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Article by DailyStocks_admin    (11-28-08 05:12 AM)

The Daily Magic Formula Stock for 11/28/2008 is FMC Technologies Inc. According to the Magic Formula Investing Web Site, the ebit yield is 18% and the EBIT ROIC is 25-50 %.

Dailystocks.com only deals with facts, not biased journalism. What is a better way than to go to the SEC Filings? It's not exciting reading, but it makes you money. We cut and paste the important information from SEC filings for you to get started on your research on a specific company.


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BUSINESS OVERVIEW

OVERVIEW

We are a global provider of technology solutions for the energy industry and other industrial markets. We design, manufacture and service technologically sophisticated systems and products such as subsea production and processing systems, surface wellhead production systems, high pressure fluid control equipment, measurement solutions, and marine loading systems for the oil and gas industry. We also produce food processing equipment for the food industry and specialized equipment to service the aviation industry. Our business segments are Energy Systems (comprising Energy Production Systems and Energy Processing Systems), FoodTech and Airport Systems. Financial information about our business segments is incorporated herein by reference from Note 18 to our consolidated financial statements included in Item 8 of this Annual Report on Form 10-K.

We were incorporated in November 2000 under Delaware law and were a wholly owned subsidiary of FMC Corporation until our initial public offering in June 2001, when 17% of our common stock was sold to the public. On December 31, 2001, FMC Corporation distributed its remaining 83% ownership of our stock to FMC Corporation’s stockholders in the form of a dividend. Our principal executive offices are located at 1803 Gears Road, Houston, Texas 77067. As used in this report, except where otherwise stated or indicated by the context, all references to “FMC Technologies,” “we,” “us,” or “our” are to FMC Technologies, Inc. and its consolidated subsidiaries.

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge through our website at www.fmctechnologies.com, under “Investor Center – SEC Filings.” Our Annual Report on Form 10-K for the year ended December 31, 2007, is also available in print to any stockholder free of charge upon written request submitted to Jeffrey W. Carr, General Counsel and Secretary, FMC Technologies, Inc., 1803 Gears Road, Houston, Texas, 77067.

Throughout this Annual Report on Form 10-K, we incorporate by reference certain information from our Proxy Statement for the 2008 Annual Meeting of Stockholders. The SEC allows us to disclose important information by referring to it in that manner. Please refer to such information. We provide stockholders with an annual report containing financial information that has been examined and reported upon, with an opinion expressed thereon by an independent registered public accounting firm. On or about April 2, 2008, our Proxy Statement for the 2008 Annual Meeting of Stockholders will be available on our website under “Investor Center – SEC Filings.” Similarly, our 2007 Annual Report to Stockholders will be available on our website under “Investor Center – Annual Reports.”


BUSINESS SEGMENTS

Energy Production Systems

Energy Production Systems designs and manufactures systems and provides services used by oil and gas companies involved in land and offshore, including deepwater, exploration and production of crude oil and gas. Our production systems control the flow of oil and gas from producing wells. We specialize in offshore production systems and have manufacturing facilities near most of the world’s principal offshore oil and gas producing basins. We market our products primarily through our own technical sales organization. Energy Production Systems revenue comprised approximately 62%, 60% and 57% of our consolidated revenue in 2007, 2006 and 2005, respectively.


Principal Products and Services


Subsea Production Systems . Subsea systems represented approximately 49%, 47%, and 45% of our consolidated revenues in 2007, 2006, and 2005, respectively. Our systems are used in the offshore production of crude oil and natural gas. Subsea systems are placed on the seafloor and are used to control the flow of crude oil and natural gas from the reservoir to a host processing facility, such as a floating production facility, a fixed platform, or an onshore facility. Our subsea equipment is remotely controlled by the host processing facility.


The design and manufacture of our subsea systems require a high degree of technical expertise and innovation. Some of our systems are designed to withstand exposure to the extreme hydrostatic pressure that deepwater environments present as well as internal pressures of up to 15,000 pounds per square inch and temperatures in excess of 350Âş F. The foundation of this business is our technology and engineering expertise.

The development of our integrated subsea systems usually includes initial engineering design studies, subsea trees, control systems, manifolds, seabed template systems, flowline connection and tie-in systems, installation and workover tools, and subsea wellheads. In order to provide these systems and services, we utilize engineering, project management, global procurement, manufacturing, assembly and testing capabilities. Further, we provide service technicians for installation assistance and field support for commissioning, intervention and maintenance of our subsea systems throughout the life of the oilfield. Additionally, we provide tools such as our riserless light well intervention system for certain well workover and intervention tasks.

Surface Production Systems . In addition to our subsea systems that control the flow of oil and natural gas from deepwater locations, we provide a full range of surface wellheads and production systems for both standard service and critical service applications. Surface production systems, or trees, are used to control and regulate the flow of oil and gas from the well. Our surface products and systems are used worldwide on both land and offshore platforms and can be used in difficult climatic conditions, such as arctic cold or desert high temperatures. We support our customers through leading engineering, manufacturing, field installation support, and aftermarket services. Surface products and systems represented approximately 13%, 12%, and 11% of our consolidated revenues in 2007, 2006, and 2005, respectively.

Separation Systems . We design and manufacture systems that separate production flows from wells into oil, gas and water. Our separation technology improves upon conventional separation technologies by moving the flow in a spiral, spinning motion. This causes the elements of the flow stream to separate more efficiently. These systems are currently capable of operating on surface systems onshore or on offshore facilities, and we began successful subsea operation in 2007.

Status of Product Development

We continue to advance the development of subsea separation processing technologies. Subsea processing is an emerging technology in the industry, which we believe offers considerable benefits to the oil and gas producer, enabling a more rapid and cost-efficient approach to separation. If separation is performed on the seabed, the hydrostatic pressure of the fluid going from the seabed to the surface is reduced, allowing the well to flow more efficiently, accelerating production and enabling higher recoveries from the subsea reservoir. Also, it can significantly reduce the capital investment required for floating vessels or platforms, since the integration of processing capabilities will not be required. We introduced this technology commercially with StatoilHydro’s Tordis field in the North Sea during 2007. Another enhancement to separation technology, inline separation, adds the efficient design of a small pipe to separate the oil and gas during production. Inline separators will be a cost-effective option in a number of surface and subsea applications, requiring only 20% of the weight and space required by most conventional separator systems.

Another subsea processing technology we believe will serve this industry in the future is gas compression in subsea applications. Subsea gas compression allows the operator to maintain gas production as the reservoir pressure declines. It also boosts gas pressure and allows for transportation of the gas to shore without the need for surface facilities. We are currently developing a subsea gas compression system suitable for large pressure ratios and volume flow.

Capital Intensity

Most of the systems and products that we supply for subsea applications are highly engineered to meet the unique demands of our customers and are typically ordered one or two years prior to installation. We commonly receive advance and progress payments from our customers in order to fund initial development and our working capital requirements. In addition, due to factors such as higher engineering content and our manufacturing strategy of outsourcing certain low value-added manufacturing activities, we believe that our Energy Production Systems business is less capital intensive than our competitors’ businesses.

Dependence on Key Customers

Generally, our customers in this segment are major integrated oil or exploration and production companies.

With our integrated systems for subsea production, we have aggressively pursued alliances with oil and gas companies that are actively engaged in the subsea development of crude oil and natural gas. Development of subsea fields, particularly in deepwater environments, involves substantial capital investments by our customers. Our customers have sought the security of alliances with us to ensure timely and cost-effective delivery of subsea and other energy-related systems that provide an integrated solution to their needs. Our alliances establish important ongoing relationships with our customers. While our alliances do not always contractually commit our customers to purchase our systems and services, they have historically led to, and we expect that they will continue to result in such purchases. For instance, we have such an alliance with StatoilHydro. In 2007, we generated approximately 10% of our consolidated revenues from StatoilHydro.

The loss of one or more of our significant oil and gas company customers could have a material adverse effect on our Energy Production Systems business segment.

Competition

Energy Production Systems competes with other companies that supply subsea systems, surface production equipment, and separation systems, and with smaller companies that are focused on a specific application, technology or geographical niche in which we operate. Companies such as Cameron International Corporation, GE Vetco Gray, Aker Kværner ASA, and Wood Group compete with us in the marketplace across our various product lines.

Some of the factors on which we compete include reliability, cost-effective technology, execution, and delivery. Our competitive strengths include our intellectual capital, experience base and breadth of technologies and products that enable us to design a unique solution for our customers’ project requirements while incorporating standardized components to contain costs. We have a strong presence in all of the major producing basins. Our deepwater expertise, experience and technology help us to maintain a leadership position in subsea systems.

Energy Processing Systems

Energy Processing Systems designs, manufactures and supplies technologically advanced high pressure valves and fittings for oilfield service customers. We also manufacture and supply liquid and gas measurement and transportation equipment and systems to customers involved in the production, transportation and processing of crude oil, natural gas and petroleum-based refined products. We sell to the end user through authorized representatives, distributor networks and our own technical sales organization. The segment’s products include fluid control, measurement solutions, loading systems, material handling systems and blending and transfer systems. Energy Processing Systems revenue comprised approximately 17%, 18% and 17% of our consolidated revenue in 2007, 2006 and 2005, respectively.

Principal Products and Services

Fluid Control . We design and manufacture flowline products, under the WECO ® /Chiksan ® trademarks, and pumps and valves used in well completion and stimulation activities by major oilfield service companies, such as Schlumberger Limited, BJ Services Company, Halliburton Company and Weatherford.


Our flowline products are used in equipment that pumps corrosive and/or erosive fluid into a well during the well construction or stimulation process. Our reciprocating pump product line includes duplex, triplex and quintuplex pumps utilized in a variety of applications. The performance of this business typically rises and falls with variations in the active rig count throughout the world.

Measurement Solutions Systems . Our measurement systems provide solutions for use in custody transfer of crude oil, natural gas and refined products. We combine advanced measurement technology with state-of-the-art electronics and supervisory control systems to provide the measurement of both liquids and gases for purposes of verifying ownership and determining revenue and tax obligations. Our Smith Meter product lines are well-established in the industry. We are one of only a few suppliers of multi-path, ultrasonic flow meters for custody transfer of petroleum liquids and natural gas.


Loading Systems . We provide land and marine-based fluid loading and transfer systems primarily to the oil and gas industry. Our systems are capable of loading and offloading marine vessels transporting a wide range of fluids, such as crude oil, liquefied natural gas and refined products. While these systems are typically constructed on a fixed jetty platform, we have also developed advanced loading systems that can be mounted on a vessel or structure to facilitate ship-to-ship or tandem loading and offloading operations in open seas or exposed locations.


Material Handling Systems . We provide material handling systems, including bulk conveying systems to the power generation industry. We provide innovative solutions for conveying, feeding, screening and orienting bulk product for customers in diverse industries. Our process, engineering, mechanical design and project management expertise enable us to execute these projects on a turnkey basis.


Blending and Transfer Systems. We provide engineering, design and construction management services in connection with the application of blending technology, process controls and automation for manufacturers in the lubricant, petroleum, additive, fuel and chemical industries.

Dependence on Key Customers

No single Energy Processing Systems customer accounts for more than 10% of our annual consolidated revenue.

Competition

Energy Processing Systems currently has the first or second largest market share for its primary products and services. Some of the factors upon which we compete include technological innovation, reliability and product quality. Energy Processing Systems competes with a number of companies primarily in the gas and liquid custody transfer, high-pressure pumping services, and fluid loading and transfer systems industries.

FoodTech

Principal Products and Services

FoodTech designs, manufactures and services technologically sophisticated food processing systems used primarily for fruit juice production, frozen food production, shelf-stable food production and convenience food preparation for the food industry. We market our systems through our own technically oriented sales and marketing personnel and, in some cases, through independent distributors and sales representatives. We have customers and business operations throughout the world, and FoodTech’s equipment is used in more than 100 countries. We serve these markets through our principal production facilities in the United States (Ohio, California and Florida), Belgium, Brazil, South Africa, China, Italy and Sweden. FoodTech revenue comprised approximately 13%, 13% and 16% of our consolidated revenue in 2007, 2006 and 2005, respectively.

We supply citrus juice extractors and related citrus processing equipment for use in citrus processing plants, and aseptic juice and pulp systems. Some of our equipment is provided under full-service leases for which we are paid annual fixed rates plus, in some cases, payments based on production volumes. We develop new extraction technologies to provide more value to customers and to increase our competitive advantage in yield and efficiencies.

We design, assemble and sell a number of industry-leading freezing technologies including individual quick freezing, self-stacking spiral freezer systems and impingement freezing technologies. Our equipment is used for a variety of frozen food products, such as meat, seafood, poultry, bakery products, ready-to-serve meals, fruits, vegetables and dairy products.

We also manufacture and supply an array of equipment and services that enable us to provide integrated systems for the processing of a variety of convenience foods. Our products include coating and cooking systems, portioners, such as our water jet portioners, and continuous batter-breading, frying and oven-cooking equipment.

We are a global supplier of commercial sterilization systems used for the production of shelf-stable and pasteurized packaged foods including fruits, vegetables, soups, milk and a broad range of ready-to-serve meals. These systems may include a filler, a closer, a sterilizer and a control system. We also supply tomato processing equipment.

Seasonality

Due primarily to the seasonal nature of fruit production, FoodTech revenue is typically greater in the second and fourth quarters of each year.

Dependence on Key Customers

FoodTech is a major supplier of citrus processing equipment and services to large citrus processors. We have signed multiyear full-service lease contracts to supply these customers with our equipment and services. The loss of one or more of these customers could have a material adverse effect on our FoodTech business segment.

Competition

FoodTech competes with a variety of local and regional companies typically focused on a specific application, technology or geographic area, and with a few large multinational companies. In each of our markets we have the first or second largest market share. Some of the factors upon which we compete include technology, system integration, high product quality and reliability, safety and quality aftermarket services. Our ability to source from multiple locations around the world helps us to respond to the market conditions that affect the industries we serve, which we believe provides an advantage over local or regional companies. Our continuing presence with our installed base of products and systems and our aftermarket business enables us to tailor and apply our development efforts to fit our customers’ specific requirements.

The food industry is undergoing continuing consolidation as food processors are subject to growing pressure to increase efficiency and lower costs to maintain profitability. Major food processors are increasing their purchasing power through these consolidations with other food processors. As a result, they are seeking technologically sophisticated integrated systems and services, such as those we provide, to maximize the efficiency of their operations, while maintaining high standards of food safety.

Airport Systems

Principal Products and Services

Airport Systems is a global supplier of passenger boarding bridges, cargo loaders, and other ground support products, as well as airport management services. We design, manufacture and service technologically advanced equipment and systems primarily for commercial airlines, air freight companies, and airport authorities. These products are sold and marketed through our own technically oriented sales force as well as through independent distributors and sales representatives. Our products are in operation in more than 90 countries around the world. Airport Systems revenue comprised approximately 8%, 9% and 10% of our consolidated revenue in 2007, 2006 and 2005, respectively.

Our Jetway ® passenger boarding bridges provide passengers access from the aircraft to the terminal. In addition to passenger boarding bridges, we supply preconditioned air, potable water and power conversion systems.

We also supply cargo loaders to commercial airlines, air freight service providers, ground handlers, and the U.S. Air Force. Our cargo loaders service wide-body jet aircraft and can be configured to lift up to 30 tons. We also service the growing narrow-body aircraft market with the RampSnake ® automated baggage loader. We provide other ground support equipment, such as deicers and push-back tractors.

Since 2000, we have been supplying the U.S. Air Force with a cargo loader designed specifically for military applications, commonly referred to today as the Halvorsen loader. Additionally, we began providing trailer mounted diesel air conditioner units to the U.S. Air Force in 2007. U.S. government procurement funding authorization determines the quantity ordered each year. We are actively pursuing the expansion of the market for Halvorsen loaders beyond the U.S. Air Force by marketing this unit to international customers.


We provide airport services which offer the customer centralized management of maintenance for airport facilities, passenger boarding bridges, ground support equipment and baggage systems. We also provide automated guided vehicles used in a variety of industries.

Government Contracts

U.S. defense contracts may be terminated unilaterally at the option of the U.S. government with compensation for work completed and costs incurred. Contracts with the U.S. government are subject to special laws and regulations, noncompliance with which could result in various sanctions.

Competition

Airport Systems competes with a variety of local and regional companies typically focused on a specific application, technology or geographic area, and with a few large multinational companies, including ThyssenKrupp Airport Systems, S.A. and Téléflex Lionel-Dupont (TLD). Some of the factors on which we compete include reliability, cost-effectiveness, product performance and quality. Airlines, airports and air freight companies continue to outsource an increasing amount of non-core services and search for suppliers like us who provide integrated systems and products that are supported by extensive service capabilities.

OTHER BUSINESS INFORMATION RELEVANT TO ALL OF OUR BUSINESS SEGMENTS

Order Backlog


Information regarding order backlog is incorporated herein by reference from the section entitled “Inbound Orders and Order Backlog” in Item 7 of this Annual Report on Form 10-K.

Sources and Availability of Raw Materials

All of our business segments purchase carbon steel, stainless steel, aluminum and steel castings and forgings both domestically and internationally. We do not use single source suppliers for the majority of our raw material purchases and believe the available supplies of raw materials are adequate to meet our needs.


MANAGEMENT DISCUSSION FROM LATEST 10K

Cautionary Note Regarding Forward-Looking Statements

Statement under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995: FMC Technologies, Inc. and its representatives may from time to time make written or oral statements that are “forward-looking” and provide information that is not historical in nature, including statements that are or will be contained in this report, the notes to our consolidated financial statements, our other filings with the Securities and Exchange Commission, our press releases and conference call presentations and our other communications to our stockholders. These statements involve known and unknown risks, uncertainties and other factors that may be outside of our control and may cause actual results to differ materially from any results, levels of activity, performance or achievements expressed or implied by any forward-looking statement. These factors include, among other things, those described under Risk Factors in Item 1A of this Annual Report on Form 10-K.

In some cases, forward-looking statements can be identified by such words or phrases as “will likely result,” “is confident that,” “expects,” “should,” “could,” “may,” “will continue to,” “believes,” “anticipates,” “predicts,” “forecasts,” “estimates,” “projects,” “potential,” “intends” or similar expressions identifying “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including the negative of those words and phrases. Such forward-looking statements are based on our current views and assumptions regarding future events, future business conditions and our outlook based on currently available information. We wish to caution you not to place undue reliance on any such forward-looking statements, which speak only as of the date made and involve judgments.

Executive Overview

We design, manufacture and service sophisticated machinery and systems for customers in the energy, food processing and air transportation industries. We have manufacturing operations worldwide and are strategically located to facilitate delivery of our products and services to our customers. We operate Energy Systems (comprising Energy Production Systems and Energy Processing Systems), FoodTech and Airport Systems business segments. Our business segments serve diverse industries with a wide customer base. We focus on economic and industry-specific drivers and key risk factors affecting each of our business segments as we formulate our strategic plans and make decisions related to allocating capital and human resources. The following discussion provides examples of the kinds of economic and industry factors and key risks that we consider.

The results of our Energy Systems businesses are primarily driven by changes in exploration and production spending by oil and gas companies, which in part depend upon current and anticipated future crude oil and natural gas prices and production volumes. Our Energy Production Systems business is affected by trends in land and offshore oil and gas production, including shallow and deepwater development. Our Energy Processing Systems business results reflect spending by oilfield service companies and engineering construction companies for equipment and systems that facilitate the flow, measurement and transportation of crude oil and natural gas. The level of production activity worldwide influences spending decisions, and we use rig count as one indicator of demand. In the past year, oil and gas prices have been high relative to historical levels, creating incentives for investment in the energy industry. This trend benefited both of our Energy Systems businesses in 2007.

Our FoodTech business results reflect the level of capital investment being made by our food processing customers. The level of capital spending is influenced by changing consumer preferences, public perception of food safety, conditions in the agricultural sector that affect commodity prices, and by our customers’ overall profitability. FoodTech revenues include variable rentals from equipment leases, such as citrus extractors. FoodTech results also may fluctuate as a result of consolidation of customers in the commercial food processing industry.

The results of our Airport Systems business are highly dependent upon the profitability of our customers in the airline and air cargo markets. Their profitability is affected by fluctuations in passenger and freight traffic and the volatility of operating expenses, including the impact of costs related to labor, fuel and airline security. There were positive developments in the airline industry during 2007, including growth in passenger traffic and air cargo. However, we have experienced competitive pressures, especially in the passenger boarding bridge product line, which has affected our pricing. In addition, results in our Airport Systems business are influenced by the level of purchases by the U.S. Air Force, which depend upon governmental funding approvals.

We also focus on key risk factors when determining our overall strategy and making decisions for allocating capital. These factors include risks associated with the global economic outlook, product obsolescence, and the competitive environment. We address these risks in our business strategies, which incorporate continuing development of leading edge technologies, cultivating strong customer relationships, and growing our energy business.

In 2007, we again emphasized technological advancement. In Energy Production Systems, we delivered the industry’s first commercial application of a full-scale subsea processing system. Subsea processing enables production and treatment of hydrocarbons on the ocean floor, thereby reducing deepwater oilfield development costs for pipelines, risers and other topside processing equipment. The installation of our system is expected to improve an oilfield’s recovery by removing the water from the well stream and then reinjecting the water back into the reservoir through a separate subsea well. In FoodTech, we advanced the design in one of our freezers to manage increased throughput while maintaining the same compact size of earlier models. This should allow food processors to increase yield and speed of processing without requiring more production space.

We have developed close working relationships with our customers in all of our business segments. Our Energy Production Systems business results reflect our ability to build long-term alliances with oil and gas companies that are actively engaged in offshore deepwater development, and provide solutions to their needs in a timely and cost-effective manner. We have formed similar collaborative relationships with oilfield service companies in Energy Processing Systems, air cargo companies in Airport Systems and citrus processors in FoodTech. We believe that by working closely with our customers we enhance our competitive advantage, strengthen our market positions and improve our results.

In October 2007, we announced our decision to spin off our FoodTech and Airport Systems businesses into a separate, publicly-traded company. If the spin-off is completed, we will be able to focus all of our efforts and resources on growing the energy business. The current economic outlook in the energy sector is positive. We expect deepwater rig additions over the next few years to add new capacity to develop future subsea fields, which we expect to support the secular growth trend for subsea equipment.

As we evaluate our operating results, we view our business segments by product line and consider performance indicators like segment revenues, operating profit and capital employed, in addition to the level of inbound orders and order backlog. A significant and growing proportion of our revenues are recognized under the percentage of completion method of accounting. Our payments for such arrangements are generally received according to milestones achieved under stated contract terms. Consequently, the timing of revenue recognition is not always highly correlated with the timing of customer payments. We may structure our contracts to receive advance payments which we may use to fund engineering efforts and inventory purchases. Working capital (excluding cash) and net debt are therefore key performance indicators of cash flows.

In all of our segments, we serve customers from around the world. During 2007, approximately 70% of our total sales were to non-U.S. locations. We evaluate international markets and pursue opportunities that fit our technological capabilities and strategies. For example, we have targeted opportunities in West Africa, Brazil and the Asia Pacific region because of the expected offshore drilling potential in those regions.

2007 Compared With 2006

Our total revenue in 2007 reflects double-digit percentage growth over 2006 in all of our business segments. Energy Productions Systems generated the highest dollar increase ($632.7 million) and the highest growth rate (28%). We entered the year with a large backlog resulting from high demand for equipment and systems in 2005 and 2006, especially subsea systems, used in the major oil and gas producing regions throughout the world. During 2007, oil and gas prices remained high relative to historical levels, and land-based drilling activity was stable, which created incentives for investment in the energy industry creating higher demand for our energy systems and services.

Gross profit (revenue less cost of sales) increased $205.2 million, and as a percentage of sales from 20.2% in 2006 to 20.9% in 2007. Higher profits were primarily attributable to higher sales volume ($164.8 million) and higher margin in our Energy Systems businesses, reflecting more complex subsea projects.

Selling, general and administrative (“SG&A”) expense for 2007 increased compared to 2006 but declined as a percentage of sales from 10.7% in 2006 to 9.8% in 2007 as we continue to leverage our SG&A spending. The majority of our increased SG&A spending in 2007 was for Energy Production Systems staffing and selling costs.

We increased our research and development activities in 2007 as we advance new technologies pertaining to subsea processing capabilities.

Other income (expense), net, reflected non-operating gains and losses including gains on foreign currency derivative instruments, for which hedge accounting is not applied, and gains and losses on assets disposals. See Note 14 in Item 8 for further discussion of our derivative instruments’ effects on the consolidated statements of income.

Net interest expense was higher in 2007, reflective of higher debt levels on average during 2007.

Our provision for income taxes reflected an effective tax rate of 33.7% in 2007. In 2006, our effective tax rate was 28.5%. The increase in the effective tax rate is primarily attributable to incremental tax expense in 2007 related to foreign earnings subject to U.S. tax and the reversal in 2006 of a $12.2 million valuation allowance on deferred tax assets related to our Brazilian operations.

Discontinued Operations

We have reported a net loss from discontinued operations reflecting operating losses in two FoodTech product lines, which were partially offset by a $3.1 million gain on sale of one of the FoodTech product lines during the third quarter of 2007. In 2006, our net income from discontinued operations included a gain of $34.8 million, net of tax, on the sale of our Floating Systems business. In addition, we generated profits from the Floating Systems business during 2006, including a $15.0 million ($9.2 million, net of tax) on the favorable resolution of claims on a large contract.

2006 Compared With 2005

Our total revenue for the year ended December 31, 2006 increased compared to the prior year, primarily as a result of our energy businesses, which generated $631.2 million of the revenue growth. Our Energy Production Systems businesses, which provided $479.0 million of the increase, benefited from the high demand for equipment and systems, especially subsea systems, used in the major oil and gas producing regions throughout the world. High oil and gas prices relative to historical levels continue to drive demand for our Energy Processing Systems businesses providing $150.5 million in incremental revenue compared to 2005.

Cost of sales increased relative to 2005, but gross profit (revenue less cost of sales) increased $162.2 million compared to 2005. Higher sales volume generated approximately 75% of the increase, particularly in our Energy Production Systems and Energy Processing Systems businesses. Gross profit improvements in all of our segments relative to 2005 drove the remaining increase in gross profits. The improvement was highly attributable to production cost reductions and shifts in product mix to higher margin products.

Selling, general and administrative expense for the year ended December 31, 2006 increased compared to the prior year, but declined as a percentage of sales from 11.4% in 2005 to 10.7% in 2006. Higher costs in our Energy Production Systems businesses were primarily responsible for the dollar increase, the result of increased headcount required for bid and proposal activity to pursue large scale subsea projects. While we have expanded our operations to meet the growing demand, we have been able to reduce expenses as a percentage of sales by leveraging our existing capabilities.

The absence of the $25.3 million gain on disposal of our investment in common stock of MODEC, Inc. recorded in 2005 contributed to the decline in other income (expense), net for 2006.

Net interest expense for the year ended December 31, 2006 was higher compared to the same period in 2005, primarily as a result of higher average debt levels.

Income tax expense for the year ended December 31, 2006 resulted in an effective income tax rate of 28.5%, compared to an effective rate of 36.8% for 2005. The decrease in effective tax rate is attributable to $25.5 million in incremental tax expense recorded in 2005 related to repatriating foreign earnings under the American Jobs Creation Act of 2004 (the “JOBS Act”). This effect was partially offset by the correction of an immaterial error in 2005 resulting in a reduction in income tax expense of $5.4 million. Additionally, in 2006, we reversed a $12.2 million valuation allowance on deferred tax assets related to our Brazilian operations. Profitability and projections for future taxable income in Brazil caused us to change our assessment of the recoverability of deferred tax assets and reverse the valuation allowance established in prior years.

Discontinued Operations

Our discontinued operations generated income of $65.4 million for the year ended December 31, 2006, compared with $26.1 million in losses for 2005. The variance was driven by two factors. First, we recognized income of $15.0 million ($9.2 million, net of tax) related to favorable resolution of contract claims for the Sonatrach project during the second quarter of 2006, compared to losses of $54.9 million ($33.6 million, net of tax) in 2005. Additionally, we recorded a gain of $34.8 million, net of tax of $18.5 million, in 2006 related to the sale of our discontinued Floating Systems business.

Outlook for 2008

We estimate that our full-year 2008 diluted earnings per share will be within the range of $2.75 to $2.85 including FoodTech and Airport Systems but excluding estimated costs of $0.08 to $0.10 associated with the planned spin-off. The section entitled “Operating Results of Business Segments” provides further discussion of our 2008 outlook. This estimate includes results of operations for FoodTech and Airport Systems, which we expect to spin off during 2008.

Operating Results of Business Segments

Segment operating profit is defined as total segment revenue less segment operating expenses. The following items have been excluded in computing segment operating profit: corporate staff expense, interest income and expense associated with corporate debt facilities and investments, income taxes and other expense, net.

We report our results of operations in U.S. dollars; however, our earnings are generated in a number of currencies worldwide. We generate a significant amount of revenues, and incur a significant amount of costs, in the Euro, Norwegian Kroner, Brazilian Real, and Swedish Kroner, for example. The earnings of subsidiaries functioning in their local currencies are translated into U.S. dollars based upon the average exchange rate for the period, in order to provide worldwide consolidated results. While the U.S. dollar results reported reflect the actual economics of the period reported upon, the variances from prior periods include the impact of translating earnings at different rates.

Energy Production Systems

2007 Compared With 2006

Energy Production Systems’ revenue was $632.7 million higher for the year ended December 31, 2007 compared to the same period in 2006, which includes approximately $200 million related to foreign currency translation. Segment revenue is affected by trends in land and offshore oil and gas exploration and production. Our revenue has grown in particular from the trend toward deepwater development. During the year ended December 31, 2007, higher natural gas and crude oil prices have created an incentive for increased exploration and production of these commodities thereby driving higher demand for our products and services. Subsea systems revenue of $2.3 billion increased by $487.4 million in 2007 compared to the same period in 2006. Subsea volumes increased primarily as a result of progress on new and ongoing projects worldwide; notably projects located offshore West Africa, the North Sea, in the Gulf of Mexico and offshore Brazil.



Energy Production Systems segment operating profit increased by $96.7 million in 2007 compared to the same period in 2006. The increase in sales volume accounted for $103.5 million of the profit increase. We achieved approximately $23.3 million in other margin improvements primarily reflective of more complex, and higher margin, subsea projects. Offsetting these profit increases were $25.0 million in increased selling, general and administrative costs, mostly higher staff levels, and $8.0 million in higher costs for research and development of our subsea technologies.

2006 Compared With 2005

Energy Production Systems’ revenue was $479.0 million higher in 2006 compared to 2005. Segment revenue is affected by trends in land and offshore oil and gas exploration and production, including shallow and deepwater development. Subsea systems revenue of $1.8 billion increased by $362.7 million in 2006 compared to 2005. Subsea volumes increased primarily as a result of progress on new and ongoing projects located offshore West Africa, the North Sea, and offshore Brazil. Surface wellhead demand has increased year-over-year, consistent with the trend of higher oil and gas prices and continued high rig activity.

Energy Production Systems generated an operating profit of $191.2 million during 2006, an increase of $62.7 million from the same period in 2005. This increase is driven by $75.9 million in higher sales volumes (particularly subsea systems) and $15.5 million in higher margins, much of which was related to revenue realized from change orders and the sale of some subsea installation equipment. These earnings were partially offset by $30.0 million in higher selling, general and administrative costs, which did not increase as a percentage of Energy Production Systems sales.

Outlook for 2008

We expect growth in operating profit for Energy Production Systems in 2008 primarily driven by higher volumes and the execution of more complex, and higher margin, subsea projects.


MANAGEMENT DISCUSSION FOR LATEST QUARTER

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Statement under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995: FMC Technologies, Inc. and its representatives may from time to time make written or oral statements that are “forward-looking” and provide information that is not historical in nature, including statements that are or will be contained in this report, the notes to our consolidated financial statements, our other filings with the Securities and Exchange Commission, our press releases and conference call presentations and our other communications to our stockholders. These statements involve known and unknown risks, uncertainties and other factors that may be outside of our control and may cause actual results to differ materially from any results, levels of activity, performance or achievements expressed or implied by any forward-looking statement. These factors include, among other things, those described under Risk Factors in Item 1A of our 2007 Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 29, 2008.

In some cases, forward-looking statements can be identified by such words or phrases as “will likely result,” “is confident that,” “expects,” “should,” “could,” “may,” “will continue to,” “believes,” “anticipates,” “predicts,” “forecasts,” “estimates,” “projects,” “potential,” “intends” or similar expressions identifying “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including the negative of those words and phrases. Such forward-looking statements are based on our current views and assumptions regarding future events, future business conditions and our outlook based on currently available information. We wish to caution you not to place undue reliance on any such forward-looking statements, which speak only as of the date made and involve judgments.


CONF CALL

Robert K Cherry - Director of Investor Relations

Thank you, operator. Good morning and welcome to FMC Technologies third quarter 2008 earnings conference call. Our press release and financial statements issued yesterday can be found on our website. During our call, we will reference earnings from continuing operations, which excludes the results from the FoodTech and Airport System businesses that were spun off to shareholders in the form of a stock dividend, on July 31, 2008. Historical results have been revised to reflect those operations as discontinued. Please refer to JBT Corporation, for the third quarter results of those businesses.

I would like to caution you with respect to any forward-looking statements made during this call. Although these forward-looking statements are based on our current views and assumptions regarding future events, future business conditions, and the outlook for us based on currently available information, these forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by these statements. I refer you to our disclosures regarding risk factors in our Annual Report and our other SEC filings.

I will now turn the call over to Peter Kinnear, FMC Technologies Chairman, President and CEO.

Peter D. Kinnear - Chairman, President, and Chief Executive Officer

Good morning. Welcome to our third quarter 2008 conference call. On the call with me today are Bill Schumann, our CFO; John Gremp, our Executive Vice President for Energy Systems; and Bob Potter, who heads our Energy Processing and Surface Wellhead businesses. I will give you some highlights of our third quarter, Bill will provide you with additional details on our financial performance, an update on our outlook for the remainder of 2008, and then we'll open up the call for your questions.

We had a strong third quarter in both revenue and operating profit. Out total company revenue for the quarter was up 28% and our diluted earnings per share from continuing operations of $0.72, was up 47% from the prior year quarter.

Energy Production revenue was up 31% from the prior year quarter on the strength of our Subsea and Surface Wellhead businesses. Subsea revenue was $722 million, up 38% from the prior year quarter. Our operating profit and energy production was up 44% over the third quarter of '07 and our operating margin increased to 11.3%.

Turning to Energy Processing segment revenue was up 15% from the prior year quarter and operating profit was up 12%. At the end of July, we successfully completed the spin-off of FoodTech and Airport Systems and we are now an entirely energy focused company. Our largest and fastest growing energy business continues to be Subsea. We have achieved a 29% compounded annual growth rate in Subsea over the last 5 years.

We ended 2007 with record Subsea backlog resulting from record orders in the fourth quarter. Our year-to-date orders for Subsea were 1.9 billion through the third quarter and our average order value per well remains over $20 million. As most of you know, due to the project nature of Subsea, the order rate at times is fairly lumpy. And looking at the upcoming Subsea projects greater than $150 million in value, which has historically been about 40% of the total market, we anticipate a strong Subsea project market going in to 2009.

We are still projecting Subsea revenue of $3 billion in 2008. The backdrop of declining commodity prices thus presents certain market risk for us in North America particularly with our Surface Wellhead and Fluid Control businesses. North American sales for these two businesses accounts for less than 10% of our total company revenue. On the other hand we believe there are several factors working in our favor on the Subsea side.

First, once drilling has commenced and equipment has been ordered on a Subsea project, all companies have historically proceeded to complete the project. Second, we have the most established customer alliances and frame agreements in the industry. These relationships allow us to capture an essentially reoccurring of stream of Subsea business. For example in the third quarter, over half of our 33 trees that were ordered come from either frame agreements or alliance partners. Third, our list of Subsea project opportunities is geographically dispersed and involves many of our key customers, both factors are very positive for us.

In addition, I think most of you know, FMC has had a long and established history of strong balance sheet management. Overall, we remain optimistic about our long-term growth and feel we have excellent technology, market positions, and global presence.

In summarizing our third quarter results, we saw a strong revenue and profit growth. Subsea revenue was up 38% and operating profit and energy production was up 44%. The end result for the quarter was a 47% increase in diluted earnings per share from continuing operations. And now, let me turn the call over to Bill Schumann, who will provide you with more details on the quarter.

William H. Schumann, III - Executive Vice President and Chief Financial Officer

Thanks Peter. Before I review the operations, let me talk a bit about the spin off. The spin off of FoodTech and Airport Systems or JBT Corporation was completed at the end of July. They paid us $158 million in cash dividend and tax payments in the third quarter and a subsequent true up of $38 million in October, for a total of $196 million. The October true up payments reflected on our balance sheet at quarters end is a receivable. Outside of a few minor transition services, we're now totally separate from JBT.

The other historical results for the month of July and all previous periods are now contained in our discontinued operations. Discontinued operations income includes a spin off costs, corporate items, and business segments associated with JBT's businesses. On Tuesday, November 4th, we filed an 8-K with updated pro forma financials.

So now, let's review our continuing operations. Energy Production's sales were $896 million in the quarter, up to 31% over the prior year quarter, primarily due to growth of Subsea which was up 38%. Surface Wellhead generated revenue growth of 15% in the quarter. The Energy Production segment generated EBIT of $101.6 million in the quarter, up 44% from the prior year quarter. Its operating margin was 11.3% in the quarter.

Reported inbound orders in energy production were $551 million, backlog was $3.9 billion with Subsea backlog at $3.6 billion. Our orders and backlog in the quarter were negatively impacted by foreign exchange translation. We achieved new Subsea orders of $685 million in the quarter but the new order volume was reduced by $290 million from the impact of weaker foreign currencies on the second quarter backlog.

Energy Processing sales were a record $229 million, up 15% over the prior year quarter. The segment generated EBIT of 42.7 million in the quarter, up 12% from the prior year quarter. Sales were up for each of the businesses in the segment except for fluid control which was down very slightly from the prior year quarter. The overall increases in sales and EBIT in the segment were driven by continued industry infrastructure activity and by strong execution from our measurement and material handling businesses. Inbound orders for Energy Processing were up by 8% from the prior year quarter and backlog at $375 million was up 5%.

Now for the corporate items. Corporate expense in the quarter was $9.9 million and was essentially flat with the prior year quarter. Other revenue and other income net of $4 million increased $1.5 million from the prior year quarter. The company had two unusual items in the quarter. The net impact of foreign exchange gains or losses in the quarter, was a gain of $4.7 million and secondly the company had a reduced liability associated with FMC stock, held in its non qualified savings plan of $5.2 million in the quarter.

The tax rate for continued operations in the third quarter was 32.8% slightly higher than expected tax rate related to our country mix of earnings and foreign dividends. Our net debt at the end of the quarter was $69 million comprised of $306 million of cash and $375 million of debt. Our access to credit continues to be more than sufficient as we have $605 million of credit facilities in place.

We spent $154 million in the third quarter to repurchase approximately 2.8 million shares of common stock. We still have approximately 9.7 million shares remaining on our original Board authorized stock repurchase program. We averaged 129 million diluted shares outstanding in the third quarter.

We spent 39.5 million for capital additions in the quarter which is down from the prior year quarter as the previously announced Subsea capacity expansions and Light Well Intervention system spending near completion. We expect the full year total for continuing operations capital expenditures to be approximately $155 million.

We are reaffirming our 2008 guidance for continuing operations of 260 to 270 per share. This will result in an annual EPS growth of 36% to the middle of the range. Included in this guidance are one time charges in the fourth quarter for pension obligations associated with executive retirements and some temporary Light Well Intervention down time resulting from an unrelated problem with the vessel owned by our partner.

The dynamically positioned vessel used with our Light Well Intervention system has had problems with its clusters and will be undergoing repairs in the fourth quarter. While it is down we will complete normal maintenance on our system. The EPS impact of each of these items is expected to be $0.03. Additionally, we expect some weakness from earnings translation as the dollar has strengthened significantly since the end of the third quarter.

So in summary, Energy Production and Energy Processing segment profits were up 44% and 12% respectively. We reported a strong quarter of earnings at $0.72, up 47% and we've reaffirmed our 2008 guidance in the range of $2.60 to $2.70. Operator, you may now open up the call for questions. Operator.

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