Equity Research Company Update

FMC Corporation FMC, $31.50, Buy Initiating With A Buy Rating

Basic Materials/Chemicals
December 12, 2003 Michael Judd 732-842-0700 Judd@GreenwichConsultants.net
Ticker Price 52-Wk. Range Rating Price Target Shares Out (M) Market Cap (M) Yield Trading Volume (M) Market FMC $31.50 $14.22 - $31.50 Buy $37 35 1,112 0% nm nm

Action We are initiating coverage of FMC Corporation (FMC) with a Buy rating. Our target price of $37 is based on a 2004 P/E of 15X and a FY2004 EV/EBITDA of 6.9X. Our P/E target and EV/EBITDA target are based on our estimation of the value of FMCs business mix relative to other agricultural chemical and specialty chemical companies. The primary risk to our price target would be less than anticipated improvements in industrial production and GDP.
Fiscal Year Dec $ Revenue Current Previous Consensus Fiscal Year FO2A 1,853 F03E F04E Calendar Year C02A C03E C04E EPS Current Previous Consensus 2.53 2.53 1.81 1.82 2.45 2.46 CFPS P/E P/E Current Current Consensus 5.99 NM NM 5.31 17.4 17.3 6.01 12.9 12.8 NM NM NM 1.57 1.09 1.46 0.68 0.20 0.62 Curr. Qtr. 4Q03E 474 Next Qtr. 1Q04E 431 Yr. Ago Qtr. 4Q02A 460 -

Sector Opinion: The chemical industry has significant operating leverage. Over the past several years, basic material companies have suffered from weak demand and excess capacity. Although it is still early to know if recently improved demand trends are sustainable, chemical companies have very recently begun to experience improving volume, so operating rates may have bottomed out for this cycle. Many chemical company operating margins remain under pressure due to higher energy and hydrocarbon costs. We currently prefer companies with less hydrocarbon exposure such as the industrial gas companies. Most companies have significantly reduced overhead costs, so if gross margins continue to improve, this could drop to the bottom line. Capital expenditures for many companies remain less than depreciation.

1,888 1,930 -

Revenues in millions, except when noted. Source: Consensus number from Capital IQ.

Just about any way we value the stock, NPV, EBITDA takeout, EV/EBITDA, forward year P/E, peak EPS, we calculate an equity value of $38 to $40/share. So, we believe the stock represents good value at the current price. We anticipate 2004 EPS will improve by 35% from $1.81 to $2.45 and 2005 EPS will improve by about 25% from $2.45 to $3.05. We expect lower interest expense in 2004 to add about $0.20 to EPS. Restructuring at Astaris could add another $0.20 to 2004 EPS. Organic growth in Specialties and Ag could add another $0.20 to 2004 EPS. Modestly improved results in Industrial Chemicals could add about $0.05 to 2004 EPS. The impact of a recovery in industrial selling prices could be enhanced by the significant cost reductions FMC has put in place during the trough years.

Important disclosure information is contained on the last page of this report. The recipient of this report is directed to read these disclosures.

Page 2

FMC Corporation FMC, $31.50, Buy : Initiating With A Buy Rating

Page 3

FMC Corporation FMC, $31.50, Buy : Initiating With Buy Rating

Investment Thesis
We are initiating coverage of FMC Corporation (FMC) with a Buy rating. FMC operates business in three segments: Specialty Chemicals, Agricultural Products, and Industrial Chemicals. The Specialty Chemical segment consists of biopolymers, and Lithium. Agricultural Products segment is primarily composed of insecticides and to a lesser extent, herbicides. The industrial chemicals segment includes soda ash, hydrogen peroxide, and Astaris (FMCs joint venture with Solutia in phosphorus chemicals). FMCs stock price is up 14% year to date (exhibit 1) versus an increase of 20% in the S&P 500 and a 14% increase in the DJ Specialty Chemical index. FMCs stock is up 122% from its 2003 low and is trading at its 52 week high. Our target price of $37 is based on a 2004 P/E of 15X and a FY2004 EV/EBITDA of 6.9X. Our P/E target and EV/EBITDA target are based on our estimation of the value of FMCs business mix relative to other agricultural chemical and specialty chemical companies. The primary risk to our price target would be less than anticipated improvements in industrial production and GDP. We rate the stock a Buy for the following reasons: We think EPS will trough in 2003 at about $1.81. Peak earnings could be north of $6. A recovery in Industrial could generate close to $100 million of incremental pre-tax operating profit or roughly $2 per share after-tax; growth plans could generate another $50 million of pre-tax operating profit or roughly $1 per share after-tax; and, de-leveraging efforts could enable FMC to reduce approximately $50 million of interest expense or another $1 per share after-tax. Just about any way we value the stock, NPV, EBITDA takeout, EV/EBITDA, forward year P/E, peak EPS, we calculate an equity value of $38 to $40/share. So, we believe the stock represents good value at the current price. We anticipate 2004 EPS will improve by 35% from $1.81 to $2.45 and 2005 EPS will improve by about 25% from $2.45 to $3.05. We expect lower interest expense in 2004 to add about $0.20 to EPS. Restructuring at Astaris could add another $0.20 to 2004 EPS. Organic growth in Specialties and Ag could add another $0.20 to 2004 EPS. Modestly improved results in Industrial Chemicals could add about $0.05 to 2004 EPS. The impact of a recovery in industrial selling prices could be enhanced by the significant cost reductions FMC has put in place during the trough years. Energy costs are only about 9% of FMC'S cost of sales and services. Only about a third of FMCs energy exposure is to natural gas. The remaining 2/3rds of FMCs energy exposure is evenly distributed between coal and electricity. Net debt to total capital is about 59%, which is on the high side of our comfort level but FMCs debt covenants are quite restrictive and do not allow the companys to pay a dividend or repurchase shares. Debt covenants also limit the size of acquisitions. Management is expected to be focused on maximizing free cash flow in order to repay a syndicated term-loan of $250 million due in 2007, which is the source of the restrictive covenants. A key management goal is to reduce debt by $300 million by the end of 2006.

Page 4

FMC Corporation FMC, $31.50, Buy : Initiating With Buy Rating

Exhibit 1: FMC 2003 Stock Price Performance (YTD Comparison), %

2003 Stock Price Performance (Year-to-date)

300%
264%

250%

200%

150%
112%

100%

96%

59%

50%

45%

41% 39% 36% 35%

32% 32% 31% 30% 28% 27% 27% 27% 26% 26% 25% 25% 24% 24% 21% 21% 20% 19%

0%

16% 15% 15% 14% 14% 14% 13% 13% 11% 9% 9% 6% 5% 5% 4% 4% 2% 1% 1%

-2%

-7%

-11% -18% -27% -29% -33%

-50%
RPM EMN AGU CYT DOW OMN AVY CBM MMM EC OLN MEOH MCH PPG DJ Spec. Chem. FMC MON NCX DJ Chemicals DJ Comdty. Chem. GLK CCMP ALB OMG TRA S&P 500 WLM HPC ARJ GGC POL MRD POT LYO ROH APD CBT SIAL SYT ECL DD NL ROG ARG PX MTX FOE PKE VAL CK FUL IGL SOI

Source: Greenwich Consultants, LLC

Page 5

FMC Corporation FMC, $31.50, Buy : Initiating With Buy Rating

Exhibit 2: FMC Snapshot

Price: Date: 52-week range: S&P 500: GC Rating: EPS 1Q 2Q 3Q 4Q Full Year EPS Consensus EPS $31.50 12/7/2003 14.22 - 31.41 1,062 Buy 2002A $0.41 A 0.71 A 0.79 A 0.62 A $2.53 A

2003E $0.05 0.61 0.47 0.68 $1.81 $1.82 17.4 17.3 0.0% 6.2

A A A E E E

2004E $0.20 0.95 0.70 0.60 $2.45 $2.46 12.9 12.8 5.9

2005E Businesses: E Ag. Products E Specialty Chem. E Industrial Chemicals E Corporate expense E $3.05 E Other expense, net E $3.13 E Total Operating Profit 10.3 10.1 5.6 Balance sheet data: 9/30/03 Shares outstanding, mil Market capitalization, $ mil Net Debt, $ mil Enterprise value, $ mil 2003 estimates: EBIT D&A EBITDA Interest Expense Dividend Capital Spending

03 Operating Profit $78 mil $104 $41 ($36) ($6) $181 35 1,109 793 1,902 $ mil 181 124 305 98 0 85

43% 57% 23% -20% -3% 100% $/sh.

P/E on GC: P/E on Consensus: Dividend Yield: Total value/EBITDA:

22.53 $/sh. 5.15 3.52 8.67 2.80 0.00 2.42

Previous highest Segment EBIT was $341 in 1996 Peak EPS potential of about $6/share, implies peak price of ~ $40. NPV implies price of ~ $40. Sum of the parts valuation implies price of ~ $40.

Earnings sensitivities: Units Products Domestic Soda Ash tons Export Soda Ash Hydrogen Peroxide Caustic soda STPP Lithium Carbonate tons lbs tons tons lbs

Units/share 0.066 0.036 10 0.003 0.004 0

Unit margin EPS change Chg. (a) $7 0.32 $7 $0.01 $10 $10 $0.01 0.17 0.07 0.02 0.03 0.00

Carrageenan Microcrystalline cellulose Alginates Agriculture Pest Pressure

Comments mil. Lbs Excludes 1.3 mil. tons of mothballed capacity 2,340 90% operating rate 35% sold to ANSAC then exported, Prices declining 1,260 Excludes 75 mi. lbs of mothballed capacity 350 90% operating rate < 100 K tons, only sell when prices are above $150/ton 100 Only in Europe through Foret 125 Astaris based STPP will be phased out end 1Q04. Only 5% of lithium sales 7 $115 mil. in revenues Vol & Innovation driven $190 mil. in revenues Vol & Innovation driven $50 mil. in revenues Vol & Innovation driven Biggest factor on Ag. sales Units

Comments Raw Materials: In '02, Raw Materials were approx. 30% of cost of sales & services. No 1 raw material was < 7% of total purchases. Purchased organic intermediate for Pyrethroids is largest single raw material

Energy costs are approximately 9% of FMC'S cost of sales and services (1/3 nat. gas, 1/3 coal, & 1/3 electricity)
Natural Gas mmbtu 0.31 0.31 0.31 1 3 3 $1 $1 $1 $0.01 $0.01 $0.01 100 bpts 0.24 0.24 0.24 0.00 0.02 0.02 $0.04 04 80% hedged, '05 40% hedged, '06 20% hedged $4 in '02, $4 in '03, $4.40 in '04 Low cost Green River Coal Ball park estimate Ball park estimate Ball park estimate Ball park estimate 38% variable-rate debt, 62% fixed 11 11 11 20 100 100

Coal mmbtu mmbtu Electricity Lithium Carbonate lbs Seaweed lbs Wood Pulp lbs Varible-rate debt interest rate

Source: FMC, Greenwich Consultants, LLC

Page 6

FMC Corporation FMC, $31.50, Buy : Initiating With Buy Rating

Business Description
FMC Corporation, incorporated in 1928, is a diversified, global chemical company providing solutions, applications and products to a wide variety of end markets. The Company operates in three distinct business segments: Agricultural Products, Specialty Chemicals and Industrial Chemicals. Agricultural Products' principal focus is on insecticides, which are used to enhance crop yield and quality by controlling a wide spectrum of pests, and on herbicides, which are used to reduce the need for manual or mechanical weeding by inhibiting or preventing weed growth. Specialty Chemicals consists of the Company's biopolymers and lithium businesses, and focuses on food ingredients that are used to enhance texture, structure and physical stability, pharmaceutical additives for binding and disintegrant use and lithium specialties for pharmaceutical synthesis and energy storage. The Company's Industrial Chemicals segment manufactures a range of inorganic materials, including soda ash, hydrogen peroxide, specialty peroxygens and phosphorus chemicals. The following table shows the principal products produced by FMCs three business segments and their raw materials and uses.
Exhibit 3: FMC Principal Products, Raw Materials, Product Uses

Source: Greenwich Consultants, LLC; FMC

FMCs single largest geographic market, generating approximately 48% of revenue in 2002, with FMCs second largest market, Europe, the Middle East and Africa representing 25% and Latin America, FMCs third largest, representing 15% of 2002 revenue. The charts below detail FMCs sales and long-term assets by major geographic region.

Page 7

FMC Corporation FMC, $31.50, Buy : Initiating With Buy Rating

Exhibit 4: FMC Geographic Mix

Source: Greenwich Consultants, LLC; FMC

Specialty Chemicals The Company's Specialty Chemicals segment represents 26% of its revenues. The majority of Specialty Chemicals revenues are to customers in non-cyclical end markets. It is focused on food ingredients, pharmaceutical excipients and intermediates and lithium specialty products. The segments historical financial summary is exhibited below.
Exhibit 5: FMC Specialty Chemicals Financial Summary

Source: Greenwich Consultants, LLC; FMC

As the following exhibit demonstrates, 54% of FMCs revenues in 2002 were generated outside North America.

Page 8

FMC Corporation FMC, $31.50, Buy : Initiating With Buy Rating

About 73% of 2002 segment revenues are Biopolymer related with about 27% from Lithium.
Exhibit 6: FMC Specialty Chemicals (Product and Regional Mix)

Source: Greenwich Consultants, LLC; FMC

BioPolymers BioPolymer is a supplier of microcrystalline cellulose, carrageenan and alginates, which are ingredients that have applications in the production of food, pharmaceutical and other specialty consumer and industrial products. FMC has market share positions in microcrystalline cellulose, carrageenan and alginates ranging from 30 to over 50%. Microcrystalline cellulose, processed from specialty grades of wood pulp, provides binding and disintegrant properties for tablets and capsules and has unique functionality that improves the texture and stability of many food products. Carrageenan and alginates, both processed from seaweed, are used in a wide variety of food, pharmaceutical and specialty areas. Biopolymers product and market mix is provided in the following exhibit.

Page 9

FMC Corporation FMC, $31.50, Buy : Initiating With Buy Rating

Exhibit 7: FMC Specialty Chemicals (Biopolymer Product and Market Mix)

Specialty Chemicals: BioPolymer Sales Mix

Personal Care 6% Food 47%

Other Alginates 4% 13% Cellulose 52%

Pharma 47%

Carrageenan 31%

Mix by market

Mix by product

29

Source: Greenwich Consultants, LLC; FMC

FMC supplies alginates into the food and healthcare markets. Highly refined extracts from selected seaweeds provide a broad range of alginate functionality, including uses in anti-reflux disorders, dental impressions, control release of drugs and wound dressings, as well as food texture management. BioPolymer is organized around three major marketsfood, pharmaceutical and specialty ingredients. The following chart summarizes the major markets for BioPolymers products and FMCs chemistries in each market.

Page 10

FMC Corporation FMC, $31.50, Buy : Initiating With Buy Rating

Exhibit 8: FMC Specialty Chemicals - BioPolymers (Products and End Use)

Source: Greenwich Consultants, LLC; FMC

The end-use markets for BioPolymer have growth rates that are typically above GDP growth and are less cyclical than markets served by other FMC businesses. BioPolymer serves food and pharmaceutical companies. BioPolymer has a broad customer base with low customer concentration.
Food ingredients

Food ingredients is BioPolymer's largest business, accounting for close to 50% of revenues. This business provides ingredients that impart unique texture, structure and physical stability (TSPS) to a broad array of food products. TSPS imparts physical properties to thicken and stabilize foods. Key applications include dairy, beverages, and other convenience and healthy food categories that tend to grow faster than the overall food market. Industry growth has averaged 3 to 4% with BioPolymer's food business tending to grow over time at rates faster than the industry. Other suppliers of TSPS ingredients include Danisco A/S, DuPont, CP Kelco ApS, Imperial Chemical Industries PLC, Cargill Incorporated, Sobel N.V., DGF Stoess AG, FMC, Degussa AG and Tate & Lyle PLC.
Pharmaceuticals

The Company's BioPolymers business sells into the formulation chemicals segment of the pharmaceutical market. The major end markets for formulation chemicals include coatings and colors, fillers, binders, sweeteners and flavors, disintegrants and others. This business accounts for over 40% of sales and provides functional incipients, which are the inactive formulation ingredients for cabling and binding of oral dose form drugs, primarily under the Avicel brand of microcrystalline cellulose. In addition to microcrystalline and cellulose, the pharmaceuticals business has smaller positions in carrageenan, alginates and other cellulose-based product. These products have unique properties that satisfy customer needs in diverse applications such as anti-reflux treatment, dental impressions, liquid cough medicines and coated tablets. Industry growth in pharmaceutical incipients has tended toward 4% annually. FMC has grown at rates slightly higher than the industry, due to the favorable trends of customers to formulate with microcrystalline cellulose

Page 11

FMC Corporation FMC, $31.50, Buy : Initiating With Buy Rating

and FMCs ability to drive sales of other smaller products under the FMC market umbrella.
Personal care

The third and smallest BioPolymer business is personal care, which focuses on oral care and cosmetic markets. This business is a leader in providing innovative technologies in such applications such as toothpaste, skincare and face masks. Expanding BioPolymer has been a key objective for FMC. In pharmaceuticals, new technologies and alliances may play a key role in broadening FMCs presence beyond the traditional incipient market. Although many of these programs have long development cycles, FMC is encouraged by the potential size of the opportunities. FMC believes that the potential exists over a five or ten year period to double the size of their business. An example of this effort is to broaden BioPolymer presence in pharmaceuticals, as illustrated by the growth potential of a small biomedical acquisition that FMC made in early 2002. This business, which is now called FMC Novamatrix, focuses on high purity hydrocarlides marketed to the biomedical field. Use of these high purity materials are expanding at a double-digit rate due to their unique properties and such end-use applications as wound healing, tissue engineering, and other cell-based therapies. In addition, FMC recently announced an alliance with BioProgress PLC in the UK to develop and market an innovative drug delivery mechanism named Enrobe to pharmaceutical companies worldwide. According to FMC, selective acquisitions could add to BioPolymers growth. FMC believes that their platforms in food ingredients and pharmaceuticals are strong and could be added to with related businesses that would benefit from the market franchise and operational focus that the company brings. Any potential acquisitions would need to improve their leadership position, broaden their product and service portfolio to existing customers and offer significant intangible synergies. The Company's principal microcrystalline cellulose competitors in pharmaceuticals include J. Rettenmaier & Sohne, Ming Tai Chemical, Asahi Kasei Corporation and Blanver Farmoquimica. Lithium Lithium is a vertically-integrated business, based on both inorganic and organic lithium chemistries. While lithium is sold into a variety of end-markets, FMC has focused their efforts on selected growth niches such as fine chemicals for pharmaceutical synthesis, specialty polymers and energy storage. Lithiums product and market mix is provided in the following exhibit.

Page 12

FMC Corporation FMC, $31.50, Buy : Initiating With Buy Rating

Exhibit 9: FMC Specialty Chemicals (Lithium Product and Market Mix)

Specialty Chemicals: Lithium Sales Mix

Other 25%

Polymers 30%

Energy Storage 20%

Pharma Synthesis 25%

32

Source: Greenwich Consultants, LLC; FMC

FMC markets a variety of lithium-based products, ranging from upstream, commodity lithium carbonate to highly specialized downstream products such as organolithium compounds and cathodic materials for batteries. In recent years, lithium carbonate has experienced a significant price decline due largely to industry oversupply. The electrochemical properties of lithium make it a good material for portable energy storage in high performance applications, including heart pacemakers, cell phones, camcorders, personal computers and next generation technologies that combine cellular and wireless capabilities into a single device. Lithium is also being developed as the enabling element in advanced batteries for use in hybrid electric vehicles. Organolithium products are sold to fine chemical and pharmaceutical customers who use lithiums chemical properties to synthesize higher value-added products. Organolithiums are also valued in the specialty polymer markets as polymer initiators in the production of synthetic rubbers and elastomers. This business has done a better job in restoring profitability in recent years and has positioned itself longer-term for continued growth. Lithium chemistry offers unique properties that apply to a broad array of end-user opportunities. Over the last several years, FMC has exited from the commodity grade lithium carbonate and focused their resources on higher margin downstream activity. Today FMCs lithium sales mix is split among four end market segments. First, polymers is the largest segment accounting for approximately 30% of sales. Given their utilities as initiators, butyl lithium and other organometallic products have demonstrated great value in synthetic polymer markets. Sales have grown at rates above GDP. Second, pharmaceuticals synthesis accounts for about 25% of sales with annual growth rates consistent with

Page 13

FMC Corporation FMC, $31.50, Buy : Initiating With Buy Rating

that of the pharmaceutical industry. Butyl lithium and several new chemistries are the key products in this segment. FMCs strategy is to become a broader-based total solution provider in order to capture additional opportunities with key pharmaceutical customers. Third, the energy storage segment has been the fastest-growing segment and now accounts for almost 20% of sales. Sales have been growing in excess of 10% annually as lithium-based batteries continue to be the preferred technology. Although this segment has attractive growth fundamentals, FMCs strategy is to focus on developing more proprietary technologies that will allow the company to improve profitability. Fourth, inorganics account for the remaining 25% of sales. A wide variety of industrial applications with slower growth potential characterizes this segment. Over the last few years, FMC has reduced their focus on these segments but is developing selective new niche opportunities. Priorities for the lithium business are to continue to improve profitability and shift the sales mix toward higher value downstream markets. FMC expects the division to provide returns in excess of the cost of capital in 2004. FMC competes with Chemetall and Sociedad Quimica y Minera de Chile, which produce lithium carbonate. The following exhibit summarizes the major markets for various lithium products.
Exhibit 10: FMC Specialty Chemicals - Lithium (Products and End Use)

Source: Greenwich Consultants, LLC; FMC

Agricultural Products FMCs Agricultural Products segment, which represents approximately 32% of its 2003 estimated revenues, manufactures and sells a portfolio of crop protection, pest control and turf and ornamental products. FMC

Page 14

FMC Corporation FMC, $31.50, Buy : Initiating With Buy Rating

spends about 10% of agricultural product sales on R&D with their discovery efforts focused entirely on insecticides. The segments historical financial summary is exhibited below.
Exhibit 11: FMC Agricultural Products Financial Summary

Source: Greenwich Consultants, LLC; FMC

FMCs product development efforts focus on developing environmentally compatible solutions to increase farmers' yields and provide alternatives to older chemistries to which insects may have developed resistance. As the following exhibit demonstrates, more than half of FMCs revenues in 2002 were generated outside North America. The business is very global; however, FMCs sales are concentrated in North and South America, with the U.S. and Brazil being the two most important countries. FMC only pursues direct sales into certain regions. The company reaches the balance of the world through a series of marketing and distribution alliances. About 78% of 2002 segment revenues were insecticide related with about 22% from herbicides. FMCs insecticide and herbicides are proprietary, branded products, which are developed in an intensive R&D and regulatory environment not unlike that found in ethical pharmaceuticals. Key crop markets for FMCs chemicals include cotton, corn, rice, cereals and vegetables.

Page 15

FMC Corporation FMC, $31.50, Buy : Initiating With Buy Rating

Exhibit 12: FMC Agricultural Products (Product and Regional Mix)

Source: Greenwich Consultants, LLC; FMC

In contrast to most other major crop protection companies, insecticides dominate FMCs Agricultural Products segment, particularly pyrethroid and carbamate chemistries. Pyrethroids are a major class of insecticides whose low spread rates distinguish it from other classes of insecticides. They are most effective against worm pests. Carbamates are a broad spectrum of insecticides used to control a wide variety of pests in both soil and foliage. FMC also maintains niche positions in the herbicide market. The following exhibit summarizes the principal product chemistries in Agricultural Products and the principal uses of each chemistry.
Exhibit 13: FMC Agricultural Products (Product and End Use)

Source: Greenwich Consultants, LLC; FMC

Page 16

FMC Corporation FMC, $31.50, Buy : Initiating With Buy Rating

The agrochemicals industry has recently undergone significant consolidation. Based on sales and giving effect to recent acquisitions, the top crop protection companies, Syngenta, Bayer, Monsanto Company, BASF, Dow Chemical and DuPont, currently represent more than three quarters of global sales, while in 1995, the top six companies represented approximately half of global sales. Four of these companies, Syngenta, Bayer, BASF and Dow, have all made significant acquisitions of other crop protection companies over the past few years. A driver for this consolidation has been the advent of biotechnology and the resulting escalation of research and development costs, particularly in herbicides employed in row crops. The next tier agrochemical producers, including Makhteshim-Agan Industries Ltd., Sumitomo Chemical Company Limited, FMC and Nufarm Limited, generally employ strategies focusing on niche crops and markets (i.e., fruits, vegetables, household plants, turf and ornamental markets and/or generic products). Additionally, there is an emerging trend among these producers to partner with one another to gain economies of scale more comparable to larger competitors. The environment in which FMC has been operating over the last 5 years has been anything but favorable. A global crop recession, growth of generic producers and penetration of biotechnology have all taken their toll on the industry. The impact of Monsantos bioengineered Roundup-Ready in row crops was the key factor in FMCs deciding to exit the row crop business for sulfentrazone, a product which contributed to their financial results in 2000. Despite these challenges, FMCs pyrethroid insecticide business has grown at 5% CAGR. In response to the changing dynamics of the crop protection market, FMC substantially restructured and refocused their business in 2002 generating SG&A savings exceeding $20 million on an annual basis. From a cost reduction perspective, the company has outsourced production to China, Mexico and India, saving on the order of $40 million since 1999. FMC sees additional opportunities to outsource production in the next few years, which will, in part, drive future earnings growth. From a revenue perspective, three core, patented products representing nearly half of FMCs sales will continue to drive near-term growth through label expansions, or the right to sell an ag chemical in a new crop and/or country. In both bifenthrin and zeta-cypermethrin, FMCs third and fourth generation pyrethroid insecticides, FMC foresees a wide range of labels driving growth including corn, vegetables, fruits and nuts. Similarly, FMC is optimistic about label growth for their post-emergent herbicide called Carfentrazone. FMC also remains optimistic about a novel chemistry they are developing for the Americas in conjunction with ISK. This product will target sucking pests and, because of its more favorable environmental impact versus current technology, is receiving a fast-track review by the EPA. The EPA has prioritized this patented new chemistry for registration in certain applications as an organophosphate alternative. The EPA is encouraging the development of alternative products for organophosphates, currently the number one class of insecticides in terms of worldwide demand. FMC expects to launch the product in 2005. FMC entered into several agreements with ISK, under which FMC will work together to market and distribute existing and new insecticide chemistries in various markets. With the ISK alliance, FMC has expanded its distribution capabilities in Japan and in Europe by jointly investing with ISK in the Belgian-based pesticide distribution company, Belchim Benelux N.V. FMC plans to obtain new and approved uses for existing product lines as well as complementary chemistries from other pesticide companies. For example, FMC recently obtained new labels for zeta-cypermethrin for use

Page 17

FMC Corporation FMC, $31.50, Buy : Initiating With Buy Rating

on corn, rice, alfalfa, sugar cane and leafy vegetable crops. Meanwhile, FMCs carfentrazone herbicide has been approved for cotton defoliation in North America. In addition, FMC continues to develop new applications for sulfentrazone and clomazone herbicides. FMC is among the first agrochemicals companies to pursue a predominantly genomics-based approach in their long-term discovery efforts to identify compounds with a specific biological function on agricultural pests. FMC hopes this approach will enable a more rapid and cost-effective way to discover new insecticide chemistries that target unique mechanisms of action in economically important insects. FMCs genomics-based research platform has discovered 10 insect-active chemistries, which are now in field testing. Given the highly regulated nature of the ag business, commercialization of such chemistries is at least 5 years away. Industrial Chemicals The Industrial chemicals business is operating in difficult trough conditions. FMC is the number one manufacturer of soda ash, peroxygens and phosphorus chemicals in North America and FMC is backward integrated into the natural resource where it is strategically important. FMCs historical performance in this segment reflects the difficult operating conditions facing these businesses since 2000 and the impact of capacity overbuilding in the late 1990s. During the past few years, FMC has taken actions to improve profitability including mothballing of roughly 25% of their capacity in both soda ash and hydrogen peroxide, closure of Astaris elemental phosphorus facility in Pocatello, Idaho, and overhead cost reductions across all businesses. FMC has conserved cash flow through low capital spending and working capital discipline. Unfortunately, in 2003, efforts to improve our core Industrial Chemicals business have been more than offset by continued weakness at Astaris resulting from low selling prices and depressed market conditions. However, the outlook for the segments 2004 performance is improving. In hydrogen peroxide, recovery may have already begun with a 1 cent per lb. increase realized in 2003. Several more cents per pound are possible in 2004. Steady volume growth in the pulp markets has resulted in tighter industry capacity utilization levels that are now above 90%. The recent industry-wide support for a 5-cent per lb. price increase could result in higher prices for 2004. In soda ash, tightening industry capacity utilizations, now just above 90%, and the possibility of capacity rationalization following Solvays acquisition of American Soda, bode well for higher prices in 2004. Already, nearly all suppliers have supported at least a $7 per ton price increase. We believe less than this will be achieved given the protracted length of the current trough, recovery to even normalized levels of pricing may take a couple of years. In addition, until FMC gets into the market with the recent price increase announcements, they will not know what kinds of price caps their competitors have put in place, which can in turn limit their ability to realize higher prices nearer term. In phosphorus chemicals and, more specifically Astaris, the market may have bottomed. Industry volume growth has been modest, and capacity utilizations remain at an unhealthy mid-70 percent level. Nonetheless, pricing has stabilized and, in a few areas, increased. However, a substantial recovery is not likely until one or more of suppliers rationalize capacity. FMCs Industrial Chemicals segment, which represents 41% of its consolidated revenues, has positions in high-

Page 18

FMC Corporation FMC, $31.50, Buy : Initiating With Buy Rating

volume inorganic chemicals, including soda ash, phosphorus chemicals and hydrogen peroxide, complemented by niche positions in specialty alkali, phosphorus and peroxygen products. The segments historical financial summary is exhibited below.
Exhibit 14: FMC Industiral Chemicals Financial Summary

Source: Greenwich Consultants, LLC; FMC

As the following exhibit demonstrates, 45% of FMCs revenues in 2002 were generated outside North America. About 49% of 2002 segment revenues were Alkali, 20% Foret, and 21% peroxygens. Sales to North America and Europe drive FMCs regional sales mix, although both soda ash and Foret have healthy major export businesses into both Asia and Latin America. Not included in FMCs sales mix, but accounted for on an earnings basis via the equity method and included in FMCs Industrial Chemicals segment earnings, is its share of Astaris, a 50/50 joint venture in phosphorus chemicals with Solutia.

Page 19

FMC Corporation FMC, $31.50, Buy : Initiating With Buy Rating

Exhibit 15: FMC Industrial Chemicals (Product and Regional Mix)

Source: Greenwich Consultants, LLC; FMC

Industrial Chemicals serves a diverse group of markets, from economically sensitive industrial sectors to technology-intensive specialty markets. FMC processes and sells refined inorganic products that are sought by customers for their reactivity or specific functionality. In addition, FMC produces, purifies and markets downstream derivatives into specialized and customer-specific applications. These applications include dialysis, rocket propulsion, animal nutrition, biocides, semiconductors and baking. Alkali FMC's alkali chemical division produces natural soda ash. Soda ash is used by manufacturers in the glass, chemical processing and detergent industries. To a lesser degree, FMC also produces sodium bicarbonate, caustic soda and sodium sesquicarbonate. FMCs products are manufactured and sold through FMC Wyoming Corporation, which FMC manages as an integral part of their alkali business in which FMC own shares representing an 87.5% economic interest, with the remaining 12.5% held by two Japanese companies. FMC mines and produces natural soda ash using proprietary, low-cost mining technologies, such as long-wall and solution mining, which may give FMC a low cost versus other suppliers. FMCs two production sites in Green River, Wyoming have the capacity to produce approximately 4.9 million tons of soda ash annually, though the business over the last several years has mothballed 1.3 million tons of capacity to improve cost structure and to respond to market conditions. Peroxygens FMC produces hydrogen peroxide worldwide, with production facilities in the United States, Canada, Mexico, Spain, the Netherlands and through a joint venture company in Thailand. FMC sells hydrogen peroxide into the pulp and paper industry, and to a lesser extent, in the electronics, chemical processing, food and textiles industries. Hydrogen peroxide represents three quarters of FMC peroxygens sales. FMCs specialty peroxygens business supplies persulfate products primarily to polymer and printed circuit

Page 20

FMC Corporation FMC, $31.50, Buy : Initiating With Buy Rating

board markets, and peracetic acid predominately to the food industry for biocidal applications. Foret FMC's European subsidiary, FMC Foret, headquartered in Barcelona, Spain, is a supplier of chemical products to the detergent, paper, textile, tanning and chemical industries. Foret is a large and diverse operation with seven manufacturing locations in Europe. Foret has positions in phosphates, hydrogen peroxides, perborates, sulfur derivatives, silicates and zeolites. Foret's sales efforts are focused in Southern Europe, Africa and the Middle East. Astaris Astaris, FMCs 50%-owned unconsolidated joint venture with Solutia, is one of two diversified phosphorus chemical suppliers in the western hemisphere. Astaris was formed as a separate company in 2000. Astaris' products are used in chemical processing, baking, food processing, detergent applications and fire suppressants. Astaris is shifting its manufacturing process to take advantage of lower-cost sourcing of phosphorus. FMC believes that the move from a manufacturing strategy based on elemental phosphorus to one based on purified phosphoric acid (PPA) feedstock will eliminate the high environmental compliance and energy costs that adversely affected their Pocatello elemental phosphorus facility and unfavorably impacted their earnings in recent years. The significant restructuring which is now underway at Astaris is expected to take about nine months to implement. The Board of Managers of Astaris has approved a plan that will result in the closing of four facilities, the exit of the commodity sodium tripolyphosphate business, and once completed the reduction of nearly $40 to $50 million of cost on an annual basis. With this restructuring, Astaris will improve its own phosphorus chemicals capacity utilization from approximately 60% to greater than 90, and it will also drive overall utilization to much healthier levels. The resulting business should have revenues of about $400 million, generate modest operating profit, and produce steady free cash flow. Any subsequent improvements in selling prices and/or in economic recovery should lead to further improvements in both profits and cash flows. Among the facility closures will be several former FMC facilities including the Bedford Park, Illinois, distribution facility and the Green River, Wyoming STPP plant. The remaining other FMC Green River plants, primarily serving the Alkali business, will continue operating. As a result of the Green River STPP closure, the Conda, Idaho PPA plant, which has been solely dedicated to supplying Green River's raw material requirements, will also be shut down. We expect these changes in Astaris's business to adversely affect the operating profits of other businesses within FMC by approximately $4 million in 2004. FMC remains optimistic that with this restructuring Astaris will be able to refinance during 2004 under terms which no longer require the support of its parents. And, therefore, FMC will not be required to make the four keep-wells. Industrial Industry Overview Soda ash, peroxygens and phosphorus chemicals are generally inorganic-based, produced from minerals or air, and are generally commodities, which, in many cases, have few cost effective substitutes. Growth is typically a function of GDP or the rate of industrialization in key export markets. Pricing tends to reflect short-term supply and demand as producers add or reduce capacity and demand changes.

Page 21

FMC Corporation FMC, $31.50, Buy : Initiating With Buy Rating

Soda Ash Soda ash is a highly alkaline inorganic chemical essential in the production of glass, and widely used in the production of chemicals, soaps and detergents and many other products. Natural soda ash is generally produced from trona, a natural form of sodium sesquicarbonate, through mining and chemical processing. Soda ash may also be produced synthetically using the process developed in the 19th century by Ernest Solvay, which uses salt, ammonia, carbon dioxide and limestone as raw materials. The Solvay process requires a significant amount of heat energy and produces large quantities of waste by-products, making it much less cost-effective than natural soda ash production. Because of the processing cost advantages of trona and the large natural reserves of trona in the U.S., particularly in Green River, Wyoming, all U.S. soda ash production is natural. By contrast, due to a lack of trona, a large percentage of the soda ash that is manufactured in the rest of the world is produced synthetically. Other U.S. producers are OCI Chemical Corporation, Solvay, The General Chemical Group, IMC Global Inc. and American Soda. Approximately 30% to 35% of U.S. natural soda ash production is exported through the American Natural Soda Ash Association (ANSAC). ANSAC is the foreign sales association of all U.S. producers of soda ash, and was established in 1983. Since its creation, ANSAC has been successful in coordinating soda ash exports, exploiting the natural cost benefits of U.S.-produced natural soda ash. Peroxygens Hydrogen peroxide is typically sold in aqueous solutions for use as a bleach or oxidizer. As such, it often competes with other chemicals capable of performing similar functions. Some of our specialty peroxygen derivatives (e.g., perborates) also function as bleaching or oxidizing agents. Environmental regulations, regional cost differences (often due to transportation costs) and technical differences in product performance enter into the decision to use hydrogen peroxide or one of its derivatives rather than another product. Since these considerations vary by region, the consumption patterns vary in different parts of the world. Hydrogen peroxide is sold in aqueous solutions, usually 35%, 50% or 70% by weight. The U.S. pulp and paper industry represents approximately 65% of domestic demand for hydrogen peroxide. In this market, hydrogen peroxide is used as an environmentally friendly bleaching agent to brighten chemical, mechanical and recycled pulps, as well as treat a wide range of mill pollutants in the waste stream. During the 1990s the hydrogen peroxide market became increasingly cyclical dependent on the pulp industry, which has recently experienced a general slowdown. In addition, demand growth for hydrogen peroxide has slowed as the conversion from elemental chlorine by the U.S. pulp industry is largely complete. These trends have had a negative effect on pricing. The other North American hydrogen peroxide producers are Akzo Nobel, ATOFINA Chemicals, Degussa, Kemira Oyj and Solvay. Phosphorus Chemicals Phosphorus chemicals are used in many industrial applications in a wide array of chemical compounds. Overall growth in demand for phosphorus chemicals tends to correlate with GDP. Phosphoric acid and phosphate salts (e.g., sodium phosphates, calcium phosphates, potassium phosphates) are sold into many markets including food, beverage, water treatment, automotive, metal cleaning, detergents, specialty agricultural and fire

Page 22

FMC Corporation FMC, $31.50, Buy : Initiating With Buy Rating

suppressants. The basic feed for making phosphorus chemicals is now produced using two processes. Most industrial applications use the cost-effective process, which involves making PPA by the purification of fertilizer-grade phosphoric acid. Thermal phosphoric acid, long the industry standard, is produced from elemental phosphorus but is far more costly due to energy and environmental compliance costs, and is now used mainly in limited applications. While Astaris ceased the production of elemental phosphorus in 2001, it is still produced by Monsanto in the United States, Thermphos in the Netherlands, and in several other countries, principally China. Worldwide demand for phosphorus chemicals declined in the early 1990s as detergents containing phosphates for home-laundry use were banned in North America and parts of Europe. According to FMC, though not projected to occur in 2003, over the next few years, industrial demand for phosphorus chemicals could improve, driven by growing demand in the detergents and food and beverage industries in newly industrializing nations, and by the growth of food and beverage applications in the United States and Europe. Beginning in the 1990s, reduced demand, the shift in growth toward developing regions, and the advent of new technology resulted in a significant restructuring of the phosphorus chemicals industry as producers consolidated or exited the business. In North America, FMC participates in the industrial phosphate business through their Astaris joint venture. In Europe, FMC participates in this business through Foret. Both Astaris and Foret use the PPA process. Major competitors include Rhodia, Potash Corporation of Saskachewan, Prayon Rupel, and Rotem Amfer & Negev.

Page 23

FMC Corporation FMC, $31.50, Buy : Initiating With Buy Rating

Valuation
Our target price for FMC is $37 based on 15X our 2004 EPS estimate of $2.45. We note that FMC currently trades a discount to our group average, which we believe is largely due to its lower liquidity, lower organic growth prospects, and higher debt. We note that FMC does not pay a dividend so there has been no dividend support for the stock.
Exhibit 16: FMC Valuation

Rating
3M COMPANY Not Rated DU PONT CO Buy DOW CHEMICAL CO Hold PRAXAIR INC Buy AIR PRODS & CHEM Buy MONSANTO CO Buy LYONDELL CHEM Sell MINERALS TECH Buy FMC CORP Buy GEORGIA GULF Hold Average
Source: Greenwich Consultants, LLC

Mkt. Cap.
63.842B 43.509B 35.625B 11.885B 11.085B 7.181B 2.486B 1.113B 1.112B 924.0M

Price
$81.34 $43.65 $38.70 $73.10 $50.40 $27.41 $15.30 $54.62 $31.50 $28.43

52 Wk Range
59.73 - 81.65 34.71 - 45.55 24.83 - 39.53 50.03 - 74.66 36.97 - 50.55 13.55 - 28.58 10.96 - 16.12 34.10 - 55.65 14.22 - 31.41 16.94 - 29.36

Target Price
$48.40 $35.00 $75.60 $51.30 $30.60 $11.00 $61.00 $36.75 $28.60

Target Price %
11% -10% 3% 2% 12% -28% 12% 17% 1%

Yield (%)
1.6% 3.2% 3.5% 1.5% 1.8% 1.9% 5.9% 0.2% 0.0% 1.1% 2.1%
ex. 3M

03E EPS
$3.07 $1.64 $1.18 $3.51 $2.50 $1.50 ($1.70) $2.75 $1.81 $0.58

04E EPS
$3.45 $2.20 $1.75 $4.20 $2.85 $1.70 ($0.75) $3.05 $2.45 $2.20

03E P/E
26.5 26.6 32.8 20.8 20.2 18.3 (9.0) 19.9 17.4 48.7 25.7

04E P/E
23.6 19.8 22.1 17.4 17.7 16.1 (20.4) 17.9 12.9 12.9 17.8

ex. LYO ex. LYO

Relative to our coverage universe, FMC looks inexpensive based on price to cash flow, EV to EBITDA, price to sales, and price to book value even though our 03 EBITDA/sales estimate is only slightly lower than average.
Exhibit 17: FMC Valuation

03E EV 04E EV 03E Net 03 to to Price/ Debt/Total EBITDA/ Price/ Short 03E 04E Sales Book Ratio Rating P/CF P/CF EBITDA EBITDA Sales Cap (Bk)
DU PONT CO DOW CHEMICAL CO PRAXAIR INC AIR PRODS & CHEM MONSANTO CO LYONDELL CHEM MINERALS TECH FMC CORP GEORGIA GULF Average
Source: Greenwich Consultants, LLC

Buy Hold Buy Buy Buy Sell Buy Buy Hold

13.1 12.0 12.4 10.5 6.6 7.4 5.4 5.9 8.4 7.7 10.3 6.7 6.1 6.5 5.3 6.0 11.1 6.8 8.8 7.7

11.8 11.0 10.4 8.9 7.2 12.6 7.8 6.2 10.7 9.6

10.5 9.3 9.3 8.3 6.8 8.8 7.5 5.9 6.7 8.1

1.6 1.1 2.2 1.6 1.4 0.2 1.4 0.6 0.6 1.2

43% 57% 50% 39% 16% 83% 10% 61% 79% 49%

16% 13% 26% 22% 23% 6% 19% 16% 9% 17%

4.5 4.5 4.2 2.9 1.4 2.1 1.7 2.2 6.8 3.4

2.0 3.3 2.0 1.6 2.2 14.1 5.5 4.5 7.1 4.7

Page 24

FMC Corporation FMC, $31.50, Buy : Initiating With Buy Rating

The following exhibit reflects FMCs forward year consensus EPS and P/E estimates after the spinout of FTI, its energy and food equipment business on December 31st, 2001. Our 2004 EPS estimate of $2.45 is only a penny below that of consensus.
Exhibit 18: FMC FMC Forward Year Consensus EPS versus Forward Year Consensus P/E (ex. FTI Spin Dec 31st 2001)
13 $10.00

12

$9.00

11

$8.00 Consensus Forward Year EPS Est.

Consensus Forward Year P/E

10

$7.00

$6.00

$5.00

$4.00

$3.00

$2.00

$1.00

$0.00

Forward P/E

Forward EPS Est.

Ja n03

Ja n02

Linear (Forward P/E)

Source: First Call, Greenwich Consultants, LLC

From a valuation perspective, we have reviewed FMC based on peer multiples, acquisition multiples, and the net present value of future cash flows. We come up with an equity value of at least $38/share, which is below the current stock price of about $31.50. Based on our two different acquisition analyses, FMCs shares are valued between $38 and $40. If FMCs various businesses were sold off in pieces, the equity would be worth about $40/share. A company takeout multiple of 6X 03 EBITDA would also value the equity at $38/share.

Page 25

FMC Corporation FMC, $31.50, Buy : Initiating With Buy Rating

Exhibit 19: FMC Acquisition Analysis

Revenue (millions) EBITDA (millions) Valuation 2003 2004 2005 2003 2004 2005 (billions)
Sum of The Parts Method Agricultural Products Specialty Chemicals Industrial Chemicals Net Debt Total Equity Value/share Whole Company Method (Specialty Chemical EBITDA Multiple) FMC Net Debt Total Equity Value/share

Methodology

602 517 773

617 541 777

633 565 788

108 131 101

114 135 105

117 140 111

0.8 1.0 0.4 (0.8) 1.4 $40

7 X '03 EBITDA 8 X '03 EBITDA 4 X '03 EBITDA

1,893 1,935 1,985

339

354

369

2.1 (0.8) 1.3 $38

6 X '04 EBITDA

Source: Greenwich Consultants

The following exhibit provides a matrix of potential values for FMCs stock depending on the discount rate and terminal value of revenues. Assuming a 9% discount rate to cash flows through FY2008 and a terminal value for revenues in 2008 of 1.25X, we estimate that FMCs stock is worth about $40/share.
Exhibit 20: FMC Net Present Value of about $40/share
NET PRESENT VALUE CASH FLOWS

Terminal Value Revenue Multiple 1.00 Discount Rate, % 1.25 1.50 $1,857 $1,734 $1,619 8% $1,191 $1,524 9% $1,109 $1,421 10% $1,033 $1,326

NET PRESENT VALUE CASH FLOWS PER SHARE Terminal Value Revenue Multiple 1.00 Discount Rate, % 8% 9% 10%
Source: Greenwich Consultants

1.25 $43 $40 $38

1.50 $53 $49 $46

$34 $32 $29

Page 26

FMC Corporation FMC, $31.50, Buy : Initiating With Buy Rating

Earnings Outlook
Our financial outlook for 2003 through 2008 is provided in the following exhibit. We expect lower interest expense in 2004 to add about $0.20 to EPS. Restructuring at Astaris could add another $0.20 to 2004 EPS. Organic growth in Specialties and Ag could add another $0.20 to 2004 EPS. Modestly improved results in Industrial Chemicals could add about $0.05 to 2004 EPS.
Exhibit 21: FMC Earnings Model ($ in millions or per share)
1Q03A 2Q03A 3Q03A 4Q03E 1Q04E 2Q04E 3Q04E 4Q04E 2001A 2002A Agricultural Products Specialty Chemicals Industrial Chemicals Eliminations Total Rev enues % Chg. Yr./Yr. COGS Gross profit Gross profit, % SG&A + R&D Other Operating Profit Ag. Products Specialty Chem. Industrial Chemicals Segment EBIT Corporate ex pense Other ex pense, net (FIFO, Pension, etc.) EBIT % Chg. Yr./Yr. Interest ex pense, net Pre-tax income Tax ex pense Tax rate Net Income Excl. unusuals Diluted Shares out (av g for EPS) EPS, First Call Basis % Chg. Yr./Yr. 36 $0.05 -88% 36 $0.61 -14% 5 24 10 40 (7) (3) 29 -14% (27) 2 (1) 21% 2 27 30 8 65 (10) (2) 53 8% (25) 28 (6) 23% 22 24 23 8 55 (9) (0) 46 -18% (24) 22 (5) 23% 17 36 35 $0.47 -41% 21 26 16 63 (9) (0) 53 -4% (22) 31 (7) 23% 24 0 35 $0.68 10% 6 24 11 41 (9) (0) 31 6% (22) 9 (2) 23% 7 0 35 $0.20 300% 30 33 12 75 (9) (0) 65 24% (22) 43 (10) 23% 33 0 35 $0.95 56% 26 25 12 63 (9) (0) 54 17% (22) 32 (7) 23% 25 0 35 $0.70 49% 22 26 10 58 (9) (0) 49 -9% (21) 27 (6) 23% 21 0 35 $0.60 -12% 73 88 73 233 (36) (2) 195 -27% (64) 131 (31) 24% 100 (603) 31 $3.10 -36% 70 90 72 231 (36) (0) 195 0% (78) 117 (29) 25% 88 0 34 $2.53 -18% 78 104 41 222 (36) (6) 181 -7% (98) 83 (19) 22% 64 36 35 $1.81 -28% 84 108 45 237 (37) (1) 199 9% (87) 112 (26) 23% 86 0 35 $2.45 35% 87 113 51 252 (37) (1) 214 8% (74) 139 (32) 23% 107 0 35 $3.05 24% 91 118 51 260 (37) (1) 222 4% (57) 165 (38) 23% 127 0 35 $3.60 18% 95 125 62 282 (37) (1) 244 10% (43) 201 (46) 23% 155 0 35 $4.40 22% 99 131 73 304 (37) (1) 266 9% (26) 240 (55) 23% 185 0 35 $5.25 19% 129 127 180 (1) 434 0% (325) 109 25% (77) 8 175 139 197 (1) 510 6% (371) 139 27% (82) 8 154 126 192 (1) 471 -1% (344) 126 27% (77) 6 145 126 204 (1) 474 3% (340) 134 28% (77) 6 132 133 168 (1) 431 -1% (320) 111 26% (77) 6 179 145 213 (1) 536 5% (390) 146 27% (77) 6 158 131 196 (1) 484 3% (350) 134 28% (77) 6 149 132 200 (1) 479 1% (350) 129 27% (77) 6 653 472 822 (4) 1,943 -5% 615 488 753 (4) 1,853 -5% 2003E 2004E 2005E 2006E 2007E 2008E 602 517 773 (5) 1,888 2% 617 541 777 (5) 1,930 2% 633 565 788 (5) 1,981 3% 649 590 815 (5) 2,049 3% 681 617 868 (5) 2,161 5% 715 645 928 (5) 2,283 6%

(1,417) (1,360) (1,380) (1,410) (1,450) (1,510) (1,600) (1,700) 526 27% (343) 50 493 27% (306) 44 508 27% (314) 28 520 27% (309) 26 531 27% (305) 26 539 26% (305) 26 561 26% (305) 26 583 26% (305) 26

Source: FMC, Greenwich Consultants, LLC

Cash Flow

On June 30, 1999, FMC acquired the assets of Tg Soda Ash, Inc. from ATOFINA Chemicals for approximately $51 million in cash and a contingent payment due at year-end 2003. The contingent payment amount, which will be based on the financial performance of the combined soda ash operations between 2001 and 2003, cannot be determined precisely but is expected to be approximately $35 million.

Page 27

FMC Corporation FMC, $31.50, Buy : Initiating With Buy Rating

We expect FMCs to manage its capital spending below D&A. We believe that FMC can meet the expected demand growth in all their businesses over the next 5 years through mothballed capacity and debottlenecking and, therefore, do not expect any significant capital spending projects as the economy recovers. We anticipate that FMC will generate significant free cash flow in 2004 to reduce debt. We believe FMC can generate close to $70 million in free cash flow in 2004 provided Astaris can be refinanced, or $27 million if not. The refinancing would eliminate the need for Astaris Keepwell payments in 2004. Further reductions in working capital are also likely in our opinion. We have also assumed that by 2005, FMC will sell its two properties in Princeton, NJ and San Jose, Ca for more than $100 million.
Exhibit 22: FMC FMCs Cash Flow ($ in millions or per share)
Abbreviated Free Cash Flow Calc. Net Income D&A Gross Cash Flow Cash Flow /Share Capital Ex penditures Astaris Financing/Keepw ell Tex as Gulf Acquisition Poctello Restructuring Div idend Asset Sales Operating Working Capital Pre-paid Pension Env ironmental Free Cash Flow Free Cash Flow /Share EBITDA Cap. Ex ./D&A 1Q03A 2Q03A 3Q03A 4Q03E 1Q04E 2Q04E 3Q04E 4Q04E 2001A 2 31 32 $0.91 (17) 0 0 (8) 0 0 (101) 0 (2) (95) 22 31 53 $1.48 (22) (26) 0 (4) 0 0 34 (7) (10) 17 17 31 48 $1.36 (20) (21) 0 2 0 13 143 0 (8) 156 $4.42 77 65% 24 31 55 $1.57 (26) (15) (35) (5) 0 0 (12) 0 (5) (43) 7 31 38 $1.09 (24) 0 0 (8) 0 0 5 0 (6) 5 33 31 65 $1.84 (24) (22) 0 (8) 0 0 5 (7) (7) 2 $0.05 97 76% 25 31 56 $1.59 (24) (11) 0 (8) 0 0 5 0 (6) 12 $0.34 85 76% 21 31 52 $1.49 (24) (11) 0 (8) 0 0 5 0 (6) 8 $0.24 80 76% 100 132 232 $7.40 (140) (31) 0 (87) 0 nm nm 0 (31) (57) 2002A 88 119 206 $5.99 (84) (30) 0 (64) 0 nm nm (2) (25) 1 2003E 2004E 64 124 188 $5.31 (85) (63) (35) (15) 0 13 64 (7) (25) 35 $0.99 305 69% 86 125 211 $6.01 (95) (45) 0 (33) 0 0 20 (7) (25) 27 $0.78 324 76% 2005E 107 125 233 $6.61 (95) 0 0 (10) 0 100 10 (7) (25) 206 $5.84 339 76% 2006E 127 125 252 $7.16 (95) 0 0 (10) 0 0 0 (7) (25) 115 $3.26 347 76% 2007E 155 125 280 $7.96 (95) 0 0 0 0 0 0 (7) (25) 153 $4.35 370 76% 2008E 185 125 310 $8.81 (95) 0 0 0 0 0 0 (7) (25) 183 $5.20 391 76%

($2.67) $0.48 60 56% 84 71%

($1.21) $0.16 85 83% 62 76%

($1.83) $0.04 327 106% 314 71%

Source: FMC, Greenwich Consultants, LLC

Capitalization

Restricted cash - During 2002, FMC obtained capital resources for planned business operations by executing a series of financing transactions that were completed in the fourth quarter of 2002. At September 30, 2003 and December 31, 2002 there were no outstanding borrowings under their $250 million committed revolving credit facility, obtained as part of the 2002 refinancing. Another objective of the 2002 refinancing was to provide substantial cash for collateral assuring the payment of certain self-insurance obligations, environmental remediation activities, future business commitments, cash to collateralize letters of credit supporting variablerate pollution control and industrial revenue bonds, and cash to redeem long-term debt maturing before December 31, 2003. The cash set aside for these purposes is shown on the condensed consolidated balance sheets as "Restricted cash," which was $137.4 million and $274.6 million at September 30, 2003 and December 31, 2002, respectively. One of FMCs objectives is to reduce net debt by $300 million by the end of 2006. FMCs syndicated term loan

Page 28

FMC Corporation FMC, $31.50, Buy : Initiating With Buy Rating

of $250 million due 2007 does not allow FMC to repurchase shares or pay a dividend until it is repaid. We do not anticipate any large acquisitions the possibility of small bolt-on acquisitions in specialty chemicals can not be ruled out. In the short-term to medium-term, we expect FMC to use free cash flow to pay down its syndicated term loan. We expect net debt to decline from about 59% of total capital in 2003 to about 55% by the end of 2004 and 44% by the end of 2005. This could prove to be conservative if Astaris is refinanced in 2004, which would increase cash by reducing the number of keepwell payments. We note that return on invested capital (ROIC) is above 10% and we expect ROIC will trend upwards moving forward.
Exhibit 23: FMC FMCs Capitalization, ($ in millions or per share)
Capitalization Long-Term Debt Short-Term Debt Less: Cash Items Net Debt Minority Interest Equity Total Capital (incl. Net Debt) Net Debt/Total Capital Return on Inv ested Capital (ROIC) 1Q03A 2Q03A 3Q03A 4Q03E 1Q04E 2Q04E 3Q04E 4Q04E 2001A 1,123 196 319 999 44 440 1,483 67% 6.5% 1,109 181 355 935 44 510 1,489 63% 11.0% 1,034 50 291 793 43 502 1,339 59% 10.0% 956 50 170 836 43 526 1,406 59% 12.0% 951 50 170 831 43 533 1,407 59% 6.8% 949 50 170 829 43 567 1,439 58% 14.1% 937 50 170 817 43 591 1,452 56% 11.4% 929 50 170 809 43 613 1,465 55% 10.3% 652 272 23 900 45 219 1,164 77% 9.8% 2002A 1,036 231 364 903 45 406 1,354 67% 11.6% 2003E 956 50 170 836 43 526 1,406 59% 10.2% 2004E 929 50 170 809 43 613 1,465 55% 10.7% 2005E 723 50 170 603 43 720 1,366 44% 11.6% 2006E 608 50 170 488 43 847 1,378 35% 12.4% 2007E 455 50 170 335 43 1,002 1,380 24% 13.6% 2008E 272 50 170 152 43 1,186 1,382 11% 14.8%

Source: FMC, Greenwich Consultants, LLC

The following Exhibit contains selected balance sheet items at the end of September 2003. Net asset value (PP&E net + inventories - net debt) implies value for FMCs assets of about $38/share. Book value per share is about $14.

Page 29

FMC Corporation FMC, $31.50, Buy : Initiating With Buy Rating

Exhibit 24: FMC Select Balance Sheet Items ($ millions, except per share data)
Select Balance Sheet Items Operating Working Capital Work Capital Inv . + Trade (AR - AP) Net debt (GAAP) Total Debt (GAAP) PP&E, at Cost/share Net asset v alue/share (100% PP&E + Inv . - Net Debt) Net asset v alue/share (70% PP&E + Inv . - Net Debt) Book equity /share Select Asset Items Inv entories Inv estments PP&E, at Cost Accum Depn PP&E, net Goodw ill Deferred income tax Other Select Debt & Equity Items LT Pension & Postretirement Env ironmental Reserv e for discontinued operations Minority interests Equity 180 162 72 44 440 185 160 71 44 510 180 149 68 43 502 184 55 2,684 1,075 134 299 156 189 71 2,776 1,110 145 296 155 186 79 2,764 1,075 144 297 135 1Q03A 2Q03A 3Q03A 269 393 457 999 1,318 $75 $52 $30 $12 235 410 437 935 1,290 $78 $57 $34 $14 92 333 388 793 1,084 $79 $61 $38 $14

(1,610) (1,665) (1,689)

Source: Greenwich Consultants, LLC; FMC

Page 30

FMC Corporation FMC, $31.50, Buy : Initiating With Buy Rating

Investment Positives
We think EPS will trough in 2003 at about $1.81. Peak earnings could be around $6. Just about any way we value the stock, NPV, EBITDA takeout, EV/EBITDA, forward year P/E, peak EPS, we calculate an equity value of $38 to $40/share. So, we believe the stock represents good value at the current price. Solvay acquisition of American Soda LLP should result in capacity closure and higher industry operating rates which could help Soda Ash pricing in 2004. Astaris is being restructured and if it can be refinanced in 2004, FMC may save some keepwell payments. FMC has two significant properties. One, the former defense operations FMC had in San Jose, California (next to the airport), and second, FMCs Princeton research facility, which has large unutilized both land, lab and office space, which FMC is interested in monetizing. These two properties may be worth more than $100 million. No meaningful amount of debt maturities until 2006, but we expect FMC to pay down about $300 million in term debt by the end of 2006. Debt covenants restrict stock buyback, dividends, and limit acquisitions until FMCs syndicated term-loan of $250 million is paid back. This provides clear direction for cash flows and limits the possibility of large dilutive acquisitions. FMC could be a candidate for sale after Jan 2004. The 2 year grace period will be over after the company split into two separate corporations, FMC and FTI. Separately and in our opinion, there is no longer a rationale to stay in the Ag business. So, FMC could sell its Agricultural Chemicals division for 8X EBITDA and would use the cash to pay down its $250 million syndicated term-loan.

Page 31

FMC Corporation FMC, $31.50, Buy : Initiating With Buy Rating

Investment Risks
Weather, Pests, and Politics Poor weather in North America, South America, or Asia can easily ruin what otherwise might have been a good Agricultural Products earnings year. Weather can limit farmers ability to use agricultural chemicals and weather can also impact the level of insect pressure and the amount of weeds. There are also economic and political risks associated with conducting business in Latin America. Environmental Obligations FMC have been named a potentially responsible party, or PRP, at 26 sites on the federal governments National Priority List. In addition, FMC also has received notice from the EPA or other regulatory agencies that they may be a PRP, at other sites, including 43 sites at which FMC has determined that it is reasonably possible that the company has an environmental liability. In cooperation with appropriate government agencies, FMC is currently participating in, or has participated in, a Remedial Investigation/Feasibility Study (RI/FS) at most of the identified sites. At certain sites, a RI/FS has only recently begun, providing limited information, if any, relating to cost estimates, timing, or the involvement of other PRPs; whereas, at other sites, the studies are complete, remedial action plans have been chosen, or a Record of Decision has been issued. FMC has provided reserves for potential environmental obligations that management considers probable and for which a reasonable estimate of the obligation could be made. Accordingly, reserves of $196.3 million and $223.4 million, excluding recoveries, have been provided at September 30, 2003 and December 31, 2002, respectively. FMC has estimated that possible contingent environmental losses may exceed amounts accrued by as much as $80 million at September 30, 2003 and may be satisfied over the next twenty years or longer. Astaris Joint Venture On October 14, 2003, Solutia, FMCs joint venture partner in Astaris, filed a lawsuit against FMC with the Circuit Court of St. Louis County, Missouri claiming that FMC had breached its joint venture agreement due to the failure of the PPA technology FMC contributed to Astaris. Solutia may be seeking $225 million in damages. According to FMC, its Spanish subsidiary, FMC Foret S.A., has over 15 years of successful production experience operating its low-cost PPA technology at its facility in Huelva, Spain. It is not clear to us whether the case has merit or not. Astaris History - Effective April 1, 2000, FMC and Solutia formed a joint venture that includes the North American and Brazilian phosphorus chemical operations of both companies. The joint venture, Astaris is a limited liability company owned equally by FMC and Solutia. Solutia's equity interest in the Fosbrasil joint venture, which is engaged in the production of purified phosphoric acid ("PPA"), was also transferred and became part of Astaris. Astaris also assumed all FMC/NuWest agreements relating to a PPA facility near Soda Springs, Idaho, and purchased all of the PPA output from that facility as part of those agreements. The phosphate operations of FMC Foret were retained by FMC and were not transferred to the joint venture. Following its formation, Astaris divested certain operations in Lawrence, Kansas, and plant assets located in Augusta, Georgia. The formation of the Astaris joint venture and several key changes in the operating processes of the joint venture, including a shift to the PPA process from the more costly elemental phosphorus process, have from

Page 32

FMC Corporation FMC, $31.50, Buy : Initiating With Buy Rating

time to time resulted in FMC recording assets and liabilities exclusive of FMC's initial equity investment in Astaris. Among these liabilities are FMC's commitments to make payments in support of earnings shortfalls under the joint venture's debt agreement (keepwells). Assets related to Astaris include a receivable for $24.8 million at September 30, 2003 for their contribution to the shutdown costs related to the closure of the joint venture's elemental phosphorus plant in Pocatello, Idaho and a receivable of $16.6 million due to Astaris's agreement to fund an equal portion of FMC's and Solutia's future other post retirement benefit obligations to former employees of the companies' phosphorus chemicals businesses. Astaris Keepwells - In connection with the finalization of Astaris's external financing arrangements during the third quarter of 2000, FMC entered into an agreement with Astaris's lenders under which FMC agreed to make payments ("keepwell payments") sufficient to make up one-half of the shortfall in Astaris's earnings below certain levels. Solutia, which owns the other 50% of Astaris, provided a parallel agreement under which it makes up the other half of any shortfall. Astaris's earnings did not meet the agreed levels for the first, second and third quarters of 2003, and FMC does not expect that such earnings will meet the levels agreed for the remainder of 2003. FMC made keepwell payments of $47.5 million under this arrangement in the first nine months of 2003 compared to keepwell payments of $27.8 million in the first nine months of 2002. FMC expects its total keepwell payments to be $63 million in 2003, depending on the financial performance of Astaris, and in the range of $40 million to $50 million in 2004. Astaris The Good News. At September 30, 2003, Astaris's credit facility obligations, which FMC's and Solutia's keepwell payments are intended to support, included outstanding borrowings of $95.5 million and letters of credit of $9.2 million, compared to $167.9 million of outstanding borrowings and $9.1 million of letters of credit at December 31, 2002. Interest Rate Risk FMCs debt portfolio, including interest rate swap agreements, at September 30, 2003 is composed of 62% fixed-rate debt and 38% variable-rate debt. The variable-rate component of our debt portfolio principally consists of foreign bank borrowings, variable-rate industrial and pollution control revenue bonds, borrowings under our $250 million term-loan facility, and interest rate swap agreements entered into in the first quarter with an aggregate notional principal amount of $100 million. Changes in interest rates affect different portions of our variable-rate debt portfolio in different ways. Based on the variable-rate debt included in our debt portfolio at September 30, 2003, a 100 basis point increase or decrease in interest rates that remained in effect for the first nine months of 2003 would increase or decrease net income by $1.1 million. Commodity Price Risk Energy costs are approximately 9% of FMCs cost of sales and services. FMC attempts to mitigate their exposure to increasing energy costs by hedging the cost of natural gas. FMC hedges forward approximately 80% of their future energy requirements. Foreign Currency Exchange Rate Risk The primary currency movements for which FMC has exchange-rate exposure are the U.S. dollar versus the euro, the euro versus the Norwegian krone, the U.S. dollar versus the Japanese yen, and the U.S. dollar versus

Page 33

FMC Corporation FMC, $31.50, Buy : Initiating With Buy Rating

the Brazilian real. With foreign currency debt and forward foreign exchange contracts FMC attempts to reduce their net asset exposure to these currency movements. FMC also uses forward foreign exchange contracts to hedge firm and anticipated foreign currency cash flows. Premises and Product Claims Like many industrial companies, FMC has been named as one of many defendants in asbestos related personal injury litigation. These cases allege personal injury or death resulting from exposure to asbestos in premises of FMC or to asbestos-containing components installed in machinery or equipment manufactured or sold by discontinued operations. The machinery and equipment businesses FMC owned or operated did not fabricate the asbestos-containing component parts at issue in the litigation. The asbestos-containing materials were housed inside of machinery and equipment and accessible only at the time of infrequent repair and maintenance. As of December 31, 2002, there were approximately 26,000 premises and product claims pending against FMC in several jurisdictions. To date, FMC has discharged, all before trial, approximately 51,000 claims against FMC, the overwhelming majority of which have been dismissed without any payment to the plaintiff. The costs of all settlements to date have totaled approximately $3 million.

Page 34

FMC Corporation FMC, $31.50, Buy : Initiating With Buy Rating

Important Disclosure Information

Rating Key: Buy: Total return expected to appreciate 15% or more over a 12-month period. Hold: Total return expected to be between 15% to -15% over a 12-month period. Sell: Total return expected to depreciate 15% or more over a 12-month period. I hereby certify that the views expressed in the foregoing research report accurately reflect my personal views about the subject securities and issuer(s) as of the date of this report. I further certify that no part of my compensation was, is, or will be directly, or indirectly, related to the specific recommendations or views contained in this research report. By: Michael Judd.