0001681459us-gaap:CarryingReportedAmountFairValueDisclosureMemberfti:SyntheticBonds2021Member2020-12-31



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,Washington, D.C. 20549
FORM 10-K
    ANNUALLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
ýANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year endedDecember 31, 20182020
or
¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from            to            
Commission file number001-37983
TechnipFMC plc
(Exact name of registrant as specified in its charter)
England and WalesUnited Kingdom98-1283037
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
One St. Paul’s Churchyard
London, United Kingdom
EC4M 8AP
London
United KingdomEC4M 8AP
(Address of principal executive offices)(Zip Code)
+44203-429-3950
(Registrant’s telephone number, including area code: +44 203-429-3950
Securities registered pursuant to Section 12(b) of the Act:
code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classEach ClassTrading SymbolName of each exchangeEach Exchange on which registeredWhich Registered
Ordinary shares, $1.00 par value per shareFTINew York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES  Yes ý    NO      No  ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES  Yes  ¨    NO     No  ý
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES  Yes   ý    NO      No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     YES  Yes  ý    NO      No  ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
ý

Accelerated filero
Non-accelerated fileroSmaller reporting companyo
Emerging growth companyo
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  YES  ¨    NO  ý
The aggregate market value of the registrant’s ordinary shares held by non-affiliates of the registrant, determined by multiplying the outstanding shares on June 29, 2018,30, 2020, by the closing price on such day of $31.74$6.80 as reported on the New York Stock Exchange, was $11,624,003,759.$2.7 billion.
The number of shares of the registrant’s ordinary shares outstanding as of March 4, 2019 was 450,129,380.
ClassOutstanding at February 24, 2021
Ordinary shares, $1.00 par value per share450,433,770
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive Proxy Statement relating to its 20192021 Annual General Meeting of Shareholders are incorporated by reference into Part III of this Annual Report on Form 10-K where indicated. The 20192021 Proxy Statement will be filed with the U.S. Securities and Exchange Commission within 120 days after the end of the fiscal year to which this report relates.





TABLE OF CONTENTS
Page
PART I
PART II
PART III
PART IV



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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains “forward-looking statements” as defined in Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Act of 1934, as amended (the “Exchange Act”). Forward-looking statements usually relate to future events and anticipated revenues, earnings, cash flows or other aspects of our operations or operating results. Forward-looking statements are often identified by the words “believe,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could,” “may,” “estimate,” “outlook” and similar expressions, including the negative thereof. The absence of these words, however, does not mean that the statements are not forward-looking. These forward-looking statements are based on our current expectations, beliefs and assumptions concerning future developments and business conditions and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate.
All of our forward-looking statements involve risks and uncertainties (some of which are significant or beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. Known material factors that could cause actual results to differ materially from those contemplated in the forward-looking statements include unpredictable trends in the demand for and price of crude oil and natural gas; competition and unanticipated changes relating to competitive factors in our industry, including ongoing industry consolidation; the COVID-19 pandemic and its impact on the demand for our products and services; our inability to develop, implement, and protect new technologies and services; the cumulative loss of major contracts, customers, or alliances; disruptions in the political, regulatory, economic, and social conditions of the countries in which we conduct business; the refusal of DTC and Euroclear to act as depository and clearing agencies for our shares; the United Kingdom’s withdrawal from the European Union; the impact of our existing and future indebtedness and the restrictions on our operations by terms of the agreements governing our existing indebtedness; the risks caused by our acquisition and divestiture activities; the risks caused by fixed-price contracts; any delays and cost overruns of new capital asset construction projects for vessels and manufacturing facilities; our failure to deliver our backlog; our reliance on subcontractors, suppliers, and our joint venture partners; a failure of our IT infrastructure, including as a result of cyber-attacks; the risks of pirates endangering our maritime employees and assets; potential liabilities inherent in the industries in which we operate or have operated; our failure to comply with numerous laws and regulations, including those related to environmental protection, health and safety, labor and employment, import/export controls, currency exchange, bribery and corruption, taxation, privacy, data protection and data security; the additional restrictions on dividend payouts or share repurchases as an English public limited company; uninsured claims and litigation against us, including intellectual property litigation; tax laws, treaties and regulations and any unfavorable findings by relevant tax authorities; the uncertainties related to the anticipated benefits or our future liabilities in connection with the spin-off of our Technip Energies business segment (the “Spin-off”); any negative changes in Technip Energies’s results of operations, cash flows and financial position, which impact the value of our remaining investment therein and our obligations under the share purchase agreement, dated January 7, 2021 (the “Share Purchase Agreement”), with Bpifrance Participations SA, a société anonyme incorporated under the laws of the Republic of France (‘‘BPI”); potential departure of our key managers and employees; adverse seasonable and weather conditions and unfavorable currency exchange rate; risk in connection with our defined benefit pension plan commitments, as well as those set forth in Part I, Item 1A, “Risk Factors” and elsewhere of this Annual Report on Form 10-K. We caution you not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any of our forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise, except to the extent required by law.

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PART I
ITEM 1. BUSINESS
Company Overview
TechnipFMC plc, a public limited company incorporated and organized under the laws of England and Wales, with registered number 09909709, and with its registered office at One St. Paul’s Churchyard, London EC4M 8AP, United Kingdom (“TechnipFMC”,TechnipFMC,” the “Company,” “we,” or “our”) is a global leader in the energy service company with a portfolio of solutions for the productionindustry; delivering projects, products, technologies, and transformation of hydrocarbons. These solutions range from discreet products and services to fully integrated solutions based onservices. With our proprietary technologies with a clear focus to deliver greater efficiency acrossand production systems, integrated expertise, and comprehensive solutions, we are transforming our customers’ project lifecycles from concept to delivery and beyond.economics.

We have operational headquarters in Paris, France, and Houston, Texas, United States. WeStates, and operate across three business segments: Subsea, Onshore/Offshore,Technip Energies, and Surface Technologies. We are uniquely positioned to deliver greater efficiency across project lifecycles from concept to project delivery and beyond. Through these segments, we are leveredinnovative technologies and improved efficiencies, our offering unlocks new possibilities for our customers in developing their energy resources and in their positioning to meet the energy transition challenge. On February 16, 2021, the Company completed the Spin-off. Subsequent to the three energy growth areas of unconventionals, liquified natural gas (“LNG”),Spin-off, the Company will operate under two reporting segments: Subsea and deepwater developments.Surface Technologies, for further details see section “The Spin-off” below.
We have a unique and comprehensive set of capabilities to serve the oil and gas industry. With
Enhancing our proprietary technologies and production systems, integration expertise, and comprehensive solutions, we are transforming our clients’ project economics.
Enhancement of the Company’s performance and competitiveness is a key component of this strategy, thatwhich is achieved through
technology and innovation differentiation, seamless execution, and reliance on simplification to drive costs down. We are targeting profitable and sustainable growth by seizing growing market growth opportunities and expanding theour range of our services, andservices. We are managing our assets efficiently to ensure that we are well-prepared to drive and benefit from the recovery we are experiencingopportunities in many of the segments we serve.

Each of our more than 37,00035,000 employees is driven by a steadfaststeady commitment to clients and a culture of project execution, purposeful innovation, challenging industry conventions, and finding new and better ways of working to unlock possibilities.rethinking how the best results are achieved. This leads to fresh thinking, streamlined decisions, and smarter results, enabling us to achieve our vision of enhancing the performance of the world’s energy industry.

History
In March 2015, FMC Technologies, Inc., a U.S. Delaware corporation (“FMC Technologies”), and Technip S.A., a French société anonyme (“Technip”), signed an agreement to form an exclusive alliance and to launch Forsys Subsea, a 50/50 joint venture, that would unite the subsea skills and capabilities of two subsea industry leaders. This alliance, which became operational on June 1, 2015, was established to identify new and innovative approaches to the design, delivery, and maintenance of subsea fields.

Forsys Subsea brought the industry's most talentedindustry’s most-talented subsea professionals together early in operators’ project concept phase with the technical capabilities to design and integrate products, systems, and installation to significantly reduce the cost of subsea field development and enhance overall project economics.

Based on the success of the Forsys Subsea joint venture and its innovative approach to integrateintegrated solutions, Technip and FMC Technologies announced in May 2016 that the companies would combine through a merger of equals to create a global subsea leader, TechnipFMC, that would drive change by redefining the production and transformation of oil and gas. The business combination was completed on January 16, 2017 (the “Merger”), and on January 17, 2017, TechnipFMC began operating as a unified, combined company trading on the New York Stock Exchange (“NYSE”) and on the Euronext Paris Stock Exchange (“Euronext Paris”) under the symbol “FTI.”



In 2017, our first year as a merged company, TechnipFMC secured several project awards as many operators moved forward with final investment decisions for major onshore projects and subsea developments. Several of the subsea awards incorporated the use of our integrated approach to project delivery, validating our unique business model aimed at lowering project costs and accelerating the delivery of initial hydrocarbon production. This approach was made possible by bringing together the complimentary subsea work scopes of the merged companies.

In 2018, TechnipFMC delivered the industry’s first three full-cycle, integrated projects and realized considerable growth in Subsea order inbound, driven in part by its unique integrated offering, iEPCI™ (“iEPCI”). For all of 2019, the value of integrated subsea awards to TechnipFMC more than doubled versus the prior year, representing more than 50% of all Subsea project order inbound. The increase was driven by a wider adoption of the integrated
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business model, particularly by those clients where we have unique alliances. With the industry’s most comprehensive and only truly integrated subsea market offering, we have continued to expand the deepwater opportunity set for our customers. clients.

TechnipFMC’s expertise does not end with the production of hydrocarbons. Because of its best in classbest-in-class Engineering and Construction (“E&C”) project design and execution capabilities, enabled by a portfolio of proprietary technologies, TechnipFMC continues to secure and deliver projects that further enable our clients to monetize resources - from liquefaction of gas, both onshore and on floating vessels, through refining and product facilities.facilities and with green chemistry and renewables.

The CompanySpin-off

On August 26, 2019, we announced our intention to separate into two diversified pure-play market leaders – TechnipFMC, focused on subsea and surface hydrocarbon production, and Technip Energies, focused on downstream engineering, procurement, and construction (”EPC”) project execution. Due to the COVID-19 pandemic, a significant decline in commodity prices, and the heightened volatility in global equity markets, on March 15, 2020, we announced the postponement of the completion of the transaction until the markets sufficiently recover. On January 7, 2021, we announced the resumption of activity toward completion of the transaction based on increased clarity in the market outlook and our demonstrated ability to successfully execute projects.

On February 16, 2021, we completed the separation of the Technip Energies business segment. The transaction was structured as a spin-off (the “Spin-off”), which occurred by way of a pro rata dividend (the “Distribution”) to our shareholders of 50.1 percent of the outstanding shares in Technip Energies N.V. Each of our shareholders received one ordinary share of Technip Energies N.V. for every five ordinary shares of TechnipFMC held at 5:00 p.m., New York City time on the record date, February 17, 2021. Technip Energies N.V. is now an independent public company and its shares trade under the ticker symbol “TE” on the Euronext Paris stock exchange.

In connection with the Spin-off, on January 7, 2021, BPI, which has been one of our substantial shareholders since 2009, entered into a Share Purchase Agreement pursuant to which BPI agreed to purchase a portion of our retained stake in Technip Energies N.V. (the “BPI Investment”) for $200.0 million (the “Purchase Price”). On February 25, 2021, BPI paid $200.0 million in connection with the Share Purchase Agreement. The Purchase Price is subject to adjustments, and BPI’s ownership stake will be determined based upon a thirty day volume-weighted average price of Technip Energies N.V.’ s shares (with BPI’s ownership collared between an 11.82 percentage floor and a 17.25 percentage cap), less a six percent discount. The BPI Investment is subject to customary conditions and regulatory approval. We intend to significantly reduce our shareholding in Technip Energies N.V. over the 18 months following the Spin-off, including in connection with the sale of shares to BPI pursuant to the BPI Investment.

Beginning in the first quarter of 2021, Technip Energies’ historical financial results for periods prior to the Distribution will be reflected in our consolidated financial statements as discontinued operations.

The Spin-off enables both companies to benefit from distinct and compelling market opportunities across the energy value chain; dedicated focus of management, resources, and capital; and unique value propositions with differentiated investment appeal.

TechnipFMC is a fully-integrated technology and services provider, driving energy development across deepwater, conventional, and unconventional resources. TechnipFMC continues to innovatesuccessfully demonstrate leadership in integrated subsea project delivery and introduce new technologies across ouris focused on replicating this success through the development of integrated production models for the surface market. TechnipFMC is also poised to benefit from service opportunities resulting from the world’s largest installed base of subsea production equipment, umbilicals, risers, and flowlines, and in the supply of surface integrated systems in the drilling, frac, production and measurement markets.

Technip Energies is a leading engineering and construction player, with a robust project delivery model, strong technical capabilities, and proven track record as demonstrated by the successful execution of some of the world’s most iconic EPC projects. Technip Energies will continue to leverage its industry-leading process technology portfolio, particularly in the areas of productsethylene and services. TechnipFMC also delivered strong financial performance in 2018, driven byhydrogen, while pursuing further opportunities to enhance and differentiate this portfolio, and to accelerate the journey to a relentless focus on operational execution and cost reduction activities.low-carbon future.
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BUSINESS SEGMENTS
On February 16, 2021, we completed the Spin-off. Subsequent to the Spin-off, we will operate under two reporting segments: Subsea and Surface Technologies.
Subsea
TheWe are focused on transforming subsea by safely delivering innovative solutions that improve economics, enhance performance and reduce emissions. As a fully-integrated technology and services provider, we continue to drive responsible energy development.

Our Subsea segment provides integrated design, engineering, procurement, manufacturing, fabrication, and installation, and life of field services for subsea systems, subsea field infrastructure, and subsea pipe systems used in oil and gas production and transportation.

We are an industry leader in front-end engineering and design (“FEED”), subsea production systems (“SPS”), subsea flexible pipe, and subsea umbilicals, risers, and flowlines (“SURF”). and subsea robotics. We also have the capability to install these products and related subsea infrastructure with our fleet of highly specialized vessels. By driving even greater value through integrating the SPS and SURF work scopes, we are able to drive greater value to our clients through more efficient field layout and more efficiently executeexecution of the installation campaign,campaign. This capability, in conjunction with our strong commercial focus, has enabled the successful market introduction of an integrated subsea business model, iEPCI™ (“iEPCI”),iEPCI, which spans a project’s early phase design through the life of field.

Our integrated model business model is unlocking incremental opportunities and materially expanding the deepwater opportunity set. Since the first iEPCI project was awarded in 2016, market adoption of the business model has accelerated each year.

Through integrated FEED studies, or iFEED™ (“iFEED”), we are uniquely positioned to influence project concept and design. Using innovative solutions for field architecture, including standardized equipment, new technologies, and simplified installation, we can significantly reduce subsea development costs and accelerate time to first production.

Our first-mover advantage and ability to convert iFEED studies into iEPCI contracts, often as a direct award, creates a unique set of opportunities for the Companyus that are not available to our peers. This allows us to deliver a fully integrated - and technologically differentiated - subsea system, and to better manage the complete work scope through a single contracting mechanism and a single interface, yielding greatmeaningful improvements in project economics and time to first oil.

We continue to support our clients following project delivery by offering aftermarket and life of field services. Our wide range of capabilities and solutions, including integrated life of field, or iLOF™ (“iLOF”), allows us to help clients increase oil and gas recovery and equipment uptime while reducing overall cost. Our iLOF offering is designed to unlock the full potential of subsea infrastructures during operations by transforming the way subsea services are delivered and proactively addressing the challenges operators face over the life of subsea fields. We provide production optimization, asset life extension insight, proactive de-bottlenecking, and condition-based maintenance.

Our Subsea business depends on our ability to maintain a cost-effective and efficient production system, achieve planned equipment production targets, successfully develop new products, and meet or exceed stringent performance and reliability standards.
Principal Products
Subsea segment products and Servicesservices
Subsea Production Systems. 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 production systems and products include subsea trees, chokes and flow modules, manifold pipeline systems, controlcontrols and data managementautomation systems, well access systems, multiphase and wetgaswet-gas meters, and additional technologies. The design and manufacture of our subsea systems requires a high degree of technical expertise and innovation. Some of our systems are designed to withstand exposure to the extreme hydrostatic pressure of deepwater environments, as well as internal pressures of up to 20,000 pounds per square inch (“psi”("psi") and
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temperatures of up to 400º F. The development of our integrated subsea production systems includes initial engineering design studies and field development planning to considerand considers all relevant aspects and project requirements, including optimization of drilling programs and subsea architecture.



Subsea Processing Systems. Our subsea processing systems, which include subsea boosting, subsea gas compression, and subsea separation, are designed to accelerate production, increase recovery, extend field life, and/or lower operators’ production costs.costs for greenfield, subsea tie-back and brownfield applications. To provide these products, systems, and services, we utilize our engineering, project management, procurement, manufacturing, and assembly and test capabilities.

Rigid Pipe. We design and fabricate rigid pipes for production and service applications at our spoolbases. Rigid pipes are installed from our fleet of differentiated rigid pipelay vessels. Our pipelines optimize flow assurance through innovative insulation coatings, electric trace heating, plastic liners, and pipe-in-pipe systems.
Flexible Pipe and Umbilical Supply.Umbilicals. We perform the engineeringdesign and manufacturing ofmanufacture flexible pipes relying on our engineering centers, and the thermoplastic,as well as steel tube, thermoplastic hose, power, communication, and hybrid (a combination of steel tube, thermoplastic hose, and electrical cables), and power cable umbilical manufacturing units across various regions. In other markets, umbilicals. TechnipFMC vessels will typically perform the installation of the flexible pipes and umbilicals, but we will also providesell these products directly to oil companies or to other vessels.vessel operators.

Vessels.We use our engineering and technical expertise to respond to tenders from a variety of clients including oil companies, engineering, procurement, construction, and installation services (“EPCI”) contractors and other subsea production system manufacturers, often as part of a broader scope.
Vessels. We operatehave a fleet of 18 vessels with one additional vessel under construction. Ofthat are used for the 18 vessels currently in operation, weinstallation and servicing of our products. We have sole ownership of eightten vessels, ownership of sevensix vessels as part of joint ventures, and operate threetwo vessels operated under long-term charter.charters.
We wholly own five pipelay support vessels and jointly own eight subsea construction vessels, including one under construction. The jointly-owned vessels operate under a 50/50 ownership structure exclusively in the Brazilian market. These vessels are primarily contracted to Petróleo Brasileiro S.A. - Petrobras (“Petrobras”), principally to install umbilical and flexible flowlines and risers to connect subsea wells to floating production units across a range of water depths. We also own one subsea construction and pipelay vessel mostly dedicated to the Asia Pacific market and have long-term charter agreements for three further construction vessels. The Company also owns two dive support vessels.
Subsea Services.We provide an arraya portfolio of subseawell and asset services tothat improve uptime, lower lifecycle costseconomics and increase recoveryenhance performance over the life of the field for our clients’clients' subsea production systems. Thesedevelopment cycle. Well services include:include all service offerings: (i) provision of exploration and production wellhead systems and services; (ii) remotely operated vehicle (“ROV”) drill support services; (iii) well head systems; (ii)completion installation and well completion; (iii) asset management services for test, maintenance, refurbishment, and upgrade of subsea equipment and tooling;services; (iv) field performance services based on product data and field data to optimize the performance of the subsea production system; (v) inspection, maintenance, and repair (“IMR”) of subsea infrastructure; (vi) well access and intervention services, both rig-based and vessel-based (riserless light well intervention or “RLWI”),; and (v) well plug and abandonment. Asset Services include all service offerings, such as (i) maintenance services for test, modification, refurbishment, and upgrade of subsea equipment and tooling; (ii) integrity services based on product and field data to optimize the performance of the subsea asset, including proactive inspection, maintenance, and repair (“IMR”) of subsea infrastructure; and (iii) production metering services to enhance well production; (vii) remotely operated vehicle (“ROV”) services; and (viii) well plugfield production, including real time virtual metering services and abandonment and decommissioning.flow assurance services.

Key drivers of subsea services market activity are the inspectionservices linked to subsea wells in greenfield development and maintenance ofbrownfield subsea infrastructure, driven in large part by aging infrastructure on mature fields. The need for well intervention services also continues to grow,tiebacks, or infill developments.
Additionally, with more than 6,000 wells operated globally, of which 33% are older than 10 years and 65% are older than five years.
With our extensive experience in subsea equipment, our largeleading installed base of subsea production equipment, our broad range of services, and our historical technical design and manufacturing leadership, we are in a unique position to offer integrated solutions throughacross the “life of field” services combining(“LOF”) services. These combine asset light solutions (e.g., RLWI), digital services (e.g., Condition Performance Monitoring / Flow Manager data driven monitoring, surveillance, and production management suite of applications), and leading edge automated and robotic systems (e.g., Schilling ROVs, In-service Riser Inspection System or “IRIS”)ROVs) to enhance the economics of producing fields through maximization of asset uptime, higher production volumes, and lower operating expense.

Robotics, Controls and Automation.We design and manufacture ROVs and manipulator arms that are used in subsea drilling, construction, IMR, and life of field services. Our product offering includes electric and hydraulic work-class ROVs, tether-management systems, launch and recovery systems, remote manipulator arms, and modular control systems .systems. We also provide support and services such as product training, pilot simulator training, spare parts, and technical assistance.

We also provide electro-hydraulic and electric production and intervention control systems, allowing accurate control and monitoring of subsea installations to ensure the highest production availability while providingthat can ensure safe and environmentally friendly field operations. These include the sensors, multiphase flow meters, digital infrastructure, integrity monitoring, control functionality, and automation features needed for subsea systems. Robotics capabilities are now being used in the control of manifold valves during production. This isproduction, which demonstrates a convergence of our technologies in order to provide better systems for our customers.



Subsea Studio™ Digital Platform. Subsea Studio™ is our portfolio of digital solutions to increase performance, transform experience, and enable innovation. Subsea Studio™ FD is our front-end field development tool,
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transforming conventional concept, FEED and tender phases into ultra-fast digital field development. Subsea Studio™ Ex is our project execution digital application that increases the efficiency and speed of project execution with a data-centric approach. Subsea Studio™ LOF uses our digitally enabled operations and advanced data driven services to enhance performance and production targets.

Research, Engineering, Manufacturing and Supply Chain (“EMS”REMS”). REMS is a newan organization we formed in November 2017September of 2019 to help achieve productivity improvementssupport accelerated technology innovation, and product delivery improvements. We accomplish this by reducing the costcycle-time of engineering and manufacturing our products, including working with our suppliers to reduce their costs, and optimizing our processes and how we manage workflow. Through EMS,REMS, we are focused on challenging existing technologies and implementing world-class manufacturing practices, including lean flowLEAN and process automation, to improve reliability while reducing total product cost and lead time to delivery. Our EMSREMS organization primarily supports our subseaSubsea segment but is also integrated across our business.Surface Technologies segment.

Product Management. In 2019, we established a Product Management function to expand our capabilities to assess, define, and deliver the technologies and products of the future. This function enables REMS, and the Subsea and Surface Technologies businesses to drive the understanding of customer requirements, competitive landscape, and investment prioritization.

Capital Intensity
Many of the systems and products we supply for subsea applications are highly engineered to meet the unique demands of our customers’ field properties and are typically ordered one to two years prior tobefore installation. We often receive advance payments and progress billings from our customers to fund initial development and working capital requirements. However, our working capital balances can vary significantly depending on the payment terms and execution timing on contracts.

Dependence on Key Customers
Generally, our customers in thisthe Subsea segment are major integrated oil companies, national oil companies, and independent exploration and production companies.

We actively pursue alliances with companies that are engaged in the subsea development of oil and natural gas to promote our integrated systems for subsea production. These alliances are typically related to the procurement of subsea production equipment, although some alliances are related to EPCI services. Development of subsea fields, particularly in deepwater environments, involves substantial capital investments. Operators have also sought the security of alliances with us to ensure timely and cost-effective delivery of subsea and other energy-related systems that provide integrated solutions to meet their needs.

Our alliances establish important ongoing relationships with our customers. While these alliances do not contractually commit our customers to purchase our systems and services, they have historically led to, and we expect that they would continue to result in, such purchases.

The commitment to our customers goes beyond project delivery, and we nurture these alliances with transparency and collaboration to better understand their needs to ensure customer success.

No single Subsea customer accounted for 10% or more of our 20182020 consolidated revenue.

Competition
As a result of the Merger, weWe are the only fully integrated company that can provide the fullcomplete suite of subsea production equipment, umbilicals, and flowlines as well aswith the complete portfolio of installation and LOF services enabling us to develop a subsea production field. Our company competesfield as a single company. We compete with companies that supply some of the components as well as installation companies. Our competitors include Aker Solutions ASA, Baker Hughes a GE Company (“BHGE”Baker Hughes”), Dril-Quip, Inc., McDermott International, Inc. (“McDermott”), National Oilwell Varco, Oceaneering International, Inc., Saipem S.p.A. (“Saipem”), Schlumberger, Ltd. (“Schlumberger”), and Subsea 7 S.A.

Seasonality
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In the North Sea, winter weather generally subdues drilling activity, reducing vessel utilization and demand for subsea services as certain activities cannot be performed. As a result, the level of offshore activity in our Subsea segment is negatively impacted in the first quarter of each year.

Market Environment
The volatile, and generally low, crude oil price environment overof the last threeseveral years led many of our customers to reduce their capital spending plans orand defer new deepwater projects. Order activity in 2020 was particularly impacted by the sharp decline in commodity prices in April, driven in part by the reduced economic activity, and the general uncertainty related to the COVID-19 pandemic. The reduction and deferral of new projects has resulted in delayed subsea projectprojects inbound for the industry. In response

While economic activity continues to be impacted by the pandemic, the short-term outlook for crude oil has improved as the OPEC+ countries better manage the oversupplied market. Long-term demand for energy is still forecast to rise, and we believe this outlook will ultimately provide our customers with the confidence to increase investments in new sources of oil and natural gas production.

The trajectory and pace of further recovery and expansion in the subsea market is subject to the lower commodity pricescapital our clients dedicate to developing offshore oil and reduced cash flow, operators took actions needed to improvegas fields amongst their subsea project economics,entire portfolio of projects and suppliers, in turn, took the steps necessary to further reduce project break-even levels by offering cost-effective approaches for project developments. These actions continue.
The ratedrivers of project sanctioning for new subsea developments has moved higher since the market trough as project economics and operator confidence have improved.capital expansion or discipline. The risk of project sanctioning delays is still present in the current environment; however, innovative approaches to subsea projects, like our iEPCI solution, have improved project economics, and many offshore discoveries can be developed economically at today’s crude oil prices. In the long-term, deepwater development is expected to remain a significant part of many of our customers’ portfolios.



As the subsea industry continues to evolve, we have taken actions to further streamline our organization, achieve standardization, and reduce cycle times. The rationalization of our global footprint will also further leverage the benefits of our integrated offering. We aim to continuously align our operations with activity levels, while preserving our core capacity in order to deliver current projects in backlog and future order activity.

Strategy
With our proprietary technologies and production systems, and integration expertise, and comprehensive solutions, we are transforming our clients’ project economics.subsea by safely delivering innovative solutions that improve economics, enhance performance, and reduce emissions. We have used these capabilities to develop a new subsea commercial model that is transforming the way we interact with our customers and create value with them.

Our strategy includes the following priorities:
Engagement in the conceptual design and integrated front-end engineering or iFEED, of subsea development projects to create value through technology and integration of scopes (iEPCI) by simplifying field architecture and accelerating both delivery schedules and time to first production;production.
Innovative research and development (“R&D”), often in collaboration with clients and partners, to develop leading products and technologies that deliver greater efficiency to the client, lower development costs, unlock stranded and/or marginal fields, and enable frontier developments;developments.
Focus on selecting the right projects to ensure a strong and healthy backlog.
Superior project execution capabilities allowing the Companyus to mobilize the right teams, assets, and facilities to capture and profitably execute complex subsea projects and services;services.
Capitalize on combined competencies coming from alliances and partnerships with both clients and suppliers; andsuppliers.
Leverage supplier relationships to optimize supply chain market dynamics and implement greater simplification and standardization in products and processes.
TechnipFMC is a clear leader in the subsea industry. Our success has been built on our technological strength, innovation, focus on digitalization, and strong partnerships with major oil companies to expand market opportunities.
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Recent and Future Developments
With manyWe continue to focus on performance improvement and optimization strategies that will improve our profitability. Our investments decisions fully support our business with technologies that will differentiate our portfolio.

Subsea StudioTM is transforming the conventional concept, FEED and tendering phases of subsea projects. Working with our customers reducing their capital spending plans or deferring new deepwater projectsclients, we are now able to develop ultra-fast, digital field architectures that bring together decades of engineering knowledge with artificial intelligence and machine learning to optimize product configurations, accelerate execution, and maximize value.

Subsea StudioTM has an open architecture that allows integration with other engineering and manufacturing systems, eliminating the need for multiple hand-offs, and resulting in responseas much as a 50% reduction in the time required for front-end engineering. We are extending the platform beyond subsea system design to incorporate the execution and field management phases of a project. Once fully implemented, we will have a complete digital thread from concept design, all the way through to the low crude oil price environment, we have adjusted our workforce and manufacturing capacity to align our operations with our anticipated outlook for project inbound. These restructuring actions have resulted in a leaner cost structure. The operational improvements and cost reductions made in 2016, combined with additional actions taken in 2017 and 2018, will partially offset the anticipated decline in operating margins in 2019.
A completely new suite of products called Subsea 2.0™ (“Subsea 2.0”), commercialized in November 2017, is gaining traction, and the first components are already in the water. Relative to traditional subsea equipment, the Subsea 2.0 technology portfolio significantly reduces the size, weight, and part countlife of the equipment installed onfield.

To further our commitment to meaningfully contribute to the seabed. Subsea 2.0 technologies can enhance project economics both asenergy transition, we formed New Energy Ventures to define a stand-alone offeringdetailed business plan and as partidentify and develop business opportunities and investment cases. We seek to make energy more sustainable through electrification of an integrated solution, further unlockingoffshore fields through renewable sources. Offshore floating wind, wave energy, and green hydrogen will be main contributors to our subsea energy transition vision. Our core competencies in systems engineering, safety control and systems, high pressure gas pipelines and risers, connection systems, and subsea tank systems are easily transferable from oil and gas reservesto alternative energy solutions.

We have set a target to reduce up to 50 percent of CO2 emissions from offshore upstream life of field. Subsea is a field development solution that otherwise would notis uniquely positioned to minimize carbon footprint and drive simplification in field design, product design and offshore operations to enable a platform-less future.

Subsea all-electric field developments enable longer step-out and tiebacks as well as unmanned platforms and operations. Subsea processing and power solutions move technology from topside to seabed. Automation and robotics such as the Gemini ROV represent a step change towards autonomous operations.

Our subsea products and infrastructure help our clients' businesses be developed.less carbon intensive across activities by reducing CO2 emissions.

We believe that 2016 marked the inflection in subsea order activity as demonstrated by the increased number of final investment decisions made on offshore project developments. The Company’s full-year Subsea inbound orders increased significantly in 2017 and remained at this improved level in 2018, with integrated project awards taking greater share of our order activity. Our integrated business model is clearly demonstrating the ability to positively impact project economics and expand the deepwater opportunity set.
In the fourth quarter of 2018, the Company performed impairment assessments and determined that goodwill and certain of our vessels had carrying values that exceeded their fair value, resulting in an impairment. Refer to Note 12 and Note 17 to our consolidated financial statements included in Part II, Item 8 of the Annual Report on Form 10-K for additional information on these impairments.
In 2019, we expect to see another increase in subsea market activity. We also anticipate a further increase in our inbound orders, where we expect our iEPCI capabilities to provide a competitive advantage as we deliver comprehensive and differentiated solutions. In addition, we anticipate the following longer-term trends in the subsea market:

Increased market adoption of integrated subsea projects, leading to further penetration of our integrated business model and higher levels of iEPCI order activity for our Company;Company.
Growing service opportunities, driven by (i) higher levels of project activity, (ii) increased asset integrity and production management activities focused on improving uptime and production volume and lowering emissions, and (iii) increased maintenance and intervention activity resulting from an expanding and aging installed equipment base;base.
Smaller projects (less than $75 million) and direct awards will continue to contribute meaningfully to our order mix. In 2017 and 2018,2020, these awards collectively represented just under one-halfmore than half of our total subsea inbound orders, with the remainder being publicly announced projects and subsea service activities. Subsea tiebacks are often part of this mix, and these shorter cycle brownfield expansions provide operators with faster paybacks and higher returns;returns.



Capital expenditures for new greenfield projects will be sanctioned and average project size will increase as the subsea market recovery develops;
There is a growing trend towards independent operators and new entrants undertaking subsea developments; we are a natural partner for this customer group because of our ability to offer fully integrated solutions; andsolutions.
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Natural gas developments are growing in prominence. We believe that more than half20 percent of offshore capital expenditures could be directed at natural gas developments by early next decade. We also anticipate that 45 percent of gas production will come from offshore, with significant growth in the Middle East (shallow water) followed by Australia (deep water) in the next five years.
We continue to work closely with our customers and believe that, in the context of lower oil prices, with our unique business model we can further reduce their project break-even levels by offering cost-effective approaches to their project developments and accelerateaccelerating time to first oil and gas.

Product Development
We continue to expand our Subsea portfolio of technology-based solutions to deliver a complete production system for high pressure and high temperature applications. In 2014, we entered into a joint development agreement with several major operators to develop common standards for subsea production equipment capable of operating at pressures as high as 20,000 psi and temperatures up to 350º F. This joint development agreement is delivering standardized design, materials, processes, and interfaces to provide improved reliability and operations over the life of the field.
Technology development progressed on theour Subsea 2.0 2.0™ (“Subsea 2.0”)product platform, the next generation of subsea equipment, using designs that are significantly simpler, leaner, and smarter than current designs. These new products incorporate a modular product architecture and component level standardization to enable a flexible configure-to-order approach, that delivers a 70-90% reduction in manual activities during the production process, reducing hardware delivery time for clients. The products are expected to deliver breakthroughs in the way subsea products are manufactured, assembled, installed, and maintained over the life of the field. The smaller, lighter products achieve up to a 50% reduction in size, weight, and part count,Incorporating our Subsea 2.0 platform can greatly simplify the subsea infrastructure, while maintaining the same or improved functionality.reducing greenhouse gas emissions. When combined with iEPCI, our powerful integrated approach to field architecture,it also simplifies vessel installation campaigns by providing an even greater environmental and project execution, Subsea 2.0 improves project economicseconomic benefit and unlocks first oil and gas faster.
Several major elements In 2020, we installed Subsea 2.0 trees on two projects, with production under way offshore in Brazil. Additionally, we were awarded our latest iEPCI project with Shell in Malaysia. It incorporates our Subsea 2.0 technology as well as a diverse set of other projects in some of the portfolio were launched to the market during the year, including the compact tree, compact manifold, flexible jumpers, distribution, controls, and horizontal connectors. We have incorporated Subsea 2.0 elements into several projects including the Shell Kaikias subsea development, which sits in 4,575 feet of watermost active basins in the Gulf of Mexico and is a tieback to the Ursa platform. On March 4, 2018, TechnipFMC and Shell celebrated the successful delivery and installationworld.

Our Joint Industry Program for electrification of the field progressed well this year. This system solution will drive reduced emissions, enable more digitally enabled intelligent field operations, improve economics for long step-out and subsea tie-back to short field developments, and contribute to a more sustainable way to develop oil and gas resources.

In a partnership with Halliburton, we introduced Odassea™, the first applicationdistributed acoustic sensing solution for subsea wells. This technology platform enables operators to execute intervention-less seismic imaging and reservoir diagnostics to reduce total cost of TechnipFMC’s compact pipelineownership while improving reservoir knowledge. This project expands our unique integrated subsea solution and manifoldleverages the competencies and know-how to drive a higher level of sustainability. In the field, we are delivering solutions with the technology to multiple subsea projects at all stages from conceptual design to execution and installation.

This year, we have also advanced on our journey towards more autonomous operations with the launch of the Gemini™® (“PLEM”Gemini”) ROV system, featuring advanced automation and horizontal connection system technologies with flexible jumpers. We also completedprecision robotics to increase offshore productivity. Gemini is the development of our secondnext generation of electrically trace heated pipe-in-pipe (“ETH-PiP”),advanced 250 horse power work class ROV system providing unprecedented subsea productivity. The integration of ROV, manipulators and tooling enables a transition to highly automated subsea robotics, which reduces task time from hours to minutes, ensuring predictable results every time. Featuring a significant advancement in manipulator design, the Gemini manipulators provide integrated hydraulics, electric power, communications, and force compliance.Additionally, the ROV has access to more than 30 subsea exchangeable tools and a comprehensive fluid intervention system to support the most demanding deepwater drilling and completion operations. With a depth rating of up to 4,000 meters, Gemini can remain subsea for one month, enabling 24/7 operations without recovery for tooling reconfiguration. Its combination of system availability, capability and productivity reduces operational costs and delivers significant advancements in power output and length-enabling hydrate prevention in longer distance tiebacks of 50 kilometers or more.unequaled performance.

In addition to investments to develop lower costlower-cost production solutions, we also invest in the development of technology to expand our service portfolio. During the year,As an example, we qualifiedhave simultaneously launched a suite of new technologyROV services for drill rigs alongside Gemini to enable the inspection of flexible risers and flowlines. We also are advancing subsea robotic productivity through the development of more efficient ROV systems that are easier to operate and maintain.drive even greater efficiency.

Acquisitions and Investments
In February 2018, we signed an agreement withWe did not make any material acquisitions or corporate investments in 2020. We have focused on business transformation to mitigate the Island Offshore Group to acquire a 51% stake in Island Offshore’s wholly-owned subsidiary, Island Offshore Subsea AS. Island Offshore Subsea AS provides RLWI project management and engineering services for plug and abandonment (“P&A”), riserless coiled tubing, and well completion operations. In connection with the acquisitionadverse effects of the controlling interest, TechnipFMCrapidly changing market environment and Island Offshore entered into a strategic cooperation agreementto ensure the long-term viability of our subsea business.
Going forward, we will need fewer assets to deliver RLWI services onmore comprehensive solutions:
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We are optimizing our operations across geographies, and if economic returns don’t make sense, we will look to exit.
We continue to right-size our assets to better align with and leverage the benefits of our differentiated offering and the advantages of new technologies – such as Subsea 2.0 – and integrated project delivery.
We continue to partner with others, providing us access to unique assets in a worldwide basis, which also include TechnipFMC’s RLWI capabilities. Island Offshore Subsea AS has been rebrandedmore capital efficient manner.
As the subsea industry continues to TIOSevolve, we are accelerating actions to further streamline our organization, achieve standardization, and is now the operating unit for TechnipFMC’s RLWI activities worldwide.reduce cycle times. We aim to continuously align our operations with activity levels, while preserving our core capacity in order to deliver current projects in backlog and future order activity.
In March 2018, we announced a collaboration agreement with Magma Global Ltd. to develop a new generation of hybrid flexible pipe (“HFP”) for use in offshore applications. HFP is expected to provide increased strength and fatigue performance, while also achieving dramatic weight and cost reductions, for subsea fluid transport applications. As part of the collaboration, TechnipFMC purchased a minority stake in Magma Global.



Onshore/Offshore
The Onshore/Offshore segmentTechnip Energies

Technip Energies offers a full range of designingdesign, project management, and project developmentconstruction services to our customers spanning the entire downstream value chain, including technical consulting, concept selection, and final acceptance test. With the drive of the energy transition, we are increasingly deploying low-carbon solutions. We have been successful in meeting our clients’ needs given our proven skills in managing large engineering, procurement, and construction (“EPC”) projects.
Our Onshore
Technip Energies’ onshore business combines the study, engineering, procurement, construction, and project management of the entire range of onshore facilities related to the production, treatment, and transportation of gas, oil and gas, as well asrenewables, the transformation of petrochemicals such as ethylene, polymers, and fertilizers, as well as other activities.major activities including refining and hydrogen.
We conduct
Technip Energies conducts large-scale, complex, and challenging projects that involve extreme climatic conditions and non-conventional resources and are subject to increasing environmental and regulatory performance standards. We relyTechnip Energies relies on technological know-how for process design and engineering, either through the integration of technologies from leading alliance partners or through ourits own technologies. We seekTechnip Energies seeks to integrate and develop advanced technologies and reinforce ourits strong project execution capabilities in each of our Onshoreits onshore activities.
Our Offshore
Technip Energies’ offshore business combines the study, engineering, procurement, construction, and project management within the entire range of fixed and floating offshore oil and gas facilities, many of which were the first of their kind, including the development of floating liquefied natural gas (“FLNG”) facilities.

Principal Products and Services
Onshore Field Development -  We designEngineering & Construction. Technip Energies designs and buildbuilds different types of facilities for the development of onshore gas, oil, and gas,renewables, processing facilities, and product export systems. In addition, we also renovateTechnip Energies renovates existing facilities by modernizing production equipment and control systems, in accordance with applicable environmental standards.
Refining - We are a leader in the design and construction of oil refineries. We manage many aspects of these projects, including the preparation of concept and feasibility studies, and the design, construction, and start-up of complex refineries or single refinery units. We have been involved in the design and construction of 30 new refineries, and are one of the few contractors in the world to have built six new refineries since 2000. We have extensive experience with technologies related to refining and have completed more than 850 individual process units, from 100 major expansion or refurbishment projects implemented in more than 75 countries. As a result of our cooperation with the most highly renowned technology licensors and catalyst suppliers and our strong technological expertise and refinery consulting services, we are able to provide an independent selection of appropriate technologies to meet specific project and client targets. These technologies result in direct benefits to the client, such as emission control and environmental protection, including hydrogen and carbon dioxide management, sulfur recovery units, water treatment, and zero flaring. With a strong record of accomplishment in refinery optimization projects, we have experience and competence in relevant technological fields in the oil refining sector.
Natural Gas Treatment and Liquefaction - We offerLiquefaction. Technip Energies offers a complete range of services across the gas value chain to support ourits clients’ capital projects from concept to delivery. OurTechnip Energies’ capabilities include the design and construction of facilities for LNG,liquefied natural gas (“LNG”), gas-to-liquids (“GTL”), natural gas liquids (“NGL”) recovery, and gas treatment.

In the field of LNG, weTechnip Energies pioneered base-load LNG plant construction through the first-ever facility in Arzew, Algeria. Working with ourits partners, we haveTechnip Energies has constructed facilities that can deliver more than 90105 million metric tonstonnes per annum (“Mtpa”), representing over 20%which is a significant portion of the global liquefaction capacity in operation today. TechnipFMCTechnip Energies brings knowledge and conceptual design capabilities that are unique among engineering and construction companies involved in LNG. We haveTechnip Energies has engineered and delivered a broad range of LNG plants, including mid-scale and very large-scale plants, both onshore and offshore, and plants in remote locations. We haveTechnip Energies has experience in the complete range of services for LNG, receiving terminals from conceptual design studies to EPC. Reference projects include LNG trains in Qatar (the sixsixth largest ever constructed), Yemen, and a series of mid-scale LNG plants in China, and togetherChina. Together with ourits joint venture partners, we are currently delivering
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Technip Energies delivered the first phase of the Yamal LNG plant (“Yamal”) in the Russian Arctic with the 3all three trains put in production before the end of 2018. During 2019, the Arctic LNG 2 project for Novatek was sanctioned following award of the EPC contract to Technip Energies, together with its joint venture partners. Technip Energies combines its capabilities with its technology and know-how to develop new solutions that supports the energy transition in reducing LNG plant emissions and improving their energy efficiency.
We are
Technip Energies is also well positionedwell-positioned in the GTL market and are one of the few contractors with experience in large GTL facilities. We haveTechnip Energies has unique experience in delivering plants using Sasol’s “Slurry Phase Distillate” technology, and we haveit has provided front-end engineering design for the Fischer-Tropsch section of more than 60%60 percent of commercial coal-to-liquids and GTLliquids conversion capacity worldwide. OurTechnip Energies’ clients also benefit from ourits development of environmental protection measures, including low nitrogen oxide and sulfur oxide emissions, waste-water treatment, and waste management.



We specializeTechnip Energies specializes in the design and construction of large-scale gas treatment complexes as well as existing facility upgrades. Gas treatment includes the removal of carbon dioxide and sulfur components from natural gas using chemical or physical solvents, sulfur recovery, and gas sweetening processes based on the use of an amine solvent. The CompanyTechnip Energies ranks among the top contractors in the field in relation to sulfur recovery units installed in refineries or natural gas processing plants. Given ourits long-term experience in the field of sour gas processing, weTechnip Energies can provide support to clients for the overall evaluation of the gas sweetening/sulfur recovery chain and the selection of optimum technologies.
Ethylene - We hold
Refining. Technip Energies is a leader in the design and construction of refineries. Technip Energies manages many aspects of these projects, including the preparation of concept and feasibility studies, and the design, construction, and start-up of complex refineries or single refinery units. Technip Energies has been involved in the design and construction of more than 30 new refineries or major refinery expansions and are one of the few contractors in the world to have built seven new refineries since 2000. Technip Energies has extensive experience with technologies related to refining and have completed more than 840 individual process units within major expansion or refurbishment projects, implemented in more than 75 countries. As a result of its cooperation with the most highly renowned technology licensors and catalyst suppliers, and its strong technological expertise and refinery consulting services, Technip Energies is able to provide an independent selection of appropriate technologies to meet specific project and client targets. These technologies result in direct benefits to the client, such as energy efficiency, emission control and environmental protection, including hydrogen and carbon dioxide management, sulfur recovery units, water treatment, and zero flaring. With a strong record of accomplishment in refinery optimization and performance improvement projects, Technip Energies has experience and competence in relevant technological fields in the refining sector. Transition to a low-carbon economy is a strategic trend driving the refining industry today for which Technip Energies offers significant experience, technological skills, solid project development, and delivery references.

Biofuels. Biofuels are a renewable alternative to fossil fuels and an advanced solution to meet stringent, medium-term climate targets. In this domain, Technip Energies is one of the global leaders and delivers a wide range of biofuel plants utilizing various technologies. Technip Energies has end-to-end project management expertise, delivering projects from feasibility studies to full EPC project execution. Opportunities lie in expansions or revamps of existing refineries, as well as stand-alone projects. As an example, Technip Energies is a partner of choice for Neste’s NEXBTL projects, being involved in its facilities in Singapore and Rotterdam.

Hydrogen. Hydrogen is widely used in the production of cleaner transport fuels and is also the most widely used industrial gas in the refining, chemical, and petrochemical industries. With more than 55 years' experience and expertise in the production of hydrogen, Technip Energies offers a single point of responsibility for the design and construction of hydrogen and synthesis gas production units, with tailored solutions ranging from Process Design Packages to full lump-sum turnkey projects. Technip Energies also offers services for maintenance and performance optimization of running units as well as a wide choice of proprietary technologies, including steam reforming technology used worldwide. Technip Energies has solutions in place for carbon capture readiness in future hydrogen plants, targeting more than a two-thirds' reduction in carbon dioxide release from hydrogen plants. Driven by its track record in grey and blue hydrogen projects, Technip Energies is also focused on positioning carbon-free, green, hydrogen in the current and future energy landscape, on the basis of its extensive expertise in hydrogen technology. In October 2020, Technip Energies entered into a strategic alliance with McPhy, a leading manufacturer and supplier of carbon-free hydrogen production and distribution equipment, to develop large-scale and competitive carbon-free hydrogen solutions from production to liquefaction, storage, and distribution.
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Ethylene. Technip Energies holds proprietary technologies and areis a leader in the design, construction, and commissioning of ethylene production plants. We designTechnip Energies designs steam crackers, from concept stage through construction and commissioning, for both new plants (including mega-crackers) and plant expansions. We haveTechnip Energies has a portfolio of the latest generation of commercially proven technologies and areis uniquely positioned to be both a licensor and an EPC contractor. OurTechnip Energies’ technological developments have improved the energy efficiency in ethylene plants by improving thermal efficiency of the furnaces and reducing the compression power required per ton, thereby reducing carbon dioxide emissions per ton of ethylene by 30%30 percent over the last 2520 years.
Petrochemicals and Fertilizers - We are
Petrochemicals. Technip Energies is one of the world leaders in the process design, licensing, and realization of petrochemical units, including basic chemicals, intermediate, and derivative plants. We provideTechnip Energies provides a range of services that includes process technology licensing and development and full EPC complexes. We licenseTechnip Energies is accelerating the energy transition by improving monomer and energy efficiencies of its plants and by integrating feedstock shifts to improve production costs and carbon footprints. Technip Energies licenses a portfolio of chemical technologies through long-standing alliances and relationships with leading manufacturing companies and technology providers. We haveTechnip Energies has research centers to develop and test technologies for polymer and petrochemical applications, where fully automated pilot plants gather design data to scale-up processes for commercializationcommercialization.
Hydrogen - Hydrogen
Fertilizers. Technip Energies’ expertise covers the entire value chain from mining and beneficiation to fertilizers, including ammonia, urea, and phosphoric acid plants. Working in more than 40 countries, Technip Energies has engineered and delivered more than 350 large fertilizer complexes and integrated units. Technip Energies services offerings range from global strategic planning, technical consulting, and feasibility studies to complete turnkey facilities and further assistance to production and de-bottlenecking. Through its commitment to continuous end-to-end innovation for higher performance and efficiencies, Technip Energies helps its clients develop optimized and sustainable process schemes for their projects and meet the highest environmental standards.

Sustainable Chemistry. Technip Energies is the most widely used industrial gasa key player in sustainable chemistry and offers a variety of technologies, processes and services in the areas of biofuels, biochemicals, and circular economy applications. With leading engineering and project management capabilities originating from expertise in chemicals, petrochemicals, refining, chemical, and petrochemical industries, and is also widely usedfermentation, it provides high value for clients – from process development in the productionvery early stage of cleaner transport fuels. Wethe project, to the implementation of large and complex sustainable chemicals plants.

Decarbonization. Technip Energies provides solutions that span from energy efficiency to full carbon removal, adapting to a variety of client challenges and requirements. Technip Energies makes clients’ businesses less carbon intensive across activities, decarbonizes fossil-based energies and manages the resulting CO2 in a sustainable manner. Technip Energies current portfolio of sustainable technologies includes process designs that improve energy efficiency and reduce emissions and provides answers today for its customers.

Carbon-free energy solutions. To offer a single point of responsibilitycarbon-free solutions requires overcoming many technical and commercial challenges, as well as integrating multiple technologies for the designmanagement of electrical power from wind or solar intermittency. In this field, Technip Energies is expanding its portfolio of technologies and construction ofprocesses to carbon-free energy chains such as green hydrogen and synthesis gas production units, with solutions rangingproduced from Process Design Packages to full lump-sum turnkey projects. We also offer services for maintenance and performance optimization of running units. We have solutions in place for carbon capture readiness in future hydrogen plants, targeting more than a two-thirds reduction in carbon dioxide release from the hydrogen plant.renewable energy.

Fixed Platforms - We offerPlatforms. Technip Energies offers a broad range of fixed platform solutions in shallow water, including: (i) large conventional platforms with pile steel jackets whose topsides are installed offshore either by heavy lift vessel or floatover; (ii) small, conventional platforms installed by small crane vessel; (iii) steel gravity-based structure platforms, generally with floatover topsides; and (iv) small to large self-installing platforms. Technip Energies offers a range of design, construction, and industrial applications that are key to the global transition to a less carbon intensive economy.

Floating Production Units - We offerUnits. Technip Energies offers a broad range of floating platform solutions for moderate to ultra-deepwater applications, including:
Spar Platforms: Capable of operating in a wide range of water depths, the Spar is a low motion floater that can support full drilling with dry trees or with tender assist and flexible or steel catenary risers. The Spar topside is installed offshore either by heavy lift vessel or floatover. Technip Energies has constructed 17 Spar facilities which are currently operating in the world.
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Semi-Submersible Platforms:Platforms: These platforms are well-suited tofor oil field developments where subsea wells drilled by thea mobile offshore drilling unit are appropriate. Semi-Submersibles can operate in a wide range of water depths and may have full drilling and large topside capability. We have ourcapabilities. Technip Energies has its own unique design of low-motion Semi-Submersible platforms that can accommodate dry trees.

Tension-Leg Platforms (“TLP”): An appropriate platform for deepwater drilling and production in water depths up to approximately 1,500 meters, the TLP can be configured with full drilling or with tender assist and is generally a dry tree unit. The TLP and our topside can be integrated ontoon to the substructure atin a cost-effective manner at quayside.

Floating Production, Storage and Offloading (“FPSO”) -. Working with ourits construction partners, we haveTechnip Energies has delivered some of the largest FPSOs in the world. FPSOs enable offshore production and storage of oil which is then transported by a tanker where pipeline export is uneconomic or technically challenged (for example,(e.g., ultra-deepwater). FPSOs utilize onshore processes adapted to a floating marine environment. They can support large topsides and hence large production capacities. Leveraging ourits industry-leading capabilities in gas monetization, particularly FLNG, we areTechnip Energies is currently well-positioned to leverage the global offshore gas cycle with gas FPSO.FPSOs.



Floating Liquefied Natural Gas (“FLNG”) -Gas. FLNG is an innovative alternative to traditional onshore LNG plants and is suitable for remote and stranded gas fields that were previously deemed uneconomical. FLNG is a commercially attractive and environmentally friendlycarbon conscious approach to the monetization of offshore stranded gas fields.fields or associated gas from oil production. It avoids the potential environmental impactcost of building and operating long-distance pipelines and extensive onshore infrastructure. WeTechnip Energies pioneered the FLNG industry and areis the only contractor best able to integrate all of the core activities required to deliver an FLNG project: LNG process, offshore facilities, loading systems, and subsea infrastructure. WeTechnip Energies delivered the industry’s first and largest FLNG facilities and areis currently executing two FLNG projects, Shell Prelude and ENIENI’s Coral South FLNG, which will be installed offshore Mozambique in East Africa.

Mining and Metals. Technip Energies offers its clients an integrated approach and expertise across the mineral value chain from mining to processing. The Sintoukola potash project in the Congo is a prime example of this integrated approach. Technip Energies covers the entire project lifecycle, from conceptual studies to engineering, procurement, construction, and project management services or EPC Lump-Sum Turn-Key services with references including successful completed projects and ongoing projects dedicated to the latter beingtreatment of nickel, uranium, phosphate, potash, alumina, and iron ore. Technip Energies brings together the inauguralknow-how and determination to transform its clients’ project economics.

Life Sciences. Technip Energies is a leading provider in the design and construction of pharmaceuticals and bio-technologies facilities, bringing together know-how, process engineering expertise, construction management, commissioning, and qualification. Technip Energies offers fully integrated technical and regulatory solutions from design to validation. Technip Energies provides its clients a robust experience with more than 350 pharmaceuticals and bio-technologies facilities delivered in the past 25 years.

Nuclear. Technip Energies has recognized expertise and dedicated capabilities at several stages of the nuclear industry chain, from mining to chemistry, underground waste storage and reprocessing. Technip Energies provides engineering services from basic to detailed design, project management, control assistance, and construction services for the nuclear market.
Loading Systems. Technip Energies is globally recognized for setting technical and performance standards in fluid transfer, delivering liquid and gas loading systems to the most challenging applications, both onshore and offshore. Technip Energies leads the market with 10,000 loading arms supplied, including more than 500 arms for LNG. Technip Energies has developed unique offshore LNG facilitytransfer systems for all FLNG facilities operating to-date. Technip Energies offers equipment design and fabrication projects, as well as services over the life of its systems.

Cybernetix robotics and surveillance. Technip Energies offers innovative robotics and surveillance systems for harsh environments and operational constraints. Technip Energies works with an array of clients in Africa.the energy industry. This includes nuclear, where Technip Energies involvement dates back more than 20 years. Technip Energies’ solutions help energy clients increase uptime, reduce costs, and improve safety and speed of decision-making through augmented monitoring and advanced robotics solutions for inspection and dexterous interventions.

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Capital Intensity
Our Onshore/Offshore businessTechnip Energies executes turnkey contracts on a lump-sum or reimbursable basis through engineering, procurement, construction, and project management services on both brownfield and greenfield developments and projects. WeTechnip Energies can execute EPC contracts through sole responsibility, joint ventures, or consortiums with other companies. WeTechnip Energies often receivereceives advance payments and progress billings from ourits customers to fund initial development and working capital requirements. However, ourits working capital balances can vary significantly through the project lifecycle depending on the payment terms and timing on contracts.

Dependence on Key Customers
Generally, our Onshore/OffshoreTechnip Energies' customers are major integrated oil companies or national oil companies. We haveTechnip Energies has developed privilegedlong-term relationships with ourits main clients around ourits portfolio of technologies, expertise in project management, and execution. Ourstrong execution, while addressing national content development requirements. Technip Energies’ customers have sought the security of alliancespartnerships with usTechnip Energies to ensure timely and cost-effective delivery of their projects.
One customer, JSC YamalArctic LNG, represented more than 10%10 percent of 2018our 2020 consolidated revenue. We consolidate all revenue from the JSC Yamal LNG partnership, including revenue associated with the minority partners of the joint venture.

Competition
In the Onshoreonshore market, we faceTechnip Energies faces a large number of competitors, including U.S. companies (Bechtel Corporation, Fluor Corporation, Jacobs Engineering Group Inc., KBR, Inc. (“KBR”), and McDermott), JapaneseAsian and Australian companies (Chiyoda Corporation, JGC Corporation, Hyundai Engineering & Construction Co., Ltd., Samsung Engineering Co., Ltd, SK Engineering & Construction Co., Ltd, and Toyo Engineering Corporation)Worley Limited), European companies (Maire(Wood Group plc, Maire Tecnimont Group, Petrofac, Ltd., Saipem, and Tecnicas Reunidas, S.A., and John Wood Group plc), and Korean companies (Daelim Industrial Co., Ltd., GS Caltex Corporation, Hyundai Oilbank, Samsung Engineering Co., Ltd., and SK Energy Co., Ltd.). In addition, we competeTechnip Energies competes against smaller, specialized, and locally-basedlocally based engineering and construction companies in certain countries or for specific units such as petrochemicals.

Competition in the Offshoreoffshore market is relatively fragmented and includes various players with different core capabilities, including offshore construction contractors, shipyards, leasing contractors, and local yards in Asia Pacific, the Middle East, and Africa. Competitors include China Offshore Oil Engineering Co., Ltd., Daewoo Shipbuilding & Marine Engineering Co., Ltd., Hyundai Heavy Industries Co., Ltd., JGC Corporation, KBR, McDermott, MODEC Inc., Saipem, and Samsung Heavy Industries Co., Ltd., Saipem, KBR, McDermott, China Offshore Oil Engineering Co., Ltd., and JGC Corporation.

Seasonality
Our OnshoreTechnip Energies’ onshore business is generally not impacted by seasonality. Our OffshoreTechnip Energies’ offshore business could be impacted by seasonality in the North Sea regionand other harsh environment regions during the offshore installation campaign at the end of a project.
Market Environment
The Onshore market is impacted by changesIn the first quarter of 2020, the COVID-19 pandemic provoked an unprecedented drop in demand for oil and gas, prices, but is typically more resilient than offshore markets. Indeed,while supply was maintained at a high level for some downstream markets have benefited from low commodity prices where market fundamentals are influencedtime by other economic factors (e.g., petrochemicals and fertilizers that are linked to world growth). This market dynamic is mostly present in developing countries with rapidly growing energy demand (in particular, Asia) and countries with abundantsome large oil and gas reserves that have decided to expand downstream (in particular,producing countries, resulting in sharp price reductions. Technip Energies’ clients reacted rapidly, cutting their investments and delaying project sanctions.

Given the Middle Eastlong cycle nature of Technip Energies business and Russia). The Onshore market remains relatively small in Western Europe, although with a diversity of projects, including a second generation of bio ethanol plants. The North American Onshore market is experiencing a strong recovery in the wakeresilience and maturity of the oilprojects in backlog, Technip Energies has been able to mitigate a significant portion of COVID-19 operational impacts. For its large capital projects, deferrals of new projects were recorded while on-going projects were maintained. With the introduction of its energy transition framework, Technip Energies is well positioned to accompany clients in their shift towards low-carbon societies and gas shale revolution.pursue commercial opportunities, including in digitalization.



The onshore market activity continues to provide a tangible set of opportunities in LNG due to the critical role that natural gas plays as a transition fuel. By focusing on selectivity, cost competitiveness and an agility to capture new opportunities, Technip Energies continues to pursue refining, petrochemical, fertilizer, and renewables project opportunities. Based on a solid track-record, technologies and its energy transition framework, Technip Energies is well positioned for growth in sustainable chemistry and other low-carbon or carbon-free energy solutions.

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Offshore market is more directly impacted by changes in oil prices. Offshore fields in the Gulf of Mexico, the Middle East, and the North Sea were the traditional backbone for investments in the last decade. Recent discoveries of offshore fields with reserves in other regions such as Brazil, Australia, and East Africa are expected to become drivers of increased investment. In the long-term, gasactivity is expected to becomebenefit in the near-term as macro conditions continue to support the international growth cycle, resulting in increased activity in offshore and deepwater exploration and development. In the long term, new upstream investment will also be required as gas becomes a bigger portion of the global energy mix, requiring new investmentsmix. Technip Energies is well positioned to capture these opportunities due to its offering in the upstream industry.all offshore markets and leadership position in FLNG or gas FPSO.

Strategy
OurTechnip Energies strategy is based on the following:
Selectivity of clients, projects, and geographies, which serves to maintain early engagement, leading to influence over technological choices, design considerations, and project specifications that make projects economically viable;viable.
Technology-driven differentiation with strong project management, which eliminates or significantly reduces technical and project risks, leading to both schedule and cost certainty without compromising safety; andsafety.
Excellence in project execution, because of our global, multi-center project delivery model complemented by deep partnerships and alliances to ensure the best possible execution for complex projects.
TechnipFMC’s Onshore/Offshore segment continually investsTechnip Energies continues to invest in innovation and technology. The CompanyTechnip Energies is at the forefront of digital solutions due in part to ourits investment in 3Dthree dimensional models, often referred to as digital twin, and interfaces.

Technip Energies continues to serve its clients in traditional markets, developing more energy-efficient solutions while making their facilities less-carbon intensive. Technip Energies’ framework about Energy Transition is organized around four pillars, and will help us accelerate the journey to a low-carbon society:

LNG – to deliver the necessary infrastructure as a global leader as we transition to a low-carbon society.
Sustainable Chemistry – to design and implement processes for products from renewable sources and to provide circular solutions for the generation of safe and sustainable substances that are in demand by industry and society.
Decarbonization – to make Technip Energies’ clients’ businesses less carbon intensive across our activities, decarbonize fossil-based energies and manage the resulting CO2 in a sustainable manner.
Carbon-Free Solutions – to expand Technip Energies’ portfolio of technologies and processes that provide non-carbon-based energy alternatives.
Recent and Future Developments
In response to industry challenges to improve project economics in the Offshore market, we are continuing our cost reduction efforts to align capacity and capabilitiesTechnip Energies’ active early engagement with market demands. As such, in 2018 we sold our interest in the Pori Offshore yard in Finland.
Onshore market activity continues to provide a tangible set of opportunities, including natural gas, refining, and petrochemical projects.
Activity in LNG is fueled by higher demand for natural gas a fuel source continues to take a greater share of global energy demand. This trend is structural, driven by market preference for cleaner energy sources and the need to satisfy growing domestic demand in markets such as Asia and the Middle East. To meet this demand, we believe that large gas projects will need to be sanctioned in the near future, as evidenced by both the significant increase in pre-FEED and FEED contract awards and higher levels of pre-bid project planning experienced in 2018.
As Onshore market activity levels remain stable, it provides our business with the opportunity to engage early with ourits clients and pursue additionalthrough front-end engineering studies which serveserves to optimize project economics while also significantly mitigating risks during project execution. MarketTechnip Energies direct engagement led to the signing of a major EPC contract in July for the construction of a new hydrocracking complex for the Assiut refinery in Egypt. Technip Energies continues to selectively track refining, petrochemical, fertilizer, and sustainable chemistry project opportunities for downstream front-end engineering studies and full EPC projects are most prevalent– notably in the Middle East, African,Africa, Asia and Asian marketsNorth America – as these sectors typically prove to be more resilient through a downturn.

In response to an increase in both LNG and refining. We continue to track near-term prospectsdemand for petrochemical and fertilizer projects as well. We believe this broad opportunity set could generate additional inbound ordersgas, new offshore investment will be required in the coming years.long term. Recent discoveries of offshore fields with reserves in regions such as Australia and East Africa are expected to benefit future activity; however, the timing of increased investment in these regions could be deferred. Offshore continued as a leader in gas projects with the ongoing Karish FPSO project for Energean, Tortue FPSO project for BP, and Coral FLNG project for Eni.

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Product Development
We areTechnip Energies is positioned as a premier provider of project execution and technology solutions, which enable ourenables its customers to unlock resources at advantaged capital and operating economics. We invest Onshore/Offshore R&DTechnip Energies invests in these main onshore R&D areas: (i) the development of process technology and equipment for economy of scale; (ii) continuous improvement of ourits proprietary process technologies and other solutions to reduce operating and investment cost; and (iii) diversification of ourits proprietary technology offering.offering, especially in the energy transition domain.
Our Offshore
Technip Energies’ offshore R&D efforts are focused on improving the economics of FLNG through innovations in designits clients’ diverse fixed and constructability. We also launched a new program to develop solutions for smaller scale FLNG and LNG importfloating platform projects. Additionally, to further reduce operating and investment costs, we progressedTechnip Energies continues to progress the development of robotic solutions for offshore platforms and continue work ontowards a standard and adaptable design for Normally Unmanned Installations (“NUI”).Installations. Technip Energies is also evaluating the various opportunities that will emerge as the industry and societal demands shift as part of the energy transition. Technip Energies continues to assess and implement the best digital technologies to support the business.



Acquisitions and Investments

Technip Energies has made an investment in McPhy, a leading manufacturer and supplier of carbon-free hydrogen production and distribution equipment. Technip Energies also signed a memorandum of understanding with McPhy, pursuant to which the two companies will jointly work on technology development and project implementation. In January 2017, we officially opened our Modular Manufacturing Yard at Dahej,addition to its leadership position in Gujarat state, located in Western India. The approximately 150,000 square meter yard combines our strengths in process technology, modularized engineering,hydrogen, this collaboration will help Technip Energies develop large-scale and manufacturing and construction.competitive Green hydrogen solutions.
The yard represents a culmination of our knowledge, skills, and technological expertise, covering a range of product lines including: (i) designed modular hydrogen plants; (ii) modular process plant and equipment using proprietary process technology as well as partnering with leading technology partners worldwide; (iii) the components and assemblies of fired heaters, reformers, and ethylene furnaces; and (iv) proprietary special application burners.
No acquisitions or significant investments occurred during 2018.
Surface Technologies
The Surface Technologies segment designs, manufactures, and manufacturesservices products and systems and provides services used by oil and gas companies involved in land and offshoreshallow water exploration and production of crude oil and natural gas. Such products and systems include wellhead systems as well as technologically advanced high pressure valves, flowlines, and pumps used in stimulation activities for oilfield service companies.Our Surface Technologies also provides:product families include (i) hydraulic fracturing (“frac”) systemsdrilling, (ii) stimulation, (iii) production, (iv) measurement, and support services; (ii) production, separation, and flow processing systems; and (iii) measurement systems and loading arm solutions for exploration and production companies.(v) services. We manufacture most of our products internally in facilities located worldwide.
Principal Products and Services
Upstream: Drilling, Completion, Pressure Control, and Production -Drilling. We provide a full range of drilling completion, pressure control, and productioncompletion systems for both standard and custom-engineeredcustom engineered applications. The customer base of our drilling and completion offerings is oil and gas exploration and production companies.
Surface wellheadsWellheads and treesProduction Trees. Our products are used to control and regulate the flow of crude oil and natural gas from the well. The wellhead is a system of spools and sealing devices from which the entire downhole well string hangs and provides the structural support for surface production trees. Production trees are comprised of valves, actuators and chokes which can be combined in both vertical and horizontal configurations, depending on customer-specific requirements.
Surface wellheads and production trees are “per-well” systems which are designed for onshore shale, onshore conventional, and offshore shallow water platform applications, and are typically sold directly to exploration and production operators during the drilling and completion phases of the well lifecycle. Our surface wellheadswellhead and production tree systems are used worldwide, on conventional and unconventional platform base applicationswe are one of the few companies that provide global coverage and a full range of system configurations, including desert high temperatures and shale fields. Our wellhead product portfolio includes(i) conventional wellheads, unihead(ii) Unihead® drill-thru wellheads designed for faster installations,installation and drill-time optimization, and (iii) high-pressure, high-temperature (��HPHT”) systems for extreme production applications.

We also provide services associated to our surface wellhead and production tree portfolio, including service personnel and rental tooling for wellhead and production tree installation and life of field repair, refurbishment, and general maintenance. Our wellhead and production tree business relies on our ability to successfully provide the necessary field operations coverage, responsiveness, and reliability to prevent downtime and non-productive time during the drilling and completion phases

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Completion and stimulation. Our iComplete™ offering is the first integrated pressure containment kit for the onshore conventional wellheads designed tostimulation market. Its CyberFrac™ digital platform reduces manpower in the red zone and enables efficiencies that significantly reduce overall rig time, sealing technology, thermal equipment, valves,GHG emissions, lower downtime, and actuators.eliminate the integration burden for operators.
Our surface completions portfolio includes
We are one of the few oilfield service providers that can offer an integrated frac solutions for shale fields that, together with our digitalized control systems, provide customerssolution covering the fracturing through flowback phases. iComplete™provides our exploration and production customers with an integrated rental and service companies with a one-stop-shop equipment supplier from wellhead to pipeline. Our portfolio includes manifolds, trees,offering, including fracturing tree and manifold systems, as well as pressure control flowlines, flowback and well testing equipment, and field services.

Fracturing Tree and Manifold Systems. During the completion of a shale well, the well undergoes hydraulic fracturing. During this phase, durable and wear-resistant wellsite equipment is temporarily deployed. Our equipment is designed to sustain the high pressure and highly erosive fracturing fluid which is pumped through the well into the formation.

Our equipment (fracturing tree systems, fracturing valve greasing systems, hydraulic control units, fracturing manifold systems, and rigid and flexible flowlines) is temporarily laid out between the wellhead and the fracturing pump truck during hydraulic fracturing. These products are typically supplied to exploration and production operators who rent this equipment directly from us during the hydraulic fracturing activities. Associated with our fracturing equipment rental is fracturing rig-up / rig-down field service personnel as well as oversight and operation of the equipment during the multiple fracturing stages for timelya shale well.

TechnipFMC’s manifold solutions help increase operational efficiency for a pad site with multiple wells. Our SuperFrac™ Manifold provides time savings and cost-effectivepumping efficiencies when stimulating multiple wells on a single pad. The manifolds are installed and connected to multiple trees off the critical path, which allows our customers to fracture more stages per day in a compact footprint and efficiently move operations from one well completion.to another, saving time and money. We also provide closed-loop flowback servicesoffer conventional and articulating arm manifold trailers, which are used as the connection point between fracturing pump trucks and the fracturing flowline and manifold system.

Our Ground Level Fracturing System is an essential tool for unconventional operators who use simultaneous operations to efficiently run completions in multi-well pads. The innovative system design uses various lengths of trunkline to align the recoverySuperFrac™ Manifold and fracturing tree at ground level, which minimizes the number of solids, fluids,flowline connections for safer operation. We are a significant supplier of flowline pipework (rigid and hydrocarbonsflexible) that is used to move the fracturing product from oilthe pump truck, via the manifold and natural gas wells afterinto the stimulation of the well, and we provide chokes, de-sanding, and early production equipment and services through to permanent production facilities and services for oil and gas operators.fracturing trees.

Pressure Pumping.We design and manufacture articulated rigid flowline products under the Weco®/Chiksan® trademarks, flexible flowline and choke-and-kill products under the Coflexip® trademark, articulating frac arm manifold trailers, manifold skids, well service pumps, compact valves, and reciprocating pumpsequipment used in well completion and stimulation activities by major oilfield service and drilling companies, such as BHGE, Halliburton Company, Schlumberger, Transocean, Ltd., and Weatherford International plc, as well as by oil and gas exploration and production operators directly.

Flexibles.We have been a leading supplier of flexible lines since the 1970s and have successfully introduced a portfolio of flexible solutions for the onshore stimulation market. Our PumpFlex™ and WellFlex™ products can be incorporated into most shale operations and are an integral part of our iComplete™ system.

Flowline. We are a leading supplier of flowline Coflexip®products are usedand services to the oilfield industry. From the original Chiksan® and Weco® products to our revolutionary equipment designs and integrated services, our family of flowline products and services provides our customers with reliable and durable pressure pumping equipment. Our facilities stock flowline products in equipmentthe specific sizes, pressures, and materials common to each region. Our commitment is to help our customers worldwide attain maximum value from their pressure pumping assets by guaranteeing that the right products arrive at the job site in top working condition. Our total solutions approach includes the InteServ tracking and management system, mobile inspection and repair, strategically located service centers, and genuine Chiksan® and Weco® spare parts.

Well Service Pumps. We offer a diverse line of well service pumps fluid into a well during the well constructionfor use in high-pressure pumping operations such as hydraulic fracturing and stimulation, processes. Our Coflexip® products are also used by drilling companies for choke-and-kill lines and other applications. Our well service pump product line includesincluding triplex and quintuplex pumps, utilized in a varietyeach with its own industry-leading features, including: (i) heavy-duty power ends, paired with main journal roller bearings and heavy-duty rod journal bearings, (ii) heavy-duty crankshafts, (iii) fluid cylinders, with accessible packing and valves, and (iv) made-to-order pumps. Our pumps can withstand some of applications, including fracturing, acidizing,the harshest operating conditions, with pressure ranges up to 20,000 psi and matrix stimulation, and are capable of delivering flow rates up to 35 barrels1,500 gallons per minute at pressures up to 20,000 psi.minute.

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Production.Our upstream production offering includes well control, safety and integrity systems, multiphase meter modules, in-line separation and processing systems, production monitoring and optimization systems, well controlstandard pumps. These offerings are differentiated by our comprehensive portfolio of in-house compact, modular, and integrity systems, standard pumps, compact valves,digital technologies, and measurement solutionsare designed to enhance field project economics and reduce operating expenditures with an integrated system that spans from wellhead to pipeline.
We support
Our iProduction™ system is the first automated integrated production platform for onshore unconventional. Our digital interface enables operators to manage their production operations remotely, leveraging Insitex data-monitoring technology. Our separation portfolio and measurement technologies, combined with our expertise in modularization, enable our customers to achieve first production faster with fully optimized and environmentally conscious, compact systems.

Flowback and Well Testing Services. After a shale well is hydraulically fractured, the well moves to the flowback phase in which much of the fracturing fluid pumped into the well flows back out through comprehensive service packagesthe wellhead and fracturing tree system. This phase lasts until the wellbore flow is adequate for flow through the production facilities downstream of the wellsite. Our flowback and well testing offering includes chokes, de-sanders, and advanced well testing equipment and related services which are provided to exploration and production operators during the flowback phase. Our Automated Well Testing Package (AWT™) is now widely used in North America enabling operators to remove personnel from processes and its digital package anticipates service. These offerings enable a substantial reduction in downtime and enhanced safety.

Well Control and Integrity Systems. We supply control components and safety systems designed to safely and efficiently run a wellpad, modules on an offshore platform, or a production facility. Our systems are based on standard, field-proven building blocks and designed for minimal maintenance during life of field operations.

Surface Multiphase Meter. Our multiphase meters (“MPMs”) are a collection of technologically advanced innovations that provide a differentiated approach to multiphase measurement. The patented technology in our MPMs offers many unique features that provide a step change in allocation measurement and allows for continuous surveillance of wells across a full range of operating conditions. Our MPMs provide real-time data to a central facility, or our cloud portal, for production reporting and remote notification and system troubleshooting.

Separation and Processing Systems. TechnipFMC provides industry-leading technology for the separation of oil, gas, sand, and water. These solutions are used in onshore production facilities and on offshore platforms worldwide. Our family of separation products delivers client success by increasing efficiency and throughput and reducing the footprint of processing facilities. Our separation systems offering includes internal components for oil and gas multiphase separation, in-line deliquidisers, and solids removal, as well as fully assembled separation modules and packages designed and fabricated for oil and gas separation, fracturing flowback treatment, solids removal, and primary produced water treatment.

Standard Pumps and Skid Systems. We provide complete skid solutions, from design consultation through startup and commissioning. We offer a diverse line of reciprocating pumps, customized according to the application with pressure ranges available up to 10,000 psi and flow rates up to 1,500 gallons per minute.

Automation and Digital Systems. We provide hardware and software solutions to ensure optimal equipmentautomate and provide simple human interfaces for a number of our critical products. These digital offerings help enable the removal of personnel from critical zones, either offshore or onshore. In addition, the digital signatures from our products can then be interpreted and used via condition performance and reliability. These service packages include all phases of the asset’s life cycle: from the early planning stages through testing and installation, commissioning and operations, replacement and upgrade, intervention, decommissioning and abandonment, and maintenance, storage, and preservation.monitoring to eliminate unplanned downtime.



Measurement Solutions -Measurement. We design, manufacture, and service measurement products for the worldwide oil and gas industry. Our flow computers and control systems manage and monitor liquid and gas measurement for applications such as custody transfer, fiscal measurement, and batch loading and deliveries. Our FPSO metering systems provide the precision and reliability required for measuring large flow rates characteristic of marine loading operations. Our gas and liquid measurement systems provide many solutionsare utilized in multiple energy-related applications, such asincluding crude oil and natural gas production and transportation, refined product transportation, petroleum refining, and petroleum marketing and distribution. We combine advanced measurement technology with state-of-the-art electronics and supervisory control systems to provide the measurement of both liquids and gases to ensuregases. This ensures processes operate efficiently while reducing operating costs and minimizing the risks associated with custody transfer.
Loading Systems -
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Services. We provide land-offer our customers a comprehensive suite of service packages to ensure optimal performance and marine-based loadingreliability of our equipment. These service packages include all phases of the asset’s life cycle: from the early planning stages through testing and transfer systems to the oilinstallation, commissioning, and gas, petrochemical,operations, replacement and chemical industries. Our systems provide loadingupgrade, maintenance, storage, preservation, intervention, integrity, decommissioning, and transfer solutions using articulated rigid Chiksan® loading arms and Chiksan® swivel joint technologies and flexible-based Coflexip® technologies, which are capable of diverse applications. While our marine systems are typically constructed on a fixed jetty platform, we have developed advanced loading systems that can be mounted on a vessel or offshore structure to facilitate ship-to-ship and tandem loading and offloading operations in open seas or exposed locations. Both our land- and marine-based loading and transfer systems are capable of handling a wide range of products including petroleum products, LNG, and chemical products.abandonment.

Capital Intensity
Surface Technologies manufactures most of its products, resulting in a reliance on manufacturing locations throughout the world.world, including fully owned manufacturing hubs in Stephenville, Texas, U.S., and Singapore, and a wide global network of third-party suppliers. We also maintain a large quantity of rental equipment related to our drilling and completion and pressure operations.control offerings.

Dependence on Key Customers
Generally, Surface Technologies’ customers are major integrated oil companies, national oil companies, independent exploration and production companies and oil and gas service companies. No single Surface Technologies customer accounted for 10% or more of our 20182020 consolidated revenue.
Competition

Surface Technologies is a market leader for many of our primary products and services. Some of the factors that distinguish us from other companies in the same sector include our technological innovation, reliability, product quality, and ability to integrate across a broad portfolio scope. Surface Technologies competes with other companies that supply surface production equipment and pressure control products. Some of our major competitors in Surface Technologies include BHGE,Baker Hughes, Cactus, Inc., Forum Energy Technologies, Inc., Gardner Denver, Inc., Schlumberger, Haliburton, and The Weir Group plc.
Seasonality
In Western Canada, the level of activity in the oilfield services industry is influenced by seasonal weather patterns. During the spring months, wet weather and the spring thaw make the ground unstable and less capable of supporting heavy equipment and machinery. As a result, municipalities and provincial transportation departments enforce road bans that restrict the movement of heavy equipment during the spring months, which reduces activity levels. There is greater demand for oilfield services provided by our Canadian services business, specifically completion services, in the winter season when freezing permits the movement and operation of heavy equipment. Activities tend to increase in the fall and peak in the winter months of November through March.
Market Environment
Surface Technologies’ performance is typicallyIt has been a challenging year for the surface market, driven in part by variationsthe COVID-19 pandemic and the decline in global drilling activity, creating a dynamic environment. Operating results can be further impacted by pressure pumping activity and completions intensity in the Americas.
The North American market recovery that began in late 2016 continued well into 2018, with rig count and drillinghydrocarbon demand. Drilling and completion activity steadily improving throughduring 2020 decreased by approximately 40 percent compared to 2019 levels.

North American activity remained lower during the first halfyear, however, the number of U.S. fracturing crews has started to recover from the year. The increased activity resultedtrough reached in stronger demand forMay, and the Company’s products and services. The market also benefited from increased service intensity related to hydraulic fracturing activity. As a result of these market dynamics, we experienced stronger demand for pressure control equipment. When combined with our cost rationalization initiatives, we were able to capture the economic benefits of the higher activity levels.weekly U.S. rig count has stabilized. Activity outside of North America remained generally stable after turning downremains resilient. We also continue to benefit from our exposure to the Middle East and Asia Pacific, both of which are being supported by strength in 2015 but continuedgas-related activity. The business mix outside of North America is expected to experience competitive pricing pressureaccount for as much as 65% of total segment revenue in certain markets.2021.



Strategy
Our strategy is focused on being a leading provider of best-costWe exist to transform the surface market in order to provide customers with breakthrough reductions in cost and high-performance integrated assets and services for our customerscarbon intensity in the drilling, completion, upstream production, and midstream and downstream transportation sectors. We distinguish our offering by combining three elements – a flawless customer experience, leading digital tools,key strengths: technology, integration, and integrated systems.automation.
Providing a flawless customer experience is our most important priority and occupies the central pillar of our strategy. For this reason, we have developed the digital tools and customer-centric organizational culture
Technology: We are committed to differentiated core products that enable our customersintegrated solutions to seamlessly transition intoleverage the next erabenefits of hydrocarbon production. In addition, our system integration capabilitiessmarter designs.

Integration: Integrated ecosystems that reduce costs and automation technologies (i) enable reductionsincrease uptime through pre-engineered, modular solutions which drive improvements in both capital and operating expenditures bygreenhouse gas emissions.

Automation: Intelligent products that are remotely managed using actionable data, reducing cycle time, allowing our customers to achieve first oil faster, and (ii) optimize the production process by minimizing facility footprint, manual interventions, and environmental impacts.
Recent and Future Developments
We continue to operate in a challenging environment as global activity is still below levels achievedmanpower in the prior industry cyclefield, maximizing uptime, and pricing remains competitive. In the second half of 2018, well completion activity in North America moved lower, negatively impacting demand for pressure control equipment. The activity decline was driven by pipeline takeaway capacity constraints, lower commodity prices, and the depletion of operator budgets, constraining activity to certain oil and gas basins that can generate acceptable returns.enabling enhanced production.
Despite the decline in completions activity, North American drilling activity continued to move higher throughout 2018. With increased well count and reduced completions, the backlog of uncompleted wells continued to grow and further supports our view that completions activity should recover in the second half of 2019 as operator budgets replenish and takeaway capacity improves. As we entered 2019, drilling activity started to decline from the recent peak levels achieved in late 2018. However, with oil prices having rebound from recent lows and operator budgets replenished in the new year, we continue to anticipate that activity levels will move higher for both drilling and completions as we progress through the year.
Outside of the Americas, we expect global activity levels to improve in 2019. Confidence in an improved outlook for our business is further supported by the strong growth experienced in inbound orders and backlog in late 2018. We believe that the Middle East, Asia Pacific, and Northern Europe are best poised for new order growth. Our international business continued to experience competitive pricing pressure throughout much of 2018. We believe market pricing has since stabilized and expect this pricing environment to continue throughout 2019.
Product Development
In early 2018,2020, we successfully launchedcapitalized on the 2” 10,000 psi cage choke expandinglaunch of our revolutionary integrated ecosystems, iProduction™ and iComplete™, with the Company’s traditional product offering for onshore solutions and deliveringsuccessful installation of our first order to a major Middle East customer. For flow testingiProduction™ system with Shell in their Permian basin iShale™
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production site, and early production, we launched a fully automated and digitized Flow Testing Advanced Automated Package (AAP) leveraging the Company’s superior de-sanding and fluid-separation technology and as well asimplementation of our iComplete™ integrated system in the U.S. utilizing our digital platform,interface technology, CyberFrac™.

iProduction™ is a modern production approach that includes well pad processing, gathering lines, and central processing facilities under a single digital interface. iProduction™ uses proprietary process technology, allowing customers to eliminate tanks, decrease GHG emissions and reduce footprint while maintaining reliability. By integrating and modularizing pre-engineered standard products, we reduced our clients’ costs by up to 33 percent, reduce time to first oil by up to 30 percent and, using our digital twin technology, each site is monitored and controlled remotely – delivering new levels of insightful data to ensure uptime.

iComplete™ uses standardized equipment that can be set up for any unconventional well in the world. The integrated system removes 80 percent of connections and reduces the need for manual intervention during operations thanks to our CyberFrac™ digital interface, which allows for remote monitoringprovides actionable data remotely. Our customers get to oil faster and real-time data capture via the cloud. We also launched compact, modular permanent production facility solutions for both onshore-shalereduce operating costs by 30 percent. This revolutionary approach is making our customers' frac pads faster, safer, and offshore shallow-water fields and have recently received our first contract award.smarter.

Acquisitions and Investments
In October 2017, we announced an agreement to acquire Plexus Holding plc’s (“Plexus”) wellhead exploration equipment and services business for jack up applications. In conjunction with our global footprint and market presence, this portfolio expansion in the mudline and high-pressure, high-temperature arena will enable us to be a leading provider of products and services to the global jack-up exploration drilling market. This acquisition fits within our strategy to extend and strengthen our position in exploration-drilling products and services while leveraging our global field presence. The acquisition closed in the first quarter of 2018.
The business has been integrated into our Surface Technologies segment, including the transfer of key personnel from Plexus, with their specialized expertise, to ensure continuity and ongoing customer support. The business continues to operate from the existing location in Dyce, Aberdeen, United Kingdom.


In December 2017, we opened a new 18,000 square meter facility in Abu Dhabi’s Industrial City 2, and in June 2018, we broke ground on a new 52,000 square meter facility in Dhahran, Saudi Arabia. These facilitiesArabia, with work continuing throughout 2019. Despite the COVID-19 pandemic, work has progressed through 2020 and we are on track to open the facility by mid-2021. The facility, which will be comprised of two stories and a 13, 000 square meter manufacturing space, is part of our continued investment in the United Arab Emirates and Saudi ArabiaMiddle East to reinforce our leading position in delivering local solutions that extend asset life and improve project returns. They positionThe new facility positions us to respond to the expected increase in activity for Abu Dhabi National Oil Company (“ADNOC”) and Saudi Aramco in 2019 and beyondthe area while strengthening our capabilities, providing a solid platform for us to grow in what is a strategic market for our integrated offerings into this region, including multiple product lines and aftermarket services that are key to our growth strategy.surface business. The new facilitiesfacility will offer a broader range of capabilities and greater value-add in-country, supporting our full portfolio with high-technologyhigh technology equipment in the drilling, completion, production, and pressure-controlpressure control sectors.

Capitalizing on Energy Transition

TechnipFMC continues to innovate and introduce new technologies across our portfolio of products and services. Leveraging our vast experience and competencies from decades of working in the transformation of the energy sector, we enable our clients to achieve their energy transition targets.

In Subsea, we fundamentally changed the way we design, manage, and execute projects, starting with digital tools such as our Subsea Studio™. Our Subsea 2.0™ platform can greatly simplify subsea infrastructure, while reducing greenhouse gas emissions by nearly 50%. Combined with iEPCI™, our unique integrated model, it simplifies vessel installation campaigns, providing an even greater environmental and economic benefit. Our vision includes an “all-electric” system powered by renewable energy, with the potential to eliminate emissions.

Technip Energies continues to break boundaries and accelerate the journey to a low-carbon society. With decades of experience in the energy industry, Technip Energies is using its engineering, process and technology competencies as well as R&D facilities to find decarbonized solutions for a better environment. Technip Energies has structured its energy transition framework around four pillars: LNG, sustainable chemistry, decarbonization and carbon-free energy solutions. Technip Energies is a leader in gas treatment and liquefaction and has significant expertise and prospects in sustainable chemistry, such as its partnership with Neste’s for renewable diesel projects. It has expanded its footprint in the circular economy, including collaboration with Carbios to demonstrate its recycling technology. Technip Energies’ Genesis advisory services have a particular focus on energy transition. Technip Energies is a leader in hydrogen, with proven technology to deliver blue hydrogen and, through its investment in McPhy, it is well positioned for the emerging Green hydrogen market.

Surface Technologies’ high-efficiency solutions enable our clients to reach hydrocarbons faster with fully optimized and environmentally compact systems. Our integrated service lines, such as iProduction™ and iComplete™, provide additional opportunities and benefits to our customers. For instance, a project utilizing our iProduction™ integrated production system allows the client to capture more than 50 percent of the greenhouse gases that are typically released into the atmosphere during the production phase of an unconventional development.

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OTHER BUSINESS INFORMATION RELEVANT TO OUR BUSINESS SEGMENTS
Sources and Availability of Raw Materials
Our business segments purchase carbon steel, stainless steel, aluminum, and steel castings and forgings from the global marketplace. We typically do not use single source suppliers for the majority of our raw material purchases; however, certain geographic areas of our businesses, or a project or group of projects, may heavily depend on certain suppliers for raw materials or supply of semi-finished goods. We believe the available supplies of raw materials are adequate to meet our needs.

Research and Development
We are engaged in R&D activities directed toward the improvement of existing products and services, the design of specialized products to meet customer needs, and the development of new products, processes, and services. A large part of our product development spending has focused on the improved design and standardization of our Subsea and Onshore/OffshoreTechnip Energies products to meet our customer needs.

Patents, Trademarks, and Other Intellectual Property
We own a number of patents, trademarks, and licenses that are cumulatively important to our businesses. As part of our ongoing R&D focus, we seek patents when appropriate for new products, product improvements, and related service innovations. We have approximately 7,0007,300 issued patents and pending patent applications worldwide. Further, we license intellectual property rights to or from third parties. We also own numerous trademarks and trade names and have approximately 500660 registrations and pending applications worldwide.

We protect and promote our intellectual property portfolio and take actions we deem appropriate to enforce and defend our intellectual property rights. We do not believe, however, that the loss of any one patent, trademark, or license, or group of related patents, trademarks, or licenses would have a material adverse effect on our overall business.
Employees
As of December 31, 2018, we had more than 37,000 employees.
Segment and Geographic Financial Information

The majority of our consolidated revenue and segment operating profits are generated in markets outside of the United States. Each segment’s revenue is dependent upon worldwide oil and gas exploration, production and petrochemical activity. Financial information about our segments and geographic areas is incorporated herein by reference from Note 57 to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.



Order Backlog
Information regarding order backlog is incorporated herein by reference from the section entitled “Inbound Orders and Order Backlog” in Part II, Item 7 of this Annual Report on Form 10-K.
Website Access to Reports and Proxy Statement

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements, and Forms 3, 4, and 5 filed on behalf of directors and executive officers, and amendments to each of those reports and statements, are available free of charge through our website at www.technipfmc.com, under “Investors—Regulatory filings—Regulatory filings”“Investors” as soon as reasonably practicable after such material is electronically filed with, or furnished to, the U.S. Securities and Exchange Commission (the “SEC”). Alternatively, our reports may be accessed through the website maintained by the SEC at www.sec.gov. Unless expressly noted, the information on our website or any other website is not incorporated by reference in this Annual Report on Form 10-K and should not be considered part of this Annual Report on Form 10-K or any other filing we make with the SEC.




HUMAN CAPITAL

Diversity
In the first quarter of 2018, we developed a global framework and key performance indicators for 2018 and beyond to promote and accelerate the development of women in all functions of our global organization.
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Our Advancing Gender Diversity objectives include the following:

Ensure gender pay equality everywhere we operate and review all jobs to ensure gender pay equality and monitor them through a full review every three years.

Improve gender balance in the organization, across all functions and levels.

Promote women fairly and equally through the career development process.

In 2018, we reviewed 100 percent of job functions to ensure pay equity. We identified areas for improvement and completed all necessary salary adjustments in 2019 to ensure fair compensation for all of our employees. Continuous monitoring to ensure pay equity was a focus for 2020. Additionally, in 2020, we announced a global parental leave policy for 2021 implementation.

In 2019, to foster a diverse and inclusive culture, we launched its “Diversity & Inclusion – It Matters!” e-learning module with an aim to raise awareness of our differences and help our employees improve as people and professionals. This e-learning module was added to new hire orientation in 2020 to promote our commitment to advancing gender diversity and an inclusive culture where all employees can reach their full potential. We also continued to improve gender balance in 2020 with a focus on increasing the representation of women hired as new graduates. 40 percent of all graduates hired globally in 2020 were women, surpassing our goal of 30 percent.

We continued to foster Employee Resource Groups (“ERGs”) and encourage participation throughout the whole Company. Our CEO made the pledge to CEO Action for Diversity and Inclusion, committing to create a trusting environment where all ideas are welcomed and employees feel comfortable and empowered to draw on their unique experiences and backgrounds. Our seven ERGs continue to be instrumental in engaging employees and creating a platform to have complex, and sometimes difficult conversations about diversity and inclusion.

Continuous discussions around improving representation of women in the organization helps us promote women fairly and equally throughout their career development process within our Company. In 2020, our People and Culture team reviewed all senior management succession plans to ensure that female candidates were considered and included.

As a result, 76 percent of our senior management succession plans in 2020 include at least one woman versus 70 percent in 2019, which exceeded our 2020 goal to increase representation of women in succession plans by five percent.

As of December 31, 2020, TechnipFMC had the following number of employees:
Male EmployeesFemale EmployeesTotal% of Female Employees
20192020201920202019202020192020
Executive officers754311836 %38 %
Senior managers8492241910811122 %19 %
Employees on payroll (overall)28,760 26,948 8,407 8,135 37,167 35,086 23 %23 %
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We are committed to improving this dimension and took necessary steps in strengthening our succession plans and graduate intake in 2020. We have also developed an inclusive leadership curriculum, which, along with executive leadership team commitment and systemic changes to policy and talent standards, will help improve women representation in senior manager roles in the medium to long term.

In June 2020, we decided to broaden our inclusion focus by reflecting not only gender but also race, ethnicity, religion, sexual orientation and disability. This committee is renamed to “Inclusion and Diversity” empowering our people to be the difference through inclusion and exercising the value of diversity. This will be accomplished through our people, culture and internal and external partnerships.

Promoting Cultural and Ethnic Diversity

We focus on our broad cultural and ethnic diversity, which we constantly promote and develop throughout the Company and our subsidiaries, through the internationalization of our teams, multicultural programs, and international mobility.

Providing Employment to People with Disabilities

Three of our Foundational Beliefs – integrity, respect, and sustainability – are tangibly embedded in fair employment practices and equal opportunity. Our policy is that our employment decisions related to recruitment, selection, evaluation, compensation, and development, among others, are not influenced by unlawful or unfair discrimination on the basis of race, religion, gender, age, ethnic origin, nationality, sexual orientation, gender or gender reassignment, marital status, or disability.

It is our policy to encourage and give full and fair consideration to applications for employment from disabled people, and to assist with their training and development in light of their aptitudes and abilities. If an existing employee becomes disabled, it is our policy wherever practicable to provide continuing employment under our usual terms and conditions, and to provide training, career development, and promotion opportunities to the disabled employee to the fullest extent possible.

Employee and Social Matters

People and culture are at the heart of our development strategy. People are our wealth and strength. We are committed to our employees, our employee guidelines are specified in our Code of Business Conduct, which applies to all employees, regardless of their roles and where they work.

We believe that all of our employees are entitled to fair treatment, courtesy, and respect, wherever they work: in the office, on vessels, on industrial and construction sites, or in client offices. We do not tolerate any form of abuse or harassment, and we will not tolerate any action, conduct, or behavior that is humiliating, intimidating, or hostile.

Furthermore, our hiring and employee development decisions are fair and objective. Employment decisions are based only on relevant qualifications, performance, demonstrated skills, experience, and other job-related factors, with our goal of creating a diverse, tolerant, and inclusive workforce.
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Workforce Overview
Our workforce consists of the following:
December 31
201820192020
Permanent employees33,52834,45431,395
Temporary employees (fixed-term)3,6162,7133,691
Employees on payroll37,14437,16735,086
Contracted workforce3,4585,3102,880
Total workforce40,60242,47737,966

Developing and Keeping Talent

We simplified the process of identifying key talents in the organization in 2020 and the new process helped us achieve significant and quality progress in a remote working environment. We also strengthened the depth of our succession planning for leadership roles in the organization.

Following the 2019 enhancement of our processes and practices, in 2020 we continued our journey of offering best-in-class development opportunities to our people:

We introduced a new process called 'Talking Talents' in 2020 to identify and flag talents to develop in the key areas of Leadership, Technology and Project Management. This population represented 6 percent of our global population and will be the primary focus for development initiatives.

Our new and improved performance appraisal process kicked off for all TechnipFMC employees in October 2020 and we concluded with 98 percent completion. A stronger focus was put on employees’ behaviors, as part of our core values framework, and a simplified workflow for employees and managers for an efficient performance appraisal process.

We continued to support our talent acquisition efforts by reinforcing the TechnipFMC employer brand in 2020, reflecting what our people say about TechnipFMC: we work on breakthrough projects, in a global playground and, as a result, our people live inspiring experiences. This is the key message we want potential future employees to associate with TechnipFMC. Initiatives, such as #technipfmcproud, launched in 2020 comprised of a series of webinars, inviting employees to share their own inspiring TechnipFMC experiences. This, along with other initiatives and onboarding of brand ambassadors, helped us put our employer brand into operation in 2020.

Enabling our people to grow and develop is a significant priority and during 2020 we launched and improved upon a number of learning and knowledge management initiatives to enhance the capabilities of our employees. While our ambition is to create a learning environment and tools and resources for everyone to succeed - some of our content is indeed focused on the following development pathways of Leadership, Technology and Project Management mentioned earlier.

In October 2020, we launched the global technical expertise program, onboarding more than 650 technical experts and laying the foundation for identifying and nurturing more technical experts who help us in creating differentiated technologies.

Engagement in the iLearn learning platform gained significant traction in 2020 as we embraced a digital transformation of learning. This hub is a learning experience platform with a modern and easy-to-use interface. In 2020, there were more than 6,860 pieces of creative and innovative learning content available, with ongoing releases of new and meaningful courses, to support skills development for our employees and enhance their performance in their job. 50 percent of our training hours and 95 percent of our course completions were done in a digital or virtual environment, which resulted in 5.85 training hours per employee. The top five areas of learning in 2020 were Health, Safety, Environment and Security, Engineering, Manufacturing, Quality and Surface.
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2020 also saw significant progress in the knowledge management space with our knowledge repository “The Well” having over 646,000 visits with 16,674 employees having utilized it. Our second knowledge-sharing platform, The Bridge, which aligns with The Well, enables chartered global knowledge-sharing networks. It had a soft launch in May 2020, and now has 17 enterprise-wide business and technical communities with the expectation that there will be more than 50 by the end of 2021.

Employee attrition in 2020 was 2.5 percent compared to 6.2 percent in 2019 attributable to a major extent to our continued focus on learning and talent development.

Strengthening Social Dialogue

TechnipFMC has developed a culture that is based on the values of trust, mutual respect, and dialogue. In accordance with local legislation, regular meetings with trade union-appointed and/or works council representatives are organized for information and/or consultation. The European Works Council (“EWC”) meets at least twice a year and all of our European entities had joined the EWC by the end of 2019 with the EWC agreement signed by participants' representatives by the end of 2019. In the first quarter of 2020, the EWC elected its new member and held two meetings in 2020, first in May and the second in December.

We also foster ERGs, which are voluntary, employee-led focus groups dedicated to a diverse and inclusive work environment. We currently have seven active ERGs with approximately 1,800 members in the United States, the United Kingdom, and Brazil, covering Diversity in Science, Technology, Engineering and Mathematics, Mothers Network, Black Organization for Leadership & Development, Young Professionals Group, Military Veterans & Friends Network, and Handicap Inclusion. ERGs discuss and promote topics related to diversity and inclusion, develop and organize workshops internally and externally, support local initiatives, and propose actions to improve accessibility and inclusivity for all at the workplace. TechnipFMC provides executive support to our ERGs to help maintain cordial employee relations and improve the wellbeing of our people.

Employee Wellbeing

In light of the global challenges faced in 2020 due to COVID-19 pandemic, we ran a global employee wellbeing survey in May to understand how our employees were coping with social distancing and other related domestic challenges during the pandemic. We received a strong response, with 19,954 (55 percent) employees responding globally which helped us develop policies to assist in the challenges our people are facing in these unprecedented times. 74 percent of responding employees answered favorably to the question on their overall wellbeing. The survey also gave us insights on other topics that helped in improving overall communication and employee engagement.

Internal Communication

We have a robust internal communications strategy and support communication channels that ensure that all employees are communicated to within a timely and relevant way. The effectiveness of internal communication is continually monitored and adjusted based on a focus group feedback program that reaches multiple levels across the organization. Employees are regularly consulted and provided with information on changes and events that may affect them through channels such as regular meetings, employee representatives, and our intranet site. These consultations and meetings ensure that employees are kept informed of the financial and economic factors affecting our performance and matters of concern to them as employees.

Labor Relations and Collective Agreements

We seek to maintain constructive relationships with works councils and trade unions, and to comply with relevant local laws and collective agreements in relation to collective or individual labor relations. We also operate through local subsidiaries in many countries, a number of which, including France, Germany, Norway, and Italy, have legal requirements for works councils, which include employee representatives.

We send regular information to all employees to share information about business success, changes to the organizational structure, and any major impact to the business or company. The same approach of sharing information and maintaining a regular dialogue with employees exists at a local level through the action of the local
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communications teams and the managers. In countries where staff representatives or works councils are in place, we seek to maintain an effective and regular dialogue. To get the direct feedback of employees, employees surveys are performed in some countries or business, such as Norway, Americas, and the Asia Pacific region. Every quarter, all employees receive a direct communication from the Chairman and CEO about our financial results and main business information. While travelling to a company center, the executive leadership team members take this as an opportunity to engage with employees, either through town halls or informal meetings.


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EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding our executive officers called for by Item 401(b) of Regulation S-K is hereby included in Part I, Item 1 “Business” of this Annual Report on Form 10-K.
The following table indicates the names and ages of our executive officers as of March 11, 2019,5, 2021, including all offices and positions held by each in the past five years:
NameAgeCurrent Position and Business Experience (Start Date)
Thierry Pilenko1Douglas J. Pferdehirt (a)
6157
Executive Chairman (2017)
Chairman and Chief Executive Officer of Technip (2007)(2019)
Douglas J. Pferdehirt1
55
Chief Executive Officer (2017)
President and Chief Executive Officer of FMC Technologies (2016)
President and Chief Operating Officer of FMC Technologies (2015)
Executive Vice President and Chief Operating Officer of FMC Technologies (2012)
Maryann T. Mannen1Alf Melin (a)
5651
Executive Vice President and Chief Financial Officer (2017)
Executive Vice President and Chief Financial Officer for FMC Technologies (2014)(2021)
Senior Vice President, and Chief Financial Officer for FMC Technologies (2011)
Dianne B. Ralston1
52
Executive Vice President, Chief Legal Officer and SecretaryFinance Operations (2017)
Senior Vice President, Surface Americas (2017)
General Counsel, and Secretary of FMC Technologies, Inc.Manager, Fluid Control (2015)
Victoria Lazar (a)
55
Executive Vice President, General Counsel and Secretary of Weatherford International plc (2014)(2020)
DeputySenior Vice President, General Counsel—Counsel and Corporate of Schlumberger Limited (2012)Secretary for Bristow Group (2020)
Executive Counsel, M&A, General Electric (2019)
Associate General Counsel, Baker Hughes, a GE Company (2018)
Associate General Counsel, GE Oil & Gas (2017)
Justin Rounce1(a)
5254
Executive Vice President and Chief Technology Officer (2018)
President—President, Valves & Measurement for Schlumberger Limited (2018)
Senior Vice President—President, Marketing & Technology for Schlumberger Limited (2016)
Vice President—Marketing & Chief Technology Officer for Cameron International Corporation (2015)
Vice President—Marketing & Technology for OneSubsea (2013)
Agnieszka Kmieciak1(a)
4547
Executive Vice President—President, People and Culture (2018)
HR Director—Director, Production Group for Schlumberger Limited (2017)
Talent Manager and Workforce Planning Manager for Schlumberger Limited (2015)
M-I SWACO HR Manager for Schlumberger Limited (2012)
Arnaud Piéton1Barry Glickman (a)
4552
President—Subsea (2018)
Executive Vice President—People and Culture (2017)
President—Asia-Pacific Region of Technip (2016)
Chief Operating Officer, Subsea—Asia-Pacific Region of Technip (2014)
Vice President, Subsea Projects—North America Region of Technip (2011)
Richard G. Alabaster1
58
President—Surface Technologies (2017)(2019)
Vice President—Surface Technologies of FMC Technologies (2015)
General Manager—Surface Integrated Services of FMC Technologies (2013)
General Manager—Fluid Control of FMC Technologies (2010)
Barry Glickman1
50
President—President, Engineering, Manufacturing and Supply Chain (2017)
Vice President—President, Subsea Services of FMC Technologies (2015)
General Manager—Subsea Systems Western Region of FMC Technologies (2012)
Nello Uccelletti1Jonathan Landes (a)
6548
President—Onshore/Offshore (2017)
President—Onshore/Offshore of Technip (2014)
Senior Vice President—Onshore/Offshore of Technip (2008)
Christophe Bélorgeot2
52
Senior Vice President, Corporate Engagement (2018)
Vice President, Corporate Communications (2017)Subsea (2020)
Senior Vice President, Communications and CEO Office of Technip (2014)Subsea Commercial (2017)
Vice President, Communications of Technip (2010)Subsea Projects North America (2017)
General Manager, Western Region Subsea (2015)
Krisztina Doroghazi3(b)
4749
Senior Vice President, Controller, and Chief Accounting Officer (2018)
Senior Vice President, Financing Planning and Reporting of MOL Group (2015)
Regional Chief Financial Officer of MOL Group (2012)
__________________
1 (a)    Member of the Executive Leadership Team and a Rule 3b-7 executive officer and Section 16 officer under the Exchange ActAct.
2 Member of the Executive Leadership Team
3 (b)    Section 16 officer under the Exchange Act


Act.
No family relationships exist among any of the above-listed officers, and there are no arrangements or understandings between any of the above-listed officers and any other person pursuant to which they serve as an officer. During the past 10 years, none of the above-listed officers was involved in any legal proceedings as defined in Item 401(f) of Regulation S-K. All officers are appointed by the Board of Directors to hold office until their successors are appointed.

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ITEM 1A. RISK FACTORS
Important risk factors that could impact our ability to achieve our anticipated operating results and growth plan goals are presented below. The following risk factors should be read in conjunction with discussions of our business and the factors affecting our business located elsewhere in this Annual Report on Form 10-K and in our other filings with the SEC.

Summary Risk Factors

The following is a summary of some of the risks and uncertainties that could materially adversely affect our business, financial condition and results of operations. You should read this summary together with the more detailed description of each risk factor contained below.

Risks Related to Our Business and Industry

Demand for our products and services depends on oil and gas industry activity and expenditure levels, which are directly affected by trends in the demand for and price of crude oil and natural gas.

We operate in a highly competitive environment and unanticipated changes relating to competitive factors in our industry, including ongoing industry consolidation, may impact our results of operations.

Our success depends on our ability to develop, implement, and protect new technologies and services.

Cumulative loss of several major contracts, customers, or alliances may have an adverse effect on us.

The COVID-19 pandemic, the United Kingdom’s withdrawal from the European Union, disruptions in the political, regulatory, economic, and social conditions of the countries in which we conduct business, could adversely affect our business or results of operations.

DTC and Euroclear may cease to act as depository and clearing agencies for our shares.

Our existing and future debt may limit cash flow available to invest in the ongoing needs of our business and could prevent us from fulfilling our obligations under our outstanding debt.

A downgrade in our debt rating could restrict our ability to access the capital markets.

Our acquisition and divestiture activities involve substantial risks.

Risks Related to Our Operations

We competemay lose money on fixed-price contracts.

New capital asset construction projects for vessels and manufacturing facilities are subject to risks, including delays and cost overruns.

Our failure to timely deliver our backlog could affect future sales, profitability, and customer relationships.

We face risks relating to our reliance on subcontractors, suppliers, and our joint venture partners.

A failure of our IT infrastructure, including as a result of cyber-attacks, could adversely impact our business and results of operations.

Pirates endanger our maritime employees and assets.

Risks Related to Legal Proceedings, Tax, and Regulatory Matters

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The industries in which we operate or have operated expose us to potential liabilities, including the installation or use of our products, which may not be covered by insurance or may be in excess of policy limits, or for which expected recoveries may not be realized.

Our operations require us to comply with numerous laws and regulations, including those related to environmental protection and climate change, health and safety, privacy, data protection and data security, labor and employment, import/export controls, currency exchange, bribery and corruption, and taxation, violations of which could have a material adverse effect on our financial condition, results of operations, or cash flows.

As an English public limited company, we must meet certain additional financial requirements before we may declare dividends or repurchase shares and certain capital structure decisions may require stockholder approval which may limit our flexibility to manage our capital structure.

Uninsured claims and litigation against us, including intellectual property litigation, could adversely impact our financial condition, results of operations, or cash flows.

The IRS may not agree that we should be treated as a foreign corporation for U.S. federal tax purposes and may seek to impose an excise tax on gains recognized by certain individuals;

U.S. tax laws and/or guidance could also affect our ability to engage in certain acquisition strategies and certain internal restructurings.

We are subject to the tax laws of numerous jurisdictions; challenges to the interpretation of, or future changes to, such laws could adversely affect us.

We intend to be treated exclusively as a resident of the United Kingdom for tax purposes, but French or other tax authorities may seek to treat us as a tax resident of another jurisdiction, and we may not qualify for benefits under tax treaties entered into between the United Kingdom and other countries.

Risks Related to the Spin-off and the Related Transactions

The Spin-off may subject us to future liabilities and may not achieve some or all of the anticipated benefits.

We are a significant shareholder of Technip Energies and the value of our investment in Technip Energies may fluctuate substantially and may result in a significant impact to our results of operations.

We may be required to refund the Purchase Price under the Share Purchase Agreement to BPI in the event that certain conditions thereunder are not met.

General Risk Factors

Our businesses are dependent on the basiscontinuing services of a number of different factors, such as product offerings, project execution, customer service,our key managers and price. In order to compete effectively we must developemployees.

Seasonal and implement innovative technologies and processes, and execute our clients’ projects effectively. We can give no assurances that we will continue to be able to compete effectively with the products and services or prices offered by our competitors.
Our industry, including our customers and competitors, has experienced unanticipated changes in recent years.  Moreover, the industry is undergoing vertical and horizontal consolidation to create economies of scale and control the value chain, which mayweather conditions could adversely affect demand for our productsservices and services because of price concessions foroperations.

Currency exchange rate fluctuations could adversely affect our competitors or decreased customer capital spending. This consolidation activity could impact our ability to maintain market share, maintain or increase pricing for our products and services or negotiate favorable contract terms with our customers and suppliers, which could have a significant negative impact on ourfinancial condition, results of operations, financial condition or cash flows.

We are unableexposed to predict what effect consolidations and other competitive factorsrisks in the industry may have on prices, capital spending by our customers, our selling strategies, our competitive position, our ability to retain customers or our ability to negotiate favorable agreementsconnection with our customers.defined benefit pension plan commitments.

Risks Related to Our Business and Industry

Demand for our products and services depends on oil and gas industry activity and expenditure levels, which are directly affected by trends in the demand for and price of crude oil and natural gas.

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We are substantially dependent on conditions in the oil and gas industry, including (i) the level of exploration, development and production activity and (ii) capital spending, and (iii) the processing of oil and natural gas in refining units, petrochemical sites, and natural gas liquefaction plants by energy companies that are our customers.spending. Any substantial or extended decline in these expenditures may result in the reduced pace of discovery and development of new reserves of oil and gas and the reduced exploration of existing wells, which could adversely affect demand for our products and services and, in certain instances, result in the cancellation, modification, or re-scheduling of existing orders in our backlog. These factors could have an adverse effect on our revenue and profitability. The level of exploration, development, and production activity is directly affected by trends in oil and natural gas prices, which historically have been volatile and are likely to continue to be volatile in the future.

Factors affecting the prices of oil and natural gas include, but are not limited to, the following:

demand for hydrocarbons, which is affected by worldwide population growth, economic growth rates, and general economic and business conditions;conditions, including reductions in travel and commerce relating to the COVID-19 pandemic;

costs of exploring for, producing, and delivering oil and natural gas;

political and economic uncertainty, and socio-political unrest;
government
governmental laws, policies, regulations and subsidies related to or affecting the production, use, and exportation/importation of oil and natural gas;
available excess production capacity within
the ability or willingness of the Organization of Petroleum Exporting Countries (“OPEC”) and the 10 other oil producing countries, including Russia, Mexico and Kazakhstan (“OPEC+”) to set and maintain production level of oil production by non-OPEC countries;for oil;

oil refining and transportation capacity and shifts in end-customer preferences toward fuel efficiency and the use of natural gas;

technological advances affecting energy consumption;

development, exploitation, and relative price, and availability of alternative sources of energy and our customers’ shift of capital to the development of these sources;

volatility in, and access to, capital and credit markets, which may affect our customers’ activity levels, and spending for our products and services;

decrease in investors’ interest in hydrocarbon producers because of environmental and sustainability initiatives; and



natural disasters.

The oil and gas industry has historically experienced periodic downturns, which have been characterized by diminished demand for oilfield services and downward pressure on the prices we charge. WhileThe oil and natural gas prices have recently started to rebound from the downturn that began in 2014, the market remains quite volatile, and the sustainability of the price recovery and business activity levels isare dependent on variables beyond our control, such as geopolitical stability, OPEC’sincreasing attention to global climate change resulting in pressure upon shareholders, financial institutions and/or financial markets to modify their relationships with oil and gas companies and to limit investments and/or funding to such companies, increasing likelihood of governmental investigations and private litigation due to increasing attention to global climate change, OPEC+’s actions to regulate its production capacity, changes in demand patterns, and international sanctions and tariffs. Continued volatility or any future reduction in demand for oilfield services and could further adversely affect our financial condition, results of operations, or cash flows.

We operate in a highly competitive environment and unanticipated changes relating to competitive factors in our industry, including ongoing industry consolidation, may impact our results of operations.

We compete on the basis of a number of different factors, such as product offerings, project execution, customer service, and price. In order to compete effectively we must develop and implement innovative technologies and
32


processes, and execute our clients’ projects effectively. We can give no assurances that we will continue to be able to compete effectively with the products and services or prices offered by our competitors.

Our industry, including our customers and competitors, has experienced unanticipated changes in recent years. Moreover, the industry is undergoing consolidation to create economies of scale and control the value chain, which may affect demand for our products and services because of price concessions for our competitors or decreased customer capital spending. This consolidation activity could impact our ability to maintain market share, maintain or increase pricing for our products and services or negotiate favorable contract terms with our customers and suppliers, which could have a significant negative impact on our financial condition, results of operations or cash flows. We are unable to predict what effect consolidations and other competitive factors in the industry may have on prices, capital spending by our customers, our selling strategies, our competitive position, our ability to retain customers or our ability to negotiate favorable agreements with our customers.

The COVID-19 pandemic has significantly reduced demand for our products and services, and has had, and may continue to have, an adverse impact on our financial condition, results of operations, and cash flows.

The COVID-19 pandemic, including actions taken by governments and businesses, has resulted in a significant reduction in global economic activity, including increased volatility in global oil and natural gas markets. Measures taken to address and limit the spread of the disease-such as stay-at-home orders, social distancing guidelines, and travel restrictions have adversely affected the economies and financial markets of many countries. The resulting disruption to our operations, communications, travel, and supply chain may continue or increase in the future, and could limit the ability of our employees, partners, or vendors to operate efficiently or at all, and has had, and is reasonably likely to continue to have, an adverse impact on our financial condition, operating results, and cash flows.

Significant uncertainty remains as to the potential impact of the COVID-19 pandemic on our operations, and we are closely monitoring the effects of the pandemic on commodity demands and on our customers. These effects may include adverse revenue and net income effects; disruptions to our operations; potential project delays or cancellations; employee impacts from illness, school closures, and other community response measures, which may lead to disruptions and decreased productivity; and temporary closures of our facilities or the facilities of our customers and suppliers. Beginning in the first quarter of 2020, we have experienced operational impacts including supply chain disruptions, productivity declines and logistics constraints. We have also experienced incremental, direct costs as a result of COVID-19.

COVID-19, and the volatile regional and global economic conditions stemming from the pandemic, could also aggravate the other risk factors discussed herein, including but not limited to risks related to the demand for oil and gas, which may not recover immediately. The full extent to which the COVID-19 pandemic will impact our results is unknown and evolving and will depend on various factors and consequences beyond our control, such as the severity, duration, and spread of COVID-19; the success of actions taken by governments and health organizations to combat the disease and treat its effects, including vaccine acceptance, distribution and effectiveness; decisions by our alliance partners and customers regarding their business plans and capital expenditures; and the extent to which, and the timing of, general economic and operating conditions recover.


Our success depends on our ability to develop, implement, and protect new technologies and services.services and the intellectual property related thereto.

Our success depends on the ongoing development and implementation of new product designs, including the processes used by us to produce and market our products, and on our ability to protect and maintain critical intellectual property assets related to these developments. If we are not able to obtain patent,patents, maintain trade secretsecrets or obtain other protection of our intellectual property rights, if our patents are unenforceable or the claims allowed under our patents are not sufficient to protect our technology, or if we are not able to adequately protect our patents or trade secrets, we may not be able to continue to develop our services, products and related technologies. Additionally, our competitors may be able to independently develop technology that is similar to ours without infringing on our patents or gaining access to our trade secrets. If any of these events occurs, we may be unable to meet evolving industry requirements or do so at prices acceptable to our customers, which could adversely affect our financial condition, results of operations, and cash flows.
The industries in which we operate or have operated expose us to potential liabilities, including the installation or use of our products, which may not be covered by insurance or may be in excess of policy limits, or for which expected recoveries may not be realized.
We are subject to potential liabilities arising from, among other possibilities, equipment malfunctions, equipment misuse, personal injuries, and natural disasters, any of which may result in hazardous situations, including uncontrollable flows of gas or well fluids, fires, and explosions. Although we have obtained insurance against many of these risks, our insurance may not be adequate to cover our liabilities. Further, the insurance may not generally be available in the future or, if available, premiums may not be commercially justifiable. If we incur substantial liability and the damages are not covered by insurance or are in excess of policy limits, or if we were to incur liability at a time when we are not able to obtain liability insurance, such potential liabilities could have a material adverse effect on our business, results of operations, financial condition or cash flows.
We may lose money on fixed-price contracts.
As customary for some of our projects, we often agree to provide products and services under fixed-price contracts. We are subject to material risks in connection with such fixed-price contracts.  It is not possible to estimate with complete certainty the final cost or margin of a project at the time of bidding or during the early phases of its execution. Actual expenses incurred in executing these fixed-price contracts can vary substantially from those originally anticipated for several reasons including, but not limited to, the following:
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unforeseen additional costs related to the purchase of substantial equipment necessary for contract fulfillment or labor shortages in the markets for where the contracts are performed;

mechanical failure of our production equipment and machinery;
delays caused by local weather conditions and/or natural disasters (including earthquakes and floods); and
a failure of suppliers, subcontractors, or joint venture partners to perform their contractual obligations.
The realization of any material risks and unforeseen circumstances could also lead to delays in the execution schedule of a project. We may be held liable to a customer should we fail to meet project milestones or deadlines or to comply with other contractual provisions. Additionally, delays in certain projects could lead to delays in subsequent projects for which production equipment and machinery currently being utilized on a project were intended.
Pursuant to the terms of fixed-price contracts, we are not always able to increase the price of the contract to reflect factors that were unforeseen at the time its bid was submitted, and this risk may be heightened for projects with


longer terms. Depending on the size of a project, variations from estimated contract performance, or variations in multiple contracts, could have a significant impact on our financial condition, results of operations or cash flows.
New capital asset construction projects for vessels and manufacturing facilities are subject to risks, including delays and cost overruns, which could have a material adverse effect on our financial condition, or results of operations.
We regularly carry out capital asset construction projects to maintain, upgrade, and develop our asset base, and such projects are subject to risks of delay and cost overruns that are inherent to any large construction project, and are the result of numerous factors including, but not limited to, the following:
shortages of key equipment, materials or skilled labor;
unscheduled delays in the delivery or ordered materials and equipment;
design and engineering issues; and
shipyard delays and performance issues.
Failure to complete construction in time, or the inability to complete construction in accordance with its design specifications, may result in loss of revenue. Additionally, capital expenditures for construction projects could materially exceed the initially planned investments or can result in delays in putting such assets into operation.
Our failure to timely deliver our backlog could affect future sales, profitability, and relationships with our customers.
Many of the contracts we enter into with our customers require long manufacturing lead times due to complex technical and logistical requirements. These contracts may contain clauses related to liquidated damages or financial incentives regarding on-time delivery, and a failure by us to deliver in accordance with customer expectations could subject us to liquidated damages or loss of financial incentives, reduce our margins on these contracts, or result in damage to existing customer relationships. The ability to meet customer delivery schedules for this backlog is dependent upon a number of factors, including, but not limited to, access to the raw materials required for production, an adequately trained and capable workforce, subcontractor performance, project engineering expertise and execution, sufficient manufacturing plant capacity, and appropriate planning and scheduling of manufacturing resources. Failure to deliver backlog in accordance with expectations could negatively impact our financial performance.
We face risks relating to our reliance on subcontractors, suppliers, and our joint venture partners.
We generally rely on subcontractors, suppliers, and our joint venture partners for the performance of our contracts. Although we are not dependent upon any single supplier, certain geographic areas of our business or a project or group of projects may depend heavily on certain suppliers for raw materials or semi-finished goods.
Any difficulty in engaging suitable subcontractors or acquiring equipment and materials could compromise our ability to generate a significant margin on a project or to complete such project within the allocated timeframe. If subcontractors, suppliers or joint venture partners refuse to adhere to their contractual obligations with us or are unable to do so due to a deterioration of their financial condition, we may be unable to find a suitable replacement at a comparable price, or at all. Moreover, the failure of one of our joint venture partners to perform their obligations in a timely and satisfactory manner could lead to additional obligations and costs being imposed on us as we may be obligated to assume our defaulting partner’s obligations or compensate our customers. 
Any delay, failure to meet contractual obligations, or other event beyond our control or not foreseeable by us, that is attributable to a subcontractor, supplier or joint venture partner, could lead to delays in the overall progress of the project and/or generate significant extra costs. Even if we are entitled to make a claim for these extra costs against the defaulting supplier, subcontractor or joint venture partner, we may be unable to recover the entirety of these costs and this could materially adversely affect our business, financial condition or results of operations.
Our businesses are dependent on the continuing services of certain of our key managers and employees.
We depend on key personnel. The loss of any key personnel could adversely impact our business if we are unable to implement key strategies or transactions in their absence. The loss of qualified employees or failure to retain and


motivate additional highly-skilled employees required for the operation and expansion of our business could hinder our ability to successfully conduct research activities and develop marketable products and services.
Pirates endanger our maritime employees and assets.
We face material piracy risks in the Gulf of Guinea, the Somali Basin, and the Gulf of Aden, and, to a lesser extent, in Southeast Asia, Malacca, and the Singapore Straits. Piracy represents a risk for both our projects and our vessels, which operate and transport through sensitive maritime areas. Such risks have the potential to significantly harm our crews and to negatively impact the execution schedule for our projects. If our maritime employees or assets are endangered, additional time may be required to find an alternative solution, which may delay project realization and negatively impact our business, financial condition, or results of operations.
Seasonal and weather conditions could adversely affect demand for our services and operations.
Our business may be materially affected by variation from normal weather patterns, such as cooler or warmer summers and winters. Adverse weather conditions, such as hurricanes in the Gulf of Mexico or extreme winter conditions in Canada, Russia, and the North Sea, may interrupt or curtail our operations, or our customers’ operations, cause supply disruptions or loss of productivity, and may result in a loss of revenue or damage to our equipment and facilities, which may or may not be insured. Any of these events or outcomes could have a material adverse effect on our business, financial condition, cash flows, and results of operations.
Due to the types of contracts we enter into and the markets in which we operate, the cumulative loss of several major contracts, customers, or alliances may have an adverse effect on our results of operations.

We often enter into large, long-term contracts that, collectively, represent a significant portion of our revenue. These agreements, if terminated or breached, may have a larger impact on our operating results or our financial condition than shorter-term contracts due to the value at risk. Moreover, the global market for the production, transportation, and transformation of hydrocarbons and by-products, as well as the other industrial markets in which we operate, is dominated by a small number of companies. As a result, our business relies on a limited number of customers. If we were to lose several key contracts, customers, or alliances over a relatively short period of time, we could experience a significant adverse impact on our financial condition, results of operations, or cash flows.
Our operations require us to comply with numerous regulations, violations of which could have a material adverse effect on our financial condition, results of operations, or cash flows.
Our operations and manufacturing activities are governed by international, regional, transnational, and national laws and regulations in every place where we operate relating to matters such as environmental protection, health and safety, labor and employment, import/export controls, currency exchange, bribery and corruption, and taxation. These laws and regulations are complex, frequently change, and have tended to become more stringent over time. In the event the scope of these laws and regulations expand in the future, the incremental cost of compliance could adversely impact our financial condition, results of operations, or cash flows.
Our international operations are subject to anti-corruption laws and regulations, such as the U.S. Foreign Corrupt Practices Act (“FCPA”), the U.K. Bribery Act of 2010 (the “Bribery Act”), the anti-corruption provisions of French law n° 2016-1691 dated December 9, 2016 relating to Transparency, Anti-corruption and Modernization of the Business Practice (“Sapin II Law”), the Brazilian Anti-Bribery Act (also known as the Brazilian Clean Company Act), and economic and trade sanctions, including those administered by the United Nations, the European Union, the Office of Foreign Assets Control of the U.S. Department of the Treasury (“U.S. Treasury”), and the U.S. Department of State. The FCPA prohibits providing anything of value to foreign officials for the purposes of obtaining or retaining business or securing any improper business advantage. We may deal with both governments and state-owned business enterprises, the employees of which are considered foreign officials for purposes of the FCPA. The provisions of the Bribery Act extend beyond bribery of foreign public officials and are more onerous than the FCPA in a number of other respects, including jurisdiction, non-exemption of facilitation payments, and penalties. Economic and trade sanctions restrict our transactions or dealings with certain sanctioned countries, territories, and designated persons.
As a result of doing business in foreign countries, including through partners and agents, we are exposed to a risk of violating anti-corruption laws and sanctions regulations. Some of the international locations in which we currently or may, in the future, operate, have developing legal systems and may have higher levels of corruption than more developed nations. Our continued expansion and worldwide operations, including in developing countries, our development of joint venture relationships worldwide, and the employment of local agents in the countries in which


we operate increases the risk of violations of anti-corruption laws and economic and trade sanctions. Violations of anti-corruption laws and economic and trade sanctions are punishable by civil penalties, including fines, denial of export privileges, injunctions, asset seizures, debarment from government contracts (and termination of existing contracts), and revocations or restrictions of licenses, as well as criminal fines and imprisonment. In addition, any major violations could have a significant impact on our reputation and consequently on our ability to win future business.
We have implemented internal controls designed to minimize and detect potential violations of laws and regulations in a timely manner but we can provide no assurance that such policies and procedures will be followed at all times or will effectively detect and prevent violations of the applicable laws by one or more of our employees, consultants, agents, or partners. The occurrence of any such violation could subject us to penalties and material adverse consequences on our business, financial condition, or results of operations.
Compliance with environmental laws and regulations may adversely affect our business and results of operations.
Environmental laws and regulations in various countries affect the equipment, systems, and services we design, market, and sell, as well as the facilities where we manufacture our equipment and systems, and any other operations we undertake. We are required to invest financial and managerial resources to comply with environmental laws and regulations, and believe that we will continue to be required to do so in the future. Failure to comply with these laws and regulations may result in the assessment of administrative, civil, and criminal penalties, the imposition of remedial obligations, the issuance of orders enjoining our operations, or other claims. These laws and regulations, as well as the adoption of new legal requirements or other laws and regulations affecting exploration and development of drilling for crude oil and natural gas, are becoming increasingly strict and could adversely affect our business and operating results by increasing our costs, limiting the demand for our products and services, or restricting our operations.
Existing or future laws and regulations relating to greenhouse gas emissions and climate change may adversely affect our business.
Existing or future laws concerning the release of greenhouse gas emissions or that concern climate change (including laws and regulations that seek to mitigate the effects of climate change) may adversely impact demand for the equipment, systems and services we design, market and sell. For example, oil and natural gas exploration and production may decline as a result of such laws and regulations and as a consequence demand for our equipment, systems and services may also decline. In addition, such laws and regulations may also result in more onerous obligations with respect to our operations, including the facilities where we manufacture our equipment and systems. Such decline in demand for our equipment, systems and services and such onerous obligations in respect of our operations may adversely affect our financial condition, results of operations and cash flows.
Disruptions in the political, regulatory, economic, and social conditions of the countries in which we conduct business could adversely affect our business or results of operations.

We operate in various countries across the world. Instability and unforeseen changes in any of the markets in which we conduct business, including economically and politically volatile areas could have an adverse effect on the demand for our services and products, our financial condition, or our results of operations. These factors include, but are not limited to, the following:

nationalization and expropriation;

potentially burdensome taxation;

inflationary and recessionary markets, including capital and equity markets;

civil unrest, labor issues, political instability, disease outbreaks, terrorist attacks, cyber-terrorism,cyber terrorism, military activity, and wars;

supply disruptions in key oil producing countries;

the ability of OPECOPEC+ to set and maintain production levels and pricing;

trade restrictions, trade protection measures, price controls, or trade disputes;



sanctions, such as prohibitions or restrictions by the United States against countries that are the targets of economic sanctions, or are designated as state sponsors of terrorism;

foreign ownership restrictions;

import or export licensing requirements;

restrictions on operations, trade practices, trade partners, and investment decisions resulting from domestic and foreign laws, and regulations;

regime changes;

changes in, and the administration of, treaties, laws, and regulations;regulations including in response to public health issues;

inability to repatriate income or capital;

reductions in the availability of qualified personnel;

foreign currency fluctuations or currency restrictions; and

fluctuations in the interest rate component of forward foreign currency rates.

DTC and Euroclear Paris may cease to act as depository and clearing agencies for our shares.

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Our shares were issued into the facilities of The Depository Trust Company (“DTC”) with respect to shares listed on the NYSE and Euroclear with respect to shares listed on Euronext Paris (DTC and Euroclear being referred to as the “Clearance Services”). The Clearance Services are widely used mechanisms that allow for rapid electronic transfers of securities between the participants in their respective systems, which include many large banks and brokerage firms. The Clearance Services have general discretion to cease to act as a depository and clearing agencies for our shares. If either of the Clearance Services determine at any time that our shares are not eligible for continued deposit and clearance within its facilities, then we believe that our shares would not be eligible for continued listing on the NYSE or Euronext Paris, as applicable, and trading in our shares would be disrupted. Any such disruption could have a material adverse effect on the trading price of our shares.

The United Kingdom’s proposed withdrawal from the European Union may have a negative effect on global economic conditions, financial markets, and our business.

We are based in the United Kingdom and have operational headquarters in Paris, France; Houston, Texas, United States; and in London, United Kingdom, with worldwide operations, including material business operations in Europe. In June 2016, a majority of voters in theThe United Kingdom elected to withdrawwithdrew from the European Union in a national referendumon January 31, 2020 (“Brexit”). The referendum was advisory, andIn connection with Brexit, the United Kingdom government served notice under Article 50 of the Treaty of the European Union in March 2017 to formally initiate a withdrawal process. The United Kingdom and the European Union have had a two-year period under Article 50 to negotiateagreed on the terms forTrade and Cooperation Agreement (“TCA”) that governs the United Kingdom’s withdrawal from the European Union. The withdrawal agreement and political declaration that were endorsed at a special meeting of the European Council on November 25, 2018 did not receive the approval of the United Kingdom Parliament in January 2019. Further discussions are ongoing, although the European Commission has stated that the European Union will not reopen the withdrawal agreement. Any extension of the negotiation period for withdrawal will require the consent of the remaining 27 member states of the European Union. Brexit has created significant uncertainty about the future trading relationship between the United Kingdom and the European Union and has given rise to calls for certain regions within thein specified areas. The TCA took effect on January 1, 2021. The United Kingdom to preserve their placeis no longer in the European Union by separatingcustoms union and is outside of the European Union single market. The TCA addresses trade, economic arrangements, law enforcement, judicial cooperation and a governance framework including procedures for dispute resolution, among other things.Because the agreement merely sets forth a framework in many respects and will require complex additional bilateral negotiations between the United Kingdom and the European Union as both parties continue to work on the rules for implementation, significant political and economic uncertainty remains about whether the terms of the relationship will differ materially from the United Kingdom.terms before withdrawal.

These developments or the perception that any of them could occur, could have a material adverse effect on global economic conditions and the stability of the global financial markets and could significantly reduce global market liquidity and restrict the ability of key market participants to operate in certain financial markets. Asset valuations, currency exchange rates, and credit ratings may be especially subject to increased market volatility. LackIn addition, there is a lack of clarity about applicablethe future United Kingdom laws and regulations or treaties as the United Kingdom negotiates the terms of a withdrawal, as well as the operation of any such rules pursuantdetermines which European Union laws to any withdrawal terms,replicate or replace, including financial laws and regulations, tax and free trade agreements, intellectual property rights, supply chain logistics, environmental, health and safety laws and regulations, immigration laws, employment laws, and other rules that would apply to us and our subsidiaries, could increase our costs, restrict our access to capital within the United Kingdom and the European Union, depress economic activity, and further decrease foreign direct investment in the United Kingdom. For


example, withdrawalany divergence in the United Kingdom from the European Union law could depending on the negotiated terms of such withdrawal, eliminate the benefit of certain tax-related E.U.European Union directives currently applicable to U.K.United Kingdom companies such as us, including the Parent-Subsidiary Directive and the Interest and Royalties Directive, which could, subject to any relief under an available tax treaty, raise our tax costs.cost.
If the United Kingdom and the European Union are unable to negotiate mutually acceptable withdrawal terms or if other E.U. member states pursue withdrawal, barrier-free access between the United Kingdom and other E.U. member states or within the European Economic Area overall could be diminished or eliminated.
Any of these factors could have a material adverse effect on our business, financial condition, andor results of operations.
As an English public limited company, we must meet certain additional financial requirements before we may declare dividends or repurchase shares and certain capital structure decisions may require stockholder approval which may limit our flexibility to manage our capital structure. We may not be able to pay dividends or repurchase shares of our ordinary shares in accordance with our announced intent, or at all.
Under English law, we will only be able to declare dividends, make distributions, or repurchase shares (other than out of the proceeds of a new issuance of shares for that purpose) out of “distributable profits.” Distributable profits are a company’s accumulated, realized profits, to the extent that they have not been previously utilized by distribution or capitalization, less its accumulated, realized losses, to the extent that they have not been previously written off in a reduction or reorganization of capital duly made. In addition, as a public limited company incorporated in England and Wales, we may only make a distribution if the amount of our net assets is not less than the aggregate of our called-up share capital and non-distributable reserves and to the extent that the distribution does not reduce the amount of those assets to less than that aggregate.
Following the Merger, we implemented a court-approved reduction of our capital, which was completed on June 29, 2017, in order to create distributable profits to support the payment of possible future dividends or future share repurchases. Our articles of association permit us by ordinary resolution of the stockholders to declare dividends, provided that the directors have made a recommendation as to its amount. The dividend shall not exceed the amount recommended by the Board of Directors. The directors may also decide to pay interim dividends if it appears to them that the profits available for distribution justify the payment. When recommending or declaring payment of a dividend, the directors are required under English law to comply with their duties, including considering our future financial requirements.
In addition, the Board of Directors’ determinations regarding dividends and share repurchases will depend on a variety of other factors, including our net income, cash flow generated from operations or other sources, liquidity position, and potential alternative uses of cash, such as acquisitions, as well as economic conditions and expected future financial results. Our ability to declare and pay future dividends and make future share repurchases will depend on our future financial performance, which in turn depends on the successful implementation of our strategy and on financial, competitive, regulatory, technical, and other factors, general economic conditions, demand and selling prices for our products and services, and other factors specific to our industry or specific projects, many of which are beyond our control. Therefore, our ability to generate cash depends on the performance of our operations and could be limited by decreases in our profitability or increases in costs, regulatory changes, capital expenditures, or debt servicing requirements.
Any failure to pay dividends or repurchase shares of our ordinary shares could negatively impact our reputation, harm investor confidence in us, and cause the market price of our ordinary shares to decline.
Our existing and future debt may limit cash flow available to invest in the ongoing needs of our business and could prevent us from fulfilling our obligations under our outstanding debt.

We have substantial existing debt. As of December 31, 2018, after giving effect to the Merger,2020, our total debt is $4.2was $4.0 billion. In addition, in connection with Spin-off, we obtained commitments from a syndicate of financial institutions for a senior secured revolving credit facility of up to $1.0 billion. We will also have the capacity under our $2.5 billion credit facility, in addition to our bilateral facilitiesdebt agreements to incur substantial additional debt.

Our level of debt could have important consequences. For example, it could:

make it more difficult for us to make payments on our debt;

require us to dedicate a substantial portion of our cash flow from operations to the payment of debt service, reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions, distributions, and other general partnership purposes;



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increase our vulnerability to adverse economic or industry conditions;

limit our ability to obtain additional financing to enable us to react to changes in our business; or

place us at a competitive disadvantage compared to businesses in our industry that have less debt.

Additionally, any failure to meet required payments on our debt or to comply with any covenants in the instruments governing our debt, could result in an event of default under the terms of those instruments. In the event of such default, the holders of such debt could elect to declare all the amounts outstanding under such instruments to be due and payable. Such default could also trigger a cross default or our other debt.

The London Inter-bankInterbank Offered Rate (“LIBOR”), the Euro Interbank Offered Rate and certain other interest “benchmarks” may be subject to further regulatory guidance and/or reform that could cause interest rates under our current or future debt agreements to perform differently than in the past or cause other unanticipated consequences. The United Kingdom’s Financial Conduct Authority, which regulates LIBOR, has announced that it intends to stop encouraging or requiring banks to submitthe continuation of LIBOR rateson the current basis cannot and will not be guaranteed after 2021 and it is unclear if LIBOR will cease to exist or if new methods of calculating LIBOR will evolve. If LIBOR ceases to exist or if the methods of calculating LIBOR change from their current form, interest rates on our current or future debt obligations may be adversely affected.
A downgrade
The terms of the agreements governing our existing indebtedness restrict our current and future operations, particularly our ability to respond to changes or to take certain actions.

The terms of the agreements governing our indebtedness contain a number of restrictive covenants that limit our flexibility in conducting our debt rating couldbusiness and restrict our ability to access the capital markets.
The terms of our financing are, in part, dependenttake specific actions, including (subject to various exceptions) restrictions on the credit ratings assigned to our debt by independent credit rating agencies. We cannot provide assurance that any of our current credit ratings will remain in effect for any given period of timeincurring indebtedness, paying dividends, making certain loans and investments, selling assets or that a rating will not be lowered or withdrawn entirely by a rating agency. Factors thatincurring liens which may impact our credit ratings include debt levels, capital structure, planned asset purchases or sales, near- and long-term production growth opportunities, market position, liquidity, asset quality, cost structure, product mix, customer and geographic diversification, and commodity price levels. A downgrade in our credit ratings, particularly to non-investment grade levels, could limit our ability to accesscompete effectively, or to take advantage of new business opportunities. In addition, the debt capital marketsrestrictive covenants in the credit agreement, dated February 16, 2021, that governs our $1,000,000,000 three-year senior secured multicurrency revolving credit facility (the “Revolving Credit Facility”) require us to maintain specified financial ratios and satisfy other financial condition tests.

A breach of the covenants or refinancerestrictions under our existing indebtedness could result in an event of default under the applicable indebtedness. Such default may allow the creditors to accelerate the related debt or cause us to refinance or issue debt with less favorable terms and conditions. Moreover, our revolving credit agreement includes an increase in interest rates if the ratings for our debt are downgraded, which could have an adverse effect on our results of operations. An increasemay result in the levelacceleration of any other debt to which a cross-acceleration or cross-default provision applies. An event of default under our Revolving Credit Facility would also permit the lenders to terminate all commitments to extend further credit under that facility. Furthermore, if we were unable to repay the amounts due and payable under our Revolving Credit Facility, lenders thereunder could proceed against the collateral granted to them to secure that indebtedness. In the event our lenders or noteholders accelerate the repayment of our indebtednessborrowings, we and related interest costsour subsidiaries may increase our vulnerabilitynot have sufficient assets to adverse general economic and industry conditions andrepay that indebtedness.

These restrictions may affect our ability to obtain additional financing, as well as have a material adverse effect ongrow in accordance with our business, financial condition, and results of operations.
Uninsured claims and litigation against us, including intellectual property litigation, could adversely impactstrategy. In addition, our financial condition, results, of operations, or cash flows.
We could be impacted by the outcome of pending litigation, as well as unexpected litigation or proceedings. We have insurance coverage against operating hazards, including product liability claimsour substantial indebtedness and personal injury claims related to our products or operating environments in which our employees operate, to the extent deemed prudent by our management and to the extent insurance is available. However, our insurance policies are subject to exclusions, limitations, and other conditions and may not apply in all cases, for example where willful wrongdoing on our part is alleged. Additionally, the nature and amount of that insurance may not be sufficient to fully indemnify us against liabilities arising out of pending and future claims and litigation. Additionally, in individual circumstances, certain proceedings or cases may also lead to our formal or informal exclusion from tenders or the revocation or loss of business licenses or permits. Our financial condition, results of operations, or cash flows could be adversely affected by unexpected claims not covered by insurance.
In addition, the tools, techniques, methodologies, programs, and components we use to provide our services may infringe upon the intellectual property rights of others. Infringement claims generally result in significant legal and other costs. The resolution of these claims could require us to enter into license agreements or develop alternative technologies. The development of these technologies or the payment of royalties under licenses from third parties, if available, would increase our costs. If a license were not available, or we are not able to develop alternative technologies, we might not be able to continue providing a particular service or product, whichcredit ratings could adversely affect our financial condition, results of operations, or cash flows.


Currency exchange rate fluctuations could adversely affect our financial condition, results of operations, or cash flows.
We conduct operations around the world in many different currencies. Because a significant portionavailability and terms of our revenue is denominated in currencies other than our reporting currency, the U.S. dollar, changes in exchange rates will produce fluctuations in our revenue, costs, and earnings, and may also affect the book value of our assets and liabilities and related equity. Although we do not hedge translation impacts on earnings, we do hedge transaction impacts on margins and earnings where the transaction is not in the functional currency of the business unit. Our efforts to minimize our currency exposure through such hedging transactions may not be successful depending on market and business conditions. Moreover, certain currencies in which the Company trades, specifically currencies in countries such as Angola and Nigeria, do not actively trade in the global foreign exchange markets and may subject us to increased foreign currency exposures. As a result, fluctuations in foreign currency exchange rates may adversely affect our financial condition, results of operations, or cash flows.financing.
We may incur significant Merger-related costs.
We have incurred and expect to incur additional non-recurring direct and indirect costs associated with the Merger. In addition to the costs and expenses associated with the consummation of the Merger, we are also integrating processes, policies, procedures, operations, technologies, and systems. While we have assumed that a certain level of expenses would be incurred relating to the Merger and continue to assess the magnitude of these costs, there are many factors beyond our control that could affect the total amount or the timing of the integration and implementation expenses. These costs and expenses could reduce the realization of efficiencies and strategic benefits we expect to achieve from the Merger, and the expected net benefit of the Merger may not be achieved in the near term or at all.
Our acquisition and divestiture activities involve substantial risks.

We have made and expect to continue to pursue acquisitions, dispositions, or other investments that may strategically fit our business and/or growth objectives. We cannot provide assurances that we will be able to locate suitable acquisitions, dispositions, or investments, or that we will be able to consummate any such transactions on terms and conditions acceptable to us. Even if we do successfully execute such transactions, they may not result in anticipated benefits, which could have a material adverse effect on our financial results. If we are unable to successfully integrate and develop acquired businesses, we could fail to achieve anticipated synergies and cost savings, including any expected increases in revenues and operating results. We may not be able to successfully cause a buyer of a divested business to assume the liabilities of that business or, even if such liabilities are assumed, we may have difficulties enforcing our rights, contractual or otherwise, against the buyer. We may invest in companies or businesses that fail, causing a loss of all or part of our investment. In addition, if we determine that an other-than-temporary decline in the fair value exists for a company in which we have invested, we may have to write down that investment to its fair value and recognize the related write-down as an investment loss.

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In connection with the Spin-off, we agreed to indemnify Technip Energies for certain liabilities and Technip Energies agreed to indemnify us for certain liabilities. If we are required to act on these indemnities to Technip Energies, our financial results could be negatively impacted. Additionally, any indemnity from Technip Energies may not be sufficient to insure us against the full amount of liabilities for which we are responsible and Technip Energies may not be able to satisfy its indemnification obligations in the future.

Risks Related to Our Operations

We may lose money on fixed-price contracts.

As customary for some of our projects, we often agree to provide products and services under fixed-price contracts. We are subject to material risks in connection with such fixed-price contracts. It is not possible to estimate with complete certainty the final cost or margin of a project at the time of bidding or during the early phases of its execution. Actual expenses incurred in executing these fixed-price contracts can vary substantially from those originally anticipated for several reasons including, but not limited to, the following:

unforeseen additional costs related to the purchase of substantial equipment necessary for contract fulfillment or labor shortages in the markets where the contracts are performed;

mechanical failure of our production equipment and machinery;

delays caused by local weather conditions and/or natural disasters (including earthquakes, floods and public health crises such as the COVID-19 pandemic); and

a failure of suppliers, subcontractors, or joint venture partners to perform their contractual obligations.

The realization of any material risks and unforeseen circumstances could also lead to delays in the execution schedule of a project. We may be held liable to a customer should we fail to meet project milestones or deadlines or to comply with other contractual provisions. Additionally, delays in certain projects could lead to delays in subsequent projects that were scheduled to use equipment and machinery still being utilized on a delayed project.

Pursuant to the terms of fixed-price contracts, we are not always able to increase the price of the contract to reflect factors that were unforeseen at the time our bid was submitted, and this risk may be heightened for projects with longer terms. Depending on the size of a project, variations from estimated contract performance, or variations in multiple contracts, could have a significant impact on our financial condition, results of operations or cash flows.

New capital asset construction projects for vessels and manufacturing facilities are subject to risks, including delays and cost overruns, which could have a material adverse effect on our financial condition, or results of operations.

From time to time, we carry out capital asset construction projects to maintain, upgrade, and develop our asset base, and such projects are subject to risks of delay and cost overruns that are inherent in any large construction project, resulting from numerous factors including, but not limited to, the following:

shortages of key equipment, materials or skilled labor;

delays in the delivery of ordered materials and equipment;

design and engineering issues; and

shipyard delays and performance issues.

Failure to complete construction in time, or the inability to complete construction in accordance with design specifications, may result in the loss of revenue. Additionally, capital expenditures for construction projects could materially exceed the initially planned investments, or there could be delays in putting such assets into operation.

Our failure to timely deliver our backlog could affect future sales, profitability, and relationships with our customers.

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Many of the contracts we enter into with our customers require long manufacturing lead times due to complex technical and logistical requirements. These contracts may contain clauses related to liquidated damages or financial incentives regarding on-time delivery, and a failure by us to deliver in accordance with customer expectations could subject us to liquidated damages or loss of financial incentives, reduce our margins on these contracts, or result in damage to existing customer relationships. The ability to meet customer delivery schedules for this backlog is dependent upon a number of factors, including, but not limited to, access to the raw materials required for production, an adequately trained and capable workforce, subcontractor performance, project engineering expertise and execution, sufficient manufacturing plant capacity, and appropriate planning and scheduling of manufacturing resources. Failure to deliver backlog in accordance with expectations could negatively impact our financial performance.

We face risks relating to our reliance on subcontractors, suppliers, and our joint venture partners.

We generally rely on subcontractors, suppliers, and our joint venture partners for the performance of our contracts. Although we are not dependent upon any single supplier, certain geographic areas of our business or a project or group of projects may depend heavily on certain suppliers for raw materials or semi-finished goods.

Any difficulty in engaging suitable subcontractors or acquiring equipment and materials could compromise our ability to generate a significant margin on a project or to complete such project within the allocated time frame. If subcontractors, suppliers or joint venture partners refuse to adhere to their contractual obligations with us or are unable to do so due to a deterioration of their financial condition, we may be unable to find a suitable replacement at a comparable price, or at all. Moreover, the failure of one of our joint venture partners to perform their obligations in a timely and satisfactory manner could lead to additional obligations and costs being imposed on us as we may be obligated to assume our defaulting partner’s obligations or compensate our customers.

Any delay, failure to meet contractual obligations, or other event beyond our control or not foreseeable by us, that is attributable to a subcontractor, supplier or joint venture partner, could lead to delays in the overall progress of the project and/or generate significant extra costs. Even if we are entitled to make a claim for these extra costs against the defaulting supplier, subcontractor or joint venture partner, we may be unable to recover the entirety of these costs and this could materially adversely affect our business, financial condition or results of operations.

A failure of our IT infrastructure, including as a result of cyber attacks,cyber-attacks, could adversely impact our business and results of operations.

The efficient operation of our business is dependent on our IT systems. Accordingly, we rely upon the capacity, reliability, and security of our IT hardware and software infrastructure and our ability to expand and update this infrastructure in response to changing needs. We have been subject to cyber attackscyber-attacks in the past, including phishing, malware, and ransomware, and although noransomware. No such attack has had a material adverse effect on our business, however this may not be the case with future attacks. Our systems may be vulnerable to damages from such attacks, as well as from natural disasters, failures in hardware or software, power fluctuations, unauthorized access to data and systems, loss or destruction of data (including confidential customer information), human error, and other similar disruptions, and we cannot give assurance that any security measures we have implemented or may in the future implement will be sufficient to identify and prevent or mitigate such disruptions. In response to the COVID-19 pandemic, we have transitioned many of our employees to remote working arrangements which presents increased cybersecurity risks. If a cyber-attack, power outage, connectivity issue, or other event occurred that impacted our employees’ ability to work remotely, it may be difficult or, in certain cases, impossible, for us to continue our business for a substantial period of time.

We rely on third parties to support the operation of our IT hardware, software infrastructure, and cloud services, and in certain instances, utilize web-based and software-as-a-service applications. The security and privacy measures implemented by such third parties, as well as the measures implemented by any entities we acquire or with whom we do business, may not be sufficient to identify or prevent cyber attacks,cyber-attacks, and any such attacks may have a material adverse effect on our business. While our IT vendor agreements typically contain provisions that seek to eliminate or limit our exposure to liability for damages from a cyber-attack,cyber attack, we cannot ensure such provisions will withstand legal challenges or cover all or any such damages.



Threats to our IT systems arise from numerous sources, not all of which are within our control, including fraud or malice on the part of third parties, accidental technological failure, electrical or telecommunication outages, failures of computer servers or other damage to our property or assets, outbreaks of hostilities, or terrorist acts. The failure
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of our IT systems or those of our vendors to perform as anticipated for any reason or any significant breach of security could disrupt our business and result in numerous adverse consequences, including reduced effectiveness and efficiency of operations, inappropriate disclosure of confidential and proprietary information, including personal data, regulatory action and fines included for a breach of data protection laws, reputational harm, regulatory fines or investigations, increased overhead costs, and loss of important information, which could have a material adverse effect on our business and results of operations. In addition, we may be required to incur significant costs to protect against or to mitigate damage caused by these disruptions or security breaches in the future. Our insurance coverage may not cover all of the costs and liabilities we incur as the result of any disruptions or security breaches, and if our business continuity and/or disaster recovery plans do not effectively and timely resolve issues resulting from a cyber-attack, we may suffer material adverse effects on our business.

Pirates endanger our maritime employees and assets.

We face material piracy risks in the Gulf of Guinea, the Somali Basin, and the Gulf of Aden, and, to a lesser extent, in Southeast Asia, Malacca, and the Singapore Straits. Piracy represents a risk for both our projects and our vessels, which operate and transport through sensitive maritime areas. Such risks have the potential to significantly harm our crews and to negatively impact the execution schedule for our projects. If our maritime employees or assets are endangered, additional time may be required to find an alternative solution, which may delay project realization and negatively impact our business, financial condition, or results of operations.


Risks Related to Legal Proceedings, Tax, and Regulatory Matters

The industries in which we operate or have operated expose us to potential liabilities, including the installation or use of our products, which may not be covered by insurance or may be in excess of policy limits, or for which expected recoveries may not be realized.

We are subject to potential liabilities arising from, among other possibilities, equipment malfunctions, equipment misuse, personal injuries, and natural disasters, any of which may result in hazardous situations, including uncontrollable flows of gas or well fluids, fires, and explosions. Our insurance against these risks may not be adequate to cover our liabilities. Further, the insurance may not generally be available in the future or, if available, premiums may not be commercially justifiable. If we incur substantial liability and the damages are not covered by insurance or are in excess of policy limits, or if we were to incur liability at a time when we were not able to obtain liability insurance, such potential liabilities could have a material adverse effect on our business, results of operations, financial condition or cash flows.

Our operations require us to comply with numerous regulations, violations of which could have a material adverse effect on our financial condition, results of operations, or cash flows.

Our operations and manufacturing activities are governed by international, regional, transnational, and national laws and regulations in every place where we operate relating to matters such as environmental protection, health and safety, labor and employment, import/export controls, currency exchange, bribery and corruption, and taxation. These laws and regulations are complex, frequently change, and have tended to become more stringent over time. In the event the scope of these laws and regulations expand in the future, the incremental cost of compliance could adversely impact our financial condition, results of operations, or cash flows.

Our international operations are subject to anti-corruption laws and regulations, such as the U.S. Foreign Corrupt Practices Act (“FCPA”), the U.K. Bribery Act of 2010 (the “Bribery Act”), the anti-corruption provisions of French law n° 2016-1691 dated December 9, 2016 relating to Transparency, Anti-corruption and Modernization of the Business Practice (“Sapin II Law”), the Brazilian law nº 12,846/13, or the Brazilian Anti-Bribery Act (also known as the Brazilian Clean Company Act), and economic and trade sanctions, including those administered by the United Nations, the European Union, the Office of Foreign Assets Control of the U.S. Department of the Treasury (“U.S. Treasury”), and the U.S. Department of State. The FCPA prohibits corruptly providing anything of value to foreign officials for the purposes of obtaining or retaining business or securing any improper business advantage. We may deal with both governments and state-owned business enterprises, the employees of which are considered foreign officials for purposes of the FCPA. The provisions of the Bribery Act extend beyond bribery of foreign public officials and are more onerous than the FCPA in a number of other respects, including jurisdiction, non-exemption of facilitation payments, and penalties. Economic and trade sanctions restrict our transactions or dealings with certain sanctioned countries, territories, and designated persons.
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As a result of doing business in countries throughout the world, including through partners and agents, we are exposed to a risk of violating anti-corruption laws and sanctions regulations. Some of the international locations in which we currently operate or may, in the future, operate, have developing legal systems and may have higher levels of corruption than more developed nations. Our continued expansion and worldwide operations, including in developing countries, our development of joint venture relationships worldwide, and the employment of local agents in the countries in which we operate increases the risk of violations of anti-corruption laws and economic and trade sanctions. Violations of anti-corruption laws and economic and trade sanctions are punishable by civil penalties, including fines, denial of export privileges, injunctions, asset seizures, debarment from government contracts (and termination of existing contracts), and revocations or restrictions of licenses, as well as criminal fines and imprisonment. In addition, any major violations could have a significant impact on our reputation and consequently on our ability to win future business.

We have implemented internal controls designed to minimize and detect potential violations of laws and regulations in a timely manner but we can provide no assurance that such policies and procedures will be followed at all times or will effectively detect and prevent violations of the applicable laws by one or more of our employees, consultants, agents, or partners. The occurrence of any such violation could subject us to penalties and material adverse consequences on our business, financial condition, results of operations, or cash flows.

Compliance with environmental and climate change-related laws and regulations may adversely affect our business and results of operations.

Environmental laws and regulations in various countries affect the equipment, systems, and services we design, market, and sell, as well as the facilities where we manufacture our equipment and systems, and any other operations we undertake. We are required to invest financial and managerial resources to comply with environmental laws and regulations, and believe that we will continue to be required to do so in the future. Failure to comply with these laws and regulations may result in the assessment of administrative, civil, and criminal penalties, the imposition of remedial obligations, the issuance of orders enjoining our operations, or other claims and complaints. Additionally, our insurance and compliance costs may increase as a result of changes in environmental laws and regulations or changes in enforcement. These laws and regulations, as well as any new laws and regulations affecting exploration and development of drilling for crude oil and natural gas, are becoming increasingly strict and could adversely affect our business and operating results by increasing our costs, limiting the demand for our products and services, or restricting our operations.

Regulatory requirements related to Environmental, Social and Governance (ESG) (including sustainability) matters have been, and are being, implemented in the European Union in particular in relation to financial market participants. Such regulatory requirements are being implemented on a phased basis. We expect regulatory requirements related to, and investor focus on, ESG (including sustainability) matters to continue to expand in the EU, the United States, and more globally. We establish ESG objectives that align with our foundational beliefs and corporate strategy with an aim toward reducing our carbon footprint, raising awareness and making advancements in inclusion and diversity. If, in relation to ESG (including sustainability) matters, we are not able to meet current and future regulatory requirements, the reporting requirements of regulators, or the current and future expectations of investors, customers or other stakeholders, our business and ability to raise capital may be adversely affected.

Existing or future laws and regulations relating to greenhouse gas emissions and climate change may adversely affect our business.

Climate change continues to attract considerable public and scientific attention. As a result, numerous laws, regulations, and proposals have been made and are likely to continue to be made at the international, national, regional, and state levels of government to monitor and limit emissions of carbon dioxide, methane, and other “greenhouse gases” (“GHGs”). These efforts have included cap-and-trade programs, carbon taxes, GHG reporting and tracking programs and regulations that directly limit GHG emissions from certain sources. Such existing or future laws, regulations, and proposals concerning the release of GHGs or that concern climate change (including laws, regulations, and proposals that seek to mitigate the effects of climate change) may adversely impact demand for the equipment, systems and services we design, market and sell. For example, oil and natural gas exploration and production may decline as a result of such laws, regulations, and proposals, and as a consequence, demand for our equipment, systems and services may also decline. In addition, such laws, regulations, and proposals may also result in more onerous obligations with respect to our operations, including the facilities where we manufacture our equipment and systems. Such decline in demand for our equipment, systems and services and such onerous
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obligations in respect of our operations may adversely affect our financial condition, results of operations, or cash flows.

As an English public limited company, we must meet certain additional financial requirements before we may declare dividends or repurchase shares and certain capital structure decisions may require stockholder approval which may limit our flexibility to manage our capital structure. We may not be able to pay dividends or repurchase shares of our ordinary shares in accordance with our announced intent, or at all.

Under English law, we will only be able to declare dividends, make distributions, or repurchase shares (other than out of the proceeds of a new issuance of shares for that purpose) out of “distributable profits.” Distributable profits are a company’s accumulated, realized profits, to the extent that they have not been previously utilized by distribution or capitalization, less its accumulated, realized losses, to the extent that they have not been previously written off in a reduction or reorganization of capital duly made. In addition, as a public limited company incorporated in England and Wales, we may only make a distribution if the amount of our net assets is not less than the aggregate of our called-up share capital and non-distributable reserves and to the extent that the distribution does not reduce the amount of those assets to less than that aggregate.

Our articles of association permit us by ordinary resolution of the stockholders to declare dividends, provided that the directors have made a recommendation as to its amount. The dividend shall not exceed the amount recommended by the Board of Directors. The directors may also decide to pay interim dividends if it appears to them that the profits available for distribution justify the payment. When recommending or declaring payment of a dividend, the directors are required under English law to comply with their duties, including considering our future financial requirements.

In addition, the Board of Directors’ determinations regarding dividends and share repurchases will depend on a variety of other factors, including our net income, cash flow generated from operations or other sources, liquidity position, and potential alternative uses of cash, such as acquisitions, as well as economic conditions and expected future financial results. Our ability to declare and pay future dividends and make future share repurchases will depend on our future financial performance, which in turn depends on the successful implementation of our strategy and on financial, competitive, regulatory, technical, general economic conditions, demand and selling prices for our products and services, and other factors specific to our industry or specific projects, many of which are beyond our control. Therefore, our ability to generate cash depends on the performance of our operations and could be limited by decreases in our profitability or increases in costs, regulatory changes, capital expenditures, or debt servicing requirements.

Any failure to pay dividends or repurchase shares of our ordinary shares could negatively impact our reputation, harm investor confidence in us, and cause the market price of our ordinary shares to decline.

Uninsured claims and litigation against us, including intellectual property litigation, could adversely impact our financial condition, results of operations, or cash flows.

We could be impacted by the outcome of pending litigation, as well as unexpected litigation or proceedings. We have insurance coverage against operating hazards, including product liability claims and personal injury claims related to our products or operating environments in which our employees operate, to the extent deemed prudent by our management and to the extent insurance is available. However, our insurance policies are subject to exclusions, limitations, and other conditions and may not apply in all cases, for example where willful wrongdoing on our part is alleged. Additionally, the nature and amount of that insurance may not be sufficient to fully indemnify us against liabilities arising out of pending and future claims and litigation. Additionally, in individual circumstances, certain proceedings or cases may also lead to our formal or informal exclusion from tenders or the revocation or loss of business licenses or permits. Our financial condition, results of operations, or cash flows could be adversely affected by unexpected claims not covered by insurance.

In addition, the tools, techniques, methodologies, programs, and components we use to provide our services may infringe upon the intellectual property rights of others. Infringement claims generally result in significant legal and other costs. The resolution of these claims could require us to pay damages, enter into license agreements or develop alternative technologies. The development of these technologies or the payment of royalties under licenses from third parties, if available, would increase our costs. If a license were not available, or we are not able to
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develop alternative technologies, we might not be able to continue providing a particular service or product, which could adversely affect our financial condition, results of operations, or cash flows.

We are subject to governmental regulation and other legal obligations related to privacy, data protection, and data security. Our actual or perceived failure to comply with such obligations could harm our business.

We are subject to international data protection laws, such as the General Data Protection Regulation, or GDPR, in the European Economic Area.Area, or EEA, and the United Kingdom (“UK”) GDPR and Data Protection Act 2018 in the UK. The GDPR imposesand implementing legislation in the EEA and UK impose several stringent requirements for controllers and processors of personal data which have increased our obligations, including, for example, by requiring more robust disclosures to individuals, notifications, in some cases, of data breaches to regulators and data subjects, and a record of processing and other policies and procedures to be maintained to adhere to the accountability principle. In addition, we are subject to the GDPR’s rules on transferring personal data outside of the EEA and UK (including to the United States), and somerecent legal developments in Europe have created complexity and uncertainty regarding such transfers. In addition, the UK’s withdrawal from the European Union may mean that in future we are required to find alternative solutions for the compliant transfer of these rules are currently being challenged inpersonal data into the courts. UK.
Failure to comply with the requirements of GDPR and the local laws implementing or supplementing the GDPR could result in fines of up to €20,000,000 or up to 4% of the total worldwide annual turnover of the preceding financial year, whichever is higher, as well as other administrative penalties. The UK GDPR mirrors the fines under the GDPR. In addition, a breach of the GDPR or UK GDPR could result in regulatory investigations and enforcement action, reputational damage, and civil claims including representative actions and other class action type litigation.

We are likely to be required to expend significant capital and other resources to ensure ongoing compliance with the GDPR and UK GDPR and other applicable data protection legislation, and we may be required to put in place additional control mechanisms which could be onerous and adversely affect our business, financial condition, results of operations, and prospects.or cash flows.
We may not realize the cost savings, synergies, and other benefits expected from the Merger.
The combination of two independent companies is a complex, costly, and time-consuming process. As a result, we will be required to continue to devote management attention and resources to integrating the business practices and operations of Technip and FMC Technologies. The integration process may disrupt our businesses and, if ineffectively implemented, could preclude realization of the full benefits expected from the Merger. Our failure to meet the challenges involved in successfully integrating the operations of Technip and FMC Technologies or otherwise realize the anticipated benefits of the Merger could interrupt, and seriously harm the results of, our operations. In addition, the overall integration of Technip and FMC Technologies may result in unanticipated expenses, liabilities, competitive responses, loss of client relationships, diversion of management’s attention, or other problems, and such problems could, if material, cause our stock price to decline. The difficulties of combining the operations of Technip and FMC Technologies include, but are not limited to, the following:
managing a significantly larger company;
coordinating geographically separate organizations;
the potential diversion of management focus and resources from other strategic opportunities and from operational matters;
aligning and executing our strategy;
retaining existing customers and attracting new customers;
maintaining employee morale and retaining key management and other employees;
integrating two unique business cultures,
the possibility of faulty assumptions underlying expectations regarding the integration process;
consolidating corporate and administrative infrastructures and eliminating duplicative operations;


coordinating distribution and marketing efforts;
integrating IT, communications, and other systems;
changes in applicable laws and regulations;
managing tax costs or inefficiencies associated with integrating our operations;
unforeseen expenses or delays associated with the Merger; and
taking actions that may be required in connection with obtaining regulatory approvals.
Many of these factors are at least partially outside our control and any one of them could result in increased costs, decreased revenue, and diversion of management’s time and energy, which could materially impact our business, financial condition, and results of operations. In addition, even if the operations of Technip and FMC Technologies are successfully integrated, we may not realize the full benefits of the Merger, including the synergies, cost savings, sales, or growth opportunities that we expect. These benefits may not be achieved within the anticipated time frame, or at all. As a result, the combination of Technip and FMC Technologies may not result in the realization of the full benefits expected from the Merger.
The IRS may not agree that we should be treated as a foreign corporation for U.S. federal tax purposes and may seek to impose an excise tax on gains recognized by certain individuals.

Although we are incorporated in the United Kingdom, the U.S. Internal Revenue Service (the “IRS”) may assert that we should be treated as a U.S. “domestic” corporation (and, therefore, a U.S. tax resident) for U.S. federal income tax purposes pursuant to Section 7874 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”). For U.S. federal income tax purposes, a corporation (i) is generally considered a “domestic” corporation (or U.S. tax resident) if it is organized in the United States or of any state or political subdivision therein, and (ii) is generally considered a “foreign” corporation (or non-U.S. tax resident) if it is not considered a domestic corporation. Because we are a U.K. incorporated entity, we would be considered a foreign corporation (and, therefore, a non-U.S. tax resident) under these rules. Section 7874 of the Code (“Section 7874”) provides an exception under which a foreign incorporated entity may, in certain circumstances, be treated as a domestic corporation for U.S. federal income tax purposes.

We do not believe this exception applies. However, the Section 7874 rules are complex and subject to detailed regulations, the application of which is uncertain in various respects. It is possible that the IRS will not agree with our position. Should the IRS successfully challenge our position, it is also possible that an excise tax under Section 4985 of the Code (the “Section 4985 Excise Tax”) may be assessed against certain “disqualified individuals” (including former officers and directors of FMC Technologies, Inc.) on certain stock-based compensation held thereby. We may, if we determine that it is appropriate, provide disqualified individuals with a payment with respect to the Section 4985 Excise Tax, so that, on a net after-tax basis, they would be in the same position as if no such Section 4985 Excise Tax had been applied.

In addition, there can be no assurance that there will not be a change in law or interpretation, including with retroactive effect, that might cause us to be treated as a domestic corporation for U.S. federal income tax purposes.

U.S. tax laws and/or guidance could affect our ability to engage in certain acquisition strategies and certain internal restructurings.

Even if we are treated as a foreign corporation for U.S. federal income tax purposes, Section 7874, U.S. Treasury regulations, and other guidance promulgated thereunder may adversely affect our ability to engage in certain future
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acquisitions of U.S. businesses or to restructure the non-U.S. members of our group. These limitations, if applicable, may affect the tax efficiencies that otherwise might be achieved in such potential future transactions or restructurings.

In addition, the IRS and the U.S. Treasury have issued final and temporary regulations providing that, even if we are treated as a foreign corporation for U.S. federal income tax purposes, certain intercompany debt instruments issued on or after April 4, 2016 will be treated as equity for U.S. federal income tax purposes, therefore limiting U.S. tax benefits and resulting in possible U.S. withholding taxes. Although recent guidance from the U.S. Treasury proposes deferringremoves certain documentation requirements that would otherwise be imposed with respect to covered debt instruments, announces an intention to further modify and possibly withdraw certain classification rules relating to covered debt instruments, and further indicates that these rules generally are the subject of continuing study and may be further materially modified, the current regulations may adversely affect our future effective tax rate and could also


impact our ability to engage in future restructurings if such transactions cause an existing intercompany debt instrument to be treated as reissued for U.S. federal income tax purposes.

We are subject to the tax laws of numerous jurisdictions; challenges to the interpretation of, or future changes to, such laws could adversely affect us.

We and our subsidiaries are subject to tax laws and regulations in the United Kingdom, the United States, France, and numerous other jurisdictions in which we and our subsidiaries operate. These laws and regulations are inherently complex, and we are, and will continue to be, obligated to make judgments and interpretations about the application of these laws and regulations to our operations and businesses. The interpretation and application of these laws and regulations could be challenged by the relevant governmental authorities, which could result in administrative or judicial procedures, actions, or sanctions, which could be material.

On December 22, 2017, the Tax Cuts and Jobs Act was signed into law in the United States, which made extensive changes to the U.S. taxation of multinational companies, and is subject to continuing regulatory and possible legislative changes, especially given the new Administration and Congress in the United States. In addition, the U.S. Congress, the U.K. Government, the European Union, the Organization for Economic Co-operation and Development (the “OECD”), and other government agencies in jurisdictions where we and our affiliates do business have had an extended focus on issues related to the taxation of multinational corporations. New tax initiatives, directives, and rules, such as the U.S. Tax Cuts and Jobs Act, the OECD’s Base Erosion and Profit Shifting initiative, and the European Union’s Anti-Tax Avoidance Directives, may increase our tax burden and require additional compliance-related expenditures. As a result, our financial condition, results of operations, or cash flows may be adversely affected. Further changes, including with retroactive effect, in the tax laws of the United States, the United Kingdom, the European Union, or other countries in which we and our affiliates do business could also adversely affect us.

We may not qualify for benefits under tax treaties entered into between the United Kingdom and other countries.

We operate in a manner such that we believe we are eligible for benefits under tax treaties between the United Kingdom and other countries. However, our ability to qualify for such benefits will depend on whether we are treated as a U.K. tax resident, the requirements contained in each treaty and applicable domestic laws, on the facts and circumstances surrounding our operations and management, and on the relevant interpretation of the tax authorities and courts. For example, because of the anticipated withdrawal of the United Kingdom from the European Union (“Brexit”),Brexit, we may lose some or all of the benefits of tax treaties between the United States and the remaining members of the European Union, and face higher tax liabilities, which may be significant. Another example is the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the “MLI”), which entered into force for participating jurisdictions on July 1, 2018. The MLI recommends that countries adopt a “limitation-on-benefit” (“LOB”) rule and/or a “principle purposes“principal purpose test” (“PPT”) rule with regards to their tax treaties. The scope and interpretation of these rules as adopted pursuant to the MLI are presently under development, but the application of eitherthe LOB rule mightor the PPT rule could deny us tax treaty benefits (such as a reduced rate of withholding tax) that were previously available and as such there remains uncertainty as to whether and, if so, to what extent such treaty benefits will continue to be available. The position is likely to remain uncertain for a number of years.

The failure by us or our subsidiaries to qualify for benefits under tax treaties entered into between the United Kingdom and other countries could result in adverse tax consequences to us (including an increased tax burden and increased filing obligations) and could result in certain tax consequences of owning and disposing of our shares.
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We intend to be treated exclusively as a resident of the United Kingdom for tax purposes, but French or other tax authorities may seek to treat us as a tax resident of another jurisdiction.

We are incorporated in the United Kingdom. English law currently provides that we will be regarded as a U.K. resident for tax purposes from incorporation and shall remain so unless (i) we are concurrently a resident in another jurisdiction (applying the tax residence rules of that jurisdiction) that has a double tax treaty with the United Kingdom and (ii) there is a tiebreaker provision in that tax treaty which allocates exclusive residence to that other jurisdiction.

In this regard, we have a permanent establishment in France to satisfy certain French tax requirements imposed by the French Tax Code with respect to the Merger. Although it is intended that we will be treated as having our exclusive place of tax residence in the United Kingdom, the French tax authorities may claim that we are a tax resident of France if we were to fail to maintain our “place of effective management” in the United Kingdom. Any such claim would be settled between the French and U.K. tax authorities pursuant to the mutual assistance procedure provided for by the tax treaty concluded between France and the United Kingdom. There is no assurance that these authorities would reach an agreement that we will remain exclusively a U.K. tax resident; aan adverse determination which could materially and adversely affect our business, financial condition, results of operations, and future prospects.or cash flows. A failure to maintain exclusive tax residency in the United Kingdom could result in adverse tax


consequences to us and our subsidiaries and could result in certain adverse changes in the tax consequences of owning and disposing of our shares.

Risks Related to the Spin-off and the Other Transactions

The Company has identified material weaknesses relatingSpin-off may subject us to internalfuture liabilities.

On February 16, 2021, we completed the Spin-off, resulting in Technip Energies, which holds our former Technip Energies business segment, becoming a stand-alone publicly traded corporation. Pursuant to agreements we entered into with Technip Energies in connection with the Spin-off, we and Technip Energies are each generally responsible for the obligations and liabilities related to our respective businesses. Pursuant to those agreements, we and Technip Energies each agreed to cross-indemnities principally designed to allocate financial responsibility for the obligations and liabilities of our business to us and those of Technip Energies’ business to it. However, third parties, including governmental agencies, could seek to hold us responsible for obligations and liabilities that Technip Energies agreed to retain or assume, and there can be no assurance that the indemnification from Technip Energies will be sufficient to protect us against the full amount of such obligations and liabilities, or that Technip Energies will be able to fully satisfy its indemnification obligations. Additionally, if a court were to determine that the Spin-off or related transactions were consummated with the actual intent to hinder, delay or defraud current or future creditors or resulted in Technip Energies receiving less than reasonably equivalent value when it was insolvent, or that it was rendered insolvent, inadequately capitalized or unable to pay its debts as they become due, then it is possible that the court could disregard the allocation of obligations and liabilities agreed to between us and Technip Energies, impose substantial obligations and liabilities on us and void some or all of the transactions related to the Spin-off. Any of the foregoing could adversely affect our results of operations and financial position.

The Spin-off may not achieve some or all of the anticipated benefits.

We may not realize some or all of the anticipated strategic, financial, operational or other benefits from the Spin-off. As independent publicly-traded companies, we and Technip Energies are smaller, less diversified companies with a narrower business focus, and may be more vulnerable to changing market conditions, which could materially adversely affect our and its results of operations, cash flows and financial position.

In addition, other events outside of our control, including, but not limited to, political climate, the severity and duration of the pandemic, and regulatory or legislative changes, could also adversely affect our ability to realize the anticipated benefits from the Spin-off. Any such difficulties could have an adverse effect on our business, financial condition, or results of operations, and cause the combined market value of us and Technip Energies after the Spin-off to fall short of the market value of our shares prior to the Spin-off.

We are a significant shareholder of Technip Energies and the value of our investment in Technip Energies may fluctuate substantially.

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Following completion of the Spin-off, we own approximately 49.9% of the outstanding shares of common stock of Technip Energies. The value of our investment in Technip Energies may be adversely affected by negative changes in its results of operations, cash flows and financial position, which may occur as a result of the many risks attendant with operating in the onshore/offshore industry, including the effect of laws and regulations on the operation of Technip Energies’ business and the development of its assets, increased competition, loss of contract commitments, delays in the timing of or the failure to complete projects, lack of access to capital and operating risks and hazards. The value of our investment in Technip Energies may fluctuate substantially and may result in a significant impact to our results of operations.

We intend to significantly reduce our shareholding in Technip Energies over financial reporting. If our remedial measures are insufficientthe 18 months following the Spin-off, including in connection with the sale of Technip Energies shares to addressBPI (as defined herein) pursuant to the material weaknesses,Investment (as defined herein). However, we can offer no guarantee that we will be able to complete such disposition or, if onecompleted, the extent to which we will reduce our shareholding or more additional material weaknesses or significant deficienciesthe value that we will realize in connection with such disposition. The occurrence of any of these and other risks faced by Technip Energies could adversely affect the value of our internal control over financial reporting are discovered or occurinvestment in the future, our consolidated financial statementsTechnip Energies.

We may contain material misstatements and we could be required to further restate our financial results,refund the Purchase Price under the Share Purchase Agreement to BPI in the event that certain conditions thereunder are not met.

In connection with the Spin-off, we entered into the Share Purchase Agreement with BPI, pursuant to which BPI agreed to purchase from us for $200.0 million, subject to a purchase price adjustment as described below (the “Purchase Price”), a number of Technip Energies shares (the “Purchased Shares”) determined based upon a thirty day volume-weighted average price of Technip Energies’ shares, less a six percent discount (the “Investment”). Pursuant to the Share Purchase Agreement, BPI paid us the Purchase Price on February 25, 2021, however (i) if the number of Purchased Shares due from us to BPI is less than 11.82% of the number of Technip Energies shares outstanding immediately following completion of the Spin-off, then BPI may, upon written notice to us, terminate the Share Purchase Agreement and we will be required to refund the Purchase Price to BPI or (ii) if the number of Purchased Shares due from us to BPI exceeds 17.25% of the number of Technip Energies shares outstanding immediately following completion of the Spin-off (the “Cap”), then we will transfer to BPI an aggregate number of Technip Energies shares equal to the Cap and will pay to BPI, as a reduction of the Purchase Price, an amount equal to (x) the difference between the number of Technip Energies shares that we would have delivered to BPI but for the Cap and the number of Technip Energies shares that we actually delivered to BPI, multiplied by (y) the applicable price per Technip Energy share. Any such refund or reduction of the Purchase Price could have a material adverse effect on our financial condition resultsor cash flows.

General Risk Factors

Our businesses are dependent on the continuing services of our key managers and employees.

We depend on key personnel. The loss of any key personnel could adversely impact our business if we are unable to implement key strategies or transactions in their absence. The loss of qualified employees or failure to retain and motivate additional highly-skilled employees required for the operation and expansion of our business could hinder our ability to successfully conduct research activities and develop marketable products and services.

Seasonal and weather conditions could adversely affect demand for our services and operations.

Our business may be materially affected by variation from normal weather patterns, such as cooler or warmer summers and winters. Adverse weather conditions, such as hurricanes in the Gulf of Mexico or extreme winter conditions in Canada, Russia, and the North Sea, may interrupt or curtail our operations, or our customers’ operations, cause supply disruptions or loss of productivity, and may result in a loss of revenue or damage to our equipment and facilities, which may or may not be insured. Increasing concentrations of greenhouse gases in the Earth’s atmosphere may produce climate changes that increase variation from normal weather patterns, such as increased frequency and severity of storms, floods, droughts, and other climatic events, which could further impact our operations. Significant physical effects of climate change could also have a direct effect on our operations and cash flows.

Management identified material weaknesses inan indirect effect on our business by interrupting the Company’s internal control over financial reporting asoperations of December 31, 2017 and December 31, 2018 as described in Part II, Item 9A of this Annual Report on Form 10-K.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

As a result of the material weaknesses, management has concluded that our internal control over financial reporting was not effective as of December 31, 2018. In addition, as a resultthose with whom we do business. Any of these material weaknesses, our chief executive officer and chief financial officer have concluded that, as of December 31, 2018, our disclosure controls and procedures were not effective. Until these material weaknesses are remediated, they could lead to errors in our financial results andevents or outcomes could have a material adverse effect on our business, financial condition, cash flows, or results of operations, and cash flows.operations.


If our remedial measures are insufficient to address the material weaknesses, or if one or more additional material weaknesses or significant deficiencies in our disclosure controls and procedures or internal control over financial reporting are discovered or occur in the future, our consolidated financial statements may contain material misstatements and we
45


Currency exchange rate fluctuations could be required to restate our financial results, which could have a material adverse effect onadversely affect our financial condition, results of operations, or cash flows.

We conduct operations around the world in many different currencies. Because a significant portion of our revenue is denominated in currencies other than our reporting currency, the U.S. dollar, changes in exchange rates will produce fluctuations in our revenue, costs, and cash flows, restrictearnings, and may also affect the book value of our abilityassets and liabilities and related equity. We hedge transaction impacts on margins and earnings where a transaction is not in the functional currency of the business unit, but we do not hedge translation impacts on earnings. Our efforts to accessminimize our currency exposure through such hedging transactions may not be successful depending on market and business conditions. Moreover, certain currencies in which we conduct operations, specifically currencies in countries such as Angola and Nigeria, do not actively trade in the capitalglobal foreign exchange markets require significant resources to correct the weaknesses or deficiencies,and may subject us to fines, penaltiesincreased foreign currency exposures. As a result, fluctuations in foreign currency exchange rates may adversely affect our financial condition, results of operations, or judgments, harmcash flows.

We are exposed to risks in connection with our reputationdefined benefit pension plan commitments.

We have funded and unfunded defined benefit pension plans, which provide defined benefits based on years of service and salary. We are required to recognize the funded status of defined benefit post-retirement plans as an asset or otherwise cause a decline in investor confidence andliability in the consolidated balance sheet and recognize changes in that funded status in comprehensive income in the year in which the changes occur. Further, we are required to measure each plan’s assets and its obligations that determine its funded status as of the date of the consolidated balance sheet. Each
defined benefit pension plan’s assets are invested in different asset classes and their value may fluctuate in accordance with market priceconditions. Any deterioration in the value of the defined benefit pension plan assets could therefore increase our stock.

Additional material weaknesses or significant deficienciesobligations. Any such increases in our internal control overnet pension obligations could adversely affect our financial reporting could be identified incondition due to increased additional outflow of funds to finance the future. Any failure to maintain pension obligations.

In addition, applicable law and/or implement required new or improved controls, or any difficulties we encounter in their implementation, could result in additional significant deficiencies or material weaknesses, causethe terms of the relevant defined benefit pension plan may require us to failmake cash contributions or provide financial support upon the occurrence of certain events. We cannot predict whether, or to meetwhat extent, changing market or economic conditions, regulatory changes or other factors will further increase our periodic reporting obligationspension expense or result in material misstatements infunding obligations. For further information regarding our financial statements. Any such failure could also adversely affect the results of periodic management evaluations and annual auditor attestation reports regarding the effectiveness of our internal control over financial reporting required under Section 404 of the U.S. Sarbanes-Oxley Act of 2002 and the rules promulgated under Section 404. The existence of a material weakness could result in errors in our financial statements that could result in a restatement of financial statements, cause us to fail to meet our reporting obligations and cause investors to lose confidence in our reported financial information, leading to, among other things, a decline in our stock price.pension liabilities, see Note 22 for further information.


We can give no assurances that the measures we have taken to date, or any future measures we may take, will fully remediate the material weaknesses identified or that any additional material weaknesses will not arise in the future due to our failure to implement and maintain adequate internal control over financial reporting. In addition, even if we are successful in strengthening our controls and procedures, those controls and procedures may not be adequate to prevent or identify irregularities or ensure the fair and accurate presentation of our financial statements included in our periodic reports filed with the U.S. Securities and Exchange Commission.


ITEM 1B. UNRESOLVED STAFF COMMENTS
None.

46



ITEM 2. PROPERTIES
Our corporate headquarters is in London, England. We also maintain corporate offices in Houston, Texas and Paris, France, where significant worldwide global support activity occurs. In addition, we own or lease numerous properties throughout the world.

We believe our properties and facilities are suitable for their present and intended purposes and are operating at a level consistent with the requirements of the industry in which we operate. We also believe that our leases are at competitive or market rates and do not anticipate any difficulty in leasing suitable additional space upon expiration of our current lease terms.

The following table shows our principal properties by reporting segment atas of December 31, 2018:
2020:
LocationSegment
Africa
Dande, AngolaSubsea
Hassi-Messaoud, AlgeriaSurface
Lagos, NigeriaSubsea
Lobito, AngolaSubsea
Luanda, AngolaSubsea
Malabo, Equatorial New GuineaSubsea
Port Harcourt, NigeriaSubsea
Takoradi, GhanaSubsea
Asia
Chennai, IndiaTechnip Energies
Dahej, IndiaTechnip Energies
Hyderabad, IndiaSurface
Jakarta, IndonesiaSurface
Johor, MalaysiaSubsea Onshore/Offshore, Surface
Kuala Lumpur, MalaysiaSubsea, Onshore/OffshoreSurface, Technip Energies
Labuan, MalaysiaMumbai, IndiaSubseaTechnip Energies
New Delhi, IndiaOnshore/OffshoreTechnip Energies
Noida, IndiaSubsea, Onshore/Offshore, Surface, Technip Energies
Nusajaya, MalaysiaSubsea, Surface
SingaporeSubsea, Surface
Australia
Henderson, AustraliaSubsea
Perth, AustraliaSubsea, Onshore/OffshoreTechnip Energies
Europe
Aberdeen, United KingdomSubsea, Surface
Aktau, KazakhstanSubsea, Surface
Atyrau, KazakhstanSubsea, Surface
Arnhem, The NetherlandsSurface
Atyrau, KazakhstanSurface
Barcelona, SpainOnshore/OffshoreTechnip Energies
Bergen, NorwaySubsea Surface
Compiegne, FranceSubseaTechnip Energies
Courbevoie (Paris - La Défense), FranceSubsea, Onshore/OffshoreTechnip Energies
Dunfermline, United KingdomSubsea, Surface
Ellerbeck,Ellerbek, GermanySurface
Evanton, United KingdomSubsea
Horten, NorwaySubsea
Kongsberg, NorwaySubsea, Surface
Krakow, PolandSubsea
La Garenne-Colombes, FranceTechnip Energies
Le Trait, FranceSubsea, Surface
Lisbon, PortugalSubsea
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London, United KingdomSubsea, Onshore/OffshoreTechnip Energies
Lyon, FranceTechnip Energies
Lysaker, NorwaySubsea, Technip Energies
Moscow, RussiaSubsea, Surface, Technip Energies
Newcastle, United KingdomSubsea
Lysaker, NorwaySubsea
Orkanger, NorwaySubsea


Paris, FranceSubsea, Onshore/Offshore
Rome, ItalyOnshore/Offshore
Schoonebeck, NetherlandsSurfaceTechnip Energies
Sens, FranceSurface, Technip Energies
St. Petersburg, RussiaTechnip Energies
Stavanger, NorwaySubsea, Surface
Veenord, NetherlandsSurface
Zoetermeer, NetherlandsOnshore/OffshoreTechnip Energies
Middle East
Abu Dhabi, United Arab EmiratesOnshore/Offshore, Surface, Technip Energies
Al-Khobar, Saudi ArabiaTechnip Energies
Dammam, Saudi ArabiaSurface
Doha, QatarTechnip Energies
North America
Brighton (Colorado), United StatesSurface
Calgary (Alberta), CanadaSurface
Corpus Christi (Texas), United StatesSurface
Davis (California), United StatesSubsea
Erie (Pennsylvania), United StatesSurface
Houston (Texas), United StatesSubsea, Onshore/Offshore, Surface,
Edmonton (Alberta), CanadaSurface
Erie (Pennsylvania), United StatesSurface Technip Energies
Odessa (Texas), United StatesSurface
Oklahoma City (Oklahoma), United StatesSurface
San Antonio (Texas), United StatesSurface
Stephenville (Texas)Speers (Pennsylvania), United StatesSurface
St. John’s (Newfoundland), CanadaSubsea
Stephenville (Texas), United StatesSurface
Theodore (Alabama), United StatesSubsea
South America
Bogota, ColombiaOnshore/OffshoreTechnip Energies
Macaé, BrazilSubsea
Neuquén, ArgentinaSurface
Rio de Janeiro, BrazilSubsea, Surface
São João da Barra, BrazilSubsea
Vitória, BrazilVeracruz, MexicoSubseaSurface
Yogal,Yopal, ColombiaSurface

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The following table shows marine vessels in which we held an interest or operated as of December 31, 2018:
2020:
Vessel NameVessel TypeSpecial Equipment
Deep BluePLSVReeled pipelay/flexible pipelay/umbilical systems
Deep EnergyPLSVReeled pipelay/flexible pipelay/umbilical systems
Apache IIPLSVReeled pipelay/umbilical systems
Global 1200(a)
PLSV/HCVConventional pipelay/Heavy handling operations
Global 1201PLSV/HCVConventional pipelay/Heavy handling operations
Deep OrientHCVConstruction/installation systems
North Sea Atlantic (a)(b)
HCVConstruction/installation systems
Skandi Africa (a)(b)
HCVConstruction/installation systems
North Sea Giant (a)
HCVConstruction/installation systems
Deep ArcticDSV/HCVDiver support systems
Deep ExplorerDiscovererDSV/HCVDiver support systems
Deep ExplorerDSV/HCVDiver support systems
Skandi VitóriaPLSVFlexible pipelay/umbilical systems
Skandi NiteróiPLSVFlexible pipelay/umbilical systems
Coral do AtlanticoPLSVFlexible pipelay/umbilical systems
Estrela do MarDeep StarPLSVFlexible pipelay/umbilical systems
Skandi AçuPLSVFlexible pipelay/umbilical systems
Skandi BúziosPLSVFlexible pipelay/umbilical systems
Skandi Olinda(b)
PLSVFlexible pipelay/umbilical systems
Skandi RecifePLSVFlexible pipelay/umbilical systems
(a)Vessels under long term charter.
(b)Vessel under construction.
(a)    At December 31, 2020, this vessel is held for sale.    
(b) Vessels under long term charter.
PLSV: Pipelay Support Vessel
HCV: Heavy Duty Construction Vessel
LCV: Light Construction Vessel
DSV: Diving Support Vessel
MSV: Multi Service Vessel
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PART II
ITEM 3. LEGAL PROCEEDINGS5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
A purportedOur ordinary shares are listed on the NYSE and the regulated market of Euronext Paris, in each case trading under the “FTI” symbol.
For information about dividends, see Note 17 “Stockholders’ Equity” to the Consolidated Financial Statements in Item 8.
As of February 25, 2021, according to data provided by our transfer agent, there were 101 shareholders of record. However, many of our shareholders hold their shares in "street name" by a nominee of Depository Trust Company, which is a single shareholder class action filedof record. We estimate that there were approximately 20,500 shareholders whose shares were held in “street name” by banks, brokers, or other financial institutions at February 25, 2021.
We had no unregistered sales of equity securities during the year ended December 31, 2020.
Issuer Purchases of Equity Securities





Period
Total Number
of Shares
Purchased
Average Price 
Paid per Share
Total Number of
Shares Purchased 
as Part of Publicly
Announced Plans 
or Programs
Maximum
Number of Shares 
That May Yet
Be Purchased
Under the Plans
or Programs (a)
October 1, 2020 – October 31, 2020— $— — 14,286,427 
November 1, 2020 – November 30, 2020— $— — 14,286,427 
December 1, 2020 – December 31, 2020— $— — 14,286,427 
Total— — 14,286,427 
(a)In December 2018, our Board of Directors authorized an extension of our share repurchase program for $300 million for the purchase of ordinary shares. As of December 31, 2020, $207.8 million remained authorized under the share repurchase program.
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Performance Graph
The graph below compares the cumulative total shareholder return on our ordinary shares for the period from January 17, 2017 to December 31, 2020 with the Standard & Poor’s 500 Index (“S&P 500 Index”) and PHLX Oil Services Index. The comparison assumes $100 was invested, including reinvestment of dividends, if any, in our ordinary shares on January 17, 2017 and amended in January 2018 and captioned Prause v. TechnipFMC, et al., No. 4:17-cv-02368 (S.D. Texas) is pendingboth of the indexes on the same date. The results shown in the U.S. District Court for the Southern Districtgraph below are not necessarily indicative of Texas against the Company and certain current and former officers and employees of the Company. The suit alleged violations of the federal securities laws in connection with the Company's restatement of our first quarter 2017 financial results and a material weakness in our internal control over financial reporting announced on July 24, 2017. On January 18, 2019, the District Court dismissed claims under Section 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Section 15 of the Securities Act of 1933, as amended (“Securities Act”). A remaining claim for alleged violation of Section 11 of the Securities Act in connection with the reporting of certain financial results in the Company’s Form S-4 Registration Statement filed in 2016 is pending and seeks unspecified damages. The Company is vigorously contesting the litigation and cannot predict its duration or outcome.future performance.
In addition to the above-referenced matters, we are involved in various other pending or potential legal actions or disputes in the ordinary course of our business. Management is unable to predict the ultimate outcome of these actions because of their inherent uncertainty. However, management believes that the most probable, ultimate resolution of these matters will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.
fti-20201231_g1.jpg

December 31
2017201820192020
TechnipFMC plc$87.76 $55.89 $62.63 $28.03 
S&P 500 Index119.82 114.56 150.62 178.32 
PHLX Oil Services Index82.00 44.93 44.68 25.88 
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ITEM 4. MINE SAFETY DISCLOSURES6. SELECTED FINANCIAL DATA
Not applicable.


PARTThe following tables set forth selected financial data for each of the five years in the period ended December 31, 2020. This information should be read in conjunction with Part I, Item 1 “Business,” Part II,
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our ordinary shares are listed on the NYSE Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the regulated marketaudited consolidated financial statements and notes thereto included in Part II, Item 8 of Euronext Paris, in each case trading underthis Annual Report on Form 10-K.
Year Ended December 31,
(In millions, except per share data)20202019201820172016
Statement of income data
Total revenue$13,050.6 $13,409.1 $12,552.9 $15,056.9 $9,199.6 
Total costs and expenses$15,936.2 $14,935.8 $13,470.5 $14,091.7 $8,743.6 
Net income (loss)$(3,237.9)$(2,412.1)$(1,910.8)$134.2 $371.1 
Net income (loss) attributable to TechnipFMC plc$(3,287.6)$(2,415.2)$(1,921.6)$113.3 $393.3 
Earnings (loss) per share from continuing operations attributable to TechnipFMC plc
Basic earnings (loss) per share$(7.33)$(5.39)$(4.20)$0.24 $3.29 
Diluted earnings (loss) per share$(7.33)$(5.39)$(4.20)$0.24 $3.16 
As of December 31,
(In millions)20202019201820172016
Balance sheet data
Total assets$19,692.6 $23,518.8 $24,784.5 $28,263.7 $18,679.3 
Long-term debt, less current portion$3,317.7 $3,980.0 $4,124.3 $3,777.9 $1,869.3 
Total TechnipFMC plc stockholders’ equity$4,154.2 $7,659.3 $10,357.6 $13,345.9 $5,013.8 
Year Ended December 31,
(In millions)20202019201820172016
Other financial information
Capital expenditures$291.8 $454.4 $368.1 $255.7 $312.9 
Cash flows provided (required) by operating activities$656.9 $848.5 $(185.4)$210.7 $493.8 
Net cash$853.9 $714.8 $1,348.3 $2,882.4 $3,716.4 
Order backlog$21,388.2 $24,251.1 $14,560.0 $12,982.8 $15,002.0 
The results of our operations for the “FTI” symbol. Prioryear ended December 31, 2020 include goodwill and long-lived asset impairment charges of $3,083.4 million and $204.0 million, respectively. The results of our operations for the year ended December 31, 2019 include goodwill and long-lived asset impairment charges of $1,988.7 million and $495.4 million, respectively. The results of our operations for the year ended December 31, 2018 include goodwill and vessels impairment charges of $1,383.0 million and $372.9 million, respectively, and a legal provision of $280.0 million. See Notes 19 and 20 to our consolidated financial statements for further details.
The results of our operations for the year ended December 31, 2017 consist of the combined results of operations of Technip and FMC Technologies. Due to the Merger, FMC Technologies common stockTechnologies’ results of operations have been included in our financial statements for periods subsequent to the consummation of the Merger on January 16, 2017 and as a result, data presented for the year December 31, 2017 is not comparable to actual results presented in prior periods. Technip was quotedthe accounting acquirer, therefore results for the years ended December 31, 2016 represent Technip only.
Net cash consists of cash and cash equivalents less short-term debt, long-term debt and the current portion of long-term debt. Net cash is a non-GAAP measure that management uses to evaluate our capital structure and financial leverage. See “Liquidity and Capital Resources” in Part II, Item 7 of this Annual Report on Form 10-K for additional discussion and reconciliations of net cash.
Order backlog is calculated as the estimated sales value of unfilled, confirmed customer orders at the reporting date.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
EXECUTIVE OVERVIEW        
We are a global leader in energy projects, technologies, systems and services. We have manufacturing operations worldwide, strategically located to facilitate efficient delivery of these products, technologies, systems and services to our customers. We report our results of operations in the following segments: Subsea, Technip Energies and Surface Technologies. Management’s determination of our reporting segments was made on the NYSEbasis of our strategic priorities and corresponds to the manner in which our Chief Executive Officer reviews and evaluates operating performance to make decisions about resource allocations to each segment.
A description of our products and services and annual financial data for each segment can be found in Part I, Item 1, “Business” and Note 7 to our consolidated financial statements.
We focus on economic- and industry-specific drivers and key risk factors affecting our business segments as we formulate our strategic plans and make decisions related to allocating capital and human resources. The results of our segments are primarily driven by changes in capital spending by oil and gas companies, which largely depend upon current and anticipated future crude oil and natural gas demand, production volumes, and consequently, commodity prices. We use crude oil and natural gas prices as an indicator of demand. Additionally, we use both onshore and offshore rig count as an indicator of demand, which consequently influences the level of worldwide production activity and spending decisions. We also focus on key risk factors when determining our overall strategy and making decisions for capital allocation. 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 and cultivating strong customer relationships.
Our Subsea segment is affected by changes in commodity prices and trends in deepwater oil and natural gas production. Our Technip Energies segment is impacted by change in commodity prices, population growth and demand for natural gas, although the onshore market is typically more resilient to these changes impacting the segment. Our Subsea and Technip Energies segments both benefit from the current market fundamentals supporting the demand for new liquefied natural gas facilities. Technip Energies also benefits from the construction of petrochemical and fertilizer plants.
Our Surface Technologies segment is primarily affected by changes in commodity prices and trends in land-based and shallow water oil and natural gas production. We have developed close working relationships with our customers. Our results reflect our ability to build long-term alliances with oil and natural gas companies and to provide solutions for their needs in a timely and cost-effective manner. We believe that by closely working with our customers, we enhance our competitive advantage, improve our operating results and strengthen our market positions.
As we evaluate our operating results, we consider business segment performance indicators like segment revenue, operating profit and capital employed, in addition to the level of inbound orders and order backlog. A significant proportion of our revenue is recognized under the FTI symbolpercentage of completion method of accounting. Cash receipts from such arrangements typically occur at milestones achieved under stated contract terms. Consequently, the timing of revenue recognition is not always correlated with the timing of customer payments. We aim to structure our contracts to receive advance payments that we typically use to fund engineering efforts and inventory purchases. Working capital (excluding cash) and net cash are therefore key performance indicators of cash flows.
In each of our segments, we serve customers from around the world. During 2020, approximately 84 percent of our total sales were recognized outside of the United States. We evaluate international markets and pursue opportunities that fit our technological capabilities and strategies.
The Spin-off

On February 16, 2021, we completed the separation of the Technip Energies business segment. The transaction was structured as a Spin-off, which occurred by way of a Distribution to our shareholders of 50.1 percent of the outstanding shares in Technip Energies N.V. Each of our shareholders received one ordinary share of Technip Energies N.V. for every five ordinary shares were listed on Euronext Paris. FMC Technologies common stock and Technip ordinary shares were suspended from tradingof TechnipFMC held at 5:00 p.m., New York City time on the NYSErecord date, February 17, 2021. Technip Energies N.V. is now an independent public company and its shares trade under the ticker symbol “TE” on the Euronext Paris respectively,stock exchange.

53


In connection with the Spin-off, on January 7, 2021, BPI, which has been one of our substantial shareholders since 2009, entered into a Share Purchase Agreement with us pursuant to which BPI agreed to purchase a portion of our retained stake in Technip Energies N.V. for $200.0 million. On February 25, 2021, BPI paid $200.0 million in connection with the Share Purchase Agreement. The Purchase Price is subject to adjustment, and BPI’s ownership stake will be determined based upon a thirty day volume-weighted average price of Technip Energies N.V.’ shares (with BPI’s ownership collared between an 11.82 percentage floor and a 17.25 percentage cap), less a six percent discount. The BPI Investment is subject to customary conditions and regulatory approval. We intend to significantly reduce our shareholding in Technip Energies N.V. over the 18 months following the Spin-off, including in connection with the sale of shares to BPI pursuant to the BPI Investment.

Beginning in the first quarter of 2021, Technip Energies’ historical financial results for periods prior to the openDistribution will be reflected in our consolidated financial statements as discontinued operations.

BUSINESS OUTLOOK
Overall outlook – While economic activity continues to be impacted by the COVID-19 pandemic, the short-term outlook for crude oil has improved as the OPEC+ countries better manage the oversupplied market. Long-term demand for energy is still forecast to rise, and we believe this outlook will ultimately provide our customers with the confidence to increase investments in new sources of tradingoil and natural gas production.

Subsequent to the Spin-off, we will operate under two reporting segments: Subsea and Surface Technologies, therefore the discussion below relates to these two reporting segments only.

Subsea – The volatile, and generally low crude oil price environment of the last several years led many of our customers to reduce their capital spending plans and defer new deepwater projects. Order activity in 2020 was particularly impacted by the sharp decline in commodity prices, driven in part by the reduced economic activity, and the general uncertainty related to the pandemic. The reduction and deferral of new projects resulted in delayed subsea project inbound for the industry.

The trajectory and pace of further recovery and expansion in the subsea market is subject to more stringent capital discipline and the allocation of capital our clients dedicate to developing offshore oil and gas fields amongst their entire portfolio of projects. The risk of project sanctioning delays still exists in the current environment; however, innovative approaches to subsea projects, like our iEPCI solution, have improved project economics, and many offshore discoveries can be developed economically at today’s crude oil prices. In the long-term, deepwater development is expected to remain a significant part of many of our customers’ portfolios.

As the subsea industry continues to evolve, we have taken actions to further streamline our organization, achieve standardization, and reduce cycle times. The rationalization of our global footprint will also further leverage the benefits of our integrated offering. We aim to continuously align our operations with activity levels, while preserving our core capacity in order to deliver current projects in backlog and future order activity.

We have experienced renewed operator confidence in advancing subsea activity as a result of the improved economic outlook, lower market volatility and higher oil price. With crude now trending back above $50 per barrel, the opportunity set of large subsea projects to be sanctioned over the next 24 months has expanded.

FEED activity is also improving, with solid momentum experienced in the second half of 2020. FEED activity in the current year is expected to return to the more robust levels seen in 2019, which further supports our view of a sustainable recovery for deepwater. We expect at least 60% of the projects undergoing studies in 2021 to include an iEPCI solution, many of which could be directly awarded to our Company upon reaching final investment decision.

TechnipFMC is increasingly less dependent on January 17, 2017.larger, publicly tendered projects.
We anticipate that an increasing share of our inbound orders will result from projects that will be direct awarded to our Company, many of which come from our alliance partners;

We anticipate higher activity in subsea services, with the industry’s largest installed base; and

54


We expect a higher mix of iEPCI project awards, demonstrating strong geographic diversity and new adopters of our unique, integrated approach to subsea development.

For information about dividends,2021, we believe that Subsea inbound orders will meet or exceed the $4 billion achieved in 2020. We expect Brazil to be the most active region of the world for new project orders, driven by continued investment in the pre-salt field discoveries. We see Item 6 “Selected Financial Data”additional market growth potential coming from the North Sea, Asia Pacific and Note 15 “Stockholders’ Equity”Africa. The strong front end activity we are experiencing today should further support project award momentum into 2022.

Surface Technologies – Surface Technologies’ performance is typically driven by variations in global drilling activity, creating a dynamic environment. Operating results can be further impacted by stimulation activity and the completions intensity of shale applications in the Americas.

The North America shale market is sensitive to oil price fluctuations. The average rig count declined by just over 50 percent in 2020, with drilling and completion spending estimated to have declined by a similar amount. North America activity improved over the second half of the year as the rig count increased following the rising oil price. The rig count exited 2020 below prior year-end levels but has experienced further improvement in the current year.

In 2021, we expect our completions-related revenue to outperform the overall market, driven by increased market adoption of iComplete – our fully integrated, digitally-enabled pressure control system. iComplete has already achieved significant market penetration since its introduction in the third quarter of 2020, with 10 customers utilizing the new integrated system.

Despite the sequential improvement in market activity, full year revenue for North America is expected to be flat to down modestly versus 2020.

Drilling activity in international markets is less cyclical than North America as most activity is driven by national oil companies, which tend to maintain a longer term view that exhibits less variability in capital spend. Additionally, we continue to benefit from our exposure to the ConsolidatedMiddle East and Asia Pacific, both of which are being supported by strength in gas-related activity. The average rig count in these two regions declined by a more modest 17 percent in 2020 versus the prior year.

International revenue has been gaining significance in our total segment revenue, representing over 60 percent in 2020. We expect a gradual and steady recovery in well count in 2021 to drive modest international market growth, with spending increases led by national oil companies, particularly in the Middle East.

Our unique capabilities in the international markets, which demand higher specification equipment, global services and local content, provide a platform for us to extend our leadership positions. We remain levered to these more resilient markets where we expect to source approximately 65% of our full year revenue in 2021.



55


CONSOLIDATED RESULTS OF OPERATIONS
This section of this Form 10-K generally discusses 2020 and 2019 items and year-to-year comparisons between 2020 and 2019. Discussions of 2018 items and year-to-year comparisons between 2019 and 2018 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial StatementsCondition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2019.
 Year Ended December 31,Change
(In millions, except percentages)2020201920182020 vs. 20192019 vs. 2018
Revenue$13,050.6 $13,409.1 $12,552.9 $(358.5)(2.7)%$856.2 6.8 %
Costs and expenses
Cost of sales11,209.4 10,950.7 10,273.0 258.7 2.4 %677.7 6.6 %
Selling, general and administrative expense1,066.2 1,228.1 1,140.6 (161.9)(13.2)%87.5 7.7 %
Research and development expense119.8 162.9 189.2 (43.1)(26.5)%(26.3)(13.9)%
Impairment, restructuring and other expense3,501.3 2,490.8 1,831.2 1,010.5 40.6 %659.6 36.0 %
Separation costs39.5 72.1 — (32.6)(45.2)%72.1 n/a
Merger transaction and integration costs— 31.2 36.5 (31.2)(100.0)%(5.3)(14.5)%
Total costs and expenses15,936.2 14,935.8 13,470.5 1,000.4 6.7 %1,465.3 10.9 %
Other income (expense), net31.1 (220.7)(323.9)251.8 114.1 %103.2 31.9 %
Income from equity affiliates63.0 62.9 114.3 0.1 0.2 %(51.4)(45.0)%
Net interest expense(293.0)(451.3)(360.9)158.3 35.1 %(90.4)(25.0)%
Loss before income taxes(3,084.5)(2,135.8)(1,488.1)(948.7)(44.4)%(647.7)(43.5)%
Provision for income taxes153.4 276.3 422.7 (122.9)(44.5)%(146.4)(34.6)%
Net loss(3,237.9)(2,412.1)(1,910.8)(825.8)(34.2)%(501.3)(26.2)%
Net profit attributable to non-controlling interests(49.7)(3.1)(10.8)(46.6)(1,503.2)%7.7 71.3 %
Net loss attributable to TechnipFMC plc$(3,287.6)$(2,415.2)$(1,921.6)$(872.4)(36.1)%$(493.6)(25.7)%

Results of Operations in 2020 Compared to 2019
Revenue
Revenue decreased by $358.5 million in 2020 compared to 2019. Subsea revenue decreased year-over-year primarily due to decreased project activity in the Gulf of Mexico and the North Sea. Increased revenue in Technip Energies was primarily driven by the continued ramp-up of Arctic LNG 2, increased activity on downstream projects and in the Process Technology business, which more than offset the decline in revenue from Yamal LNG. Technip Energies revenue was also favorably impacted by the result of a litigation settlement. Surface Technologies revenue decreased, primarily as a result of the significant decline in operator activity in North America, with partial positive impact from order intake timing in international markets. In addition, our consolidated revenues were negatively impacted by operational challenges associated with the COVID-19 related disruptions.
Gross Profit
Gross profit (revenue less cost of sales) as a percentage of sales decreased to 14.1% in 2020 compared to 18.3% in 2019. Subsea gross profit decreased due to a more competitively priced backlog and the negative operational impacts related to COVID-19. Gross profit declined in Technip Energies due in large part to a reduced contribution from Yamal LNG as the project reached physical completion last year and is progressing through the warranty phase. Surface Technologies gross profit was negatively impacted by the year-over-year decline in North American drilling and completions activity, which was partially offset by the lower costs from our accelerated cost reduction initiative implemented during 2020.
56


Selling, General and Administrative Expense
Selling, general and administrative expense decreased by $161.9 million year-over-year, primarily as a result of decreased corporate expenses. During the beginning of 2020, in response to the deteriorated market environment, driven in part by the COVID-19 pandemic, we implemented a series of cost reduction initiatives that resulted in significant savings and extended to all business segments and support functions.
Impairment, Restructuring and Other Expenses
We incurred $3,501.3 million of restructuring, impairment and other expenses in 2020. These charges primarily included $3,083.4 million of goodwill impairment, $204.0 million of long-lived assets impairment, $101.8 million of COVID-19 related expenses, and $112.1 million for restructuring and severance expenses. COVID-19 related expenses represent unplanned, one-off, incremental and non-recoverable costs incurred solely as a result of the COVID-19 pandemic situation, which would not have been incurred otherwise. COVID-19 related expenses primarily included (a) employee payroll and travel, operational disruptions associated with quarantining, personnel travel restrictions to job sites, and shutdown of manufacturing plants and sites; (b) supply chain and related expediting costs of accelerated shipments for previously ordered and undelivered products; (c) costs associated with implementing additional information technology to support remote working environments; and (d) facilities-related expenses to ensure safe working environments. COVID-19 related expenses exclude costs associated with project and/or operational inefficiencies, time delays in performance delivery, indirect costs increases and potentially reimbursable or recoverable expenses. During 2019, we incurred $2,490.8 million of restructuring, impairment and other expenses, which included $1,988.7 million and $495.4 million of goodwill and long-lived assets impairments, respectively. See Note 19 to our consolidated financial statements for further details.
Separation costs
During the year ended December 31, 2020, we incurred $39.5 million of separation costs associated with the preparation of the separation transaction. During the first quarter of 2020, we incurred $27.1 million of separation costs associated with the separation transaction, which was postponed due to the COVID-19 pandemic, the significant decline in commodity prices, and the heightened volatility in global equity markets. During the fourth quarter of 2020, we incurred $12.4 million of separation costs associated with the January 2021 announcement of the resumption of activities toward the separation of Technip Energies. During the year ended December 31, 2019, we incurred $72.1 million of separation costs associated with the separation transaction. See Note 3 to our consolidated financial statements for further details.
Merger Transaction and Integration Costs
Prior to the initial announcement of the planned separation transaction in August 2019, we incurred merger transaction and integration costs of $31.2 million during the first half of 2019 relating to the continuation of the integration activities following the Merger. No such costs were incurred subsequently in 2019 or in 2020.
Other Income (Expense), Net
Other income (expense), net, primarily reflects foreign currency gains and losses, including gains and losses associated with the remeasurement of net cash positions, gains and losses on sales of property, plant and equipment and other non-operating gains and losses. During 2020, we recognized $31.1 million of other income, which primarily included $23.1 million of gains on sales of property, plant and equipment and other assets. During 2019, we recognized $220.7 million of other expenses, which primarily included $146.9 million of net foreign exchange losses and $54.6 million of legal provision, net of settlements. The change in foreign exchange losses is primarily due to a reduction in foreign exchange losses from unhedged currencies, more favorable hedging costs, and the effects of a weakened U.S. dollar on naturally hedged projects.
Net Interest Expense
Net interest expense decreased $158.3 million in 2020 compared to 2019, primarily due to the change in the fair value of the redeemable financial liability. We revalued the mandatorily redeemable financial liability to reflect current expectations about the obligation and recognized a charge of $202.0 million, as compared to $423.1 million recognized in 2019. See Note 24 to our consolidated financial statements for further details. Net interest expense, excluding the fair value measurement of the mandatorily redeemable financial liability and including interest income decreased by $62.8 million during 2020.
57


Provision for Income Taxes
Our provision for income taxes for 2020 and 2019 reflected effective tax rates of (5.0)% and (12.9)%, respectively. The year-over-year change in the effective tax rate was primarily due to the impact of nondeductible goodwill impairments, increase in adjustment on prior year taxes, offset in part by the amount of tax expense associated with movements in valuation allowances.
Our effective tax rate can fluctuate depending on our country mix of earnings, which may change based on changes in the jurisdictions in which we operate.
OPERATING RESULTS OF BUSINESS SEGMENTS
Segment operating profit is defined as total segment revenue less segment operating expenses. Certain items have been excluded in computing segment operating profit and are included in corporate items. See Note 7 to our consolidated financial statements for further details.
We report our results of operations in U.S. dollars; however, our earnings are generated in various currencies worldwide. In order to provide worldwide consolidated results, the earnings of subsidiaries functioning in their local currencies are translated into U.S. dollars based upon the average exchange rate during the period. 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.
Subsea
 Year Ended December 31,Favorable/(Unfavorable)
(In millions, except %)2020201920182020 vs. 20192019 vs. 2018
Revenue$5,471.4 $5,523.0 $4,840.0 $(51.6)(0.9)%$683.0 14.1 %
Operating loss$(2,815.5)$(1,447.7)$(1,529.5)$(1,367.8)(94.5)%$81.8 5.3 %
Operating loss as a percentage of revenue(51.5)%(26.2)%(31.6)%(25.3) pts.5.4  pts.

Subsea revenue decreased $51.6 million, or (0.9)% year-over-year, primarily due to operational challenges driven by the COVID-19 pandemic. However, despite these challenges and related disruptions, we continued to demonstrate strong execution of our backlog.
Subsea operating loss is primarily due to significant impairment and other non-recurring charges. The operating loss included $2,957.5 million of goodwill and long-lived assets impairments, restructuring and other charges and COVID-19 related expenses compared to $1,752.2 million in 2019. Non-recurring charges incurred related to COVID-19 disruptions during 2020 were $50.1 million. See Note 19 to our consolidated financial statements for further details.
Refer to ‘Non-GAAP Measures’ for more information regarding our segment operating results.
Technip Energies
 Year Ended December 31,Favorable/(Unfavorable)
(In millions, except %)2020201920182020 vs. 20192019 vs. 2018
Revenue$6,520.0 $6,268.8 $6,120.7 $251.2 4.0 %$148.1 2.4 %
Operating profit$683.6 $959.6 $824.0 $(276.0)(28.8)%$135.6 16.5 %
Operating profit as a percentage of revenue10.5 %15.3 %13.5 %(4.8) pts.1.8  pts.

Technip Energies revenue increased $251.2 million year-over-year. Revenue benefited from the continued ramp-up of Arctic LNG 2 and higher activity on downstream projects in Africa, North America and India, which more than offset the decline in revenue from Yamal LNG. COVID-19 related operational efficiencies and business disruption also impeded revenue growth during 2020. Revenue during the period benefited from a $113.2 million litigation settlement.
58


Operating profit decreased year-over-year, primarily due to a reduced contribution from Yamal LNG and lower margin realization on early stage projects, including Arctic LNG 2. Project execution remained strong across the portfolio. Non-recurring charges incurred related to COVID-19 disruptions during the period were $44.0 million.
Refer to ‘Non-GAAP Measures’ for more information regarding our segment operating results. Subsequent to the Spin-off, we operate under two reporting segments: Subsea and Surface Technologies, for further details see Note 3 to our consolidated financial statements.
Surface Technologies
 Year Ended December 31,Favorable/(Unfavorable)
(In millions, except %)2020201920182020 vs. 20192019 vs. 2018
Revenue$1,059.2 $1,617.3 $1,592.2$(558.1)(34.5)%$25.1 1.6 %
Operating profit (loss)$(429.3)$(656.1)$172.8$226.8 34.6%$(828.9)(479.7)%
Operating profit (loss) as a percentage of revenue(40.5)%(40.6)%10.9 %0.1  pts.(51.5) pts.

Surface Technologies revenue decreased $558.1 million, or (34.5)% year-over-year, primarily driven by the significant reduction in operator activity in North America. Revenue outside of North America displayed resilience, with a more modest decline due to reduced activity levels. Nearly 64% of total segment revenue was generated outside of North America in the period.
Surface Technologies operating loss was primarily due to impairment and other non-recurring charges. The operating loss included $440.2 million of goodwill and long-lived assets impairments, restructuring and other charges and COVID-19 related expenses compared to $704.2 million incurred in 2019. Operating loss was also negatively impacted by the reduced demand in North America driven by the significant decline in rig count and completions-related activity, which was partially offset by lower costs from our accelerated cost reduction actions initiated in the first quarter of 2020. Non-recurring charges incurred related to COVID-19 disruptions during the period were $7.7 million. See Note 19 to our consolidated financial statements for further details.
Refer to ‘Non-GAAP Measures’ for more information regarding our segment operating results.
Corporate Items
 Year Ended December 31,Favorable/(Unfavorable)
(In millions, except %)2020201920182020 vs. 20192019 vs. 2018
Corporate expense$(201.5)$(393.4)$(478.0)$191.9 49%$84.6 18%

Corporate expenses decreased by $191.9 million during 2020. The reduction in corporate expenses is primarily due to $54.6 million decrease in legal provision, net of settlements; $38.6 million decrease due to lower activity and the impact of cost reductions implemented in 2020; $32.7 million decrease in separation costs; $31.2 million decrease in integration expenses and $16.6 million decrease in restructuring and impairment expenses.
Refer to ‘Non-GAAP Measures’ for more information regarding our segment operating results.
59


NON-GAAP MEASURES
In addition to financial results determined in accordance with U.S. generally accepted accounting principles (“GAAP”), we provide non-GAAP financial measures (as defined in Item 8.10 of Regulation S-K of the Securities Exchange Act of 1934, as amended) below:
Net income (loss), excluding charges and credits, as well as measures derived from it (excluding charges and credits;
Income (loss) before net interest expense and income taxes, excluding charges and credits (“Adjusted Operating profit”);
Adjusted diluted earnings per share attributable to TechnipFMC plc;
Depreciation and amortization, excluding charges and credits (“Adjusted Depreciation and amortization”);
Earnings before net interest expense, income taxes, depreciation and amortization, excluding charges and credits (“Adjusted EBITDA”);
Corporate expenses excluding charges and credits;
Net cash; and
Free cash flow.
Management believes that the exclusion of charges and credits from these financial measures enables investors and management to more effectively evaluate our operations and consolidated results of operations period-over-period, and to identify operating trends that could otherwise be masked or misleading to both investors and management by the excluded items. These measures are also used by management as performance measures in determining certain incentive compensation. The foregoing non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, other measures of financial performance prepared in accordance with GAAP.
The following is a reconciliation of the most comparable financial measures under GAAP to the non-GAAP financial measures.















60


Year Ended
December 31, 2020
Net income (loss) attributable to TechnipFMC plcNet income (loss) attributable to non-controlling interestsProvision for income taxesNet interest expenseIncome (loss) before net interest expense and income taxes (Operating profit)Depreciation and amortizationEarnings before net interest expense, income taxes, depreciation and amortization (EBITDA)
TechnipFMC plc, as reported$(3,287.6)$49.7 $153.4 $293.0 $(2,791.5)$447.2 $(2,344.3)
Charges and (credits):
Impairment and other charges3,271.0 — 16.4 — 3,287.4 — 3,287.4 
Restructuring and other charges96.1 — 16.0 — 112.1 — 112.1 
Direct COVID-19 expenses83.7 — 18.1 — 101.8 — 101.8 
Litigation settlement(113.2)— — — (113.2)— (113.2)
Separation costs36.3 — 3.2 — 39.5 — 39.5 
Purchase price accounting adjustment6.5 — 2.0 — 8.5 (8.5)— 
Valuation allowance(3.5)— 3.5 — — — — 
Adjusted financial measures$89.3 $49.7 $212.6 $293.0 $644.6 $438.7 $1,083.3 
Diluted earnings (loss) per share attributable to TechnipFMC plc, as reported$(7.33)
Adjusted diluted earnings per share attributable to TechnipFMC plc$0.20 


Year Ended
December 31, 2019
Net income (loss) attributable to TechnipFMC plcNet income (loss) attributable to non-controlling interestsProvision for income taxesNet interest expenseIncome (loss) before net interest expense and income taxes (Operating profit)Depreciation and amortizationEarnings before net interest expense, income taxes, depreciation and amortization (EBITDA)
TechnipFMC plc, as reported$(2,415.2)$(3.1)$276.3 $(451.3)$(1,684.5)$509.6 $(1,174.9)
Charges and (credits):
Impairment and other charges2,364.2 — 119.9 — 2,484.1 — 2,484.1 
Restructuring and other charges27.7 — 9.3 — 37.0 — 37.0 
Business combination transaction and integration costs23.1 — 8.1 — 31.2 — 31.2 
Separation costs54.2 — 17.9 — 72.1 — 72.1 
Reorganization17.2 — 8.1 — 25.3 — 25.3 
Legal provision, net46.3 — 8.3 — 54.6 — 54.6 
Purchase price accounting adjustment26.0 — 8.0 — 34.0 (34.0)— 
Valuation allowance187.0 — (187.0)— — — — 
Adjusted financial measures$330.5 $3.1 $268.9 $451.3 $1,053.8 $475.6 $1,529.4 
Diluted earnings per share attributable to TechnipFMC plc, as reported$(5.39)
Adjusted diluted earnings per share attributable to TechnipFMC plc$0.74 


61


Year Ended
December 31, 2020
SubseaTechnip EnergiesSurface TechnologiesCorporate ExpenseForeign Exchange, netTotal
Revenue$5,471.4 $6,520.0 $1,059.2 $— $— $13,050.6 
Operating profit (loss), as reported (pre-tax)$(2,815.5)$683.6 $(429.3)$(201.5)$(28.8)$(2,791.5)
Charges and (credits):
Impairment and other charges2,854.5 10.3 419.3 3.3 — 3,287.4 
Restructuring and other charges*52.9 39.3 13.2 6.7 — 112.1 
Direct COVID-19 expenses50.1 44.0 7.7 — — 101.8 
Litigation settlement— (113.2)— — — (113.2)
Separation costs— — — 39.5 — 39.5 
Purchase price accounting adjustments8.5 — — — — 8.5 
Subtotal2,966.0 (19.6)440.2 49.5 — 3,436.1 
Adjusted Operating profit (loss)150.5 664.0 10.9 (152.0)(28.8)644.6 
Adjusted Depreciation and amortization316.4 34.2 70.1 18.0 — 438.7 
Adjusted EBITDA$466.9 $698.2 $81.0 $(134.0)$(28.8)$1,083.3 
Operating profit margin(51.5)%10.5 %(40.5)%(21.4)%
Adjusted Operating profit margin2.8 %10.2 %1.0 %4.9 %
Adjusted EBITDA margin8.5 %10.7 %7.6 %8.3 %
*On December 30, 2019, we completed the acquisition of the remaining 50% of Technip Odebrecht PLSV CV. A $7.3 million gain was recorded within restructuring and other charges in the Subsea segment during 2020.
62


Year Ended
December 31, 2019
SubseaTechnip EnergiesSurface TechnologiesCorporate ExpenseForeign Exchange, netTotal
Revenue$5,523.0 $6,268.8 $1,617.3 $— $— $13,409.1 
Operating profit (loss), as reported (pre-tax)$(1,447.7)$959.6 $(656.1)$(393.4)$(146.9)$(1,684.5)
Charges and (credits):
Impairment and other charges*1,798.6 — 685.5 — — 2,484.1 
Restructuring and other charges*(46.4)17.0 39.8 26.6 — 37.0 
Business combination transaction and integration costs— — — 31.2 — 31.2 
Separation costs— — — 72.1 — 72.1 
Reorganization— 25.3 — — — 25.3 
Legal provision, net— — — 54.6 — 54.6 
Purchase price accounting adjustments34.0 — — — — 34.0 
Subtotal1,786.2 42.3 725.3 184.5 — 2,738.3 
Adjusted Operating profit (loss)338.5 1,001.9 69.2 (208.9)(146.9)1,053.8 
Adjusted Depreciation and amortization311.6 38.7 107.9 17.4 — 475.6 
Adjusted EBITDA$650.1 $1,040.6 $177.1 $(191.5)$(146.9)$1,529.4 
Operating profit margin(26.2)%15.3 %(40.6)%(12.6)%
Adjusted Operating profit margin6.1 %16.0 %4.3 %7.9 %
Adjusted EBITDA margin11.8 %16.6 %11.0 %11.4 %
*On December 30, 2019, we completed the acquisition of the remaining 50 percent of Technip Odebrecht PLSV CV, which resulted in a net loss of $0.9 million that was recorded in the Subsea segment. The net loss was comprised of an impairment charge of $84.2 million included within impairment and other charges and a gain on bargain purchase of $83.3 million included within restructuring and other charges.
63


INBOUND ORDERS AND ORDER BACKLOG
Inbound orders - Inbound orders represent the estimated sales value of confirmed customer orders received during the reporting period. The significant decline in commodity prices, due in part to the lower demand resulting from COVID-19 contributed to the decrease in the inbound orders during 2020.
 Inbound Orders
Year Ended December 31,
(In millions)20202019
Subsea$4,003.0 $7,992.6 
Technip Energies5,001.3 13,080.5 
Surface Technologies1,061.2 1,619.9 
Total inbound orders$10,065.5 $22,693.0 

Order backlog - Order backlog is calculated as the estimated sales value of unfilled, confirmed customer orders at the reporting date. Backlog reflects the current expectations for the timing of project execution. The scheduling of some future work included in our order backlog has been impacted by COVID-19 related disruptions and remains subject to future adjustment. See Note 6 to our consolidated financial statements for further details.
 Order Backlog
December 31,
(In millions)20202019
Subsea$6,876.0 $8,479.8 
Technip Energies14,098.7 15,298.1 
Surface Technologies413.5 473.2 
Total order backlog$21,388.2 $24,251.1 

Subsea - Order backlog for Subsea as of December 31, 2020, decreased by $1.6 billion from December 31, 2019. Subsea backlog of $6.9 billion as of December 31, 2020, was composed of various subsea projects, including Total Mozambique LNG; Eni Coral and Merakes; Petrobras Mero I and Mero II; Energean Karish; ExxonMobil Payara; Reliance MJ-1; Equinor Johan Sverdrup Phase 2; Husky West White Rose; BP Platina; Chevron Gorgon Stage 2; and Woodside Pyxis and Lambert Deep.

Technip Energies - Technip Energies order backlog as of December 31, 2020, decreased by $1.2 billion compared to December 31, 2019. Technip Energies backlog of $14.1 billion as of December 31, 2020 was composed of various projects, including Arctic LNG 2, Yamal LNG; Midor refinery expansion; BP Tortue FPSO; Long Son Petrochemicals; ExxonMobil Beaumont refinery expansion; HURL fertilizer plants; Petronas Kasawari; Energean Karish; Neste bio-diesel expansion; and Motor Oil Hellas New Naphtha Complex. Subsequent to the Spin-off, we will operate under two reporting segments: Subsea and Surface Technologies, for further details see Note 3 to our consolidated financial statements.
Surface Technologies - Order backlog for Surface Technologies as of December 31, 2020, decreased by $59.7 million compared to December 31, 2019, mainly driven by the transfer of the Loading Systems business unit from Surface Technologies to Technip Energies. Given the short-cycle nature of the business, most orders are quickly converted into sales revenue; longer contracts are typically converted within twelve months.
Non-consolidated backlog - Non-consolidated backlog reflects the proportional share of backlog related to joint ventures that is not consolidated due to our minority ownership position.
Non-consolidated order backlog
(In millions)December 31,
2020
Subsea$640.2 
Technip Energies1,890.3 
Total order backlog$2,530.5 
64


LIQUIDITY AND CAPITAL RESOURCES
Most of our cash is managed centrally and flows through centralized bank accounts controlled and maintained by TechnipFMC globally and in many operating jurisdictions to best meet the liquidity needs of our global operations.
Net Cash - Net cash, is a non-GAAP financial measure reflecting cash and cash equivalents, net of debt. Management uses this non-GAAP financial measure to evaluate our capital structure and financial leverage. We believe net cash is a meaningful financial measure that may assist investors in understanding our financial condition and recognizing underlying trends in our capital structure. Net cash should not be considered an alternative to, or more meaningful than, cash and cash equivalents as determined in accordance with GAAP or as an indicator of our operating performance or liquidity.
The following table provides a reconciliation of our cash and cash equivalents to net cash, utilizing details of classifications from our consolidated balance sheets.
(In millions)December 31, 2020December 31, 2019
Cash and cash equivalents$4,807.8 $5,190.2 
Short-term debt and current portion of long-term debt(636.2)(495.4)
Long-term debt, less current portion(3,317.7)(3,980.0)
Net cash$853.9 $714.8 
Cash Flows
Cash flows for the years ended December 31, 2020, 2019 and 2018 were as follows:
 Year Ended December 31,
(In millions)202020192018
Cash provided (required) by operating activities$656.9 $848.5 $(185.4)
Cash required by investing activities(180.6)(419.8)(460.2)
Cash required by financing activities(1,082.2)(784.4)(444.8)
Effect of exchange rate changes on cash and cash equivalents223.5 5.9 (107.0)
Decrease in cash and cash equivalents$(382.4)$(349.8)$(1,197.4)
Working capital$54.0 $(82.2)$(759.0)
Free cash flow$365.1 $394.1 $(553.5)
Operating cash flows - During 2020, we generated $656.9 million in cash flows from operating activities as compared to $848.5 million generated in 2019, resulting in a $191.6 million decrease compared to 2019. The decrease in operating cash flows is primarily driven by the decrease in cash generated by our operations during the year due to the overall decline in activity.
Investing cash flows - Investing activities used $180.6 million and $419.8 million of cash in 2020 and 2019, respectively. The decrease in cash used by investing activities was due primarily to decreased capital expenditures, decreased payments to acquire debt securities and increased proceeds from sale of assets and debt securities during 2020. In 2019, we purchased a deepwater dive support vessel, Deep Discoverer for $116.8 million, that was subsequently funded through a sale-leaseback transaction.

Financing cash flows - Financing activities used $1,082.2 million and $784.4 million in 2020 and 2019, respectively. The increase of $297.8 million in cash required for financing activities was due primarily to the increased debt pay down activity during 2020 of $883.6 million, partially offset by $338.6 million reduction in settlements of mandatorily redeemable financial liability and our efforts and commitment to preserve cash, which included reduction in cash dividends of $173.6 million and reduction in share repurchases of $92.7 million .

Working capital represents total changes in operating current assets and liabilities.
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Free cash flow is defined as operating cash flows less capital expenditures. The following table reconciles cash provided by operating activities, which is directly comparable financial measure determined in accordance with GAAP, to free cash flow (non-GAAP measure).
Year Ended December 31,
(In millions)202020192018
Cash provided (required) by operating activities$656.9 $848.5 $(185.4)
Capital expenditures(291.8)(454.4)(368.1)
Free cash flow$365.1 $394.1 $(553.5)


Debt and Liquidity

Significant Funding and Liquidity Activities - During 2020, we completed the following transactions in order to enhance our total liquidity position:

Repaid $233.9 million of 5.00% 2010 private placement notes;
Repaid the remaining outstanding balance of $190.0 million of the term loan assumed in connection with the acquisition of the remaining 50% interest in TOP CV.
Issued €200 million aggregate principal amount of 4.500% Private Placement Notes due June 30, 2025. Within three months of the effective date of the Spin-off of Technip Energies, if there is a downgrade by a nationally recognized rating agency of the corporate rating of TechnipFMC from an investment grade to a non-investment grade rating or a withdrawal of any such rating, the interest rate applicable to the Private Placement Notes will be increased to 5.75%;
Entered into a new, six-month €500 million senior unsecured revolving credit facility agreement, which may be extended for two additional three-month periods (the “Euro Facility”); and
Entered into the Bank of England’s COVID Corporate Financing Facility program (the “CCFF Program”), which allows us to issue up to £600 million of unsecured commercial paper notes.

Total borrowings as of December 31, 2020 and 2019 were as follows: 
(In millions)December 31,
20202019
Commercial paper$1,525.9 $1,967.0 
Synthetic bonds due 2021551.2 492.9 
3.45% Senior Notes due 2022500.0 500.0 
5.00% Notes due 2020— 224.6 
3.40% Notes due 2022184.0 168.5 
3.15% Notes due 2023159.5 146.0 
3.15% Notes due 2023153.4 140.4 
4.50% Notes due 2025245.4 — 
4.00% Notes due 202792.0 84.2 
4.00% Notes due 2032122.7 112.3 
3.75% Notes due 2033122.7 112.3 
Bank borrowings and Other309.9 536.3 
Unamortized debt issuance costs and discounts(12.8)(9.1)
Total borrowings$3,953.9 $4,475.4 

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Credit Facilities - The following is a summary of our credit facilities as of December 31, 2020:
(In millions)
Description
AmountDebt
Outstanding
Commercial
Paper
Outstanding 
(a)
Letters
of Credit
Unused
Capacity
Maturity
Revolving credit facility$2,500.0 $— $708.0 $— $1,792.0 January 2023
CCFF Program£600.0 £— £600.0 £— £— March 2021
Euro Facility500.0 — — — 500.0 February 2021
Bilateral credit facility100.0 — — — 100.0 May 2021
(a)Under our commercial paper program, we have the ability to access up to $1.5 billion and €1.0 billion of financing through our commercial paper dealers. Our available capacity under our revolving credit facility is reduced by any outstanding commercial paper.
Committed credit available under our revolving credit facilities provides the ability to issue our commercial paper obligations on a long-term basis. We had $708.0 million of commercial paper issued under our facilities as of December 31, 2020. In addition, we had $817.9 million of Notes outstanding under the CCFF Program. When we have both the ability and intent to refinance certain obligations on a long-term basis, the obligations are classified as long-term, as such, the commercial paper borrowings were classified as long-term debt in our consolidated balance sheet as of December 31, 2020.

On June 12, 2020, we entered into Amendment No. 1 to the Facility Agreement and into an Amendment and Restatement Agreement to our Euro Facility. The amendments, which are effective through the respective expirations of the Facility Agreement and Euro Facility, permit us to include the gross book value of $3.2 billion of goodwill (fully impaired in the quarter ended March 31, 2020) in the calculation of consolidated net worth, which is used in the calculation of our quarterly compliance with the total capitalization ratio under the Facility Agreement and Euro Facility.

The amended and restated Facility Agreement and Euro Facility contain usual and customary covenants, representations and warranties, and events of default for credit facilities of this type, including financial covenants requiring that our total capitalization ratio not exceed 60% at the end of any financial quarter. The Facility Agreement and Euro Facility also contain covenants restricting our ability and our subsidiaries’ ability to incur additional liens and indebtedness, enter into asset sales, or make certain investments.

As of December 31, 2020, we were in compliance with all restrictive covenants under our credit facilities.

Refer to Note 24 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further information related to credit risk.
Credit Ratings - As of February 25, 2021, our credit ratings with Standard and Poor’s (S&P) are BB+ for our long-term secured debt and B for commercial paper program. Our credit ratings with Moody’s are Ba1 for our long-term secured debt.

Credit Risk Analysis
For the purposes of mitigating the effect of the changes in exchange rates, we hold derivative financial instruments. Valuations of derivative assets and liabilities reflect the fair value of the instruments, including the values associated with counterparty risk. These values must also take into account our credit standing, thus including the valuation of the derivative instrument and the value of the net credit differential between the counterparties to the derivative contract. Adjustments to our derivative assets and liabilities related to credit risk were not material for any period presented.

The income approach was used as the valuation technique to measure the fair value of foreign currency derivative instruments on a recurring basis. This approach calculates the present value of the future cash flow by measuring the change from the derivative contract rate and the published market indicative currency rate, multiplied by the contract notional values. Credit risk is then incorporated by reducing the derivative’s fair value in asset positions by the result of multiplying the present value of the portfolio by the counterparty’s published credit spread. Portfolios in a liability position are adjusted by the same calculation; however, a spread representing our credit spread is used.
Our credit spread, and the credit spread of other counterparties not publicly available, are approximated using the spread of similar companies in the same industry, of similar size, and with the same credit rating. See Notes 24 and 25 to our consolidated financial statements for further details.
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At this time, we have no credit-risk-related contingent features in our agreements with the financial institutions that would require us to post collateral for derivative positions in a liability position.

Financial Position Outlook
Overview

We are committed to a strong balance sheet and ample liquidity that that will enable us to avoid distress in cyclical troughs and access capital markets throughout the cycle. We believe our liquidity has and continues to exceed the level required to achieve this goal.

Our objective in financing our business is to maintain sufficient liquidity, adequate financial resources and financial flexibility in order to fund the requirements of our business. Our capital expenditures can be adjusted and managed to match market demand and activity levels. Based on current market conditions and our future expectations, our capital expenditures for 2021 are estimated to be approximately $250.0 million. Projected capital expenditures do not include any contingent capital that may be needed to respond to a contract award.

Spin-off

In connection with the Spin-off, we executed a series of refinancing transactions, in order to provide a capital structure with sufficient cash resources to support future operating and investment plans.

Debt Issuance

On February 16, 2021, we entered into Revolving Credit Facility that provides for aggregate revolving capacity of up to $1.0 billion. Availability of borrowings under the Revolving Credit Facility is reduced by any outstanding letters of credit issued against the facility. At February 25, 2021, there were no outstanding letters of credit and availability of borrowings under the Revolving Credit Facility was $800 million.

On January 29, 2021, we issued $1.0 billion of 6.5% senior notes due 2026 (the “2021 Notes”). The interest on the 2021 Notes is paid semi-annually on February 1 and August 1 of each year, beginning on August 1, 2021. The 2021 Notes are senior unsecured obligations and are guaranteed on a senior unsecured basis by substantially all of our wholly-owned U.S. subsidiaries and non-U.S. subsidiaries in Brazil, the Netherlands, Norway, Singapore and the United Kingdom.

Repayment of Debt

The proceeds from the debt issuance described above along with the available cash on hand were used to fund:

The repayment of all $522.8 million of the outstanding Synthetic Convertible Bonds that matured in January 2021.
The repayment of all $500.0 million aggregate principal amount of outstanding 3.45% Senior Notes due 2022.
The termination of the $2.5 billion senior unsecured revolving credit facility we entered into on January 17, 2017; the termination of the €500.0 million Euro Facility and the CCFF Program we entered into on May 19, 2020. In connection with the termination of these credit facilities, we repaid most of the outstanding commercial paper borrowings, which were $1,525.9 million as of December 31, 2020.

We will continue to be strategically focused on cash and liquidity preservation. Subsequent to the completion of the Spin-off, we own 49.9% of the outstanding shares of Technip Energies. The ownership percentage will be further reduced by the sale of shares to BPI pursuant to the Share Purchase Agreement, for further details see section “The Spin-off” in “Item 1. Business.” We intend to conduct an orderly sale of our stake in Technip Energies over time and will use the proceeds from future sales to further reduce our net leverage.
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CONTRACTUAL OBLIGATIONS
The following is a summary of our contractual obligations as of December 31, 2020:
Payments Due by Period
(In millions)Total
payments
Less than
1 year
1-3
years
3-5
years
After 5
years
Debt (a)
$3,953.9 $636.2 $2,589.1 $294.0 $434.6 
Interest on debt (a)
242.3 58.1 69.3 42.9 72.0 
Operating leases (b)
1,128.0 131.2 328.6 196.8 471.4 
Purchase obligations (c)
5,709.4 4,587.5 1,008.9 112.0 1.0 
Pension and other post-retirement benefits (d)
19.0 19.0 — — — 
Unrecognized tax benefits (e)
56.1 4.2 4.2 47.6 0.1 
Other contractual obligations (f)
246.6 141.9 104.7 — — 
Total contractual obligations$11,355.3 $5,578.1 $4,104.8 $693.3 $979.1 
(a)Our available debt is dependent upon our compliance with covenants, including negative covenants related to liens and our total capitalization ratio. Any violation of covenants or other events of default, which are not waived or cured, or changes in our credit rating could have a material impact on our ability to maintain our committed financing arrangements.
Due to our intent and ability to refinance commercial paper obligations on a long-term basis under our revolving credit facility and the variable interest rates associated with these debt instruments, only interest on our Senior Notes is included in the table. During 2020, we paid $107.0 million for interest charges, net of interest capitalized.
Subsequent to the Spin-off, we expect the total future principal payments on debt and total future interest payments to be approximately $2,376.8 million and $556.1 million, respectively.
(b)We lease office space, manufacturing facilities and various types of manufacturing and data processing equipment. Leases of real estate generally provide for payment of property taxes, insurance and repairs by us. Substantially all of our leases are classified as operating leases.
(c)In the normal course of business, we enter into agreements with our suppliers to purchase raw materials or services. These agreements include a requirement that our supplier provide products or services to our specifications and require us to make a firm purchase commitment to our supplier. As substantially all of these commitments are associated with purchases made to fulfill our customers’ orders, the costs associated with these agreements will ultimately be reflected in cost of sales in our consolidated statements of income. Subsequent to the Spin-off, we expect the total remaining future purchase obligations to be approximately $1,094.1 million.
(d)We expect to contribute approximately $20.7 million to our international pension plans during 2021. Required contributions for future years depend on factors that cannot be determined at this time. Additionally, we expect to pay directly to beneficiaries approximately $14.3 million for international unfunded pension plan and $4.7 million for U.S. Non-Qualified unfunded pension plan during 2021. Subsequent to the Spin-off, we expect to contribute approximately $18.9 million to our international pension plans during 2021.
(e)It is reasonably possible that $4.2 million of liabilities for unrecognized tax benefits will be settled during 2021, and this amount is reflected in income taxes payable in our consolidated balance sheet as of December 31, 2020. Although unrecognized tax benefits are not contractual obligations, they are presented in this table because they represent demands on our liquidity.
(f)Other contractual obligations represent our share of the mandatorily redeemable financial liability, which is recorded at its fair value. The mandatorily redeemable financial liability relates to our voting control interests in legal Technip Energies contract entities which own and account for the design, engineering and construction of the Yamal LNG plant. During the year ended December 31, 2020 we revalued the liability to reflect current expectations about the obligation. See Note 24 to our consolidated financial statements for further details.
OTHER OFF-BALANCE SHEET ARRANGEMENTS
The following is a summary of other off-balance sheet arrangements for our consolidated subsidiaries as of December 31, 2020:
 Amount of Commitment Expiration per Period
(In millions)Total
amount
Less than
1 year
1-3
years
3-5
years
After 5
years
Financial guarantees (a)
$310.1 $204.1 $38.9 $24.7 $42.4 
Performance guarantees (b)
4,659.6 1,968.0 2,011.4 565.7 114.5 
Total other off-balance sheet arrangements$4,969.7 $2,172.1 $2,050.3 $590.4 $156.9 
(a)Financial guarantees represent contracts that contingently require a guarantor to make payments to a guaranteed party based on changes in an underlying agreement that is related to an asset, a liability or an equity security of the guaranteed party. These tend to be drawn down only if there is a failure to fulfill our financial obligations.
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(b)Performance guarantees represent contracts that contingently require a guarantor to make payments to a guaranteed party based on another entity's failure to perform under a nonfinancial obligating agreement. Events that trigger payment are performance-related, such as failure to ship a product or provide a service.
CRITICAL ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with GAAP requires management to make certain estimates, judgments and assumptions about future events that affect the reported amounts of assets and liabilities at the date of the financial statements, the reported amounts of revenue and expenses during the periods presented and the related disclosures in the accompanying notes to the financial statements. Management has reviewed these critical accounting estimates with the Audit Committee of our Board of Directors. We believe the following critical accounting estimates used in preparing our financial statements address all important accounting areas where the nature of the estimates or assumptions is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change. See Note 1 to our consolidated financial statements for further details.
Revenue Recognition
The majority of our revenue is derived from long-term contracts that can span several years. We account for revenue in accordance with Accounting Standard Codification (“ASC”) Topic 606, Revenues from Contracts with Customers. The unit of account in ASC Topic 606 is a performance obligation. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Our performance obligations are satisfied over time as work progresses or at a point in time.
A significant portion of our total revenue recognized over time relates to our Technip Energies and Subsea segments, primarily for the entire range of onshore facilities, fixed and floating offshore oil and gas facilities, and subsea exploration and production equipment projects that involve the design, engineering, manufacturing, construction, and assembly of complex, customer-specific systems. Because of control transferring over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. We generally use the cost-to-cost measure of progress for our contracts because it best depicts the transfer of control to the customer that occurs as we incur costs on our contracts. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues, including estimated fees or profits, are recorded proportionally as costs are incurred.
Due to the nature of the work required to be performed on many of our performance obligations, the estimation of total revenue and cost at completion is complex, subject to many variables, and requires significant judgment. It is common for our long-term contracts to contain award fees, incentive fees, or other provisions that can either increase or decrease the transaction price. We include estimated amounts in the transaction price when we believe we have an enforceable right to the modification, the amount can be estimated reliably, and its realization is probable. The estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.
We execute contracts with our customers that clearly describe the equipment, systems, and/or services. After analyzing the drawings and specifications of the contract requirements, our project engineers estimate total contract costs based on their experience with similar projects and then adjust these estimates for specific risks associated with each project, such as technical risks associated with a new design. Costs associated with specific risks are estimated by assessing the probability that conditions arising from these specific risks will affect our total cost to complete the project. After work on a project begins, assumptions that form the basis for our calculation of total project cost are examined on a regular basis and our estimates are updated to reflect the most current information and management’s best judgment.
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Adjustments to estimates of contract revenue, total contract cost, or extent of progress toward completion are often required as work progresses under the contract and as experience is gained, even though the scope of work required under the contract may not change. The nature of accounting for long-term contracts is such that refinements of the estimating process for changing conditions and new developments are continuous and characteristic of the process. Consequently, the amount of revenue recognized over time is sensitive to changes in our estimates of total contract costs. There are many factors, including, but not limited to, the ability to properly execute the engineering and design phases consistent with our customers’ expectations, the availability and costs of labor and material resources, productivity, and weather, all of which can affect the accuracy of our cost estimates, and ultimately, our future profitability.
Our operating loss for the year ended December 31, 2020 was positively impacted by approximately $457.9 million, as a result of changes in contract estimates related to projects that were in progress as of December 31, 2019. During the year ended December 31, 2020, we recognized changes in our estimates that had an impact on our margin in the amounts of $519.5 million, $(56.5) million and $(5.1) million in our Technip Energies, Subsea and Surface Technologies segments, respectively. The changes in contract estimates are attributed to better, than expected performance throughout our execution of our projects.
Our operating loss for the year ended December 31, 2019 was positively impacted by approximately $1,114.3 million, as a result of changes in contract estimates related to projects that were in progress as of December 31, 2018. During the year ended December 31, 2019, we recognized changes in our estimates that had 81 registered shareholders.an impact on our margin in the amounts of $797.2 million, $324.7 million and $(7.6) million in our Technip Energies, Subsea and Surface Technologies segments, respectively. The changes in contract estimates are attributed to better, than expected performance throughout our execution of our projects.
Our operating profit for the year ended December 31, 2018 was positively impacted by approximately $553.4 million, as a result of changes in contract estimates related to projects that were in progress as of December 31, 2017. During the year ended December 31, 2018, we recognized changes in our estimates that had an impact on our margin in the amounts of $379.2 million, $169.9 million and $4.3 million in our Technip Energies, Subsea and Surface technologies segments, respectively. The changes in contract estimates are attributed to better, than expected performance throughout our execution of our projects.
Accounting for Income Taxes
Our income tax expense, deferred tax assets and liabilities, and reserves for uncertain tax positions reflect management’s best assessment of estimated future taxes to be paid. We hadare subject to income taxes in the United Kingdom and numerous foreign jurisdictions. Significant judgments and estimates are required in determining our consolidated income tax expense.
In determining our current income tax provision, we assess temporary differences resulting from differing treatments of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are recorded in our consolidated balance sheets. When we maintain deferred tax assets, we must assess the likelihood that these assets will be recovered through adjustments to future taxable income. To the extent, we believe recovery is not likely, we establish a valuation allowance. We record a valuation allowance to reduce the asset to a value we believe will be recoverable based on our expectation of future taxable income. We believe the accounting estimate related to the valuation allowance is a critical accounting estimate because it is highly susceptible to change from period to period, requires management to make assumptions about our future income over the lives of the deferred tax assets, and finally, the impact of increasing or decreasing the valuation allowance is potentially material to our results of operations.
Forecasting future income requires us to use a significant amount of judgment. In estimating future income, we use our internal operating budgets and long-range planning projections. We develop our budgets and long-range projections based on recent results, trends, economic and industry forecasts influencing our segments’ performance, our backlog, planned timing of new product launches and customer sales commitments. Significant changes in our judgment related to the expected realizability of a deferred tax asset results in an adjustment to the associated valuation allowance.
As of December 31, 2020, we have provided a valuation allowance against the related deferred tax assets where we believe it is not more likely than not that we will generate future taxable income sufficient to realize such assets.
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The calculation of our income tax expense involves dealing with uncertainties in the application of complex tax laws and regulations in numerous jurisdictions in which we operate. We recognize tax benefits related to uncertain tax positions when, in our judgment, it is more likely than not that such positions will be sustained on examination, including resolutions of any related appeals or litigation, based on the technical merits. We adjust our liabilities for uncertain tax positions when our judgment changes as a result of new information previously unavailable. Due to the complexity of some of these uncertainties, their ultimate resolution may result in payments that are materially different from our current estimates. Any such differences will be reflected as adjustments to income tax expense in the periods in which they are determined.
Accounting for Pension and Other Post-retirement Benefit Plans
The determination of the projected benefit obligations of our pension and other post-retirement benefit plans are important to the recorded amounts of such obligations in our consolidated balance sheets and to the amount of pension expense in our consolidated statements of income. In order to measure the obligations and expense associated with our pension benefits, management must make a variety of estimates, including discount rates used to value certain liabilities, expected return on plan assets set aside to fund these costs, rate of compensation increase, employee turnover rates, retirement rates, mortality rates and other factors. We update these estimates on an annual basis or more frequently upon the occurrence of significant events. These accounting estimates bear the risk of change due to the uncertainty and difficulty in estimating these measures. Different estimates used by management could result in our recognition of different amounts of expense over different periods of time.
Due to the specialized and statistical nature of these calculations which attempt to anticipate future events, we engage third-party specialists to assist management in evaluating our assumptions as well as appropriately measuring the costs and obligations associated with these pension benefits. The discount rate and expected long-term rate of return on plan assets are primarily based on investment yields available and the historical performance of our plan assets, respectively. The timing and amount of cash outflows related to the bonds included in the indices matches it estimated defined benefits payments. These measures are critical accounting estimates because they are subject to management’s judgment and can materially affect net income.
The actuarial assumptions and estimates made by management in determining our pension benefit obligations may materially differ from actual results as a result of changing market and economic conditions and changes in plan participant assumptions. While we believe the assumptions and estimates used are appropriate, differences in actual experience or changes in plan participant assumptions may materially affect our financial position or results of operations.
The following table illustrates the sensitivity of changes in the discount rate and expected long-term return on plan assets on pension expense and the projected benefit obligation:
(In millions, except basis points)Increase (Decrease) in 2020 Pension Expense Before Income TaxesIncrease (Decrease) in Projected Benefit Obligation as of December 31, 2020
25 basis point decrease in discount rate$3.2 $66.8 
25 basis point increase in discount rate$(3.2)$(63.5)
25 basis point decrease in expected long-term rate of return on plan assets$3.7 N/A
25 basis point increase in expected long-term rate of return on plan assets$(1.6)N/A
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Determination of Fair Value in Business Combinations
Accounting for the acquisition of a business requires the allocation of the purchase price to the various assets acquired and liabilities assumed at their respective fair values. The determination of fair value requires the use of significant estimates and assumptions, and in making these determinations, management uses all available information. If necessary, we have up to one year after the acquisition closing date to finalize these fair value determinations. For tangible and identifiable intangible assets acquired in a business combination, the determination of fair value utilizes several valuation methodologies including discounted cash flows which has assumptions with respect to the timing and amount of future revenue and expenses associated with an asset. The assumptions made in performing these valuations include, but are not limited to, discount rates, future revenues and operating costs, projections of capital costs, and other assumptions believed to be consistent with those used by principal market participants. Due to the specialized nature of these calculations, we engage third-party specialists to assist management in evaluating our assumptions as well as appropriately measuring the fair value of assets acquired and liabilities assumed. See Note 2 to our consolidated financial statements for further details.
Impairment of Long-Lived and Intangible Assets
Long-lived assets, including vessels, property, plant and equipment, identifiable intangible assets being amortized and capitalized software costs are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of the long-lived asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If it is determined that an impairment loss has occurred, the loss is measured as the amount by which the carrying amount of the long-lived asset exceeds its fair value. The determination of future cash flows as well as the estimated fair value of long-lived assets involves significant estimates on the part of management. Because there usually is a lack of quoted market prices for long-lived assets, fair value of impaired assets is typically determined based on the present values of expected future cash flows using discount rates believed to be consistent with those used by principal market participants, or based on a multiple of operating cash flows validated with historical market transactions of similar assets where possible. The expected future cash flows used for impairment reviews and related fair value calculations are based on judgmental assessments of revenue, forecasted utilization, operating costs and capital decisions and all available information at the date of review. If future market conditions deteriorate beyond our current expectations and assumptions, impairments of long-lived assets may be identified if we conclude that the carrying amounts are no unregistered saleslonger recoverable.
Impairment of equity securitiesGoodwill
Goodwill represents the excess of cost over the fair market value of net assets acquired in business combinations. Goodwill is not subject to amortization but is tested for impairment at a reporting unit level on an annual basis, or more frequently if impairment indicators arise. We have established October 31 as the date of our annual test for impairment of goodwill. We identify a potential impairment by comparing the fair value of the applicable reporting unit to its net book value, including goodwill. If the net book value exceeds the fair value of the reporting unit, we measure the impairment by comparing the carrying value of the reporting unit to its fair value. Reporting units with goodwill are tested for impairment using a quantitative impairment test.
When using the quantitative impairment test, determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. We estimate the fair value of our reporting units using a discounted future cash flow model. The majority of the estimates and assumptions used in a discounted future cash flow model involve unobservable inputs reflecting management’s own assumptions about the assumptions market participants would use in estimating the fair value of a business. These estimates and assumptions include revenue growth rates and operating margins used to calculate projected future cash flows, discount rates and future economic and market conditions. Our estimates are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and do not reflect unanticipated events and circumstances that may occur.

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The income approach estimates fair value by discounting each reporting unit’s estimated future cash flows using a weighted-average cost of capital that reflects current market conditions and the risk profile of the reporting unit. To arrive at our future cash flows, we use estimates of economic and market assumptions, including growth rates in revenues, costs, estimates of future expected changes in operating margins, tax rates and cash expenditures. Future revenues are also adjusted to match changes in our business strategy. We believe this approach is an appropriate valuation method. Under the market multiple approach, we determine the estimated fair value of each of our reporting units by applying transaction multiples to each reporting unit’s projected EBITDA and then averaging that estimate with similar historical calculations using either a one, two or three year average. Our reporting unit valuations were determined primarily by utilizing the income approach, with a lesser weighting attributed the market multiple approach.
During the first quarter of 2020 a severe decline in the Company’s market capitalization, significant decline in crude oil prices and the growing pandemic caused by COVID-19 triggered the need for an impairment test at March 31, 2020. We utilized a market approach to measure the fair value of our reporting units as of March 31, 2020. In measuring a fair value of the Company we used the Company’s market capitalization. An appropriate control premium was considered for each of the reporting units and applied to the output of the market approach. An interim impairment test during the first quarter of 2020 resulted in $2,747.5 million and $335.9 million of goodwill impairment charges recorded in our Subsea and Surface Technologies segments, respectively.
During our annual impairment test the following significant estimates were used by management in determining the fair values of our reporting units in order to test the remaining goodwill at October 31:
202020192018
Year of cash flows before terminal value445
Discount rates0.1512.5% to 15.0%12.0% to 13.0%
EBITDA multiplesN/A6.0 - 8.5x7.0 - 8.5x

During the year ended December 31, 2020, the significant estimates used by management in determining the fair value described above relate to Technip Energies reporting unit only. Based on the impairment tests performed during the year ended December 31, 2018.2020 we recorded $2,747.5 million and $335.9 million of goodwill impairment charges recorded in our Subsea and Surface Technologies reporting units, respectively. No goodwill impairment charges were recorded in our Technip Energies reporting unit. The fair value over carrying amount for our Technip Energies segment was in excess of 300% of its carrying amount at our annual impairment test date that is October 31, 2020.
Issuer PurchasesDuring the year ended December 31, 2019, we recorded $1,321.9 million and $666.8 million of Equity Securitiesgoodwill impairment charges in our Subsea and Surface Technologies segments, respectively.





Period
Total Number
of Shares
Purchased (a)
 
Average Price 
Paid per Share
 
Total Number of
Shares Purchased 
as Part of Publicly
Announced Plans 
or Programs
 
Maximum
Number of Shares 
That May Yet
Be Purchased
Under the Plans
or Programs (b)
October 1, 2018 – October 31, 2018408,691
 $29.29
 408,691
 3,650,795
November 1, 2018 – November 30, 20181,202,133
 $23.38
 1,202,057
 2,448,738
December 1, 2018 – December 31, 2018928,273
 $19.67
 927,809
 16,091,108
Total2,539,097
   2,538,557
 16,091,108
(a)Represents 2,538,557 ordinary shares purchased and canceled and 540 ordinary shares purchased and held in an employee benefit trust established for the FMC Technologies, Inc. Non-Qualified Savings and Investment Plan (the “Non-Qualified Plan”). In addition to these shares purchased on the open market, we sold 760 registered ordinary shares held in this trust, as directed by the beneficiaries during the three monthsDuring the year ended December 31, 2018.
(b)In April 2017, we announced a repurchase plan approved by our Board of Directors authorizing up to $500 million to repurchase shares of our issued and outstanding ordinary shares through open market purchases. Following a court-approved reduction of our capital, we implemented our share repurchase program on September 25, 2017. The Board of Directors authorized an extension of this program, adding $300 million in December 2018 for a total of $800 million in ordinary shares.


Performance Graph
The graph below compares the cumulative total shareholder return on our ordinary shares for the period from January 17, 2017 to December 31, 2018, we recorded $1,383.0 million of goodwill impairment charges in our Subsea segment.
See Notes 15 and 19 to our consolidated financial statements for further details.
OTHER MATTERS
On March 28, 2016, FMC Technologies received an inquiry from the U.S. Department of Justice (“DOJ”) related to the DOJ's investigation of whether certain services Unaoil S.A.M. provided to its clients, including FMC Technologies, violated the FCPA. On March 29, 2016, Technip S.A. also received an inquiry from the DOJ related to Unaoil. We cooperated with the Standard & Poor’s 500 IndexDOJ's investigations and, with regard to FMC Technologies, a related investigation by the SEC.
In late 2016, Technip S.A. was contacted by the DOJ regarding its investigation of offshore platform projects awarded between 2003 and 2007, performed in Brazil by a joint venture company in which Technip S.A. was a minority participant, and we have also raised with DOJ certain other projects performed by Technip S.A. subsidiaries in Brazil between 2002 and 2013. The DOJ has also inquired about projects in Ghana and Equatorial Guinea that were awarded to Technip S.A. subsidiaries in 2008 and 2009, respectively. We cooperated with the DOJ in its investigation into potential violations of the FCPA in connection with these projects. We contacted and cooperated with the Brazilian authorities (Federal Prosecution Service (“S&P 500 Index”MPF”), the Comptroller General of Brazil (“CGU”) and PHLX Oil Services Index. The comparison assumes $100 was invested, including reinvestmentthe Attorney General of dividends, if any,Brazil (“AGU”)) with their investigation concerning the projects in Brazil and have also
74


contacted and are cooperating with French authorities (the Parquet National Financier (“PNF”)) about these existing matters.
On June 25, 2019, we announced a global resolution to pay a total of $301.3 million to the DOJ, the SEC, the MPF, and the CGU/AGU to resolve these anti-corruption investigations. We will not be required to have a monitor and will, instead, provide reports on our ordinary sharesanti-corruption program to the Brazilian and U.S. authorities for two and three years, respectively.
As part of this resolution, we entered into a three-year Deferred Prosecution Agreement (“DPA”) with the DOJ related to charges of conspiracy to violate the FCPA related to conduct in Brazil and with Unaoil. In addition, Technip USA, Inc., a U.S. subsidiary, pled guilty to one count of conspiracy to violate the FCPA related to conduct in Brazil. We will also provide the DOJ reports on January 17, 2017 and in bothour anti-corruption program during the term of the indexes onDPA.
In Brazil, our subsidiaries Technip Brasil - Engenharia, Instalações E Apoio Marítimo Ltda. and Flexibrás Tubos Flexíveis Ltda. entered into leniency agreements with both the same date. The results shownMPF and the CGU/AGU. We have committed, as part of those agreements, to make certain enhancements to their compliance programs in Brazil during a two-year self-reporting period, which aligns with our commitment to cooperation and transparency with the compliance community in Brazil and globally.
In September 2019, the SEC approved our previously disclosed agreement in principle with the SEC Staff and issued an Administrative Order, pursuant to which we paid the SEC $5.1 million, which was included in the graph below areglobal resolution of $301.3 million.
To date, the investigation by PNF related to historical projects in Equatorial Guinea and Ghana has not necessarily indicativereached resolution. We remain committed to finding a resolution with the PNF and will maintain a $70.0 million provision related to this investigation. As we continue to progress our discussions with PNF towards resolution, the amount of future performance.a settlement could exceed this provision.
tsrgrapha02.jpgThere is no certainty that a settlement with PNF will be reached or that the settlement will not exceed current accruals. The PNF has a broad range of potential sanctions under anti-corruption laws and regulations that it may seek to impose in appropriate circumstances including, but not limited to, fines, penalties, and modifications to business practices and compliance programs. Any of these measures, if applicable to us, as well as potential customer reaction to such measures, could have a material adverse impact on our business, results of operations, and financial condition. If we cannot reach a resolution with the PNF, we could be subject to criminal proceedings in France, the outcome of which cannot be predicted.
RECENTLY ISSUED ACCOUNTING STANDARDS
See Note 4 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
75
 January 17 December 31
 2017 2017 2018
TechnipFMC plc$100.00
 $87.76
 $55.89
S&P 500 Index100.00
 119.82
 114.56
PHLX Oil Services Index100.00
 82.00
 44.93




ITEM 6. SELECTED FINANCIAL DATA7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are subject to financial market risks, including fluctuations in foreign currency exchange rates and interest rates. In order to manage and mitigate our exposure to these risks, we may use derivative financial instruments in accordance with established policies and procedures. We do not use derivative financial instruments where the objective is to generate profits solely from trading activities. As of December 31, 2020 and 2019, substantially all of our derivative holdings consisted of foreign currency forward contracts and foreign currency instruments embedded in purchase and sale contracts.
These forward-looking disclosures only address potential impacts from market risks as they affect our financial instruments and do not include other potential effects that could impact our business as a result of changes in foreign currency exchange rates, interest rates, commodity prices or equity prices.
Foreign Currency Exchange Rate Risk
We conduct operations around the world in a number of different currencies. Many of our significant foreign subsidiaries have designated the local currency as their functional currency. Our earnings are therefore subject to change due to fluctuations in foreign currency exchange rates when the earnings in foreign currencies are translated into U.S. dollars. We do not hedge this translation impact on earnings. A 10% increase or decrease in the average exchange rates of all foreign currencies as of December 31, 2020, would have changed our revenue and income before income taxes attributable to TechnipFMC by approximately $813.0 million and $38.0 million, respectively.
When transactions are denominated in currencies other than our subsidiaries’ respective functional currencies, we manage these exposures through the use of derivative instruments. We primarily use foreign currency forward contracts to hedge the foreign currency fluctuation associated with firmly committed and forecasted foreign currency denominated payments and receipts. The following tables set forth selected financial dataderivative instruments associated with these anticipated transactions are usually designated and qualify as cash flow hedges, and as such the gains and losses associated with these instruments are recorded in other comprehensive income until such time that the underlying transactions are recognized. Unless these cash flow contracts are deemed to be ineffective or are not designated as cash flow hedges at inception, changes in the derivative fair value will not have an immediate impact on our results of operations since the gains and losses associated with these instruments are recorded in other comprehensive income. When the anticipated transactions occur, these changes in value of derivative instrument positions will be offset against changes in the value of the Companyunderlying transaction. When an anticipated transaction in a currency other than the functional currency of an entity is recognized as an asset or liability on the balance sheet, we also hedge the foreign currency fluctuation of these assets and liabilities with derivative instruments after netting our exposures worldwide. These derivative instruments do not qualify as cash flow hedges.
Occasionally, we enter into contracts or other arrangements containing terms and conditions that qualify as embedded derivative instruments and are subject to fluctuations in foreign exchange rates. In those situations, we enter into derivative foreign exchange contracts that hedge the price or cost fluctuations due to movements in the foreign exchange rates. These derivative instruments are not designated as cash flow hedges.
For our foreign currency forward contracts hedging anticipated transactions that are accounted for as cash flow hedges, a 10% increase in the value of the U.S. dollar would have resulted in an additional loss of $68.4 million in the net fair value of cash flow hedges reflected in our consolidated balance sheet as of December 31, 2020.
Interest Rate Risk
As of December 31, 2020, we had commercial paper of approximately $1.5 billion with a weighted average interest rate of 0.26%. Using sensitivity analysis to measure the impact of a 10% adverse movement in the interest rate, or three basis points, would result in an increase to interest expense of $0.5 million.
76


We assess effectiveness of forward foreign currency contracts designated as cash flow hedges based on changes in fair value attributable to changes in spot rates. We exclude the impact attributable to changes in the difference between the spot rate and the forward rate for the assessment of hedge effectiveness and recognize the change in fair value of this component immediately in earnings. Considering that the difference between the spot rate and the forward rate is proportional to the differences in the interest rates of the countries of the currencies being traded, we do not have significant exposure in the unrealized valuation of our forward foreign currency contracts to relative changes in interest rates between countries in our results of operations. To the extent any one interest rate increases by 10% across all tenors and other countries’ interest rates remain fixed, and assuming no change in discount rates, we would expect to recognize a decrease of $1.5 million in unrealized earnings in the period of change. Based on our portfolio at December 31, 2020, we have material positions with exposure to interest rates in the United States, Canada, Australia, Brazil, the United Kingdom, Singapore, the European Community, and Norway.
77


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of TechnipFMC plc

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of TechnipFMC plc and its subsidiaries (the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of income, of comprehensive income, of changes in stockholders’ equity and of cash flows for each of the fourthree years in the period ended December 31, 2018. This information should be read2020, including the related notes and schedule of valuation and qualifying accounts for each of the three years in conjunction with Part I,the period ended December 31, 2020 appearing under Item 1 “Business,” Part II, Item 7 “Management’s Discussion15(a)(2) (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and Analysis of Financial Condition and Results of Operations”2019, and the auditedresults of its operations and its cash flows for each of the three years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and notes thereto includedon the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in Part II, Item 8accordance with the U.S. federal securities laws and the applicable rules and regulations of this Annual Report on Form 10-K.the Securities and Exchange Commission and the PCAOB.

 Year Ended December 31,
(In millions, except per share data)
2018 (a)
 
2017 (b)
 2016 2015
Statement of income data       
Total revenue$12,552.9
 $15,056.9
 $9,199.6
 $11,471.9
Total costs and expenses$13,470.5
 $14,091.7
 $8,743.6
 $11,198.3
Net income (loss)$(1,910.8) $134.2
 $371.1
 $14.0
Net income (loss) attributable to TechnipFMC plc$(1,921.6) $113.3
 $393.3
 $14.4
        
Earnings (loss) per share from continuing operations attributable to TechnipFMC plc       
Basic earnings (loss) per share$(4.20) $0.24
 $3.29
 $0.13
Diluted earnings (loss) per share$(4.20) $0.24
 $3.16
 $0.13
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

 December 31,
(In millions)2018 
2017 (b)
 2016 2015
Balance sheet data       
Total assets$24,784.5
 $28,263.7
 $18,679.3
 $14,953.6
Long-term debt, less current portion$4,124.3
 $3,777.9
 $1,869.3
 $2,005.0
Total TechnipFMC plc stockholders’ equity$10,399.6
 $13,387.9
 $5,055.8
 $4,947.2
 Year Ended December 31,
(In millions)2018 
2017 (b)
 2016 2015
Other financial information       
Capital expenditures$368.1
 $255.7
 $312.9
 $325.5
Cash flows provided (required) by operating activities$(185.4) $210.7
 $493.8
 $700.3
Net cash (c)
$1,348.3
 $2,882.4
 $3,716.4
 $370.4
Order backlog (d)
$14,560.0
 $12,982.8
 $15,002.0
 $18,475.5
(a)The results of our operations for the year ended December 31, 2018 includes goodwill and vessels impairment charges of $1,383.0 million and $372.9 million, respectively, and a legal provision of $280.0 million. Refer to Notes 17 and 18 to our consolidated financial statements included in Part II, Item 8 of this Annual Report of Form 10-K for additional information on the impairments and legal provision, respectively.
(b)The results of our operations for the year ended December 31, 2017 consistOur audits of the combined results of operations of Technip and FMC Technologies. Due to the Merger, FMC Technologies’ results of operations have been included in our financial statements for periods subsequent to the consummation of the merger on January 16, 2017 and as result data presented for the year December 31, 2017 is not comparable to actual results presented in prior periods. Since Technip was identified as the accounting acquiree for the Merger, our actual results for the years ended December 31, 2016 and December 31, 2015 represent Technip only.
Refer to Note 2 to our consolidated financial statements included in Part II, Item 8performing procedures to assess the risks of this Annual Report on Form 10-K for further information related to the Merger. In order to provide for improved comparabilitymaterial misstatement of the 2017 actual results, unaudited pro forma results for 2016 are presented in Part II, Item 7 of this Annual Report on Form 10-K.
(c)Net (debt) cash consists of cash and cash equivalents less short-term debt, long-term debt and the current portion of long-term debt. Net (debt) cash is a non-GAAP measure that management uses to evaluate our capital structure and financial leverage. See “Liquidity and Capital Resources” in Part II, Item 7 of this Annual Report on Form 10-K for additional discussion and reconciliations of net (debt) cash.
(d)Order backlog is calculated as the estimated sales value of unfilled, confirmed customer orders at the reporting date.


ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
EXECUTIVE OVERVIEW
We are a global leader in oil and gas projects, technologies, systems and services. We have manufacturing operations worldwide, strategically located to facilitate efficient delivery of these products, technologies, systems and services to our customers. We report our results of operations in the following segments: Subsea, Onshore/Offshore and Surface Technologies. Management’s determination of the Company’s reporting segments was made on the basis of our strategic priorities and corresponds to the manner in which our Chief Executive Officer reviews and evaluates operating performance to make decisions about resource allocations to each segment.
A description of our products and services and annual financial data for each segment can be found in Part I, Item 1, “Business” and Note 5 to our consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in Part II, Item 8the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of this Annual Reportthe consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on Form 10-K. the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A discussion and analysiscompany’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of our consolidated results of operationsfinancial reporting and the resultspreparation of operationsfinancial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting
78


includes those policies and procedures that (i) pertain to the maintenance of eachrecords that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our segments for the years ended December 31, 2018, 2017assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and 2016 follows.that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
We focus on economic- and industry-specific drivers and key
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk factors affecting our business segments as we formulate our strategic plans and make decisions related to allocating capital and human resources. The resultsthat controls may become inadequate because of our segments are primarily driven by changes in capital spending by oil and gas companies, which largely depend upon current and anticipated future crude oil and natural gas demand, production volumes, and consequently, commodity prices. We use crude oil and natural gas prices as an indicatorconditions, or that the degree of demand. Additionally, we use both onshore and offshore rig count as an indicator of demand, which consequently influences the level of worldwide production activity and spending decisions. We also focus on key risk factors when determining our overall strategy and making decisions for capital allocation. These factors include risks associatedcompliance 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 and cultivating strong customer relationships.policies or procedures may deteriorate.
Our Subsea segment is affected by changes in commodity prices and trends in deepwater oil and natural gas production. Our Onshore/Offshore segment is impacted by change in commodity prices, population growth and demand for natural gas, although the onshore market is typically more resilient to these changes impacting the segment. Our Subsea and Onshore/Offshore segments both benefit
Critical Audit Matters

The critical audit matters communicated below are matters arising from the current market fundamentals supportingperiod audit of the demand for new liquefied natural gas facilities. Onshore/Offshore also benefits from the construction of petrochemical and fertilizer plants.
Our Surface Technologies segment is primarily affected by changes in commodity prices and trends in land-based and shallow water oil and natural gas production, including trends in shale production. We have developed close working relationships with our customers. Our results reflect our abilityconsolidated financial statements that were communicated or required to build long-term alliances with oil and natural gas companies and to provide solutions for their needs in a timely and cost-effective manner. We believe that by closely working with our customers, we enhance our competitive advantage, improve our operating results and strengthen our market positions.
As we evaluate our operating results, we consider business segment performance indicators like segment revenue, operating profit and capital employed, in additionbe communicated to the levelaudit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of inbound orders and order backlog. A significant proportion ofcritical audit matters does not alter in any way our revenue is recognized underopinion on the percentage of completion method of accounting. Cash receipts from such arrangements typically occur at milestones achieved under stated contract terms. Consequently, the timing of revenue recognition is not always correlated with the timing of customer payments. We aim to structure our contracts to receive advance payments that we typically use to fund engineering efforts and inventory purchases. Working capital (excluding cash) and net (debt) cash are therefore key performance indicators of cash flows.
In each of our segments, we serve customers from around the world. During 2018, approximately 90% of our total sales were recognized outside of the United States. We evaluate international markets and pursue opportunities that fit our technological capabilities and strategies.


BUSINESS OUTLOOK
Overall Outlook - Following the steep decline from prior years, the price of crude oil has been onconsolidated financial statements, taken as a gradual upward trend since the cyclical trough experienced in early 2016, though the price of crude oil remains quite volatile. In addition, the sustainability of the price recovery and business activity levels is dependent on several variables, including geopolitical stability, OPEC’s actions to regulate its production capacity, changes in demand patterns, and international sanctions and tariffs. However, as long-term demand is forecast to rise and base production continues to naturally decline, we believe the macroeconomic backdrop will provide our customers with greater confidence to increase their investments in new sources of oil and natural gas production.
Subsea - The impact of the low crude oil price environment over the last three years led many of our customers to reduce their capital spending plans and defer new offshore projects. Through this period, we have lowered our cost base through reductions in workforce as well as in manufacturing. This has helped align our operations with the anticipated reductions in activity in order to mitigate some of the negative impact to our operating profit. We have been realizing the benefits from restructuring actions through greater cost efficiency, most notably in our manufacturing operations. We have taken additional actions in 2018, but we have balanced further reductions with the need to preserve capacity in preparation for increased market activity and higher order inbound as industry conditions continue to improve. The operational improvements we have made through the downturn are providing us with the capability to respond to an increase in order activity despite the reductions in both personnel and manufacturing capacity. However, the subsea industry continues to have both underutilized manufacturing and vessel capacity, which may lead to continued pricing pressure. We also recognize the need to further develop and invest in our people to ensure we have the core competencies and capabilities necessary for continued success during the market recovery.
Our lowered cost base combined with the aggressive cost reductions taken by our customers has caused project economics to improve. Many current and future offshore projects are deemed to be economic at prices below those experienced in the third quarter. While customer investment decisions can be delayed for a variety of reasons, we continue to work closely with our customers through early engagement in (FEED) studies and the use of our unique integrated approach to subsea development (iEPCI) to allow more project final investment decisions through the cycle. iEPCI™ can support clients’ initiatives to improve subsea project economics by helping to reduce cost and accelerate time to first oil. In the long term, we continue to believe that offshore and deepwater developments will remain a significant part of our customers’ portfolios.
Onshore/Offshore - Onshore market activity continues to provide a tangible set of opportunities, particularly for natural gas monetization projects, as natural gas continues to take a larger share of global energy demand. Market conditions for liquefied natural gas (“LNG”) have improved as rising demand continues to rebalance an oversupplied market. This is driving an improved outlook for our business,whole, and we are confident thatnot, by communicating the pacecritical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue Recognition - Determination of LNG investments will continueEstimated Costs to growComplete for Long-Term Contracts

As described in Note 6 to the near and intermediate term. As an industry leader, we are well positioned for the growth in new liquefaction and regasification capacity and are actively engaged in several LNG FEED studies across multiple geographies. These FEED studies provide a platform for early engagement with clients and can significantly de-risk project execution while also supporting our pursuitconsolidated financial statements, approximately 86% of the engineering, procurement and construction (“EPC”) contract. Additionally, we continue to selectively pursue refining, petrochemical, and fertilizer project opportunities in the Middle East, Africa, Asia, and North American markets.
Surface Technologies - After a periodtotal revenue of rapid growth, the North America unconventional market is undergoing near-term volatility. While drilling activity has proved to be resilient, completions activity has been reduced, stemming from pipeline take-away capacity constraints and exhaustion of operator capital budgets for exploration and production. Hydraulic fracturing activity has slowed sequentially, particularly in the Permian basin through 2018. These constraints should prove to be transitory, though, as operator budgets renew and pipeline take-away capacity improves and we expect improvement in activity in the second half of 2019. Despite the near-term volatility, we are continuing to introduce new, innovative commercial models in North America. Activity in our surface business outside of North America has been more resilient but continues to experience pressure from competitive pricing; however, growth prospects for these markets are expected to improve further in 2019.



Pro Forma Results of Operations
Unaudited supplemental pro forma results of operations$13.1 billion for the year ended December 31, 2016 present consolidated information as if (i) the Merger and (ii) the consolidation of legal onshore/offshore contract entities that own and account2020 is generated from long-term contracts. As disclosed by management, for the design, engineering and construction of the Yamal had been completed as of January 1, 2016. The pro forma results do not include any potential synergies, cost savings or other expected benefits of these transactions. Accordingly, the pro forma results should not be considered indicative of the results that would have occurred if the transactions had been consummated as of January 1, 2016, nor are they indicative of future results.
Refer to Note 2 and Note 14 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further information related to the Merger and Yamal, respectively.
Due to the size of the aforementioned transactions relative to the size of historical results of operations and for purposes of comparability, management’s discussion of the consolidated and segment results of operations are provided on the basis of comparing actual results of operations for the year ended December 31, 2017 to pro forma results of operations for the year ended December 31, 2016. Actual results for the year ended December 31, 2016 represent Technip only.



CONSOLIDATED RESULTS OF OPERATIONS
 Year Ended December 31, Change
(In millions, except percentages)2018 2017 
2016
Pro Forma*
 2016 2018 vs. 2017 
2017 vs. 2016
Pro Forma
Revenue$12,552.9
 $15,056.9
 $19,068.8
 $9,199.6
 $(2,504.0) (16.6)% $(4,011.9) (21)%
Costs and expenses        
 
   
Cost of sales10,273.0
 12,524.6
 16,382.5
 7,630.0
 (2,251.6) (18.0)% (3,857.9) (24)%
Selling, general and administrative expense1,140.6
 1,060.9
 1,229.9
 572.6
 79.7
 7.5 % (169.0) (14)%
Research and development expense189.2
 212.9
 219.5
 105.4
 (23.7) (11.1)% (6.6) (3)%
Impairment, restructuring and other expense1,831.2
 191.5
 443.6
 343.0
 1,639.7
 856.2 % (252.1) (57)%
Merger transaction and integration costs36.5
 101.8
 137.8
 92.6
 (65.3) (64.1)% (36.0) (26)%
Total costs and expenses13,470.5
 14,091.7
 18,413.3
 8,743.6
 (621.2) (4.4)% (4,321.6) (23)%
Other income (expense), net(323.9) (25.9) 12.1
 6.5
 (298.0) (1,150.6)% (38.0) (314)%
Income from equity affiliates114.3
 55.6
 10.9
 117.7
 58.7
 105.6 % 44.7
 410%
Net interest expense(360.9) (315.2) (29.1) (28.8) (45.7) (14.5)% (286.1) (983)%
Income (loss) before income taxes(1,488.1) 679.7
 649.4
 551.4
 (2,167.8) (318.9)% 30.3
 5%
Provision for income taxes422.7
 545.5
 284.7
 180.3
 (122.8) (22.5)% 260.8
 92%
Income (loss) from continuing operations(1,910.8) 134.2
 364.7
 371.1
 (2,045.0) (1,523.8)% (230.5) (63)%
Income (loss) from discontinued operations, net of income taxes
 
 (10.1) 
 
  % 10.1
 100%
Net income (loss)(1,910.8) 134.2
 354.6
 371.1
 (2,045.0) (1,523.8)% (220.4) (62)%
Net loss (income) attributable to noncontrolling interests(10.8) (20.9) 23.6
 22.2
 10.1
 48.3 % (44.5) (189)%
Net income (loss) attributable to TechnipFMC plc$(1,921.6) $113.3
 $378.2
 $393.3
 $(2,034.9) (1,796.0)% $(264.9) (70)%
*Refer to “Pro Forma Results of Operations” above for further information related to the presentation of and transactions included in pro forma results for the year ended December 31, 2016.
2018 Compared With 2017
Revenue
Revenue decreased $2.5 billion in 2018 compared to the prior-year period, primarily as a result of declining project activity. Subsea project activity declined in Africa, Asia Pacific, and North America. Onshore/Offshore activity also declined as projects progressed towards completion, driven primarily by Yamal LNG, partially offset by an increase in project activity in the Middle East and Asia Pacific. Surface Technologies’ revenue increased primarily as a result of strong demand for the North American land market recovery.
Gross profit
Gross profit (revenue less cost of sales) increased as a percentage of sales to 18.2% in 2018, from 16.8% in the prior-year. The increase in gross profit as a percentage of sales was primarily due to the realization of cost reduction opportunities on certain projects, a lower overall cost structure due to cost reduction and synergy initiatives, the successful progression of several major projects with strong economic performance, and the benefit of a better product and service mix.


Selling, general and administrative expense
Selling, general and administrative expense increased $79.7 million year-over-year. FMC Technologies operations prior to the Merger date of January, 17, 2017 is excluded from 2017. FMC Technologies' selling, general and administrative expenses for this period were $63.0 million. On a comparable basis, selling, general and administrative expense increased by $16.7 million, primarily due to increased tendering costs related to an increasing number of FEED studies and future project awards.
Impairment, restructuring and other expense
We incurred impairment, restructuring and other expense of $1.8 billion primarily driven by a $1.4 billion impairment of goodwill and $372.9 million impairment of our vessels. Refer to Note 17 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information related to impairments.
Merger transaction and integration costs
We incurred integration costs of $36.5 million during 2018. Refer to Note 2 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information related to the Merger.
Other income (expense), net
Other income (expense), net, primarily reflects $280.0 million in legal provisions and $116.5 million of net foreign exchange losses associated with the remeasurement of net cash positions and foreign currency derivatives.
Net interest expense
During the year ended December 31, 2018, we revalued the mandatorily redeemable financial liability to reflect current expectations about the obligation and recognized a loss of $322.3 million. Refer to Note 22 for further information regarding the fair value measurement assumptions of the mandatorily redeemable financial liability and related changes in its fair value. Net interest expense, excluding the fair value measurement of the mandatorily redeemable financial liability, also includes interest income and expenses, which were higher by $17.2 million on a net basis compared to 2017.
Provision for income taxes
The effective tax rate was (28.4)% in 2018 and 80.3% in 2017. The effective tax rate for 2018 was significantly impacted by impairments which were only partially tax-effective and non-deductible legal provision. The change in the effective tax rate in 2018 as compared to 2017, excluding these items, was primarily attributable to an unfavorable change in actual country mix of earnings.
2017 Compared With 2016 Pro Forma
Revenue
Revenue decreased $4.0 billion in 2017 compared to the prior-year period on a pro forma basis, primarily resulting from a sharp decline in Subsea activities in the Europe and Africa region due to lower order activity during 2015 and 2016, resulting in a lower backlog of business coming into 2017. The decrease was also attributable to the completion of several projects, combined with lower Subsea vessel utilization. Revenue also decreased across all Onshore/Offshore businesses year-over-year on a pro forma basis, primarily driven by lower levels of project backlog coming into 2017 for the Middle East, North America, and South America regions.
Gross profit
Gross profit (revenue less cost of sales) increased as a percentage of sales to 16.8% in 2017, from 14.1% in the prior-year on a pro forma basis. The improvement in gross profit as a percentage of sales was primarily due to the reduction of cost of sales year-over-year on a pro forma basis as a result of the realization of cost reduction opportunities on certain projects, a lower overall cost structure due to cost reduction and synergy initiatives, the successful progression of several major projects with strong economic performance, and the benefit of a better product and service mix.


Selling, general and administrative expense
Selling, general and administrative expense decreased $169.0 million year-over-year on a pro forma basis, resulting from lower headcount across all reporting segments, due in part to the benefit of Merger synergies and decreased sales commissions due to the reduced revenue.
Impairment, restructuring and other expense
Impairment, restructuring and other expense decreased by $252.1 million year-over-year on a pro forma basis. Impairment, restructuring and other expense for 2017 included $157.2 million of restructuring expense and $34.3 million of impairment expense.
In the comparable periods, on a pro forma basis, we have implemented restructuring plans across our segments to reduce costs and better align our workforce with anticipated activity levels. Thus, we previously incurred significant restructuring expenses in 2016 on a pro forma basis. In 2017 we continued to align our capacity to expected operating activity levels for 2018 and beyond and we were also negatively impacted by Hurricane Harvey, as a result of which we incurred expenses of $10.9 million due to lost productivity.
Merger transaction and integration costs
We incurred merger transaction and integration costs of $101.8 million during 2017 due to the Merger. A significant portion of the expenses recorded in the period are related to transaction and leased facility termination fees, with a lower portion but still material related to integration activities pertaining to combining the two legacy companies. Refer to Note 2 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further information related to the Merger.
Other income (expense), net
Other income (expense), net, primarily reflects foreign currency gains and losses. These include gains and losses associated with the remeasurement of net cash positions as well as foreign currency derivatives. During 2017, we incurred $40.1 million of additional net foreign exchange losses compared to 2016.
Net interest expense
The increase in interest expense was due to the changes in the fair value of a mandatorily redeemable financial liability. During the year ended December 31, 2017, we revalued the liability to reflect current expectations about the obligation and recognized a loss of $293.7 million. Refer to Note 22 for further information regarding the fair value measurement assumptions of the mandatorily redeemable financial liability and related changes in its fair value.
Provision for income taxes
Our income tax provisions for 2017 and 2016 on a historical basis reflected effective tax rates of 80.3% and 32.7%, respectively.The year-over-year increase in the effective tax rate was primarily due to increases in our valuation allowance due to additional losses generated during the year for which no tax benefit is expected to be realized and an unfavorable change in actual country mix of earnings. In addition, due to U.S. legislation passed in the fourth quarter of 2017, we incurred a one-time deemed repatriation transition tax of $148.7 million and an unfavorable tax provision impact of $18.9 million from the revaluation of the U.S. deferred individual tax assets and liabilities.


OPERATING RESULTS OF BUSINESS SEGMENTS
Segment operating profit is defined as total segment revenue less segment operating expenses. Certain items have been excluded in computing segment operating profit and are included in corporate items. Refer to Note 5 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further information.
We report our results of operations in U.S. dollars; however, our earnings are generated in various currencies worldwide. In order to provide worldwide consolidated results, the earnings of subsidiaries functioning in their local currencies are translated into U.S. dollars based upon the average exchange rate during the period. 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.
Subsea
 Year Ended December 31, Favorable/(Unfavorable)
(In millions, except %)2018 
2017 (a)
 2016 Pro Forma 2016 2018 vs.
2017
 2017 vs.
2016 Pro Forma
Revenue$4,840.0
 $5,877.4
 $9,150.5
 $5,850.5
 $(1,037.4) (18)% $(3,273.1) (36)%
Operating profit (loss)$(1,529.5) $460.5
 $982.6
 $732.0
 $(1,990.0) (432)% $(522.1) (53)%
                
Operating profit as a percent of revenuen/a
 7.8% 10.7% 12.5%   n/a   (2.9) pts.
(a)Due to the Merger, there were 11.5 months included in the year ended 2017 for legacy FMC Technologies, compared with twelve months in pro forma 2016. Refer to Note 2 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further information related to the Merger.
2018 Compared With 2017
Subsea revenue decreased $1.0 billion year-over-year, primarily due to projects in Africa, Asia Pacific and North America regions that progressed towards completion, partially offset by increased activity in Europe. Subsea revenue continued to be negatively impacted by prior period lower inbound orders related to the market downturn.
Subsea operating profit, excluding $1,784.2 million of asset impairment charges, totaled $254.7 million, compared to the prior-year’s operating profit of $460.5 million. The reduction was primarily due to the anticipated revenue decline related to the prior period lower inbound orders, partially offset by Merger synergies and other cost reduction activities, and the successful completion of key project milestones. Additionally, 2018 included $1,784.2 million of asset impairment charges primarily related to the impairment of goodwill and certain of our vessels. Refer to Note 17 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information related to these asset impairments.
Refer to ‘Non-GAAP Measures’ for further information regarding our segment operating results.
2017 Compared With 2016 Pro Forma
Subsea revenue decreased $3.3 billion year-over-year on a pro forma basis primarily due to lower overall activity in the Europe, Africa and North America regions as a result of the reduced backlog from 2015 and 2016. Additionally, the decrease in revenue was attributable to the completion of several projects during the first nine months of 2017 and lower vessel utilization year-over-year on a pro forma basis primarily due to high vessel campaigns in Africa and Asia in the prior year that did not continue into the current year at similar levels.
Subsea operating profit as a percent of revenue decreased year-over-year on a pro forma basis due to lower revenue in our Subsea projects business across most Subsea regions.



Onshore/Offshore
 Year Ended December 31, Favorable/(Unfavorable)
(In millions, except %)2018 2017 2016 Pro Forma 2016 2018 vs.
2017
 2017 vs.
2016 Pro Forma
Revenue$6,120.7
 $7,904.5
 $8,690.0
 $3,349.1
 $(1,783.8) (23)% $(785.5) (9)%
Operating profit$824.0
 $810.9
 $184.5
 $34.1
 $13.1
 2% $626.4
 340%
                
Operating profit as a percent of revenue13.5% 10.3% 2.1% 1.0%   3.2 pts.   8.2 pts.
2018 Compared With 2017
Onshore/Offshore revenue decreased $1.8 billion year-over-year. The decrease was primarily driven by major projects including Yamal LNG, Silbur, and Martin Linge, that progressed towards completion. The decrease was partially offset by the Energean Karish project awarded in early 2018, FEED work for the Arctic LNG project, and increased work in our Process and Technology business.
Operating profit year-over-year was favorably impacted by reduced costs, strong project execution and bonus achievements on Yamal LNG due to completion of key milestones ahead of schedule. Additionally, 2018 was favorably impacted by $3.4 million related to settlements on restructured projects and operations.

Onshore/Offshore operating profit as a percentage of revenue increased to 13.5% compared to 2017.

Refer to ‘Non-GAAP Measures’ for further information regarding our segment operating results.

2017 Compared With 2016 Pro Forma
Onshore/Offshore revenue decreased $785.5 million year-over-year. The decrease in revenue was attributable to lower activity in North America, due to the delivery of several projects in 2016 and early 2017, as well as reduced activity in Yamal, partially offset by increases projects in Prelude FLNG and the Middle East.
Operating profit and operating profit as a percentage of revenue for the year ended 2017 were both favorable compared to the year ended 2016 on a pro forma basis in comparison and both benefited by successful progression of several major projects, including Yamal and Prelude FLNG, and the successful resolution of certain contract disputes. In addition, the year-over-year performances were favorably impacted by a decrease of $209.7 million related to impairment, restructuring and other expense.
Surface Technologies (b)
 Year Ended December 31,Favorable/(Unfavorable)
(In millions, except %)2018 
2017 (a)
 2016 Pro Forma 2018 vs.
2017
 
2017 vs.
2016 Pro Forma
Revenue$1,592.2
 $1,274.6
 $1,252.2
 $317.6
 25% $22.4
 2%
Operating profit (loss)$172.8
 $82.7
 $(122.0) $90.1
 109% $204.7
 168%
              
Operating profit (loss) as a percent of revenue10.9% 6.5% (9.7)%   4.4 pts.   16.2 pts.
(a)Due to the Merger, there were 11.5 months included in the year ended 2017 for legacy FMC Technologies, compared with twelve months in pro forma 2016. Refer to Note 2 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
(b)Prior to the Merger, we reported our business in two segments, Subsea and Onshore/Offshore. As a result of the Merger and the addition of FMC Technologies, we began reporting our business in three segments. As such, actual results of operations for 2016 do not include Surface Technologies.


2018 Compared With 2017
Surface Technologies revenue increased $317.6 million year-over-year primarily driven by increased activity in the North American market. The solid growth in North America reflected increased demand for flowline, hydraulic fracturing services, wellhead systems, and pressure control equipment and services. Outside of North America, revenue also increased year-over-year primarily driven by increased demand for pressure control equipment and services.
Surface Technologies operating profit as a percent of revenue increased significantly year-over-year. The increase was primarily driven by increased volume in North America and cost reductions, partially offset by continued international pricing pressure. Additionally, 2018 included $13.8 million of impairment and restructuring and other severance charges compared to $19.2 million in the prior year.
Surface Technologies operating profit as a percentage of revenue increased to 10.9% compared to 2017.
Refer to ‘Non-GAAP Measures’ for further information regarding our segment operating results.

2017 Compared With 2016 Pro Forma
Surface Technologies revenue increased $22.4 million year-over-year on a pro forma basis. Lower revenue in our surface international, measurement solutions, and loading systems businesses year-over-year on a pro forma basis was more than offset by revenue increase in our surface Americas business. The increase for surface Americas was driven primarily by a higher rig count, which had a positive impact on our flowline and well service pump revenues.
Surface Technologies operating profit as a percent of revenue increased year-over-year on a pro forma basis and was driven primarily by increased volume in flowline and well service pump products in our surface Americas business, and a $48.8 million decrease in impairment, restructuring and other severance charges.
Corporate Items
 Year Ended December 31,Favorable/(Unfavorable)
(In millions, except %)2018 2017 2016 Pro Forma 2016 2018 vs.
2017
 2017 vs.
2016 Pro Forma
Corporate expense$(594.5) $(359.2) $(366.6) $(185.9) $(235.3) (66)% $7.4
 2%
2018 Compared With 2017
Corporate expense increased by $235.3 million year-over-year. The increase is due primarily to a legal provision of $280.0 million recorded in 2018. See Note 18 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. Offsetting the increase was $65.3 million less integration costs and $24.4 million less restructuring costs than in 2017.
Refer to ‘Non-GAAP Measures’ for further information regarding our segment operating results.

2017 Compared With 2016 Pro Forma
Corporate expense decreased by $7.4 million year-over-year on a pro forma basis. The decrease is primarily attributable to a reduction of business combination transaction and integration costs of $34.4 million in 2017 compared to 2016 on a pro forma basis.


NON-GAAP MEASURES
In addition to financial results determined in accordance with U.S. generally accepted accounting principles (GAAP), we provide non-GAAP financial measures (as defined in Item 10 of Regulation S-K of the Securities Exchange Act of 1934, as amended) below.
Net income, excluding charges and credits, as well as measures derived from it (excluding charges and credits; Income before net interest expense and taxes, excluding charges and credits ("Adjusted Operating profit"); Depreciation and amortization, excluding charges and credits; Earnings before net interest expense, income taxes, depreciation and amortization, excluding charges and credits ("Adjusted EBITDA"); and net cash) are non-GAAP financial measures.
Management believes that the exclusion of charges and credits from these financial measures enables investors and management to more effectively evaluate TechnipFMC's operations and consolidated results of operations period-over-period, and to identify operating trends that could otherwise be masked or misleading to both investors and management by the excluded items. These measures are also used by management as performance measures in determining certain incentive compensation. The foregoing non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, other measures of financial performance prepared in accordance with GAAP.
The following is a reconciliation of the most comparable financial measures under GAAP to the non-GAAP financial measures.
 Year Ended
 December 31, 2018
 Subsea Onshore/
Offshore
 Surface Technologies Corporate and Other Total
Revenue$4,840.0
 $6,120.7
 $1,592.2
 $
 $12,552.9
          
Operating profit (loss), as reported (pre-tax)$(1,529.5) $824.0
 $172.8
 $(594.5) $(1,127.2)
          
Charges and (credits):         
Impairment and other charges1,784.2
 
 4.5
 3.9
 1,792.6
Restructuring and other severance charges17.7
 (3.4) 9.3
 15.0
 38.6
Business combination transaction and integration costs
 
 
 36.5
 36.5
Legal provision
 
 
 280.0
 280.0
Gain on divestitures(3.3) (28.3) 
 
 (31.6)
Purchase price accounting adjustments - non-amortization related(9.4) 
 7.1
 (0.2) (2.5)
Purchase price accounting adjustments - amortization related91.3
 
 
 
 91.3
Subtotal1,880.5
 (31.7) 20.9
 335.2
 2,204.9
          
Adjusted Operating profit (loss)351.0
 792.3
 193.7
 (259.3) 1,077.7
          
Adjusted Depreciation and amortization349.2
 38.1
 66.6
 5.2
 459.1
          
Adjusted EBITDA$700.2
 $830.4
 $260.3
 $(254.1) $1,536.8
          
Operating profit margin(31.6)% 13.5% 10.9%   (9.0)%
          
Adjusted Operating profit margin7.3 % 12.9% 12.2%   8.6 %
          
Adjusted EBITDA margin14.5 % 13.6% 16.3%   12.2 %


 Year Ended
 December 31, 2017
 Subsea Onshore/
Offshore
 Surface Technologies Corporate and Other Total
Revenue$5,877.4
 $7,904.5
 $1,274.6
 $0.4
 $15,056.9
          
Operating profit (loss), as reported (pre-tax)$460.5
 $810.9
 $82.7
 $(359.2) $994.9
          
Charges and (credits):         
Impairment and other charges11.5
 
 10.2
 12.6
 34.3
Restructuring and other severance charges88.4
 27.0
 9.0
 32.8
 157.2
Business combination transaction and integration costs
 
 
 101.8
 101.8
Change in accounting estimate11.8
 
 10.1
 
 21.9
Purchase price accounting adjustments - non-amortization related40.5
 
 43.3
 (25.6) 58.2
Purchase price accounting adjustments - amortization related139.2
 
 12.4
 (1.2) 150.4
Subtotal291.4
 27.0
 85.0
 120.4
 523.8
          
Adjusted Operating profit (loss)751.9
 837.9
 167.7
 (238.8) 1,518.7
          
Adjusted Depreciation and amortization368.0
 41.1
 51.1
 4.1
 464.3
          
Adjusted EBITDA$1,119.9
 $879.0
 $218.8
 $(234.7) $1,983.0
          
Operating profit margin7.8% 10.3% 6.5%   6.6%
          
Adjusted Operating profit margin12.8% 10.6% 13.2%   10.1%
          
Adjusted EBITDA margin19.1% 11.1% 17.2%   13.2%



INBOUND ORDERS AND ORDER BACKLOG
Inbound orders - Inbound orders represent the estimated sales value of confirmed customer orders received during the reporting period. 
 
Inbound Orders
Year Ended December 31,
(In millions)2018 2017
Subsea$5,178.5
 $5,143.6
Onshore/Offshore7,425.9
 3,812.9
Surface Technologies1,686.6
 1,239.8
Total inbound orders$14,291.0
 $10,196.3
Order backlog - Order backlog is calculated as the estimated sales value of unfilled, confirmed customer orders at the reporting date. See “Transaction Price Allocated to the Remaining Unsatisfied Performance Obligations” in Note 4 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for more information on order backlog.
 
Order Backlog
December 31,
(In millions)2018 2017
Subsea$5,999.6
 $6,203.9
Onshore/Offshore8,090.5
 6,369.1
Surface Technologies469.9
 409.8
Total order backlog$14,560.0
 $12,982.8
Subsea - Order backlog for Subsea at December 31, 2018, decreased by $204.3 million from December 31, 2017. Subsea backlog of $6.0 billion at December 31, 2018, was composed of various subsea projects, including Petrobras’ pipelay support vessel and pre-salt tree awards; the Eni Coral project; Total’s Kaombo; VNG’s Fenja; Peregrino Phase II; and BP’s Shah Deniz.
Onshore/Offshore - Onshore/Offshore order backlog at December 31, 2018, increased by $1.7 billion compared to December 31, 2017. Onshore/Offshore backlog of $8.1 billion was composed of various projects, including Yamal; Long Son EPC contract, Energean Karish project, HURL Ammonia fertilizer projects, and Neste bio-diesel expansion project in Singapore.
Non-consolidated backlog - Non-consolidated backlog reflects the proportional share of backlog related to joint ventures that is not consolidated due to our minority ownership position.
 Non-consolidated backlog
(In millions)December 31,
2018
Subsea$974.0
Onshore/Offshore1,748.5
Total order backlog$2,722.5


LIQUIDITY AND CAPITAL RESOURCES
Most of our cash is managed centrally and flowed through centralized bank accounts controlled and maintained by TechnipFMC in the US and in other jurisdictions to best meet the liquidity needs of our global operations. Under current U.S. law, as amended by the Tax Cuts and Jobs Act (TCJA), signed into law on December 22, 2017, any repatriation to the U.S. in the form of a dividend would be eligible for a 100% dividend received deduction and therefore would not be subject to U.S. federal income tax.
We expect to meet the continuing funding requirements of our global operations with cash generated by such operations, our commercial paper programs, and our existing revolving credit facility.
Net (Debt) Cash - Net (debt) cash, is a non-GAAP financial measure reflecting cash and cash equivalents, net of debt. Management uses this non-GAAP financial measure to evaluate our capital structure and financial leverage. We believe net debt, or net cash, is a meaningful financial measure that may assist investors in understanding our financial condition and recognizing underlying trends in our capital structure. Net (debt) cash should not be considered an alternative to, or more meaningful than, cash and cash equivalents as determined in accordance with GAAP or as an indicator of our operating performance or liquidity.
The following table provides a reconciliation of our cash and cash equivalents to net (debt) cash, utilizing details of classifications from our consolidated balance sheets.
(In millions)December 31, 2018 December 31, 2017
Cash and cash equivalents$5,540.0
 $6,737.4
Short-term debt and current portion of long-term debt(67.4) (77.1)
Long-term debt, less current portion(4,124.3) (3,777.9)
Net cash$1,348.3
 $2,882.4
Cash Flows
Cash flows for each of the years in the three-year period ended December 31, 2018, were as follows:
 Year Ended December 31,
(In millions)2018 2017 2016
Cash provided (required) by operating activities$(185.4) $210.7
 $493.8
Cash provided (required) by investing activities(460.2) 1,250.0
 3,110.5
Cash required by financing activities(444.8) (1,054.8) (534.6)
Effect of exchange rate changes on cash and cash equivalents(107.0) 62.2
 21.6
Increase (decrease) in cash and cash equivalents$(1,197.4) $468.1
 $3,091.3
      
Working capital$(759.0) $(725.2) $(142.7)
Operating cash flows - During 2018, we used $185.4 million in cash flows from operating activities as compared to $210.7 million generated in 2017, resulting in a $396.1 million decrease compared to 2017. Our cash flows from operating activities in 2017 were $283.1 million lower than 2016.
Our working capital balances can vary significantly depending on the payment and delivery terms on key contracts in our portfolio of projects. The year-over-year changes in operating cash flow were primarily due to the changes in trade receivables, net and contract assets and accounts payable, trade.
Investing cash flows - Investing activities used $460.2 million of cash in 2018 primarily due to capital expenditures of $368.1 million and business acquisitions of $104.9 million.
Cash provided by investing activities in 2017 was $1,250.0 million, primarily reflecting cash acquired in the Merger. Refer to Note 2 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further information related to the Merger.


Cash provided by investing activities in 2016 was $3,110.5 million, primarily reflecting cash acquired through an acquisition. Refer to Note 9 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further information related to the acquisition and consolidation of legal onshore/offshore contract entities that own and account for Yamal.
Financing cash flows - Financing activities used $444.8 million in 2018. The decrease of $610.0 million in cash required for financing activities was primarily due to repayments of long-term debt in 2017.
Financing activities used $1,054.8 million in 2017. The increase of $520.2 million in cash required for financing activities was primarily due to a decrease in proceeds from the issuance of long-term debt in 2016, an increase in settlements on mandatorily redeemable liability, and an increase in payments of taxes withheld on share-based compensation, offset by increased borrowings of our commercial paper during 2017.
Debt and Liquidity
Total borrowings at December 31, 2018 and 2017, comprised the following: 
(In millions)December 31,
2018
 December 31,
2017
Revolving credit facility$
 $
Bilateral credit facilities
 
Commercial paper1,916.1
 1,450.4
Synthetic bonds due 2021490.9
 502.4
3.45% Senior Notes due 2022500.0
 500.0
5.00% Notes due 2020229.0
 239.9
3.40% Notes due 2022171.8
 179.9
3.15% Notes due 2023148.9
 155.9
3.15% Notes due 2023143.1
 149.9
4.00% Notes due 202785.9
 89.9
4.00% Notes due 2032114.5
 119.9
3.75% Notes due 2033114.5
 119.9
Bank borrowings265.2
 332.5
Other23.2
 28.2
Unamortized debt issuance costs and discounts(11.4) (13.8)
Total borrowings$4,191.7
 $3,855.0
The following is a summary of our revolving credit facility at December 31, 2018:
(In millions)
Description
Amount 
Debt
Outstanding
 
Commercial
Paper
Outstanding 
(a)
 
Letters
of Credit
 
Unused
Capacity
 Maturity
Five-year revolving credit facility$2,500.0
 $
 $1,916.1
 $
 $583.9
 January 2023
(a)Under our commercial paper program, we have the ability to access up to $1.5 billion and €1.0 billion of financing through our commercial paper dealers. Our available capacity under our revolving credit facility is reduced by any outstanding commercial paper.
Committed credit available under our revolving credit facility provides the ability to issue our commercial paper obligations on a long-term basis. We had $1,916.1 million of commercial paper issued under our facilities at December 31, 2018. As we had both the ability and intent to refinance these obligations on a long-term basis, our commercial paper borrowings were classified as long-term debt in the accompanying consolidated balance sheets at December 31, 2018.


Our revolving credit facility contains customary covenants as defined by the credit facility agreement which includes a financial covenant requiring that our total capitalization ratio not exceed 60% at the end of any financial quarter. The facility agreement also contains covenants restricting our ability and our subsidiaries ability to incur additional liens and indebtedness, enter into asset sales, make certain investments. As of December 31, 2018, we were in compliance with all restrictive covenants under our revolving credit facility.
Refer to Note 13 and Note 14 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further information related to our credit facility and our mandatorily redeemable liability, respectively.
Credit Risk Analysis
Valuations of derivative assets and liabilities reflect the fair value of the instruments, including the values associated with counterparty risk. These values must also take into account our credit standing, thus including in the valuation of the derivative instrument and the value of the net credit differential between the counterparties to the derivative contract. Our methodology includes the impact of both counterparty and our own credit standing. Adjustments to our derivative assets and liabilities related to credit risk were not material for any period presented.
We use the income approach as the valuation technique to measure the fair value of foreign currency derivative instruments on a recurring basis. This approach calculates the present value of the future cash flow by measuring the change from the derivative contract rate and the published market indicative currency rate, multiplied by the contract notional values. Credit risk is then incorporated by reducing the derivative’s fair value in asset positions by the result of multiplying the present value of the portfolio by the counterparty’s published credit spread. Portfolios in a liability position are adjusted by the same calculation; however, a spread representing our credit spread is used. Our credit spread, and the credit spread of other counterparties not publicly available are approximated by using the spread of similar companies in the same industry, of similar size and with the same credit rating.
At this time, we have no credit-risk-related contingent features in our agreements with the financial institutions that would require us to post collateral for derivative positions in a liability position.
Additional information about credit risk is incorporated herein by reference to Note 22 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Outlook
Historically, we have generated our liquidity and capital resources primarily through operations and, when needed, through our credit facility. We have $583.9 million of capacity available under our revolving credit facility that we expect to utilize if working capital needs temporarily increase. The volatility in credit, equity and commodity markets creates some uncertainty for our business. Any payment deferrals or discounts on pricing granted to clients in prior years may adversely affect our results of operations and cash flows in 2019 and beyond.
We project spending approximately $350 million in 2019 for capital expenditures. However, projected capital expenditures for 2019 do not include any contingent capital that may be needed to respond to a contract award.
We implemented a U.K. court-approved reduction of our capital, which was completed on June 29, 2017, in order to create distributable profits to support the payment of future dividends or future share repurchases. Our board of directors authorized $500 million for the repurchase of shares which was completed in 2018. The Board of Directors authorized an extension of this program, adding $300 million in December 2018 for a total of $800 million in ordinary shares. Also, on October 23, 2018, it was announced that our Board of Directors authorized and declared a quarterly cash dividend of $0.13 per ordinary share.
During 2019, we expect to make contributions of approximately $2.7 million to our international pension plans, representing primarily the Netherlands qualified pension plans and U.K. Actual contribution amounts are dependent upon plan investment returns, changes in pension obligations, regulatory environments and other economic factors. We update our pension estimates annually during the fourth quarter or more frequently upon the occurrence of significant events. We do not expect to make any contributions to our U.S. Qualified Pension Plan and our U.S. Non-Qualified Defined Benefit Pension Plan in 2019.


CONTRACTUAL OBLIGATIONS
The following is a summary of our contractual obligations at December 31, 2018:
 Payments Due by Period
(In millions)
Total
payments
 
Less than
1 year
 
1-3
years
 
3-5
years
 
After 5
years
Debt (a)
$4,191.7
 $67.4
 $2,854.2
 $962.9
 $307.2
Interest on debt (a)
394.8
 60.6
 121.1
 93.7
 119.4
Operating leases (b)
1,519.7
 329.8
 478.4
 225.9
 485.6
Purchase obligations (c)
3,766.1
 3,211.8
 552.0
 0.4
 1.9
Pension and other post-retirement benefits (d)
14.5
 14.5
 
 
 
Unrecognized tax benefits (e)
93.8
 1.3
 69.1
 23.4
 
Other contractual obligations (f)
1,028.3
 358.3
 400.0
 220.0
 50.0
Total contractual obligations$11,008.9
 $4,043.7
 $4,474.8
 $1,526.3
 $964.1
(a)Our available debt is dependent upon our compliance with covenants, including negative covenants related to liens and our total capitalization ratio. Any violation of covenants or other events of default, which are not waived or cured, or changes in our credit rating could have a material impact on our ability to maintain our committed financing arrangements.
Due to our intent and ability to refinance commercial paper obligations on a long-term basis under our revolving credit facility and the variable interest rates associated with these debt instruments, only interest on our Senior Notes is included in the table. During 2018, we paid $99.0 million for interest charges, net of interest capitalized.
(b)We lease office space, manufacturing facilities and various types of manufacturing and data processing equipment. Leases of real estate generally provide for payment of property taxes, insurance and repairs by us. Substantially all of our leases are classified as operating leases. In addition, in 2014 we entered into construction and operating lease agreements to finance the construction of manufacturing and office facilities located in Houston, TX. In January 2016, construction of the facilities was completed and the operating lease commenced. Upon expiration of the lease term in September 2021, we have the option to renew the lease, purchase the facilities or re-market the facilities on behalf of the lessor, including certain guarantees of residual value under the re-marketing option.
(c)In the normal course of business, we enter into agreements with our suppliers to purchase raw materials or services. These agreements include a requirement that our supplier provide products or services to our specifications and require us to make a firm purchase commitment to our supplier. As substantially all of these commitments are associated with purchases made to fulfill our customers’ orders, the costs associated with these agreements will ultimately be reflected in cost of sales on our consolidated statements of income.
(d)We expect to contribute approximately $2.7 million to our international pension plans during 2019. Required contributions for future years depend on factors that cannot be determined at this time. Additionally, we expect to pay directly to beneficiaries approximately $9.0 million for international unfunded pension plan and $5.5 million for U.S. Non-Qualified unfunded pension plan during 2019.
(e)It is reasonably possible that $1.3 million of liabilities for unrecognized tax benefits will be settled during 2019, and this amount is reflected in income taxes payable in our consolidated balance sheet as of December 31, 2018. Although unrecognized tax benefits are not contractual obligations, they are presented in this table because they represent demands on our liquidity.
(f)Other contractual obligations represent a mandatorily redeemable financial liability. In the fourth quarter of 2016, we obtained voting control interests in legal onshore/offshore contract entities which own and account for the design, engineering and construction of the Yamal LNG plant. Prior to the amendments of the contractual terms that provided us with voting interest control, we accounted for these entities under the equity method of accounting based on our previously held interests in each of these entities. A mandatorily redeemable financial liability of $174.8 million was recognized as of December 31, 2016 to account for the fair value of the non-controlling interests. During the year ended December 31, 2018 we revalued the liability to reflect current expectations about the obligation. Refer to Note 22 for further information regarding the fair value measurement assumptions of the mandatorily redeemable financial liability and related changes in its fair value.


OTHER OFF-BALANCE SHEET ARRANGEMENTS
The following is a summary of other off-balance sheet arrangements at December 31, 2018:
 Amount of Commitment Expiration per Period
(In millions)
Total
amount
 
Less than
1 year
 
1-3
years
 
3-5
years
 
After 5
years
Letters of credit and bank guarantees (a)
$4,796.9
 $1,932.5
 $2,024.5
 $670.4
 $169.5
Surety bonds (a)
1.1
 1.1
 
 
 
Total other off-balance sheet arrangements$4,798.0
 $1,933.6
 $2,024.5
 $670.4
 $169.5
(a)As collateral for our performance on certain sales contracts or as part of our agreements with insurance companies, we are liable under letters of credit, surety bonds and other bank guarantees. Our ability to generate revenue from certain contracts is dependent upon our ability to obtain these off-balance sheet financial instruments. These off-balance sheet financial instruments may be renewed, revised or released based on changes in the underlying commitment. Historically, our commercial commitments have not been drawn upon to a material extent; consequently, management believes it is not reasonably likely there will be material claims against these commitments. However, should these financial instruments become unavailable to us, our operations and liquidity could be negatively impacted.
CRITICAL ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with GAAP requires management to make certain estimates, judgments and assumptions about future events that affect the reported amounts of assets and liabilities at the date of the financial statements, the reported amounts of revenue and expenses during the periods presented and the related disclosures in the accompanying notes to the financial statements. Management has reviewed these critical accounting estimates with the Audit Committee of our Board of Directors. We believe the following critical accounting estimates used in preparing our financial statements address all important accounting areas where the nature of the estimates or assumptions is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change. See Note 1 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for a description of our significant accounting policies.
Revenue Recognition
The majority of our revenue is derived fromCompany’s long-term contracts, that can span several years. We account for revenue in accordance with Accounting Standard Codification (“ASC”) Topic 606, Revenues from Contracts with Customers. The unit of account in ASC Topic 606 is a performance obligation. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Our performance obligations are satisfied over time as work progresses or at a point in time.
A significant portion of our total revenue recognized over time relates to our Onshore/Offshore and Subsea segments, primarily for the entire range of onshore facilities, fixed and floating offshore oil and gas facilities, and subsea exploration and production equipment projects that involve the design, engineering, manufacturing, construction, and assembly of complex, customer-specific systems. Becausebecause of control transferring over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. WeThe Company generally useuses the cost-to-cost measure of progress for ourits contracts because it best depicts the transfer of control to the customer thatwhich occurs as we incurthe Company incurs costs on ourthe contracts. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues, including estimated fees or profits, are recorded proportionally as costs are incurred.
Due to the nature of the work required to be performed on many of ourthe performance obligations, themanagement’s estimation of total revenue and cost at completion is complex, subject to many variables and requires significant judgment. It is common for our long-term contracts to contain award fees, incentive fees, or other provisions that can either increase or decrease the transaction price. We include estimated amounts in the transaction price when we believe we have an enforceable right to the modification, the amount can be estimated reliably, and its realization is probable. The estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.


We execute contracts with our customers that clearly describe the equipment, systems, and/or services. After analyzing the drawings and specifications of the contract requirements, our project engineers estimate total contract costs based on their experience with similar projects and then adjust these estimates for specific risks associated with each project, such as technical risks associated with a new design. Costs associated with specific risks are estimated by assessing the probability that conditions arising from these specific risks will affect our total cost to complete the project. After work on a project begins, assumptions that form the basis for our calculation of total project cost are examined on a regular basis and our estimates are updated to reflect the most current information and management’s best judgment.
Adjustments to estimates of contract revenue, total contract cost, or extent of progress toward completion are often required as work progresses under the contract and as experience is gained, even though the scope of work required under the contract may not change. The nature of accounting for long-term contracts is such that refinements of the estimating process for changing conditions and new developments are continuous and characteristic of the process. Consequently, the amount of revenue recognized over time is sensitive to changes in our estimates of total contract costs. There are many factors, including, but not limited to, the ability to properly execute the engineering and design phases consistent with our customers’ expectations, the availability and costs of labor and materialmaterials resources, productivity and weather, all of which can affect the accuracy of our cost estimates, and ultimately, our future profitability.
Our operating profit
The principal considerations for our determination that performing procedures relating to revenue recognition - determination of estimated costs to complete for long-term contracts is a critical audit matter are the significant judgment by management when determining the estimated costs to complete for long-term contracts, which in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumptions related to the estimates of costs to complete.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the revenue recognition process, including controls over the determination of estimated costs to complete for long-term contracts. These procedures also included, among others, testing management’s process for determining the estimated costs to complete for a selection of long-term contracts by (i) obtaining executed purchase orders and agreements, (ii) evaluating the appropriateness of the method to measure progress towards completion, (iii) testing the completeness and accuracy of the underlying data used by management, and (iv) evaluating the reasonableness of significant assumptions related to the estimates of costs to complete. Evaluating the reasonableness of significant assumptions involved assessing management’s ability to reasonably estimate costs to complete long-term contracts, as applicable, by (i) performing procedures to assess the reasonableness of estimated costs to complete, (ii) testing management’s process to evaluate the timely identification of circumstances which may warrant a modification to a previous cost estimate, (iii) testing management’s process to evaluate contract contingencies relative to the contractual terms and actual progress of contracts, and (iv) performing procedures to assess the reasonableness of changes in life of project margin.
79



Long-Lived Asset Impairments - Certain Asset Groups in the Subsea and Surface Segments

As described in Notes 1, 14, and 19 to the consolidated financial statements, the Company’s consolidated net property, plant and equipment was $2,861.8 million as of December 31, 2020. For the year ended December 31, 2018 was negatively impacted by approximately $6.7 million, as a result of changes2020, the Company recorded impairment charges in contract estimates relatedrelation to projects that werecertain asset groups in progress at December 31, 2017. During the year ended December 31, 2018, we recognized changes in our estimates that had an impact on our margin in the amounts of $(5.1) million, $(5.9) million and $4.3 million in our Onshore/Offshore, Subsea and Surface technologies segments respectively. The changes in contract estimates are attributed to better than expected performance throughout our execution of our projects.
Accounting for Income Taxes
Our income tax expense, deferred tax assets and liabilities, and reserves for uncertain tax positions reflect management’s best assessment of estimated future taxes to be paid. We are subject to income taxes in the United Kingdom and numerous foreign jurisdictions. Significant judgments and estimates are required in determining our consolidated income tax expense.
In determining our current income tax provision, we assess temporary differences resulting from differing treatments of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are recorded in our consolidated balance sheets. When we maintain deferred tax assets, we must assess the likelihood that these assets will be recovered through adjustments to future taxable income. To the extent, we believe recovery is not likely, we establish a valuation allowance. We record a valuation allowance to reduce the asset to a value we believe will be recoverable based on our expectation of future taxable income. We believe the accounting estimate related to the valuation allowance is a critical accounting estimate because it is highly susceptible to change from period to period, requires management to make assumptions about our future income over the lives of the deferred tax assets, and finally, the impact of increasing or decreasing the valuation allowance is potentially material to our results of operations.
Forecasting future income requires us to use a significant amount of judgment. In estimating future income, we use our internal operating budgets and long-range planning projections. We develop our budgets and long-range projections based on recent results, trends, economic and industry forecasts influencing our segments’ performance, our backlog, planned timing of new product launches and customer sales commitments. Significant changes in our judgment related to the expected realizability of a deferred tax asset results in an adjustment to the associated valuation allowance.
As of December 31, 2018, we have provided a valuation allowance against the related deferred tax assets where we believe it is more likely than not that we will generate future taxable income in jurisdictions in which we have cumulative net operating losses.


The calculation of our income tax expense involves dealing with uncertainties in the application of complex tax laws and regulations in numerous jurisdictions in which we operate. We recognize tax benefits related to uncertain tax positions when, in our judgment, it is more likely than not that such positions will be sustained on examination, including resolutions of any related appeals or litigation, based on the technical merits. We adjust our liabilities for uncertain tax positions when our judgment changes as a result of new information previously unavailable. Due to the complexity of some of these uncertainties, their ultimate resolution may result in payments that are materially different from our current estimates. Any such differences will be reflected as adjustments to income tax expense in the periods in which they are determined.
Accounting for Pension and Other Post-retirement Benefit Plans
The determination of the projected benefit obligations of our pension and other post-retirement benefit plans are important to the recorded amounts of such obligations on our consolidated balance sheet and to the amount of pension expense in our consolidated statements of income. In order to measure the obligations$88.4 million and expense associated with our pension benefits, management must make a variety of estimates, including discount rates used to value certain liabilities, expected return$82.0 million, respectively. Management conducts impairment tests on planlong-lived assets set aside to fund these costs, rate of compensation increase, employee turnover rates, retirement rates, mortality rates and other factors. We update these estimates on an annual basis or more frequently upon the occurrence of significant events. These accounting estimates bear the risk of change due to the uncertainty and difficulty in estimating these measures. Different estimates used by management could result in our recognition of different amounts of expense over different periods of time.
Due to the specialized and statistical nature of these calculations which attempt to anticipate future events, we engage third-party specialists to assist management in evaluating our assumptions as well as appropriately measuring the costs and obligations associated with these pension benefits. The discount rate and expected long-term rate of return on plan assets are primarily based on investment yields available and the historical performance of our plan assets, respectively. These measures are critical accounting estimates because they are subject to management’s judgment and can materially affect net income.
The actuarial assumptions and estimates made by management in determining our pension benefit obligations may materially differ from actual results as a result of changing market and economic conditions and changes in plan participant assumptions. While we believe the assumptions and estimates used are appropriate, differences in actual experience or changes in plan participant assumptions may materially affect our financial position or results of operations.
The following table illustrates the sensitivity of changes in the discount rate and expected long-term return on plan assets on pension expense and the projected benefit obligation:
(In millions, except basis points)Increase (Decrease) in 2018 Pension Expense Before Income Taxes Increase (Decrease) in Projected Benefit Obligation at December 31, 2018
25 basis point decrease in discount rate$1.1
 $48.2
25 basis point increase in discount rate$(1.0) $(49.0)
25 basis point decrease in expected long-term rate of return on plan assets$2.6
 N/A
25 basis point increase in expected long-term rate of return on plan assets$(2.6) N/A


Determination of Fair Value in Business Combinations
Accounting for the acquisition of a business requires the allocation of the purchase price to the various assets acquired and liabilities assumed at their respective fair values. The determination of fair value requires the use of significant estimates and assumptions, and in making these determinations, management uses all available information. If necessary, we have up to one year after the acquisition closing date to finalize these fair value determinations. For tangible and identifiable intangible assets acquired in a business combination, the determination of fair value utilizes several valuation methodologies including discounted cash flows which has assumptions with respect to the timing and amount of future revenue and expenses associated with an asset. The assumptions made in performing these valuations include, but are not limited to, discount rates, future revenues and operating costs, projections of capital costs, and other assumptions believed to be consistent with those used by principal market participants. Due to the specialized nature of these calculations, we engage third-party specialists to assist management in evaluating our assumptions as well as appropriately measuring the fair value of assets acquired and liabilities assumed. Business combinations are described in Note 2 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Impairment of Long-Lived and Intangible Assets
Long-lived assets, including vessels, property, plant and equipment, identifiable intangible assets being amortized and capitalized software costs are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of the long-lived assetvalue may not be recoverable. The carrying amountvalue of a long-livedan asset group is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If it is determined that an impairment loss has occurred, the impairment loss is measured as the amount by which the carrying amountvalue of the long-lived asset exceeds its fair value. TheDue to the substantial decline in global demand for oil caused by the COVID-19 pandemic, management reviewed the corresponding impact on the asset group’s service potential and determined the carrying amount of the asset groups exceeded their fair value. As disclosed by management, the determination of future cash flows as well as the estimated fair value of long-lived assets involves significant estimates on the part of management. Because there usually is a lack of quoted market prices for long-lived assets, fair value of impaired assets is typically determined based on the present values of expected future cash flows using discount rates believed to be consistent with those used by principal market participants, or based on a multiple of operating cash flow validated with historical market transactions of similar assets where possible. The expected future cash flows used for impairment reviews and related fair value calculations are based on judgmental assessments of future productivity of the asset,revenue, forecasted utilization, operating costs, and capital decisions and all available information at the date of review. If

The principal considerations for our determination that performing procedures relating to the long-lived asset impairments – certain asset groups in the Subsea and Surface segments is a critical audit matter are the significant judgment by management when determining the fair value estimates, which in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumptions related to future market conditions deteriorate beyondrevenue for certain asset groups in the Subsea segment and future revenue and operating costs for certain asset groups in the Surface segment.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our current expectations and assumptions, impairmentsoverall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s long-lived assets may be identified if we conclude that the carrying amounts are no longer recoverable.
Impairmentimpairment assessments, including controls over management’s determination of Goodwill
Goodwill represents the excess of cost over the fair market value of net assets acquired in business combinations. Goodwill is not subject to amortization but is tested for impairment on an annual basis at a reporting level unit, or more frequently if impairment indicators arise. We have established October 31 as the date of our annual test for impairment of goodwill. We identify a potential impairment by comparing the fair value of certain asset groups in the applicable reporting unit to its net book value, including goodwill. If the net book value exceedsSubsea and Surface segments. These procedures also included, among others, testing management’s process for developing the fair value estimates, by (i) evaluating the appropriateness of the reporting unit, we measuremethod used; (ii) testing the impairment by comparing the carrying valuecompleteness and accuracy of the reporting unit to its fair value. Reporting units with goodwill are tested for impairment using a quantitative impairment test.
When using the quantitative impairment test, determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. We estimate the fair value of our reporting units using a discounted future cash flow model. The majority of the estimates and assumptionsunderlying data used in a discounted future cash flow model involve unobservable inputs reflecting management’s own assumptions about the assumptions market participants would use in estimating the fair valuenet future cash flows; and (iii) evaluating the reasonableness of a business. These estimatessignificant assumptions related to future revenue for certain asset groups in the Subsea segment and assumptions includefuture revenue growth rates and operating margins used to calculate projected future cash flows, discount rates and future economic and market conditions. Our estimates are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and do not reflect unanticipated events and circumstances that may occur.


A lower fair value estimatecosts for certain asset groups in the future for any of our reporting units could result in goodwill impairments. Factors that could trigger a lower fair value estimate include sustained price declinesSurface segment. Evaluating management’s significant assumptions involved evaluating whether the significant assumptions used by management were reasonable considering the current and past performance of the reporting unit’s productsbusiness in which the assets operate in and services, cost increases, regulatory or political environment changes, changeswhether they were consistent with evidence obtained in customer demand, and other changes in market conditions, which may affect certain market participant assumptions used inareas of the discounted future cash flow model based on internal forecasts of revenues and expenses over a specified period plus a terminal value (the income approach). When assessing triggering factors, on a quarterly and also on an annual basis, we also analyzeaudit.




/s/ PricewaterhouseCoopers LLP
Houston, Texas
March 5, 2021

We have served as the relationship between our market capitalization and our consolidated book value of equity.Company’s auditor since 2017.
80


TECHNIPFMC PLC AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
 Year Ended
(In millions, except per share data)202020192018
Revenue
Service revenue$9,708.2 $9,789.7 $9,057.6 
Product revenue3,200.4 3,352.9 3,272.6 
Lease revenue142.0 266.5 222.7 
Total revenue13,050.6 13,409.1 12,552.9 
Costs and expenses
Cost of service revenue8,261.9 7,767.2 7,452.7 
Cost of product revenue2,830.8 3,015.6 2,676.9 
Cost of lease revenue116.7 167.9 143.4 
Selling, general and administrative expense1,066.2 1,228.1 1,140.6 
Research and development expense119.8 162.9 189.2 
Impairment, restructuring and other expense (Note 19)3,501.3 2,490.8 1,831.2 
Separation costs (Note 3)39.5 72.1 
Merger transaction and integration costs— 31.2 36.5 
Total costs and expenses15,936.2 14,935.8 13,470.5 
Other income (expense), net31.1 (220.7)(323.9)
Income from equity affiliates (Note 12)63.0 62.9 114.3 
Loss before interest income, interest expense and income taxes(2,791.5)(1,684.5)(1,127.2)
Interest income56.6 116.5 121.4 
Interest expense(349.6)(567.8)(482.3)
Loss before income taxes(3,084.5)(2,135.8)(1,488.1)
Provision for income taxes (Note 21)153.4 276.3 422.7 
Net loss(3,237.9)(2,412.1)(1,910.8)
Net profit attributable to non-controlling interests(49.7)(3.1)(10.8)
Net loss attributable to TechnipFMC plc$(3,287.6)$(2,415.2)$(1,921.6)
Earnings (loss) per share attributable to TechnipFMC plc (Note 8)
Basic$(7.33)$(5.39)$(4.20)
Diluted$(7.33)$(5.39)$(4.20)
Weighted average shares outstanding (Note 8)
Basic448.7 448.0 458.0 
Diluted448.7 448.0 458.0 
The income approach estimates fair value by discounting each reporting unit’s estimated future cash flows using a weighted-average cost of capital that reflects current market conditions and the risk profileaccompanying notes are an integral part of the reporting unit. To arrive at our future cash flows, we use estimatesconsolidated financial statements.
81


TECHNIPFMC PLC AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 Year Ended
(In millions)202020192018
Net loss$(3,237.9)$(2,412.1)$(1,910.8)
Foreign currency translation adjustments
Net gain (losses) arising during the period(169.1)15.6 (183.3)
Reclassification adjustment for net gains included in net income— (12.0)(41.1)
Foreign currency translation adjustments(a)
(169.1)3.6 (224.4)
Net gains (losses) on hedging instruments
Net gains (losses) arising during the period25.4 8.9 (58.7)
Reclassification adjustment for net losses (gains) included in net income13.0 18.2 (2.0)
Net gains (losses) on hedging instruments (b)
38.4 27.1 (60.7)
Pension and other post-retirement benefits
Net losses arising during the period(88.3)(81.5)(72.4)
Prior service cost arising during the period(4.6)(0.7)(2.1)
Reclassification adjustment for settlement losses (gains) included in net income1.4 0.2 (2.5)
Reclassification adjustment for amortization of prior service cost included in net income0.9 2.0 1.2 
Reclassification adjustment for amortization of net actuarial loss included in net income6.9 0.8 0.3 
Net pension and other post-retirement benefits (c)
(83.7)(79.2)(75.5)
Other comprehensive loss, net of tax(214.4)(48.5)(360.6)
Comprehensive loss(3,452.3)(2,460.6)(2,271.4)
Comprehensive income attributable to non-controlling interest(50.4)(2.4)(6.2)
Comprehensive loss attributable to TechnipFMC plc$(3,502.7)$(2,463.0)$(2,277.6)
(a)Net of economicincome tax (expense) benefit of NaN, $7.9 and market assumptions, including growth rates in revenues, costs, estimates of future expected changes in operating margins, tax rates and cash expenditures. Future revenues are also adjusted to match changes in our business strategy. We believe this approach is an appropriate valuation method. Under$3.6 for the market multiple approach, we determine the estimated fair value of each of our reporting units by applying transaction multiples to each reporting unit’s projected EBITDA and then averaging that estimate with similar historical calculations using either a one, two or three year average. Our reporting unit valuations were determined primarily by utilizing the income approach, with a lesser weighting attributed the market multiple approach.
Late in the fourth quarter of 2018, oil prices fell dramatically and our market capitalization declined significantly, together with other companies in the oil service industry. This short-term event is not expected to have significant negative impact on our short-term performance and it is not changing materially our medium-term and long-term cash flow projections.

The excess of fair value over carrying amount for our Surface Technologies and Onshore/Offshore reporting units ranged from approximately 56% to in excess of 200% of the respective carrying amounts.
During the yearyears ended December 31, 2020, 2019 and 2018, we recorded $1,383.0 millionrespectively.
(b)Net of goodwill impairment charges in our Subsea reporting unit. Refer to Note 17 to our consolidated financial statements included in Part II, Item 8income tax (expense) benefit of this Annual Report on Form 10-K$(9.7), $(6.9) and $16.6 for additional disclosure related to the impairment of goodwill during the yearyears ended December 31, 2018.2020, 2019 and 2018, respectively.
The following table presents(c)Net of income tax (expense) benefit of $25.5, $20.3 and $15.5 for the significant estimates used by management in determining the fair values of our reporting units at December 31, 2018:
2018
Year of cash flows before terminal value5
Discount rates12.0% to 13.0%
EBITDA multiples7.0 - 8.5x
Refer to Note 12 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information related to goodwill impairment testing during 2018.
OTHER MATTERS
On March 28, 2016, FMC Technologies received an inquiry from the U.S. Department of Justice ("DOJ") related to the DOJ's investigation of whether certain services Unaoil S.A.M. provided to its clients, including FMC Technologies, violated the U.S. Foreign Corrupt Practices Act ("FCPA"). On March 29, 2016, Technip S.A. also received an inquiry from the DOJ related to Unaoil. We are cooperating with the DOJ's investigations and, with regard to FMC Technologies, a related investigation by the U.S. Securities and Exchange Commission.
In late 2016, Technip S.A. was contacted by the DOJ regarding its investigation of offshore platform projects awarded between 2003 and 2007, performed in Brazil by a joint venture company in which Technip S.A. was a minority participant, and we have also raised with DOJ certain other projects performed by Technip S.A. subsidiaries in Brazil between 2002 and 2013. The DOJ has also inquired about projects in Ghana and Equatorial Guinea that were awarded to Technip S.A. subsidiaries in 2008 and 2009, respectively. We are cooperating with the DOJ in its investigation into potential violations of the FCPA in connection with these projects. We have contacted the Brazilian authorities (Federal Prosecution Service (MPF), the Comptroller General of Brazil (CGU) and the Attorney General of Brazil (AGU)) and are cooperating with their investigation concerning the projects in Brazil and have also contacted French authorities (the Parquet National Financier (PNF)) about these existing matters.


We have been informed that these authorities in Brazil, the U.S. and France have been coordinating their investigations, which could result in a global resolution. These matters have progressed to a point where a probable estimate of the aggregate settlement amount with all authorities is $280.0 million for which we have taken a provision in the fourth quarter and yearyears ended December 31, 2020, 2019 and 2018,. respectively.
These matters involve negotiations with law enforcement authorities in three separate jurisdictions, and there is no certainty that a global settlement will be reached or that

The accompanying notes are an integral part of the settlement will not exceed current accruals. These authorities have a broad range of civil and criminal sanctions under anticorruption laws and regulations, which they may seek to impose against corporations and individuals in appropriate circumstances including, but not limited to, fines, penalties and modifications to business practices and compliance programs. These authorities have entered into agreements with, and obtained a range of sanctions against, numerous public corporations and individuals arising from allegations of improper payments whereby civil and/or criminal penalties were imposed. Recent civil and criminal settlements have included fines, deferred prosecution agreements, guilty pleas and other sanctions, including the requirement that the relevant corporation retain a monitor to oversee its compliance with anticorruption laws. Any of these remedial measures, if applicable to us, as well as potential customer reaction to such remedial measures, could have a material adverse impact on our business, results of operations and financial condition.
RECENTLY ISSUED ACCOUNTING STANDARDS
Refer to Note 3 to our consolidated financial statements included in Part II, Item 8statements.
82


TECHNIPFMC PLC AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions, except par value data)December 31,
Assets20202019
Cash and cash equivalents$4,807.8 $5,190.2 
Trade receivables, net of allowances of $108.9 in 2020 and $95.4 in 20192,289.8 2,287.1 
Contract assets, net of allowances of $1.0 in 2020 and $2.5 in 20191,267.6 1,520.0 
Inventories, net (Note 9)1,268.5 1,416.0 
Derivative financial instruments (Note 23)301.4 101.9 
Income taxes receivable313.4 264.6 
Advances paid to suppliers203.6 242.9 
Other current assets (Note 10)992.6 863.7 
Total current assets11,444.7 11,886.4 
Investments in equity affiliates (Note 12)358.9 300.4 
Property, plant and equipment, net (Note 14)2,861.8 3,162.0 
Operating lease right-of-use assets (Note 5)1,016.7 892.6 
Finance lease right-of-use assets (Note 5)27.5 
Goodwill (Note 15)2,512.5 5,598.3 
Intangible assets, net (Note 15)981.1 1,086.6 
Deferred income taxes (Note 21)217.9 260.5 
Derivative financial instruments (Note 23)35.9 39.5 
Other assets235.6 292.5 
Total assets$19,692.6 $23,518.8 
Liabilities and equity
Short-term debt and current portion of long-term debt (Note 16)$636.2 $495.4 
Operating lease liabilities (Note 5)247.0 275.1 
Finance lease liabilities (Note 5)26.9 
Accounts payable, trade2,740.3 2,659.8 
Contract liabilities4,736.1 4,585.1 
Accrued payroll418.8 411.5 
Derivative financial instruments (Note 23)167.2 141.3 
Income taxes payable74.1 75.7 
Other current liabilities (Note 10)1,368.6 1,494.5 
Total current liabilities10,415.2 10,138.4 
Long-term debt, less current portion (Note 16)3,317.7 3,980.0 
Operating lease liabilities, less current portion (Note 5)881.0 681.7 
Deferred income taxes (Note 21)79.5 138.2 
Accrued pension and other post-retirement benefits, less current portion (Note 22)420.8 368.6 
Derivative financial instruments (Note 23)23.3 52.7 
Other liabilities297.1 430.0 
Total liabilities15,434.6 15,789.6 
Commitments and contingent liabilities (Note 20)00
Mezzanine equity
Redeemable non-controlling interest43.7 41.1 
Stockholders’ equity (Note 17)
Ordinary shares, $1 par value; 618.3 shares authorized in 2020 and 2019; 449.5 shares and 447.1 shares issued and outstanding in 2020 and 2019, respectively; NaN and 4.0 shares canceled in 2020 and 2019, respectively449.5 447.1 
Capital in excess of par value of ordinary shares10,242.4 10,182.8 
Accumulated deficit(4,915.2)(1,563.1)
Accumulated other comprehensive loss(1,622.5)(1,407.5)
Total TechnipFMC plc stockholders’ equity4,154.2 7,659.3 
Non-controlling interests60.1 28.8 
Total equity4,214.3 7,688.1 
Total liabilities and equity$19,692.6 $23,518.8 
The accompanying notes are an integral part of this Annual Report on Form 10-K.

the consolidated financial statements.

83


TECHNIPFMC PLC AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Year Ended December 31,
(In millions)202020192018
Cash provided (required) by operating activities
Net loss$(3,237.9)$(2,412.1)$(1,910.8)
Adjustments to reconcile net income to cash provided (required) by operating activities
Depreciation323.5 383.5 367.8 
Amortization123.7 126.1 182.6 
Impairments (Note 19)3,287.4 2,484.1 1,792.6 
Employee benefit plan and share-based compensation costs47.5 63.3 22.4 
Deferred income tax provision (benefit), net(6.7)(75.4)48.8 
Unrealized loss (gain) on derivative instruments and foreign exchange(41.2)32.5 102.7 
Income from equity affiliates, net of dividends received(58.1)(58.8)(110.7)
Other195.5 364.4 291.8 
Changes in operating assets and liabilities, net of effects of acquisitions
Trade receivables, net and contract assets348.1 (39.7)(664.1)
Inventories, net82.8 (169.6)(339.4)
Accounts payable, trade18.4 26.1 (1,248.7)
Contract liabilities(75.2)520.1 762.7 
Income taxes payable (receivable), net(52.8)12.7 (190.7)
Other current assets and liabilities, net(267.3)(431.8)921.2 
Other noncurrent assets and liabilities, net(30.8)23.1 (213.6)
Cash provided (required) by operating activities656.9 848.5 (185.4)
Cash required by investing activities
Capital expenditures(291.8)(454.4)(368.1)
Payment to acquire debt securities(3.9)(71.6)
Proceeds from sale of debt securities51.5 18.9 
Acquisition of equity securities(17.9)
Acquisitions, net of cash acquired16.0 (104.9)
Cash received from (used by) divestitures8.8 (2.1)(6.7)
Proceeds from sale of assets46.0 7.8 19.5 
Proceeds from repayment of advance to joint venture26.7 62.0 — 
Other— 3.6 
Cash required by investing activities(180.6)(419.8)(460.2)
Cash required by financing activities
Net decrease in short-term debt(24.4)(49.6)(34.9)
Net increase (decrease) in commercial paper(554.5)57.3 496.6 
Proceeds from issuance of long-term debt223.2 96.2 — 
Repayments of long-term debt(423.9)
Purchase of ordinary shares— (92.7)(442.6)
Dividends paid(59.2)(232.8)(238.1)
Payments related to taxes withheld on share-based compensation(7.4)— 
Settlements of mandatorily redeemable financial liability(224.2)(562.8)(225.8)
Acquisition of non-controlling interest(11.8)
Cash required by financing activities(1,082.2)(784.4)(444.8)
Effect of changes in foreign exchange rates on cash and cash equivalents223.5 5.9 (107.0)
Decrease in cash and cash equivalents(382.4)(349.8)(1,197.4)
Cash and cash equivalents, beginning of year5,190.2 5,540.0 6,737.4 
Cash and cash equivalents, end of year$4,807.8 $5,190.2 $5,540.0 
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Year Ended December 31,
(In millions)202020192018
Supplemental disclosures of cash flow information
Cash paid for interest (net of interest capitalized)$107.0 $109.4 $99.0 
Cash paid for income taxes (net of refunds received)$219.7 $374.5 $410.6 
The accompanying notes are an integral part of the consolidated financial statements.
85


TECHNIPFMC PLC AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(In millions)Ordinary SharesOrdinary Shares Held in
Treasury and
Employee
Benefit
Trust
Capital in
Excess of Par
Value of
Ordinary Shares
Retained
Earnings
(Accumulated
Deficit)
Accumulated
Other
Comprehensive
Income
(Loss)
Non-
controlling
Interest
Total
Stockholders’
Equity
Balance as of December 31, 2017$465.1 $(4.8)$10,483.3 $3,406.0 $(1,003.7)$21.5 $13,367.4 
Adoption of accounting standards (Note 6)— — — (91.5)— 0.1 (91.4)
Net income (loss)— — — (1,921.6)— 10.8 (1,910.8)
Other comprehensive loss— — — — (356.0)(4.6)(360.6)
Cancellation of treasury shares (Note 17)(14.8)— (333.5)(94.5)— — (442.8)
Issuance of ordinary shares0.2 — — — — — 0.2 
Net sales of ordinary shares for employee benefit trust— 2.4 — — — — 2.4 
Cash dividends declared ($0.52 per share) (Note 17)— — — (238.1)— — (238.1)
Share-based compensation (Note 18)— — 49.1 — — — 49.1 
Other— — (1.9)11.9 — 3.5 13.5 
Balance as of December 31, 2018$450.5 $(2.4)$10,197.0 $1,072.2 $(1,359.7)$31.3 $10,388.9 
Adoption of accounting standards (Note 5)— — — 1.8 — — 1.8 
Net income (loss)— — — (2,415.2)— 3.1 (2,412.1)
Other comprehensive loss— — — — (47.8)(0.7)(48.5)
Cancellation of treasury shares (Note 17)(4.0)— (88.7)— — — (92.7)
Issuance of ordinary shares0.6 — — — — — 0.6 
Net sales of ordinary shares for employee benefit trust— 2.4 — — — — 2.4 
Cash dividends declared ($0.52 per share) (Note 17)— — — (232.8)— — (232.8)
Share-based compensation (Note 18)— — 74.5 — — — 74.5 
Other— — — 10.9 — (4.9)6.0 
Balance as of December 31, 2019$447.1 $$10,182.8 $(1,563.1)$(1,407.5)$28.8 $7,688.1 
Adoption of accounting standards (Note 4)— — — (7.8)— — (7.8)
Net income (loss)— — — (3,287.6)— 49.7 (3,237.9)
Other comprehensive loss— — — — (215.0)0.6 (214.4)
Issuance of ordinary shares2.4 — (9.4)— — — (7.0)
Cash dividends declared ($0.13 per share) (Note 17)— — — (59.2)— — (59.2)
Share-based compensation (Note 18)— — 69.0 — — — 69.0 
Acquisition of non-controlling interest— — — (9.4)— (2.1)(11.5)
Other— — — 11.9 — (16.9)(5.0)
Balance as of December 31, 2020$449.5 $$10,242.4 $(4,915.2)$(1,622.5)$60.1 $4,214.3 
The accompanying notes are an integral part of the consolidated financial statements.
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TECHNIPFMC PLC AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ITEM 7A. QUANTITATIVENOTE 1. BASIS OF PRESENTATION AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of operations - TechnipFMC plc and consolidated subsidiaries (“TechnipFMC,” “we,” “us” or “our”) is a global leader in oil and gas projects, technologies, systems and services through our business segments: Subsea, Technip Energies and Surface Technologies. We have manufacturing operations worldwide, strategically located to facilitate delivery of our products, systems and services to our customers. On February 16, 2021, we completed the separation of Technip Energies segment (the “Spin-off”). Subsequent to the Spin-off, we will operate under two reporting segments: Subsea and Surface Technologies.
In this Annual Report on Form 10-K, we are subject to financial market risks, including fluctuations in foreign currency exchange rates and interest rates. In order to manage and mitigatereporting the results of our exposure to these risks, we may use derivative financial instruments in accordance with established policies and procedures. We do not use derivative financial instruments whereoperations for the objective is to generate profits solely from trading activities. Atyear ended December 31, 2018 and December 31, 2017, substantially all of our derivative holdings consisted of foreign currency forward contracts and foreign currency instruments embedded in purchase and sale contracts.
These forward-looking disclosures only address potential impacts from market risks as they affect our financial instruments and do not include other potential effects that could impact our business as a result of changes in foreign currency exchange rates, interest rates, commodity prices or equity prices.
Foreign Currency Exchange Rate Risk
We conduct operations around the world in a number of different currencies. Many of our significant foreign subsidiaries have designated the local currency as their functional currency. Our earnings are therefore subject to change due to fluctuations in foreign currency exchange rates when the earnings in foreign currencies are translated into U.S. dollars. We do not hedge this translation impact on earnings. A 10% increase or decrease2020. Beginning in the average exchange ratesfirst quarter of all foreign currencies at December 31, 2018, would have changed our revenue and income before income taxes attributable2021, Technip Energies’ historical financial results for periods prior to TechnipFMC by approximately $134.6 million and $5.7 million, respectively.
When transactions are denominated in currencies other than our subsidiaries’ respective functional currencies, we manage these exposures through the use of derivative instruments. We primarily use foreign currency forward contracts to hedge the foreign currency fluctuation associated with firmly committed and forecasted foreign currency denominated payments and receipts. The derivative instruments associated with these anticipated transactions are usually designated and qualify as cash flow hedges, and as such the gains and losses associated with these instruments are recorded in other comprehensive income until such time that the underlying transactions are recognized. Unless these cash flow contracts are deemed to be ineffective or are not designated as cash flow hedges at inception, changes in the derivative fair value will not have an immediate impact on our results of operations since the gains and losses associated with these instruments are recorded in other comprehensive income. When the anticipated transactions occur, these changes in value of derivative instrument positionsSpin-off will be offset against changes in the value of the underlying transaction. When an anticipated transaction in a currency other than the functional currency of an entity is recognized as an asset or liability on the balance sheet, we also hedge the foreign currency fluctuation of these assets and liabilities with derivative instruments after netting our exposures worldwide. These derivative instruments do not qualify as cash flow hedges.
Occasionally, we enter into contracts or other arrangements containing terms and conditions that qualify as embedded derivative instruments and are subject to fluctuations in foreign exchange rates. In those situations, we enter into derivative foreign exchange contracts that hedge the price or cost fluctuations due to movements in the foreign exchange rates. These derivative instruments are not designated as cash flow hedges.
For our foreign currency forward contracts hedging anticipated transactions that are accounted for as cash flow hedges, a 10% increase in the value of the U.S. dollar would have resulted in an additional loss of $50.7 million in the net fair value of cash flow hedges reflected in our consolidated balance sheet at December 31, 2018.financial statements as discontinued operations.
Interest Rate Risk
At December 31, 2018, we had commercial paperBasis of approximately $1.9 billion with a weighted average interest rate of 1.82%. Using sensitivity analysis to measure the impact of a 10% adverse movement in the interest rate, or eighteen basis points, would result in an increase to interest expense of $3.5 million.


We assess effectiveness of forward foreign currency contracts designated as cash flow hedges based on changes in fair value attributable to changes in spot rates. We exclude the impact attributable to changes in the difference between the spot rate and the forward rate for the assessment of hedge effectiveness and recognize the change in fair value of this component immediately in earnings. Considering that the difference between the spot rate and the forward rate is proportional to the differences in the interest rates of the countries of the currencies being traded, we have exposure in the unrealized valuation of our forward foreign currency contracts to relative changes in interest rates between countries in our results of operations. To the extent any one interest rate increases by 10% across all tenors and other countries’ interest rates remain fixed, and assuming no change in discount rates, we would expect to recognize a decrease of $1.1 million in unrealized earnings in the period of change. Based on our portfolio as of December 31, 2018, we have material positions with exposure to interest rates in the United States, Canada, Australia, Brazil, the United Kingdom, Singapore, the European Community, and Norway.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of TechnipFMC plc
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of TechnipFMC plc and its subsidiaries (the “Company”) as of December 31, 2018 and 2017, and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for the years then ended, including the related notes and financial statement schedule of valuation and qualifying accounts for the years ended December 31, 2018 and 2017 appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, thepresentation - Our consolidated financial statements referred to above present fairly,were prepared in all material respects, the financial position of the Company as of December 31, 2018U.S. dollars and 2017, and the results of its operations and its cash flows for each of the two years then ended in conformityaccordance with accounting principles generally accepted in the United States of America. Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control-Integrated Framework (2013) issued by the COSO because material weaknesses in internal control over financial reporting existed as of that date related to the designAmerica (“GAAP”) and operating effectiveness of internal controls over (i) the period end financial reporting process, and (ii) the accounting for income taxes.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses referred to above are described in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 9A. We considered these material weaknesses in determining the nature, timing and extent of audit tests applied in our audit of the 2018 consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in management’s report referred to above. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”) pertaining to annual financial information. The preparation of financial statements in conformity with these accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the PCAOB.reported amounts of revenue and expenses during the reporting period. Ultimate results could differ from our estimates.
We conducted our audits in accordance with the standardsPrinciples of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether theconsolidation - The consolidated financial statements include the accounts of TechnipFMC and its majority-owned subsidiaries and affiliates. Intercompany accounts and transactions are freeeliminated in consolidation.
Use of material misstatement, whether dueestimates - The preparation of financial statements in conformity with GAAP requires management to error or fraud,make estimates and whether effective internal control over financial reporting were maintained in all material respects.
Our auditsassumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Such estimates include, but are not limited to, estimates of total contract profit or loss on long-term construction-type contracts; estimated realizable value on excess and obsolete inventory; estimates related to pension accounting; estimates related to fair value for purposes of assessing goodwill, long-lived assets and intangible assets for impairment; estimates of fair value in business combinations and estimates related to income taxes.
Investments in the common stock of unconsolidated affiliates - The equity method of accounting is used to account for investments in unconsolidated affiliates where we have the ability to exert significant influence over the affiliates’ operating and financial policies. We measure equity investments not accounted for under the equity method at fair value and recognize any changes in fair value in net income. For certain construction joint ventures, we use the proportionate consolidation method, whereby our proportionate share of each entity’s assets, liabilities, revenues and expenses are included performing procedures to assessin the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosuresappropriate classifications in the consolidated financial statements. Our audits also included evaluating the accounting principles usedIntercompany balances and significant estimates made by management, as well as evaluating the overall presentation oftransactions have been eliminated in preparing the consolidated financial statements. Our audit
Investments in unconsolidated affiliates are assessed for impairment whenever events or changes in facts and circumstances indicate the carrying value of internal control over financial reporting included obtaining an understandingthe investments may not be fully recoverable. When such a condition is subjectively determined to be other than temporary, the carrying value of internal control over financial reporting, assessing the riskinvestment is written down to fair value. Management’s assessment as to whether any decline in value is other than temporary is based on our ability and intent to hold the investment and whether evidence indicating the carrying value of the investment is recoverable within a reasonable period of time outweighs evidence to the contrary. Management generally considers our investments in equity method investees to be strategic, long-term investments and completes its assessments for impairment with a long-term viewpoint.
Investments in which ownership is less than 20% or that a material weaknessdo not represent significant investments are reported in other assets in the consolidated balance sheets. Where no active market exists and testing and evaluatingwhere no other valuation method can be used, these financial assets are maintained at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the design and operating effectivenessidentical or a similar investment of internal controlthe same issuer.
87


We determine whether investments involve a variable interest entity (“VIE”) based on the assessed risk. Our audits also included performing suchcharacteristics of the subject entity. If the entity is determined to be a VIE, then management determines if we are the primary beneficiary of the entity and whether or not consolidation of the VIE is required. The primary beneficiary consolidating the VIE must normally have both (i) the power to direct the activities that most significantly affect the VIE’s economic performance and (ii) the obligation to absorb significant losses of or the right to receive significant benefits from the VIE. If we are deemed to be the primary beneficiary, the VIE is consolidated and the other procedures as we considered necessaryparty’s equity interest in the circumstances.VIE is accounted for as a non-controlling interest. Our unconsolidated VIEs are accounted for using the equity method of accounting.
Business combinations - Business combinations are accounted for using the acquisition method of accounting. Under the acquisition method, assets acquired and liabilities assumed are recorded at their respective fair values as of the acquisition date. Determining the fair value of assets and liabilities involves significant judgment regarding methods and assumptions used to calculate estimated fair values. The purchase price is allocated to the acquired assets, assumed liabilities and identifiable intangible assets based on their estimated fair values. Any excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. Transaction related costs are expensed as incurred. 
Leases- The majority of our leases are operating leases. We believe that our audits provide a reasonable basisaccount for our opinions.


Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposesleases in accordance with Accounting Standard Codification (“ASC”)Topic 842, Leases, which we adopted on January 1, 2019 using the modified retrospective method. See Note 5 for further details.
Revenue recognition - The majority of our revenue is derived from long-term contracts that can span several years. We account for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers, which we adopted on January 1, 2018, using the modified retrospective method. See Note 6 for further details.
Contract costs to obtain a contract - Our incremental direct costs of obtaining a contract are deferred and amortized over the period of contract performance or a longer period, generally accepted accounting principles. A company’s internal control over financial reporting includes those policiesthe estimated life of the customer relationship, if renewals are expected and procedures that (i) pertainthe renewal commission is not commensurate with the initial commission. We classify deferred commissions as current or noncurrent based on the timing of when we expect to recognize the expense. The current and noncurrent portions of deferred commissions are included in other current assets and other assets, respectively, in our consolidated balance sheets.
Amortization of deferred commissions is included in selling, general and administrative expenses in our consolidated statements of income.
Cash equivalents - Cash equivalents are highly-liquid, short-term investments with original maturities of three months or less from their date of purchase.
Trade receivables, net of allowances - An allowance for doubtful accounts is provided on receivables equal to the maintenanceestimated uncollectible amounts and is calculated based on loss rates from historical data. We develop loss-rate statistics on the basis of records that, in reasonable detail, accuratelythe amount written off over the life of the receivable and fairly reflectadjust these historical credit loss trends for forward-looking factors specific to the transactionsdebtors and dispositionsthe economic environment to determine lifetime expected losses.
Inventories - Inventories are stated at the lower of cost or net realizable value, except as it relates to inventory measured using the last-in, first-out (“LIFO”) method, for which the inventories are stated at the lower of cost or market. Inventory costs include those costs directly attributable to products, including all manufacturing overhead, but excluding costs to distribute. Cost for a significant portion of the U.S. domiciled inventories is determined on the LIFO method. The first-in, first-out (“FIFO”) or weighted average methods are used to determine the cost for the remaining inventories. Write-down of inventories is recorded when the net realizable value of inventories is lower than their net book value.
Property, plant and equipment - Property, plant, and equipment is recorded at cost. Depreciation is principally provided on the straight-line basis over the estimated useful lives of the assets (vessels - 10 to 30 years; buildings - 10 to 50 years; and machinery and equipment - 3 to 20 years). Gains and losses are realized upon the sale or retirement of assets and are recorded in other income (expense), net on our consolidated statements of income. Maintenance and repair costs are expensed as incurred. Expenditures that extend the useful lives of property, plant and equipment are capitalized and depreciated over the estimated new remaining life of the company; (ii) provide reasonable assuranceasset.
88


Impairment of property, plant and equipment - Property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate the carrying value of the long-lived asset may not be recoverable. The carrying value of an asset group is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If it is determined that transactionsan impairment loss has occurred, the impairment loss is measured as the amount by which the carrying value of the long-lived asset exceeds its fair value.
Long-lived assets classified as held for sale are reported at the lower of carrying value or fair value less cost to sell.
Goodwill - Goodwill is not subject to amortization but is tested for impairment on an annual basis (or more frequently if impairment indicators arise) by comparing the estimated fair value of each reporting unit to its carrying value, including goodwill. A reporting unit is defined as an operating segment or one level below the operating segment. We have established October 31 as the date of our annual test for impairment of goodwill. Reporting units with goodwill are tested for impairment using a quantitative impairment test known as the income approach, which estimates fair value by discounting each reporting unit’s estimated future cash flows using a weighted-average cost of capital that reflects current market conditions and the risk profile of the reporting unit. To arrive at our future cash flows, we use estimates of economic and market assumptions, including growth rates in revenues, costs, estimates of future expected changes in operating margins, tax rates and cash expenditures. Future revenues are also adjusted to match changes in our business strategy. If the fair value of the reporting unit is less than its carrying amount as a result of this method, then an impairment loss is recorded.
A lower fair value estimate in the future for any of our reporting units could result in goodwill impairments. Factors that could trigger a lower fair value estimate include sustained price declines of the reporting unit’s products and services, cost increases, regulatory or political environment changes, changes in customer demand, and other changes in market conditions, which may affect certain market participant assumptions used in the discounted future cash flow model.
Intangible assets - Our acquired intangible assets are generally amortized on a straight-line basis over their estimated useful lives, which generally range from 2 to 20years. Our acquired intangible assets do not have indefinite lives. Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of the intangible asset may not be recoverable. The carrying amount of an intangible asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If it is determined that an impairment loss has occurred, the loss is measured as the amount by which the carrying amount of the intangible asset exceeds its fair value.
Capitalized software costs are recorded at cost. Capitalized software costs include purchases of software and internal and external costs incurred during the application development stage of software projects. These costs are amortized on a straight-line basis over the estimated useful lives. For internal use software, the useful lives range from 3 to 10years. For Internet website costs, the estimated useful lives do not exceed 3 years.
Research and development expense is expensed as incurred. Research and development expense includes improvement of existing products and services, design and development of new products and services and test of new technologies.
Debt instruments - Debt instruments include synthetic bonds, senior and private placement notes and other borrowings. Issuance fees and redemption premium on debt instruments are included in the cost of debt in the consolidated balance sheets, as an adjustment to the nominal amount of the debt. Loan origination costs for revolving credit facilities are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles,an asset and that receipts and expendituresamortized over the life of the companyunderlying debt.
Fair value measurements - Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The fair value framework requires the categorization of assets and liabilities measured at fair value into three levels based upon the assumptions (inputs) used to price the assets or liabilities, with the exception of certain assets and liabilities measured using the net asset value practical expedient, which are being made onlynot required to be leveled. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:
Level 1: Unadjusted quoted prices in accordance with authorizationsactive markets for identical assets and liabilities.
Level 2: Observable inputs other than quoted prices included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.
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Level 3: Unobservable inputs reflecting management’s own assumptions about the assumptions market participants would use in pricing the asset or liability.
Income taxes - Current income taxes are provided on income reported for financial statement purposes, adjusted for transactions that do not enter into the computation of income taxes payable in the same year. Deferred tax assets and liabilities are measured using enacted tax rates for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. A valuation allowance is established whenever management believes that it is more likely than not that deferred tax assets may not be realizable.
Income taxes are not provided on our equity in undistributed earnings of foreign subsidiaries or affiliates to the extent we have determined that the earnings are indefinitely reinvested. Income taxes are provided on such earnings in the period in which we can no longer support that such earnings are indefinitely reinvested.
Tax benefits related to uncertain tax positions are recognized when it is more likely than not, based on the technical merits, that the position will be sustained upon examination.
We classify interest expense and directorspenalties recognized on underpayments of income taxes as income tax expense.
Share-based compensation - The measurement of share-based compensation expense on restricted share awards and performance share awards is based on the market price at the grant date and the number of shares awarded. We use Black-Scholes options pricing model to measure the fair value of stock options granted on or after January 1, 2017. The stock-based compensation expense for each award is recognized ratably over the applicable service period or the period beginning at the start of the company;service period and (iii) provide reasonable assurance regarding prevention or timely detectionending when an employee becomes eligible for retirement, after taking into account estimated forfeitures.
Earnings per ordinary share (“EPS”) - Basic EPS is computed using the weighted-average number of unauthorized acquisition,ordinary shares outstanding during the year. We use or dispositionthe treasury stock method to compute diluted EPS which gives effect to the potential dilution of the company’s assetsearnings that could have occurred if additional shares were issued for awards granted under our incentive compensation and stock plan. The treasury stock method assumes proceeds that would be obtained upon exercise of awards granted under our incentive compensation and stock plan are used to purchase outstanding ordinary shares at the average market price during the period.
Foreign currency - Financial statements of operations for which the U.S. dollar is not the functional currency, and which are located in non-highly inflationary countries, are translated into U.S. dollars prior to consolidation. Assets and liabilities are translated at the exchange rate in effect at the balance sheet date, while income statement accounts are translated at the average exchange rate for each period. For these operations, translation gains and losses are recorded as a component of accumulated other comprehensive income (loss) in stockholders’ equity until the foreign entity is sold or liquidated. For operations in highly inflationary countries and where the local currency is not the functional currency, inventories, property, plant and equipment, and other non-current assets are converted to U.S. dollars at historical exchange rates, and all gains or losses from conversion are included in net income. Foreign currency effects on cash, cash equivalents and debt in highly inflationary economies are included in interest income or expense.
For certain committed and anticipated future cash flows and recognized assets and liabilities which are denominated in a foreign currency, we may choose to manage our risk against changes in the exchange rates, when compared against the functional currency, through the economic netting of exposures instead of derivative instruments. Cash outflows or liabilities in a foreign currency are matched against cash inflows or assets in the same currency, such that movements in exchange rates will result in offsetting gains or losses. Due to the inherent unpredictability of the timing of cash flows, gains and losses in the current period may be economically offset by gains and losses in a future period. All gains and losses are recorded in our consolidated statements of income in the period in which they are incurred. Gains and losses from the remeasurement of assets and liabilities are recognized in other income (expense), net.
During 2018, Argentina’s three year cumulative inflation rate exceeded 100% based on published inflation data, and effective July 1, 2018, Argentina’s currency was considered highly inflationary. Our local operations in Argentina use U.S. dollars as the functional currency and both monetary and non-monetary assets and liabilities denominated in Argentina pesos were remeasured into U.S. dollars with gains and losses resulting from foreign currency transactions included in current results of operations. This event did not have a material effectimpact on theTechnipFMC’s consolidated financial statements.
Because
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Derivative instruments - Derivatives are recognized on the consolidated balance sheets at fair value, with classification as current or non-current based upon the maturity of the derivative instrument. Changes in the fair value of derivative instruments are recorded in current earnings or deferred in accumulated other comprehensive income (loss), depending on the type of hedging transaction and whether a derivative is designated as, and is effective as, a hedge. Each instrument is accounted for individually and assets and liabilities are not offset.
Hedge accounting is only applied when the derivative is deemed to be highly effective at offsetting changes in anticipated cash flows of the hedged item or transaction. Changes in fair value of derivatives that are designated as cash flow hedges are deferred in accumulated other comprehensive income (loss) until the underlying transactions are recognized in earnings. At such time, related deferred hedging gains or losses are recorded in earnings on the same line as the hedged item. Effectiveness is assessed at the inception of the hedge and on a quarterly basis. Effectiveness of forward contract cash flow hedges are assessed based solely on changes in fair value attributable to the change in the spot rate. The change in the fair value of the contract related to the change in forward rates is excluded from the assessment of hedge effectiveness. Changes in this excluded component of the derivative instrument, along with any ineffectiveness identified, are recorded in earnings as incurred. We document our risk management strategy and hedge effectiveness at the inception of, and during the term of, each hedge.
We also use forward contracts to hedge foreign currency assets and liabilities, for which we do not apply hedge accounting. The changes in fair value of these contracts are recognized in other income (expense), net on our consolidated statements of income, as they occur and offset gains or losses on the remeasurement of the related asset or liability.
Reclassifications - Certain prior-year amounts have been reclassified to conform to the current year’s presentation.
NOTE 2. BUSINESS COMBINATION AND OTHER TRANSACTIONS
On October 7, 2020, we signed a Memorandum of Understanding with McPhy Energy S.A. (“McPhy”), a leading manufacturer and supplier of carbon-free hydrogen production and distribution equipment, pursuant to which we will jointly work on technology development and project implementation. In October 2020, we subscribed to 638,297 shares for €15 million that represents 2.29% of McPhy’s capital. The investment was recorded at the fair value.
On December 30, 2019, we completed the acquisition of the remaining 50% interest in Technip Odebrecht PLSV CV (“TOP CV”). TOP CV was formed as a joint venture between Technip SA and Ocyan SA to provide pipeline installation ships to Petroleo Brasileiro SA (“Petrobras”) for their work in oil and gas fields offshore Brazil with results reported in our Subsea segment using the equity method of accounting. Subsequent to this transaction the investment became a fully consolidated entity. In connection with the acquisition, we acquired $391.0 million in assets, including two vessels valued at $335.2 million. In addition, we assumed $239.9 million of liabilities, including a $203.1 million term loan. As a result of the acquisition, we recorded a net loss of $0.9 million. The net loss on acquisition was comprised of the impairment charge of $84.2 million and a gain on bargain purchase of $83.3 million included within restructuring and other charges in our consolidated statement of income.
In February 2018, we signed an agreement with the Island Offshore Group to acquire a 51% stake in Island Offshore’s wholly-owned subsidiary, Island Offshore Subsea AS. Island Offshore Subsea AS provides RLWI project management and engineering services for plug and abandonment (“P&A”), riserless coiled tubing, and well completion operations. In connection with the acquisition of the controlling interest, TechnipFMC and Island Offshore entered into a strategic cooperation agreement to deliver RLWI services on a worldwide basis, which also include TechnipFMC’s RLWI capabilities. Island Offshore Subsea AS has been rebranded to TIOS AS and is now the operating unit for TechnipFMC’s RLWI activities worldwide. The acquisition was completed on April 18, 2018 for total cash consideration of $42.4 million. As a result of the acquisition, we recorded a redeemable financial liability equal to the fair value of a written put option and a goodwill of $85.0 million.
On July 18, 2018, we entered into a share sale and purchase agreement with POC Holding Oy to sell 100% of the outstanding shares of Technip Offshore Finland Oy. The total pre-tax gain recognized in 2018 was $27.8 million.
Additional acquisitions, including purchased interests in equity method investments, during 2018 totaled $62.5 million in consideration paid.

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NOTE 3. SEPARATION TRANSACTION
On August 26, 2019, we announced our intention to separate into two diversified pure-play market leaders – TechnipFMC, focused on subsea and surface hydrocarbon production, and Technip Energies, focused on downstream engineering, procurement, and construction project execution. Due to the COVID-19 pandemic, a significant decline in commodity prices, and the heightened volatility in global equity markets, on March 15, 2020, we announced the postponement of the completion of the transaction until the markets sufficiently recover. On January 7, 2021, we announced the resumption of activity toward completion of the transaction based on increased clarity in the market outlook and our demonstrated ability to successfully execute projects.

On February 16, 2021, we completed the separation of the Technip Energies business segment. The transaction was structured as a spin-off (the “Spin-off”), which occurred by way of a pro rata dividend (the “Distribution”) to our shareholders of 50.1 percent of the outstanding shares in Technip Energies N.V. Each of our shareholders received 1 ordinary share of Technip Energies N.V. for every 5 ordinary shares of TechnipFMC held at 5:00 p.m., New York City time on the record date, February 17, 2021. Technip Energies N.V. is now an independent public company and its inherent limitations, internal controlshares trade under the ticker symbol “TE” on the Euronext Paris stock exchange.
In connection with the Spin-off, on January 7, 2021, Bpifrance Participations SA (“BPI”), which has been one of our substantial shareholders since 2009, entered into a share purchase agreement with us (the “Share Purchase Agreement”) pursuant to which BPI agreed to purchase a portion of our retained stake in Technip Energies N.V. (the “BPI Investment”) for $200.0 million (the “Purchase Price”). On February 25, 2021, BPI paid $200.0 million in connection with the Share Purchase Agreement. The Purchase Price is subject to adjustment, and BPI’s ownership stake will be determined based upon a thirty day volume-weighted average price of Technip Energies N.V.’s shares (with BPI’s ownership collared between an 11.82 percentage floor and a 17.25 percentage cap), less a 6 percent discount. The BPI Investment is subject to customary conditions and regulatory approval. We intend to significantly reduce our shareholding in Technip Energies N.V. over the 18 months following the Spin-off, including in connection with the sale of shares to BPI pursuant to the BPI Investment.
Beginning in the first quarter of 2021, Technip Energies’ historical financial results for periods prior to the Distribution will be reflected in our consolidated financial statements as discontinued operations, as the Spin-off represented a strategic shift that will have a major impact to our operations and consolidated financial statements. Following the completion of the Spin-off, we elected to apply a fair value option to account for our equity method investment in Technip Energies N.V.
During the years ended December 31, 2020 and 2019, we incurred $39.5 million and $72.1 million of separation costs associated with the Spin-off transaction, respectively.

NOTE 4. NEW ACCOUNTING STANDARDS
Recently Adopted Accounting Standards under GAAP
Effective January 1, 2020, we adopted Accounting Standards Update (“ASU”) No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.” This update modifies the disclosure requirement on fair value measurements in Topic 820. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively. The adoption of this update concerns presentation and disclosure only as it relates to our consolidated financial statements. See Note 24 for our fair value measurements disclosure.
Effective January 1, 2020, we adopted ASU No. 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force).” This update requires that the implementation costs incurred in a cloud computing arrangement under a service contract are deferred, not capitalized. The adoption of this update did not have a material impact on our consolidated financial statements.
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Effective January 1, 2020, we adopted ASU No. 2018-18, “Collaborative Arrangements (Topic 808)—Clarifying the Interaction between Topic 808 and Topic 606.” This update clarifies the interaction between the guidance for certain collaborative arrangements and the Revenue Recognition financial accounting and reporting may not preventstandard. The adoption of this update concerns presentation and disclosure only with no material impact to our consolidated financial statements.
Effective January 1, 2020, we adopted ASU No. 2019-04, “Codification Improvements to
Topic 326, Financial Instruments—Credit Losses;
Topic 815, Derivatives and Hedging; and
Topic 825, Financial Instruments.”
The update clarifies and improves areas of guidance related to the recently issued standards including
ASU No. 2016-01, “Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Liabilities”;
ASU No. 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.”; and
ASU No. 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.”
The adoption of this update concerns presentation and disclosure only with no material impact to our consolidated financial statements.
Adoption of ASU No. 2016-13 “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments
Effective January 1, 2020, we adopted ASU No. 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This ASU introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. The guidance applies to (1) loans, accounts receivable, trade receivables, and other financial assets measured at amortized cost, (2) loan commitments and other off-balance sheet credit exposures, (3) debt securities and other financial assets measured at fair value through other comprehensive income, and (4) beneficial interests in securitized financial assets.
In June 2016, the Financial Accounting Standards Board (“FASB”) issued an update of the ASU to provide a practical expedient for transition and targeted improvements.
We adopted Topic 326 using a modified retrospective transition method through a cumulative-effect adjustment to beginning retained earnings in the period of adoption. The effect of adopting Topic 326 was an increase in accumulated deficit of $7.8 million, which includes a $2.1 million increase in noncurrent deferred tax assets, with a corresponding decrease in trade receivables, loans, and debt notes receivable.
Financial assets at amortized cost include trade receivables, loans issued to third or detect misstatements. Also, projections of any evaluation of effectivenessrelated parties, and held to future periodsmaturity debt securities. These financial assets were presented under other current assets or other assets, as applicable. Contract assets are subject to the credit losses standard per revenue recognition standard.
Trade receivables and contract assets constitute a homogeneous portfolio, and therefore, to measure the expected credit losses, trade receivables and contract assets have been grouped together. The contract assets relate to unbilled work in progress and have substantially the same risk that controls may become inadequate becausecharacteristics as the trade receivables for the same types of changes in conditions, orcontracts. We have therefore concluded that the degreeexpected loss rates for trade receivables are a reasonable approximation of compliance with the policies or procedures may deteriorate.loss rates for the contract assets.

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/s/ PricewaterhouseCoopers LLPThe following table summarizes the balances of financial assets and non-financial assets at amortized cost as of January 1, 2020:

Houston, Texas
March 11, 2019

(In millions)As reported as of December 31, 2019Impact of ASC 326Balance as of January 1, 2020
Trade receivables, net$2,287.1 $(3.8)$2,283.3 
Loans receivable, net138.5 (1.5)137.0 
Security deposits and other, net36.6 (1.0)35.6 
Held-to-maturity
Debt securities at amortized cost71.9 (1.1)70.8 
Total financial assets$2,534.1 $(7.4)$2,526.7 
Non-financial assets
Contract assets, net$1,520.0 $(2.5)$1,517.5 
We manage our receivables portfolios using published default risk as a key credit quality indicator for our loans and receivables. Our loans receivable and security deposits were related to sales of long-lived assets or businesses, loans to related parties for capital expenditure purposes, or security deposits for lease arrangements.
We manage our held-to-maturity debt securities using published credit ratings as a key credit quality indicator as our held-to-maturity debt securities consist of government bonds.
The table below summarizes the amortized cost basis of financial assets by years of origination and credit quality. The key credit quality indicator is updated as of December 31, 2020.
(In millions)Year of originationBalance as of December 31, 2020
Loans receivables, security deposits and other
Moody’s rating Ba22019$133.0 
Debt securities at amortized cost
Moody’s rating B3201923.7 
Total financial assets$156.7 
Credit Losses
For contract assets and trade receivables, we have servedelected to calculate an expected credit loss based on loss rates from historical data. We develop loss-rate statistics on the basis of the amount written off over the life of the financial assets and contract assets and adjust these historical credit loss trends for forward-looking factors specific to the debtors and the economic environment to determine lifetime expected losses. For short-term notes receivable an expected credit loss is calculated assuming the maximum possible loss in the event of a default (that is, the loan is fully drawn and no amount is recovered). Management established a probability of default based on the counterparty’s credit risk as determined by external credit rating agencies and the Company's auditor since 2017.maximum loss given default (average recovery rate of sovereign bond issuers as published by credit rating agencies). Based on these factors we determine the expected credit loss for our short-term loans receivable.



For held-to-maturity debt securities at amortized cost, we evaluate whether the debt securities are considered to have low credit risk at the reporting date using available, reasonable, and supportable information.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ToThe table below shows the Boardroll-forward of Directors and Stockholders of TechnipFMC plc
In our opinion, the accompanying consolidated statements of income, comprehensive income, cash flows and changes in stockholders’ equityallowance for credit losses for the year ended December 31, 2016 present fairly,2020.
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Balance as of December 31, 2020
(In millions)Trade receivablesContract assetsLoans receivableSecurity deposit and otherHeld-to-maturity debt securities
Beginning balance in allowance for credit losses$99.2$5.0$9.5$1.6$1.1
Current period provision for expected credit losses54.3 (0.2)(0.1)0.9 (0.6)
Write-offs charged against the allowance(46.9)
Recoveries2.3 (3.8)(0.9)(1.4)
Ending balance in the allowance for credit losses$108.9 $1.0 $8.5 $1.1 $0.5 
Other than certain trade receivables due in allone year or less, we do not have any financial assets that are past due or are on non-accrual status.
Recently Issued Accounting Standards under GAAP
In August 2018, the FASB issued ASU No. 2018-14, “Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans.” This update amends ASC 715 to add, remove, and clarify disclosure requirements related to defined benefit pension and other post-retirement plans. The amendments in this update are required to be adopted retrospectively. We adopted this amendment as of January 1, 2021. The adoption of this update did not have a material respects,impact on our consolidated financial statements.
In December 2019, the resultsFASB issued ASU No. 2019-12, “Income Taxes to Topic 740—Simplifying the Accounting for Income Taxes.” The amendments simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. This update also improves and simplifies areas of operationsgenerally accepted accounting principles (GAAP) for which costs and cash flowscomplexity can be reduced while maintaining or improving the usefulness of TechnipFMC plcthe information provided to users of financial statements. We adopted this amendment as of January 1, 2021. The adoption of this update did not have a material impact on our consolidated financial statements.
In January 2020, the FASB issued ASU No. 2020-01, "Investments—Equity Securities (Topic 321),”“Investments—Equity Method and its subsidiariesJoint Ventures (Topic 323),” and “Derivatives and Hedging (Topic 815)—Clarifying the Interactions between Topic 321, Topic 323, and Topic 815,”and made targeted improvements to address certain aspects of accounting for financial instruments. This update clarifies that a company should consider observable transactions that require a company to either apply or discontinue the equity method of accounting under Topic 323, Investments—Equity Method and Joint Ventures, for the yearpurposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. The new ASU also clarifies that, when determining the accounting for certain forward contracts and purchased options, a company should not consider whether underlying securities would be accounted for under the equity method or fair value option upon settlement or exercise. We adopted this amendment as of January 1, 2021. The adoption of this update did not have a material impact on our consolidated financial statements.
In March 2020, the FASB issued ASU No. 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848),” The amendments in this update apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The amendments in this update are effective as of March 12, 2020 through December 31, 2022. The adoption of this update is not expected to have a material impact on our consolidated financial statements.

NOTE 5. LEASES
Lessee Arrangements
We lease real estate, including land, buildings and warehouses, machinery/equipment, vessels, vehicles, and various types of manufacturing and data processing equipment, from a lessee perspective. Leases of real estate generally provide for payment of property taxes, insurance, and repairs by us. Substantially all our leases are classified as operating leases.
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We determine if an arrangement is a lease at inception by assessing whether an identified asset exists and if we have the right to control the use of the identified asset. Operating leases are included in Operating lease right-of-use assets, Operating lease liabilities (current), and Operating lease liabilities (non-current) in our consolidated balance sheets. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at the commencement date based on the present value of the remaining lease payments over the lease term. With the exception of rare cases in which the implicit rate is readily determinable, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The Operating lease right-of-use assets also includes any lease prepayments made and excludes lease incentives we received from the lessor. Lease cost for lease payments is recognized on a straight-line basis over the lease term. Several of our leases provide for certain guarantees of residual value. We estimate and include in the determination of lease payments any amount probable of being owed under these residual value guarantees.
Lease terms within our lessee arrangements may include options to extend/renew or terminate the lease and/or purchase the underlying asset when it is reasonably certain that we will exercise that option. TechnipFMC applies a portfolio approach by asset class to determine lease term renewals. The leases within these portfolios are categorized by asset class and have initial lease terms that vary depending on the asset class. The renewal terms range from 60 days to 5 years for asset classes such as temporary residential housing, forklifts, vehicles, vessels, office and IT equipment, and tool rentals, and up to 15 years or more for commercial real estate. Short-term leases with an initial term of 12 months or less that do not include a purchase option are not recorded on the balance sheet. Lease costs for short-term leases are recognized on a straight-line basis over the lease term and amounts related to short-term leases are disclosed within our financial statements.
TechnipFMC has variable lease payments, including adjustments to lease payments based on an index or rate (such as the Consumer Price Index), fair value adjustments to lease payments, and common area maintenance, real estate taxes, and insurance payments in triple-net real estate leases. Variable lease payments that depend on an index or a rate (such as the Consumer Price Index or a market interest rate) are included when measuring consideration within our lease arrangements using the payments’ base rate or index. Variable payments that do not depend on an index or rate are recognized in the consolidated income statements and are disclosed as “variable lease costs” in the period they are incurred.
We adopted the practical expedient to not separate lease and non-lease components for all asset classes except for vessels, which have significant non-lease components.
TechnipFMC currently subleases certain of its leased real estate and vessels to third parties.
The following table is a summary of the Company’s components of net lease cost for the years ended December 31, 2016, in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule2020 and 2019:

Year Ended December 31,
(In millions)20202019
Operating lease costs including variable costs$312.1 $362.4 
Short-term lease costs13.7 20.8 
Less: sublease income7.3 8.9 
Net lease cost$318.5 $374.3 

Supplemental cash flow information related to leases for the yearyears ended December 31, 2016 presents fairly,2020 and 2019 is as follows:

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Year Ended December 31,
(In millions)20202019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases$314.2 $384.7 
Right-of-use assets obtained in exchange for lease liabilities
Operating leases$535.9 $125.4 

Supplemental balance sheet information related to leases as of December 31, 2020 and 2019 is as follows:

December 31,
(In millions, except lease term and discount rate)20202019
Weighted average remaining lease term
Operating leases11.8 years7.5 years
Finance leases0.6 years$— 
Weighted average discount rate
Operating leases5.1 %4.4 %
Finance leases2.1 %— %

Maturities of operating lease liabilities as of December 31, 2020 are as follows:

(In millions)
Operating Leases
2021$252.5 
2022191.5 
2023137.1 
2024117.6 
202579.2 
Thereafter471.4 
Total lease payments1,249.3 
Less: Imputed interest (a)
121.3 
Total lease liabilities (b)
$1,128.0 
Note: For leases that commenced prior to 2019, minimum lease payments exclude payments to landlords for real estate taxes and common area maintenance.
(a)Calculated using the interest rate for each lease.
(b)Includes the current portion of $247.0 million for operating leases.
In December 2020, TechnipFMC sold its leased office building at Gremp Campus in all material respects,Houston, Texas on behalf of the information set forth therein when readexisting lessor to Oak Street Real Estate Capital, LLC (“New Lessor”). TechnipFMC also sold the land underneath Gremp Campus which the Company owned to the New Lessor. TechnipFMC concurrently executed a new lease agreement for both land and the office building (collectively, “Gremp Campus Properties”) with New Lessor.
The new lease agreement of Gremp Campus Properties commenced on December 11, 2020 and the initial term ends on December 31, 2042. TechnipFMC has 4 renewal periods of 10 years each after the expiration of initial term. At inception of the new lease agreement, TechnipFMC did not consider any renewal period as probable of being exercised.
TechnipFMC paid net cash of $1.8 million in conjunctionconnection with the related consolidated financial statements. These financial statementsnew lease agreement, and financial statement schedule are the responsibilityrecognized a loss of $3.1 million from derecognition of the Company’s management.existing lease. There was no gain or loss from the sale of the land at Gremp Campus.
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Lessor Arrangements
We lease real estate including land, buildings and warehouses, machinery/equipment, and vessels from a lessor perspective. We determine if an arrangement is a lease at inception by assessing whether an identified asset exists and if the customer has the right to control the use of the identified asset. We use our implicit rate for our lessor arrangements. We have elected the practical expedient available for lessors to not separate lease and non-lease components for vessels. If the non-lease component is predominant in our contracts, we account for the contracts under the revenue recognition guidance in ASU 2014-09, “Revenue from Contracts with Customers” (Topic 606). If the lease component is predominant in our contracts, we account for the contracts under the lease guidance in Topic842. We estimate the amount we expect to derive from the underlying asset following the end of the lease term based on remaining economic life. Our responsibilitylessor arrangements generally do not include any residual value guarantees. We recognize lessee payments of lessor costs such as taxes and insurance on a net basis when the lessee pays those costs directly to a third party or when the amount paid by the lessee is not readily determinable.
The following table is a summary of components of lease revenue for the years ended December 31, 2020 and 2019:
Year Ended December 31,
(In millions)20202019
Operating lease revenue including variable revenue$142.0 $266.5 

The following table is a summary of the maturity analysis of the undiscounted cash flows to be received on an annual basis for each of the first five years, and a total of the amounts for the remaining years:

(In millions)Operating Leases
2021$21.4 
202214.3 
20231.0 
2024
2025
Thereafter
Total undiscounted cash flows$36.7 

NOTE 6. REVENUE
The majority of our revenue is from long-term contracts associated with designing and manufacturing products and systems and providing services to customers involved in exploration and production of crude oil and natural gas. On January 1, 2018, we adopted Topic 606 of GAAP using the modified retrospective method applied to those contracts that were not completed as of January 1, 2018 resulting in a $91.5 million reduction to retained earnings.
Significant Revenue Recognition Criteria Explained
Allocation of transaction price to performance obligations - A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue, when, or as, the performance obligation is satisfied. To determine the proper revenue recognition method, we evaluate whether two or more contracts should be combined and accounted for as one single contract and whether the combined or single contract should be accounted for as more than one performance obligation. This evaluation requires significant judgment; some of our contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and, therefore, not distinct.
98


Variable consideration - Due to the nature of the work required to be performed on many of our performance obligations, the estimation of total revenue and cost at completion is complex, subject to many variables and requires significant judgment. It is common for our long-term contracts to contain variable considerations that can either increase or decrease the transaction price. Variability in the transaction price arises primarily due to liquidated damages. We consider our experience with similar transactions and expectations regarding the contract in estimating the amount of variable consideration to which we will be entitled, and determining whether the estimated variable consideration should be constrained. We include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available to us.
Payment terms - Progress billings are generally issued upon completion of certain phases of the work as stipulated in the contract. Payment terms may either be fixed, lump-sum or driven by time and materials (e.g., daily or hourly rates, plus materials). Because typically the customer retains a small portion of the contract price until completion of the contract, our contracts generally result in revenue recognized in excess of billings which we present as contract assets on the balance sheet. Amounts billed and due from our customers are classified as receivables in the consolidated balance sheets. The portion of the payments retained by the customer until final contract settlement is not considered a significant financing component because the intent is to expressprotect the customer. For some contracts, we may be entitled to receive an opinion onadvance payment. We recognize a liability for these financial statementsadvance payments in excess of revenue recognized and financial statement schedulepresent it as contract liabilities in the consolidated balance sheets. The advance payment typically is not considered a significant financing component because it is used to meet working capital demands that can be higher in the early stages of a contract and to protect us from the other party failing to adequately complete some or all of its obligations under the contract.
Warranty - Certain contracts include an assurance-type warranty clause, typically between 18 to 36 months, to guarantee that the products comply with agreed specifications. A service-type warranty may also be provided to the customer; in such a case, management allocates a portion of the transaction price to the warranty based on the estimated stand-alone selling price of the service-type warranty.
Revenue recognized over time - Our performance obligations are satisfied over time as work progresses or at a point in time. Revenue from products and services transferred to customers over time accounted for approximately 86.0%, 81.7% and 82.4% of our audit.revenue for the years ended December 31, 2020, 2019 and 2018, respectively. Typically, revenue is recognized over time using an input measure (e.g., costs incurred to date relative to total estimated costs at completion) to measure progress.
Cost-to-cost method - For our long-term contracts, because of control transferring over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. We conductedgenerally use the cost-to-cost measure of progress for our auditcontracts because it best depicts the transfer of control to the customer which occurs as we incur costs on our contracts. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues, including estimated fees or profits, are recorded proportionally as costs are incurred. Any expected losses on construction-type contracts in progress are charged to earnings, in total, in the period the losses are identified.
Right to invoice practical expedient - The right-to-invoice practical expedient can be applied to a performance obligation satisfied over time if we have a right to invoice the customer for an amount that corresponds directly with the value transferred to the customer for our performance completed to date. When this practical expedient is used, we do not estimate variable consideration at the inception of the contract to determine the transaction price or for disclosure purposes. We have contracts which have payment terms dictated by daily or hourly rates where some contracts may have mixed pricing terms which include a fixed fee portion. For contracts in which we charge the customer a fixed rate based on the time or materials spent during the project that correspond to the value transferred to the customer, we recognize revenue in the amount to which we have the right to invoice.
99


Contract modifications - Contracts are often modified to account for changes in contract specifications and requirements. We consider contract modifications to exist when the modification either creates new, or changes the existing, enforceable rights and obligations. Most of our contract modifications are for goods or services that are not distinct from the existing contract due to the significant integration service provided in the context of the contract and are accounted for as if they were part of that existing contract. The effect of a contract modification on the transaction price and our measure of progress for the performance obligation to which it relates is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis.
Revenue Recognition by Segment
The following is a description of principal activities separated by reportable segments from which TechnipFMC generates its revenue. See Note 7 for more detailed information about reportable segments.
Subsea
Our Subsea segment manufactures and designs products and systems, performs engineering, procurement and project management and provides services used by oil and gas companies involved in offshore exploration and production of crude oil and natural gas. Systems and services may be sold separately or as combined integrated systems and services offered within one contract. Many of the systems and products TechnipFMC supplies for subsea applications are highly engineered to meet the unique demands of our customers’ field properties and are typically ordered one to two years prior to installation. We often receive advance payments and progress billings from our customers in order to fund initial development and working capital requirements.
Under Subsea engineering, procurement, construction and installation contracts, revenue is principally generated from long-term contracts with customers. We have determined these contracts generally have one performance obligation as the delivered product is highly customized to customer and field specifications. We generally recognize revenue over time for such contracts as the customized products do not have an alternative use for TechnipFMC and we have an enforceable right to payment plus a reasonable profit for performance completed to date.
Our Subsea segment also performs an array of subsea services including (i) installation services, (ii) asset management services (iii) product optimization, (iv) inspection, maintenance and repair services, and (v) well access and intervention services, where revenue is generally earned through the execution of either installation-type or maintenance-type contracts. For either contract-type, management has determined that the performance of the service generally represents one single performance obligation. We have determined that revenue from these contracts is recognized over time as the customer simultaneously receives and consumes the benefit of the services.
Technip Energies
Our Technip Energies segment designs and builds onshore facilities related to the production, treatment, transformation and transportation of hydrocarbons and renewable feedstock; and designs, manufactures and installs fixed and floating platforms for the offshore production and processing of oil and gas reserves.
Our onshore business combines the design, engineering, procurement, construction and project management of the entire range of onshore facilities. Our onshore activity covers all types of onshore facilities related to the production, treatment and transportation of oil and gas, as well as transformation with petrochemicals such as ethylene, polymers and fertilizers. Some of the onshore activities include the development of onshore fields, refining, natural gas treatment and liquefaction, and design and construction of hydrogen and synthesis gas production units.
Many of these financial statements in accordance withcontracts provide a combination of engineering, procurement, construction, project management and installation services, which may last several years. We have determined that contracts of this nature have generally one performance obligation. In these contracts, the standardsfinal product is highly customized to the specifications of the Public Company Accounting Oversight Board (United States). Those standards requirefield and the customer’s requirements. Therefore, the customer obtains control of the asset over time, and thus revenue is recognized over time.
Our offshore business combines the design, engineering, procurement, construction and project management within the entire range of fixed and floating offshore oil and gas facilities, many of which were the first of their kind, including the development of floating liquefied natural gas (“FLNG”) facilities. Similar to onshore contracts, contracts grouped under this segment provide a combination of services, which may last several years.
100


We have determined that contracts of this nature have one performance obligation. In these contracts, the final product is highly customized to the specifications of the field and the customer’s requirements. We have determined that the customer obtains control of the asset over time, and thus revenue is recognized over time as the customized products do not have an alternative use for us and we planhave an enforceable right to payment plus reasonable profit for performance completed to date. Subsequent to the Spin-off, we operate under two reporting segments: Subsea and performSurface Technologies, for further details see Note 3 for further details.
Surface Technologies
Our Surface Technologies segment designs, manufactures and supplies technologically advanced wellhead systems and high pressure valves and pumps used in stimulation activities for oilfield service companies and provides installation, flowback and other services for exploration and production companies.
We provide a full range of drilling, completion and production wellhead systems for both standard and custom-engineered applications. Under pressure control product contracts, we design and manufacture flowline products, under the auditWeco®/Chiksan® trademarks, articulating frac arm manifold trailers, well service pumps, compact valves and reciprocating pumps used in well completion and stimulation activities by major oilfield service companies. Performance obligations within these systems are satisfied either through delivery of a standardized product or equipment or the delivery of a customized product or equipment.
For contracts with a standardized product or equipment performance obligation, management has determined that because there is limited customization to obtain reasonable assurance about whetherproducts sold within such contracts and the financial statementsasset delivered can be resold to another customer, revenue should be recognized as of a point in time, upon transfer of control to the customer and after the customer acceptance provisions have been met.
For contracts with a customized product or equipment performance obligation, the revenue is recognized over time, as the manufacturing of our product does not create an asset with an alternative use for us.
This segment also designs, manufactures and services measurement products globally. Contract-types include standard product or equipment and maintenance-type services where we have determined that each contract under this product line represents one performance obligation.
Revenue from standard measurement equipment contracts is recognized at a point in time, while maintenance-type contracts are freetypically priced at a daily or hourly rate. We have determined that revenue for these contracts is recognized over time because the customer simultaneously receives and consumes the benefit of material misstatement. An audit includes examining,the services.
Disaggregation of Revenue
We disaggregate revenue by geographic location and contract type. The following table presents products and services revenue by geography for each reportable segment for the years ended December 31, 2020, 2019 and 2018:
Reportable Segments
Year Ended December 31,
202020192018
(In millions)SubseaTechnip EnergiesSurface TechnologiesSubseaTechnip EnergiesSurface TechnologiesSubseaTechnip EnergiesSurface Technologies
Europe, Russia, Central Asia$1,641.9 $3,111.6 $188.2 $1,745.2 $2,813.1 $236.7 $1,528.1 $3,506.1 $227.7 
Americas1,957.7 982.6 373.1 1,770.0 766.2 732.1 1,721.5 365.1 865.5 
Asia Pacific753.2 1,094.3 123.4 659.9 1,152.5 189.3 532.9 1,236.1 123.2 
Africa893.9 884.4 45.8 824.8 526.0 61.1 758.1 252.7 57.9 
Middle East169.8 447.1 241.6 407.1 1,011.0 247.6 181.2 760.7 213.4 
Total products and services revenue$5,416.5 $6,520.0 $972.1 $5,407.0 $6,268.8 $1,466.8 $4,721.8 $6,120.7 $1,487.7 
101


The following table represents revenue by contract type for each reportable segment for the years ended December 31, 2020, 2019 and 2018:
Reportable Segments
Year Ended December 31,
202020192018
(In millions)SubseaTechnip EnergiesSurface TechnologiesSubseaTechnip EnergiesSurface TechnologiesSubseaTechnip EnergiesSurface Technologies
Services$3,121.1 $6,436.9 $150.2 $3,244.5 $6,268.8 $276.4 $2,687.1 $6,120.7 $249.8 
Products2,295.4 83.1 821.9 2,162.5 1,190.4 2,034.7 1,237.9 
Total products and services revenue5,416.5 6,520.0 972.1 5,407.0 6,268.8 1,466.8 4,721.8 6,120.7 1,487.7 
Lease and other(a)
54.9 87.1 116.0 150.5 118.2 104.5 
Total revenue$5,471.4 $6,520.0 $1,059.2 $5,523.0 $6,268.8 $1,617.3 $4,840.0 $6,120.7 $1,592.2 
(a)Represents revenue not subject to ASC Topic 606.
Contract Balances
The timing of revenue recognition, billings and cash collections results in billed accounts receivable, costs and estimated earnings in excess of billings on a test basis, evidence supporting the amountsuncompleted contracts (contract assets), and disclosuresbillings in excess of costs and estimated earnings on uncompleted contracts (contract liabilities) in the financial statements, assessingconsolidated balance sheets.
Contract Assets -Contract Assets include unbilled amounts typically resulting from sales under long-term contracts when revenue is recognized over time and revenue recognized exceeds the accounting principles usedamount billed to the customer, and significant estimates made by management,right to payment is not just subject to the passage of time. Amounts may not exceed their net realizable value. Costs and evaluating the overall financial statement presentation. estimated earnings in excess of billings on uncompleted contracts are generally classified as current.
Contract Liabilities - We believe thatsometimes receive advances or deposits from our audit provides a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers Audit

Paris, France
April 2, 2018


TECHNIPFMC PLC AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
 Year Ended
(In millions, except per share data)2018 2017 2016
Revenue     
Service revenue$9,765.0
 $12,210.5
 $9,128.7
Product revenue2,565.2
 2,651.8
 70.9
Lease and other revenue222.7
 194.6
 
Total revenue12,552.9
 15,056.9
 9,199.6
      
Costs and expenses     
Cost of service revenue7,895.1
 9,984.0
 7,585.7
Cost of product revenue2,234.5
 2,403.4
 44.3
Cost of lease and other revenue143.4
 137.2
 
Selling, general and administrative expense1,140.6
 1,060.9
 572.6
Research and development expense189.2
 212.9
 105.4
Impairment, restructuring and other expense (Note 17)1,831.2
 191.5
 343.0
Merger transaction and integration costs (Note 2)36.5
 101.8
 92.6
Total costs and expenses13,470.5
 14,091.7
 8,743.6
      
Other income (expense), net(323.9) (25.9) 6.5
Income from equity affiliates (Note 9)114.3
 55.6

117.7
Income before interest income, interest expense and income taxes(1,127.2) 994.9
 580.2
Interest income121.4
 140.8
 85.3
Interest expense(482.3) (456.0) (114.1)
Income (loss) before income taxes(1,488.1) 679.7
 551.4
Provision for income taxes (Note 19)422.7
 545.5
 180.3
Net income (loss)(1,910.8) 134.2
 371.1
Net (income) loss attributable to noncontrolling interests(10.8) (20.9) 22.2
Net income (loss) attributable to TechnipFMC plc$(1,921.6) $113.3
 $393.3
      
Earnings (loss) per share attributable to TechnipFMC plc (Note 6)     
Basic$(4.20) $0.24
 $3.29
Diluted$(4.20) $0.24
 $3.16
Weighted average shares outstanding (Note 6)     
Basic458.0
 466.7
 119.4
Diluted458.0
 468.3
 125.1
customers, before revenue is recognized, resulting in contract liabilities.
The accompanying notes are an integral partfollowing table provides information about net contract assets (liabilities) as of December 31, 2020 and 2019:
December 31,
(In millions)20202019$ change% change
Contract assets$1,267.6 $1,520.0 $(252.4)(16.6)
Contract (liabilities)(4,736.1)(4,585.1)(151.0)(3.3)
Net contract liabilities$(3,468.5)$(3,065.1)$(403.4)(13.2)
The decrease in our contract assets from December 31, 2019 to December 31, 2020 was primarily due to the timing of milestones.
The increase in our contract liabilities was primarily due to additional cash received, excluding amounts recognized as revenue during the period.
In order to determine revenue recognized in the period from contract liabilities, we first allocate revenue to the individual contract liability balance outstanding at the beginning of the consolidated financial statements.

period until the revenue exceeds that balance. Any subsequent revenue we recognize increases contract asset balance. Revenue recognized for the years ended December 31, 2020 and 2019 that were included in the contract liabilities balance as of December 31, 2019 and 2018 was $1,267.5 million and $2,414.0 million, respectively.

TECHNIPFMC PLC AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEIn addition, net revenue recognized for the years ended December 31, 2020 and 2019 from our performance obligations satisfied in previous periods had favorable impacts of $470.8 million and $1,176.5 million, respectively. This primarily relates to the changes in the estimate of the stage of completion that impacted revenue.
102


 Year Ended
(In millions)2018 2017 2016
Net income (loss)$(1,910.8) $134.2
 $371.1
Foreign currency translation adjustments     
Net gain (losses) arising during the period
(183.3) (87.2) (71.4)
Reclassification adjustment for net gains included in net income(41.1) 
 
Net gains (losses) on foreign currency translation adjustments(a)
(224.4) (87.2) (71.4)
      
Net gains (losses) on hedging instruments     
Net gains (losses) arising during the period(58.7) 53.8
 (64.8)
Reclassification adjustment for net gains included in net income(2.0) 101.2
 120.1
Net gains (losses) on hedging instruments (b)
(60.7) 155.0
 55.3
      
Pension and other post-retirement benefits     
Net gains arising during the period(72.4) 43.2
 7.0
Prior service cost arising during the period(2.1) 
 
Reclassification adjustment for settlement losses included in net income(2.5) (15.2) (7.4)
Reclassification adjustment for amortization of prior service cost included in net income1.2
 0.7
 0.5
Reclassification adjustment for amortization of net actuarial loss included in net income0.3
 1.8
 0.7
Net pension and other post-retirement benefits (c)
(75.5) 30.5
 0.8
Other comprehensive income (loss), net of tax(360.6) 98.3
 (15.3)
Comprehensive income (loss)(2,271.4) 232.5
 355.8
Comprehensive (income) loss attributable to noncontrolling interest(6.2) (21.3) 20.9
Comprehensive income (loss) attributable to TechnipFMC plc$(2,277.6) $211.2
 $376.7
(a)Net of income tax (expense) benefit of $3.6, $(11.5) and nil for the years ended December 31, 2018, 2017 and 2016, respectively.
(b)Net of income tax (expense) benefit of $16.6, $(52.5) and $(24.3) for the years ended December 31, 2018, 2017 and 2016, respectively.
(c)Net of income tax (expense) benefit of $15.5, $(11.7) and $1.0 for the years ended December 31, 2018, 2017 and 2016, respectively.

Transaction Price Allocated to the Remaining Unsatisfied Performance Obligations

Remaining unsatisfied performance obligations (“RUPO” or “order backlog”) represent the transaction price for products and services for which we have a material right, but work has not been performed. Transaction price of the order backlog includes the base transaction price, variable consideration and changes in transaction price. The order backlog table does not include contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. The transaction price of order backlog related to unfilled, confirmed customer orders is estimated at each reporting date. As of December 31, 2020, the aggregate amount of the transaction price allocated to order backlog was $21,388.2 million. TechnipFMC expects to recognize revenue on approximately 51.2% of the order backlog through 2021 and 48.8% thereafter.
The accompanying notes are an integral partfollowing table details the order backlog for each business segment as of the consolidated financial statements.

December 31, 2020:

(In millions)20212022Thereafter
Subsea$3,585.4 $2,217.2 $1,073.4 
Technip Energies7,016.2 4,081.7 3,000.8 
Surface Technologies343.6 69.4 0.5 
Total remaining unsatisfied performance obligations$10,945.2 $6,368.3 $4,074.7 
TECHNIPFMC PLC AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions, except par value data)December 31,
Assets2018 2017
Cash and cash equivalents$5,540.0
 $6,737.4
Trade receivables, net of allowances of $119.6 in 2018 and $117.4 in 20172,469.7
 1,484.4
Contract assets1,295.0
 1,755.5
Inventories, net (Note 7)1,251.2
 987.0
Derivative financial instruments (Note 21)95.7
 78.3
Income taxes receivable284.3
 337.0
Advances paid to suppliers189.7
 391.3
Other current assets (Note 8)655.6
 1,206.2
Total current assets11,781.2
 12,977.1
Investments in equity affiliates (Note 9)394.5
 272.5
Property, plant and equipment, net (Note 11)3,259.8
 3,871.5
Goodwill (Note 12)7,607.6
 8,929.8
Intangible assets, net (Note 12)1,176.7
 1,333.8
Deferred income taxes (Note 19)232.4
 454.7
Derivative financial instruments (Note 21)18.3
 94.9
Other assets314.0
 329.4
Total assets$24,784.5
 $28,263.7
    
Liabilities and equity   
Short-term debt and current portion of long-term debt (Note 13)$67.4
 $77.1
Accounts payable, trade2,600.3
 3,958.7
Contract liabilities4,085.1
 3,314.2
Accrued payroll394.7
 402.2
Derivative financial instruments (Note 21)138.4
 69.0
Income taxes payable81.9
 320.3
Other current liabilities (Note 8)1,766.6

1,687.9
Total current liabilities9,134.4
 9,829.4
Long-term debt, less current portion (Note 13)4,124.3
 3,777.9
Deferred income taxes (Note 19)209.2
 419.7
Accrued pension and other post-retirement benefits, less current portion (Note 20)298.9
 282.0
Derivative financial instruments (Note 21)44.9
 68.1
Other liabilities503.4
 477.2
Total liabilities14,315.1
 14,854.3
Commitments and contingent liabilities (Note 18)
 
Mezzanine equity   
Redeemable noncontrolling interest
38.5
 
Stockholders’ equity (Note 15)   
Ordinary shares, $1.00 par value; 618.3 shares and 525.0 shares authorized in 2018 and 2017, respectively; 450.5 shares and 465.1 shares issued and outstanding in 2018 and 2017, respectively; 14.8 and 2.1 shares canceled in 2018 and 2017, respectively450.5
 465.1
Ordinary shares held in employee benefit trust, at cost; 0.1 and 0.1 shares in 2018 and 2017, respectively(2.4) (4.8)
Capital in excess of par value of ordinary shares10,197.0
 10,483.3
Retained earnings1,114.2
 3,448.0
Accumulated other comprehensive loss(1,359.7) (1,003.7)
Total TechnipFMC plc stockholders’ equity10,399.6
 13,387.9
Noncontrolling interests31.3
 21.5
Total equity10,430.9
 13,409.4
Total liabilities and equity$24,784.5
 $28,263.7

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



TECHNIPFMC PLC AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Year Ended December 31,
(In millions)2018 2017 2016
Cash provided (required) by operating activities     
Net income (loss)$(1,910.8) $134.2
 $371.1
Adjustments to reconcile net income to cash provided (required) by operating activities     
Depreciation367.8
 370.2
 283.2
Amortization182.6
 244.5
 17.5
Employee benefit plan and share-based compensation costs22.4
 18.7
 27.4
Deferred income tax provision (benefit), net48.8
 141.6
 (172.1)
Unrealized loss (gain) on derivative instruments and foreign exchange102.7
 (73.5) (123.2)
Impairments (Note 17)1,792.6
 34.3
 38.2
Income from equity affiliates, net of dividends received(110.7) (37.9) (48.1)
Other291.8
 4.7
 161.8
Changes in operating assets and liabilities, net of effects of acquisitions     
Trade receivables, net and contract assets(664.1) 286.8
 (268.7)
Inventories, net(339.4) 130.9
 172.7
Accounts payable, trade(1,248.7) (525.8) 115.5
Contract liabilities762.7
 (1,111.4) (498.3)
Income taxes payable (receivable), net(190.7) (152.2) 71.7
Other current assets and liabilities, net921.2
 646.5
 264.4
Other noncurrent assets and liabilities, net(213.6) 99.1
 80.7
Cash provided (required) by operating activities(185.4) 210.7
 493.8
      
Cash provided (required) by investing activities     
Capital expenditures(368.1) (255.7) (312.9)
Cash acquired in merger of FMC Technologies, Inc. and Technip S.A. (Note 2)
 1,479.2
 
Acquisitions, net of cash acquired(104.9) 
 
Cash acquired upon consolidation of investee
 
 3,480.7
Cash divested from deconsolidation(6.7) 
 (89.1)
Proceeds from sale of assets19.5
 14.4
 39.2
Other
 12.1
 (7.4)
Cash provided (required) by investing activities(460.2) 1,250.0
 3,110.5
      
Cash provided (required) by financing activities     
Net increase (decrease) in short-term debt(34.9) (106.4) 8.6
Net increase in commercial paper496.6
 234.9
 
Proceeds from issuance of long-term debt
 25.7
 644.5
Repayments of long-term debt
 (888.0) (891.2)
Purchase of ordinary shares(442.6) (58.5) (186.8)
Dividends paid(238.1) (60.6) (111.5)
Payments related to taxes withheld on share-based compensation
 (46.6) 
Settlements of mandatorily redeemable financial liability(225.8) (156.5) 
Other
 1.2
 1.8
Cash provided (required) by financing activities(444.8) (1,054.8) (534.6)
Effect of changes in foreign exchange rates on cash and cash equivalents(107.0) 62.2
 21.6
Increase (decrease) in cash and cash equivalents(1,197.4) 468.1
 3,091.3
Cash and cash equivalents, beginning of year6,737.4
 6,269.3
 3,178.0
Cash and cash equivalents, end of year$5,540.0
 $6,737.4
 $6,269.3


 Year Ended December 31,
(In millions)2018 2017 2016
Supplemental disclosures of cash flow information     
Cash paid for interest (net of interest capitalized)$99.0
 $50.3
 $40.2
Cash paid for income taxes (net of refunds received)$410.6
 $424.7
 $261.3
The accompanying notes are an integral part of the consolidated financial statements.


TECHNIPFMC PLC AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(In millions)Ordinary Shares 
Ordinary Shares Held in
Treasury and
Employee
Benefit
Trust
 
Capital in
Excess of Par
Value of
Ordinary Shares
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income
(Loss)
 
Non-
controlling
Interest
 
Total
Stockholders’
Equity
Balance as of December 31, 2015$114.5
 $(81.1) $2,725.4
 $3,273.4
 $(1,085.0) $9.2
 $4,956.4
Net income (loss)
 
 
 393.3
 
 (22.2) 371.1
Other comprehensive income (loss)
 
 
 
 (16.6) 1.3
 (15.3)
Net capital transactions0.2
 
 (35.1) 
 
 
 (34.9)
Treasury shares (Note 15)
 36.6
 (31.1) 
 
 
 5.5
Dividends (€2.00 per share) (Note 15)
 
 
 (262.6) 
 
 (262.6)
Share-based compensation (Note 16)
 
 22.0
 
 
 
 22.0
Other
 
 1.9
 
 
 
 1.9
Balance as of December 31, 2016$114.7
 $(44.5) $2,683.1
 $3,404.1
 $(1,101.6)
$(11.7)
$5,044.1
Net income (loss)
 
 
 113.3
 
 20.9
 134.2
Other comprehensive income (loss)
 
 
 
 97.9
 0.4
 98.3
Issuance of ordinary shares due to the merger of FMC Technologies and Technip351.9
 (6.6) 7,825.4
 
 
 
 8,170.7
Cancellation of treasury shares due to the merger of FMC Technologies and Technip
 44.5
 (23.3) 
 
 
 21.2
Cancellation treasury shares (Note 15)(2.1) 
 (47.6) (8.8) 
 
 (58.5)
Net sales of ordinary shares for employee benefit trust
 1.8
 
 
 
 
 1.8
Issuance of ordinary shares0.6
 
 0.6
 
 
 
 1.2
Dividends ($0.13 per share) (Note 15)
 
 
 (60.6) 
 
 (60.6)
Share-based compensation (Note 16)
 
 44.4
 
 
 
 44.4
Other
 
 0.7
 
 
 11.9
 12.6
Balance as of December 31, 2017$465.1
 $(4.8) $10,483.3
 $3,448.0
 $(1,003.7) $21.5
 $13,409.4
Adoption of accounting standards (Note 4)
 
 
 (91.5) 
 0.1
 (91.4)
Net income (loss)
 
 
 (1,921.6) 
 10.8
 (1,910.8)
Other comprehensive income (loss)
 
 
 
 (356.0) (4.6) (360.6)
Cancellation of treasury shares (Note 15)(14.8) 
 (333.5) (94.5) 
 
 (442.8)
Issuance of ordinary shares0.2
 
 
 
 
 
 0.2
Net sales of ordinary shares for employee benefit trust
 2.4
 
 
 
 
 2.4
Dividends ($0.52 per share) (Note 15)
 
 
 (238.1) 
 
 (238.1)
Share-based compensation (Note 16)
 
 49.1
 
 
 
 49.1
Other
 
 (1.9) 11.9
 
 3.5
 13.5
Balance as of December 31, 2018$450.5
 $(2.4) $10,197.0
 $1,114.2
 $(1,359.7) $31.3
 $10,430.9
The accompanying notes are an integral part of the consolidated financial statements.


TECHNIPFMC PLC AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES7. BUSINESS SEGMENTS
NatureManagement’s determination of our reporting segments was made on the basis of our strategic priorities within each segment and the differences in the products and services we provide, which corresponds to the manner in which our Chairman and Chief Executive Officer, as our chief operating decision maker, reviews and evaluates operating performance to make decisions about resources to be allocated to the segment.
We report the results of operations in the following segments:
Subsea - TechnipFMC plcdesigns and consolidated subsidiaries (“TechnipFMC,” “we,” “us” or “our”) is a global leader inmanufactures products and systems, performs engineering, procurement and project management, and provides services used by oil and gas projects, technologies, systemscompanies involved in offshore exploration and services through our business segments: Subsea, Onshore/Offshoreproduction of crude oil and Surface Technologies. We have manufacturing operations worldwide, strategically located to facilitate delivery of ournatural gas.
Technip Energies - offers extensive experience, knowledge and unique project management capabilities in onshore and offshore hydrocarbon infrastructure businesses; it also combines its leading engineering and construction capabilities with its technological know-how, products systems and services to our customers.develop new solutions that will support the world’s energy transition.
BasisSurface Technologies - designs and manufactures products and systems and provides services used by oil and gas companies involved in land and shallow water exploration and production of presentation - Our consolidated financial statements were prepared in U.S. dollarscrude oil and in accordance with accounting principles generally acceptednatural gas; designs, manufactures, and supplies technologically advanced high-pressure valves and fittings for oilfield service companies; and also provides flowback and well testing services.
Beginning in the United Statesfirst quarter of America (“GAAP”)2020, in anticipation of our separation transaction, we renamed our Onshore/Offshore segment to Technip Energies, which includes our Loading Systems business that was previously reported in the Surface Technologies segment and rulesour process automation business, Cybernetix, that was previously reported in the Subsea segment. Prior year information has not been restated due to these businesses not being material. Subsequent to the Spin-off, we operate under two reporting segments: Subsea and regulations of the SecuritiesSurface Technologies, for further details see Note 3 for further details.
Segment operating profit (loss) is defined as total segment revenue less segment operating expenses. Income (loss) from equity method investments is included in computing segment operating profit. The following items have been excluded in computing segment operating profit (loss): corporate staff expense, net interest income (expense) associated with corporate debt facilities, income taxes, and Exchange Commission (“SEC”) pertaining to annual financial information. The preparation of financial statements in conformity with these accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts ofother revenue and other expense, net.
103


Information by business segment
Segment revenue and segment operating profit (loss) were as follows:
 Year Ended December 31,
(In millions)202020192018
Segment revenue
Subsea$5,471.4 $5,523.0 $4,840.0 
Technip Energies6,520.0 6,268.8 6,120.7 
Surface Technologies1,059.2 1,617.3 1,592.2 
Total revenue$13,050.6 $13,409.1 $12,552.9 
Segment operating profit (loss)
Subsea$(2,815.5)$(1,447.7)$(1,529.5)
Technip Energies683.6 959.6 824.0 
Surface Technologies(429.3)(656.1)172.8 
Total segment operating loss(2,561.2)(1,144.2)(532.7)
Corporate items
Impairment, restructuring and other expenses(10.0)(17.4)(18.9)
Separation costs(39.5)(72.1)
Merger transaction and integration costs— (31.2)(36.5)
Legal expenses— (54.6)(280.0)
Other corporate expenses (a)
(152.0)(218.1)(142.6)
Corporate expense(201.5)(393.4)(478.0)
Interest income56.6 116.5 121.4 
Interest expense(349.6)(567.8)(482.3)
Foreign exchange losses(28.8)(146.9)(116.5)
Total corporate items(523.3)(991.6)(955.4)
Loss before income taxes (b)
$(3,084.5)$(2,135.8)$(1,488.1)
(a)Other corporate expenses during the reporting period. Ultimate results could differ from our estimates. Certain prior-yearprimarily include corporate staff expenses, share-based compensation expenses, and other employee benefits.
(b)Includes amounts have been reclassifiedattributable to conform to the current year’s presentation. non-controlling interests.
In this Annual Report on Form 10-K, we are reporting the results of our operations forDuring the year ended December 31, 2018, which consist2020, revenue from Arctic LNG exceeded 10% of our consolidated revenue. During the combined results of operations of Technip S.A. (“Technip”) and FMC Technologies, Inc. (“FMC Technologies”). Due to the merger of FMC Technologies and Technip, FMC Technologies’ results of operations have been included in our financial statements for periods subsequent to the consummation of the merger on January 16, 2017.
Since TechnipFMC is the successor company to Technip, we are presenting the results of Technip’s operations for the yearyears ended December 31, 2016. Refer2019 and 2018, revenue from Yamal LNG exceeded 10% of our consolidated revenue.
Segment assets were as follows:
 December 31,
(In millions)20202019
Segment assets
Subsea$6,796.6 $10,824.2 
Technip Energies5,058.3 4,448.8 
Surface Technologies1,758.3 2,246.4 
Total segment assets13,613.2 17,519.4 
Corporate (a)
6,079.4 5,999.4 
Total assets$19,692.6 $23,518.8 
(a)Corporate includes cash, LIFO adjustments, deferred income tax balances, property, plant and equipment and intercompany eliminations not associated with a specific segment, pension assets and the fair value of derivative financial instruments.
104


Other business segment information is as follows:
Capital ExpendituresDepreciation and
Amortization
Research and
Development Expense
 Year Ended December 31,Year Ended December 31,Year Ended December 31,
(In millions)202020192018202020192018202020192018
Subsea$213.6 $287.7 $223.2 $324.9 $345.6 $440.4 $66.5 $134.4 $145.2 
Technip Energies13.0 22.6 7.6 34.2 38.7 38.2 44.5 13.2 29.7 
Surface Technologies38.5 96.6 111.9 70.1 107.9 66.6 8.8 15.3 14.3 
Corporate26.7 47.5 25.4 18.0 17.4 5.2 — — — 
Total$291.8 $454.4 $368.1 $447.2 $509.6 $550.4 $119.8 $162.9 $189.2 
Information by geography
Sales by geography were identified based on the country where our products and services were delivered, and are as follows:
Year Ended December 31,
(In millions)202020192018
Revenue
Russia$2,451.5 $2,378.0 $2,773.3 
United States2,141.4 1,931.2 1,275.8 
Norway1,393.5 1,371.1 1,202.6 
Brazil698.8 1,099.7 1,478.7 
United Kingdom513.8 540.8 442.1 
Angola488.5 447.8 385.7 
Egypt445.9 177.6 13.2 
Mozambique391.4 166.1 116.2 
India386.4 518.0 214.0 
Senegal353.0 176.5 1.2 
Vietnam340.7 72.1 34.7 
Israel333.6 757.0 243.8 
Guyana330.1 7.2 7.6 
Australia320.8 372.8 926.6 
Singapore312.2 64.9 23.4 
Indonesia286.9 237.6 130.7 
Malaysia281.7 283.8 362.3 
France186.9 92.8 138.9 
China151.4 272.9 112.3 
United Arab Emirates147.9 327.2 460.3 
All other countries1,094.2 2,114.0 2,209.5 
Total revenue$13,050.6 $13,409.1 $12,552.9 

105


Long-lived assets by geography represent property, plant and equipment, net, and are as follows:
 December 31,
(In millions)20202019
Long-lived assets
United Kingdom$936.2 $957.1 
United States467.5 558.1 
Netherlands419.5 493.0 
Norway312.2 333.0 
Brazil260.0 313.2 
All other countries466.4 507.6 
Total long-lived assets$2,861.8 $3,162.0 

NOTE 8. EARNINGS (LOSS) PER SHARE
A reconciliation of the number of shares used for the basic and diluted earnings per share calculation was as follows:
Year Ended December 31,
(In millions, except per share data)202020192018
Net loss attributable to TechnipFMC plc$(3,287.6)$(2,415.2)$(1,921.6)
Weighted average number of shares outstanding448.7 448.0 458.0 
Dilutive effect of restricted stock units— 
Dilutive effect of performance shares— — 
Total shares and dilutive securities448.7 448.0 458.0 
Basic loss per share attributable to TechnipFMC plc$(7.33)$(5.39)$(4.20)
Diluted loss per share attributable to TechnipFMC plc$(7.33)$(5.39)$(4.20)

For the years ended December 31, 2020, 2019 and 2018, we incurred net losses; therefore, the impact of any incremental shares from our share-based compensation awards would be anti-dilutive. For the years ended December 31, 2020, 2019 and 2018, 3.8 million shares, 4.3 million shares and 2.7 million shares, respectively, were anti-dilutive due to Note 2a net loss position.
Weighted average shares of the following share-based compensation awards were excluded from the calculation of diluted weighted average number of shares where the assumed proceeds exceed the average market price from the calculation of diluted weighted average number of shares, because their effect would be anti-dilutive:
Year Ended December 31,
(millions of shares)202020192018
Share option awards4.6 4.0 3.5 
Restricted share units1.8 
Performance shares1.9 1.6 
Total8.3 5.6 3.5 
106



NOTE 9. INVENTORIES
Inventories consisted of the following: 
December 31,
(In millions)20202019
Raw materials$272.4 $347.5 
Work in process245.2 290.2 
Finished goods750.9 778.3 
Inventories, net$1,268.5 $1,416.0 
All amounts in the table above are reported net of obsolescence reserves of $162.8 million and $135.7 million as of December 31, 2020 and 2019, respectively.
Net inventories accounted for further information relatedunder the LIFO method totaled $408.5 million and $386.6 million as of December 31, 2020 and 2019, respectively. The current replacement costs of LIFO inventories exceeded their recorded values by $11.6 million and $10.9 million as of December 31, 2020 and 2019, respectively. There was 0 reduction to the merger of FMC Technologies and Technip.base LIFO inventory in 2020.
Principles of consolidation - The consolidated financial statements include the accounts of TechnipFMC and its majority-owned subsidiaries and affiliates. Intercompany accounts and transactions are eliminated in consolidation.
Use of estimates - The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of
NOTE 10. OTHER CURRENT ASSETS & OTHER CURRENT LIABILITIES
Other current assets and liabilities and disclosures of contingent assets and liabilities at the dateconsisted of the financial statementsfollowing:
December 31,
(In millions)20202019
Value - added tax receivables$450.5 $395.2 
Sundry receivables179.3 69.6 
Prepaid expenses111.7 66.8 
Other taxes receivables90.1 100.7 
Assets held for sale47.3 25.8 
Current financial assets at amortized cost40.6 42.0 
Held-to-maturity investments24.2 49.7 
Other48.9 113.9 
Total other current assets$992.6 $863.7 
Other current liabilities consisted of the following:
December 31,
(In millions)20202019
Warranty accruals and project contingencies285.9 310.1 
Value - added tax and other taxes payable$221.3 $240.4 
Legal provisions188.5 183.6 
Redeemable financial liability141.9 129.1 
Social security liability108.9 116.5 
Provisions75.5 86.6 
Compensation accrual54.3 89.6 
Current portion of accrued pension and other post-retirement benefits13.9 14.9 
Liabilities classified as held for sale9.3 
Other accrued liabilities278.4 314.4 
Total other current liabilities$1,368.6 $1,494.5 
107



NOTE 11. WARRANTY OBLIGATIONS
Warranty obligations are included within “Other current liabilities” in our consolidated balance sheets as of December 31, 2020 and 2019. A reconciliation of warranty obligations for the reported amounts of revenueyears ended December 31, 2020 and expenses during the reporting period. Actual results could differ from those estimates. Such estimates include, but are not limited to, estimates of total contract profit or loss on long-term construction-type contracts; estimated realizable value on excess and obsolete inventory; estimates related to pension accounting; estimates related to fair value for purposes of assessing goodwill, long-lived assets and intangible assets for impairment; estimates of fair value in business combinations and estimates related to income taxes.2019 is as follows:
Investments in the common stock of unconsolidated affiliates -
Year Ended December 31,
(In millions)20202019
Balance at beginning of period$193.5 $234.4 
Warranty expenses95.6 78.8 
Adjustment to existing accruals(86.2)(57.5)
Claims paid(28.1)(62.2)
Balance at end of period$174.8 $193.5 

NOTE 12. EQUITY METHOD INVESTMENTS
The equity method of accounting is used to account for investments in unconsolidated affiliates where we can have the ability to exert significant influence over the affiliates’affiliates operating and financial policies. The cost method of accounting is used where significant influence over the affiliate is not present.
For certain construction joint ventures, we use the proportionate consolidation method, whereby our proportionate share of each entity’s assets, liabilities, revenues, and expenses are included in the appropriate classifications in the accompanying consolidated financial statements. Intercompany balancesNone of our proportionate consolidation investments, individually or in the aggregate, are significant to our consolidated results for 2020, 2019, or 2018.
Our equity investments were as follows as of December 31, 2020 and transactions have been eliminated in preparing the accompanying consolidated financial statements.2019:
Investments in unconsolidated affiliates are assessed for impairment whenever events or changes in facts and circumstances indicate the carrying value of the investments may not be fully recoverable. When such a condition is subjectively determined to be other than temporary, the carrying value of the investment is written down to fair value. Management’s assessment as to whether any decline in value is other than temporary is based on our ability and intent to hold the investment and whether evidence indicating the carrying value of the investment is recoverable within a reasonable period of time outweighs evidence to the contrary. Management generally considers our investments in
December 31
20202019
(In millions, except %)Percentage OwnedCarrying Value
Dofcon Brasil AS50.0 %234.7 167.4 
Magma Global Limited25.0 %51.4 50.2 
Serimax Holdings SAS20.0 %18.8 21.5 
Other54.0 61.3 
Investments in equity affiliates$358.9 $300.4 

Our major equity method investees to be strategic, long-term investments and completes its assessments for impairment with a long-term viewpoint.


Investments in which ownership is less than 20% or that do not represent significant investments are reportedas follows:
Dofcon Brasil AS (“Dofcon”) - is an affiliated company in other assets on the consolidated balance sheets. Where no active market existsform of a joint venture between TechnipFMC and where no other valuation method can be used, these financial assets are maintained at cost minus impairment, if any, plus or minus changes resulting from observable price changesDOF Subsea and was founded in orderly transactions2006. Dofcon provides Pipe-Laying Support Vessels (PLSVs) for the identical or a similar investment of the same issuer.
We determine whether investments involve a variable interest entity (“VIE”) based on the characteristics of the subject entity. If the entitywork in oil and gas fields offshore Brazil. Dofcon is determined to beconsidered a VIE then management determines if webecause it does not have sufficient equity to finance its activities without additional subordinated financial support from other parties. We are not the primary beneficiary of the entity and whether or not consolidation of the VIE is required. The primary beneficiary consolidating the VIE must normallyVIE. As such, we have both (i) the power to direct the activities that most significantly affect the VIE’s economic performance and (ii) the obligation to absorb significant losses of or the right to receive significant benefits from the VIE. If we are deemed to be the primary beneficiary, the VIE is consolidated and the other party’s equity interest in the VIE is accounted for as a noncontrolling interest. Our unconsolidated VIEs are accounted forour 50% investment using the equity method of accounting.
Business combinations - Business combinations are accounted for using the acquisition method of accounting. Under the acquisition method, assets acquired and liabilities assumed are recorded at their respective fair values as of the acquisition date. Determining the fair value of assets and liabilities involves significant judgment regarding methods and assumptions used to calculate estimated fair values. The purchase price is allocated to the assets, assumed liabilities and identifiable intangible assets based on their estimated fair values. Any excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. Transaction related costs are expensed as incurred. 
Revenue recognition - The majority of our revenue is derived from long-term contracts that can span several years. We account for revenue in accordanceaccounting with Accounting Standard Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, which we adopted on January 1, 2018, using the modified retrospective method. Refer to Note 4 for further discussion of the adoption, including the impact on our 2018 financial statements.
Contract costs to obtain a contract - Our incremental direct costs of obtaining a contract are deferred and amortized over the period of contract performance or a longer period, generally the estimated life of the customer relationship, if renewals are expected and the renewal commission is not commensurate with the initial commission. We classify deferred commissions as current or noncurrent based on the timing of when we expect to recognize the expense. The current and noncurrent portions of deferred commissions are included in other current assets and other assets, respectively,results reported in our consolidated balance sheets.Subsea segment.
Amortization of deferred commissionsMagma Global Limited (“Magma Global”) - is included in selling, general and administrative expenses.
Cash equivalents - Cash equivalents are highly-liquid, short-term instruments with original maturities of generally three months or less from their date of purchase.
Trade receivables, net of allowances - An allowance for doubtful accounts is provided on receivables equal to the estimated uncollectible amounts. This estimate is based on historical collection experience and a specific review of each customer’s receivables balance.
Inventories - Inventories are stated at the lower of cost or net realizable value, except as it relates to inventory measured using the last-in, first-out (“LIFO”) method, for which the inventories are stated at the lower of cost or market. Inventory costs include those costs directly attributable to products, including all manufacturing overhead, but excluding costs to distribute. Cost for a significant portion of the U.S. domiciled inventories is determined on the LIFO method. The first-in, first-out (“FIFO”) or weighted average methods are used to determine the cost for the remaining inventories. Write-down on inventories are recorded when the net realizable value of inventories is lower than their net book value.
Property, plant and equipment - Property, plant, and equipment is recorded at cost. Depreciation is principally provided on the straight-line basis over the estimated useful lives of the assets (vessels - 10 to 30 years; buildings - 10 to 50 years; and machinery and equipment - 3 to 20 years). Gains and losses are realized upon the sale or retirement of assets and are recorded in other income (expense), net on our consolidated statements of income. Maintenance and repair costs are expensed as incurred. Expenditures that extend the useful lives of property, plant and equipment are capitalized and depreciated over the estimated new remaining life of the asset.


Impairment of property, plant and equipment - Property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate the carrying value of the long-lived asset may not be recoverable. The carrying value of an asset group is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If it is determined that an impairment loss has occurred, the impairment loss is measured as the amount by which the carrying value of the long-lived asset exceeds its fair value.
Long-lived assets classified as held for sale are reported at the lower of carrying value or fair value less cost to sell.
Goodwill - Goodwill is not subject to amortization but is tested for impairment on an annual basis (or more frequently if impairment indicators arise) by comparing the estimated fair value of each reporting unit to its carrying value, including goodwill. A reporting unit is defined as an operating segment or one level below the operating segment. We have established October 31 as the date of our annual test for impairment of goodwill. Reporting units with goodwill are tested for impairment using a quantitative impairment test known as the income approach, which estimates fair value by discounting each reporting unit’s estimated future cash flows using a weighted-average cost of capital that reflects current market conditions and the risk profile of the reporting unit. To arrive at our future cash flows, we use estimates of economic and market assumptions, including growth rates in revenues, costs, estimates of future expected changes in operating margins, tax rates and cash expenditures. Future revenues are also adjusted to match changes in our business strategy. If the fair value of the reporting unit is less than its carrying amount as a result of this method, then an impairment loss is recorded.
A lower fair value estimateaffiliated company in the futureform of a collaborative agreement signed in 2018 between Technip-Coflexip UK Holdings Limited and Magma Global to develop hybrid flexible pipe for any of our reporting units could result in goodwill impairments. Factors that could trigger a lower fair value estimate include sustained price declines of the reporting unit’s products and services, cost increases, regulatory or political environment changes, changes in customer demand, and other changes in market conditions, which may affect certain market participant assumptions used in the discounted future cash flow model.
Intangible assets - Our acquired intangible assets are generally amortized on a straight-line basis over their estimated useful lives, which generally range from 2 to 20 years. Our acquired intangible assets do not have indefinite lives. Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of the intangible asset may not be recoverable. The carrying amount of an intangible asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If it is determined that an impairment loss has occurred, the loss is measured as the amount by which the carrying amount of the intangible asset exceeds its fair value.
Capitalized software costs are recorded at cost. Capitalized software costs include purchases of software and internal and external costs incurred during the application development stage of software projects. These costs are amortized on a straight-line basis over the estimated useful lives. For internal use software, the useful lives range from three to ten years. For Internet website costs, the estimated useful lives do not exceed three years.
Research and development expense is expensed as incurred. Research and development expense includes improvement of existing products and services, design and development of new products and services and test of new technologies.
Debt instruments - Debt instruments include synthetic bonds, senior and private placement notes and other borrowings. Issuance fees and redemption premium on debt instruments are included in the cost of debt in the consolidated balance sheets, as an adjustment to the nominal amount of the debt. Loan origination costs for revolving credit facilities are recorded as an asset and amortized over the life of the underlying debt.
Fair value measurements - Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The fair value framework requires the categorization of assets and liabilities measured at fair value into three levels based upon the assumptions (inputs) used to price the assets or liabilities, with the exception of certain assets and liabilities measured using the net asset value practical expedient, which are not required to be leveled. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:
Level 1: Unadjusted quoted prices in active markets for identical assets and liabilities.
Level 2: Observable inputs other than quoted prices included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.


Level 3: Unobservable inputs reflecting management’s own assumptions about the assumptions market participants would use in pricing the asset or liability.
Income taxes - Current income taxes are provided on income reported for financial statement purposes, adjusted for transactions that do not enter into the computation of income taxes payable in the same year. Deferred tax assets and liabilities are measured using enacted tax rates for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. A valuation allowance is established whenever management believes that it is more likely than not that deferred tax assets may not be realizable.
Income taxes are not provided on our equity in undistributed earnings of foreign subsidiaries or affiliates to the extent we have determined that the earnings are indefinitely reinvested. Income taxes are provided on such earnings in the period in which we can no longer support that such earnings are indefinitely reinvested.
Tax benefits related to uncertain tax positions are recognized when it is more likely than not, based on the technical merits, that the position will be sustained upon examination.
We classify interest expense and penalties recognized on underpayments of income taxes as income tax expense.
Share-based employee compensation - The measurement of share-based compensation expense on restricted share awards and performance share awards is based on the market price at the grant date and the number of shares awarded. We used the Cox Ross Rubinstein binomial model to measure the fair value of stock options granted prior to December 31, 2016 and Black-Scholes options pricing model to measure the fair value of stock options granted on or after January 1, 2017. The stock-based compensation expense for each award is recognized ratably over the applicable service period or the period beginning at the start of the service period and ending when an employee becomes eligible for retirement, after taking into account estimated forfeitures,.
Ordinary shares held in employee benefit trust - Our ordinary shares are purchased by the plan administrator of the FMC Technologies, Inc. Non-Qualified Savings and Investment Plan and placed in a trust that we own. Purchased shares are recorded at cost and classified as a reduction of stockholders’ equity on the consolidated balance sheets.
Earnings per ordinary share (“EPS”) - Basic EPS is computed using the weighted-average number of ordinary shares outstanding during the year. We use the treasury stock method to compute diluted EPS which gives effect to the potential dilution of earnings that could have occurred if additional shares were issued for awards granted under our incentive compensation and stock plan. The treasury stock method assumes proceeds that would be obtained upon exercise of awards granted under our incentive compensation and stock plan are used to purchase outstanding ordinary shares at the average market price during the period.
Convertible bonds that could be converted into or be exchangeable for new or existing shares would additionally result in a dilution of earnings per share. The ordinary shares assumed to be converted as of the issuance date are included to compute diluted EPS under the if-converted method. Additionally, the net profit of the period is adjusted as if converted for the after-tax interest expense related to these dilutive shares.
Foreign currency - Financial statements of operations for which the U.S. dollar is not the functional currency, and which are located in non-highly inflationary countries, are translated into U.S. dollars prior to consolidation. Assets and liabilities are translated at the exchange rate in effect at the balance sheet date, while income statement accounts are translated at the average exchange rate for each period. For these operations, translation gains and losses are recorded as a component of accumulated other comprehensive income (loss) in stockholders’ equity until the foreign entity is sold or liquidated. For operations in highly inflationary countries and where the local currency is not the functional currency, inventories, property, plant and equipment, and other non-current assets are converted to U.S. dollars at historical exchange rates, and all gains or losses from conversion are included in net income. Foreign currency effects on cash, cash equivalents and debt in highly inflationary economies are included in interest income or expense.


For certain committed and anticipated future cash flows and recognized assets and liabilities which are denominated in a foreign currency, we may choose to manage our risk against changes in the exchange rates, when compared against the functional currency, through the economic netting of exposures instead of derivative instruments. Cash outflows or liabilities in a foreign currency are matched against cash inflows or assets in the same currency, such that movements in exchange rates will result in offsetting gains or losses. Due to the inherent unpredictability of the timing of cash flows, gains and losses in the current period may be economically offset by gains and losses in a future period. All gains and losses are recorded in our consolidated statements of income in the period in which they are incurred. Gains and losses from the remeasurement of assets and liabilities are recognized in other income (expense), net.
During the second half of 2018, Argentina’s three year cumulative inflation rate exceeded 100% based on published inflation data, and effective July 1, 2018, Argentina’s currency is considered highly inflationary. Our local operations in Argentina use U.S. dollars as the functional currency and both monetary and non-monetary assets and liabilities denominated in Argentina pesos were remeasured into U.S. dollars with gains and losses resulting from foreign currency transactions included in current results of operations. This event did not have a material impact on the Company’s condensed consolidated financial statements.
Derivative instruments - Derivatives are recognized on the consolidated balance sheets at fair value, with classification as current or non-current based upon the maturity of the derivative instrument. Changes in the fair value of derivative instruments are recorded in current earnings or deferred in accumulated other comprehensive income (loss), depending on the type of hedging transaction and whether a derivative is designated as, and is effective as, a hedge. Each instrument is accounted for individually and assets and liabilities are not offset.
Hedge accounting is only applied when the derivative is deemed to be highly effective at offsetting changes in anticipated cash flows of the hedged item or transaction. Changes in fair value of derivatives that are designated as cash flow hedges are deferred in accumulated other comprehensive income (loss) until the underlying transactions are recognized in earnings. At such time, related deferred hedging gains or losses are recorded in earnings on the same line as the hedged item. Effectiveness is assessed at the inception of the hedge and on a quarterly basis. Effectiveness of forward contract cash flow hedges are assessed based solely on changes in fair value attributable to the change in the spot rate. The change in the fair value of the contract related to the change in forward rates is excluded from the assessment of hedge effectiveness. Changes in this excluded component of the derivative instrument, along with any ineffectiveness identified, are recorded in earnings as incurred. We document our risk management strategy and hedge effectiveness at the inception of, and during the term of, each hedge.
We also use forward contracts to hedge foreign currency assets and liabilities, for which we do not apply hedge accounting. The changes in fair value of these contracts are recognized in other income (expense), net on our consolidated statements of income, as they occur and offset gains or losses on the remeasurement of the related asset or liability.
NOTE 2. BUSINESS COMBINATION TRANSACTIONS
Description of the merger of FMC Technologies and Technip
On June 14, 2016, FMC Technologies and Technip entered into a definitive business combination agreement providing for the business combination among FMC Technologies, FMC Technologies SIS Limited, a private limited company incorporated under the laws of England and Wales and a wholly-owned subsidiary of FMC Technologies, and Technip. On August 4, 2016, the legal name of FMC Technologies SIS Limited was changed to TechnipFMC Limited, and on January 11, 2017, was subsequently re-registered as TechnipFMC plc, a public limited company incorporated under the laws of England and Wales.
On January 16, 2017, the business combination was completed. Pursuant to the terms of the definitive business combination agreement, Technip merged with and into TechnipFMC, with TechnipFMC continuing as the surviving company (the “Technip Merger”), and each ordinary share of Technip (the “Technip Shares”), other than Technip Shares owned by Technip or its wholly-owned subsidiaries, were exchanged for 2.0 ordinary shares of TechnipFMC, subject to the terms of the definitive business combination agreement. Immediately following the Technip Merger, a wholly-owned indirect subsidiary of TechnipFMC (“Merger Sub”) merged with and into FMC Technologies, with FMC Technologies continuing as the surviving company and as a wholly-owned indirect subsidiary of TechnipFMC (the “FMCTI Merger”), and each share of common stock of FMC Technologies (the “FMCTI Shares”), other than FMCTI Shares owned by FMC Technologies, TechnipFMC, Merger Sub or their wholly-owned subsidiaries, were exchanged for 1.0 ordinary share of TechnipFMC, subject to the terms of the definitive business combination agreement.


Under the acquisition method of accounting, Technip was identified as the accounting acquirer and acquired a 100% interest in FMC Technologies.
The merger of FMC Technologies and Technip (the “Merger”) has created a larger and more diversified company that is better equipped to respond to economic and industry developments and better positioned to develop and build on its offerings in the subsea, surface, and onshore/offshore markets as compared to the former companies on a standalone basis. More importantly, the Merger has brought about the ability of the combined company to (i) standardize its product and service offerings to customers, (ii) reduce costs to customers, and (iii) provide integrated product offerings to the oil and gas industry with the aim to innovate the markets in which the combined company operates.
We incurred merger transaction and integration costs of $36.5 million, $101.8 million and $92.6 million during the years ended December 31, 2018, 2017 and 2016, respectively.
Description of FMC Technologies as Accounting Acquiree - FMC Technologies is a global provider of technology solutions for the energy industry. FMC Technologies designs, manufactures and services technologically sophisticated systems and products, including subsea production and processing systems, surface wellhead production systems, high pressure fluid control equipment, measurement solutions and marine loading systems for the energy industry. Subsea systems produced by FMC Technologies are used in the offshore production of crude oil and natural gas and are placed on the seafloor to control the flow of crude oil and natural gas from the reservoir to a host processing facility. Additionally, FMC Technologies provides a full range of drilling, completion and production wellhead systems for both standard and custom-engineered applications. Surface wellhead production systems, or trees, are used to control and regulate the flow of crude oil and natural gas from the well and are used in both onshore and offshore applications.
Consideration Transferred - The acquisition-date fair value of the consideration transferred consisted of the following:
(In millions, except per share data)  
Total FMC Technologies, Inc. shares subject to exchange as of January 16, 2017 228.9
FMC Technologies, Inc. exchange ratio (a)
 0.5
Shares of TechnipFMC issued 114.4
Value per share of Technip as of January 16, 2017 (b)
 $71.4
Total purchase consideration $8,170.7
(a)As the calculation is deemed to reflect a share capital increase of the accounting acquirer, the FMC Technologies exchange ratio (1 share of TechnipFMC for 1 share of FMC Technologies as provided in the business combination agreement) is adjusted by dividing the FMC Technologies exchange ratio by the Technip exchange ratio (2 shares of TechnipFMC for 1 share of Technip as provided in the business combination agreement), i.e.,  1 ⁄ 2 = 0.5 in order to reflect the number of shares of Technip that FMC Technologies stockholders would have received if Technip was to have issued its own shares.
(b)Closing price of Technip’s ordinary shares on Euronext Paris on January 16, 2017 in Euro converted at the Euro to U.S. dollar exchange rate of $1.0594 on January 16, 2017.


Assets Acquired and Liabilities Assumed - The following table summarizes the final allocation of the fair values of the assets acquired and liabilities assumed at the acquisition date:
(In millions)  
Assets  
Cash $1,479.2
Accounts receivable 647.8
Costs and estimated earnings in excess of billings on uncompleted contracts 599.6
Inventory 764.8
Income taxes receivable 139.2
Other current assets 282.2
Property, plant and equipment 1,293.3
Intangible assets 1,390.3
Other long-term assets 167.3
Total identifiable assets acquired 6,763.7
Liabilities  
Short-term and current portion of long-term debt 319.5
Accounts payable, trade 386.0
Billings in excess of costs and estimated earnings on uncompleted contracts 454.0
Income taxes payable 92.1
Other current liabilities 524.3
Long-term debt, less current portion 1,444.2
Accrued pension and other post-retirement benefits, less current portion 195.5
Deferred income taxes 219.4
Other long-term liabilities 138.7
Total liabilities assumed 3,773.7
Net identifiable assets acquired 2,990.0
Goodwill 5,180.7
Net assets acquired $8,170.7
Segment Allocation of Goodwill - The final allocation of goodwill to the reporting segments based on the final valuation is as follows:
(In millions)Allocated Goodwill
Subsea$2,527.7
Onshore/Offshore1,635.5
Surface Technologies1,017.5
Total$5,180.7
Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the expected revenue and cost synergies of the combined company, which are further described above. Goodwill recognized as a result of the acquisition is not deductible for tax purposes.
Acquired Identifiable Intangible Assets - The identifiable intangible assets acquired include the following:
(In millions, except estimated useful lives)Fair Value 
Estimated
Useful Lives
Acquired technology$240.0
 10
Backlog175.0
 2
Customer relationships285.0
 10
Tradenames635.0
 20
Software55.3
 Various
Total identifiable intangible assets acquired$1,390.3
  


FMC Technologies’ results of operations have been included in our financial statements for periods subsequent to the consummation of the Merger on January 16, 2017. FMC Technologies contributed revenues and a net loss of $3,441.1 million and $251.2 million, respectively, for the period from January 17, 2017 through December 31, 2017.
As part of the ongoing reviewcollaboration, TechnipFMC holds a minority stake. We have accounted for our 25% investment using the equity method investment of accounting with results reported in our Subsea segment.
Serimax Holdings SAS (“Serimax”) - is an affiliated company in the purchase price allocation,form of a $19.7 million adjustment to our deferred tax liability balancejoint venture between TechnipFMC and Vallourec SA and was recorded during the first quarter of 2018 which increased Surface Technologies goodwill.
Pro Forma Impact of the Merger (unaudited) - The following unaudited supplemental pro forma results present consolidated information as if the Merger had been completed as of January 1,founded in 2016. The pro forma results do not include any potential synergies, cost savings or other expected benefits of the Merger. Accordingly, the pro forma results should not be considered indicative of the results that would have occurred if the Merger had been consummated as of January 1, 2016, nor are they indicative of future results. For comparative purposes, the weighted average shares outstanding used for the diluted earnings per share calculation for the year ended December 31, 2017 was also used to calculate the diluted earnings per share for the year ended December 31, 2016.
 Unaudited
 Year Ended December 31,
(In millions, except per share data)
2017
Pro Forma
 2016
Pro Forma
Revenue$15,169.8
 $13,727.9
Net income attributable to TechnipFMC adjusted for dilutive effects$28.5
 $291.8
Diluted earnings per share0.06
 0.62
Other Transactions
In February 2018, we signed an agreement with the Island Offshore Group to acquire a 51% stakeSerimax is headquartered in Island Offshore’s wholly-owned subsidiary, Island Offshore Subsea AS. Island Offshore Subsea ASParis, France and provides RLWI project management and engineeringrigid pipes welding services for plugwork in oil and abandonment (“P&A”), riserless coiled tubing, and well completion operations. In connection withgas fields around the acquisition of the controlling interest, TechnipFMC and Island Offshore entered into a strategic cooperation agreement to deliver RLWI services on a worldwide basis, which also include TechnipFMC’s RLWI capabilities. Island Offshore Subsea AS has been rebranded to TIOS and is now the operating unit for TechnipFMC’s RLWI activities worldwide. The acquisition was completed on April 18, 2018 for total cash consideration of $42.4 million. As a result of the acquisition, we recorded redeemable financial liability equal to the fair value of a written put option. Finally, we preliminarily increased goodwill by $85.0 million.
On July 18, 2018, we entered into a share sale and purchase agreement with POC Holding Oy to sell 100% of the outstanding shares of Technip Offshore Finland Oy. The total gain before tax recognized in the third quarter of 2018 was $27.8 million.
Additional acquisitions, including purchased interests in equity method investments, during the year ended December 31, 2018 totaled $62.5 million in consideration paid.
NOTE 3. NEW ACCOUNTING STANDARDS
Recently Adopted Accounting Standards under U.S. GAAP
Effective January 1, 2018, we adopted Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” This update requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. See Note 4 for more information.
In March 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-08, “Principal versus Agent Considerations (Reporting Revenue Gross versus Net)”, which clarifies the implementation guidance on principal versus agent considerations. Entities are permitted to apply the amendments either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the ASU recognized at the date of initial application. The adoption of this update did notworld. We have a material impact on our consolidated financial statements.


Effective January 1, 2018, we adopted ASU No. 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities.” This update addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. Among other amendments, this update requires equity investments not accounted for underour 20% investment using the equity method of accounting to be measured at fair value with changesresults reported in fair value recognized in net income. An entity may choose to measureour Subsea segment.
108


Our income from equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. This updated guidance also simplifies the impairment assessment of equity investments without readily determinable fair values and eliminates the requirement to disclose significant assumptions and methods used to estimate the fair value of financial instruments measured at amortized cost. The updated guidance further requires the use of an exit price notion when measuring the fair value of financial instruments for disclosure purposes. All amendments are required to be adopted on a modified retrospective basis, with two exceptions. The amendments related to equity investments without readily determinable fair values and the requirement to use an exit price notion are required to be adopted prospectively. In February 2018, the FASB issued ASU No. 2018-03, “Technical Corrections and Improvements to Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities”. These amendments clarify the guidance in ASU No. 2016-01, on the following issues (among other things): Equity Securities without a Readily Determinable Fair Value-Discontinuation; Equity Securities without a Readily Determinable Fair Value - Adjustment; Forward Contracts and Purchase Options; Presentation Requirements for Certain Fair Value Option Liabilities; Fair Value Option Liabilities Denominated in a Foreign Currency; and Transition Guidance for Equity Securities without a Readily Determinable Fair Value. The amendments in this ASU are effective in conjunction with the adoption of ASU No. 2016-01. In March 2018, the FASB issued ASU No. 2018-04, “Investments-Debt Securities (Topic 320) and Regulated Operations (Topic 980): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 117 and SEC Release No. 33-9273.” This ASU supersedes SEC paragraphs pursuant to the SEC Staff Accounting Bulletin No. 117, which brings existing guidance into conformity with Topic 321, Investments-Equity Securities, and SEC Release No. 33-9273, which removed Regulation S-X Rule 3A-05, Special Requirements as to Public Utility Holding Companies. The adoption of these updates did not have a material impact on our consolidated financial statements.
Effective January 1, 2018, we adopted ASU No. 2016-15, “Classification of Certain Cash Receipts and Cash Payments.” This update amends the existing guidance for the statement of cash flows and provides guidance on eight classification issues related to the statement of cash flows. The amendments in this ASU are required to be adopted retrospectively. For issues that are impracticable to adopt retrospectively, the amendments may be adopted prospectively as of the earliest date practicable. The adoption of this update did not have a material impact on our consolidated financial statements.
Effective January 1, 2018, we adopted ASU No. 2016-16, “Intra-Entity Transfers of Assets Other Than Inventory.” This update requires that income tax consequences are recognized on an intra-entity transfer of an asset other than inventory when the transfer occurs. The amendments in this ASU are required to be adopted on a modified retrospective basis. The adoption of this update did not have a material impact on our consolidated financial statements.
Effective January 1, 2018, we adopted ASU No. 2017-01, “Clarifying the Definition of a Business.” This update clarifies the definition of a business and provides a screen to determine when a set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired or disposed of is concentrated in a single identifiable asset or a group of similar identifiable assets, such set of assets is not a business. The amendments in this ASU are required to be adopted prospectively. The adoption of this update did not have a material impact on our consolidated financial statements.


Effective January 1, 2018, we adopted ASU  No. 2017-07, “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” This update requires employers to disaggregate the service cost component from the other components of net benefit cost and disclose the amount of net benefit cost that isaffiliates included in the income statement or capitalized in assets, by line item. The updated guidance requires employers to report the service cost component in the same line item(s) as other compensation costs and to report other pension-related costs (which include interest costs, amortization of pension-related costs from prior periods, and the gains or losses on plan assets) separately and exclude them from the subtotal of operating income. The updated guidance also allows only the service cost component to be eligible for capitalization when applicable. The amendments in this ASU are effective for us on January 1, 2018. The guidance requires adoption on a retrospective basis for the presentation of the service cost component and the other components of net periodic pension cost and net periodic post-retirement benefit cost in the income statement and on a prospective basis for the capitalization of the service cost component of net periodic pension cost and net periodic post-retirement benefit in assets. The adoption of this update did not have a material impact on our consolidated financial statements.
Effective January 1, 2018, we adopted ASU No. 2017-09, “Scope of Modification Accounting.” This update provides clarity on when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. The amendments in this ASU are effective for us January 1, 2018 and are required to be adopted prospectively. The adoption of this update did not have a material impact on our consolidated financial statements.
In March 2018, the FASB issued ASU No. 2018-05, “Income Taxes (Topic 740)-Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118.” This ASU adds SEC paragraphs pursuant to the SEC Staff Accounting Bulletin No. 118, which expresses the view of the staff regarding application of Topic 740, Income Taxes, in the reporting period that includes December 22, 2017 - the date on which the Tax Cuts and Jobs Act of 2017 (the “Tax Cuts and Jobs Act”) was signed into law. The amendments in this ASU are effective upon issuance. The adoption of this update did not have a material impact on our consolidated financial statements.
Recently Issued Accounting Standards under U.S. GAAP
Lease Accounting
In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” This update requires that a lessee recognize a liability to make lease payments and a right-of-use (“ROU”) asset representing its right to use the underlying asset for the lease term. Similar to current guidance, the update continues to differentiate between finance leases and operating leases, however, this distinction now primarily relates to differences in the manner of expense recognition over time and in the classification of lease payments in the statement of cash flows. The updated guidance leaves the accounting for leases by lessors largely unchanged from existing GAAP. Early application is permitted. Entities are required to use a modified retrospective adoption, with certain relief provisions, for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements when adopted. The guidance will become effective for us on January 1, 2019.
In January 2018, the FASB issued ASU 2018-01, “Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842.” The amendments in this update permit an entity to elect an optional transition practical expedient to not evaluate land easements that existed or expired before the entity’s adoption of Topic 842 and that were not previously accounted for as leases under Topic 840.
In July 2018 and December 2018, the FASB issued ASU 2018-10, “Codification Improvements to Topic 842, Lease” and ASU 2018-20, “Narrow-scope Improvements for Lessors”, respectively. The amendments in these updates affect narrow aspects of the guidance issued in ASU 2016-02 and is intended to simplify adoption of the new standard. The amendments do not make substantive changes to the core provisions or principles of the new standard and will be considered during our implementation process.
In July 2018, the FASB also issued ASU 2018-11, “Leases (Topic 842): Targeted Improvements.” The amendments in this update provide entities with an optional transition method, which permits an entity to initially apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. In addition, the amendments in this update also provide lessors with a practical expedient (provided certain conditions are met), by class of underlying asset, to not separate the non-lease component(s) from the associated lease component for purposes of income statement presentation. We plan to not elect this practical expedient for lessors and will account for lease and non-lease components within our lessor contracts separately. We plan to elect the practical expedient available for lessees to not separate lease and non-lease components for all asset classes other than vessels, which typically include significant non-lease components.


We will adopt Topic 842 on January 1, 2019, electing the optional transition method that allows for a cumulative-effect adjustment in the period of adoption and, as a result, we will not restate prior periods. We expect to elect certain practical expedients permitted under Topic 842, including the practical expedient for short-term leases in which a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities for leases with a term of 12 months or less. In addition, we expect to elect the package of practical expedients permitted under the transition guidance within Topic 842, which among other things, allows us to carry forward the historical lease classification.
As parteach of our assessment work-to-date, we have formed an implementation work team, conducted region-specific training for the relevant staff regarding the potential impacts of Topic 842 and are continuing our contract analysis and policy review. We have engaged external resources to assist us in our efforts of completing the analysis of potential changes to current accounting practices and are in the process of implementing a new lease accounting system in connection with the adoption of the updated guidance. We are also evaluating the impact of Topic 842 on our internal control over financial reporting and other changes in business practices and processes.segments was as follows:
On adoption, we currently expect to recognize material operating liabilities with corresponding ROU assets of approximately the same amount, based on the present value of the lease payments not yet paid under current leasing standards for existing operating leases where we are a lessee.
Year Ended December 31,
(In millions)202020192018
Subsea$64.6 $59.8 $80.9 
Technip Energies(1.6)3.1 33.4 
Income from equity affiliates$63.0 $62.9 $114.3 
Other
In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses.” This update introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. The updated guidance applies to (i) loans, accounts receivable, trade receivables and other financial assets measured at amortized cost, (ii) loan commitments and other off-balance sheet credit exposures, (iii) debt securities and other financial assets measured at fair value through other comprehensive income and (iv) beneficial interests in securitized financial assets. The amendments in this ASU are effective for us on January 1, 2020 and are required to be adopted on a modified retrospective basis. Early adoption is not permitted. We are currently evaluating the impact of this ASU on our consolidated financial statements.
In November 2018, the FASB also issued ASU No. 2018-19, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses.” The update amends the transition requirements and scope of the credit losses standard issued in 2016. This update clarifies that receivables arising from operating leases are not within the scope of the credit losses standard, but rather, should be accounted for in accordance with the leases standard. The amendments in this ASU are effective for us on January 1, 2020 and are required to be adopted on a modified retrospective basis. Early adoption is not permitted. We are currently evaluating the impact of this ASU on our consolidated financial statements.
In August 2017, the FASB issued ASU No. 2017-12, “Targeted Improvements to Accounting for Hedging Activities.” This update improves the financial reporting of hedging relationships to better portray the economic results of an entity's risk management activities in its financial statements and make certain targeted improvements to simplify the application of the hedge accounting guidance in current GAAP. The amendments in this update better align an entity's risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and presentation of hedge results. The amendments in this ASU are effective for us January 1, 2019. Early adoption is permitted. For cash flow and net investment hedges as of the adoption date, the guidance requires a modified retrospective approach. The amended presentation and disclosure guidance is required to be adopted prospectively. We are currently evaluating the impact of this ASU on our consolidated financial statements.


In February 2018, the FASB issued ASU No. 2018-02, “Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (AOCI).” This update provides an option to reclassify stranded tax effects with AOCI to retained earnings in each period in which the effect of the change in the U.S. federal corporate tax rate in the Tax Cuts and Jobs Act (or portion thereof) is recorded. The ASU requires financial statement disclosures that indicate a description of the accounting policy for releasing income tax effects from AOCI; whether there is an election to reclassify the stranded income tax effects from the Tax Cuts and Jobs Act and information about the other income tax effects are reclassified. These amendments affect any organization that is required to apply the provisions of Topic 220, Income Statement-Reporting Comprehensive Income, and has items of other comprehensive income for which the related tax effects are presented in other comprehensive income as required by GAAP. The amendments in this ASU are effective for us January 1, 2019. The adoption of this update will not have a material effect on our consolidated financial statements.
In June 2018, the FASB issued ASU No. 2018-07, “Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.” This update expands the scope of Topic 718 to include all share-based payment transactions for acquiring goods and services from nonemployees. The amendments in this update specify that Topic 718 applies to all share-based payment transactions in which the grantor acquires goods and services to be used or consumed in its own operations by issuing share-based payment awards. The amendments in this update also clarify that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under ASC Topic 606. The amendments in this update are effective for us on January 1, 2019, with early adoption permitted, but no earlier than our adoption of ASC Topic 606. We are currently evaluating the impact of this ASU on our consolidated financial statements.
In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.” This update modifies the disclosure requirement on fair value measurements in Topic 820. The amendments in this ASU are effective for us January 1, 2020. Early adoption is permitted. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively. All other amendments should be applied retrospectively. We are currently evaluating the impact of this ASU on our consolidated financial statements.
In August 2018, the FASB issued ASU No. 2018-14, “Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans.” This update amends ASC 715 to add, remove and clarify disclosure requirements related to defined benefit pension and other postretirement plans. The amendments in this ASU are effective for us January 1, 2021. Early adoption is permitted. The amendments in this update is required to be adopted retrospectively. We are currently evaluating the impact of this ASU on our consolidated financial statements.
In August 2018, the FASB issued ASU No. 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force).” This update requires that the implementation costs incurred in a cloud computing arrangement that is a service contract are deferred if they would be capitalized based on the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The amendments in this ASU are effective for us January 1, 2020. Early adoption is permitted. The amendments in this update is required to be adopted either retrospectively or prospectively. We are currently evaluating the impact of this ASU on our consolidated financial statements.
In November 2018, the FASB issued ASU No. 2018-18, “Collaborative Arrangements (Topic 808) -Clarifying the Interaction between Topic 808 and Topic 606.” This update clarifies the interaction between the guidance for certain collaborative arrangements and the Revenue Recognition financial accounting and reporting standard. The amendments in this ASU are effective for us January 1, 2020. Early adoption is permitted. The amendments in this update is required to be adopted retrospectively to the date of initial application of Topic 606. An entity should recognize the cumulative effect of initially applying the amendments as an adjustment to the opening balance of retained earnings of the later of the earliest annual period presented and the annual period that includes the date of the entity’s initial application of Topic 606. We are currently evaluating the impact of this ASU on our consolidated financial statements.


NOTE 4. REVENUE
The majority of our revenue is from long-term contracts associated with designing and manufacturing products and systems and providing services to customers involved in exploration and production of crude oil and natural gas. On January 1, 2018, we adopted ASC Topic 606 of GAAP using the modified retrospective method applied to those contracts that were not completed as of January 1, 2018 resulting in a $91.5 million reduction to retained earnings. Results for reporting periods beginning after January 1, 2018 are presented under ASC Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under Topic 605.
Significant Revenue Recognition Criteria Explained
Allocation of transaction price to performance obligations - A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue, when, or as, the performance obligation is satisfied. To determine the proper revenue recognition method, we evaluate whether two or more contracts should be combined and accounted for as one single contract and whether the combined or single contract should be accounted for as more than one performance obligation. This evaluation requires significant judgment; some of our contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and, therefore, not distinct.
Variable consideration - Due to the nature of the work required to be performed on many of our performance obligations, the estimation of total revenue and cost at completion is complex, subject to many variables and requires significant judgment. It is common for our long-term contracts to contain variable considerations that can either increase or decrease the transaction price. Variability in the transaction price arises primarily due to liquidated damages. The Company considers its experience with similar transactions and expectations regarding the contract in estimating the amount of variable consideration to which it will be entitled, and determining whether the estimated variable consideration should be constrained. We include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available to us.
Payment terms - Progress billings are generally issued upon completion of certain phases of the work as stipulated in the contract. Payment terms may either be fixed, lump-sum or driven by time and materials (e.g., daily or hourly rates, plus materials). Because typically the customer retains a small portion of the contract price until completion of the contract, our contracts generally result in revenue recognized in excess of billings which we present as contract assets on the balance sheet. Amounts billed and due from our customers are classified as receivables on the balance sheet. The portion of the payments retained by the customer until final contract settlement is not considered a significant financing component because the intent is to protect the customer. For some contracts, we may be entitled to receive an advance payment. We recognize a liability for these advance payments in excess of revenue recognized and present it as contract liabilities on the balance sheet. The advance payment typically is not considered a significant financing component because it is used to meet working capital demands that can be higher in the early stages of a contract and to protect us from the other party failing to adequately complete some or all of its obligations under the contract.
Warranty - Certain contracts include an assurance-type warranty clause, typically between 18 to 36 months, to guarantee that the products comply with agreed specifications. A service-type warranty may also be provided to the customer; in such a case, management allocates a portion of the transaction price to the warranty based on the estimated stand-alone selling price of the service-type warranty.
Revenue recognized over time - Our performance obligations are satisfied over time as work progresses or at a point in time. Revenue from products and services transferred to customers over time accounted for approximately 82.4% of our revenue for the year ended December 31, 2018, respectively. Typically, revenue is recognized over time using an input measure (e.g., costs incurred to date relative to total estimated costs at completion) to measure progress.


Cost-to-cost method - For our long-term contracts, because of control transferring over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. Upon adoption of the new standard we generally use the cost-to-cost measure of progress for our contracts because it best depicts the transfer of control to the customer which occurs as we incur costs on our contracts. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues, including estimated fees or profits, are recorded proportionally as costs are incurred. Any expected losses on construction-type contracts in progress are charged to earnings, in total, in the period the losses are identified.
Right to invoice practical expedient - The right-to-invoice practical expedient can be applied to a performance obligation satisfied over time if we have a right to invoice the customer for an amount that corresponds directly with the value transferred to the customer for our performance completed to date. When this practical expedient is used, we do not estimate variable consideration at the inception of the contract to determine the transaction price or for disclosure purposes. We have contracts which have payment terms dictated by daily or hourly rates where some contracts may have mixed pricing terms which include a fixed fee portion. For contracts in which we charge the customer a fixed rate based on the time or materials spent during the project that correspond to the value transferred to the customer, we recognize revenue in the amount to which we have the right to invoice.
Contract modifications - Contracts are often modified to account for changes in contract specifications and requirements. We consider contract modifications to exist when the modification either creates new, or changes the existing, enforceable rights and obligations. Most of our contract modifications are for goods or services that are not distinct from the existing contract due to the significant integration service provided in the context of the contract and are accounted for as if they were part of that existing contract. The effect of a contract modification on the transaction price and our measure of progress for the performance obligation to which it relates is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis.
Revenue Recognition by Segment
The following is a description of principal activities separated by reportable segments from which the Company generates its revenue. See Note 5 for more detailed information about reportable segments.
a.Subsea
Our Subsea segment manufactures and designs products and systems, performs engineering, procurement and project management and provides services used by oil and gas companies involved in offshore exploration and production of crude oil and natural gas. Systems and services may be sold separately or as combined integrated systems and services offered within one contract. Many of the systems and products the Company supplies for subsea applications are highly engineered to meet the unique demands of our customers’ field properties and are typically ordered one to two years prior to installation. We often receive advance payments and progress billings from our customers in order to fund initial development and working capital requirements.
Under Subsea engineering, procurement, construction and installation contracts, revenue is principally generated from long-term contracts with customers. We have determined these contracts generally have one performance obligation as the delivered product is highly customized to customer and field specifications. We generally recognize revenue over time for such contracts as the customized products do not have an alternative use for the Company and we have an enforceable right to payment plus a reasonable profit for performance completed to date.
Our Subsea segment also performs an array of subsea services including (i) installation services, (ii) asset management services (iii) product optimization, (iv) inspection, maintenance and repair services, and (v) well access and intervention services, where revenue is generally earned through the execution of either installation-type or maintenance-type contracts. For either contract-type, management has determined that the performance of the service generally represents one single performance obligation. We have determined that revenue from these contracts is recognized over time as the customer simultaneously receives and consumes the benefit of the services.
b.Onshore/Offshore
Our Onshore/Offshore segment designs and builds onshore facilities related to the production, treatment, transformation and transportation of oil and gas; and designs, manufactures and installs fixed and floating platforms for the offshore production and processing of oil and gas reserves.


Our onshore business combines the design, engineering, procurement, construction and project management of the entire range of onshore facilities. Our onshore activity covers all types of onshore facilities related to the production, treatment and transportation of oil and gas, as well as transformation with petrochemicals such as ethylene, polymers and fertilizers. Some of the onshore activities include the development of onshore fields, refining, natural gas treatment and liquefaction, and design and construction of hydrogen and synthesis gas production units.
Many of these contracts provide a combination of engineering, procurement, construction, project management and installation services, which may last several years. We have determined that contracts of this nature have generally one performance obligation. In these contracts, the final product is highly customized to the specifications of the field and the customer’s requirements. Therefore, the customer obtains control of the asset over time, and thus revenue is recognized over time.
Our offshore business combines the design, engineering, procurement, construction and project management within the entire range of fixed and floating offshore oil and gas facilities, many of which were the first of their kind, including the development of floating liquefied natural gas (“FLNG”) facilities. Similar to onshore contracts, contracts grouped under this segment provide a combination of services, which may last several years.
We have determined that contracts of this nature have one performance obligation. In these contracts, the final product is highly customized to the specifications of the field and the customer’s requirements. We have determined that the customer obtains control of the asset over time, and thus revenue is recognized over time as the customized products do not have an alternative use for us and we have an enforceable right to payment plus reasonable profit for performance completed to date.
c.Surface Technologies
Our Surface Technologies segment designs, manufactures and supplies technologically advanced wellhead systems and high pressure valves and pumps used in stimulation activities for oilfield service companies and provides installation, flowback and other services for exploration and production companies.
We provide a full range of drilling, completion and production wellhead systems for both standard and custom-engineered applications. Under pressure control product contracts, we design and manufacture flowline products, under the Weco®/Chiksan® trademarks, articulating frac arm manifold trailers, well service pumps, compact valves and reciprocating pumps used in well completion and stimulation activities by major oilfield service companies. Performance obligations within these systems are satisfied either through delivery of a standardized product or equipment or the delivery of a customized product or equipment.
For contracts with a standardized product or equipment performance obligation, management has determined that because there is limited customization to products sold within such contracts and the asset delivered can be resold to another customer, revenue should be recognized as of a point in time, upon transfer of control to the customer and after the customer acceptance provisions have been met.
For contracts with a customized product or equipment performance obligation, the revenue is recognized over time, as the manufacturing of our product does not create an asset with an alternative use for us.
This segment also designs, manufactures and services measurement products globally. Contract-types include standard product or equipment and maintenance-type services where we have determined that each contract under this product line represents one performance obligation.
Revenue from standard measurement equipment contracts is recognized at a point in time, while maintenance-type contracts are typically priced at a daily or hourly rate. We have determined that revenue for these contracts is recognized over time because the customer simultaneously receives and consumes the benefit of the services.
Disaggregation of Revenue
The Company disaggregates revenue by geographic location and contract types. The tables also include a reconciliation of the disaggregated revenue with the reportable segments.


The following tables present products and services revenue by geography for each reportable segment for the year ended December 31, 2018:
 Reportable Segments
 Year Ended
 December 31, 2018
(In millions)Subsea Onshore/
Offshore
 Surface Technologies
Europe, Russia, Central Asia1,528.1
 3,506.1
 227.7
America1,721.5
 365.1
 865.5
Asia Pacific532.9
 1,236.1
 123.2
Africa758.1
 252.7
 57.9
Middle East181.2
 760.7
 213.4
Total products and services revenue$4,721.8
 $6,120.7
 $1,487.7
The following tables represent revenue by contract type for each reportable segment for the year ended December 31, 2018:
 Reportable Segments
 Year Ended
 December 31, 2018
(In millions)Subsea Onshore/
Offshore
 Surface Technologies
Services3,394.5
 6,120.7
 249.8
Products1,327.3
 
 1,237.9
Total products and services revenue4,721.8
 6,120.7
 1,487.7
Lease and other(a)
118.2
 
 104.5
Total revenue$4,840.0
 $6,120.7
 $1,592.2
(a)Represents revenue not subject to ASC Topic 606.
Contract Balances
The timing of revenue recognition, billings and cash collections results in billed accounts receivable, costs and estimated earnings in excess of billings on uncompleted contracts (contract assets), and billings in excess of costs and estimated earnings on uncompleted contracts (contract liabilities) on the consolidated balance sheets.
Contract Assets -Contract Assets, previously disclosed as costs and estimated earnings in excess of billings on uncompleted contracts,include unbilled amounts typically resulting from sales under long-term contracts when revenue is recognized over time and revenue recognized exceeds the amount billed to the customer, and right to payment is not just subject to the passage of time. Amounts may not exceed their net realizable value. Costs and estimated earnings in excess of billings on uncompleted contracts are generally classified as current.
Contract Liabilities - We sometimes receive advances or deposits from our customers, before revenue is recognized, resulting in contract liabilities.
The following table provides information about net contract assets (liabilities) as of December 31, 2018 and December 31, 2017:
(In millions)December 31,
2018
 December 31,
2017
 $ change % change
Contract assets$1,295.0
 $1,755.5
 $(460.5) (26.2)
Contract (liabilities)(4,085.1) (3,314.2) (770.9) (23.3)
Net contract assets (liabilities)$(2,790.1) $(1,558.7) $(1,231.4) (79.0)


The majority of the change in net contract assets (liabilities) was due to the adoption of ASC Topic 606. The adoption resulted in a net reclassification from net contract assets (liabilities) to trade receivables. See ‘Impact on Primary Financial Statements’ below. Certain amounts that were previously reported in contract assets and contract liabilities have been reclassified to trade receivables as of December 31, 2018.
The remaining decrease not related to the adoption of ASC Topic 606 in our contract assets from December 31, 2017 to December 31, 2018 was primarily due to the timing of milestone payments, partially offset by an increase of $5.7 million in contract assets due to acquisitions.
The remaining increase not related to the adoption of ASC Topic 606 in our contract liabilities was primarily due to cash received, excluding amounts recognized as revenue during the period.
In order to determine revenue recognized in the period from contract liabilities, we first allocate revenue to the individual contract liability balance outstanding at the beginning of the period until the revenue exceeds that balance. Revenue recognized for the year ended December 31, 2018 that were included in the contract liabilities balance at December 31, 2017 was $2,814.6 million.
In addition, net revenue recognized for the year ended December 31, 2018 from our performance obligations satisfied in previous periods has favorable impact of $21.8 million. This primarily relates to the changes in the estimate of the stage of completion that impacted revenue.
Transaction Price Allocated to the Remaining Unsatisfied Performance Obligations
Remaining unsatisfied performance obligations (“RUPO” or “order backlog”) represent the transaction price for products and services for which we have a material right but work has not been performed. Transaction price of the order backlog includes the base transaction price, variable consideration and changes in transaction price. The order backlog table does not include contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. The transaction price of order backlog related to unfilled, confirmed customer orders is estimated at each reporting date. As of December 31, 2018, the aggregate amount of the transaction price allocated to order backlog was $14,560.0 million. The Company expects to recognize revenue on approximately 63.1% of the order backlog through 2019 and 36.9% thereafter.
The following table details the order backlog for each business segment as of December 31, 2018:
(In millions)2019 2020 Thereafter
Subsea3,379.2
 1,382.1
 1,238.3
Onshore/Offshore5,335.1
 1,732.9
 1,022.5
Surface Technologies469.9
 
 
Total remaining unsatisfied performance obligations$9,184.2

$3,115.0
 2,260.8


Impact on Primary Financial Statements
The impact to revenues for the year ended December 31, 2018 was an increase of $27.1 million, as a result of applying ASC Topic 606. A difference between revenue recognized under ASC Topic 606 as compared to ASC Topic 605 exists for certain contracts in which physical progress was used as the measure of progress for which the cost-to-cost method best depicts the transfer of control to the customer.
A difference exists in the presentation of trade receivables, contract assets and contract liabilities. Upon adoption of ASC Topic 606, we recognize trade receivables when we have the unconditional right to payment. Previously, we reported certain billed amounts on a net basis within contract assets and contract liabilities when the legal right of offset was present within the contract.
Consolidated Statements of Income for the year ended December 31, 2018:
 Year Ended
 December 31, 2018
(In millions, except per share data)As reported Effect of ASC Topic 606 Under ASC Topic 605
Revenue     
Service revenue$9,765.0
 $(32.0) $9,733.0
Product revenue2,565.2
 4.9
 2,570.1
Lease and other revenue222.7
 
 222.7
Total revenue12,552.9
 (27.1) 12,525.8
      
Costs and expenses     
Cost of service revenue7,895.1
 (17.7) 7,877.4
Cost of product revenue2,234.5
 5.9
 2,240.4
Cost of lease and other revenue143.4
 
 143.4
Selling, general and administrative expense1,140.6
 
 1,140.6
Research and development expense189.2
 
 189.2
Impairment, restructuring and other expenses (Note 17)1,831.2
 
 1,831.2
Merger transaction and integration costs (Note 2)36.5
 
 36.5
Total costs and expenses13,470.5
 (11.8) 13,458.7
      
Other income (expense), net(323.9) 
 (323.9)
Income from equity affiliates114.3
 (8.0) 106.3
Income before net interest expense and income taxes(1,127.2) (23.3) (1,150.5)
Net interest expense(360.9) 
 (360.9)
Income before income taxes(1,488.1) (23.3) (1,511.4)
Provision for income taxes (Note 19)422.7
 (8.9) 413.8
Net income (loss)(1,910.8) (14.4) (1,925.2)
Net (income) loss attributable to noncontrolling interests(10.8) 
 (10.8)
Net income (loss) attributable to TechnipFMC plc$(1,921.6) $(14.4) $(1,936.0)


Consolidated Balance Sheets as of December 31, 2018:
 December 31, 2018
(In millions, except par value data)As reported Effect of ASC Topic 606 Under ASC Topic 605
Assets     
Cash and cash equivalents$5,540.0
 $
 $5,540.0
Trade receivables, net2,469.7
 (1,513.4) 956.3
Contract assets1,295.0
 450.2
 1,745.2
Inventories, net (Note 7)1,251.2
 16.4
 1,267.6
Derivative financial instruments (Note 21)95.7
 
 95.7
Income taxes receivable284.3
 (1.2) 283.1
Advances paid to suppliers189.7
 
 189.7
Other current assets (Note 8)655.6
 
 655.6
Total current assets11,781.2
 (1,048.0) 10,733.2
Investments in equity affiliates394.5
 (8.0) 386.5
Property, plant and equipment, net of accumulated depreciation3,259.8
 
 3,259.8
Goodwill7,607.6
 
 7,607.6
Intangible assets, net of accumulated amortization1,176.7
 
 1,176.7
Deferred income taxes232.4
 (0.2) 232.2
Derivative financial instruments (Note 21)18.3
 
 18.3
Other assets314.0
 
 314.0
Total assets$24,784.5
 $(1,056.2) $23,728.3
      
Liabilities and equity     
Short-term debt and current portion of long-term debt (Note 13)$67.4
 $
 $67.4
Accounts payable, trade2,600.3
 17.6
 2,617.9
Contract liabilities4,085.1
 (1,116.1) 2,969.0
Accrued payroll394.7
 
 394.7
Derivative financial instruments (Note 21)138.4
 
 138.4
Income taxes payable81.9
 2.2
 84.1
Other current liabilities (Note 8)1,766.6
 (39.0) 1,727.6
Total current liabilities9,134.4
 (1,135.3) 7,999.1
Long-term debt, less current portion (Note 13)4,124.3
 
 4,124.3
Accrued pension and other post-retirement benefits, less current portion298.9
 
 298.9
Derivative financial instruments (Note 21)44.9
 
 44.9
Deferred income taxes209.2
 2.1
 211.3
Other liabilities503.4
 
 503.4
Total liabilities14,315.1
 (1,133.2) 13,181.9
Commitments and contingent liabilities (Note 18)     
Mezzanine equity     
Redeemable noncontrolling interest38.5
 
 38.5
Stockholders’ equity (Note 15)     
Ordinary shares450.5
 
 450.5
Ordinary shares held in employee benefit trust(2.4) 
 (2.4)
Capital in excess of par value of ordinary shares10,197.0
 
 10,197.0
Retained earnings1,114.2
 77.1
 1,191.3
Accumulated other comprehensive loss(1,359.7) 
 (1,359.7)
Total TechnipFMC plc stockholders’ equity10,399.6
 77.1
 10,476.7
Noncontrolling interests31.3
 (0.1) 31.2
Total equity10,430.9
 77.0
 10,507.9
Total liabilities and equity$24,784.5
 $(1,056.2) $23,728.3


NOTE 5. BUSINESS SEGMENTS13. RELATED PARTY TRANSACTIONS
Management’s determinationReceivables, payables, revenues and expenses which are included in our consolidated financial statements for all transactions with related parties, defined as entities related to our directors and main shareholders as well as the partners of our reporting segments was madeconsolidated joint ventures, were as follows.
Trade receivables consisted of receivables due from following related parties:
December 31,
(In millions)20202019
TP JGC Coral France SNC$38.1 $40.1 
Equinor ASA24.1 
TTSJV W.L.L.14.9 22.4 
Novarctic SNC9.7 
Dofcon Navegacao4.2 
Techdof Brasil AS8.0 4.3 
Storengy6.1 3.1 
Others8.4 6.9 
Total trade receivables$113.5 $76.8 
TP JGC Coral France SNC, TTSJV W.L.L., Dofcon Navegacao, and Novarctic SNC are equity method affiliates. Techdof Brasil AS is a wholly owned subsidiary of Dofcon Brasil AS, our equity method affiliate. A member of our Board of Directors serves on the basisBoard of Directors for Storengy. In October 2020, we added a new member of our strategic priorities within each segmentBoard of Directors who is an executive of Equinor ASA.
Trade payables consisted of payables due to following related parties:
December 31,
(In millions)20202019
Chiyoda$14.2 $24.8 
Nipigas14.2 — 
Saipem23.7 — 
JGC Corporation1.9 15.1 
IFP Energies nouvelles— 2.4 
Dofcon Navegacao1.5 2.1 
Others5.7 6.7 
Total trade payables$61.2 $51.1 
Chiyoda and JGC Corporation are joint venture partners on our Yamal project. Saipem and Nipigas are joint venture partners on our Arctic LNG project. A member of our Board of Directors serves as an executive officer of IFP Energies nouvelles until June 2020.
Additionally, we have note receivable balance of $40.3 million and $65.2 million as of December 31, 2020 and 2019, respectively. The note receivable balance includes $37.6 million and $62.5 million with Dofcon Brasil AS as of December 31, 2020 and 2019, respectively. Dofcon Brasil AS is a VIE and accounted for as an equity method affiliate. These are included in other assets in our consolidated balance sheets.
Revenue consisted of amount from following related parties:
109


Year Ended December 31,
(In millions)202020192018
TTSJV W.L.L.$47.2 $127.9 $
TP JGC Coral France SNC44.2 110.4 118.2 
Equinor ASA81.1 
Equinor Brasil38.5 
Anadarko Petroleum Company— 67.1 124.8 
TOP CV— 11.9 7.2 
Storengy10.7 8.8 — 
Novarctic SNC10.7 0.4 
Dofcon Navegacao3.4 8.4 2.9 
Techdof Brasil AS11.2 8.3 7.0 
JGC Corporation— 6.7 
Others27.2 29.7 33.2 
Total revenue$274.2 $379.6 $293.3 
A member of our Board of Directors (the “Director”) served on the differences in the products and services we provide, which corresponds to the manner in which our Chief Executive Officer, as our chief operating decision maker, reviews and evaluates operating performance to make decisions about resources to be allocated to the segment.
Upon completionBoard of the Merger, we reorganized our reporting structure and aligned our segments and the underlying businesses to execute the strategyDirectors of TechnipFMC.Anadarko Petroleum Company (“Anadarko”) until August 2019. In August 2019, Anadarko was acquired by Occidental Petroleum Corporation (“Occidental”). As a result, we report the resultsDirector no longer serves as a member of operations in the following segments: Subsea, Onshore/Offshore and Surface Technologies.Board of Directors of Anadarko. The Director is not an officer or director of Occidental.
Our reportable segments are:
Subsea - manufactures and designs products and systems, performs engineering, procurement and project management and provides services used by oil and gas companies involved in offshore exploration and production of crude oil and natural gas.
Onshore/Offshore - designs and builds onshore facilities related to the production, treatment, transformation and transportation of oil and gas; and designs, manufactures and installs fixed and floating platforms for the production and processing of oil and gas reserves.
Surface Technologies - designs and manufactures systems and provides services used by oil and gas companies involved in land and shallow water exploration and production of crude oil and natural gas; designs, manufactures and supplies technologically advanced high pressure valves and fittings for oilfield service companies; and also provides flowback and well testing services.
Segment operating profit is defined as total segment revenue less segment operating expenses. Income (loss) fromTOP CV was previously an equity method investmentsaffiliate that became a fully consolidated subsidiary on December 30, 2019. See Note 2 for further details.
Equinor Brasil is includeda subsidiary of Equinor ASA in computing segment operating profit. ReferBrazil.
Expenses consisted of amounts to Note 9 for additional information. The following items have been excluded in computing segment operating profit: corporate staff expense, net interest income (expense) associated with corporate debt facilities, income taxes,related parties:
Year Ended December 31,
(In millions)202020192018
Chiyoda$1.4 $25.1 $53.0 
JGC Corporation0.4 20.8 81.2 
Arkema S.A.5.3 18.9 2.6 
Serimax Holdings SAS0.4 17.7 0.1 
Saipem26.8 
Nipigas36.8 
Magma Global Limited14.0 7.3 3.0 
TP JGC Coral France SNC— 5.0 — 
Jumbo Shipping16.0 4.5 — 
Dofcon Navegacao24.0 1.8 
Others24.6 41.3 14.8 
Total expenses$149.7 $142.4 $154.7 
Serimax Holdings SAS and other revenue and other expense, net.
Segment revenue and segment operating profit
 Year Ended December 31,
(In millions)2018 2017 2016
Segment revenue     
Subsea$4,840.0
 $5,877.4
 $5,850.5
Onshore/Offshore6,120.7
 7,904.5
 3,349.1
Surface Technologies1,592.2
 1,274.6
 
Other revenue and intercompany eliminations
 0.4
 
Total revenue$12,552.9
 $15,056.9
 $9,199.6
      
Segment operating profit (loss)     
Subsea$(1,529.5) $460.5
 $732.0
Onshore/Offshore824.0
 810.9
 34.1
Surface Technologies172.8
 82.7
 
Total segment operating profit (loss)(532.7) 1,354.1
 766.1
      
Corporate items     
Corporate expense (a)
(594.5) (359.2) (185.9)
Interest income121.4
 140.8
 85.3
Interest expense(482.3) (456.0) (114.1)
Total corporate items(955.4) (674.4) (214.7)
Income (loss) before income taxes (b)
$(1,488.1) $679.7
 $551.4
(a)Corporate expense primarily includes corporate staff expenses, legal reserve, stock-based compensation expenses, other employee benefits, certain foreign exchange gains and losses, and merger-related transaction expenses.
(b)Includes amounts attributable to noncontrolling interests.


Segment assets
 December 31,
(In millions)2018 2017
Segment assets   
Subsea$11,037.8
 $12,944.4
Onshore/Offshore4,355.2
 4,604.8
Surface Technologies2,825.6
 2,453.3
Intercompany eliminations(26.4) (24.3)
Total segment assets18,192.2
 19,978.2
Corporate (a)
6,592.3
 8,285.5
Total assets$24,784.5
 $28,263.7
(a)Corporate includes cash, LIFO adjustments, deferred income tax balances, legal provisions, property, plant and equipment not associated with a specific segment, pension assets and the fair value of derivative financial instruments.
Geographic segment information
Geographic segment sales were identified basedMagma Global Limited are equity method affiliates. Members of our Board of Directors serve on the country where our productsBoard of Directors for Arkema S.A. and services were delivered.Jumbo Shipping.
110
 Year Ended December 31,
(In millions)2018 2017 2016
Revenue     
Russia$2,773.3
 $4,894.2
 $283.3
Brazil1,478.7
 911.1
 1,006.9
United States1,275.8
 1,534.7
 1,033.7
Norway1,202.6
 971.2
 574.4
Australia926.6
 953.9
 776.6
United Kingdom442.1
 465.9
 761.5
Angola385.7
 1,016.2
 935.3
All other countries4,068.1
 4,309.7
 3,827.9
Total revenue$12,552.9
 $15,056.9
 $9,199.6


Geographic segment long-lived assets represent property,
NOTE 14. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment net.
consisted of the following: 
 December 31,
(In millions)2018 2017
Long-lived assets   
United Kingdom$925.6
 $1,190.1
United States589.9
 567.1
Netherlands360.5
 574.2
Brazil325.8
 408.3
Norway311.4
 321.4
All other countries746.6
 810.4
Total long-lived assets$3,259.8
 $3,871.5
December 31,
(In millions)20202019
Land and land improvements$88.4 $108.4 
Buildings611.0 626.9 
Vessels1,968.1 2,091.9 
Machinery and equipment1,919.4 1,930.6 
Office fixtures and furniture292.0 285.0 
Construction in process148.1 130.9 
Other243.5 277.1 
5,270.5 5,450.8 
Accumulated depreciation(2,408.7)(2,288.8)
Property, plant and equipment, net$2,861.8 $3,162.0 
Other business segment information
 Capital Expenditures 
Depreciation and
Amortization
 
Research and
Development Expense
 Year Ended December 31, Year Ended December 31, Year Ended December 31,
(In millions)2018 2017 2016 2018 2017 2016 2018 2017 2016
Subsea$223.2
 $179.1
 $286.9
 $440.4
 $507.2
 $256.8
 $145.2
 $169.2
 $75.4
Onshore/Offshore7.6
 16.2
 26.0
 38.2
 41.1
 43.9
 29.7
 31.4
 30.0
Surface Technologies111.9
 35.4
 
 66.6
 63.6
 
 14.3
 12.3
 
Corporate25.4
 25.0
 
 5.2
 2.8
 
 
 
 
Total$368.1
 $255.7
 $312.9
 $550.4
 $614.7
 $300.7
 $189.2
 $212.9
 $105.4


Depreciation expense was $323.5 million, $383.5 million and $367.8 million in 2020, 2019 and 2018, respectively. The amount of interest cost capitalized was not material for the years presented.
During 2020 and 2019, we determined the years ended December 31, 2018, 2017 and 2016, revenue from JSC Yamal LNG exceeded 10%carrying amount of certain of our long-lived assets exceeded their fair value and recorded an impairment. See Note 19 for further details.
In December 2020, we declared our intent to sell our G1200 vessel as part of our overall strategy to optimize the profile and size of our subsea fleet and classified it as an asset held for sale in Other Current Assets in our consolidated revenue. Duringbalance sheet. We also evaluated the vessel’s book value and recorded an impairment charge of $8.3 million within Impairment, Restructuring and Other Expenses in our consolidated statement of income for the year ended December 31, 2016, revenue from Total exceeded 10%2020.
In December 2019, we completed the sale of our consolidated revenue.
NOTE 6. EARNINGS (LOSS) PER SHARE
A reconciliationG1201 vessel as part of our overall strategy to optimize the numberprofile and size of shares used for the basic and diluted earnings per share calculation was as follows:
 Year Ended December 31,
(In millions, except per share data)2018 2017 2016
Net income (loss) attributable to TechnipFMC plc$(1,921.6) $113.3
 $393.3
After-tax interest expense related to dilutive shares
 
 1.5
Net income (loss) attributable to TechnipFMC plc adjusted for dilutive effects(1,921.6) 113.3
 394.8
      
Weighted average number of shares outstanding458.0
 466.7
 119.4
Dilutive effect of restricted stock units
 0.2
 
Dilutive effect of stock options
 
 
Dilutive effect of performance shares
 1.4
 0.5
Dilutive effect of convertible bonds
 
 5.2
Total shares and dilutive securities458.0
 468.3
 125.1
      
Basic earnings (loss) per share attributable to TechnipFMC plc$(4.20) $0.24
 $3.29
Diluted earnings (loss) per share attributable to TechnipFMC plc$(4.20) $0.24
 $3.16
NOTE 7. INVENTORIES
Inventories consistedour subsea fleet. We recorded a net loss of the following: 
 December 31,
(In millions)2018 2017
Raw materials$366.4
 $271.4
Work in process146.4
 130.2
Finished goods738.4
 585.4
Inventory, net1,251.2
 987.0
All amounts in the table above are reported net of obsolescence reserves of $97.5$7.1 million, and $70.8 million at December 31, 2018 and 2017, respectively.
Net inventories accounted for under the LIFO method totaled $387.2 million and $300.9 million at December 31, 2018 and 2017, respectively. The current replacement costs of LIFO inventories exceeded their recorded values by $7.9 million and $0.6 million at December 31, 2018 and 2017, respectively. There was no reduction to the base LIFO inventory in 2018.


NOTE 8. OTHER CURRENT ASSETS & OTHER CURRENT LIABILITIES
Other current assets consisted of the following:
 December 31,
(In millions)2018 2017
Value-added tax receivables$305.8
 $532.5
Prepaid expenses91.3
 136.2
Sundry receivables87.0
 170.9
Other taxes receivables85.0
 155.8
Held-to-maturity investments
 60.0
Asset held for sale9.6
 50.2
Available-for-sale securities
 9.9
Other76.9
 90.7
Other current assets$655.6
 $1,206.2
Other current liabilities consisted of the following:
(In millions)December 31,
2018
 December 31, 2017
Legal provisions$418.2
 $74.6
Warranty accruals and project contingencies418.2
 616.3
Value added tax and other taxes payable214.3
 204.4
Provisions135.5
 83.4
Redeemable financial liability173.0
 69.7
Social security liability112.3
 145.0
Compensation accrual87.3
 123.5
Liabilities held for sale16.2
 13.7
Current portion of accrued pension and other post-retirement benefits14.0
 10.3
Other accrued liabilities177.6
 347.0
Total other current liabilities$1,766.6
 $1,687.9
NOTE 9. EQUITY METHOD INVESTMENTS
The equity method of accountingwhich is used to account for investments in unconsolidated affiliates where we can have the ability to exert significant influence over the affiliates operating and financial policies.
For certain construction joint ventures, we use the proportionate consolidation method, whereby our proportionate share of each entity’s assets, liabilities, revenues, and expenses are included in the appropriate classifications in the accompanying consolidated financial statements. None of our proportionate consolidation investments, individually or in the aggregate, are significant to our consolidated results for 2018, 2017, or 2016.
Our equity investments were as follows as of December 31, 2018 and 2017:
 December 31, 2018
 Percentage Owned 
Carrying Value
(in millions)
Technip Odebrecht PLSV CV50.0% $136.1
Dofcon Brasil AS50.0% 126.2
Serimax Holdings SAS20.0% 23.2
Magma Global Limited25.0% 49.8
Other  59.2
Investments in equity affiliates  $394.5


 December 31, 2017
 Percentage Owned 
Carrying Value
(in millions)
Technip Odebrecht PLSV CV50.0% $111.4
Dofcon Brasil AS50.0% 74.1
Serimax Holdings SAS20.0% 25.1
FSTP Brasil Ltda25.0% 21.5
Other  40.4
Investments in equity affiliates  $272.5
Ourother income from equity affiliates included in each of our reporting segments was as follows:
 Year Ended December 31,
(In millions)2018 2017 2016
Subsea$80.9
 $55.3
 $35.0
Onshore/Offshore33.4
 0.3
 82.7
Income from equity affiliates$114.3
 $55.6
 $117.7
Summarized financial information(b)-Summarized financial information for our equity method investments is presented below for 2016. Our major equity method investments are as follows:
Technip Odebrecht PLSV CV (“Technip Odebrecht”) - is an affiliated company in the form of a joint venture between Technip SA and Ocyan SA. Technip Odebrecht was formed in 2011 when awarded a contract to provide pipeline installation ships to state-controlled Petroleo Brasileiro SA (“Petrobras”) for their work in oil and gas fields offshore Brazil. We have accounted for our 50% investment using the equity method of accounting with results reported in our Subsea segment.
Dofcon Brasil AS (“Dofcon”) - is an affiliated company in the form of a joint venture between Technip SA and DOF Subsea and was founded in 2006. Dofcon provides Pipe-Laying Support Vessels (PLSVs) for work in oil and gas fields offshore Brazil. Dofcon is considered a VIE because it does not have sufficient equity to finance its activities without additional subordinated financial support from other parties. We are not the primary beneficiary of the VIE. As such, we have accounted for our 50% investment using the equity method of accounting with results reported in our Subsea segment.
Serimax Holdings SAS (“Serimax”) - is an affiliated company in the form of a joint venture between Technip SA and Vallourec SA and was founded in 2016. Serimax is headquartered in Paris, France and provides rigid pipes welding services for work in oil and gas fields around the world. We have accounted for our 20% investment using the equity method of accounting with results reported in our Subsea segment.
Magma Global Limited (“Magma Global”) - is an affiliated company in the form of a collaborative agreement signed in 2018 between Technip-Coflexip UK Holdings Limited and Magma Global to develop hybrid flexible pipe for use in offshore applications. As part of the collaboration, TechnipFMC holds a minority stake. We have accounted for our 25% investment using the equity method investment of accounting with results reported in our Subsea segment.
Yamgaz SNC (“Yamgaz”) - In 2015, Yamgaz was an affiliated company in the form of a joint venture between Technip, JGC Corporation (“JGC”)(expense), and Chiyoda International Corporation (“Chiyoda”). Yamgaz was formed in 2013 when it was awarded a contract to carry out the engineering, procurement, supply, construction and commissioning of an integrated facility for natural gas liquefaction based on the resources of the South Tambey Gas Condensate field located on the Yamal Peninsula, Russia. In the fourth quarter of 2016, we obtained voting control interests in legal onshore/offshore contract entities which own and account for the design, engineering and construction of the Yamal LNG plant. Prior to the amendments of the contractual terms that provided us with voting interest control, we accounted for our 50% investment using the equity method of accounting with results reported in our Onshore/Offshore segment. Subsequent to this transaction we recorded the resultsnet in our consolidated financial information.statements of income.



The following table presents summarized financial information of the equity method investments:
(In millions)
2016 (a)
Year ended December 31 
Revenues$6,782.9
Gross profit461.0
Net income (loss)(348.4)
(a)As discussed above, in the fourth quarter of 2016, we obtained the voting control interests of legal Onshore/Offshore entities that own and account for the design, engineering and construction of Yamal. As a result of the acquisition and consolidation, we recorded $3.5 billion in cash, $601.7 million in advances to suppliers, $71.1 million in intangibles, $3.8 billion in current liabilities, $191.2 million in noncurrent liabilities, and a $7.7 million gain.
(b)As of December 31, 2018 and 2017, our equity method investments were no longer significant individually or in the aggregate. As such, summarized financial information for 2018 and 2017 is not presented.
NOTE 10. RELATED PARTY TRANSACTIONS15. GOODWILL AND INTANGIBLE ASSETS
Receivables, payables,Goodwill - We record goodwill as the excess of the purchase price over the fair value of the net assets acquired in acquisitions accounted for under the purchase method of accounting. We test goodwill for impairment annually as of October 31 of each year, or more frequently if circumstances indicate possible impairment. We identify a potential impairment by comparing the fair value of the applicable reporting unit (which is consistent with our business segments) to its net book value, including goodwill. If the net book value exceeds the fair value of the reporting unit, we measure the impairment by comparing the carrying value of the reporting unit to its fair value.
We test our goodwill for impairment by comparing the fair value of each of our reporting units to their net carrying value. Our impairment analysis is quantitative; however, it includes subjective estimates based on assumptions regarding future growth rates, interest rates and operating expenses.
A lower fair value estimate in the future for any of our reporting units could result in goodwill impairments. Factors that could trigger a lower fair value estimate include sustained price declines of the reporting unit’s products and services, cost increases, regulatory or political environment changes, changes in customer demand, and other changes in market conditions, which may affect certain market participant assumptions used in the discounted future cash flow model based on internal forecasts of revenues and expenses over a specified period plus a terminal value (the income approach).
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The income approach estimates fair value by discounting each reporting unit’s estimated future cash flows using a weighted-average cost of capital that reflects current market conditions and the risk profile of the reporting unit. To arrive at our future cash flows, we use estimates of economic and market assumptions, including growth rates in revenues, costs, estimates of future expected changes in operating margins, tax rates and cash expenditures. Future revenues are also adjusted to match changes in our business strategy. We believe this approach is an appropriate valuation method. Under the market multiple approach, we determine the estimated fair value of each of our reporting units by applying transaction multiples to each reporting unit’s projected EBITDA and then averaging that estimate with similar historical calculations using either a one, two or three year average. Our reporting unit valuations were determined primarily by utilizing the income approach and the market multiple approach.
During the first quarter of 2020, triggering events were identified which led to performing interim goodwill impairment testing in our reporting units as of March 31, 2020. These events included the COVID-19 pandemic breakout, commodity price declines, and a significant decrease in our market capitalization as well as those of our peers and customers. The fair value for our reporting units for the interim testing was valued using a market approach. An appropriate control premium was considered for each of the reporting units and applied to the output of the market approach. An interim impairment test during the first quarter of 2020 resulted in $2,747.5 million and $335.9 million of goodwill impairment charges recorded in our Subsea and Surface Technologies segments, respectively.
During our annual impairment tests the following significant estimates were used by management in determining the fair values of reporting units in order to test the goodwill at October 31:
202020192018
Year of cash flows before terminal value445
Discount rates15.0%12.5% to 15.0%12.0% to 13.0%
EBITDA multiplesN/A6.0 - 8.5x7.0 - 8.5x

During the year ended December 31, 2020, the significant estimates used by management in determining the fair value described above relate to Technip Energies reporting unit only. The fair value over carrying amount for our Technip Energies segment was in excess of 300% of its carrying amount at October 31, 2020.
Based on the impairment tests performed during the year ended December 31, 2020 we recorded $2,747.5 million and $335.9 million of goodwill impairment charges recorded in our Subsea and Surface Technologies reporting units, respectively. No goodwill impairment charges were recorded in our Technip Energies reporting unit.
During the year ended December 31, 2019, we recorded $1,321.9 million and $666.8 million of goodwill impairment charges in our Subsea and Surface Technologies reporting units, respectively. See Note 19 for further details.

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The carrying amount of goodwill by reporting segment was as follows:
(In millions)SubseaTechnip EnergiesSurface TechnologiesTotal
December 31, 20184,142.4 2,447.7 1,017.5 7,607.6 
Impairments(1,321.9)— (666.8)(1,988.7)
Purchase accounting adjustment— — 9.9 9.9 
Other— (17.7)— (17.7)
Translation(6.4)(6.4)— (12.8)
December 31, 20192,814.1 2,423.6 360.6 5,598.3 
Impairments(2,747.5)(335.9)(3,083.4)
Transfers (a)
(21.2)46.1 (24.9)— 
Translation(45.4)42.8 0.2 (2.4)
December 31, 2020$— $2,512.5 $— $2,512.5 
(a)    Beginning in the first quarter of 2020, Technip Energies includes our Loading Systems business that was previously reported in the Surface Technologies segment and our process automation business, Cybernetix, that was previously reported in the Subsea segment. See Note 7 for further details.
As of December 31, 2020 and 2019, accumulated goodwill impairment was $6,455.1 million and $3,371.7 million, respectively.
Intangible assets - The components of intangible assets were as follows:
December 31,
20202019
(In millions)Gross
Carrying
Amount
Accumulated
Amortization
Gross
Carrying
Amount
Accumulated
Amortization
Acquired technology$247.1 $98.1 $246.7 $73.6 
Backlog175.0 175.0 
Customer relationships285.4 114.4 285.4 85.9 
Licenses, patents and trademarks816.8 264.0 811.1 227.6 
Software232.1 178.9 215.9 151.1 
Other120.2 65.1 115.9 50.2 
Total intangible assets$1,701.6 $720.5 $1,850.0 $763.4 
We recorded $123.7 million, $126.1 million and $182.6 million in amortization expense related to intangible assets during the years ended December 31, 2020, 2019 and 2018, respectively. During the years 2021 through 2025, annual amortization expense is expected to be as follows: $117 million in 2021, $114 million in 2022, $110 million in 2023, $96 million in 2024, $93 million in 2025 and $451 million thereafter.

NOTE 16. DEBT
Overview
Short-term debt and current portion of long-term debt - Short-term debt and current portion of long-term debt consisted of the following:
December 31,
(In millions)20202019
Bank borrowings and other$85.0 $270.8 
Synthetic bonds due 2021551.2 
5.00% 2010 Private placement notes due 2020224.6 
Total short-term debt and current portion of long-term debt$636.2 $495.4 

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Long-term debt consisted of the following:
December 31,
(In millions)20202019
Commercial paper$1,525.9 $1,967.0 
Synthetic bonds due 2021551.2 492.9 
3.45% Senior Notes due 2022500.0 500.0 
5.00% 2010 Private placement notes due 2020224.6 
3.40% 2012 Private placement notes due 2022184.0 168.5 
3.15% 2013 Private placement notes due 2023159.5 146.0 
3.15% 2013 Private placement notes due 2023153.4 140.4 
4.50% 2020 Private placement notes due 2025245.4 
4.00% 2012 Private placement notes due 202792.0 84.2 
4.00% 2012 Private placement notes due 2032122.7 112.3 
3.75% 2013 Private placement notes due 2033122.7 112.3 
Bank borrowings and other309.9 536.3 
Unamortized debt issuance costs and discounts(12.8)(9.1)
Total debt3,953.9 4,475.4 
Less: current borrowings636.2 495.4 
Long-term debt$3,317.7 $3,980.0 

Debt maturities as of December 31, 2020, are as follows:
 Payments Due by Period
(In millions)Total
payments
Less than
1 year
1-3
years
3-5
years
After 5
years
Total debt$3,953.9 $636.2 $2,589.1 $294.0 $434.6 

Subsequent to the Spin-off, we expect the total future principal payments on debt to be approximately $2,376.8 million. Refer to Note 26 for further details.
Significant Funding and Liquidity Activities
During 2020, we completed the following transactions in order to enhance our total liquidity position:
Repaid $233.9 million of 5.00% 2010 private placement notes;
Repaid the remaining outstanding balance of $190.0 million of the term loan assumed in connection with the acquisition of the remaining 50% interest in TOP CV.
Issued €200 million aggregate principal amount of 4.500% 2020 Private Placement Notes due June 30, 2025. Within three months of the effective date of the Spin-off of Technip Energies, if there is a downgrade by a nationally recognized rating agency of the corporate rating of TechnipFMC from an investment grade to a non-investment grade rating or a withdrawal of any such rating, the interest rate applicable to the 2020 Private Placement Notes will be increased to 5.75%;
Entered into a new, six-month €500 million senior unsecured revolving credit facility agreement, which may be extended for two additional three-month periods (the “Euro Facility”); and
Entered into the Bank of England’s COVID Corporate Financing Facility program (the “CCFF Program”), which allows us to issue up to £600 million of unsecured commercial paper notes.
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Credit Facilities and Debt
Revolving credit facility - On January 17, 2017, we acceded to a new $2.5 billion senior unsecured revolving credit facility agreement (“Facility Agreement”) between FMC Technologies, Inc., Technip Eurocash SNC (the “Borrowers”), and TechnipFMC plc (the “Additional Borrower”) with JPMorgan Chase Bank, National Association (“JPMorgan”), as agent and an arranger, SG Americas Securities LLC as an arranger, and the lenders party thereto.
The Facility Agreement provides for the establishment of a multicurrency, revolving credit facility, which includes a $1.5 billion letter of credit subfacility. Subject to certain conditions, the Borrowers may request the aggregate commitments under the facility agreement be increased by an additional $500.0 million. On November 26, 2018, we entered into an extension which extends the expiration date to January 2023.
Borrowings under the facility agreement bear interest at the following rates, plus an applicable margin, depending on currency:
U.S. dollar-denominated loans bear interest, at the Borrowers’ option, at a base rate or an adjusted rate linked to the London interbank offered rate (“Adjusted LIBOR”);
sterling-denominated loans bear interest at Adjusted LIBOR; and
euro-denominated loans bear interest at the Euro interbank offered rate (“EURIBOR”).
Depending on the credit rating of TechnipFMC, the applicable margin for revolving loans varies (i) in the case of Adjusted LIBOR and EURIBOR loans, from 0.820% to 1.300% and (ii) in the case of base rate loans, from 0.000% to 0.300%. The “base rate” is the highest of (a) the prime rate announced by JPMorgan, (b) the greater of the Federal Funds Rate and the Overnight Bank Funding Rate plus 0.5% or (c) one-month Adjusted LIBOR plus 1.0%. As of December 31, 2020, there were no outstanding borrowings under our revolving credit facility.
Euro Facility – On May 19, 2020, we entered into the Euro Facility with HSBC France, as agent, and the lenders party thereto, which provides for the establishment of a six-month revolving credit facility denominated in Euros with total commitments of €500 million, which may be extended by us for two additional three-month periods. Borrowings under the Euro Facility bear interest at the Euro interbank offered rate for a period equal in length to the interest period of a given loan (which may be three or six months), plus an applicable margin. As of December 31, 2020, there were no outstanding borrowings under Euro Facility.
On June 12, 2020, we entered into Amendment No. 1 to the Facility Agreement and into an Amendment and Restatement Agreement to our Euro Facility. The amendments, which are includedeffective through the respective expirations of the Facility Agreement and Euro Facility, permit us to include the gross book value of $3.2 billion of goodwill (fully impaired in the quarter ended March 31, 2020) in the calculation of consolidated net worth, which is used in the calculation of our quarterly compliance with the total capitalization ratio under the Facility Agreement and Euro Facility.
The Facility Agreement and Euro Facility contain usual and customary covenants, representations and warranties, and events of default for credit facilities of this type, including financial covenants requiring that our total capitalization ratio not exceed 60% at the end of any financial quarter. The Facility Agreement and Euro Facility also contain covenants restricting our ability and our subsidiaries’ ability to incur additional liens and indebtedness, enter into asset sales, or make certain investments.
As of December 31, 2020, we were in compliance with all restrictive covenants under our credit facilities.
CCFF Program - On May 19, 2020, we entered into a dealer agreement (the “Dealer Agreement”) with Bank of America Merrill Lynch International DAC (the “Dealer”) and an Issuing and Paying Agency Agreement (the “Agency Agreement”, and together with the Dealer Agreement, the “Agreements”) with Bank of America, National Association, London Branch, relating to the European commercial paper program established under the CCFF Program as a source of additional liquidity.
The Agreements provide the terms under which we may issue, and the Dealer will arrange for, the sale of short-term, unsecured commercial paper notes (the “Notes”) to reduce existing debt or decrease overall borrowing costs. The Notes contain customary representations, warranties, covenants, defaults, and indemnification provisions, and will be sold at such discounts from their face amounts as shall be agreed between us and the Dealer. The Notes will be fully payable at maturity, and the maturities of the Notes will vary but may not exceed 364 days. The principal amount of outstanding Notes may not exceed £600 million. The Agency Agreement provides for the terms of
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issuance and payment of the Notes. As of December 31, 2020, our commercial paper borrowings under the CCFF Program had a weighted average interest rate of0.43%. As of December 31, 2020, we had $817.9 million of Notes outstanding and recorded as long-term borrowings under the CCFF Program. When we have both the ability and intent to refinance certain obligations on a long-term basis, the obligations are classified as long-term, as such, the outstanding borrowings of the CCFF Program were classified as long-term debt in our consolidated financial statementsbalance sheet as of December 31, 2020.
Bilateral credit facility - We have access to a €100.0 million bilateral credit facility expiring in May 2021.
The bilateral credit facility contains usual and customary covenants, representations and warranties and events of default for all transactionscredit facilities of this type.
As of December 31, 2020, there were no outstanding borrowings under our bilateral credit facility.
Commercial paper - Under our commercial paper program, we have the ability to access $1.5 billion and €1.0 billion of short-term financing through our commercial paper dealers, subject to the limit of unused capacity of our facility agreement. When we have both the ability and intent to refinance certain obligations on a long-term basis, the obligations are classified as long-term, as such, the commercial paper borrowings were classified as long-term debt in our consolidated balance sheets as of December 31, 2020 and 2019.Commercial paper borrowings are issued at market interest rates. As of December 31, 2020, our commercial paper borrowings had a weighted average interest rate of 0.34% on the U.S. dollar denominated borrowings and (0.06)% on the Euro denominated borrowings. As of December 31, 2020, we had $708.0 million of outstanding commercial paper borrowings under this program.
Synthetic bonds - On January 25, 2016, we issued €375.0 million principal amount of 0.875% convertible bonds with related parties, defined as entities relateda maturity date of January 25, 2021 and a redemption at par of the bonds which have not been converted. On March 3, 2016, we issued additional convertible bonds for a principal amount of €75.0 million issued on the same terms, fully fungible with and assimilated to the bonds issued on January 25, 2016. The issuance of these non-dilutive cash-settled convertible bonds (“Synthetic Bonds”), which are linked to our directorsordinary shares were backed simultaneously by the purchase of cash-settled equity call options in order to hedge our economic exposure to the potential exercise of the conversion rights embedded in the Synthetic Bonds. As the Synthetic Bonds could only be cash settled, they did not result in the issuance of new ordinary shares or the delivery of existing ordinary shares upon conversion. Interest on the Synthetic Bonds is payable semi-annually in arrears on January 25 and main shareholdersJuly 25 of each year, beginning July 26, 2016. The synthetic bonds were repaid during the first quarter of 2021.

Senior Notes - We have outstanding 3.45% $500.0 million senior notes due October 1, 2022 (the “Senior Notes”). The terms of the Senior Notes are governed by the indenture, dated as wellof March 29, 2017 between TechnipFMC and U.S. Bank National Association, as trustee (the “Trustee”), as amended and supplemented by the First Supplemental Indenture between TechnipFMC and the Trustee (the “First Supplemental Indenture”) relating to the issuance of the 2017 Notes and the Second Supplemental Indenture between TechnipFMC and the Trustee (the “Second Supplemental Indenture”) relating to the issuance of the 2022 Notes.
At any time prior to July 1, 2022, in the case of the 2022 Notes, we may redeem some or all of the Senior Notes at the redemption prices specified in the First Supplemental Indenture and Second Supplemental Indenture, respectively. At any time on or after July 1, 2022, we may redeem the 2022 Notes at the redemption price equal to 100% of the principal amount of the 2022 Notes redeemed. The Senior Notes are our senior unsecured obligations. The Senior Notes will rank equally in right of payment with all of our existing and future unsubordinated debt, and will rank senior in right of payment to all of our future subordinated debt.
Private Placement Notes
2020 Issuance:
During 2020, we completed the private placement of €200 million aggregate principal amount of the 2020 Private Placement Notes. The 2020 Private Placement Notes bear interest of 4.50% and are due June 2025. Interest on the notes is payable annually in arrears on June 30 of each year beginning June 30, 2020. The 2020 Private Placement Notes contain usual and customary covenants and events of default for notes of this type. In addition, within three months of the effective date of the Spin-off of Technip Energies, if there is a downgrade by a nationally recognized rating agency of the corporate rating of TechnipFMC from an investment grade to a non-investment grade rating or a withdrawal of any such rating, the interest rate applicable to the 2020 Private Placement Notes will be increased to 5.75%.

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2013 Issuances:

In October 2013, we completed the private placement of €355.0 million aggregate principal amount of senior notes. The notes were issued in three tranches with €100.0 million bearing interest at 3.75% and due October 2033 (the “Tranche A 2033 Notes”), €130.0 million bearing interest of 3.15% and due October 2023 (the “Tranche B 2023 Notes) and €125.0 million bearing interest of 3.15% and due October 2023 (the “Tranche C 2023 Notes” and, collectively with the “Tranche A 2033 Notes and the “Tranche B 2023 Notes”, the “2013 Private Placement Notes”).

Interest on the Tranche A 2033 Notes is payable annually in arrears on October 7 each year, beginning October 7, 2014. Interest on the Tranche B 2023 Notes is payable annually in arrears on October 16 of each year beginning October 16, 2014. Interest on the Tranche C 2023 Notes is payable annually in arrears on October 18 of each year, beginning October 18, 2014.

2012 Issuances:

In June 2012, we completed the private placement of €325.0 million aggregate principal amount of notes. The notes were issued in three tranches with €150.0 million bearing interest at 3.40% and due June 2022 (the “Tranche A 2022 Notes”), €75.0 million bearing interest of 4.0% and due June 2027 (the “Tranche B 2027 Notes”) and €100.0 million bearing interest of 4.0% and due June 2032 (the “Tranche C 2032 Notes” and, collectively with the “Tranche A 2022 Notes and the “Tranche B 2027 Notes,” the “2012 Private Placement Notes”). Interest on the Tranche A 2022 Notes and the Tranche C 2032 Notes is payable annually in arrears on June 14 of each year beginning June 14, 2013. Interest on the Tranche B 2027 Notes is payable annually in arrears on June 15 of each year, beginning June 15, 2013.
The 2013 and 2012 Private Placement Notes contain usual and customary covenants and events of default for notes of this type. In the event of a change of control resulting in a downgrade in the rating of the notes below BBB-, the 2013 and 2012 Private Placement Notes may be redeemed early at the request of any bondholder, at its sole discretion. The 2013 and 2012 Private Placement Notes are our unsecured obligations. The 2013 and 2012 Private Placement Notes will rank equally in right of payment with all of our existing and future unsubordinated debt.
Term loan - In December 2016, we entered into a £160.0 million term loan agreement to finance the Deep Explorer, a diving support vessel (“DSV��), maturing December 2028. Under the loan agreement, interest accrues at an annual rate of 2.813%. This loan agreement contains usual and customary covenants and events of default for loans of this type.
Bank borrowings - In January 2019, we executed a sale-leaseback transaction to finance the purchase of a deepwater dive support vessel, Deep Discoverer (the “Vessel”) for the full transaction price of $116.8 million. The sale-leaseback agreement (“Charter”) was entered into with a French joint-stock company, owned by Credit Industrial et Commercial (“CIC”) which was formed for the sole purpose to purchase and act as the partnerslessor of the Vessel. It is a variable interest entity, which is fully consolidated in our condensed consolidated financial statements. The transaction was funded through debt of $96.2 million which is primarily long-term, expiring on January 8, 2031.
Foreign committed credit - We have committed credit lines at many of our consolidated joint ventures,international subsidiaries for immaterial amounts. We utilize these facilities for asset financing and to provide a more efficient daily source of liquidity. The effective interest rates depend upon the local national market.

NOTE 17. STOCKHOLDERS’ EQUITY
Cash dividends paid during the years ended December 31, 2020, 2019 and 2018 were as follows.$59.2 million, $232.8 million and $238.1 million, respectively. In April 2020, our Board of Directors announced its decision to lower the annual dividend by 75% to $0.13 per share.
Trade receivables consisted
As an English public limited company, we are required under U.K. law to have available “distributable reserves” to conduct share repurchases or pay dividends to shareholders. Distributable reserves are a statutory requirement and are not linked to a GAAP reported amount (e.g. retained earnings). The declaration and payment of receivables due from following related parties:
 December 31,
(In millions)2018 2017
TP JGC Coral France SNC$31.6
 $42.5
Technip Odebrecht PLSV CV10.9
 13.8
Anadarko Petroleum Company4.9
 22.3
Others14.3
 19.8
Total trade receivables$61.7
 $98.4
TP JGC Coral France SNC and Technip Odebrecht PLSV CV are equity method affiliates. A memberdividends require the authorization of our Board of Directors, servesprovided that such dividends on issued share capital may be paid only out of our “distributable reserves” on our statutory balance sheet. Therefore, we are not permitted to pay
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dividends out of share capital, which includes share premium. On November 27, 2019, we redeemed 50,000 redeemable shares of £1 each and cancelled one deferred ordinary share of £1 in the capital of TechnipFMC.
The following is a summary of our capital stock activity for the years ended December 31, 2020, 2019 and 2018:
(Number of shares in millions)Ordinary
Shares Issued
Ordinary Shares
Held in 
Employee
Benefit Trust
Treasury Stock
December 31, 2017465.1 — — 
Stock awards0.2 — — 
Treasury stock purchases— — 14.8 
Treasury stock cancellation(14.8)— (14.8)
Net stock purchased for employee benefit trust— 0.1 — 
December 31, 2018450.5 0.1 — 
Stock awards0.6 — — 
Treasury stock purchases— — 4.0 
Treasury stock cancellation(4.0)— (4.0)
Net stock purchased for employee benefit trust— (0.1)— 
December 31, 2019447.1 — — 
Stock awards2.4 — — 
December 31, 2020449.5 — — 

In 2017, the Board of Directors authorized a share repurchase program of Anadarko Petroleum Company.
Trade payables consisted of payables dueup to following related parties:
 December 31,
(In millions)2018 2017
Dofcon Navegacao$2.5
 $12.3
Chiyoda70.0
 48.3
JGC Corporation69.5
 52.4
IFP Energies nouvelles2.4
 
Anadarko Petroleum Company0.7
 
Magma Global Limited0.6
 
Others2.9
 8.8
Total trade payables$148.6
 $121.8
Dofcon Navegacao and Magma Global Limited are equity affiliates. JGC Corporation and Chiyoda are joint venture partners on our Yamal project. A member of our$500.0 million in ordinary shares. In December 2018, the Board of Directors isauthorized an executive officerextension of IFP Energies nouvelles.
Additionally,the share repurchase program of up to $300.0 million of additional shares. During the years ended December 31, 2020, 2019 and 2018, we have note receivable balance of $130.0repurchased $0.0 million, $92.7 million and $140.9$442.8 million asof shares, respectively. As of December 31, 20182020, we had $207.8 million of shares authorized for repurchase. Repurchased shares are canceled and 2017, respectively. The note receivables balance includes $119.9 million and $114.9 million with Dofcon Brasil AS at December 31, 2018 and 2017, respectively. Dofcon Brasil AS is a VIE andnot held in treasury. Canceled treasury shares are accounted for as an equity method affiliate.using the constructive retirement method.
Accumulated other comprehensive income (loss) - Accumulated other comprehensive income (loss) consisted of the following:
(In millions)Foreign Currency
Translation
HedgingDefined Pension 
and Other
Post-Retirement
Benefits
Accumulated Other
Comprehensive 
Loss Attributable to
TechnipFMC plc
Accumulated Other
Comprehensive 
Loss Attributable
to Non-Controlling Interest
December 31, 2018$(1,234.4)$(32.9)$(92.4)$(1,359.7)$(4.0)
Other comprehensive income (loss) before reclassifications, net of tax16.3 8.9 (82.2)(57.0)(0.7)
Reclassification adjustment for net (gains) losses included in net income, net of tax(12.0)18.2 3.0 9.2 — 
Other comprehensive income (loss), net of tax4.3 27.1 (79.2)(47.8)(0.7)
December 31, 2019(1,230.1)(5.8)(171.6)(1,407.5)(4.7)
Other comprehensive income (loss) before reclassifications, net of tax(171.1)26.8 (92.9)(237.2)0.6 
Reclassification adjustment for net (gains) losses included in net income, net of tax— 13.0 9.2 22.2 — 
Other comprehensive income (loss), net of tax(171.1)39.8 (83.7)(215.0)0.6 
December 31, 2020$(1,401.2)$34.0 $(255.3)$(1,622.5)$(4.1)
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Reclassifications out of accumulated other comprehensive income (loss) - Reclassifications out of accumulated other comprehensive income (loss) consisted of the following:
Year Ended December 31,
(In millions)202020192018
Details about Accumulated Other Comprehensive Loss ComponentsAmount Reclassified out of Accumulated Other Comprehensive LossAffected Line Item in the Consolidated Statement of Income
Gains on foreign currency translation$$12.0 $41.1 Other income (expense), net
Gains (losses) on hedging instruments
Foreign exchange contracts$(83.7)$(26.6)$(2.4)Revenue
68.5 12.0 3.4 Costs of sales
(0.4)(0.1)Selling, general and administrative expense
(4.4)(9.1)1.0 Other Income (expense), net
(20.0)(23.7)1.9 Income (loss) before income taxes
(7.0)(5.5)(0.1)Provision (benefit) for income taxes
$(13.0)$(18.2)$2.0 Net income (loss)
Pension and other post-retirement benefits
Settlements and curtailments(2.2)(0.3)3.0 (a)
Amortization of actuarial gain (loss)(9.0)(2.5)(0.6)(a)
Amortization of prior service credit (cost)(1.2)(1.0)(1.3)(a)
(12.4)(3.8)1.1 Income (loss) before income taxes
(3.2)(0.8)0.1 Provision (benefit) for income taxes
$(9.2)$(3.0)$1.0 Net income (loss)
(a)    These accumulated other comprehensive income components are included in other noncurrent assets on our consolidated balance sheets.the computation of net periodic pension cost (See Note 22 for further details).



Revenue consisted of amount from following related parties:
 Year Ended December 31,
(In millions)2018 2017 2016
Anadarko Petroleum Company
$124.8
 $111.3
 $
TP JGC Coral France SNC$118.2
 $
 $
Yamgaz
 
 196.7
Others50.3
 126.8
 87.8
Total revenue$293.3
 $238.1
 $284.5
Expenses consisted of amount to following related parties:
 Year Ended December 31,
(In millions)2018 2017 2016
Chiyoda$53.0
 $44.1
 $
JGC Corporation81.2
 46.8
 
Heerema
 
 71.3
IFP Energy nouvelles4.4
 
 
Creowave OY1.9
 4.7
 
Arkema S.A.2.6
��
 
Magma Global Limited3.0
 
 
Others8.6
 45.8
 34.2
Total expenses$154.7
 $141.4
 $105.5
NOTE 11. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following: 
 December 31,
(In millions)2018 2017
Land and land improvements$103.5
 $105.2
Buildings656.7
 691.2
Vessels1,893.3
 2,246.0
Machinery and equipment1,905.7
 1,892.2
Office fixtures and furniture300.0
 350.4
Construction in process179.0
 136.7
Other290.1
 397.7
 5,328.3
 5,819.4
Accumulated depreciation(2,068.5) (1,947.9)
Property, plant and equipment, net$3,259.8
 $3,871.5
Depreciation expense was $367.8 million, $370.2 million and $283.2 million in 2018, 2017 and 2016, respectively. The amount of interest cost capitalized was not material for the years presented.
During 2018, we determined the carrying amount of certain of our vessels exceeded their fair value and recorded an impairment. Refer to Note 17 to these consolidated financial statements for additional information regarding this impairment.


NOTE 12. GOODWILL AND INTANGIBLE ASSETS18. SHARE-BASED COMPENSATION
GoodwillIncentive compensation and award plan - We record goodwill asOn January 11, 2017, we adopted the excessTechnipFMC plc Incentive Award Plan (the “Plan”). The Plan provides certain incentives and awards to officers, employees, non-employee directors and consultants of TechnipFMC and its subsidiaries. The Plan allows our Board of Directors to make various types of awards to non-employee directors and the Compensation Committee (the “Committee”) of the purchaseBoard of Directors to make various types of awards to other eligible individuals. Awards may include share options, share appreciation rights, performance share units, restricted share units, restricted shares or other awards authorized under the Plan. All awards are subject to the Plan’s provisions, including all share-based grants previously issued prior to consummation of the merger of FMC Technologies and Technip S.A. (the “Merger”). Under the Plan, 24.1 million ordinary shares were authorized for awards. As of December 31, 2020, 8.5 million ordinary shares were available for future grant.
The exercise price overfor options is determined by the Committee but cannot be less than the fair market value of our ordinary shares at the grant date. Restricted share and performance share unit grants generally vest after three years of service.
Under the Plan, our Board of Directors has the authority to grant non-employee directors share options, restricted shares, restricted share units and performance shares. Unless otherwise determined by our Board of Directors, awards to non-employee directors generally vest one year from the date of grant. All restricted share units awarded prior to 2020 will be settled when a non-executive director ceases services on the Board of Directors. Beginning with the 2020 equity award, non-executive directors now have the opportunity to elect the year in which they will take receipt of the equity grants from either (a) a period of 1 to 10 years from the grant date or (b) upon their separation from Board service. The elections are made prior to the beginning of the grant year and are irrevocable after December 31 of the year prior to grant. Restricted share units are settled when a director ceases services to the Board of Directors. As of December 31, 2020, outstanding awards to active and retired non-employee directors included 254.3 thousand of share units.
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The measurement of share-based compensation expense on restricted share awards is based on the market price and fair value at the grant date and the number of shares awarded. The fair value of performance shares is estimated using a combination of the closing stock price on the grant date and the Monte Carlo simulation model. We use Black-Scholes options pricing model to measure the fair value of stock options granted on or after January 1, 2017.
The share-based compensation expense for each award is recognized ratably over the net assets acquired in acquisitions accountedapplicable service period or the period beginning at the start of the service period and ending when an employee becomes eligible for retirement (currently age 62 under the purchase methodPlan), after taking into account estimated forfeitures.
We recognize compensation expense and the corresponding tax benefits for awards under the Plan. The compensation expense under the Plan was as follows:
Year Ended December 31,
(In millions)202020192018
Share-based compensation expense$69.0 $74.5 $49.1 
Income tax benefits related to share-based compensation expense$18.6 $20.1 $13.2 
As of accounting. We test goodwill for impairment annually,December 31, 2020, the portion of share-based compensation expense related to outstanding awards to be recognized in future periods is as follows:
December 31, 2020
Share-based compensation expense not yet recognized (in millions)$68.1 
Weighted-average recognition period (in years)1.8
Restricted Share Units
A summary of the non-vested restricted share units’ activity is as follows:
(Shares in thousands)SharesWeighted-Average 
Grant Date 
Fair Value
Non-vested as of December 31, 20194,525.9 $27.44 
Granted3,836.0 $9.27 
Vested(1,909.1)$27.16 
Cancelled/forfeited(330.9)$15.71 
Non-vested as of December 31, 20206,121.9 $18.43 
The total grant date fair value of restricted stock share units vested during the years ended December 31, 2020 and 2019 was $51.8 million and $10.2 million, respectively.
Performance Share Units
The Board of Directors has granted certain employees, senior executives and directors performance share units that vest subject to achieving satisfactory performances. For performance share units issued on or more frequently if circumstances indicate possible impairment. We identify a potential impairment by comparingafter January 1, 2017, performance is based on results of return on invested capital and total shareholder return (“TSR”).
For the performance share units which vest based on TSR, the fair value of performance shares is estimated using a combination of the applicable reporting unitclosing stock price on the grant date and the Monte Carlo simulation model. The weighted-average fair value and the assumptions used to its net book value, including goodwill. If the net book value exceedsmeasure the fair value of performance share units subject to performance-adjusted vesting conditions in the reporting unit, we measureMonte Carlo simulation model were as follows:
Year Ended December 31,
202020192018
Weighted-average fair value (a)
$10.02$29.04$41.97
Expected volatility (b)
38.30 %34.00 %34.00 %
Risk-free interest rate (c)
0.40 %2.42 %2.37 %
Expected performance period in years (d)
3.03.03.0
(a) The weighted-average fair value was based on performance share units granted during the impairment by comparingperiod.
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(b) Expected volatility is based on normalized historical volatility of our shares over a preceding period commensurate with the carryingexpected term of the performance share units.
(c) The risk-free rate for the expected term of the performance share units is based on the U.S. Treasury yield curve in effect at the time of grant.
(d) For awards subject to service-based vesting, due to the lack of historical exercise and post-vesting termination patterns of the post-Merger employee base, the expected term was estimated using a simplified method for all awards granted in 2020, 2019 and 2018.
A summary of the non-vested performance share units’ activity is as follows:
(Shares in thousands)SharesWeighted-Average 
Grant Date 
Fair Value
Non-vested as of December 31, 20193,817.7 $28.52 
Granted2,828.4 $10.02 
Vested(1,364.4)$31.65 
Cancelled/forfeited(441.0)$20.62 
Non-vested as of December 31, 20204,840.7 $17.55 
The total grant date fair value of the reporting unit to its fair value.performance share units vested during years ended December 31, 2020, 2019 and 2018 was $43.2 million, $13.3 million and $7.0 million, respectively.
We test our goodwill for impairment by comparing theShare Option Awards
The fair value of each share option award is estimated as of the date of grant using the Black-Scholes options pricing model.
Share options awarded prior to 2017 were granted subject to performance criteria based upon certain targets, such as TSR, return on capital employed, and operating income from recurring activities. Subsequent share options granted are time-based awards vesting over three years.
The weighted-average fair value and the assumptions used to measure fair value are as follows:
Year Ended December 31,
202020192018
Weighted-average fair value (a)
$$5.64 $9.07 
Expected volatility (b)
%32.5 %32.5 %
Risk-free interest rate (c)
%2.5 %2.7 %
Expected dividend yield (d)
%2.6 %2.0 %
Expected term in years (e)
06.56.5
(a)The weighted-average fair value was based on stock options granted during the period.
(b)Expected volatility is based on normalized historical volatility of our reporting unitsshares over a preceding period commensurate with the expected term of the option.
(c)The risk-free rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.
(d)There were 0 share options awarded in 2020. Share options awarded in 2019 and 2018 were valued using an expected dividend yield of 2.6% and 2.0%, respectively.
(e)For awards subject to service-based vesting, due to the lack of historical exercise and post-vesting termination patterns of the post-Merger employee base, the expected term was estimated using a simplified method for all awards granted in 2020, 2019 and 2018.
The following is a summary of share option transactions during the year ended December 31, 2020:
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Number of SharesWeighted average exercise priceWeighted average remaining life
(in years)
Balance as of December 31, 20194,842.4 $29.68 5.3
Granted$
Exercised$
Cancelled(244.0)$28.08 
Balance as of December 31, 20204,598.4 $29.77 4.2
Exercisable as of December 31, 20203,460.8 $31.47 3.0

The aggregate intrinsic value of stock options outstanding and stock options exercisable as of December 31, 2020 was NaN and NaN, respectively.
Cash received from the share option exercises was NaN, during each of the years ended December 31, 2020, 2019 and 2018. The total intrinsic value of share options exercised during each of the years ended December 31, 2020, 2019 and 2018 was NaN. To exercise share options, an employee may choose (1) to pay, either directly or by way of the group savings plan, the share option strike price to obtain shares, or (2) to sell the shares immediately after having exercised the share option (in this case, the employee does not pay the strike price but instead receives the intrinsic value of the share options in cash).
The following summarizes significant ranges of outstanding and exercisable share options as of December 31, 2020:
Options OutstandingOptions Exercisable
Exercise Price RangeNumber of options
(in thousands)
Weighted average remaining life (in years)Weighted average exercise priceNumber of options
(in thousands)
Weighted average exercise price
$20.00-$33.004,087.2 4.6$26.68 2,949.5 $26.90 
$45.00-$51.0033.0 1.0$45.49 33.0 $45.49 
$55.00-$57.00478.2 0.4$56.93 478.3 $56.93 
Total4,598.4 4.2$29.77 3,460.8 $31.47 
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NOTE 19. IMPAIRMENT, RESTRUCTURING AND OTHER EXPENSES
Impairment, restructuring and other expenses were as follows:
Year Ended December 31,
(In millions)202020192018
Subsea$2,957.5 $1,752.2 $1,801.9 
Technip Energies93.6 17.0 (3.4)
Surface Technologies440.2 704.2 13.8 
Corporate and other10.0 17.4 18.9 
Total impairment, restructuring and other expenses$3,501.3 $2,490.8 $1,831.2 
Goodwill and Long-Lived Assets Impairments
Goodwill and long-lived assets impairments were as follows:
Year Ended December 31,
(In millions)202020192018
Subsea$2,854.5 $1,798.6 $1,784.2 
Technip Energies10.3 
Surface Technologies419.3 685.5 4.5 
Corporate and other3.3 3.9 
Total impairments$3,287.4 $2,484.1 $1,792.6 

Due to the substantial decline in global demand for oil caused by the COVID-19 pandemic in 2020 we reviewed the future utilization of our vessels and service potential of our subsea service and surface equipment and determined that the carrying amount of our goodwill and some of our long-lived assets exceeded their netrespective fair values. We recorded $3,083.4 million and $204.0 million, respectively, related to goodwill and long-lived assets impairments. The $204.0 million of long-lived asset impairments during the year ended December 31, 2020 consisted of $88.4 million attributable to plant, equipment and various machinery infrastructure in our Subsea operating segment; $82.0 million mainly related to building and surface equipment in our Surface reportable segment; and $33.6 million of operating lease right-of-use assets impairments.
The prolonged downturn in the energy market and its corresponding impact on our business outlook in 2019 led us to conclude the carrying amount of certain of our assets in our Subsea and Surface Technologies segments exceeded their fair value as of OctoberDecember 31, 2019. During the 2019 year we recorded $1,988.7 million and $495.4 million, respectively, related to goodwill and long-lived assets impairments. The $495.4 million of each year. Our impairment analysis is quantitative; however, it includes subjective estimates basedlong-lived asset impairments during the year ended December 31, 2019 primarily consisted of $153.8 million related to vessels in our Subsea operating segment and $168.9 million related to our flexible pipe and umbilical manufacturing facilities in our Surface reportable segment due to the prolonged downturn in the energy market and its corresponding impact on assumptions regarding future growth rates, interest ratesour business outlook.
The prolonged downturn in the energy market and its corresponding impact on our business outlook in 2018 led us to conclude the carrying amount of certain of our assets in our Subsea operating expenses.
A lowersegment exceeded their fair value estimate in the future for anyas of our reporting units could result in goodwill impairments. Factors that could trigger a lower fair value estimate include sustained price declines of the reporting unit’s products and services, cost increases, regulatory or political environment changes, changes in customer demand, and other changes in market conditions, which may affect certain market participant assumptions used in the discounted future cash flow model based on internal forecasts of revenues and expenses over a specified period plus a terminal value (the income approach).
The income approach estimates fair value by discounting each reporting unit’s estimated future cash flows using a weighted-average cost of capital that reflects current market conditions and the risk profile of the reporting unit. To arrive at our future cash flows, we use estimates of economic and market assumptions, including growth rates in revenues, costs, estimates of future expected changes in operating margins, tax rates and cash expenditures. Future revenues are also adjusted to match changes in our business strategy. We believe this approach is an appropriate valuation method. Under the market multiple approach, we determine the estimated fair value of each of our reporting units by applying transaction multiples to each reporting unit’s projected EBITDA and then averaging that estimate with similar historical calculations using either a one, two or three year average. Our reporting unit valuations were determined primarily by utilizing the income approach, with a lesser weighting attributed the market multiple approach.
The excess of fair value over carrying amount for our Surface Technologies and Onshore/Offshore reporting units ranged from approximately 56% to in excess of 200% of the respective carrying amounts.
December 31, 2018. During the year ended December 31, 2018, we recorded $1,383.0 million ofand $372.9 million, respectively, related to goodwill impairment chargesand vessel impairments in our Subsea reporting unit. Referoperating segment.
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that carrying amounts of such assets may not be recoverable. Assessing the recoverability of assets to Note 17 to these consolidated financial statements for additional disclosure related to impairment of goodwill during the year ended December 31, 2018.
The following table presents thebe held and used involves significant estimates used by management injudgement, when determining the fair valuespresent value of expected future cash flows. Significant judgements included expected revenue, operating costs and capital decisions that were available at the time of the assessment.

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Restructuring and Other Expenses
Restructuring and other charges primarily consisted of severance and other employee related costs and COVID-19 related expenses across all segments. Restructuring and other expenses were as follows:
Year Ended December 31,
202020192018
(In millions)Restructuring and other chargesCOVID-19 expensesRestructuring and other chargesRestructuring and other charges
Subsea$52.9 $50.1 $(46.4)$17.7 
Technip Energies39.3 44.0 17.0 (3.4)
Surface Technologies13.2 7.7 18.7 9.3 
Corporate and other6.7 17.4 15.0 
Total$112.1 $101.8 $6.7 $38.6 
COVID-19 related expenses represent unplanned, one-off, incremental and non-recoverable costs incurred solely as a result of the COVID-19 pandemic situation, which would not have been incurred otherwise. COVID-19 related expenses primarily included (a) employee payroll and travel, operational disruptions associated with quarantining, personnel travel restrictions to job sites, and shutdown of manufacturing plants and sites; (b) supply chain and related expediting costs of accelerated shipments for previously ordered and undelivered products; (c) costs associated with implementing additional information technology to support remote working environments; and (d) facilities-related expenses to ensure safe working environments.
Prolonged uncertainty in energy markets could lead to further future reductions in capital spending from our customer base. In turn, this may lead to changes in our strategy. We will continue to take actions designed to mitigate the adverse effects of the rapidly changing market environment and expect to continue to adjust our cost structure to market conditions. If market conditions continue to deteriorate, we may record additional restructuring charges and additional impairments of our reporting units at December 31, 2018:
2018
Year of cash flows before terminal value5
Discount rates12.0% to 13.0%
EBITDA multiples7.0 - 8.5x
For recently acquired reporting units, a quantitative impairment test may indicate a fair value that is substantially similar to the reporting unit’s carrying amount. Such similarities in value are generally an indication that management’s estimates of future cash flows associated with the recently acquired reporting unit remain relatively consistent with the assumptions that were used to derive its initial fair value.
As discussed above, when evaluating the 2018 quantitative impairment test results, management considered many factors in determining whether an impairment of goodwill for any reporting unit was reasonably likely to occur in future periods, including future market conditionslong-lived assets, operating lease right-of-use assets and the economic environment. Circumstances such as market declines, unfavorable economic conditions, loss of a major customer or other factors could increase the risk of impairment of goodwill for this reporting unit in future periods.


The carrying amount of goodwill by reporting segment was as follows:
(In millions)Subsea Onshore/Offshore Surface Technologies Total
December 31, 2015$2,977.4
 $809.1
 $
 $3,786.5
Additions due to business combinations
 
 
 
Impairment
 
 
 
Translation(46.3) (21.9) 
 (68.2)
December 31, 20162,931.1
 787.2
 
 3,718.3
Additions due to business combinations2,532.6
 1,635.5
 997.8
 5,165.9
Impairment
 
 
 
Translation6.7
 38.9
 
 45.6
December 31, 20175,470.4
 2,461.6
 997.8
 8,929.8
Additions due to business combinations85.0
 
 
 85.0
Impairment(1,383.0) 
 
 (1,383.0)
Purchase accounting adjustments
 
 19.7
 19.7
Translation(30.0) (13.9) 
 (43.9)
December 31, 2018$4,142.4
 $2,447.7
 $1,017.5
 $7,607.6
Intangible assets - The components of intangible assets were as follows:
 December 31,
 2018 2017
(In millions)
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Gross
Carrying
Amount
 
Accumulated
Amortization
Acquired technology$246.7
 $49.3
 $240.0
 $25.0
Backlog175.0
 175.0
 175.0
 118.0
Customer relationships285.0
 57.4
 285.0
 29.0
Licenses, patents and trademarks812.6
 194.8
 810.1
 157.7
Software232.1
 159.1
 237.9
 145.5
Other84.3
 23.4
 72.7
 11.7
Total intangible assets$1,835.7
 $659.0
 $1,820.7
 $486.9
In connection with the Merger, we recorded identifiable intangible assets acquired. Refer to Note 2 to these consolidated financial statements for additional information regarding the Merger. All of our acquired identifiable intangible assets are subject to amortization and, where applicable, foreign currency translation adjustments.
We recorded $182.6 million, $244.5 million and $17.5 million in amortization expense related to intangible assets during the years ended December 31, 2018, 2017 and 2016, respectively. During the years 2019 through 2023, annual amortization expense is expected to be as follows: $126.4 million in 2019, $121.2 million in 2020, $116.5 million in 2021, $112.4 million in 2022, $107.5 million in 2023 and $592.7 million thereafter.
NOTE 13. DEBT
Short-term debt and current portion of long-term debt - Short-term debt and current portion of long-term debt consisted of the following:
 December 31,
(In millions)2018 2017
Bank borrowings44.2
 48.9
Other23.2
 28.2
Total short-term debt and current portion of long-term debt$67.4
 $77.1


Long-term debt - Long-term debt consisted of the following:
 December 31,
(In millions)2018 2017
Revolving credit facility$
 $
Bilateral credit facilities
 
Commercial paper (a)
1,916.1
 1,450.4
Synthetic bonds due 2021490.9
 502.4
3.45% Senior Notes due 2022500.0
 500.0
5.00% 2010 Private placement notes due 2020229.0
 239.9
3.40% 2012 Private placement notes due 2022171.8
 179.9
3.15% 2013 Private placement notes due 2023148.9
 155.9
3.15% 2013 Private placement notes due 2023143.1
 149.9
4.00% 2012 Private placement notes due 202785.9
 89.9
4.00% 2012 Private placement notes due 2032114.5
 119.9
3.75% 2013 Private placement notes due 2033114.5
 119.9
Bank borrowings265.2
 332.5
Other23.2
 28.2
Unamortized issuing fees(11.4) (13.8)
Total debt4,191.7
 3,855.0
Less: current borrowings67.4
 77.1
Long-term debt$4,124.3
 $3,777.9
(a)At December 31, 2018 and 2017, committed credit available under our revolving credit facility provided the ability to refinance our commercial paper obligations on a long-term basis.
Maturities of debt as of December 31, 2018, are payable as follows:
 Payments Due by Period
(In millions)Total
payments
 Less than
1 year
 1-3
years
 3-5
years
 After 5
years
Total debt$4,191.7
 $67.4
 $2,854.2
 $962.9
 $307.2
Revolving credit facility - On January 17, 2017, we acceded to a new $2.5 billion senior unsecured revolving credit facility agreement (“facility agreement”) between FMC Technologies, Inc., Technip Eurocash SNC (the “Borrowers”), and TechnipFMC plc (the “Additional Borrower”) with JPMorgan Chase Bank, National Association (“JPMorgan”), as agent and an arranger, SG Americas Securities LLC as an arranger, and the lenders party thereto.
The facility agreement provides for the establishment of a multicurrency, revolving credit facility, which includes a $1.5 billion letter of credit subfacility. Subject to certain conditions, the Borrowers may request the aggregate commitments under the facility agreement be increased by an additional $500.0 million. On November 26, 2018, we entered into an extension which extends the expiration date to January 2023.
Borrowings under the facility agreement bear interest at the following rates, plus an applicable margin, depending on currency:
U.S. dollar-denominated loans bear interest, at the Borrowers’ option, at a base rate or an adjusted rate linked to the London interbank offered rate (“Adjusted LIBOR”);
sterling-denominated loans bear interest at Adjusted LIBOR; and
euro-denominated loans bear interest at the Euro interbank offered rate (“EURIBOR”).
Depending on the credit rating of TechnipFMC, the applicable margin for revolving loans varies (i) in the case of Adjusted LIBOR and EURIBOR loans, from 0.820% to 1.300% and (ii) in the case of base rate loans, from 0.000% to 0.300%. The “base rate” is the highest of (a) the prime rate announced by JPMorgan, (b) the greater of the Federal Funds Rate and the Overnight Bank Funding Rate plus 0.5% or (c) one-month Adjusted LIBOR plus 1.0%.


The facility agreement contains usual and customary covenants, representations and warranties and events of default for credit facilities of this type, including financial covenants requiring that our total capitalization ratio not exceed 60% at the end of any financial quarter. The facility agreement also contains covenants restricting our ability and our subsidiaries’ ability to incur additional liens and indebtedness, enter into asset sales or make certainequity method investments.
As of December 31, 2018, we were in compliance with all restrictive covenants under our revolving credit facility.
Bilateral credit facilities - We have access to four bilateral credit facilities in the aggregate of €320.0 million. The bilateral credit facilities consist of:
two credit facilities of €80.0 million each expiring in May 2019;
a credit facility of €60.0 million expiring in June 2019; and
a credit facility of €100.0 million expiring in May 2021.
Each bilateral credit facility contains usual and customary covenants, representations and warranties and events of default for credit facilities of this type.
Commercial paper - Under our commercial paper program, we have the ability to access $1.5 billion and €1.0 billion of short-term financing through our commercial paper dealers, subject to the limit of unused capacity of our facility agreement. As we have both the ability and intent to refinance these obligations on a long-term basis, our commercial paper borrowings were classified as long-term in the consolidated balance sheets as of December 31, 2018 and December 31, 2017.Commercial paper borrowings are issued at market interest rates. As of December 31, 2018, our commercial paper borrowings had a weighted average interest rate of 3.07% on the U.S. dollar denominated borrowings and (0.24)% on the Euro denominated borrowings.
Synthetic bonds - On January 25, 2016, we issued €375.0 million principal amount of 0.875% convertible bonds with a maturity date of January 25, 2021 and a redemption at par of the bonds which have not been converted. On March 3, 2016, we issued additional convertible bonds for a principal amount of €75.0 million issued on the same terms, fully fungible with and assimilated to the bonds issued on January 25, 2016. The issuance of these non-dilutive cash-settled convertible bonds (“Synthetic Bonds”), which are linked to our ordinary shares were backed simultaneously by the purchase of cash-settled equity call options in order to hedge our economic exposure to the potential exercise of the conversion rights embedded in the Synthetic Bonds. As the Synthetic Bonds will only be cash settled, they will not result in the issuance of new ordinary shares or the delivery of existing ordinary shares upon conversion. Interest on the Synthetic Bonds is payable semi-annually in arrears on January 25 and July 25 of each year, beginning July 26, 2016. Net proceeds from the Synthetic Bonds were used for general corporate purposes and to finance the purchase of the call options. The Synthetic Bonds are our unsecured obligations. The Synthetic Bonds will rank equally in right of payment with all of our existing and future unsubordinated debt.
The Synthetic Bonds issued on January 25, 2016 were issued at par. The Synthetic Bonds issued on March 3, 2016 were issued at a premium of 112.43802% resulting from an adjustment over the 3-day trading period following the issuance resulting in a share reference price of €48.8355.
A 40.0% conversion premium was applied to the share reference price of €40.7940. The share reference price was computed using the average of the daily volume weighted average price of our ordinary shares on the Euronext Paris market over the 10 consecutive trading days from January 21 to February 3, 2016. The initial conversion price of the bonds was then fixed at €57.1116.
The Synthetic Bonds each have a nominal value of €100.0 thousand with a conversion ratio of 3,359.7183 and a conversion price of €29.7644. Any bondholder may, at its sole option, request the conversion in cash of all or part of the bonds it owns, beginning November 15, 2020 to the 38th business day before the maturity date.
Senior Notes - On February 28, 2017, we commenced offers to exchange any and all outstanding notes issued by FMC Technologies for up to $800.0 million aggregate principal amount of new notes issued by TechnipFMC and cash. In conjunction with the offers to exchange, FMC Technologies solicited consents to adopt certain proposed amendments to each of the indentures governing the previously issued notes to eliminate certain covenants, restrictive provisions and events of defaults from such indentures.


On March 29, 2017, we settled the offers to exchange and consent solicitations (the “Exchange Offers”) for (i) any and all 2.00% senior notes due October 1, 2017 (the “2017 FMC Notes”) issued by FMC Technologies for up to an aggregate principal amount of $300.0 million of new 2.00% senior notes due October 1, 2017 (the “2017 Senior Notes’) issued by TechnipFMC and cash, and (ii) any and all 3.45% senior notes due October 1, 2022 (the “2022 FMC Notes”) issued by FMC Technologies for up to an aggregate principal amount of $500.0 million in new 3.45% senior notes due October 1, 2022 (the “2022 Senior Notes”) issued by TechnipFMC with registration rights and cash. Pursuant to the Exchange Offers, we issued approximately $215.4 million in aggregate principal amount of 2017 Senior Notes and $459.8 million in aggregate principal amount of 2022 Senior Notes (collectively the “Senior Notes”). Interest on the 2017 Senior Notes is payable on October 1, 2017. Interest on the 2022 Senior Notes is payable semi-annually in arrears on April 1 and October 1 of each year, beginning October 1, 2017.
On April 3, 2018, we commenced offers to exchange up to $459.8 million in aggregate principal amount of new 3.45% Senior Notes due 2022, Series B, which have been registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), for any and all of our outstanding restricted 3.45% Senior Notes due 2022, Series A (the “Outstanding Notes”), which we previously issued in a private transaction that was not subject to the registration requirements of the Securities Act (the “Initial Offering”). We refer to the Exchange Notes and the Outstanding Notes collectively as the “Notes”.
The terms of the Senior Notes are governed by the indenture, dated as of March 29, 2017 between TechnipFMC and U.S. Bank National Association, as trustee (the “Trustee”), as amended and supplemented by the First Supplemental Indenture between TechnipFMC and the Trustee (the “First Supplemental Indenture”) relating to the issuance of the 2017 Notes and the Second Supplemental Indenture between TechnipFMC and the Trustee (the “Second Supplemental Indenture”) relating to the issuance of the 2022 Notes.
At maturity, all outstanding amounts under the 2017 Senior Notes were repaid.
At any time prior to July 1, 2022, in the case of the 2022 Notes, we may redeem some or all of the Senior Notes at the redemption prices specified in the First Supplemental Indenture and Second Supplemental Indenture, respectively. At any time on or after July 1, 2022, we may redeem the 2022 Notes at the redemption price equal to 100% of the principal amount of the 2022 Notes redeemed. The Senior Notes are our senior unsecured obligations. The Senior Notes will rank equally in right of payment with all of our existing and future unsubordinated debt, and will rank senior in right of payment to all of our future subordinated debt.
Private Placement Notes - On July 27, 2010, we completed the private placement of €200.0 million aggregate principal amount of 5.0% notes due July 2020 (the “2020 Notes”). Interest on the 2020 Notes is payable annually in arrears on July 27 of each year, beginning July 27, 2011. Net proceeds of the 2020 Notes were used to partially finance the 2004-2011 bond issue, which was repaid at its maturity date on May 26, 2011. The 2020 Notes contain contains usual and customary covenants and events of default for notes of this type. In the event of a change of control resulting in a downgrade in the rating of the notes below BBB-, the 2020 Notes may be redeemed early by any bondholder, at its sole discretion. The 2020 Notes are our unsecured obligations. The 2020 Notes will rank equally in right of payment with all of our existing and future unsubordinated debt.
In June 2012, we completed the private placement of €325.0 million aggregate principal amount of notes. The notes were issued in three tranches with €150.0 million bearing interest at 3.40% and due June 2022 (the “Tranche A 2022 Notes”), €75.0 million bearing interest of 4.0% and due June 2027 (the “Tranche B 2027 Notes”) and €100.0 million bearing interest of 4.0% and due June 2032 (the “Tranche C 2032 Notes” and, collectively with the “Tranche A 2022 Notes and the “Tranche B 2027 Notes”, the “2012 Private Placement Notes”). Interest on the Tranche A 2022 Notes and the Tranche C 2032 Notes is payable annually in arrears on June 14 of each year beginning June 14, 2013. Interest on the Tranche B 2027 Notes is payable annually in arrears on June 15 of each year, beginning June 15, 2013. Net proceeds of the 2012 Private Placement Notes were used for general corporate purposes. The 2012 Private Placement Notes contain usual and customary covenants and events of default for notes of this type. In the event of a change of control resulting in a downgrade in the rating of the notes below BBB-, the 2012 Private Placement Notes may be redeemed early by any bondholder, at its sole discretion. The 2012 Private Placement Notes are our unsecured obligations. The 2012 Private Placement Notes will rank equally in right of payment with all of our existing and future unsubordinated debt.


In October 2013, we completed the private placement of €355.0 million aggregate principal amount of senior notes. The notes were issued in three tranches with €100.0 million bearing interest at 3.75% and due October 2033 (the “Tranche A 2033 Notes”), €130.0 million bearing interest of 3.15% and due October 2023 (the “Tranche B 2023 Notes) and €125.0 million bearing interest of 3.15% and due October 2023 (the “Tranche C 2023 Notes” and, collectively with the “Tranche A 2033 Notes and the “Tranche B 2023 Notes”, the “2013 Private Placement Notes”). Interest on the Tranche A 2033 Notes is payable annually in arrears on October 7 each year, beginning October 7, 2014. Interest on the Tranche B 2023 Notes is payable annually in arrears on October 16 of each year beginning October 16, 2014. Interest on the Tranche C 2023 Notes is payable annually in arrears on October 18 of each year, beginning October 18, 2014. Net proceeds of the 2013 Private Placement Notes were used for general corporate purposes. The 2013 Private Placement Notes contain contains usual and customary covenants and events of default for notes of this type. In the event of a change of control resulting in a downgrade in the rating of the notes below BBB-, the 2013 Private Placement Notes may be redeemed early by any bondholder, at its sole discretion. The 2013 Private Placement Notes are our unsecured obligations. The 2013 Private Placement Notes will rank equally in right of payment with all of our existing and future unsubordinated debt.
Term loan - In December 2016, we entered into a £160.0 million term loan agreement to finance the Deep Explorer, a diving support vessel (“DSV”), maturing December 2028. Under the loan agreement, interest accrues at an annual rate of 2.813%. This loan agreement contains usual and customary covenants and events of default for loans of this type.
Foreign committed credit - We have committed credit lines at many of our international subsidiaries for immaterial amounts. We utilize these facilities for asset financing and to provide a more efficient daily source of liquidity. The effective interest rates depend upon the local national market.
NOTE 14. OTHER LIABILITIES
In the fourth quarter of 2016, we obtained voting control interests in legal onshore/offshore contract entities which own and account for the design, engineering and construction of the Yamal LNG plant. Prior to the amendments of the contractual terms that provided us with voting interest control, we accounted for these entities under the equity method of accounting based on our previously held interests in each of these entities. Since nearly all substantive processes to perform and execute the obligations of the underlying contract are conducted by TechnipFMC and the noncontrolling interest holders, we accounted for these entities as an acquisition upon our obtaining control and recognized a net gain of $7.7 million during 2016. As of December 31, 2016, total assets, liabilities and equity related to these entities were consolidated onto our balance sheet and our results of operations for the year ended December 31, 2018 and 2017 reflect the consolidated results of operations related to these entities. Refer to Note 9 for further information regarding the acquisition and consolidation of these entities.
A mandatorily redeemable financial liability of $312.0 million was recognized as of December 31, 2017 to account for the fair value of the non-controlling interests, for which $69.7 million was recorded as other current liabilities. During the year ended December 31, 2018 we revalued the liability to reflect current expectations about the obligation which resulted in the recognition of a loss of $322.3 million for the year ended December 31, 2018. Changes in the fair value of the financial liability are recorded as interest expense on the consolidated statements of income. Refer to Note 8 for further information regarding our other current liabilities. Refer to Note 22 for further information regarding the fair value measurement assumptions of the mandatorily redeemable financial liability and related changes in its fair value.
NOTE 15. STOCKHOLDERS’ EQUITY
Dividends declared and paid during the year ended December 31, 2018 were $238.1 million.
Dividends declared and paid during the year ended December 31, 2017 were $60.6 million.
Dividends declared and paid during the year ended December 31, 2016 based on the results of the year ended December 31, 2015 were €236.6 million. The dividends were paid in cash and shares in the amount of €100.8 million and €135.8 million, respectively.
As an English public limited company, we are required under U.K. law to have available “distributable reserves” to conduct share repurchases or pay dividends to shareholders. Distributable reserves are a statutory requirement and are not linked to a U.S. GAAP reported amount (e.g. retained earnings). The declaration and payment of dividends require the authorization of our Board of Directors, provided that such dividends on issued share capital


may be paid only out of our “distributable reserves” on our statutory balance sheet. Therefore, we are not permitted to pay dividends out of share capital, which includes share premium.
The following is a summary of our capital stock activity for the years ended December 31, 2018, 2017 and 2016:
(Number of shares in millions)
Ordinary
Shares Issued
 
Ordinary Shares
Held in 
Employee
Benefit Trust
 Treasury Stock
December 31, 2015119.0
 
 0.8
Stock awards0.2
 
 (0.4)
Treasury stock purchases
 
 3.2
Dividend payment in shares3.2
 
 
Shares acquired pursuant to liquidity contract
 
 1.3
Shares sold pursuant to liquidity contract
 
 (1.4)
Cancellation of treasury shares(3.2) 
 (3.2)
December 31, 2016119.2
 
 0.3
Net capital increases due to the merger of FMC Technologies and Technip347.4
 
 
Stock awards0.6
 
 
Treasury stock cancellation due to the merger of FMC Technologies and Technip
 
 (0.3)
Treasury stock purchases
 
 2.1
Treasury stock cancellation(2.1) 
 (2.1)
Net stock purchased for employee benefit trust
 0.1
 
December 31, 2017465.1
 0.1
 
Net capital increase as per merger
 
 
Stock awards0.2
 
 
Treasury stock purchases
 
 14.8
Treasury stock cancellation(14.8) 
 (14.8)
Net stock purchased for employee benefit trust
 
 
December 31, 2018450.5
 0.1
 
The plan administrator of the Non-Qualified Plan purchases shares of our ordinary shares on the open market. Such shares are placed in a trust owned by a subsidiary.
In April 2017, the Board of Directors authorized the repurchase of $500.0 million in ordinary shares under our share repurchase program. We implemented our share repurchase plan in September 2017. The Board of Directors authorized an extension of this program, adding $300.0 million in December 2018 for a total of $800.0 million in ordinary shares. We repurchased 14.8 million of ordinary shares for a total consideration of $442.6 million during the year ended December 31, 2018, under our authorized share repurchase program. The $500.0 million part of the program was completed on December 20, 2018. We intend to cancel repurchased shares and not hold them in treasury. Canceled treasury shares are accounted for using the constructive retirement method.


Accumulated other comprehensive income (loss) - Accumulated other comprehensive income (loss) consisted of the following:
(In millions)Foreign Currency
Translation
 Hedging Defined Pension 
and Other
Post-Retirement
Benefits
 Accumulated Other
Comprehensive 
Loss attributable to
TechnipFMC plc
 Accumulated Other
Comprehensive 
Loss attributable
to Non-controlling interest
December 31, 2016$(927.1) $(127.1) $(47.4) $(1,101.6) $0.2
Other comprehensive income (loss) before reclassifications, net of tax(87.5) 53.7
 43.2
 9.4
 0.4
Reclassification adjustment for net (gains) losses included in net income, net of tax
 101.2
 (12.7) 88.5
 
Other comprehensive income (loss), net of tax(87.5) 154.9
 30.5
 97.9
 0.4
December 31, 2017(1,014.6) 27.8
 (16.9) (1,003.7) 0.6
Other comprehensive income (loss) before reclassifications, net of tax(178.7) (58.7) (74.5) (311.9) (4.6)
Reclassification adjustment for net (gains) losses included in net income, net of tax(41.1) (2.0) (1.0) (44.1) 
Other comprehensive income (loss), net of tax(219.8) (60.7) (75.5) (356.0) (4.6)
December 31, 2018$(1,234.4) $(32.9) $(92.4) $(1,359.7) $(4.0)
Reclassifications out of accumulated other comprehensive income (loss) - Reclassifications out of accumulated other comprehensive income (loss) consisted of the following:
  Year Ended  
(In millions) December 31, 2018 December 31, 2017 December 31, 2016  
Details about Accumulated Other Comprehensive Loss Components Amount Reclassified out of Accumulated Other Comprehensive Loss Affected Line Item in the Consolidated Statement of Income
Gains on foreign currency translation $41.1
 $
 
 Other income (expense), net
         
Gains (losses) on hedging instruments        
Foreign exchange contracts $(2.4) $(39.3) $
 Revenue
  3.4
 5.3
 
 Costs of sales
  (0.1) 0.8
 
 Selling, general and administrative expense
  1.0
 (102.2) (165.7) Other (expense), net
  1.9
 (135.4) (165.7) Income before income taxes
  (0.1) (34.2) (45.6) Provision (benefit) for income taxes
  $2.0
 $(101.2) $(120.1) Net income
         
Pension and other post-retirement benefits        
Settlements and curtailments $3.0
 $25.3
 $10.7
 (a)
Amortization of actuarial gain (loss) (0.6) (2.5) (1.0) (a)
Amortization of prior service credit (cost) (1.3) (1.0) (0.7) (a)
  1.1
 21.8
 9.0
 Income before income taxes
  0.1
 9.1
 2.8
 Provision (benefit) for income taxes
  $1.0
 $12.7
 $6.2
 Net income
(a)These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see Note 20 for additional details).


NOTE 16. SHARE-BASED COMPENSATION20. COMMITMENTS AND CONTINGENT LIABILITIES
Incentive compensationContingent liabilities associated with guarantees - In the ordinary course of business, we enter into standby letters of credit, performance bonds, surety bonds, and award planother guarantees with financial institutions for the benefit of our customers, vendors, and other parties. The majority of these financial instruments expire within five years. Management does not expect any of these financial instruments to result in losses that, if incurred, would have a material adverse effect on our consolidated financial position, results of operations, or cash flows.
Guarantees of our consolidated subsidiaries consisted of the following:
(In millions)December 31, 2020
Financial guarantees (a)
$310.1 
Performance guarantees (b)
4,659.6 
Maximum potential undiscounted payments$4,969.7 
(a)Financial guarantees represent contracts that contingently require a guarantor to make payments to a guaranteed party based on changes in an underlying agreement that is related to an asset, a liability or an equity security of the guaranteed party. These tend to be drawn down only if there is a failure to fulfill our financial obligations.
(b)Performance guarantees represent contracts that contingently require a guarantor to make payments to a guaranteed party based on another entity's failure to perform under a nonfinancial obligating agreement. Events that trigger payment are performance-related, such as failure to ship a product or provide a service.
We believe the ultimate resolution of our known contingencies will not materially adversely affect our consolidated financial position, results of operations, or cash flows.
Contingent liabilities associated with legal and tax matters - We are involved in various pending or potential legal and tax actions or disputes in the ordinary course of our business. These actions and disputes can involve our agents, suppliers, clients, and venture partners, and can include claims related to payment of fees, service quality,
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and ownership arrangements, including certain put or call options. We are unable to predict the ultimate outcome of these actions because of their inherent uncertainty. However, we believe that the most probable, ultimate resolution of these matters will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.
On January 11,March 28, 2016, FMC Technologies received an inquiry from the U.S. Department of Justice (“DOJ”) related to the DOJ's investigation of whether certain services Unaoil S.A.M. provided to its clients, including FMC Technologies, violated the U.S. Foreign Corrupt Practices Act (“FCPA”). On March 29, 2016, Technip S.A. also received an inquiry from the DOJ related to Unaoil. We cooperated with the DOJ's investigations and, with regard to FMC Technologies, a related investigation by the SEC.
In late 2016, Technip S.A. was contacted by the DOJ regarding its investigation of offshore platform projects awarded between 2003 and 2007, performed in Brazil by a joint venture company in which Technip S.A. was a minority participant, and we have also raised with the DOJ certain other projects performed by Technip S.A. subsidiaries in Brazil between 2002 and 2013. The DOJ has also inquired about projects in Ghana and Equatorial Guinea that were awarded to Technip S.A. subsidiaries in 2008 and 2009, respectively. We cooperated with the DOJ in its investigation into potential violations of the FCPA in connection with these projects. We contacted and cooperated with the Brazilian authorities (Federal Prosecution Service (“MPF”), the Comptroller General of Brazil (“CGU”) and the Attorney General of Brazil (“AGU”)) with their investigation concerning the projects in Brazil and have also contacted and are cooperating with French authorities (the Parquet National Financier (“PNF”)) with their investigation about these existing matters.
On June 25, 2019, we announced a global resolution to pay a total of $301.3 million to the DOJ, the SEC, the MPF, and the CGU/AGU to resolve these anti-corruption investigations. We will not be required to have a monitor and will, instead, provide reports on our anti-corruption program to the Brazilian and U.S. authorities for two and three years, respectively.
As part of this resolution, we entered into a three-year Deferred Prosecution Agreement (“DPA”) with the DOJ related to charges of conspiracy to violate the FCPA related to conduct in Brazil and with Unaoil. In addition, Technip USA, Inc., a U.S. subsidiary, pled guilty to one count of conspiracy to violate the FCPA related to conduct in Brazil. We will also provide the DOJ reports on our anti-corruption program during the term of the DPA.
In Brazil, our subsidiaries Technip Brasil - Engenharia, Instalações E Apoio Marítimo Ltda. and Flexibrás Tubos Flexíveis Ltda. entered into leniency agreements with both the MPF and the CGU/AGU. We have committed, as part of those agreements, to make certain enhancements to their compliance programs in Brazil during a two-year self-reporting period, which aligns with our commitment to cooperation and transparency with the compliance community in Brazil and globally.
In September 2019, the SEC approved our previously disclosed agreement in principle with the SEC Staff and issued an Administrative Order, pursuant to which we paid the SEC $5.1 million, which was included in the global resolution of $301.3 million.
To date, the investigation by PNF related to historical projects in Equatorial Guinea and Ghana has not reached resolution. We remain committed to finding a resolution with the PNF and will maintain a $70.0 million provision related to this investigation. As we continue to progress our discussions with PNF towards resolution, the amount of a settlement could exceed this provision.
There is no certainty that a settlement with PNF will be reached or that the settlement will not exceed current accruals. The PNF has a broad range of potential sanctions under anticorruption laws and regulations that it may seek to impose in appropriate circumstances including, but not limited to, fines, penalties, and modifications to business practices and compliance programs. Any of these measures, if applicable to us, as well as potential customer reaction to such measures, could have a material adverse impact on our business, results of operations, and financial condition. If we cannot reach a resolution with the PNF, we could be subject to criminal proceedings in France, the outcome of which cannot be predicted.
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Contingent liabilities associated with liquidated damages - Some of our contracts contain provisions that require us to pay liquidated damages if we are responsible for the failure to meet specified contractual milestone dates and the applicable customer asserts a conforming claim under these provisions. These contracts define the conditions under which our customers may make claims against us for liquidated damages. Based upon the evaluation of our performance and other commercial and legal analysis, management believes we have appropriately recognized probable liquidated damages as of December 31, 2020 and 2019, and that the ultimate resolution of such matters will not materially affect our consolidated financial position, results of operations, or cash flows.

NOTE 21. INCOME TAXES
Components of income (loss) before income taxes - U.S. and outside U.S. components of income (loss) before income taxes were as follows:
 Year Ended December 31,
(In millions)202020192018
United States$(3,073.5)$(1,406.5)$(197.0)
Outside United States$(11.5)$(729.3)$(1,291.1)
Loss before income taxes$(3,085.0)$(2,135.8)$(1,488.1)
Provision for income tax - The provision for income taxes consisted of:
 Year Ended December 31,
(In millions)202020192018
Current
United States$(4.7)$34.7 $52.1 
Outside United States164.8 317.0 321.8 
Total current income taxes160.1 351.7 373.9 
Deferred
United States(3.1)2.6 19.5 
Outside United States(3.6)(78.0)29.3 
Total deferred income taxes(6.7)(75.4)48.8 
Provision for income taxes$153.4 $276.3 $422.7 
126


Deferred tax assets and liabilities - Significant components of deferred tax assets and liabilities were as follows: 
 December 31,
(In millions)20202019
Deferred tax assets attributable to
Accrued expenses$147.8 $124.4 
Capital loss21.1 21.1 
Non-deductible interest77.0 84.7 
Foreign tax credit carryforwards145.8 135.3 
Other tax credits166.8 113.2 
Net operating loss carryforwards489.0 430.5 
Inventories16.5 6.3 
Research and development credit3.4 7.6 
Foreign exchange— 20.4 
Provisions for pensions and other long-term employee benefits96.1 84.1 
Contingencies43.4 163.3 
Margin recognition on construction contracts113.9 115.9 
Leases254.9 219.8 
Revenue in excess of billings on contracts accounted for under the percentage of completion method10.9 
Other— 6.9 
Deferred tax assets1,575.7 1,544.4 
Valuation allowance(935.3)(916.9)
Deferred tax assets, net of valuation allowance640.4 627.5 
Deferred tax liabilities attributable to
Revenue in excess of billings on contracts accounted for under the percentage of completion method42.6 — 
U.S. tax on foreign subsidiaries’ undistributed earnings not indefinitely reinvested4.2 10.4 
Property, plant and equipment, intangibles and other assets185.8 279.6 
Foreign exchange27.8 
Leases237.0 215.2 
Other4.7 
Deferred tax liabilities502.1 505.2 
Net deferred tax assets$138.3 $122.3 
At December 31, 2020 and 2019, the carrying amount of net deferred tax assets and the related valuation allowance included the impact of foreign currency translation adjustments.
Non-deductible interest. At December 31, 2020, deferred tax assets include tax benefits related to certain intercompany interest costs which are not currently deductible, but which may be deductible in future periods. If not utilized, these costs will become permanently non-deductible beginning in 2025. Management believes that it is more likely than not that we will not be able to deduct these costs before expiration of the carry forward period; therefore, we have established a valuation allowance against the related deferred tax assets.
Foreign tax credit carryforwards. At December 31, 2020, deferred tax assets included U.S. foreign tax credit carryforwards of $145.8 million, which, if not utilized, will begin to expire in 2024. Realization of these deferred tax assets is dependent on the generation of sufficient U.S. taxable income prior to the above date. Based on long-term forecasts of operating results, management believes that it is more likely than not that our U.S. earnings over the forecast period will not result in sufficient U.S. taxable income to fully realize these deferred tax assets; therefore, we have established a valuation allowance against the related deferred tax assets. In its analysis, management has considered the effect of deemed dividends and other expected adjustments to U.S. earnings that are required in determining U.S. taxable income. Non-U.S. earnings subject to U.S. tax, including deemed dividends for U.S. tax purposes, were $61 thousand in 2020, $3.8 million in 2019 and $307.6 million in 2018.
127


Net operating loss carryforwards. As of December 31, 2020, deferred tax assets include tax benefits relating to net operating loss carryforwards. If not utilized, these net operating loss carryforward will begin to expire in 2021. Except in Norway (net operating losses of $373.7 million), management believes it is more likely than not that we will not be able to utilize these operating loss carryforwards before expiration; thus, we have established a valuation allowance against the related deferred tax assets (inclusive of NOL’s generated in United Kingdom, Saudi Arabia, Netherlands, Mexico, Brazil, Canada, United States, Luxembourg, and Germany). Except in Canada, Mexico, and Netherlands, all of these tax loss carryforwards extend indefinitely.
Certain Adjustments to Valuation Allowance. The net increase in valuation allowance from December 31, 2019 to December 31, 2020 includes certain adjustments which did not impact net tax expense. These adjustments include $62.0 million of deferred tax assets which were recorded in 2020 and are related to certain previously unrecorded tax credits in the Netherlands that are subject to a full valuation allowance. In addition, the Company wrote off $15.3 million and $11.3 million of deferred tax assets in Italy and Mexico, respectively, that had been subject to a full valuation allowance.
Unrecognized tax benefits - The following table presents a summary of changes in our unrecognized tax benefits: 
(In millions)Federal,
State and
Foreign
Tax
Balance at December 31, 2018$91.0 
Reductions for tax positions related to prior years(62.4)
Additions for tax positions related to current year72.9 
Reductions for tax positions due to settlements(20.8)
Balance at December 31, 2019$80.7 
Reductions for tax positions related to prior years(7.9)
Additions for tax positions related to current year0.9 
Reductions for tax positions due to settlements(2.6)
Balance at December 31, 2020$71.1 

The amounts reported above for uncertain tax positions excludes interest and penalties of $3.7 million, $0.1 million, and $2.8 million for the years ended December 31, 2020, 2019, and 2018, respectively. Interest and penalties relating to these uncertain tax positions were included in income tax expense in our consolidated statements of income. It is reasonably possible that within twelve months, $4.2 million of liabilities for unrecognized tax benefits will be settled. This amount is reflected in income taxes payable, the remaining balance of the unrecognized tax benefits is recorded in other long term liabilities.

We operate in numerous jurisdictions around the world and could be subject to multiple tax audits at any given time. Most notably, the following tax years and thereafter remain subject to examination: 2010 for Norway, 2016 for Nigeria, 2016 for Brazil, 2017 we adoptedfor France, and 2016 for the United States.
TechnipFMC plc Incentive Award Plan (the “Plan”). The Plan provides certain incentives and awards to officers, employees, non-employee directors and consultants of TechnipFMC and its subsidiaries. The Plan allows our Board of Directors to make various types of awards to non-employee directors and the Compensation Committee (the “Committee”) of the Board of Directors to make various types of awards to other eligible individuals. Awards may include share options, share appreciation rights, performance share units, restricted share units, restricted shares or other awards authorizedis a public limited company incorporated under the Plan. All awardslaws of England and Wales. Therefore, our earnings are subject to the Plan’s provisions, includingU.K. statutory rate which is 19.0% for 2020, 2019, and 2018.
128


Effective income tax rate reconciliation - The effective income tax rate was different from the statutory U.K. income tax rate due to the following:
 Year Ended December 31,
 202020192018
Statutory income tax rate19.0 %19.0 %19.0 %
Net difference resulting from
Foreign earnings subject to different tax rates(1.5)%0.3 %(9.7)%
Adjustments to prior year taxes(1.3)%(0.4)%(0.7)%
Changes in valuation allowance%(8.8)%(14.4)%
Deferred tax asset/liability revaluation for tax rate change— %(0.5)%(1.7)%
Impairments(22.5)%(21.9)%(16.5)%
Non-deductible legal provision%(0.8)%(3.8)%
Other1.3 %0.2 %(0.6)%
Effective income tax rate(5.0)%(12.9)%(28.4)%
Income tax holidays. We benefit from income tax holidays in Singapore and Malaysia which will expire after 2023 for Singapore and 2020 for Malaysia. For the year ended December 31, 2020, these tax holidays reduced our provision for income taxes by $5.8 million, or $0.01 per share on a diluted basis.

NOTE 22. PENSION AND OTHER POST-RETIREMENT BENEFIT PLANS
We have funded and unfunded defined benefit pension plans, which provide defined benefits based on years of service and final average salary.
On December 31, 2017, we amended the U.S. retirement plans (the “Plans”) to freeze benefit accruals for all share-based grants previously issued by FMC Technologies and Technip prior to consummationparticipants of the Merger. Under the Plan, 24.1 million ordinary shares were authorized for awards. AtPlans as of December 31, 2018, 18.2 million ordinary shares were available2017. After that date, participants in the Plans will no longer accrue any further benefits and participants’ benefits under the Plans will be determined based on credited service and eligible earnings as of December 31, 2017.
Foreign-based employees are eligible to participate in TechnipFMC-sponsored or government-sponsored benefit plans to which we contribute. Several of the foreign defined benefit pension plans sponsored by us provide for future grant.employee contributions; the remaining plans are noncontributory. The most significant of these plans are in the Netherlands, France, and the United Kingdom.
The exercise price for options is determined by the Committee but cannot be less than the fair market valueWe have other post-retirement benefit plans covering substantially all of our ordinary shares atU.S. unionized employees. The post-retirement health care plans are contributory; the grant date. Restricted sharepost-retirement life insurance plans are noncontributory.
We are required to recognize the funded status of defined benefit post-retirement plans as an asset or liability in the consolidated balance sheet and performance share unit grants generally vest after three years of service.
Underrecognize changes in that funded status in comprehensive income (loss) in the Plan, our Board of Directors hasyear in which the authority to grant non-employee directors share options, restricted shares, restricted share units and performance shares. Unless otherwise determined by our Board of Directors, awards to non-employee directors generally vest one year from the date of grant. Restricted share unitschanges occur. Further, we are settled when a director ceases services to the Board of Directors. At December 31, 2018, outstanding awards to active and retired non-employee directors included 119.4 thousand share units.
The measurement of share-based compensation expense on restricted share awards is based on the market price and fair value at the grant date and the number of shares awarded. The fair value of performance shares is estimated using a combination of the closing stock price on the grant date and the Monte Carlo simulation model. We used the Cox Ross Rubinstein binomial modelrequired to measure the fair value of stock options granted prior to December 31, 2016plan’s assets and Black-Scholes options pricing model to measure the fair value of stock options granted on or after January 1, 2017.
The share-based compensation expense for each award is recognized ratably over the applicable service period or the period beginning at the start of the service period and ending when an employee becomes eligible for retirement (currently age 62 under the plan), after taking into account estimated forfeitures.
We recognize compensation expense and the corresponding tax benefits for awards under the Plan. The compensation expense under the Plan is as follows:
 Year Ended December 31,
(In millions)2018 2017 2016
Share-based compensation expense (1)
$49.1
 $44.4
 $22.0
Income tax benefits related to share-based compensation expense$13.2
 $12.0
 $5.9
(1) Expense recognized for the year ended 2016 relates to Technip’s historical incentive and compensation award plan.
As of December 31, 2018, the portion of share-based compensation expense related to outstanding awards to be recognized in future periods is as follows:
 December 31, 2018
Share-based compensation expense not yet recognized (in millions)$83.4
Weighted-average recognition period (in years)1.7


Restricted Share Units
We began issuing restricted share units 2017. A summary of the nonvested restricted share units activity is as follows:
(Shares in thousands)Shares 
Weighted-Average 
Grant Date 
Fair Value
Nonvested at December 31, 20171,722.3
 $28.53
Granted1,516.0
 $31.57
Vested(165.4) $28.94
Cancelled/forfeited(95.5) $27.85
Nonvested at December 31, 20182,977.4
 $30.10
The total grant date fair value of restricted stock units vested during years ended December 31, 2018 and 2017 was $4.8 million and nil, respectively. 
Performance Shares
The Board of Directors has granted certain employees, senior executives and Directors or Officers restricted share unitsits obligations that vest subject to achieving satisfactory performances. For performance shares issued prior to December 31, 2016, performance is based on results in terms of health/safety/environment, operating income from recurring activities, and treasury generated from operating activities and total shareholder return (“TSR”). For performance share units issued on or after January 1, 2017, performance is based on results of return on invested capital and TSR.
For the performance share units which vest based on TSR, the fair value of performance shares is estimated using a combination of the closing stock price on the grant date and the Monte Carlo simulation model. The weighted-average fair value and the assumptions used to measure the fair value of performance share units subject to performance-adjusted vesting conditions in the Monte Carlo simulation model were as follows:
 Year Ended December 31,
 2018 2017 2016
Weighted-average fair value (a)
$41.97 $34.42 $22.47
Expected volatility (b)
34.00% 34.87% 31.30%
Risk-free interest rate (c)
2.37% 1.50% 0.85%
Expected performance period in years (d)
3.0
 3.0
 2.8
(a) The weighted-average fair value was based on performance share units granted during the period.
(b) Expected volatility is based on normalized historical volatility of our shares over a preceding period commensurate with the expected term of the option.
(c) From 2017, the risk-free rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Prior to 2017, the risk free rate was based on the bond yields from the European Central Bank.
(d) For awards subject to service-based vesting, due to the lack of historical exercise and post-vesting termination patterns of the post-Merger employee base, the expected term was estimated using a simplified method for all awards granted in 2018 and 2017 and the expected term was estimated using historical exercise and post-vesting termination patterns for all awards granted in 2016.
A summary of the nonvested performance share unit activity is as follows:
(Shares in thousands)Shares Weighted-Average 
Grant Date 
Fair Value
Nonvested at December 31, 20172,748.8
 $25.59
Granted623.0
 $36.06
Vested(203.6) $34.55
Cancelled/forfeited(124.4) $28.45
Nonvested at December 31, 20183,043.8
 $27.02


The total grant date fair value of performance share units vested during years ended December 31, 2018, 2017 and 2016 was $7.0 million, $33.3 million and $7.5 million, respectively.
Share Option Awards
The fair value of each option award is estimateddetermine its funded status as of the date of grant using the Black-Scholes options pricing model orconsolidated balance sheet. We have applied this guidance to our domestic pension and other post-retirement benefit plans as well as for many of our non-U.S. plans, including those in the Cox Ross Rubinstein binomial model.
Share options awarded prior to 2017 were granted subject to performance criteria based upon certain targets, such as TSR, return on capital employed,United Kingdom, Germany, France and operating incomeCanada. Pension expense measured in compliance with GAAP for the other non-U.S. pension plans is not materially different from recurring activities. Subsequent share options granted are time based awards vesting over a three year period.
The weighted-average fair value and the assumptions used to measure fair value are as follows:
 Year Ended December 31,
 2018 2017 2016
Weighted-average fair value (a)
$9.07
 $8.79
 7.7
Expected volatility (b)
32.5% 35.7% 34.5%
Risk-free interest rate (c)
2.7% 2.1% %
Expected dividend yield (d)
2.0% 2.0% 2.0%-4.5%
Expected term in years (e)
6.5
 6.5
 4.2
(a)The weighted-average fair value was based on stock options granted during the period.
(b)Expected volatility is based on normalized historical volatility of our shares over a preceding period commensurate with the expected term of the option.
(c)From 2017, the risk-free rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Prior to 2017, the risk free rate was based on the bond yields from the European Central Bank.
(d)Share options awarded prior to 2017 were valued using an expected dividend yield of between 2.0% and 4.5% while those awarded in 2017 and 2018 used 2.0%.
(e)For awards subject to service-based vesting, due to the lack of historical exercise and post-vesting termination patterns of the post-Merger employee base, the expected term was estimated using a simplified method for all awards granted in 2018 and 2017 and the expected term was estimated using historical exercise and post-vesting termination patterns for all awards granted in 2016.
The following is a summary of option transactions during years ended December 31, 2018, 2017 and 2016:
(Shares in thousands)Number of shares Weighted average exercise price 
Weighted average remaining life
(in years)
Balance as of December 31, 20152,420.5
 61.88
 3.5
Granted595.1
 48.33
 
Exercised(25.5) 57.22
 
Cancelled(801.3) 52.43
 
Balance as of December 31, 20162,188.8
 61.72
 5.0
Adjustment due to FMC Technologies transaction (a)
2,188.8
 $
  
Granted798.4
 $29.29
 
Exercised
 $
 
Cancelled(292.2) $47.60
 
Balance as of December 31, 20174,883.8
 $36.35
 4.6
Granted602.2
 $30.70
  
Exercised
 $
  
Cancelled(827.6) $47.20
  
Balance as of December 31, 20184,658.4
 $33.68
 4.8
Exercisable at December 31, 20181,114.9
 $52.37
 1.3
(a)The Weighted-Average Grant Date Fair Value for the increase in shares due to the merger remains at $0.00 in order to recalculate the new weighted average for the December 31, 2016 nonvested shares (see Note 2).


locally reported pension expense.
The aggregate intrinsic valuefunded status of stock options outstandingour U.S. Pension Plans, certain foreign pension plans and stock options exercisableU.S. post-retirement health care and life insurance benefit plans, together with the associated balances recognized in our consolidated balance sheets as of December 31, 2018 was nil2020 and nil, respectively.2019, were as follows:
Cash received from
129


 PensionsOther
Post-retirement
Benefits
 2020201920202019
(In millions)U.S.Int’lU.S.Int’l  
Accumulated benefit obligation$684.7 $873.0 $669.6 $773.3 
Projected benefit obligation at January 1$669.7 $881.0 $598.1 $753.4 $10.6 $9.5 
Service cost— 19.1 — 16.3 — — 
Interest cost22.2 14.1 25.6 18.3 0.4 0.5 
Actuarial (gain) loss53.9 35.5 80.7 102.8 (0.2)1.4 
Amendments— 0.1 — 0.9 — — 
Curtailments— (0.2)— — — — 
Settlements(25.6)(3.5)— (0.6)— — 
Foreign currency exchange rate changes— 48.0 — 11.1 (0.5)(0.1)
Plan participants’ contributions— 1.1 — 1.1 — — 
Benefits paid(35.5)(27.2)(34.7)(25.7)(0.5)(0.5)
Other— 2.1 — 3.4 — (0.2)
Projected benefit obligation as of December 31684.7 970.1 669.7 881.0 9.8 10.6 
Fair value of plan assets at January 1520.0 657.8 477.4 570.6 — — 
Actual return on plan assets14.3 45.9 72.0 89.1 — — 
Company contributions— 28.7 — 6.9 — — 
Foreign currency exchange rate changes— 33.4 — 13.5 — — 
Settlements(19.6)(1.9)— — — — 
Plan participants’ contributions— 1.1 — 1.1 — — 
Benefits paid(31.0)(20.8)(29.4)(19.6)— — 
Other— 2.0 — (3.8)— — 
Fair value of plan assets as of December 31483.7 746.2 520.0 657.8 — — 
Funded status of the plans (liability) as of December 31$(201.0)$(223.9)$(149.7)$(223.2)$(9.8)$(10.6)
 PensionsOther
Post-retirement
Benefits
 2020201920202019
(In millions)U.S.Int’lU.S.Int’l  
Current portion of accrued pension and other post-retirement benefits(4.6)(8.6)(5.5)(8.8)(0.7)(0.6)
Accrued pension and other post-retirement benefits, net of current portion(196.4)(215.3)(144.2)(214.4)(9.1)(10.0)
Funded status as of December 31$(201.0)$(223.9)$(149.7)$(223.2)$(9.8)$(10.6)
130


The following table summarizes the option exercises was nil, nil and €1.5 million during years endedpre-tax amounts in accumulated other comprehensive (income) loss as of December 31, 2018, 20172020 and 2016, respectively. 2019 that have not been recognized as components of net periodic benefit cost:
 PensionsOther
Post-retirement
Benefits
 2020201920202019
(In millions)U.S.Int’lU.S.Int’l  
Pre-tax amounts recognized in accumulated other comprehensive (income) loss
Unrecognized actuarial loss$198.4 $122.3 $121.6 $90.7 $1.3 $1.9 
Unrecognized prior service cost— 6.2 — 7.0 — — 
Accumulated other comprehensive (income) loss as of December 31$198.4 $128.5 $121.6 $97.7 $1.3 $1.9 
The total intrinsicfollowing tables summarize the projected and accumulated benefit obligations and fair values of plan assets where the projected or accumulated benefit obligation exceeds the fair value of options exercised duringplan assets as of December 31, 2020 and 2019:
 PensionsOther
Post-retirement
Benefits
 2020201920202019
(In millions)U.S.Int’lU.S.Int’l  
Plans with underfunded or non-funded projected benefit obligation
Aggregate projected benefit obligation$684.7 $818.7 $668.4 $741.2 $9.8 $10.7 
Aggregate fair value of plan assets$483.7 $596.7 $518.8 $522.8 $— $— 
 PensionsOther
Post-retirement
Benefits
 2020201920202019
(In millions)U.S.Int’lU.S.Int’l  
Plans with underfunded or non-funded accumulated benefit obligation
Aggregate accumulated benefit obligation$684.7 $325.7 $668.4 $292.1 $— $— 
Aggregate fair value of plan assets$483.7 $154.0 $518.8 $140.3 $— $— 
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The following table summarizes the components of net periodic benefit cost (income) for the years ended December 31, 2018, 20172020, 2019 and 2016 was nil, nil2018:
 PensionsOther Post-retirement
Benefits
 202020192018202020192018
(In millions)U.S.Int’lU.S.Int’lU.S.Int’l   
Components of net periodic benefit cost (income)
Service cost$— $19.1 $— $16.3 $0.2 $21.2 $— $— $— 
Interest cost22.2 14.1 25.6 18.3 23.8 20.9 0.4 0.5 0.4 
Expected return on plan assets(45.4)(37.9)(41.6)(33.5)(50.1)(41.2)— — — 
Settlement cost1.4 0.8 — 0.3 0.4 0.4 — — — 
Curtailment benefit— — — — — (3.8)— — — 
Amortization of net actuarial loss (gain)6.9 2.1 1.8 0.7 — 0.6 0.1 — — 
Amortization of prior service cost (credit)— 1.2 — 1.0 — 1.3 — — — 
Net periodic benefit cost (income)$(14.9)$(0.6)$(14.2)$3.1 $(25.7)$(0.6)$0.5 $0.5 $0.4 
The following table summarizes changes in plan assets and nil, respectively. To exercise stock options, an employee may choose (1)benefit obligations recognized in other comprehensive income (loss) for the years ended December 31, 2020, 2019 and 2018:
 PensionsOther Post-retirement
Benefits
 202020192018202020192018
(In millions)U.S.Int’lU.S.Int’lU.S.Int’l   
Changes in plan assets and benefit obligations recognized in other comprehensive income (loss)
Net actuarial gain (loss) arising during period$(85.1)$(27.2)$(50.2)$(47.3)$(73.5)$(15.3)$— $— $— 
Prior service (cost) credit arising during period— (0.1)— (0.9)0.2 (2.7)— — — 
Settlements and curtailments1.4 0.8 — 0.3 0.4 (3.4)— — — 
Amortization of net actuarial loss (gain)6.9 2.1 1.8 0.7 — 0.6 (0.1)— — 
Amortization of prior service cost (credit)— 1.2 — 1.0 — 1.3 — — — 
Other— (7.5)— (0.8)— 1.4 (0.6)(0.1)(0.1)
Total recognized in other comprehensive income (loss)$(76.8)$(30.7)$(48.4)$(47.0)$(72.9)$(18.1)$(0.7)$(0.1)$(0.1)
Included in accumulated other comprehensive income (loss) as of December 31, 2020, are noncash, pre-tax charges which have not yet been recognized in net periodic benefit cost (income). The estimated amounts expected to pay, either directly or by waybe amortized from the portion of each component of accumulated other comprehensive income (loss) as a component of net period benefit cost (income), during the next fiscal year are as follows:
 PensionsOther
Post-retirement
Benefits
(In millions)U.S.Int’l 
Net actuarial losses$16.8 $4.0 $— 
Prior service cost$— $1.2 $— 
132


Key assumptions - The following weighted-average assumptions were used to determine the benefit obligations:
 PensionsOther
Post-retirement
Benefits
 2020201920202019
 U.S.Int’lU.S.Int’l  
Discount rate2.70 %1.23 %3.40 %1.70 %3.47 %4.31 %
Rate of compensation increaseN/A1.92 %N/A2.39 %4.00 %4.00 %
The following weighted-average assumptions were used to determine net periodic benefit cost:
 PensionsOther
Post-retirement
Benefits
202020192018202020192018
 U.S.Int’lU.S.Int’lU.S.Int’l   
Discount rate3.40 %1.65 %4.40 %2.56 %3.70 %2.39 %4.31 %5.04 %4.33 %
Rate of compensation increaseN/A2.33 %N/A2.34 %N/A2.39 %4.00 %4.00 %4.00 %
Expected rate of return on plan assets7.75 %4.84 %8.65 %5.04 %8.57 %4.90 %N/AN/AN/A
Our estimate of expected rate of return on plan assets is primarily based on the historical performance of plan assets, current market conditions, our asset allocation and long-term growth expectations.
Plan assets - We actively monitor how the duration and the expected yield of the group savingsinvestments are matching the expected cash outflows arising from the pension obligations. We have not changed the processes used to manage its risks from previous periods. Investments are well diversified, such that the failure of any single investment would not have a material impact on the overall level of assets. Our pension investment strategy emphasizes maximizing returns consistent with balancing risk. Excluding our international plans with insurance-based investments, 86% of our total pension plan assets represent the stock option strikeU.S. qualified plan and the U.K. plan. These plans are primarily invested in equity securities to maximize the long-term returns of the plans. The investment managers of these assets, including the hedge funds and limited partnerships, use Graham and Dodd fundamental investment analysis to select securities that have a margin of safety between the price to obtain shares, or (2) to sellof the shares immediately after having exercisedsecurity and the stock option (in this case, the employee does not pay the strike price but instead receives the intrinsicestimated value of the stock options in cash).security. This value-oriented approach tends to mitigate the risk of a large equity allocation.
The following summarizes significant rangesis a description of outstanding and exercisable options atthe valuation methodologies used for the pension plan assets. There have been no changes in the methodologies used as of December 31, 2018:
2020 and 2019.
 Options Outstanding Options Exercisable
Exercise Price Range
Number of options
(in thousands)
 Weighted average remaining life (in years) Weighted average exercise price 
Number of options
(in thousands)
 Weighted average exercise price
$24.00-$33.003,543.5
 5.9 $27.80
 
 $
$45.00-$51.00570.0
 0.4 $48.12
 570.0
 $48.12
$55.00-$57.00544.9
 2.2 $56.82
 544.9
 $56.82
Total4,658.4
 4.8 $33.67
 1,114.9
 $52.37
Cash is valued at cost, which approximates fair value.
Equity securities are comprised of common stock and preferred stock. The fair values of equity securities are valued at the closing price reported on the active market on which the securities are traded.
NOTE 17. IMPAIRMENT, RESTRUCTURING AND OTHER EXPENSEFair values of registered investment companies and common/collective trusts are valued based on quoted market prices, which represent the net asset value (“NAV”) of shares held. Registered investment companies primarily include investments in emerging market bonds. Common/collective trusts primarily includes money market instruments with short maturities.
Impairment, restructuringInsurance contracts are valued at book value, which approximates fair value, and is calculated using the prior-year balance plus or minus investment returns and changes in cash flows.
The fair values of hedge funds are valued using the NAV as determined by the administrator or custodian of the fund. The funds primarily invest in U.S. and international equities, debt securities and other expense werehedge funds.
The fair values of limited partnerships are valued using the NAV as follows:
 Year Ended December 31,
(In millions)2018 2017 2016
Impairment expense     
Subsea$1,784.2
 $11.5
 $23.0
Onshore/Offshore
 
 14.6
Surface Technologies4.5
 10.2
 
Corporate and other3.9
 12.6
 0.6
Total impairment expense1,792.6
 34.3
 38.2
      
Restructuring and other expense     
Subsea$17.7
 $88.4
 $58.7
Onshore/Offshore(3.4) 27.0
 214.4
Surface Technologies9.3
 9.0
 
Corporate and other15.0
 32.8
 31.7
Total restructuring and other expense38.6
 157.2
 304.8
Total impairment, restructuring and other expense$1,831.2
 $191.5
 $343.0
Asset impairments - We conduct impairment tests on long-lived assets whenever eventsdetermined by the administrator or changes in circumstances indicate the carrying value may not be recoverable. The carrying value of a long-lived asset is not recoverable if it exceeds the sumcustodian of the undiscounted cash flows expected to result fromfund. The partnerships primarily invest in U.S. and international equities and debt securities.
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Real estate and other investments primarily consist of real estate investment trusts and other investments. These investments are measured at quoted market prices, which represent the use and eventual disposition over the asset’s remaining useful life. Our review of recoverabilityNAV of the carryingsecurities held in such funds at year end.
Our pension plan assets measured at fair value on a recurring basis are as follows as of our assets considers several assumptions including the intended useDecember 31, 2020 and service potential of the asset.2019. Refer to “Fair value measurements” in Note 221 to these consolidated financial statements for a discussiondescription of the method usedlevels.
(In millions)U.S.International
December 31, 2020TotalLevel 1Level 2Level 3
Net Asset Value (a)
TotalLevel 1Level 2Level 3
Net Asset Value (a)
Cash and cash equivalents$38.1 $38.1 $— $— $— $66.3 $66.3 $— $— $— 
Equity securities
U.S. companies83.3 83.3 — — — 96.3 96.3 — — — 
International companies1.1 1.1 — — — 209.1 209.1 — — — 
Registered investment companies38.4 — — — 38.4 68.2 — — — 68.2 
Insurance contracts— — — — — 154.0 — 154.0 — — 
Hedge funds160.9 — — — 160.9 98.3 — — — 98.3 
Limited partnerships160.9 — — — 160.9 14.5 — — — 14.5 
Real estate and other investments1.0 1.0 — — — 39.5 39.5 — — — 
Total assets$483.7 $123.5 $— $— $360.2 $746.2 $411.2 $154.0 $— $181.0 
December 31, 2019        
Cash and cash equivalents$50.5 $50.5 $— $— $— $10.0 $10.0 $— $— $— 
Equity securities
U.S. companies110.3 110.3 — — — 70.4 70.4 — — — 
International companies5.4 5.4 — — — 251.5 251.5 — — — 
Registered investment companies36.3 — — — 36.3 63.4 — — — 63.4 
Common/collective trusts12.5 — — — 12.5 — — — — — 
Insurance contracts— — — — — 138.5 — 138.5 — — 
Hedge funds164.3 — — — 164.3 82.0 — — — 82.0 
Limited partnerships139.4 — — — 139.4 7.9 — — — 7.9 
Real estate and other investments1.3 1.3 — — — 36.0 36.0 — — — 
Total assets$520.0 $167.5 $$$352.5 $659.7 $367.9 $138.5 $$153.3 
(a)Certain investments that are measured at fair value using net asset value per share (or its equivalent) have not been classified in the fair value hierarchy.
Contributions - We expect to determinecontribute approximately $20.7 million to our international pension plans, representing primarily the Netherlands qualified pension plans and U.K. qualified pension plans. We do not expect to make any contributions to our U.S. Qualified Pension Plan and our U.S. Non-Qualified Defined Benefit Pension Plan in 2021. All of the contributions are expected to be in the form of cash. In 2020 and 2019, we contributed $28.7 million and $6.9 million to all pension plans, respectively. Subsequent to the Spin-off, we expect to contribute approximately $18.9 million to our non-U.S. pension plans.
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Estimated future benefit payments - The following table summarizes expected benefit payments from our various pension and post-retirement benefit plans through 2028. Actual benefit payments may differ from expected benefit payments.
 PensionsOther
Post-retirement
Benefits
(In millions)U.S.International 
2021$47.6 $36.6 $0.6 
202232.4 30.6 0.6 
202331.0 32.8 0.6 
202431.7 34.8 0.6 
202531.9 34.8 0.6 
2025-2029$164.3 $198.3 $2.6 
Savings plans - The TechnipFMC Retirement Savings Plan (“Qualified Plan”), a qualified salary reduction plan under Section 401(k) of the Internal Revenue Code, is a defined contribution plan. Additionally, we have a non-qualified deferred compensation plan, the Non-Qualified Plan, which allows certain highly compensated employees the option to defer the receipt of a portion of their salary. We match a portion of the participants’ deferrals to both plans. Both plans relate to FMC Technologies, Inc.
Participants in the Non-Qualified Plan earn a return based on hypothetical investments in the same options as our 401(k) plan. Changes in the market value of these participant investments are reflected as an adjustment to the deferred compensation liability with an offset to other income (expense), net. As of December 31, 2020 and 2019, our liability for the Non-Qualified Plan was $22.8 million and $26.3 million, respectively, and was recorded in other liabilities in our consolidated balance sheets. We hedge the financial impact of changes in the participants’ hypothetical investments by purchasing the investments that the participants have chosen. Changes in the fair value of these assets.
The prolonged downturn in the energy market and its corresponding impact on our business outlook led usinvestments are recognized as an offset to conclude the carrying amount of certain of our assetsother income (expense), net in our Subsea segment exceeded theirconsolidated statements of income. As of December 31, 2020 and 2019, we had investments for the Non-Qualified Plan totaling $22.8 million and $26.3 million at fair value. market value, respectively.
During the yearyears ended December 31, 2018,2020, and 2019 we recorded $1,784.2 millionrecognized expense of impairment charges in our Subsea segment. These charges included impairment of goodwill and vessels of $1,383.0$29.9 million and $372.9$34.0 million, respectively for matching contributions to these plans in 2020 and 2019, respectively.
During Additionally, during the yearyears ended December 31, 2017, our impairment2020 and 2019, we recognized expense was primarily related to leasehold improvements, decommissioning vacant buildingsof $12.1 million and other long-lived assets.$13.2 million, respectively, for non-elective contributions.
During the year ended December 31, 2016, our impairment expense was primarily associated with the restructuring plan discussed below.



Restructuring and other - During 2018 and 2017 we initiated further cost cutting measures that have resulted in restructuring expense primarily related to termination of lease contracts.
In the year ended December 31, 2016, as part of our restructuring plan, we divested and deconsolidated our wholly owned subsidiaries Technip Germany Holding GmBH and Technip Germany GmBH.
In July 2015, as a result of the decline in crude oil prices and its effect on the demand for products and services in the oilfield services industry worldwide, we initiated a company-wide reduction in workforce and facility consolidation (the “July 2015 Plan”) intended to reduce costs and better align our workforce with current and anticipated activity levels, which resulted in the continued recognition of severance costs relating to termination benefits and other restructuring charges. The initial plan included a workforce reduction of approximately 6,000 employees.
A significant part of the restructuring plan was focused on the Onshore/Offshore segment. In this segment, we reduced our presence in North America, Latin America, Asia and Europe. In the Subsea segment, we reduced our presence in the North Sea.
NOTE 18. COMMITMENTS AND CONTINGENT LIABILITIES23. DERIVATIVE FINANCIAL INSTRUMENTS
CommitmentsFor purposes of mitigating the effect of changes in exchange rates, we hold derivative financial instruments to hedge the risks of certain identifiable and anticipated transactions and recorded assets and liabilities in our consolidated balance sheets. The types of risks hedged are those relating to the variability of future earnings and cash flows caused by movements in foreign currency exchange rates. Our policy is to hold derivatives only for the purpose of hedging risks associated with leases - We lease office space, manufacturing facilitiesanticipated foreign currency purchases and various types of manufacturing and data processing equipment. Leases of real estate generally provide for payment of property taxes, insurance and repairs by us. Substantially all of our leases are classified as operating leases. Rent expense under operating leases amounted to $365.1 million, $369.2 million and $313.5 millionsales created in 2018, 2017 and 2016, respectively.
In March 2014, we entered into construction and operating lease agreements to finance the construction of manufacturing and office facilities located in Houston, TX. In January 2016, construction of the facilities was completed and the operating lease commenced. Upon expiration of the operating lease in September 2021, we have the option to renew the lease, purchase the facilities or re-market the facilities on behalf of the lessor, including certain guarantees of residual value under the re-marketing option.
At December 31, 2018, future minimum rental payments under noncancellable operating leases were:
(In millions) 
2019$329.8
2020286.1
2021192.3
2022123.8
2023102.1
Thereafter485.6
Total1,519.7
Less income from sub-leases25.6
Net minimum operating lease payments$1,494.1
Contingent liabilities associated with guarantees - In the ordinarynormal course of business, and not for trading purposes where the objective is solely to generate profit.
Generally, we enter into standby lettershedging relationships such that changes in the fair values or cash flows of credit, performance bonds, surety bondsthe transactions being hedged are expected to be offset by corresponding changes in the fair value of the derivatives. For derivative instruments that qualify as a cash flow hedge, the effective portion of the gain or loss of the derivative, which does not include the time value component of a forward currency rate, is reported as a component of other comprehensive income (“OCI”) and other guarantees with financial institutions forreclassified into earnings in the benefitsame period or periods during which the hedged transaction affects earnings. For derivative instruments not designated as hedging instruments, any change in the fair value of our customers, vendors and other parties.those instruments is reflected in earnings in the period such change occurs.
We hold the following types of derivative instruments:
Foreign exchange rate forward contracts The majoritypurpose of these financial instruments expire within five years. Management does not expect anyis to hedge the risk of these financial instruments to resultchanges in losses that, if incurred, would have a material adverse effect on our consolidated financial position, resultsfuture cash flows of operationsanticipated purchase or cash flows.
Guarantees consisted of the following:
(In millions)December 31, 2018
Financial guarantees (a)
$750.4
Performance guarantees (b)
4,047.6
Maximum potential undiscounted payments$4,798.0


(a)Financial guarantees represent contracts that contingently require a guarantor to make payments to a guaranteed party based on changes in an underlying agreement that is related to an asset, a liability, or an equity security of the guaranteed party. These tend to be drawn down only if there is a failure to fulfill our financial obligations.
(b)Performance guarantees represent contracts that contingently require a guarantor to make payments to a guaranteed party based on another entity's failure to perform under a nonfinancial obligating agreement. Events that trigger payment are performance related, such as failure to ship a product or provide a service.
Management believes the ultimate resolution of our known contingencies will not materially affect our consolidated financial position, results of operations, or cash flows.
Contingent liabilities associated with legal matters - We are involvedsale commitments denominated in various pending or potential legal actions or disputes in the ordinary course of our business. Management is unable to predict the ultimate outcome of these actions because of their inherent uncertainty. However, management believes that the most probable, ultimate resolution of these matters will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.
On March 28, 2016, FMC Technologies received an inquiry from the U.S. Department of Justice ("DOJ") related to the DOJ's investigation of whether certain services Unaoil S.A.M. provided to its clients, including FMC Technologies, violated the U.S. Foreign Corrupt Practices Act ("FCPA"). On March 29, 2016 Technip S.A. also received an inquiry from the DOJ related to Unaoil. We are cooperating with the DOJ's investigationsforeign currencies and with regard to FMC Technologies, a related investigation by the U.S. Securities and Exchange Commission.
In late 2016, Technip S.A. was contacted by the DOJ regarding its investigation of offshore platform projects awarded between 2003 and 2007, performed in Brazil by a joint venture company in which Technip S.A. was a minority participant, and we have also raised with DOJ certain other projects performed by Technip S.A. subsidiaries in Brazil between 2002 and 2013. The DOJ has also inquired about projects in Ghana and Equatorial Guinea that were awarded to Technip S.A. subsidiaries in 2008 and 2009, respectively. We are cooperating with the DOJ in its investigation into potential violations of the FCPA in connection with these projects. We have contacted the Brazilian authorities (Federal Prosecution Service (MPF), the Comptroller General of Brazil (CGU) and the Attorney General of Brazil (AGU)) and are cooperating with their investigation concerning the projects in Brazil and have also contacted French authorities (the Parquet National Financier (PNF)) and are cooperating with their investigation about these existing matters.
We have been informed that these authorities in Brazil, the U.S. and France have been coordinating their investigations, which could result in a global resolution. These matters have progressed to a point where a probable estimate of the aggregate settlement amount with all authorities is $280.0 million for which we have taken a provision in the fourth quarter and year ended December 31, 2018.
These matters involve negotiations with law enforcement authorities in three separate jurisdictions, and there is no certainty that a global settlement will be reached or that the settlement will not exceed current accruals. These authorities have a broad range of civil and criminal sanctions under anticorruption laws and regulations, which they may seek to impose against corporations and individuals in appropriate circumstances including, but not limited to, fines, penalties and modifications to business practices and compliance programs. These authorities have entered into agreements with, and obtained a range of sanctions against, numerous public corporations and individuals arising from allegations of improper payments whereby civil and/or criminal penalties were imposed. Recent civil and criminal settlements have included fines, deferred prosecution agreements, guilty pleas and other sanctions, including the requirement that the relevant corporation retain a monitor to oversee its compliance with anticorruption laws. Any of these remedial measures, if applicable to us, as well as potential customer reaction to such remedial measures, could have a material adverse impact on our business, results of operations and financial condition.
Contingent liabilities associated with liquidated damages - Some of our contracts contain provisions that require us to pay liquidated damages if we are responsible for the failure to meet specified contractual milestone dates and the applicable customer asserts a conforming claim under these provisions. These contracts define the conditions under which our customers may make claims against us for liquidated damages. Based upon the evaluation of our performance and other commercial and legal analysis, management believes we have appropriately recognized probable liquidated damages at December 31, 2018 and 2017, and that the ultimate resolution of such matters will not materially affect our consolidated financial position, results of operations, or cash flows.


NOTE 19. INCOME TAXES
Components of income (loss) before income taxes - U.S. and outside U.S. components of income (loss) before income taxes were as follows:
 Year Ended December 31,
(In millions)2018 2017 2016
United States$(197.0) $284.3
 $154.3
Outside United States$(1,291.1) $395.4
 $397.1
Income (loss) before income taxes$(1,488.1) $679.7
 $551.4
Provision for income tax - The provision for income taxes consisted of:
 Year Ended December 31,
(In millions)2018 2017 2016
Current     
United States$52.1
 $30.2
 $54.1
Outside United States321.8
 373.7
 298.3
Total current373.9
 403.9
 352.4
Deferred     
United States19.5
 71.4
 (7.2)
Outside United States29.3
 70.2
 (164.9)
Total deferred48.8
 141.6
 (172.1)
Provision for income taxes$422.7
 $545.5
 $180.3


Deferred taxrecorded assets and liabilities - Significant components of deferred tax assets and liabilities were as follows: 
 December 31,
(In millions)2018 2017
Deferred tax assets attributable to   
Accrued expenses$128.0
 $155.2
Capital Loss21.2
 
Non-deductible interest89.3
 85.9
Foreign tax credit carryforwards105.9
 34.9
Net operating loss carryforwards382.8
 390.7
Inventories3.2
 13.4
Research and development credit6.5
 7.5
Foreign exchange32.5
 
Provisions for pensions and other long-term employee benefits72.4
 86.4
Contingencies related to contracts83.7
 111.3
Other contingencies28.7
 33.5
Fair value losses/gains
 12.4
Margin recognition on construction contracts34.4
 
Other15.2
 11.1
Deferred tax assets1,003.8
 942.3
Valuation allowance(683.4) (430.0)
Deferred tax assets, net of valuation allowance320.4
 512.3
    
Deferred tax liabilities attributable to   
Revenue in excess of billings on contracts accounted for under the percentage of completion method9.2
 41.2
U.S. tax on foreign subsidiaries’ undistributed earnings not indefinitely reinvested9.4
 4.9
Foreign exchange
 21.5
Property, plant and equipment, intangibles and other assets278.6
 403.3
Margin recognition on construction contracts
 6.4
Deferred tax liabilities297.2
 477.3
Net deferred tax assets/(liabilities)$23.2
 $35.0
At December 31, 2018 and 2017, the carrying amount of net deferred tax assets and the related valuation allowance included the impact of foreign currency translation adjustments.
Non-deductible interest. At December 31, 2018, deferred tax assets include tax benefits related to certain intercompany interest costs which are not currently deductible, but which may be deductible in future periods. If not utilized, these costs will become permanently non-deductible beginning in 2025. Management believes that it is more likely than not that we will not be able to deduct these costs before expiration of the carry forward period; therefore, we have established a valuation allowance against the related deferred tax assets.
Foreign tax credit carryforwards. At December 31, 2018, deferred tax assets included U.S. foreign tax credit carryforwards of $105.9 million, which, if not utilized, will begin to expire in 2023. Realization of these deferred tax assets is dependent on the generation of sufficient U.S. taxable income prior to the above date. Based on long-term forecasts of operating results, management believes that it is more likely than not that our U.S. earnings over the forecast period will not result in sufficient U.S. taxable income to fully realize these deferred tax assets; therefore, we have established a valuation allowance against the related deferred tax assets. In its analysis, management has considered the effect of deemed dividends and other expected adjustments to U.S. earnings that are required in determining U.S. taxable income. Non-U.S. earnings subject to U.S. tax, including deemed dividends for U.S. tax purposes, were $307.6 million in 2018, $1.3 billion in 2017 and nil in 2016.
Net operating loss carryforwards. consolidated balance sheets. As of December 31, 2018, deferred tax assets2020, we held the following material net positions:
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 Net Notional Amount
Bought (Sold)
(In millions) USD Equivalent
Euro1,794.5 2,201.8 
British pound771.7 1,054.3 
Malaysian ringgit891.0 221.5 
Norwegian krone1,721.6 201.7 
Brazilian real681.4 131.1 
Singapore dollar171.2 129.4 
Mexican peso1,288.0 64.7 
Australian dollar78.2 60.3 
Indian rupee3,172.0 43.4 
Japanese yen1,124.4 10.9 
Columbian peso37,142.2 10.8 
Hong Kong dollar(97.6)(12.6)
Indonesian rupiah(201,679.7)(14.3)
U.S. dollar(2,922.1)(2,922.1)
Foreign exchange rate instruments embedded in purchase and sale contracts – The purpose of these instruments is to match offsetting currency payments and receipts for particular projects, or comply with government restrictions on the currency used to purchase goods in certain countries. As of December 31, 2020, our portfolio of these instruments included tax benefits related tothe following material net operating loss carryforwards. Ifpositions:
 Net Notional Amount
Bought (Sold)
(In millions) USD Equivalent
Brazilian real77.9 15.0 
Hong Kong dollar48.3 6.2 
Euro(8.7)(10.7)
Norwegian krone(142.8)(16.7)
U.S. dollar5.2 5.2 
Fair value amounts for all outstanding derivative instruments have been determined using available market information and commonly accepted valuation methodologies. See Note 24 for further details. Accordingly, the estimates presented may not utilized, these net operating loss carryforwards will begin to expire in 2019. Management believes it is more likely than notbe indicative of the amounts that we willwould realize in a current market exchange and may not be able to utilize certain of these operating loss carryforwards before expiration; therefore, we have established a valuation allowance against the related deferred tax assets.


The majorityindicative of the net operating loss carryforwardsgains or losses we may ultimately incur when these contracts are in Brazil ($275.0 million), Saudi Arabia ($271.0 million), Mexico ($185.5 million), Norway ($128.8 million), U.K. ($186.5 million), and Canada ($78.5 million). Except in Canada and Mexico, all of these tax loss carryforwards extend indefinitely.settled.
Unrecognized tax benefits -
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The following table presents a summarythe location and fair value amounts of changesderivative instruments reported in our unrecognizedthe consolidated balance sheets:
 December 31, 2020December 31, 2019
(In millions)AssetsLiabilitiesAssetsLiabilities
Derivatives designated as hedging instruments
Foreign exchange contracts
Current - Derivative financial instruments$215.8 $151.6 $94.3 $125.0 
Long-term - Derivative financial instruments35.6 23.3 34.8 48.0 
Total derivatives designated as hedging instruments251.4 174.9 129.1 173.0 
Derivatives not designated as hedging instruments
Foreign exchange contracts
Current - Derivative financial instruments85.6 15.6 7.6 16.3 
Long-term - Derivative financial instruments0.3 0.4 0.4 
Total derivatives not designated as hedging instruments85.9 15.6 8.0 16.7 
Long-term - Derivative financial instruments - Synthetic Bonds - Call Option Premium— 4.3 — 
Long-term - Derivative financial instruments - Synthetic Bonds - Embedded Derivatives— — 4.3 
Total derivatives$337.3 $190.5 $141.4 $194.0 
Cash flow hedges of forecasted transactions, net of tax, benefits: 
(In millions)
Federal,
State and
Foreign
Tax
Balance as of December 31, 2016$16.6
Reductions for tax positions related to prior years(13.6)
Additions for tax positions related to current year39.5
Reductions for tax positions due to settlements(0.2)
Additions for tax positions related to purchase accounting48.1
Balance as of December 31, 2017$90.4
Reductions for tax positions related to prior years(11.5)
Additions for tax positions related to current year21.1
Reductions for tax positions due to settlements(9.0)
Balance as of December 31, 2018$91.0
The amounts reported abovewhich qualify for uncertain tax positions excludes interest and penaltieshedge accounting, resulted in accumulated other comprehensive gains (losses) of $2.8 million, $5.9$32.5 million and nil at December 31, 2018, 2017, and 2016, respectively. Interest and penalties relating to these uncertain tax positions are included in tax expense in our Consolidated Financial Statements. It is reasonably possible that within twelve months, $1.3$(5.8) million of liabilities for unrecognized tax benefits will be settled. This amount is reflected in income taxes payable, the remaining balance of the unrecognized tax benefits are recorded in other long term liabilities.
We operate in numerous jurisdictions around the world and could be subject to multiple tax audits at any given time. Most notably, the following tax years and thereafter remain subject to examination: 2008 for Norway, 2016 for Nigeria, 2013 for Brazil, 2017 for France, and 2015 for the United States.
As a result of the Merger, TechnipFMC plc is a public limited company incorporated under the laws of England and Wales. Therefore, our earnings are subject to the United Kingdom statutory rate of 19.0% beginning on the effective date of the Merger. Previously these earnings were subject to the French statutory rate of 34.4%. Our consolidated effective income tax rate information has been presented accordingly.
Effective income tax rate reconciliation - The effective income tax rate was different from the statutory federal income tax rate due to the following: 
 Year Ended December 31,
 2018 2017 2016
Statutory income tax rate19.0 % 19.3 % 34.4 %
Net difference resulting from     
Foreign earnings subject to different tax rates(9.7)% 18.2 % (18.5)%
Net change in unrecognized tax benefits(0.7)% 4.3 % 3.0 %
Adjustments on prior year taxes(0.7)% (4.4)% 2.4 %
Change in valuation allowance(14.4)% 19.3 % 13.1 %
Deferred tax asset/liability revaluation for tax rate change(1.7)% 1.4 % (0.8)%
U.S. transition tax(0.8)% 17.1 %  %
Impairments(16.5)%  %  %
Non-deductible legal provision(3.8)%  %  %
Other0.9 % 5.1 % (0.9)%
Effective income tax rate(28.4)% 80.3 % 32.7 %


U.S. Tax Cuts and Jobs Act (TCJA) and Other Jurisdictional Tax Reform. Included in the 2017 provision for income taxes are taxes related to the deemed repatriation to the United States of foreign earnings. The Tax Cuts and Jobs Act (TCJA), signed into U.S. law on December 22, 2017, made significant changes to the U.S. federal income taxation of non-U.S. corporate subsidiaries that are controlled by one or more U.S. shareholders. As part of these changes, the TCJA required a onetime deemed repatriation of all accumulated non-U.S. earnings.
The TCJA generally requires that, for the last taxable year of a non-U.S. corporation beginning before January 1, 2018, all U.S. shareholders of such a corporation that is at least 10-percent U.S.-owned must include in income their pro rata share of the corporation’s accumulated post-1986 deferred foreign income that was not previously subject to U.S. tax. Accordingly, the Company recorded income tax expense of approximately $148.7 million in 2017 associated with the deemed repatriation of approximately $2.6 billion of non-U.S. earnings that were not previously subject to U.S. tax. The company recorded additional income tax expense of $11.8 million in 2018 associated with the deemed repatriation of approximately $307 million of non-U.S. earnings that were not previously subject to U.S. tax. The company has recorded no current tax payable associated with the deemed repatriation.
Also included in the 2017 provision for income taxes is the result of the revaluation of deferred tax attributes as a result of changes in corporate tax rates as part of jurisdictional tax reform.  The tax expense from the revaluation of U.S. deferred tax attributes is $18.9 million. The tax benefit from the revaluation of deferred tax attributes in other foreign jurisdictions is $9.7 million. For 2018, the tax expense from jurisdictional corporate tax rate reform is $25.6 million.
As a result of the deemed repatriation, U.S. income tax has been provided on all undistributed earnings of non-U.S. subsidiaries of the Company’s U.S. affiliates as of December 31, 2017. 2020 and 2019, respectively. We expect to transfer an approximately $107.6 million gain from accumulated OCI to earnings during the next 12 months when the anticipated transactions actually occur. All anticipated transactions currently being hedged are expected to occur by the second half of 2025.
The cumulative balancefollowing tables present the location of these undistributed earnings was approximately $2.9 billion as of December 31, 2017.
As of December 31, 2018, we have completed our analysis of the financial statement impact of TCJA and have recorded all amounts associated with our 2017 final and 2018 anticipated compliance filings.
As of the date of the Merger, the cumulative balance of legacy FMC Technologies foreign earnings with respect to which no provision for U.S. income taxes has been recorded was $2.3 billion. Although the parent company of TechnipFMC has since changed jurisdictions, the undistributed foreign earnings previously reported were still liable for U.S. income taxes. In light of 2017’s tax reform, the entirety of the previously untaxed foreign earnings have been taxed via the deemed repatriation accounted for and includedgains (losses) in the transition tax which eliminatesconsolidated statements of income related to derivative instruments designated as cash flow hedges.
 Gain (Loss) Recognized in OCI 
 Year Ended December 31,
(In millions)202020192018
Foreign exchange contracts$28.0 $10.3 $(75.4)
The following represents the company’s liabilityeffect of cash flow hedge accounting on such earnings.
Income tax holidays. We benefit fromthe consolidated statements of income tax holidays in Singapore and Malaysia which will expire after 2018 for Singapore and 2020 for Malaysia. For the year ended December 31, 2018, these tax holidays reduced our provision for income taxes by $0.1 million, or $0.00 per share on2020, 2019 and 2018:
Year Ended December 31,
(In millions)202020192018
Total amount of income (expense) presented in the consolidated statements of income associated with hedges and derivativesRevenueCost of salesSelling,
general
and
administrative
expense
Other income (expense), netRevenueCost of salesSelling,
general
and
administrative
expense
Other income (expense), netRevenueCost of salesSelling,
general
and
administrative
expense
Other income (expense), net
Cash Flow hedge gain (loss) recognized in income
Foreign Exchange Contracts
Amounts reclassified from accumulated OCI to income (loss)$(83.7)$68.5 $(0.4)$(4.4)$(26.6)$12.0 $— $(9.1)$(2.4)$3.4 $(0.1)$1.0 
Amounts excluded from effectiveness testing7.7 (9.8)(0.2)34.2 0.6 (7.6)(34.9)(2.2)(4.8)(12.3)
Total cash flow hedge gain (loss) recognized in income(76.0)58.7 (0.6)29.8 (26.0)4.4  (44.0)(4.6)(1.4)(0.1)(11.3)
Gain (loss) recognized in income on derivatives not designated as hedging instruments(0.8)3.4 22.7 (1.6)0.2 (10.2)(1.7)0.2 (11.4)
Total$(76.8)$62.1 $(0.6)$52.5 $(27.6)$4.6 $ $(54.2)$(6.3)$(1.2)$(0.1)$(22.7)
137


Balance Sheet Offsetting - We execute derivative contracts with counterparties that consent to a diluted basis.
NOTE 20. PENSION AND OTHER POST-RETIREMENT BENEFIT PLANS
We have funded and unfunded defined benefit pension plansmaster netting agreement which provide defined benefits based on years of service and final average salary.
On December 31, 2017, we amended the retirement plans (the “Plans”) to freeze benefit accruals for all participantspermits net settlement of the Plans asgross derivative assets against gross derivative liabilities. Each instrument is accounted for individually and assets and liabilities are not offset. As of December 31, 2017. After that date, participants in the Plans will2020 and 2019, we had no longer accrue any further benefits and participants’ benefits under the Plans will be determined based on credited service and eligible earnings as of December 31, 2017.
Foreign-based employees are eligible to participate in TechnipFMC-sponsored or government-sponsored benefit plans to which we contribute. Several of the foreign defined benefit pension plans sponsored by us provide for employee contributions; the remaining plans are noncontributory. The most significant of these plans are in the Netherlands, France, Norway and the United Kingdom.
We have other post-retirement benefit plans covering substantially all of our U.S. employees who were hired prior to January 1, 2003. The post-retirement health care plans are contributory; the post-retirement life insurance plans are noncontributory.


We are required to recognize the funded status of defined benefit post-retirement plans as an asset or liability in the consolidated balance sheet and recognize changes in that funded status in comprehensive income in the year in which the changes occur. Further, we are required to measure the plan’s assets and its obligations that determine its funded status as of the date of the consolidated balance sheet. We have applied this guidance to our domestic pension and other post-retirement benefit plans as well as for many of our non-U.S. plans, including those in the United Kingdom, Norway, Germany, France and Canada. Pension expense measured in compliance with GAAP for the other non-U.S. pension plans is not materially different from the locally reported pension expense.


The funded status of our U.S. Pension Plans, certain foreign pension plans and U.S. post-retirement health care and life insurance benefit plans, together with the associated balances recognized in our consolidated balance sheets as of December 31, 2018 and 2017, were as follows:
 Pensions 
Other
Post-retirement
Benefits
 2018 2017 2018 2017
(In millions)U.S. Int’l U.S. Int’l    
Accumulated benefit obligation$598.1
 $664.3
 $659.8
 $769.9
    
Projected benefit obligation at January 1$659.8
 $898.1
 $
 $399.6
 $10.0
 $0.9
Service cost0.2
 21.2
 10.3
 21.0
 
 
Interest cost23.8
 20.9
 26.7
 19.6
 0.4
 0.3
Actuarial (gain) loss(47.9) (40.0) 56.2
 (13.5) (0.2) 0.8
Amendments0.3
 2.7
 0.2
 
 0.1
 
Curtailments
 (4.0) (67.9) (2.8) 
 
Settlements(5.3) (89.0) 
 (13.5) (0.1) 
Foreign currency exchange rate changes
 (25.7) 
 68.9
 
 
Plan participants’ contributions
 1.2
 
 1.4
 
 
Benefits paid(32.8) (31.7) (27.5) (27.6) (0.5) (0.6)
Acquisition/Business Combination/Divestiture
 
 661.9
 432.3
 
 7.7
Other
 (0.3) (0.1) 12.7
 (0.2) 0.9
Projected benefit obligation at December 31598.1
 753.4
 659.8
 898.1
 9.5
 10.0
Fair value of plan assets at January 1576.4
 699.2
 
 229.7
 
 
Actual return on plan assets(70.7) (16.0) 60.4
 63.3
 
 
Company contributions
 18.5
 
 19.1
 
 
Foreign currency exchange rate changes
 (20.9) 
 50.4
 
 
Settlements
 (87.6) 
 (7.0) 
 
Plan participants’ contributions
 1.2
 
 1.4
 
 
Benefits paid(28.3) (23.3) (24.8) (21.5) 
 
Acquisition/Business Combination/Divestiture
 
 540.8
 361.4
 
 
Other
 (0.5) 
 2.4
 
 
Fair value of plan assets at December 31477.4
 570.6
 576.4
 699.2
 
 
Funded status of the plans (liability) at December 31$(120.7) $(182.8) $(83.4) $(198.9) $(9.5) $(10.0)
 Pensions 
Other
Post-retirement
Benefits
 2018 2017 2018 2017
(In millions)U.S. Int’l U.S. Int’l    
Current portion of accrued pension and other post-retirement benefits$(5.5) $(7.9) $(5.4) $(4.1) $(0.7) $(0.7)
Accrued pension and other post-retirement benefits, net of current portion(115.2) (174.9) (78.0) (194.8) (8.8) (9.3)
Funded status recognized in the consolidated balance sheets at December 31$(120.7) $(182.8) $(83.4) $(198.9) $(9.5) $(10.0)


The following table summarizes the pre-tax amounts in accumulated other comprehensive (income) loss at December 31, 2018 and 2017 that have not been recognized as components of net periodic benefit cost:
 Pensions 
Other
Post-retirement
Benefits
 2018 2017 2018 2017
(In millions)U.S. Int’l U.S. Int’l    
Pre-tax amounts recognized in accumulated other comprehensive (income) loss           
Unrecognized actuarial (gain) loss$73.2
 $43.7
 $0.1
 $21.2
 $0.6
 $0.8
Unrecognized prior service (credit) cost
 7.0
 0.2
 5.5
 
 
Accumulated other comprehensive (income) loss at December 31$73.2
 $50.7
 $0.3
 $26.7
 $0.6
 $0.8
collateralized derivative contracts. The following tables summarize the projectedpresent both gross information and accumulated benefit obligationsnet information of recognized derivative instruments:
December 31, 2020December 31, 2019
(In millions)Gross Amount RecognizedGross Amounts Not Offset Permitted Under Master Netting AgreementsNet AmountGross Amount RecognizedGross Amounts Not Offset Permitted Under Master Netting AgreementsNet Amount
Derivative assets$337.3 $(134.0)$203.3 $141.4 $(112.5)$28.9 
Derivative liabilities$190.5 $(134.0)$56.5 $194.0 $(112.5)$81.5 

NOTE 24. FAIR VALUE MEASUREMENTS
Recurring Fair Value Measurements
Assets and fair values of plan assets where the projected or accumulated benefit obligation exceeds the fair value of plan assets at December 31, 2018 and 2017:
 Pensions 
Other
Post-retirement
Benefits
 2018 2017 2018 2017
(In millions)U.S. Int’l U.S. Int’l    
Plans with underfunded or non-funded projected benefit obligation           
Aggregate projected benefit obligation$598.1
 $621.1
 $659.8
 $744.3
 $9.5
 $9.9
Aggregate fair value of plan assets$477.4
 $439.8
 $576.4
 $558.0
 $
 $
 Pensions 
Other
Post-retirement
Benefits
 2018 2017 2018 2017
(In millions)U.S. Int’l U.S. Int’l    
Plans with underfunded or non-funded accumulated benefit obligation           
Aggregate accumulated benefit obligation$598.1
 $269.2
 $659.8
 $212.5
 $
 $
Aggregate fair value of plan assets$477.4
 $126.6
 $576.4
 $82.2
 $
 $


The following table summarizes the components of net periodic benefit cost (income) for the years ended December 31, 2018, 2017 and 2016:
 Pensions 
Other Post-retirement
Benefits
 2018 2017 2016 2018 2017 2016
(In millions)U.S. Int’l U.S. Int’l U.S. Int’l      
Components of net periodic benefit cost (income)                 
Service cost$0.2
 $21.2
 $10.3
 $21.0
 $
 $11.7
 $
 $
 $
Interest cost23.8
 20.9
 26.7
 19.6
 
 10.9
 0.4
 0.3
 
Expected return on plan assets(50.1) (41.2) (45.5) (36.3) 
 (8.2) 
 
 
Settlement cost0.4
 0.4
 
 1.5
 
 
 
 
 
Curtailment benefit
 (3.8) (26.8) 
 
 (10.7) 
 
 
Amortization of net actuarial loss (gain)
 0.6
 
 2.5
 
 1.0
 
 
 
Amortization of prior service cost (credit)
 1.3
 
 1.0
 
 0.7
 
 
 
Net periodic benefit cost (income)$(25.7) $(0.6) $(35.3) $9.3
 $
 $5.4
 $0.4
 $0.3
 $
The following table summarizes changes in plan assets and benefit obligations recognized in other comprehensive income (loss) for the years ended December 31, 2018, 2017 and 2016:
 Pensions 
Other Post-retirement
Benefits
 2018 2017 2016 2018 2017 2016
(In millions)U.S. Int’l U.S. Int’l U.S. Int’l      
Changes in plan assets and benefit obligations recognized in other comprehensive income (loss)                 
Net actuarial gain (loss) arising during period$(73.5) $(15.3) $26.7
 $43.3
 $
 $(10.5) $
 $(0.8) $
Prior service (cost) credit arising during period0.2
 (2.7) (0.2) 0.1
 
 0.1
 
 
 
Settlements and curtailments0.4
 (3.4) (26.8) 1.5
 
 (10.7) 
 
 
Amortization of net actuarial loss (gain)
 0.6
 
 2.5
 
 1.0
 
 
 
Amortization of prior service cost (credit)
 1.3
 
 1.0
 
 0.7
 
 
 
Other
 1.4
 
 (5.1) 
 17.6
 (0.1) 
 
Total recognized in other comprehensive income (loss)$(72.9) $(18.1) $(0.3) $43.3
 $
 $(1.8) $(0.1) $(0.8) $
Included in accumulated other comprehensive income (loss) at December 31, 2018, are noncash, pre-tax charges which have not yet been recognized in net periodic benefit cost (income). The estimated amounts expected to be amortized from the portion of each component of accumulated other comprehensive income (loss) as a component of net period benefit cost (income), during the next fiscal year are as follows:
 Pensions 
Other
Post-retirement
Benefits
(In millions)U.S. Int’l  
Net actuarial losses (gains)$1.8
 $0.9
 $
Prior service cost (credit)$
 $1.2
 $


Key assumptions - The following weighted-average assumptions were used to determine the benefit obligations:
 Pensions 
Other
Post-retirement
Benefits
 2018 2017 2018 2017
 U.S. Int’l U.S. Int’l    
Discount rate4.40% 2.54% 3.70% 2.42% 5.04% 4.33%
Rate of compensation increaseN/A
 2.24% N/A
 2.37% 4.00% 4.00%
The following weighted-average assumptions were used to determine net periodic benefit cost:
 Pensions 
Other
Post-retirement
Benefits
 2018 2017 2016 2018 2017 2016
 U.S. Int’l U.S. Int’l U.S. Int’l      
Discount rate3.70% 2.39% 4.30% 2.37% N/A 2.80% 4.33% 4.05% 2.20%
Rate of compensation increaseN/A
 2.39% 4.00% 2.39% N/A 2.30% 4.00% 4.00% 3.00%
Expected rate of return on plan assets8.57% 4.90% 9.00% 6.24% N/A 2.80% N/A
 N/A
 N/A
Our estimate of expected rate of return on plan assets is primarily based on the historical performance of plan assets, current market conditions, our asset allocation and long-term growth expectations.
Plan assets - Our pension investment strategy emphasizes maximizing returns consistent with balancing risk. Excluding our international plans with insurance-based investments, 99% of our total pension plan assets represent the U.S. qualified plan, the U.K. plan and the Netherlands plan. These plans are primarily invested in equity securities to maximize the long-term returns of the plans. The investment managers of these assets, including the hedge funds and limited partnerships, use Graham and Dodd fundamental investment analysis to select securities that have a margin of safety between the price of the security and the estimated value of the security. This value-oriented approach tends to mitigate the risk of a large equity allocation.
The following is a description of the valuation methodologies used for the pension plan assets. There have been no changes in the methodologies used at December 31, 2018 and 2017.
Cash is valued at cost, which approximates fair value.
Equity securities are comprised of common stock and preferred stock. The fair values of equity securities are valued at the closing price reported on the active market on which the securities are traded.
Fair values of registered investment companies and common/collective trusts are valued based on quoted market prices, which represent the net asset value (“NAV”) of shares held. Registered investment companies primarily include investments in emerging market bonds. Common/collective trusts primarily includes money market instruments with short maturities.
Insurance contracts are valued at book value, which approximates fair value, and is calculated using the prior-year balance plus or minus investment returns and changes in cash flows.
The fair values of hedge funds are valued using the NAV as determined by the administrator or custodian of the fund. The funds primarily invest in U.S. and international equities, debt securities and other hedge funds.
The fair values of limited partnerships are valued using the NAV as determined by the administrator or custodian of the fund. The partnerships primarily invest in U.S. and international equities and debt securities.
Real estate and other investments primarily consists of real estate investment trusts and other investments. These investments are measured at quoted market prices, which represent the NAV of the securities held in such funds at year end.


Our pension plan assetsliabilities measured at fair value on a recurring basis were as follows:
 December 31, 2020December 31, 2019
(In millions)TotalLevel 1Level 2Level 3TotalLevel 1Level 2Level 3
Assets
Investments
Equity securities(a)
$65.6 $65.6 $— $— $54.8 $54.8 $$— 
Money market fund1.7 — 1.7 — 1.5 — 1.5 — 
Stable value fund(b)
0.9 — — — 2.1 — — — 
Held-to-maturity debt securities24.2 — 24.2 — 71.9 71.9 
Derivative financial instruments
Synthetic bonds - call option premium— — — — 4.3 — 4.3 — 
Foreign exchange contracts337.3 — 337.3 — 137.1 — 137.1 — 
Assets held for sale47.3 — — 47.3 25.8 — — 25.8 
Total assets$477.0 $65.6 $363.2 $47.3 $297.5 $54.8 $214.8 $25.8 
Liabilities
Redeemable financial liability$246.6 $— $— $246.6 $268.8 $— $— $268.8 
Derivative financial instruments
Synthetic bonds - embedded derivatives— — — 4.3 — 4.3 — 
Foreign exchange contracts190.5 — 190.5 — 189.7 — 189.7 — 
Liabilities held for sale— — — — 9.3 — — 9.3 
Total liabilities$437.1 $— $190.5 $246.6 $472.1 $— $194.0 $278.1 
(a)Includes fixed income and other investments measured at fair value.
(b)Certain investments that are measured at fair value using net asset value per share (or its equivalent) have not been classified in the fair value hierarchy.
Equity securities and Available-for-sale Securities - The fair value measurement of our traded securities and Available-for-sale-Securities is based on quoted prices that we have the ability to access in public markets.
Stable value fund and Money market fund - Stable value fund and money market fund are valued at the net asset value of the shares held at the end of the quarter, which is based on the fair value of the underlying investments using information reported by our investment advisor at quarter-end.
Held-to-maturity debt securities - Held-to-maturity debt securities consist of government bonds. These investments are stated at amortized cost, which approximates fair value.
138


Assets and liabilities held for sale - The fair value of our assets and liabilities held for sale was determined using a market approach that took into consideration the expected sales price.
Mandatorily redeemable financial liability - We have a mandatorily redeemable financial liability which is recorded at its fair value. The mandatorily redeemable financial liability relates to our voting control interests in legal Technip Energies contract entities which own and account for the design, engineering and construction of the Yamal LNG plant. The fair value is determined using a discounted cash flow model. The key assumptions used in applying the income approach are the selected discount rates and the expected dividends to be distributed in the future to the non-controlling interest holders. Expected dividends to be distributed are based on the non-controlling interests’ share of the expected profitability of the underlying contract, a 15.0% discount rate and the overall timing of completion of the project.

A mandatorily redeemable financial liability of $246.6 million, $268.8 million and $408.5 million was recognized as follows atof December 31, 2020, 2019 and 2018, and 2017. Referrespectively, to “Fairaccount for the fair value measurements” in Note 1 to these consolidated financial statements for a description of the levels.
(In millions)U.S. International
December 31, 2018Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3
Cash and cash equivalents$46.8
 $46.8
 $
 $
 $11.1
 $11.1
 $
 $
Equity securities               
U.S. companies109.4
 109.4
 
 
 92.2
 92.2
 
 
International companies8.5
 8.5
 
 
 186.8
 186.8
 
 
Registered investment companies (a)
32.6
 
 
 
 44.4
 
 
 
Common/collective trusts (a)
11.7
 
 
 
 10.0
 
 
 
Insurance contracts
 
 
 
 125.0
 
 125.0
 
Hedge funds (a)
176.5
 
 
 
 99.1
 
 
 
Limited partnerships (a)
89.7
 
 
 
 
 
 
 
Real estate and other investments2.2
 2.2
 
 
 1.2
 1.2
 
 
Total assets$477.4
 $166.9
 $
 $
 $569.8
 $291.3
 $125.0
 $
                
December 31, 2017               
Cash and cash equivalents$41.2
 $41.2
 $
 $
 $4.8
 $4.8
 $
 $
Equity securities               
U.S. companies131.7
 131.7
 
 
 106.9
 106.9
 
 
International companies33.7
 33.7
 
 
 216.7
 216.7
 
 
Registered investment companies (a)
33.6
 
 
 
 72.6
 
 
 
Common/collective trusts (a)
31.2
 
 
 
 13.0
 
 
 
Insurance contracts
 
 
 
 208.2
 
 208.2
 
Hedge funds (a)
194.3
 
 
 
 74.7
 
 
 
Limited partnerships (a)
109.7
 
 
 
 
 
 
 
Real estate and other investments0.8
 0.8
 
 
 1.5
 1.5
 
 
Total assets$576.2
 $207.4
 $
 $
 $698.4
 $329.9
 $208.2
 $
(a)Certain investments that are measured at fair value using net asset value per share (or its equivalent) have not been classified in the fair value hierarchy.
Contributions - We expectnon-controlling interests. During the years ended December 31, 2020, 2019 and 2018, we revalued the liability to contribute approximately $2.7 million to our international pension plans, representing primarilyreflect current expectations about the Netherlands qualified pension plans and U.K. qualified pension plans. We do not expect to make any contributions to our U.S. Qualified Pension Plan and our U.S. Non-Qualified Defined Benefit Pension Plan in 2019. All of the contributions are expected to beobligation, which resulted in the formrecognition of cash. In 2018 and 2017, we contributed $18.5a loss of $202.0 million, $423.1 million and $19.1$322.3 million, to all pension plans, respectively.


Estimated future benefit payments - The following table summarizes expected benefit payments from our various pension and post-retirement benefit plans through 2028. Actual benefit payments may differ from expected benefit payments.
 Pensions 
Other
Post-retirement
Benefits
(In millions)U.S. International  
2019$34.9
 $28.3
 $0.7
2020$35.2
 $30.4
 $0.7
2021$35.7
 $31.8
 $0.7
2022$35.1
 $32.0
 $0.6
2023$33.7
 $33.8
 $0.6
2024-2028$175.8
 $189.3
 $2.7
Savings plans - The TechnipFMC Retirement Savings Plan (“Qualified Plan”), a qualified salary reduction plan under Section 401(k)A decrease of the Internal Revenue Code, is a defined contribution plan. Additionally, we have a non-qualified deferred compensation plan, the Non-Qualified Plan, which allows certain highly compensated employees the option to defer the receipt of a portion of their salary. We match a portion of the participants’ deferrals to both plans. Both plans relate to FMC Technologies, Inc.
Participantsone percentage point in the Non-Qualified Plan earn a returndiscount rate would have increased the liability by $2.0 million as of December 31, 2020. The fair value measurement is based on hypothetical investments in the same options as our 401(k) plan, including TehnipFMC plc stock. Changesupon significant unobservable inputs not observable in the market and is consequently classified as a Level 3 fair value of these participant investments are reflected as an adjustment to the deferred compensation liability with an offset to other income (expense), net. As of December 31, 2018 and 2017, our liability for the Non-Qualified Plan was $22.8 million and $29.4 million, respectively, and was recorded in other non-current liabilities. We hedge the financial impact of changes in the participants’ hypothetical investments by purchasing the investments that the participants have chosen. With the exception of TechnipFMC plc stock, which is maintained at its cost basis, changesmeasurement.
Change in the fair value of these investments are recognizedour Level 3 mandatorily redeemable financial liability is recorded as an offsetinterest expense on the consolidated statements of income and was as follows:
Year Ended December 31,
(In millions)202020192018
Balance at beginning of period$268.8 $408.5 $312.0 
Less: Expenses recognized in net interest expense(202.0)(423.1)(322.3)
Less: Settlements224.2 562.8 225.8 
Balance at end of period$246.6 $268.8 $408.5 
Redeemable non-controlling interest - We own a 51% share in Island Offshore Subsea AS that was subsequently renamed to other income (expense), net.TIOS AS. The non-controlling interest is recorded as mezzanine equity at fair value.The fair value measurement is based upon significant unobservable inputs not observable in the market and is consequently classified as a Level 3 fair value measurement. As of December 31, 20182020 and 2017, we had investments2019, the fair value of our redeemable non-controlling interest was $43.7 million and $41.1 million, respectively. See Note 2 for further details.
Derivative financial instruments - We use the income approach as the valuation technique to measure the fair value of foreign currency derivative instruments on a recurring basis. This approach calculates the present value of the future cash flow by measuring the change from the derivative contract rate and the published market indicative currency rate, multiplied by the contract notional values. Credit risk is then incorporated by reducing the derivative’s fair value in asset positions by the result of multiplying the present value of the portfolio by the counterparty’s published credit spread. Portfolios in a liability position are adjusted by the same calculation; however, a spread representing our credit spread is used. Our credit spread, and the credit spread of other counterparties not publicly available, are approximated by using the spread of similar companies in the same industry, of similar size and with the same credit rating. We have no credit-risk-related contingent features in our agreements with the financial institutions that would require us to post collateral for derivative positions in a liability position. See Note 23 for further details.
Nonrecurring Fair Value Measurements
Fair value of long-lived, non-financial assets - Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that carrying amounts of such assets may not be recoverable.
The following summarizes impairments of long-lived assets and related post-impairment fair value for the Non-Qualified Plan totaling $21.4years ended December 31, 2020 and 2019:
139


Year Ended December 31,
20202019
(In millions)Impairment
Fair Value (a)
Impairment
Fair Value (a)
Long-lived assets$204.0 $464.7 $495.4 $342.5 (b)
(a)Measured as of the impairment date using the income approach and a 10.8% risk-adjusted rate of interest, resulting in a Level 3 fair value measurement.
(b)Includes $104.0 million fair value of vessels determined using the transaction price of a similar vessel, resulting in a Level 2 fair value measurement.
Other fair value disclosures
Fair value of debt - The fair value of our Synthetic Bonds, Senior Notes and private placement notes are as follows:
December 31, 2020December 31, 2019
(In millions)
Carrying Amount (a)
Fair Value (b)
Carrying Amount (a)
Fair Value (b)
Synthetic bonds due 2021$551.2 $552.0 $492.9 $513.1 
3.45% Senior Notes due 2022500.0 513.2 500.0 499.2 
5.00% Notes due 2020224.6 230.0 
3.40% Notes due 2022184.0 188.8 168.5 180.6 
3.15% Notes due 2023159.5 163.7 146.0 156.8 
3.15% Notes due 2023153.4 161.8 140.4 150.5 
4.50% Notes due 2025245.4 256.8 
4.00% Notes due 202792.0 99.7 84.2 96.4 
4.00% Notes due 2032122.7 136.8 112.3 127.8 
3.75% Notes due 2033122.7 126.4 112.3 123.8 
(a)Carrying amounts include unamortized debt discounts and premiums and unamortized debt issuance costs of $12.8 million and $25.1$9.1 million at fair market value, respectively. Asas of December 31, 20182020, and 2017, TechnipFMC stock held in trust of $2.4 million and $4.8 million at its cost basis,2019, respectively. Refer to Note 22 to these consolidated financial statements for
(b)Fair values are based on Level 2 quoted market prices.
Other fair value disclosuredisclosures - The carrying amounts of cash and cash equivalents, trade receivables, accounts payable, short-term debt, commercial paper, debt associated with our bank borrowings, credit facilities, as well as amounts included in other current assets and other current liabilities that meet the definition of financial instruments, approximate fair value.
Credit risk - By their nature, financial instruments involve risk, including credit risk, for non-performance by counterparties. Financial instruments that potentially subject us to credit risk primarily consist of trade receivables and derivative contracts. We manage the credit risk on financial instruments by transacting only with what management believes are financially secure counterparties, requiring credit approvals and credit limits, and monitoring counterparties’ financial condition. Our maximum exposure to credit loss in the event of non-performance by the counterparty is limited to the amount drawn and outstanding on the financial instrument. Allowances for losses on trade receivables are established based on collectability assessments. We mitigate credit risk on derivative contracts by executing contracts only with counterparties that consent to a master netting agreement, which permits the net settlement of gross derivative assets against gross derivative liabilities.
140



NOTE 25. QUARTERLY INFORMATION (UNAUDITED)
20202019
(In millions, except per share data)4th Qtr.3rd Qtr.2nd Qtr.1st Qtr.4th Qtr.3rd Qtr.2nd Qtr.1st Qtr.
Revenue$3,426.1 $3,335.7 $3,158.5 $3,130.3 $3,726.8 $3,335.1 $3,434.2 $2,913.0 
Cost of sales2,973.8 2,882.3 2,647.0 2,706.3 3,067.2 2,726.4 2,745.2 2,411.9 
Net income (loss)(13.9)6.4 15.3 (3,245.7)(2,430.3)(115.3)113.7 19.8 
Net income (loss) attributable to TechnipFMC plc$(39.3)$(3.9)$11.7 $(3,256.1)$(2,414.0)$(119.1)$97.0 $20.9 
Basic earnings (loss) per share (1)
$(0.09)$(0.01)$0.03 $(7.28)$(5.40)$(0.27)$0.22 $0.05 
Diluted earnings (loss) per share (1)
$(0.09)$(0.01)$0.03 $(7.28)$(5.40)$(0.27)$0.21 $0.05 
(1)    Basic and diluted earnings (loss) per share are computed independently for each of the Non-Qualified Plan investments.quarters presented. Therefore, the sum of quarterly basic and diluted per share information may not equal annual basic and diluted earnings (loss) per share.
We recognized expense
NOTE 26. SUBSEQUENT EVENT

On February 16, 2021, we completed the Spin-off, see Note 3 for further details. In connection with the Spin-off, we executed a series of $31.8refinancing transactions, in order to provide a capital structure with sufficient cash resources to support future operating and investment plans.

On February 16, 2021, we entered into a new senior secured revolving credit facility (the “Revolving Credit Facility”) that provides for aggregate revolving capacity of up to $1.0 billion. Availability of borrowings under the Revolving Credit Facility is reduced by any outstanding letters of credit issued against the facility. At February 25, 2021, there were no outstanding letters of credit and availability of borrowings under the Revolving Credit Facility was $800 million.

On January 29, 2021, we issued $1.0 billion of 6.5% senior notes due 2026 (the “2021 Notes”). The interest on the 2021 Notes is paid semi-annually on February 1 and August 1 of each year, beginning on August 1, 2021. The 2021 Notes are senior unsecured obligations and are guaranteed on a senior unsecured basis by substantially all of our wholly-owned U.S. subsidiaries and non-U.S. subsidiaries in Brazil, the Netherlands, Norway, Singapore and the United Kingdom.
The proceeds from the debt issuance described above along with the available cash on hand were used to fund the repayment of all $522.8 million of the outstanding Synthetic Convertible Bonds that matured in January 2021 and $20.3the repayment of all $500.0 million for matching contributions toaggregate principal amount of outstanding 3.45% Senior Notes due 2022.

In addition, we terminated the $2.5 billion senior unsecured revolving credit facility we entered into on January 17, 2017 and terminated the €500.0 million Euro Facility and CCFF Program we entered into on May 19, 2020. In connection with the termination of these plans in 2018 and 2017, respectively. Additionally,credit facilities, we recognized expenserepaid most of $14.3the outstanding commercial paper borrowings, which were $1,525.9 million and $12.5 million for non-elective contributions in 2018 and 2017, respectively.as December 31, 2020.

NOTE 21. DERIVATIVEITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL INSTRUMENTSDISCLOSURE
For purposesNone.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of mitigating the effect of changes in exchange rates, we hold derivative financial instruments to hedge the risks of certain identifiableDisclosure Controls and anticipated transactions and recorded assets and liabilities in our consolidated balance sheets. The types of risks hedged are those relating to the variability of future earnings and cash flows caused by movements in foreign currency exchange rates. Our policy is to hold derivatives only for the purpose of hedging risks associated with anticipated foreign currency purchases and sales created in the normal course of business, and not for trading purposes where the objective is solely to generate profit.Procedures
Generally, we enter into hedging relationships such that changes in the fair values or cash flows of the transactions being hedged are expected to be offset by corresponding changes in the fair value of the derivatives. For derivative instruments that qualify as a cash flow hedge, the effective portion of the gain or loss of the derivative, which does not include the time value component of a forward currency rate, is reported as a component of other comprehensive income (“OCI”) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. For derivative instruments not designated as hedging instruments, any change in the fair value of those instruments are reflected in earnings in the period such change occurs.


We hold the following types of derivative instruments:
Foreign exchange rate forward contracts – The purpose of these instruments is to hedge the risk of changes in future cash flows of anticipated purchase or sale commitments denominated in foreign currencies and recorded assets and liabilities in our consolidated balance sheets. At December 31, 2018, we held the following material net positions:
 
Net Notional Amount
Bought (Sold)
(In millions)  USD Equivalent
Euro725.9
 831.1
Norwegian krone2,264.7
 260.6
Brazilian real752.3
 194.2
Australian dollar183.2
 129.3
Malaysian ringgit397.0
 96.1
Singapore dollar108.2
 79.4
Japanese yen8,118.0
 73.9
British pound52.4
 67.0
Canadian dollar(247.0) (181.0)
U.S. dollar(1,051.8) (1,051.8)
Foreign exchange rate instruments embedded in purchase and sale contracts – The purpose of these instruments is to match offsetting currency payments and receipts for particular projects, or comply with government restrictions on the currency used to purchase goods in certain countries. At December 31, 2018, our portfolio of these instruments included the following material net positions:
 
Net Notional Amount
Bought (Sold)
(In millions)  USD Equivalent
Norwegian krone(104.3) (12.0)
U.S. dollar13.1
 13.1
Fair value amounts for all outstanding derivative instruments have been determined using available market information and commonly accepted valuation methodologies. Refer to Note 22 to these consolidated financial statements for further disclosures related to the fair value measurement process. Accordingly, the estimates presented may not be indicative of the amounts that we would realize in a current market exchange and may not be indicative of the gains or losses we may ultimately incur when these contracts are settled.


The following table presents the location and fair value amounts of derivative instruments reported in the consolidated balance sheets:
 December 31, 2018 December 31, 2017
(In millions)Assets Liabilities Assets Liabilities
Derivatives designated as hedging instruments       
Foreign exchange contracts       
Current - Derivative financial instruments$83.8
 $127.7
 $65.6
 $51.0
Long-term - Derivative financial instruments9.0
 35.6
 28.0
 1.7
Total derivatives designated as hedging instruments92.8
 163.3
 93.6
 52.7
Derivatives not designated as hedging instruments       
Foreign exchange contracts       
Current - Derivative financial instruments11.9
 10.7
 12.7
 18.0
Long-term - Derivative financial instruments0.1
 0.1
 4.7
 4.2
Total derivatives not designated as hedging instruments12.0
 10.8
 17.4
 22.2
Long-term - Derivative financial instruments - Synthetic Bonds - Call Option Premium9.2
 
 62.2
 
Long-term - Derivative financial instruments - Synthetic Bonds - Embedded Derivatives
 9.2
 
 62.2
Total derivatives$114.0
 $183.3
 $173.2
 $137.1
We recognized a loss of $2.5 million, a gain of $25.3 million and a loss of $10.3 million on cash flow hedges for the years ended December 31, 2018, 2017 and 2016, respectively, due to hedge ineffectiveness as it was probable that the original forecasted transaction would not occur. Cash flow hedges of forecasted transactions, net of tax, resulted in accumulated other comprehensive income (loss) of $(33.0) million and $28.5 million at December 31, 2018 and 2017, respectively. We expect to transfer an approximately $11.7 million loss from accumulated OCI to earnings during the next 12 months when the anticipated transactions actually occur. All anticipated transactions currently being hedged are expected to occur by the second half of 2023.
The following table presents the location of gains (losses) on the consolidated statements of income related to derivative instruments designated as fair value hedges.
Location of Fair Value Hedge Gain (Loss) Recognized in IncomeGain (Loss) Recognized in Income
 Year Ended December 31,
(In millions)2018 2017 2016
Other income (expense), net$(18.1) $44.9
 $32.8
The following tables present the location of gains (losses) on the consolidated statements of income related to derivative instruments designated as cash flow hedges.
 Gain (Loss) Recognized in OCI (Effective Portion)
 Year Ended December 31,
(In millions)2018 2017 2016
Foreign exchange contracts$(75.4) $72.1
 $(86.1)
Location of Cash Flow Hedge Gain (Loss) Reclassified from Accumulated OCI into Income
Gain (Loss) Reclassified From Accumulated
OCI into Income (Effective Portion)
 Year Ended December 31,
(In millions)2018 2017 2016
Foreign exchange contracts     
Revenue$(2.4) $(39.3) $
Cost of sales3.4
 5.3
 
Selling, general and administrative expense(0.1) 0.8
 
Other (expense), net1.0
 (102.2) (165.7)
Total$1.9
 $(135.4) $(165.7)


Location of Cash Flow Hedge Gain (Loss) Recognized in Income
Gain (Loss) Recognized in Income (Ineffective Portion
and Amount Excluded from Effectiveness Testing)
 Year Ended December 31,
(In millions)2018 2017 2016
Foreign exchange contracts     
Revenue$(2.2) $9.5
 $
Cost of sales(4.8) (9.0) 
Selling, general and administrative expense
 0.1
 
Other income (expense), net(12.3) 23.0
 (13.2)
Total$(19.3) $23.6
 $(13.2)
The following table presents the location of gains (losses) on the consolidated statements of income related to derivative instruments not designated as hedging instruments.
Location of Gain (Loss) Recognized in Income
Gain (Loss) Recognized in Income on
Derivatives (Instruments Not Designated
as Hedging Instruments)
 Year Ended December 31,
(In millions)2018 2017 2016
Foreign exchange contracts     
Revenue$(1.7) $0.9
 $
Cost of sales0.2
 (0.3) 
Other income, net(11.4) 43.0
 0.1
Total$(12.9) $43.6
 $0.1
Balance Sheet Offsetting - We execute derivative contracts with counterparties that consent to a master netting agreement which permits net settlement of the gross derivative assets against gross derivative liabilities. Each instrument is accounted for individually and assets and liabilities are not offset. As of December 31, 20182020, and 2017, we had no collateralized derivative contracts. The following tables present both gross information and net information of recognized derivative instruments:
 December 31, 2018 December 31, 2017
(In millions)Gross Amount Recognized Gross Amounts Not Offset Permitted Under Master Netting Agreements Net Amount Gross Amount Recognized Gross Amounts Not Offset Permitted Under Master Netting Agreements Net Amount
Derivative assets$114.0
 $(105.9) $8.1
 $173.2
 $(114.4) $58.8
Derivative liabilities$183.3
 $(105.9) $77.4
 $137.1
 $(114.4) $22.7


NOTE 22. FAIR VALUE MEASUREMENTS
Recurring Fair Value Measurements
Assets and liabilities measured at fair value on a recurring basis were as follows:
 December 31, 2018 December 31, 2017
(In millions)Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3
Assets               
Investments               
Nonqualified Plan:               
Equity securities(a)
$40.4
 $40.4
 $
 $
 $63.7
 $63.7
 $
 $
Money market fund1.6
 
 1.6
 
 2.4
 
 2.4
 
Stable value fund(b)
0.5
 
 
 
 0.6
 
 
 
Derivative financial instruments               
Synthetic bonds - call option premium9.2
 
 9.2
 
 62.2
 
 62.2
 
Foreign exchange contracts104.8
 
 104.8
 
 111.0
 
 111.0
 
Asset held for sale9.6
 
 
 9.6
 50.2
 
 
 50.2
Total assets$166.1
 $40.4
 $115.6
 $9.6
 $290.1
 $63.7
 $175.6
 $50.2
Liabilities               
Redeemable financial liability$408.5
 $
 $
 $408.5
 $312.0
 $
 $
 $312.0
Derivative financial instruments               
Synthetic bonds - embedded derivatives9.2
 
 9.2
 
 62.2
 
 62.2
 
Foreign exchange contracts174.1
 
 174.1
 
 74.9
 
 74.9
 
Liabilities held for sale16.2
 
 
 16.2
 13.7
 
 
 13.7
Total liabilities$608.0
 $
 $183.3
 $424.7
 $462.8
 $
 $137.1
 $325.7
(a)Includes fixed income and other investments measured at fair value.
(b)Certain investments that are measured at fair value using net asset value per share (or its equivalent) have not been classified in the fair value hierarchy.
Equity securities - The fair value measurementunder the direction of our equity securities is based on quoted prices thatChief Executive Officer and Chief Financial Officer, we haveevaluated the ability to access in public markets.
Stable value fund and Money market fund - Stable value fund and money market fund are valued at the net asset value of the shares held at the end of the quarter, which is based on the fair value of the underlying investments using information reported by our investment advisor at quarter-end.
Assets and liabilities held for sale - The fair valueeffectiveness of our assetsdisclosure controls and liabilities held for sale was determined using a market approach that took into considerationprocedures, as defined in Rule 13a-15(e) under the expected sales price.
Mandatorily redeemable financial liability - In the fourth quarter of 2016, we obtained voting control interests in legal Onshore/Offshore contract entities which ownExchange Act. Based upon this evaluation, our Chief Executive Officer and account for the design, engineering and construction of the Yamal LNG plant. As part of this transaction, we recognized the fair value of the mandatorily redeemable financial liability using a discounted cash flow model. The key assumptions used in applying the income approach are the selected discount rates and the expected dividends to be distributed in the future to the noncontrolling interest holders. Expected dividends to be distributed are based on the noncontrolling interests’ share of the expected profitability of the underlying contract, the selected discount rate and the overall timing of completion of the project.
A mandatorily redeemable financial liability of $312.0 million was recognizedChief Financial Officer concluded as of December 31, 2017 to account2020, that our disclosure controls and procedures were effective.

Management’s Annual Report on Internal Control over Financial Reporting
141



Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the fair valueExchange Act.

Management evaluated the effectiveness of the non-controlling interests. During the twelve months ended December 31, 2018 and 2017, we revalued the liability to reflect current expectations about the obligation, which resulted in the recognition of a loss of $322.3 million and $293.7 million, respectively.
A decrease of one percentage point in the discount rate would have increased the liability by $5.4 millionour internal control over financial reporting as of December 31, 2018. The fair value measurement is2020 based upon significant unobservable inputs not observable in the market and is consequently classified as a Level 3 fair value measurement.


Change in the fair value of our Level 3 mandatorily redeemable financial liability is recorded as interest expense on the consolidated statementsframework in Internal Control-Integrated Framework (2013) issued by the Committee of income and is presented below:
  Year Ended December 31,
(In millions) 2018 2017
Balance at beginning of period $312.0
 $174.8
Less: Gains (losses) recognized in net interest expense (322.3) (293.7)
Less: Settlements 225.8
 156.5
Balance at end of period $408.5
 $312.0
Redeemable noncontrolling interest - InSponsoring Organizations of the first quarterTreadway Commission (COSO). As a result of 2018, we acquired a 51% share in Island Offshore. The noncontrolling interest is recordedthis evaluation, management concluded that our internal control over financial reporting was effective as mezzanine equity at fair value.The fair value measurement is based upon significant unobservable inputs not observable in the market and is consequently classified as a Level 3 fair value measurement. As of December 31, 2018, the fair value2020.

The effectiveness of our redeemable noncontrolling interest was $38.5 million. Refer to Note 2 to these consolidatedinternal control over financial statements for additional disclosure related to the acquisition.reporting as of December 31, 2020, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report included herein.
Derivative financial instruments - We use the income approach as the valuation technique to measure the fair value of foreign currency derivative instruments on a recurring basis. This approach calculates the present value of the future cash flow by measuring the change from the derivative contract rate and the published market indicative currency rate, multiplied by the contract notional values. Credit risk is then incorporated by reducing the derivative’s fair value
Changes in asset positions by the result of multiplying the present value of the portfolio by the counterparty’s published credit spread. Portfolios in a liability position are adjusted by the same calculation; however, a spread representing our credit spread is used. Our credit spread, and the credit spread of other counterparties not publicly available, are approximated by using the spread of similar companies in the same industry, of similar size and with the same credit rating.Internal Control over Financial Reporting
At the present time, we have
There were no credit-risk-related contingent featureschanges in our agreements withinternal control over financial reporting during the year ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial institutions that would require us to post collateral for derivative positions in a liability position.reporting.
Refer to Note 21 to these consolidated financial statements for additional disclosure related to derivative financial instruments.
Nonrecurring Fair Value Measurements
Fair value of long-lived, non-financial assets - Long-lived, non-financial assets are measured at fair value on a non-recurring basis for the purposes of calculating impairment, when the recoverable amount of the assets has been determined to be less than the book value of the assets. The fair value measurements of our long-lived, non-financial assets measured by estimating the amount and timing of net future cash flows, which are Level 3 unobservable inputs, and discounting them using a risk-adjusted rate of interest. Significant changes in actual or estimated cash flows may result in changes to the fair value of long-lived non-financial assets. Refer to Note 17 for additional disclosure related to these asset impairments.


Other fair value disclosures
Fair value of debt - The fair value of our Synthetic Bonds, Senior Notes and private placement notes are as follows:
 December 31, 2018 December 31, 2017
(In millions)
Carrying Amount (a)
 
Fair Value (b)
 
Carrying Amount (a)
 
Fair Value (b)
Synthetic bonds due 2021$490.9
 $532.4
 $502.4
 $647.4
3.45% Senior Notes due 2022500.0
 489.7
 500.0
 497.7
5.00% Notes due 2020229.0
 244.0
 239.9
 265.2
3.40% Notes due 2022171.8
 186.9
 179.9
 199.4
3.15% Notes due 2023148.9
 161.3
 155.9
 167.6
3.15% Notes due 2023143.1
 153.3
 149.9
 161.4
4.00% Notes due 202785.9
 95.8
 89.9
 99.9
4.00% Notes due 2032114.5
 120.2
 119.9
 142.9
3.75% Notes due 2033114.5
 126.1
 119.9
 126.7
(a)Carrying amounts include unamortized debt discounts and premiums and unamortized debt issuance costs of $11.4 million and $13.8 million as of 2018 and 2017, respectively.
(b)Fair values are based on Level 2 quoted market rates.
Other fair value disclosures - The carrying amounts of cash and cash equivalents, trade receivables, accounts payable, short-term debt, commercial paper, debt associated with our bank borrowings, credit facilities, convertible bonds, as well as amounts included in other current assets and other current liabilities that meet the definition of financial instruments, approximate fair value.
Credit risk - By their nature, financial instruments involve risk, including credit risk, for non-performance by counterparties. Financial instruments that potentially subject us to credit risk primarily consist of trade receivables and derivative contracts. We manage the credit risk on financial instruments by transacting only with what management believes are financially secure counterparties, requiring credit approvals and credit limits, and monitoring counterparties’ financial condition. Our maximum exposure to credit loss in the event of non-performance by the counterparty is limited to the amount drawn and outstanding on the financial instrument. Allowances for losses on trade receivables are established based on collectibility assessments. We mitigate credit risk on derivative contracts by executing contracts only with counterparties that consent to a master netting agreement, which permits the net settlement of gross derivative assets against gross derivative liabilities.


NOTE 23. QUARTERLY INFORMATION (UNAUDITED)
 2018 2017
(In millions, except per share data)4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
Revenue$3,323.0
 $3,143.8
 $2,960.9
 $3,125.2
 $3,683.0
 $4,140.9
 $3,845.0
 $3,388.0
Cost of sales2,767.7
 2,558.5
 2,422.2
 2,524.6
 2,914.1
 3,468.2
 3,162.0
 2,980.3
Net income (loss)(2,246.5) 134.2
 110.1
 91.4
 (127.5) 117.9
 159.0
 (15.2)
Net income (loss) attributable to TechnipFMC plc$(2,259.3) $136.9
 $105.7
 $95.1
 $(153.9) $121.0
 $164.9
 $(18.7)
Basic earnings (loss) per share (1)
$(5.00) $0.30
 $0.23
 $0.20
 $(0.33) $0.26
 $0.35
 $(0.04)
Diluted earnings (loss) per share (1)
$(5.00) $0.30
 $0.23
 $0.20
 $(0.33) $0.26
 $0.35
 $(0.04)
(1)
Basic and diluted earnings (loss) per share are computed independently for each of the quarters presented. Therefore, the sum of quarterly basic and diluted per share information may not equal annual basic and diluted earnings (loss) per share.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE9B. OTHER INFORMATION
None.
ITEM 9A. CONTROLS AND PROCEDURES3. LEGAL PROCEEDINGS
Evaluation of Disclosure ControlsA purported shareholder class action filed in 2017 and Procedures

As of December 31,amended in January 2018 and undercaptioned Prause v. TechnipFMC, et al., No. 4:17-cv-02368 (S.D. Texas) is pending in the directionU.S. District Court for the Southern District of Texas (“District Court”) against TechnipFMC and certain current and former officers and employees of TechnipFMC. The suit alleged violations of the federal securities laws in connection with the restatement of our Chief Executive Officerfirst quarter 2017 financial results and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Exchange Act. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded as of December 31, 2018, that our disclosure controls and procedures were not effective because of thea material weaknessesweakness in our internal control over financial reporting described below.

announced on July 24, 2017. On January 18, 2019, the District Court dismissed claims under Section 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Section 15 of the Securities Act of 1933, as amended (“Securities Act”). The shareholder also asserted a claim for alleged violation of Section 11 of the Securities Act in connection with the reporting of certain financial results in our Form S-4 Registration Statement filed in 2016. On December 13, 2020, the parties filed a Stipulation and Agreement of Settlement to settle all claims asserted in the suit with prejudice. The defendants entered into the Stipulation solely to eliminate the burden, expense, uncertainty and risk of further litigation, and denied, and continue to deny, each and all of the claims and contentions alleged by the shareholder plaintiff in this action. On December 16, 2020, the District Court entered an order preliminarily approving the settlement and ordering notice to the settlement class. A settlement hearing is scheduled in the first quarter 2021.
In responseaddition to the identificationabove-referenced matter, we are involved in various other pending or potential legal actions or disputes in the ordinary course of our business. These actions and disputes can involve our agents, suppliers, clients, and join venture partners and can include claims related to payment of fees, service quality, and ownership arrangements including certain put or call options. Management is unable to predict the material weaknesses described below, the Company performed additional analysis and other post-closing procedures.  Based upon the work performed,ultimate outcome of these actions because of their inherent uncertainty. However, management believes that the Company’smost probable, ultimate resolution of these matters will not have a material adverse effect on our consolidated financial statements for the periods covered by and included in this Annual Report on Form 10-K fairly present in all material respects the Company’s financial position, results of operations, andor cash flows, in conformity with U.S. generally accepted accounting principles.flows.

Remediation Activities of Previously Disclosed Material Weaknesses

As of December 31, 2017, our management concluded that we had not maintained effective internal control over financial reporting in the following areas:

(i) foreign exchange adjustments;
(ii) information technology general controls; and
(iii) period-end financial reporting.
The material weaknesses related to foreign exchange adjustments and information technology general controls were remediated as of December 31, 2018, as noted below. In addition, we implemented remediation activities in 2018 related to the period-end financial reporting material weakness as described below, but our management has concluded that this material weakness is not yet remediated as of December 31, 2018.

Foreign Exchange Adjustments - Remediated as of December 31, 2018

We previously reported that we did not maintain effective controls related to the calculation of temporary gains and losses from natural hedges on certain of our projects and related foreign exchange adjustments, and this control deficiency resulted in the restatement of our interim condensed consolidated financial statements as of, and for, the three-month period ended March 31, 2017. Accordingly, our management determined that this control deficiency constituted a material weakness.



Management took the following corrective actions to address this material weakness:

Implemented controls designed to ensure the accurate remeasurement of gains and losses due to foreign currency impact for the purpose of external reporting; and
Revised the internal system for recording and tracking foreign currency gains and losses and for recording asset/liability project positions to ensure that proper remeasurement procedures are performed.

As a result of these remediation activities and based on testing of the new and modified controls for operating effectiveness, our management concluded that we remediated the material weakness related to foreign exchange adjustments as of December 31, 2018 and believes the Company’s consolidated financial statements for the periods covered by and included in this Annual Report on Form 10-K fairly present in all material respects the Company’s financial position, results of operations, and cash flows, in conformity with U.S. generally accepted accounting principles.

Information Technology General Controls - Remediated as of December 31, 2018

We previously reported that we did not design and maintain effective controls over certain information technology (IT) general controls for information systems that are relevant to the preparation of our consolidated financial statements. Specifically, we did not design and maintain: (i) user access controls to ensure appropriate segregation of duties that adequately restrict user and privileged access to certain financial applications, programs, and data to appropriate Company personnel, including direct access to data, and (ii) program change management controls due to privileged access.

These IT deficiencies did not result in a material misstatement of the financial statements; however, the deficiencies, when aggregated, could have impacted maintaining effective segregation of duties, as well as the effectiveness of IT-dependent controls (such as automated controls that address the risk of material misstatement to one or more assertions, along with the IT controls and underlying data that support the effectiveness of system-generated data and reports), that could have resulted in misstatements potentially impacting financial statement accounts and disclosures that would not be prevented or detected. Accordingly, our management determined that these deficiencies, in the aggregate, constituted a material weakness.

Management took the following corrective actions to address this material weakness:

Improved the control activities and procedures associated with user and privilege access to certain systems;
Improved the control activities related to proper segregation of duties related to the affected IT systems;
Implemented additional business process controls or improving existing business process controls, as needed, to address the risks related to the financial reports and data generated from the affected IT systems; and
Implemented policies, procedures, and training for control owners regarding internal control processes to mitigate identified risks and maintaining adequate documentation to evidence effective design and operation of such processes.

As a result of these remediation activities and based on testing of the new and modified controls for operating effectiveness, our management concluded that we remediated the material weakness related to information technology general controls as of December 31, 2018.

Period-End Financial Reporting - Unremediated as of December 31, 2018

We previously reported that in certain regions and locations, we did not design and maintain effective controls over the period-end financial reporting process. We had ineffective controls over the documentation, authorization, and review of journal entries and account reconciliations in certain regions and locations.
These deficiencies did not result in a material misstatement of the financial statements; however, the deficiencies, when aggregated, could have resulted in material misstatements of the consolidated financial statements and disclosures that would not be prevented or detected. Accordingly, our management determined that these deficiencies, in the aggregate, constituted a material weakness.


Management took the following corrective actions to address this material weakness:

Implemented specific policies and procedures with detailed instructions in order to adequately communicate the requirements around processes and controls;
Implemented controls over manual journal entries and account reconciliations, including improving the timeliness and effectiveness of our review and approval procedures;
Communicated the requirements of journal entry and account reconciliation controls to the global accounting and finance organization as part of our global accounting and finance organization training and communication;
Expanded our corporate finance leadership team by adding individuals with the commensurate knowledge, experience, and training to properly support our financial reporting and accounting functions; and
Improved the control activities related to account reconciliation and journal entry processes by issuing guidance regarding adequate retention of evidence of control activities.

We have implemented the above-described remediation activities in 2018. Based on testing of the new and modified controls in 2018 for operating effectiveness, our management determined that additional remediation activities, as described below, and further testing of new and modified controls were needed for 2019. Our management concluded that we have not yet remediated the material weakness related to period-end financial reporting as of December 31, 2018.

Management’s Annual Report on Internal Control over Financial Reporting

Overview

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act.

Management evaluated the effectiveness of our internal control over financial reporting as of December 31, 2018 based on the framework in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a result of this evaluation, management identified material weaknesses in our internal control, as further described below. As a result of these material weaknesses, management has concluded that our internal control over financial reporting was not effective as of December 31, 2018.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

We concluded that we had not maintained effective internal control over financial reporting in the following areas that are discussed more fully below: (i) period-end financial reporting and (ii) accounting for income taxes. These deficiencies did not result in a material misstatement of the financial statements for the year ended December 31, 2018.

The effectiveness of our internal control over financial reporting as of December 31, 2018, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report included herein.

Description of Material Weaknesses

Period-End Financial Reporting

In certain locations, we did not design and maintain effective controls over the period-end financial reporting process. We have ineffective controls over the documentation, authorization, and review of adjustments to and reconciliations of financial information.

These deficiencies did not result in a material misstatement of the financial statements; however, the deficiencies, when aggregated, could result in a material misstatement of the consolidated financial statements and disclosures


that would not be prevented or detected. Accordingly, our management has determined these deficiencies, in the aggregate, constitute a material weakness.

Accounting for Income Taxes

We did not design and maintain effective controls over the completeness, accuracy, and presentation of our accounting for income taxes, including the income tax provision and related income tax assets and liabilities.

These deficiencies did not result in a material misstatement of the financial statements; however, the deficiencies, when aggregated, could result in a material misstatement of the consolidated financial statements and disclosures that would not be prevented or detected. Accordingly, our management has determined these deficiencies, in the aggregate, constitute a material weakness.

Remediation Activities
Overview
Management has implemented, and continues to design and implement, certain remediation measures to address the above-described material weaknesses and enhance our system of internal control over financial reporting. Management will not make a final determination that we have completed our remediation of these material weaknesses until we have completed designing and testing of our newly implemented internal controls. Management believes the remediation measures described below will remediate the identified deficiencies and strengthen our internal control over financial reporting. As management continues to evaluate and work to enhance our internal control over financial reporting, it may be determined that additional measures must be taken to address deficiencies or it may be determined that we need to modify or otherwise adjust the remediation measures described below.
Period-End Financial Reporting

Management continues to take corrective actions in 2019 to remediate this material weakness, including:

Providing additional training and continuous guidance to finance team members on the requirements around control processes;

Continuously improving the timeliness and effectiveness of our review and approval procedures; and

Further improving the control activities related to the review of adjustments to and reconciliations of financial information by issuing guidance regarding documentation and adequate retention of evidence of control activities.

Accounting for Income Taxes

Management is taking corrective actions to address this material weakness by:

Reinforcing the proper application of the Company’s global taxation tool, implemented in 2018, by issuing detailed instructions and application descriptions;
Providing additional training to finance team members on the adequate use of the global taxation tool;
Improving the timeliness and effectiveness of our review and approval procedures; and
Improving the control activities related to our accounting for income taxes by issuing guidance regarding adequate documentation and retention of evidence of control activities.

Changes in Internal Control over Financial Reporting

Other than as described above, there were no changes in our internal control over financial reporting during the three months ended December 31, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


ITEM 9B. OTHER INFORMATION4. MINE SAFETY DISCLOSURES
Within the second quarter 2018, management decided to wind down all business in Iran, with the exception of seeking to collect outstanding receivables for work previously completed in Iran. Since the second quarter 2018, the Company has not and will not accept any new work in Iran.Not applicable.
Pursuant to section 13(r) of the Exchange Act, two of our non-U.S. subsidiaries had contracts with entities in Iran. Pursuant to these contracts, which were terminated in the first and second quarter 2018, we prepared a feasibility study related to improvements to an olefins plant in Iran and also provided engineering and design services for the construction of an ethylene plant in Iran. We have not received any revenue under either of these contracts for the fiscal year ended December 31, 2018. The expected revenue related to services performed prior to contract termination for the olefins plant and the ethylene plant is 260,000 Euros and 4,000,000 Euros, respectively, which is less than 0.1% of our revenues for the fiscal year ended December 31, 2018. We also had a non-binding arrangement with an engineering, procurement, and construction company in Iran for the purpose of jointly bidding and negotiating for work on two projects in Iran, which we terminated in third quarter 2018. No projects were pursued under the non-binding agreement and no revenue was generated.  
142
We had submitted bids to or had discussions with companies in Iran, including some that may be owned or controlled by the Government of Iran, regarding potential future projects in Iran. In third quarter 2018, we withdrew all pending bids in Iran and will not accept a contract award related to such a project.




PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by this item regarding our directors and corporate governance is incorporated by reference to the section of TechnipFMC’s definitive Proxy Statement for its 2019 Annual General Meeting of Shareholders entitled “Corporate Governance and Board of Directors.” See Part I, Item 1 “Executive Officers of the Registrant” of this Annual Report on Form 10-K for information regarding our executive officers. The information required by this item regarding compliance by our directorsset forth under the sections “Corporate Governance,” “Proposals 1(a) - 1(n) - Election of Directors”, and executive officers withif applicable, “Delinquent Section 16(a) of the Securities and Exchange Act of 1934, as amended,Reports” in our 2021 Proxy Statement is incorporated herein by reference to the section of TechnipFMC’s definitive Proxy Statement for its 2019 Annual General Meeting of Shareholders entitled “Section 16(a) Beneficial Ownership Reporting Compliance.”reference.
We have adopted a Code of Business Conduct, which is applicable to our directors, officers, and employees, including our principal executive officer, financial and other senior financialaccounting officers, including our principal financial officer, principal accounting officer or controller, and persons performing similar functions. TheOur Code of Business Conduct may be found on our website at www.technipfmc.com under “About us—Governance”us-Governance” and is available in print to shareholders without charge by submitting a request to 11740 Katy Freeway, Energy Tower 3, Houston, Texas 77079, Attention: Corporate Secretary. We intend to satisfy the disclosure requirements under the Securities and Exchange Act of 1934, as amended, regarding an amendment to or waiver from a provision of our Code of Business Conduct by posting such information on our website.
NamePrincipal Occupation
Thierry Pilenko*Douglas J. PferdehirtExecutive Chairman of TechnipFMC
Douglas J. Pferdehirt*and Chief Executive Officer of TechnipFMC
Arnaud CaudouxDeputy Chief Executive Officer of Banque publique d'investissement, a French state-owned investment bank
Pascal ColombaniPresident of TII Strategies SASU, a consulting and investment company
Marie-Ange DebonSenior Executive Vice President of the Suez Group, a global water and waste company, managing France, Italy, and Central and Eastern Europe operations of the Suez Group
Eleazar de Carvalho FilhoFounding Partner of Virtus BR Partners Assessoria Corporativa Ltda. and Founding Partner of Sinfonia Consultoria Financeira e Participações Ltda., financial advisory and consulting firms
Claire S. FarleyVice Chairman in the Energy & Infrastructure business of KKR & Co. L.P., a global investment firm
Didier HoussinChairman and Chief Executive Officer of IFP Énergies nouvelles, a research and training company in the fields of energy, transport, and the environment
Peter MellbyeFormer Executive Vice President, Development & Production, International, of Statoil ASA, an international oil and gas company
John O’LearyChief Executive Officer of Strand Energy, a Dubai-based company specializing in business development in the oil and gas industry
Richard A. PattarozziMargareth ØvrumFormerExecutive Vice President of Shell Oil Company, a producerDevelopment and Production Brazil of Equinor ASA, an international oil and gas and petrochemicalscompany
Kay G. PriestlyFormer Chief Executive Officer of Turquoise Hill Resources Ltd., an international mining company
Joseph RinaldiManaging Partner of Fennecourt Partners, LLC, an investment management and consulting firm
James M. RinglerNon-executiveFormer non-executive Chairman of the Board of Teradata Corporation, a provider of database software, data warehousing and analytics
John YearwoodFormer Chief Executive Officer, President, and Chief Operating Officer of Smith International, Inc., a supplier of services and manufactured products to oil and gas exploration and production companies
* As previously disclosed, Mr. Pilenko is retiring from the Board of Directors effective May 1, 2019, and Mr. Pferdehirt will assume the role of Chairman of the Board of Directors and serve as Chairman and Chief Executive Officer of TechnipFMC effective May 1, 2019.
ITEM 11. EXECUTIVE COMPENSATION
Information required by this item is incorporated herein by reference from the sections entitled “Director Compensation,” “Corporate Governance - Compensation Committee Interlocks and Insider Participation in Compensation Decisions” and “Executive Compensation Discussion and Analysis” of our Proxy Statement for the 20192021 Annual General Meeting of Shareholders.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS
Information required by this item is incorporated herein by reference from the section entitled “Security Ownership of Our Management and Holders of More Than 5% of our Outstanding Ordinary Shares” of our Proxy Statement for the 20192021 Annual General Meeting of Shareholders.
As of December 31, 2018,2020, our securities authorized for issuance under equity compensation plans were as follows:
(shares in thousands)
Number of Securities 
to be Issued 
Upon Exercise of Outstanding Options,
Warrants and Rights
 
Weighted Average 
Exercise Price of 
Outstanding Options,
Warrants and Rights
 
Number of Securities
Remaining Available
for Future Issuance
under Equity
Compensation Plans
(shares in thousands)Number of Securities 
to be Issued 
Upon Exercise of Outstanding Options,
Warrants and Rights
Weighted Average 
Exercise Price of 
Outstanding Options,
Warrants and Rights
Number of Securities
Remaining Available
for Future Issuance
under Equity
Compensation Plans
Equity compensation plans approved by security holders4,658.4
 $33.68
 26,304.6
Equity compensation plans approved by security holders4,598.4 $29.77 14,250.2 
Equity compensation plans not approved by security holders
 
 
Equity compensation plans not approved by security holders— — — 
Total4,658.4
 $33.68
 26,304.6
Total4,598.4 $29.77 14,250.2 
143


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information required by this item is incorporated herein by reference from the sections entitled “Transactions with Related Persons” and “Corporate Governance - Director Independence” of our Proxy Statement for the 20192021 Annual General Meeting of Shareholders.
ITEM 14. PRINCIPAL ACCOUNTINGACCOUNTANT FEES AND SERVICES
Information required by this item is incorporated herein by reference from the sections entitled “Proposal 65 — Ratification of U.S. Auditor” of our Proxy Statement for the 20192021 Annual General Meeting of Shareholders.

144



PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)The following documents are filed as part of this Annual Report on Form 10-K:
1.The following consolidated financial statements of TechnipFMC plc and subsidiaries are filed as part of this Annual Report on Form 10-K under Part II, Item 8:
(a)The following documents are filed as part of this Annual Report on Form 10-K:
1.The following consolidated financial statements of TechnipFMC plc and subsidiaries are filed as part of this Annual Report on Form 10-K under Part II, Item 8:
Reports of Independent Registered Public Accounting Firm on Consolidated Financial Statements
Consolidated Statements of Income for the Years Ended December 31, 2018, 20172020, 2019 and 20162018
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2018, 2017,2020, 2019, and 20162018
Consolidated Balance Sheets as of December 31, 20182020 and 20172019
Consolidated Statements of Cash Flows for the Years Ended December 31, 2018, 20172020, 2019 and 20162018
Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2018, 20172020, 2019 and 20162018
Notes to Consolidated Financial Statements
2.Financial Statement Schedule:
2.Financial Statement Schedule:
See “Schedule II - Valuation and Qualifying Accounts” included herein. All other schedules are omitted because of the absence of conditions under which they are required or because information called for is shown in the consolidated financial statements and notes thereto in Part II, Item 8 of this Annual Report on Form 10-K.
3.Exhibits:
3.Exhibits:
See “Index of Exhibits” filed as part of this Annual Report on Form 10-K.



145


Schedule II—Valuation and Qualifying Accounts
 
(In millions)  Additions    (In millions)Additions
Description
Balance at
Beginning of 
Period
 
Charged to 
Costs
and Expenses
 
Charged to
Other 
Accounts (a)
 
Deductions
and Adjustments (b)
 
Balance at
End of Period
DescriptionBalance at
Beginning of 
Period
Charged to 
Costs
and Expenses
Charged to Other Accounts (a)
Deductions
and Adjustments (b)
Balance at
End of Period
Year Ended December 31, 2016         
Allowance for doubtful accounts$48.2
 $58.4
 $
 $(21.0) $85.6
Year Ended December 31, 2018Year Ended December 31, 2018
Trade receivables allowance for doubtful accountsTrade receivables allowance for doubtful accounts$117.4 $54.7 $0.3 $(52.8)$119.6 
Valuation allowance for deferred tax assets$133.8
 $38.9
 $
 $
 $172.7
Valuation allowance for deferred tax assets$430.0 $213.8 $(21.3)$60.9 $683.4 
Year Ended December 31, 2017         
Allowance for doubtful accounts$85.6
 $15.5
 $19.8
 $(3.5) $117.4
Year Ended December 31, 2019Year Ended December 31, 2019
Trade receivables allowance for doubtful accountsTrade receivables allowance for doubtful accounts$119.6 $22.0 $(2.9)$(43.3)$95.4 
Valuation allowance for deferred tax assets$172.7
 $258.7
 $4.4
 $(5.8) $430.0
Valuation allowance for deferred tax assets$683.4 $187.0 $(2.1)$48.6 $916.9 
Year Ended December 31, 2018         
Allowance for doubtful accounts$117.4
 $54.7
 $0.3
 $(52.8) $119.6
Year Ended December 31, 2020Year Ended December 31, 2020
Trade receivables allowance for doubtful accounts (c)
Trade receivables allowance for doubtful accounts (c)
$95.4 $66.8 $11.9 $(65.2)$108.9 
Valuation allowance for deferred tax assets$430.0
 $213.8
 $(21.3) $60.9
 $683.4
Valuation allowance for deferred tax assets$916.9 $94.7 $(7.3)$(69.0)$935.3 
(a)“Additions charged to other accounts” includes translation adjustments.
(b)“Deductions and adjustments” includes write-offs, net of recoveries, increases in allowances offset by increases to deferred tax assets, and reductions in the allowances credited to expense.
(a)"Additions charged to other accounts” includes translation adjustments.
(b)“Deductions and adjustments” includes write-offs, net of recoveries, increases in allowances offset by increases to deferred tax assets, and reductions in the allowances credited to expense.
(c)On January 1, 2020, we adopted ASU 2016-13, resulting in a $3.8 million increase to our trade receivables allowance for doubtful accounts. See Note 4 for further details.
See accompanying Report of Independent Registered Public Accounting Firm.

146



ITEM 16. SUMMARY
None.

147





INDEX OF EXHIBITS

Exhibit     
No.Number
Exhibit Description
2.1
2.1.a
2.3
3.1
4.1
4.1.a
10.1*4.2
4.2.a
4.3
10.1*
10.1.a*
10.1.b*
10.2*
10.3*
10.4*10.3a*
10.3b*
10.4*
10.5*
10.6*10.5a*
10.5b*
10.7*10.6*
10.8*10.7*
10.9*
10.10*
10.11*10.8*
10.12*10.9*
10.13*10.10*
10.14*10.11*
10.15*10.12*
10.16*10.13*
10.17*10.14*
10.18*10.15*
10.19*10.16*
10.20*10.17*
10.21*10.18*
10.22*10.19*
10.2410.20*
10.2510.21
10.2610.22
10.2710.23*
10.2810.24
10.2910.25*
10.26
10.3010.27
21.110.28
10.29
10.30
10.31
10.32
10.33
10.34
10.35
10.36
10.37
10.38
10.39
10.40
10.41
10.42
21.1
23.1
23.231.1
31.1
31.2
32.1**
32.2**
101.INSXBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCHInline XBRL Taxonomy Extension Schema DocumentDocument.
101.CALInline XBRL Taxonomy Extension Calculation Linkbase DocumentDocument.
101.DEFInline XBRL Taxonomy Extension Definition Linkbase DocumentDocument.
101.LABInline XBRL Taxonomy Extension Label Linkbase DocumentDocument.
101.PREInline XBRL Taxonomy Extension Presentation Linkbase DocumentDocument.
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
* Indicates a management contract or compensatory plan or arrangementarrangement.

** Furnished with this Form 10-K

10-K.

148


SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
TechnipFMC plc
(Registrant)
By:
TechnipFMC plc
(Registrant)/S/    KRISZTINA DOROGHAZI
By:
/S/    KRISZTINA DOROGHAZI
Krisztina Doroghazi

Senior Vice President, Controller and Chief Accounting Officer

(Principal Accounting Officer and a Duly Authorized Officer)
Date: March 11, 20195, 2021
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
DateSignature
DateMarch 5, 2021Signature
March 11, 2019
/S/S/   DOUGLAS J. PFERDEHIRT
Douglas J. Pferdehirt

Chairman and
Chief Executive Officer

(Principal Executive Officer)
March 5, 2021
/S/    ALF MELIN
March 11, 2019
/S/    MARYANN T. MANNEN
Maryann T. Mannen
Alf Melin
Executive Vice President and Chief Financial Officer

(Principal Financial Officer)
March 5, 2021
/S/    ELEAZAR DE CARVALHO FILHO
Eleazar de Carvalho Filho,
Director
March 11, 20195, 2021
/S/    THIERRY PILENKOCLAIRE S. FARLEY
Claire S. Farley,
Director
March 5, 2021
Thierry Pilenko
Executive Chairman/S/    PETER MELLBYE
Peter Mellbye,
Director
March 11, 20195, 2021
/S/    ARNAUD CAUDOUXJOHN O’LEARY
John O’Leary,
Director
March 5, 2021
Arnaud Caudox,
Director/S/   MARGARETH ØVRUM
Margareth Øvrum,
Director
March 11, 20195, 2021
/S/KAY G. PASCAL COLOMBANIRIESTLY
Kay G. Priestly,
Director
March 5, 2021
Pascal Colombani,
Director/S/    JAMES M. RINGLER
James M. Ringler,
Director
March 11, 20195, 2021
/S/    MARIE-ANGE DEBONJOHN YEARWOOD
Marie-Ange Debon,
Director
March 11, 2019
/S/    ELEAZAR DE CARVALHO FILHO
Eleazar De Carvalho Filho,
Director
March 11, 2019
/S/    CLAIRE S. FARLEY
Claire S. Farley,
Director
March 11, 2019
/S/    DIDIER HOUSSIN
Didier Houssin,
Director
March 11, 2019
/S/    PETER MELLBYE
Peter Mellbye,
Director
March 11, 2019
/S/    JOHN O’LEARY
John O’Leary,
Yearwood,
Director
March 11, 2019
/S/    RICHARDA. PATTAROZZI
Richard A. Pattarozzi,
Director
March 11, 2019
/S/    KAY G. PRIESTLY
Kay G. Priestly,
Director
March 11, 2019
/S/    JOSEPH RINALDI
Joseph Rinaldi,
Director
March 11, 2019
/S/    JAMES M. RINGLER
James M. Ringler,
Director

141149