform strategic reviews and assess the return on our business. This sometimes results in a plan to restructure the operations of our business. We record an accrual for severance and other exit costs under the provisions of the relevant accounting guidance.

Additionally, as part of these restructuring plans, write-downs of long-lived assets may occur. Two types of assets are impacted: assets to be disposed of by sale and assets to be abandoned. Assets to be disposed of by sale are measured at the lower of carrying amount or estimated net proceeds from the sale. Assets to be abandoned with no remaining future service potential are written down to amounts expected to be recovered. The useful life of assets to be abandoned that have a remaining future service potential are adjusted and depreciation is recorded over the adjusted useful life.

Capitalized software. We capitalize the costs of internal use software in accordance with accounting literature which generally requires the capitalization of certain costs incurred to develop or obtain internal use software. We assess the recoverability of capitalized software costs on an ongoing basis and record write-downs to fair value as necessary. We amortize capitalized software costs over expected useful lives ranging from three to 10 years. See Note 22 for the net unamortized computer software balances.

Goodwill and intangible assets. Goodwill and other indefinite life intangible assets are not subject to amortization. Instead, they are subject to at least an annual assessment for impairment by applying a fair value-based test.

We test goodwill and indefinite life intangibles for impairment annually using the criteria prescribed by U.S. GAAP accounting guidance for goodwill and other intangible assets. Based upon our annual impairment assessments conducted in 2020, 2019 and 2018, we did not record any goodwill impairments.

Finite-lived intangible assets consist of primarily customer relationships as well as patents, brands, registration rights, industry licenses, and other intangibles and are generally being amortized over periods of approximately three to 20 years. See Note 6 for additional information on goodwill and intangible assets.

Revenue recognition. We recognize revenue when (or as) we satisfy our performance obligation which is when the customer obtains control of the good or service. Rebates due to customers are accrued as a reduction of revenue in the same period that the related sales are recorded based on the contract terms. Refer to Note 3.

We record amounts billed for shipping and handling fees as revenue. Costs incurred for shipping and handling are recorded as costs of sales and services. Amounts billed for sales and use taxes, value-added taxes, and certain excise and other specific transactional taxes imposed on revenue-producing transactions are presented on a net basis and excluded from sales in the consolidated income statements. We record a liability until remitted to the respective taxing authority.

We periodically enter into prepayment arrangements with customers and receive advance payments for product to be delivered in future periods. These advance payments are recorded as deferred revenue and classified as "Advance payments from customers" on the consolidated balance sheet. Revenue associated with advance payments is recognized as shipments are made and transfer of control to the customer takes place.

Research and development.Research and development costs are expensed as incurred. In-process research and development acquired as part of asset acquisitions, which include license and development agreements, are expensed as incurred and included as a component of "Restructuring and other charges (income)" on the consolidated statements of income (loss).

Income and other taxes. We provide current income taxes on income reported for financial statement purposes adjusted for transactions that do not enter into the computation of income taxes payable. We recognize deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. We have not provided income taxes for other outside basis differences inherent in our investments in subsidiaries because the investments and related unremitted earnings are essentially permanent in duration or we have concluded that no additional tax liability will arise upon disposal or remittance.

Foreign currency. We translate the assets and liabilities of our foreign operations at exchange rates in effect at the balance sheet date. For foreign operations for which the functional currency is not the U.S. dollar we record translation gains and losses as a component of accumulated other comprehensive income (loss) in equity. The foreign operations' income statements are translated at the monthly exchange rates for the period.

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Notes to Consolidated Financial Statements — (Continued)

We record remeasurement gains and losses on monetary assets and liabilities, such as accounts receivables and payables, which are not in the functional currency of the operation. These remeasurement gains and losses are recorded in income as they occur. We generally enter into foreign currency contracts to mitigate the financial risk associated with these transactions. See "Derivative financial instruments" below and Note 19.