FMC US Equity☆

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

Overview

FMC Corporation is a global agricultural sciences company dedicated to helping growers produce food, feed, fiber and fuel for an expanding world population while adapting to a changing environment. We operate in a single distinct business segment. We develop, market and sell all three major classes of crop protection chemicals (insecticides, herbicides and fungicides) as well as biologicals, crop nutrition and seed treatment, which we group as plant health. FMC’s innovative crop protection solutions enable growers, crop advisers and turf and pest management professionals to address their toughest challenges economically without compromising safety or the environment. FMC is committed to discovering new herbicide, insecticide and fungicide active ingredients, product formulations and pioneering technologies that are consistently better for the planet.

FORWARD-LOOKING INFORMATION

Statement under the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995: FMC and its representatives may from time to time make written or oral statements that are "forward-looking" and provide other than historical information, including statements contained herein, in FMC’s other filings with the SEC, and in reports or letters to FMC stockholders.

In some cases, FMC has identified forward-looking statements by such words or phrases as "will likely result," "is confident that," "expect," "expects," "should," "could," "may," "will continue to," "believe," "believes," "anticipates," "predicts," "forecasts," "estimates," "projects," "potential," "intends" or similar expressions identifying "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including the negative of those words and phrases. Such forward-looking statements are based on management’s current views and assumptions regarding future events, future business conditions and the outlook for the company based on currently available information. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any results, levels of activity, performance or achievements expressed or implied by any forward-looking statement. Currently, one of the most significant factors is the potential adverse effect of the current COVID pandemic on our financial condition, results of

21

Table of Contents

operations, cash flows and performance, which is substantially influenced by the potential adverse effect of the pandemic on our customers and suppliers and the global economy and financial markets. The extent to which COVID impacts us will depend on future developments, many of which remain uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others. Additional factors include, among other things, the risk factors and other cautionary statements filed with the SEC included within this Form 10-K as well as other SEC filings and public communications. Moreover, investors are cautioned to interpret many of these factors as being heightened as a result of the ongoing and numerous adverse impacts of COVID. FMC cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Forward-looking statements are qualified in their entirety by the above cautionary statement. FMC undertakes no obligation, and specifically disclaims any duty, to update or revise any forward-looking statements to reflect events or circumstances arising after the date on which they were made, except as otherwise required by law.

COVID-19 Pandemic

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 properly staffed. Our research laboratories and greenhouses also have continued to operate throughout the pandemic. One of our third-party tollers experienced a short-term disruption earlier during the pandemic because of COVID-related staffing issues, which reflects one of the ongoing business risks that the pandemic creates. We are closely monitoring raw material and supply chain costs. Additionally, we are aware of the potential for disruptions or lack of availability, at any price, of critical materials. The extent to which COVID will continue to impact us will depend on future developments, many of which remain uncertain and cannot be predicted with confidence, including the duration of the pandemic, further actions to be taken to contain the pandemic or mitigate its impact, and the extent of the direct and indirect economic effects of the pandemic and containment measures, among others.

We have implemented 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. Earlier this year, we introduced flexible work arrangements to facilitate the return of all staff to our headquarters in Philadelphia, as well as some other locations in adherence with local guidelines. We enacted a policy that all employees, contractors and interns based in our Philadelphia headquarters, as well as visitors, must be fully vaccinated against COVID and must provide proof of their vaccination with exemptions granted in certain situations. In addition, we have thousands of employees who continue operating our manufacturing sites and distribution warehouses worldwide. In all our facilities, we are using a variety of best practices to address COVID risks, following the protocols and procedures recommended by leading health authorities. We are continuing to monitor the situation in all regions and adjust our health and safety protocols accordingly. We made significant investments in our employees as a result of the COVID 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 related furloughs or workforce reductions to date.

We will continue to monitor the economic environment related to the pandemic on an ongoing basis and assess the impacts on our business.

2021 Highlights

The following are the more significant developments in our businesses during the year ended December 31, 2021:

•Revenue of $5,045.2 million in 2021 increased $403.1 million or approximately 9 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 increased 8 percent, driven by strong volume growth and price increases, sales in Latin America increased by 12 percent driven by strong volume growth and price increases, sales in Europe, Middle East and Africa decreased 1 percent with favorable currency and price tailwinds mostly offset by a decrease in volume due to weather challenges and sales in Asia increased 13 percent, driven by favorable currency, volume growth especially from launches, as well as price growth. Approximately $400 million in revenues came from products launched in the last five years.

•Our gross margin of $2,171.7 million increased $119.7 million or approximately 6 percent versus last year. The increase in gross margin was primarily driven by top line revenue growth which was partially offset by higher costs due to rising input costs and increasing logistics expenses. Gross margin as a percent of revenue of 43 percent decreased slightly from 44 percent in the prior year period, driven by higher costs primarily increases in raw materials, packaging, and logistics.

22

Table of Contents

•Selling, general and administrative expenses decreased from $729.7 million to $714.1 million due to lower transaction-related charges resulting from the finalization of our worldwide ERP system in the first quarter 2021. Selling, general and administrative expenses, excluding transaction-related charges, of $713.7 million increased $37.3 million or approximately 6 percent. The increase was the result of resuming normal spending following cost-saving measures in the prior year due 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 $304.7 million increased $16.8 million or 6 percent. In the prior year, we phased some research and development projects differently to allow for lower costs in response to the pandemic without fundamentally impacting long-term timelines. In the current year, we have resumed research and development expenses related to these projects. 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 $736.5 million increased $185 million or approximately 34 percent from $551.5 million in the prior year period. The higher results were driven by our gross margin growth as well as $52.9 million in lower transaction-related charges due to the completion of our integration of the Dupont Crop Protection business in 2020. See Note 5 to the consolidated financial statements included in this Form 10-K for additional information on the Dupont Crop Protection business. Further contributing to our increase in net income was $24.2 million in lower restructuring and other charges versus prior year primarily due to the charge of $65.6 million associated with the Isagro asset acquisition in 2020 somewhat offset by the $33.5 million charge for the India indirect tax matter in 2021. Interest expense, net decreased $20.1 million compared to the prior year due to lower outstanding debt and lower rates. Additionally, the provision for income taxes was lower by $59.3 million, primarily due to the geographic mix of earnings among our global subsidiaries as well as changes in various tax reserves. Adjusted after-tax earnings from continuing operations attributable to FMC stockholders of $894.9 million increased $85.9 million or approximately 11 percent. See the disclosure of our adjusted earnings Non-GAAP financial measurement under the section titled "Results of Operations".

Other 2021 Highlights

In March 2021, we announced our agreement with UPL Ltd. ("UPL"), a global provider of sustainable agriculture products and solutions, to expand access of Rynaxypyr® active to growers around the world and increase the manufacturing capacity for this critical molecule. Under the multi-year agreement, we will provide UPL access to products containing Rynaxypyr® active for distribution in select markets. In the future, we will supply Rynaxypyr® active to UPL for use in product formulations developed and marketed by UPL around the world. Additionally, UPL will toll manufacture Rynaxypyr® active for us in India for the India market. This arrangement will significantly increase our manufacturing footprint and capacity for Rynaxypyr® active, expanding our ability to supply the growing demand.

2022 Outlook

We expect 2022 revenue will be in the range of approximately $5.25 billion to $5.55 billion, up approximately 7 percent at the midpoint versus 2021. We also expect adjusted EBITDA(1) of $1.32 billion to $1.48 billion, which represents 6 percent growth at the midpoint versus 2021 results. Our results may be impacted if cost inflation becomes more severe, which would trend our results towards the lower end of guidance. Mid-to-high single digit price increases or the easing of foreign currency headwinds may drive our results towards the high end of the range. We are prepared to navigate certain challenges such as rising input costs, inconsistent raw material availability, increasing logistic expenses, long lead times for ocean freight, labor cost inflation and emerging currency headwinds. 2022 adjusted earnings are expected to be in the range of $6.80 to $8.10 per diluted share(1), up 8 percent at the midpoint versus 2021, excluding any impact from potential share repurchases in 2022. 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.

23

Table of Contents

Results of Operations — 2021, 2020 and 2019

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 and organic revenue are 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. These items are discussed in detail within the "Other Results of Operations" section that follows. Organic revenue growth excludes the impacts of foreign currency changes, which we believe is a meaningful metric to evaluate our revenue changes. 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 714.1 729.7 792.9

Non-operating pension and postretirement charges (income) 20.0 21.2 8.1

Interest income — (0.1) (1.9)

Income from continuing operations before income taxes $ 893.8 $ 729.8 $ 655.0

Income (loss) from continuing operations $ 802.2 $ 578.9 $ 543.5

Discontinued operations, net of income taxes (68.2) (28.3) (63.3)

Adjustments to arrive at Adjusted EBITDA (Non-GAAP):

Corporate special charges (income):

Restructuring and other charges (income) (3) $ 108.0 $ 132.2 $ 171.0

Non-operating pension and postretirement charges (income) (4) 20.0 21.2 8.1

Discontinued operations, net of income taxes 68.2 28.3 63.3

24

Table of Contents

____________________

(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 business for the employment benefits provided to active employees.

(5)Charges relate to transaction costs, costs for transitional employees, other acquired employee related costs, integration related legal and professional third-party fees. We completed the integration of the DuPont Crop Protection Business in 2020, other than the completion of certain in-flight initiatives associated with the finalization of our worldwide ERP system in early 2021.

Year Ended December 31,

DuPont Crop Protection Business Acquisition (1)

Legal and professional fees (2) $ 0.4 $ 53.3 $ 77.8

Total transaction-related charges $ 0.4 $ 53.3 $ 77.8

____________________

(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).

ADJUSTED EARNINGS RECONCILIATION

(in Millions) Year Ended December 31,

Corporate special charges (income), net of income taxes $ 105.0 $ 182.9 $ 207.7

____________________

(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 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. 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.

25

Table of Contents

ORGANIC REVENUE GROWTH RECONCILIATION

Total Revenue Change (GAAP) 9 %

Less: Foreign Currency Impact (1%)

Organic Revenue Change (Non-GAAP) 8 %

Results of Operations

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

Revenue

2021 vs. 2020

Revenue of $5,045.2 million increased $403.1 million, or approximately 9 percent versus the prior year period. The increase was driven by higher volumes, which accounted for an approximate 7 percent increase, as well as favorable pricing which accounted for an approximate 1 percent increase. Growth in volumes was broad-based across synthetic and biological portfolios, with North America, Latin America and Asia delivering strong results. Foreign currency tailwinds had a favorable impact of approximately 1 percent on revenue. Excluding foreign currency impacts, revenue increased approximately 8 percent.

2020 vs. 2019

Revenue of $4,642.1 million 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.

See below for a discussion of revenue by region.

Total Revenue by Region

Year Ended December 31,

2021 vs. 2020

North America: Revenue increased approximately 8 percent in the year ended December 31, 2021, driven by sales growth for herbicides and diamides, and strong product launches of XywayTM fungicide and VantacorTM insect control. The increase was partially offset by a shift of diamide partner sales from North America to other regions.

Latin America: Revenue increased approximately 12 percent, or approximately 14 percent excluding foreign currency headwinds, for the year ended December 31, 2021 compared to the prior year period due to strong volume growth across all countries and pricing actions. Growth was broad-based across segments with insecticides, fungicides and biologicals increasing double digits.

EMEA: Revenue decreased approximately 1 percent versus the prior year period, or approximately 4 percent excluding foreign currency tailwinds, driven by a shift of diamide partner sales from EMEA to other regions. Volume and price contributed to the region’s revenue driven by diamides, herbicides, biologicals and fungicides.

Asia: Revenue increased approximately 13 percent versus the prior year period, or approximately 10 percent excluding foreign currency tailwinds, primarily driven by growth in Australia, India, ASEAN zone and Korea. We had strong sales for our new Overwatch® herbicide and VantacorTM insect control. Sales of our diamides were robust across the region despite erratic rainfall in several countries.

For 2022, full-year revenue is expected to be in the range of approximately $5.25 billion to $5.55 billion, which represents approximately 7 percent growth at the midpoint versus 2021.

26

Table of Contents

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.

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.

Gross margin

2021 vs. 2020

Gross margin of $2,171.7 million increased by $119.7 million, or approximately 6 percent versus the prior year period. The increase was primarily due to higher revenues driven by increased volumes, partially offset by higher cost of goods sold.

Gross margin percent of approximately 43 percent slightly decreased from 44 percent in the prior year period, driven by higher costs primarily increases in raw materials, packaging, and logistics.

2020 vs. 2019

Gross margin of $2,052.0 million decreased by $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 approximately 45 percent in the prior year period, primarily due to unfavorable foreign currency headwinds.

Selling, general, and administrative expenses

2021 vs. 2020

Selling, general and administrative expenses of $714.1 million decreased by $15.6 million, or approximately 2 percent versus the prior year period due to lower transaction-related charges resulting from the finalization of our worldwide ERP system in the first quarter 2021. Selling, general and administrative expenses, excluding transaction-related charges, increased $37.3 million, or approximately 6 percent, versus the prior year driven by resuming normal spending following cost-saving measures taken in the prior year due to the pandemic.

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.

Research and development expenses

2021 vs. 2020

Research and development expenses of $304.7 million increased by $16.8 million, or approximately 6 percent versus the prior year period. During 2020, we phased some research and development projects differently to allow for lower costs in response to the pandemic without fundamentally impacting long-term timelines. In the current year, we have resumed research and development expenses related to these projects.

27

Table of Contents

2020 vs. 2019

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

Other Results of Operations

Depreciation and amortization

2021 vs. 2020

Depreciation and amortization of $170.9 million increased $8.2 million, or approximately 5 percent, as compared to 2020 of $162.7 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 $5 million.

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.

Interest expense, net

2021 vs. 2020

Interest expense, net of $131.1 million decreased by $20.1 million, or approximately 13 percent, compared to $151.2 million in 2020. The decrease was driven by lower foreign debt balances and rates which decreased interest expense by approximately $9 million and, lower short term interest rates which decreased interest expense by approximately $10 million.

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.

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) $ 108.0 $ 132.2 $ 171.0

_______________

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

2021

Restructuring charges in 2021 primarily consisted of $16.7 million of charges associated with the integration of the DuPont Crop Protection Business which was completed in 2020 except for certain in-flight initiatives. These charges primarily reflect non-cash charges and to a lesser extent remaining severance. Restructuring charges associated with the DuPont program are largely complete and any future charges are not expected to be material. There were other restructuring charges of $13.4 million related to various actions to improve organizational structure as well as regional alignment activities which primarily included the move of our European headquarters. Types of costs primarily relate to facility-related shut down costs including asset impairments as well as employee-related costs.

28

Table of Contents

Other charges (income), net in 2021 includes $33.5 million of charges related to the establishment of reserves for certain historical India indirect tax matters that were triggered during the period of which approximately half are non-cash charges. See Note 20 to the consolidated financial statements included within this Form 10-K for further information regarding this matter. Additional charges of $27.1 million consists of charges of environmental sites.

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 in 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 to the consolidated financial statements included within this Form 10-K 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 to the consolidated financial statements included within this Form 10-K for further information regarding this matter.

Non-operating pension and postretirement charges (income)

2021 vs. 2020

The charge for 2021 was $20.0 million compared to $21.2 million in 2020 and was not a material change.

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.

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. Transaction related charges, which consisted entirely of those for the DuPont Crop acquisition, ended in early 2021.

Provision for income taxes

Provision for income taxes for 2021 was expense of $91.6 million resulting in an effective tax rate of 10.2 percent. 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. 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.

29

Table of Contents

Year Ended December 31,

_______________

(1)Tax adjustments in 2021, 2020, and 2019 are materially attributable to the effects of certain changes in various tax reserves. See Note 13 to the consolidated financial statements included within this Form 10-K.

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 included within this Form 10-K 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 primarily reflect adjustments to retained liabilities from previously discontinued operations and include environmental liabilities, other postretirement benefit liabilities, self-insurance, long-term obligations related to legal proceedings and historical restructuring activities. Discontinued operations also includes the results of our discontinued FMC Lithium business in periods up to its disposition on March 1, 2019. See Note 11 to the consolidated financial statements included within this Form 10-K for additional details on our discontinued operations.

2021 vs. 2020

Discontinued operations, net of income taxes represented a loss of $68.2 million in 2021 compared to a loss of $28.3 million in 2020. The loss during both periods was primarily due to adjustments related to the retained liabilities from our previously discontinued operations. Offsetting the losses in 2021 and 2020 were the gain on sales of land in our discontinued sites of $15 million and $24 million, net of taxes, respectively.

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.

Net income (loss)

2021 vs. 2020

Net income increased to $734.0 million from $550.6 million. The higher results were driven by higher revenues and margins as well as lower selling, general, and administrative costs primarily resulting from lower transaction-related charges. Additionally, we had lower restructuring and other charges of $24.2 million, interest expense, net of $20.1 million, and tax expense of $59.3 million. These reductions were offset by higher discontinued operations charges of $39.9 million resulting from higher adjustments to retained liabilities and lower gains from real estate sales.

The only difference between Net income (loss) and Net income (loss) attributable to FMC stockholders is noncontrolling interest, which period over period is immaterial.

2020 vs. 2019

Net income (loss) increased to $550.6 million from $480.2 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 $35.0 million compared to the prior year. These increases to income were partially offset by

30

Table of Contents

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.

The only difference between Net income (loss) and Net income (loss) attributable to FMC stockholders is noncontrolling interest, which period over period is immaterial.

Adjusted EBITDA (Non-GAAP)

2021 vs. 2020

Adjusted EBITDA of $1,324.2 million increased $73.8 million, or approximately 6 percent versus the prior year period. The increase was due to higher volumes and higher pricing which accounted for approximately 20 percent and 3 percent increases respectively. These factors more than offset cost increases in raw materials, packaging, and logistics costs, and to a lesser extent the reversal of some temporary cost savings in the prior year, which had an unfavorable impact of approximately 15 percent and foreign currency fluctuations which had an unfavorable impact of approximately 2 percent on adjusted EBITDA.

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.

31

Table of Contents

Liquidity and Capital Resources

As a global agricultural sciences company, we require cash primarily for seasonal working capital needs, capital expenditures, and return of capital to shareholders. We plan to meet these liquidity needs through available cash, cash generated from operations, commercial paper issuances and borrowings under our committed revolving credit facility as well as other liquidity facilities, and in certain instances access to debt capital markets. We believe our strong financial standing and credit ratings will ensure adequate access to the debt capital markets on favorable conditions. Information involving our material cash requirements is detailed below.

Cash

Cash and cash equivalents at December 31, 2021 and 2020, were $516.8 million and $568.9 million, respectively. Of the cash and cash equivalents balance at December 31, 2021, $510.3 million was held by our foreign subsidiaries. During the third quarter of 2021, we established plans to repatriate cash from certain foreign subsidiaries with minimal tax on a go forward basis. Other cash held by foreign subsidiaries is generally used to finance subsidiaries’ operating activities and future foreign investments. See Note 13 to the consolidated financial statements included within this Form 10-K for more information on our indefinite reinvestment assertion.

Outstanding debt

At December 31, 2021, we had total debt of $3,172.5 million as compared to $3,267.8 million at December 31, 2020. Total debt included $2,731.7 million and $2,929.5 million of long-term debt (excluding current portions of $84.5 million and $93.6 million) at December 31, 2021 and 2020, respectively. On May 26, 2021, we amended our Revolving Credit Agreement. On November 22, 2021, we borrowed $1.0 billion under our previously announced senior unsecured term loan facility. The proceeds were used to pay off our 2017 Term Loan Facility and Senior Notes maturing in 2022. As of December 31, 2021, we were in compliance with all of our debt covenants. See Note 14 to the consolidated financial statements included within 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 2021.

The decrease in long-term debt was primarily due to paying down $200 million of the 2021 Term Loan Facility in December.

Our short-term debt consists of foreign borrowings and borrowings under our commercial paper program. Foreign borrowings increased from $98.4 million at December 31, 2020 to $112.2 million at December 31, 2021 while outstanding commercial paper increased from $146.3 million at December 31, 2020 to $244.1 million at December 31, 2021. We provide parent-company guarantees to lending institutions providing credit to our foreign subsidiaries.

Our total debt maturities, excluding discounts, is $3,191.0 million at December 31, 2021, with $440.8 million payable in the next 12 months. As of December 31, 2021, we had contractual interest obligations of $936.5 million outstanding, with $84.2 million payable in the next 12 months. Contractual interest is the interest we are contracted to pay on our long-term debt obligations. We had $800.0 million of long-term debt subject to variable interest rates at December 31, 2021. The rate assumed for the variable interest component of the contractual interest obligation was the rate in effect at December 31, 2021. Variable rates are determined by the market and will fluctuate over time.

Access to credit and future liquidity and funding needs

At December 31, 2021, our remaining borrowing capacity under our credit facility was $1,093.4 million. See Note 14 to the consolidated financial statements included within this Form 10-K for discussion of the 2021 Term Loan Agreement as well as the amendments to the Revolving Credit Facility and Term Loan Agreements undertaken in the current year. Our commercial paper program allows us to borrow at rates generally more favorable than those available under our credit facility. At December 31, 2021, we had $244.1 million borrowings outstanding under the commercial paper program at an average borrowing rate of 0.45 percent. Our commercial paper balances fluctuate from year to year depending on working capital needs.

Working Capital Initiatives

The Company works with suppliers to optimize payment terms and conditions on accounts payable to improve working capital and cash flows. The Company offers to a select group of suppliers a voluntary Supply Chain Finance (“SCF”) program with a global financial institution. The suppliers, at their sole discretion, may sell their receivables to the financial institution based on terms negotiated between them. Our obligations to our suppliers are not impacted by our suppliers’ decisions to sell under these arrangements. Agreements under these supplier financing programs are recorded within Accounts payable in our Consolidated Balance Sheets and the associated payments are included in operating activities within our Consolidated Statements of Cash Flows. We do not believe that changes in the availability of the supply chain finance program would have a significant impact on our liquidity.

From time to time, the Company may sell receivables on a non-recourse basis to third-party financial institutions. These sales are normally driven by specific market conditions, including, but not limited to, foreign exchange environments, customer credit management, as well as other factors where the receivables may lay.

32

Table of Contents

We account for these transactions as sales which result in a reduction in accounts receivables because the agreements transfer effective control and risk related to the receivables to the buyers. The net cash proceeds received are presented within cash provided by operating activities within our Consolidated Statements of Cash Flows. The cost of factoring these accounts receivables is recorded as an expense within the Consolidated Statements of Income and has been inconsequential during each reporting period.

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 $215.9 million at December 31, 2021. 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 to the consolidated financial statements included within this Form 10-K for further details.

Taxes, Pension, Environmental, and Other Discontinued Liabilities

As of December 31, 2021, the liability for uncertain tax positions was $45.5 million. We also have a liability attributable to the transition tax on deemed repatriated foreign earnings incurred as a result of the Act of $92.1 million. Our consolidated balance sheets contain accrued pension and other postretirement benefits, our environmental liabilities, and our other discontinued liabilities for which we are unable to make a reasonably reliable estimate of the amount and periods in which these liabilities might be paid beyond 2022. See our discussion under 2022 Cash Flow Outlook in the Free Cash Flow section within this Form 10-K for information on these liabilities and the related expected payments in 2022.

Derivatives

At times we can be in a derivative liability position that can require future cash obligations; however as of December 31, 2021, we had no such obligations.

Leases

We have lease arrangements for equipment and facilities, including office spaces, IT equipment, transportation equipment, machinery equipment, furniture and fixtures, and plant and facilities. As of December 31, 2021, we had fixed lease payment obligations of $217.2 million, with $29.2 million payable within 12 months.

Purchase obligations

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. As of December our purchase obligations were $702.9 million, with $225.9 million payable in the first 12 months. 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, and as such, the obligations 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.

33

Table of Contents

Statement of Cash Flows

Cash provided (required) by operating activities was $898.6 million, $736.8 million and $555.6 million for 2021, 2020 and 2019, respectively.

The table below presents the components of net cash provided (required) by operating activities of continuing operations.

(in Millions) Year ended December 31,

Change in guarantees of vendor financing 65.6 64.8 8.6

Change in advance payments from customers (2) 283.6 (145.5) 34.1

Change in accrued customer rebates (3) 108.7 17.2 (85.8)

Change in all other operating assets and liabilities (6) (77.6) (68.2) (208.5)

Restructuring and other spending (7) (34.7) (17.9) (18.6)

Environmental spending, continuing, net of recoveries (8) (63.6) (1.9) (18.3)

Pension and other postretirement benefit contributions (9) (5.3) (4.6) (13.4)

Transaction and integration costs (12) (9.5) (63.9) (77.1)

____________________

(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 2021 was driven by timing of collections as well as higher sales year over year. 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 2021, we collected approximately $1,118 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 2021 was primarily related to substantially higher overall payments received due to a strong North America season.

(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 in 2021 compared to 2020 are mostly associated with higher North Americarevenue, primarily volume related, as well as with the mix in sales eligible for rebates and incentives and timing of certain rebate payments.

(4)The change in cash flows during 2021 reflect the inventory build required to meet business demand and to help manage supply chain volatility as well as higher input costs. Changes in inventory in 2019 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 2021, 2020 and 2019 is primarily due to timing of payments made to suppliers and vendors as well as in 2021 in line with the inventory build.

(6)Changes in all periods presented primarily represent timing of payments associated with all other operating assets and liabilities. Additionally, the 2021, 2020 and 2019 period includes the effects of the unfavorable contracts amortization of approximately $103 million, $120 million and $116 million, respectively.

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

34

Table of Contents

(8)Included in our results for each of the years presented are environmental charges for environmental remediation of $27.1 million, $24.9 million and $108.7 million, respectively. The amounts in 2021 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. Amounts in 2021 include payments of $32.2 million related to the Pocatello Tribal Litigation. 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 to the consolidated financial statements included within this Form 10-K for more details.

(9)There were no voluntary contributions to our U.S. qualified defined benefit plan in 2021 or 2020. Amounts in 2019 include voluntary contributions to our U.S. qualified defined benefit plan of $7.0 million. As our U.S. qualified plan is fully funded, we do not anticipate making voluntary contributions for the next several years.

(10)Interest payments were lower during 2021 largely due to lower foreign debt balances and rates as well as lower LIBOR rates in the US.

(11)Amounts shown in the chart represent net tax payments of our continuing operations. The increase in net tax payments in 2021 is primarily attributable to the 2021 remittance of previously deferred income tax payments in various jurisdictions as a result of the COVID 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.

(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. We completed the integration of the DuPont Crop Protection Business in 2020, other than the completion of certain in-flight initiatives associated with the finalization of our worldwide ERP system in early 2021. See Note 5 to the consolidated financial statements included within this Form 10-K for more information.

Cash provided (required) by operating activities of discontinued operations was $(78.5) million, $(89.0) million and $(67.1) million for 2021, 2020 and 2019, 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.

Cash provided (required) by investing activities of continuing operations was $(131.7) million, $(200.4) million and $(195.9) million for 2021, 2020 and 2019, respectively.

Cash required in 2021 is primarily due to capital expenditures and spending related to our contract manufacturing arrangements. We completed the final stage of our SAP system implementation during the early part of 2021, therefore a reduction in those payments year over year.

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 provided (required) by investing activities of discontinued operations was $19.7 million, $31.1 million and $9.2 million for 2021, 2020 and 2019, respectively.

Cash provided by investing activities of discontinued operations in 2021 represents the proceeds from the sale of land of our discontinued sites. This resulted in a gain recognized within discontinued operations of approximately $15.4 million, net of taxes.

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 provided (required) by financing activities was $(747.9) million, $(250.3) million and $(87.0) million in 2021, 2020 and 2019, respectively.

The change in cash required by financing activities in 2021 is primarily driven due to the payment of long term debt and the increase in share repurchases under our publicly announced program.

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 2019 as compared to the prior period.

35

Table of Contents

Cash provided (required) by financing activities of discontinued operations was zero , zero and $(37.2) million in 2021, 2020 and 2019, 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.

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 including cost and equity method investments, 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,

Transaction and integration costs (1) 9.5 63.9 77.1

Capital additions and other investing activities $ (113.8) $ (87.6) $ (147.9)

Transaction and integration costs (1) (9.5) (63.9) (77.1)

Investment in Enterprise Resource Planning system (3) (12.7) (47.2) (48.0)

___________________

(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 included within this Form 10-K for more information.

(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.

36

Table of Contents

(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 $18.8 million, $17.4 million and $51.7 million for the years ended December 31, 2021, 2020 and 2019, respectively.

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

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

2022 Cash Flow Outlook

Our cash needs for 2022 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, 2021 our remaining borrowing capacity under our credit facility was $1,093.4 million.

We expect 2022 free cash flow (Non-GAAP) to fall within a range of approximately $515 million to $735 million. At the mid-point of the range there is a reduction year over year driven by reduced adjusted cash from operations primarily due to working capital growth and higher capital expenditures. We expect a year over year increase in capital additions as we expand capacity to meet growing demand, especially for our new products.

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 equal or lower cash from operating activities, excluding the effects of transaction-related cash flows, to be in the range of approximately $750 million to $910 million. Working capital growth reflects our current expectations of a return to more normal advance payment levels in North America among other factors negatively impacting working capital in 2022. 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 2022. The plan is slightly overfunded 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 2022 spending, net of recoveries includes approximately $25 million to $35 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.

Projected 2022 spending, net of recoveries includes approximately $45 million to $55 million of net environmental remediation spending for our discontinued sites, which is part of legacy and transformation noted below. 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 $10 million maximum per year on average, until the remediation is complete.

Total projected 2022 environmental spending, inclusive of sites accounted for within both continuing operations and discontinued sites, is expected to be in the range of $70 million to $90 million.

37

Table of Contents

Restructuring and asset retirement obligations

We expect to make payments of approximately $30 to $40 million in 2022, of which approximately $10 million is related to exit and disposal costs as a result of our previous decision in 2019 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).

Capital additions and other investing activities

Projected 2022 capital expenditures and expenditures related to contract manufacturers are expected to be in the range of approximately $145 million to $175 million. The spending is mainly driven by continuing to expand capacity to meet growing demand, especially for our new products. Expenditures related to contract manufacturers are included within "other investing activities".

Legacy and transformation

Projected 2022 legacy and transformation spending are expected to be in the range of approximately $30 million to $60 million. This is primarily driven by environmental remediation spending for our discontinued sites, discussed above, and other legacy liabilities. We completed the integration of the DuPont Crop Protection Business in 2020, other than the completion of certain in-flight initiatives associated with the finalization of our worldwide ERP system in early 2021. As such, transformation spending in 2022 is not expected to be material.

Share repurchases

During the year ended December 31, 2021, 4.0 million shares were repurchased under the publicly announced repurchase program for approximately $400 million. At December 31, 2021, approximately $150 million remained unused under our Board-authorized repurchase program. However, in February 2022 the Board of Directors authorized the repurchase of up to $1 billion of the Company's common stock. The $1 billion share repurchase program is replacing in its entirety the previous authorization. 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.

We intend to purchase between $500 million to $600 million of our common shares in 2022.

Dividends

On January 20, 2022, we paid dividends aggregating $66.8 million to our shareholders of record as of December 31, 2021. This amount is included in "Accrued and other liabilities" on the consolidated balance sheet as of December 31, 2021. For the years ended December 31, 2021, 2020 and 2019, we paid $247.2 million, $228.5 million and $210.3 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.

Contingencies

See Note 20 to our consolidated financial statements included within 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 2021. As part of FMC’s continued commitment to address climate change, in August of 2021, FMC announced its goal to achieve net-zero GHG emissions by 2035 FMC. FMC committed to the Science Based Target initiative (SBTi) Net-Zero Standard, aligned with keeping the global temperature at 1.5°C above pre-industrial times.FMC anticipates submitting targets to SBTi in the first quarter of 2022.

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

38

Table of Contents

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. In addition, extreme weather events attributable to climate change may result in, among other things, physical damage to our property and equipment, and interruptions to our supply chain.

Though the nature of these events makes them difficult to predict, to respond to the uncertainty and better understand our risks and opportunities as they relate to climate change, we are conducting climate related scenario analyses consistent with the recommendations provided by the Taskforce for Climate-Related Financial Disclosures ("TCFD"). As part of the TCFD scenario analysis, we are currently evaluating the potential risks at operation sites, leveraging scenarios published by the International Energy Agency (IEA) and the United Nations’ Intergovernmental Panel on Climate Change (IPCC).Results of this analysis will help determine where strategic capital could be deployed to address risks and opportunities.

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 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. Along with our ambitious net-zero GHG emissions goal, FMC will also be re-evaluating our waste and water reduction targets in order to set more aggressive goals.

In our product portfolio, we see market opportunities for our products to address climate change and its impacts. For example, FMC's agricultural solutions can help customers increase yield, energy and water efficiency, and decrease greenhouse gas emissions. Our solutions 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 research and development pipeline 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. 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. FMC has committed to net-zero GHG emissions across our entire value, which includes reductions across our entire supply chain. 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. In November 2021, the above parties reconvened at the United Nations Climate Change Conference in Glasgow to reaffirm the Paris Agreement and urged countries to reach 1.5°C level reductions by the 2030s to lessen the impacts of climate change. Although it remains to be seen how and when each of these countries will implement this agreement, FMC has echoed this commitment with our net-zero by 2035 goal which allows us to do our part in reaching 1.5°C level reductions.

FMC will actively manage climate risks and incorporate them in our decision making as indicated in our responses to the CDP Climate Change Module. FMC will also use recommendations outlined in the TCFD to evaluate potential risks and opportunities and incorporate these into our overall strategy and risk management.

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.

See Item IA. Risk Factors for additional considerations related to risks of climate change and sustainability.

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 within this Form 10-K.

39

Table of Contents

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.

Critical Accounting Policies and Estimates

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. Our most critical accounting estimates and assumptions, which are those that involve a significant level of estimation uncertainty and have had, or are reasonably likely to have, a material impact on our financial condition or results of operations, include: Impairments and valuation of long-lived and indefinite-lived assets, Pension and other postretirement benefits, and the Allowance for credit losses on our trade receivables. Additional critical accounting policies are included within the list below:

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.

We believe our allowance for credit losses is a critical accounting estimate because the underlying assumptions used for the reserve can change from time to time and potentially have a material impact on our results of operations. Based on a combination of historical trends as well as current economic factors, we apply judgment to reserve for expected credit losses in the period in which the sale is recorded. A substantial change in the operating environments in any of our key locations (driven by weather conditions, industry specific events, and macroeconomic conditions) may result in actual adjustments that differ from our original assumptions.

40

Table of Contents

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 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 to the consolidated financial statements included within this Form 10-K 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 within 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. Although the estimates were deemed reasonable by management based on information available at the dates of acquisition, those estimates are inherently uncertain.

41

Table of Contents

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.

We estimate the fair value of the reporting unit using a discounted cash flow model as part of the Income Approach. We assess the appropriateness of projected financial information by comparing projected revenue growth rates, profit margins and tax rates to historical performance, industry data and selected guideline companies, where applicable. Our key assumptions include future cash flow projections, tax rates, terminal growth rates and discount rates.

We employ the relief from royalty method of the Income Approach to value our brand portfolios (indefinite-lived intangible assets). The principle behind this method is that the value of the intangible asset is equal to the present value of the after-tax royalty savings attributable to owning the intangible asset. Primary inputs and key assumptions include revenue forecasts attributable to each portfolio, royalty rates (considering both external market data and internal arrangements), tax rates, terminal growth rates and discount rates.

Estimating the fair value requires significant judgment and actual results may differ due to changes in the overall market conditions. We believe we have applied reasonable assumptions which considers both internal and external factors.

We believe that an accounting estimate relating to asset impairment is a critical accounting estimate because of the inherent uncertainty within the underlying assumptions. An adverse change in any of these assumptions could result in an impairment charge which would potentially have a material impact on our results of operations.

Based on the annual assessment, we concluded the fair value of the reporting unit substantially exceeded the carrying value. Additionally, the fair value of each indefinite-lived intangible asset exceeded its carrying value by at least 20%.

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

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, 2021, 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 2.84 percent for our U.S. qualified plan, 2.18 percent for our U.S. nonqualified, and 2.39 percent for our U.S. other postretirement benefit plans.

42

Table of Contents

The discount rates used to determine projected benefit obligation at our December 31, 2021 and 2020 measurement dates for the U.S. qualified plan were 2.84 percent and 2.49 percent, respectively. The effect of the change in the discount rate from 2.49 percent to 2.84 percent at December 31, 2021 resulted in a $55.7 million decrease 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 3.22 percent at December 31, 2020 to 2.49 percent at December 31, 2021 resulted in a $4.4 million decrease to the 2021 U.S. qualified pension expense.

The change in discount rate from 2.49 percent at December 31, 2020 to 2.84 percent at December 31, 2021 was attributable to an increase in yields on high quality corporate bonds with cash flows matching the timing and amount of our expected future benefit payments between the 2020 and 2021 measurement dates. Using the December 31, 2021 and 2020 yield curves, our U.S. qualified plan cash flows produced a single weighted-average discount rate of approximately 2.84 percent and 2.49 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, 2021, 2020 and 2019 was 2.25 percent, 3.00 percent and 4.25 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 $66.1 million and $72.6 million at December 31, 2021 and 2020, respectively, and increased pension and other postretirement benefit costs by $0.4 million, zero and $0.6 million for 2021, 2020 and 2019, respectively. A one-half percent decrease in the assumed discount rate would have increased pension and other postretirement benefit obligations by $72.1 million and $79.3 million at December 31, 2021 and 2020, respectively, and decreased pension and other postretirement benefit costs by $0.4 million in 2021, $0.1 million in 2020, and increased costs by $0.5 million in 2019.

A one-half percent increase in the assumed expected long-term rate of return on plan assets would have decreased pension costs by $6.3 million, $6.2 million and $6.3 million for 2021, 2020 and 2019, respectively. A one-half percent decrease in the assumed long-term rate of return on plan assets would have increased pension costs by $6.3 million, $6.2 million and $6.3 million for 2021, 2020 and 2019, 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.

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.

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

43

Table of Contents

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, 2021, our net financial instrument position was a net asset of $19.4 million compared to a net liability of $25.3 million at December 31, 2020. 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 Brazilian real, Chinese yuan, Indian rupee, euro, Mexican peso and 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, 2021 and 2020, 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, 2021, 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, 2021 and 2020, with all other variables held constant.

Net asset/(liability) position at December 31, 2021 $ 3.7 $ 13.1 $ (5.6)

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

Our debt portfolio at December 31, 2021 is composed of 64 percent fixed-rate debt and 36 percent variable-rate debt. The variable-rate component of our debt portfolio principally consists of borrowings under our 2021 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, 2021, a one percentage point increase in interest rates would have increased gross interest expense by $11.4 million and a one percentage point decrease in interest rates would have decreased gross interest expense by $2.9 million for the year ended December 31, 2021.

44

Table of Contents

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Page

Consolidated Balance Sheets as of December 31, 2021 and 2020 48

Notes to Consolidated Financial Statements 52

Report of Independent Registered Public Accounting Firm 103

Management's Annual Report on Internal Control Over Financial Reporting 105

Report of Independent Registered Public Accounting Firm 106

45

Table of Contents

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 714.1 729.7 792.9

Non-operating pension and postretirement charges (income) 20.0 21.2 8.1

Interest income — (0.1) (1.9)

Income (loss) from continuing operations $ 802.2 $ 578.9 $ 543.5

Discontinued operations, net of income taxes (68.2) (28.3) (63.3)

Less: Net income (loss) attributable to noncontrolling interests (2.5) (0.9) 2.8

Net income (loss) attributable to FMC stockholders $ 736.5 $ 551.5 $ 477.4

Amounts attributable to FMC stockholders:

Continuing operations, net of income taxes $ 804.7 $ 579.8 $ 540.7

Discontinued operations, net of income taxes (68.2) (28.3) (63.3)

Net income (loss) attributable to FMC stockholders $ 736.5 $ 551.5 $ 477.4

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

Net income (loss) attributable to FMC stockholders $ 5.72 $ 4.24 $ 3.64

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

Net income (loss) attributable to FMC stockholders $ 5.70 $ 4.22 $ 3.62

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

46

Table of Contents

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) $ (87.0) $ 102.0 $ (18.5)

Derivative instruments:

Pension and other postretirement benefits:

Other comprehensive income (loss), net of tax $ (34.0) $ 130.1 $ (92.3)

____________________

(1)Income taxes are not provided for foreign currency translation because the related investments are essentially permanent in duration.

(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. See Note 15 to the consolidated financial statements included within this Form 10-K for further details.

(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 to the consolidated financial statements included within this Form 10-K for further details.

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

47

Table of Contents

FMC CORPORATION

CONSOLIDATED BALANCE SHEETS

December 31,

(in Millions, Except Share and Par Value Data) 2021 2020

ASSETS

Current assets

Cash and cash equivalents $ 516.8 $ 568.9

Prepaid and other current assets 431.4 380.8

Property, plant and equipment, net 817.0 771.7

Other assets including long-term receivables, net 613.8 712.3

LIABILITIES AND EQUITY

Current liabilities

Short-term debt and current portion of long-term debt $ 440.8 $ 338.3

Accounts payable, trade and other 1,135.0 946.7

Advance payments from customers 630.7 347.1

Accrued and other liabilities 631.2 674.7

Guarantees of vendor financing 206.2 140.6

Accrued pension and other postretirement benefits, current 4.3 4.2

Long-term debt, less current portion 2,731.7 2,929.5

Accrued pension and other postretirement benefits, long-term 41.8 46.4

Environmental liabilities, continuing and discontinued 415.9 443.5

Commitments and contingent liabilities (Note 20)

Equity

Capital in excess of par value of common stock 880.4 860.2

Accumulated other comprehensive income (loss) (315.7) (282.2)

Noncontrolling interests 19.4 22.4

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

48

Table of Contents

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 68.2 28.3 63.3

Income (loss) from continuing operations $ 802.2 $ 578.9 $ 543.5

Pension and other postretirement benefits 24.9 25.8 12.6

Guarantees of vendor financing 65.6 64.8 8.6

Pension and other postretirement benefit contributions (5.3) (4.6) (13.4)

Environmental spending, continuing, net of recoveries (63.6) (1.9) (18.3)

Restructuring and other spending (1) (34.7) (17.9) (18.6)

Transaction and integration costs (9.5) (63.9) (77.1)

Change in other operating assets and liabilities, net (2) (61.6) (30.0) (183.7)

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

Other discontinued spending (21.0) (29.9) (24.4)

____________________

(1)The restructuring and other spending amount includes spending of $6.0 million related to the Furadan® asset retirement obligations and also includes $4.4 million of payments for certain historical India indirect tax matters. For additional detail on restructuring and other charges 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.

49

Table of Contents

FMC CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(in Millions) Year Ended December 31,

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

Investment in Enterprise Resource Planning system (12.7) (47.2) (48.0)

Acquisitions, including cost and equity method, net (3) (5.2) (65.6) —

Other investing activities (4) (13.7) (20.4) (54.0)

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

Proceeds from disposal of property, plant and equipment $ 19.7 $ 31.1 $ 26.2

Other discontinued investing activities — — (17.0)

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

Increase (decrease) in short-term debt $ 104.9 $ 97.0 $ (11.9)

Financing fees and interest rate swap settlements (2.4) (3.5) (97.4)

Acquisitions of noncontrolling interests — (7.4) —

Distributions to noncontrolling interests — (1.3) —

Issuances of common stock, net 7.9 24.7 50.7

Other repurchases of common stock (8.0) (8.4) (16.2)

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

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 (12.3) 1.6 (0.2)

Increase (decrease) in cash and cash equivalents $ (52.1) $ 229.8 $ 177.4

Cash and cash equivalents, beginning of period $ 568.9 $ 339.1 $ 161.7

Cash and cash equivalents, end of period $ 516.8 $ 568.9 $ 339.1

____________________

(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 $18.8 million, $17.4 million and $51.7 million for the years ended December 31, 2021, 2020 and 2019, respectively.

(5) See Note 17 to the consolidated financial statements included within this Form 10-K regarding our quarterly cash dividend.

(6) 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 $125.8 million, $141.8 million and $140.9 million, and income taxes paid, net of refunds was $139.2 million, $82.1 million and $130.9 million in December 31, 2021, 2020 and 2019, respectively. Accrued additions to property, plant and equipment and other assets at December 31, 2021, 2020 and 2019 were $45.5 million, $14.7 million and $18.2 million, respectively.

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

50

Table of Contents

FMC CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FMC Stockholders’ Equity

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)

Shares for benefit plan trust 1.6 1.6

Net hedging gains (losses) and other, net of income tax 49.6 49.6

Foreign currency translation adjustments (86.5) (0.5) (87.0)

Repurchases of common stock (408.0) (408.0)

____________________

(1) See Note 17 to the consolidated financial statements included within this Form 10-K for more detail on transactions with noncontrolling interest.

(2) Represents the effects of the distribution of FMC Lithium. Refer to Note 1 to the consolidated financial statements included within this Form 10-K for further information.

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

51

Table of Contents

FMC CORPORATION

Notes to Consolidated Financial Statements

Note 1: Principal Accounting Policies and Related Financial Information

Nature of operations. We are a global agricultural sciences company dedicated to helping growers produce food, feed, fiber and fuel for an expanding world population while adapting to a changing environment. 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, as well as biologicals, crop nutrition, seed treatment, which we group as plant health, and digital and precision agriculture. 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.

COVID-19. Given the COVID 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. 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 manufacturing facilities and distribution warehouses are operational. The extent to which COVID will continue to impact us will depend on future developments, many of which remain uncertain and cannot be predicted with confidence, including the duration of the pandemic, further actions to be taken to contain the pandemic or mitigate its impact, and the extent of the direct and indirect economic effects of the pandemic and containment measures, among others.

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 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 $37.4 million and $27.9 million as of December 31, 2021 and 2020, respectively. The allowance for long-term receivables was $27.7 million and $24.7 million at December 31, 2021 and 2020, respectively. The provision to the allowance for receivables charged against operations was $21.1 million, $4.7 million and $21.2 million for the years ended December 31, 2021, 2020 and 2019, respectively. See Note 10 to the consolidated financial statements included within this Form 10-K for more information.

52

Table of Contents

FMC CORPORATION

Notes to Consolidated Financial Statements — (Continued)

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 and are not material to our consolidated financial statements. 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 accounting guidance requires these nonmarketable equity securities to be recorded at cost and adjusted to fair value each reporting period. However, the guidance allows for a measurement alternative, which is to record the investment at cost, less impairment, if any, and subsequently adjust for observable price changes. Each reporting period, we review the portfolio for any observable price changes or potential indicators of impairment. At December 31, 2021, our investments made through FMC Ventures 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 a first-in, first-out ("FIFO") basis. See Note 7 to the consolidated financial statements included within this Form 10-K 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 — 3 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 $3.4 million, $3.5 million, and $4.7 million in 2021, 2020, and 2019, 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, 2021 and 2020.

The carrying amounts for the AROs for the years ended December 31, 2021 and 2020 are $24.2 million and $30.7 million, respectively. These amounts are included in "Accrued and other liabilities" and "Other long-term liabilities" on the consolidated balance sheet.

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.

53

Table of Contents

FMC CORPORATION

Notes to Consolidated Financial Statements — (Continued)

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 3 to 10 years. See Note 22 to the consolidated financial statements included within this Form 10-K 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 2021, 2020 and 2019, we did not record any goodwill or intangible asset 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 3 to 20 years. See Note 6 to the consolidated financial statements included within this Form 10-K 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 to the consolidated financial statements included within this Form 10-K for further details.

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.

54

Table of Contents

FMC CORPORATION

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 to the consolidated financial statements included within this Form 10-K.

Derivative financial instruments. We mitigate certain financial exposures, including currency risk, interest rate risk and to a lesser extent commodity price exposures, through a controlled program of risk management that includes the use of derivative financial instruments. We enter into foreign exchange contracts, including forward and purchased option contracts, to reduce the effects of fluctuating foreign currency exchange rates.

We recognize all derivatives on the balance sheet at fair value. On the date the derivative instrument is entered into, we generally designate the derivative as either a hedge of the variability of cash flows to be received or paid related to a forecasted transaction (cash flow hedge) or a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (fair value hedge). We record in accumulated other comprehensive income (loss) changes in the fair value of derivatives that are designated as, and meet all the required criteria for, a cash flow hedge. We then reclassify these amounts into earnings as the underlying hedged item affects earnings. We record immediately in earnings changes in the fair value of derivatives that are not designated as cash flow hedges.