UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



x	~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2017~~2019

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____ .

Commission File Number:001-37983



¨	~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

~~For the transition period from to~~

~~Commission File Number~~ ~~001-37983~~

TechnipFMC plc

(Exact name of registrant as specified in its charter)



~~England and Wales~~United Kingdom	98-1283037
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

One St. Paul’s Churchyard
London
United Kingdom	EC4M 8AP
(Address of principal executive offices)	(Zip Code)

~~+44 203-429-3950~~

+44203-429-3950

(Registrant’s telephone number, including area code)



Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Ordinary shares, $1.00 par value per share	FTI	New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None.

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. Yesx☒ No o☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files). Yesx☒ No ¨☐

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	o☒	Accelerated filer	o☐
Non-accelerated filer ~~(Do not check if a smaller reporting company)~~	x ☐	Smaller reporting company	o☐
		Emerging growth company	o☐

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. o☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o ☐No x☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.



Class		Outstanding at November ~~3, 2017~~8, 2019
Ordinary shares, $1.00 par value per share		~~466,429,009~~447,064,767

TABLE OF CONTENTS



~~PART I—Financial Information~~	Page
~~Item 1.~~PART I — Financial ~~Statements (unaudited)~~Information	5
~~Condensed Consolidated~~Item 1. Financial Statements ~~of Income~~(Unaudited)	5
Condensed Consolidated Statements of Income	5
Condensed Consolidated Statements of Comprehensive Income	6
Condensed Consolidated Balance Sheets	7
Condensed Consolidated Statements of Cash Flows	8
Condensed Consolidated Statements of Changes in Stockholders’ Equity	9
Notes to Condensed Consolidated Financial Statements	1011
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Business Outlook	37
Consolidated Results of Operations	39
~~Business Outlook~~Segment Results of Operations	3943
~~Consolidated Results of Operations~~Non-GAAP Measures	4147
~~Segment Results of Operations~~	45
Inbound Orders and Order Backlog	4954
Liquidity and Capital Resources	5055
Critical Accounting Estimates	5357
~~Off-Balance Sheet Arrangements~~Other Matters	56
~~Other Matters~~	56
~~Recently Issued Accounting Standards~~	5658
Item 3. Quantitative and Qualitative Disclosures About Market Risk	57
~~Item 4. Controls and Procedures~~	58
~~PART II—Other Information~~
~~Item 1. Legal Proceedings~~	59
Item ~~1A. Risk Factors~~4. Controls and Procedures	59
PART II — Other Information	60
Item 1. Legal Proceedings	60
Item 1A. Risk Factors	60
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	7060
Item 3. Defaults Upon Senior Securities	7061
Item 4. Mine Safety Disclosures	7061
Item 5. Other Information	7061
Item 6. Exhibits	7062
Signature	63

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q of TechnipFMC plc (the Company, we, us, or our) 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 Exchange 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 those set forth in Part II, Item 1A, “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q, as well as the following:

risks associated with our ability to consummate our proposed separation and spin-off, and our ability to achieve the ~~completion~~intended benefits and synergies of the ~~material weakness remediation process could identify additional issues relating to disclosure controls and procedures or internal control over financial reporting;~~

the Company may need to devote additional time, effort and expense to address other matters relating to the restatement, including potential governmental investigations or shareholder lawsuits and possible fines, penalties or settlements resulting therefrom;transaction;

unanticipated changes relating to competitive factors in our industry;

demand for our products and services, which is affected by changes in the price of, and demand for, crude oil and natural gas in domestic and international markets;

our ability to develop and implement new technologies and services, as well as our ability to protect and maintain critical intellectual property assets;

potential liabilities arising out of the installation or use of our products;

cost overruns related to our fixed price contracts or capital asset construction projects that may affect revenues;

~~disruptions in the~~our ability to timely ~~delivery of~~deliver our backlog and its effect on our future sales, profitability, and our relationships with our customers;

~~risks related to~~our reliance on subcontractors, suppliers, and joint venture partners in the performance of our contracts;

our ability to hire and retain key personnel;

piracy risks for our maritime employees and assets;

the potential impacts of seasonal and weather conditions;

the cumulative loss of major contracts or alliances;

U.S. and international laws and regulations, including existing or future environmental regulations, that may increase our costs, limit the demand for our products and services or restrict our operations;

disruptions in the political, regulatory, economic, and social conditions of the countries in which we conduct business;

risks associated with The Depository Trust Company and Euroclear for clearance services for shares traded on the NYSE and Euronext Paris, respectively;

~~results of~~ the United Kingdom’s ~~referendum on~~proposed withdrawal from the European Union;

risks associated with being an English public limited company, including the need for ~~court approval of~~ “distributable profits” ~~and stockholder~~, shareholder approval of certain capital structure ~~decisions;~~

~~our ability~~decisions, and the risk that we may not be able to pay dividends or repurchase shares in accordance with our announced capital allocation plan;

compliance with covenants under our debt instruments and conditions in the credit markets;

downgrade in the ratings of our debt could restrict our ability to access the debt capital markets;

the outcome of uninsured claims and litigation against us;

the risks of currency exchange rate fluctuations associated with our international operations;

significant merger-related costs;

risks related to our acquisition and divestiture activities;

failure of our information technology infrastructure or any significant breach of security, including related to cyber attacks, and actual or perceived failure to comply with data security and privacy obligations;

risks that the legacy businesses of FMC Technologies, Inc. and Technip S.A. will not be integrated successfully or that the combined company will not realize estimated cost savings, value of certain tax assets, synergies, and growth, or that such benefits may take longer to realize than expected;

~~unanticipated merger-related costs;~~

~~failure of our information technology infrastructure or any significant breach of security;~~

risks associated with tax liabilities, or changes in U.S. federal or international tax laws, or interpretations to which ~~they~~we are subject;

the remedial measures to address our material weaknesses could be insufficient or additional issues relating to disclosure controls and procedures or internal control over financial reporting could be identified; and

such other risk factors set forth in our filings with the ~~United States~~U.S. Securities and Exchange Commission and in our filings with the Autorité des marchés financiers or the U.K. Financial Conduct Authority.

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.

PART I—I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TECHNIPFMC PLC AND CONSOLIDATED SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)


	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30,						September 30,						September 30,						September 30,
(In millions, except per share data)	2017			2016			2017			2016			2019			2018			2019			2018
Revenue:
Revenue
Service revenue	$	3,374.9		$	2,360.0		$	9,301.0		$	7,089.6		$	2,409.6		$	2,276.9		$	7,009.5		$	6,616.9
Product revenue	710.9			15.7			1,928.2			62.3			839.8			806.2			2,471.9			2,449.6
Lease and other revenue	55.1			—			144.7			—
Lease revenue													85.7			60.7			200.9			163.4
Total revenue	4,140.9			2,375.7			11,373.9			7,151.9			3,335.1			3,143.8			9,682.3			9,229.9
Costs and expenses:

Costs and expenses
Cost of service revenue	2,841.3			1,925.4			7,728.4			5,825.4			1,926.0			1,860.2			5,520.1			5,488.4
Cost of product revenue	589.4			5.6			1,781.9			38.3			743.9			667.4			2,237.2			1,917.5
Cost of lease and other revenue	37.5			—			100.2			—
Cost of lease revenue													56.5			30.9			126.2			99.4
Selling, general and administrative expense	284.4			143.0			806.5			434.0			298.1			250.6			919.7			835.1
Research and development expense	51.1			22.0			143.6			67.8			40.6			38.6			110.0			133.3
Impairment, restructuring and other expense (Note 5)	59.4			10.2			56.8			109.7
Merger transaction and integration costs (Note 2)	9.2			14.0			87.2			30.7
Impairment, restructuring and other expenses (Note 16)													140.3			9.7			166.0			32.6
Separation costs (Note 2)													9.4			—			9.4			—
Merger transaction and integration costs													6.2			6.3			31.2			20.9
Total costs and expenses	3,872.3			2,120.2			10,704.6			6,505.9			3,221.0			2,863.7			9,119.8			8,527.2

Other income (expense), net	30.0			81.7			43.2			(17.5		)	(57.7		)	10.4			(156.5		)	(12.6		)
Income from equity affiliates (Note 8)	17.3			67.4			39.4			72.8
Income from equity affiliates (Note 11)													25.9			16.4			54.0			70.6
Income before net interest expense and income taxes	315.9			404.6			751.9			701.3			82.3			306.9			460.0			760.7
Net interest expense	(86.3		)	(0.4		)	(240.5		)	(21.4		)	(116.5		)	(106.0		)	(345.3		)	(244.3		)
Income before income taxes	229.6			404.2			511.4			679.9
Provision for income taxes (Note 14)	111.7			102.5			249.7			153.8
Net income	117.9			301.7			261.7			526.1
Net loss attributable to noncontrolling interests	3.1			0.7			5.5			1.0
Net income attributable to TechnipFMC plc	$	121.0		$	302.4		$	267.2		$	527.1
Income (loss) before income taxes													(34.2		)	200.9			114.7			516.4
Provision for income taxes (Note 18)													81.1			66.7			96.5			180.7
Net income (loss)													(115.3		)	134.2			18.2			335.7
Net (income) loss attributable to noncontrolling interests													(3.8		)	2.7			(19.4		)	2.0
Net income (loss) attributable to TechnipFMC plc													$	(119.1	)	$	136.9		$	(1.2	)	$	337.7

Earnings per share attributable to TechnipFMC plc (Note 4):
Earnings (loss) per share attributable to TechnipFMC plc (Note 8)
Basic	$	0.26		$	2.50		$	0.57		$	4.41		$	(0.27	)	$	0.30		$	—		$	0.73
Diluted	$	0.26		$	2.39		$	0.57		$	4.22		$	(0.27	)	$	0.30		$	—		$	0.73
Weighted average shares outstanding (Note 4):

Weighted average shares outstanding (Note 8)
Basic	467.2			121.0			466.8			119.6			446.9			454.5			448.6			460.0
Diluted	469.7			126.9			468.3			125.3			446.9			459.0			448.6			464.0

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

TECHNIPFMC PLC AND CONSOLIDATED SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

Three Months Ended Nine Months Ended
September 30, September 30,
(In millions) 2017 2016 2017 2016
Net income $ 117.9
$ 301.7
$ 261.7
$ 526.1
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments ⁽¹⁾
0.2
(2.3 ) (34.7 ) (27.2 )
Net unrealized gains (losses) on available-for-sale securities:
Net unrealized gains (losses) arising during the period —
(3.7 ) —
1.3
Reclassification adjustment for net gains (losses) included in net income —
—
—
—
Net unrealized gains (losses) on available-for-sale securities ⁽²⁾
—
(3.7 ) —
1.3
Net gains (losses) on hedging instruments:
Net gains (losses) arising during the period 32.7
(51.7 ) 74.9
(9.0 )
Reclassification adjustment for net losses included in net income 19.5
13.8
74.3
76.4
Net gains (losses) on hedging instruments ⁽³⁾
52.2
(37.9 ) 149.2
67.4
Pension and other post-retirement benefits:
Net losses arising during the period (2.8 ) (0.3 ) (4.0 ) (16.5 )
Reclassification adjustment for amortization of prior service cost included in net income 0.2
0.2
0.4
0.4
Reclassification adjustment for amortization of net actuarial loss included in net income 0.5
0.1
1.4
0.5
Net pension and other post-retirement costs ⁽⁴⁾
(2.1 ) —
(2.2 ) (15.6 )
Other comprehensive income (loss), net of tax 50.3
(43.9 ) 112.3
25.9
Comprehensive income 168.2
257.8
374.0
552.0
Comprehensive (income) loss attributable to noncontrolling interest 2.6
(14.0 ) 4.8
(13.0 )
Comprehensive income attributable to TechnipFMC plc $ 170.8
$ 243.8
$ 378.8
$ 539.0



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(In millions)	2019			2018			2019			2018
Net income (loss)	$	(115.3	)	$	134.2		$	18.2		$	335.7
Foreign currency translation adjustments^(a)	(42.5		)	(142.0		)	(43.8		)	(282.1		)

Net gains (losses) on hedging instruments
Net gain (losses) arising during the period	(37.3		)	11.2			(32.1		)	(21.0		)
Reclassification adjustment for net losses included in net income	(17.1		)	(3.8		)	(10.7		)	(7.2		)
Net gains (losses) on hedging instruments^(b)	(54.4		)	7.4			(42.8		)	(28.2		)

Pension and other post-retirement benefits
Net gains arising during the period	0.4			0.3			1.4			0.3
Reclassification adjustment for amortization of prior service cost included in net income	0.9			0.3			2.3			0.6
Net pension and other postretirement benefits^(c)	1.3			0.6			3.7			0.9
Other comprehensive losses, net of tax	(95.6		)	(134.0		)	(82.9		)	(309.4		)
Comprehensive income (loss)	(210.9		)	0.2			(64.7		)	26.3
Comprehensive (income) loss attributable to noncontrolling interest	0.6			2.9			(16.3		)	1.2
Comprehensive income (loss) attributable to TechnipFMC plc	$	(210.3	)	$	3.1		$	(81.0	)	$	27.5

~~_______________________~~


⁽¹⁾ (a)	Net of income tax (expense) benefit of ~~(0.9)~~$7.9 and ~~nil~~NaN for the three months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively, and ~~$(4.8)~~$7.9 and ~~nil~~$(0.5) for the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively.


⁽²⁾ (b)	Net of income tax (expense) benefit of ~~nil~~$14.4 and ~~nil~~$(4.1) for the three months ended September 30, ~~2017~~2019 and ~~2016, respectively,~~2018, respectively. and ~~nil~~$14.1 and ~~nil~~$4.8 for the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively.


⁽³⁾	~~Net of income tax (expense) benefit of $(12.1) and $(4.8)for the three months ended September 30, 2017 and 2016, respectively, and $(49.4) and $(25.7) for the nine months ended September 30, 2017 and 2016, respectively.~~


⁽⁴⁾ (c)	Net of income tax (expense) benefit of ~~$0.7~~$(0.2) and ~~$0.2~~$(0.3) for the three months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively, and ~~$1.1~~$0.4 and ~~$0.4~~$(0.5) for the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively.

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

~~TECHNIPFMC PLC AND CONSOLIDATED SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)~~

September 30, 2017 December 31, 2016
(In millions, except par value data)
Assets
Cash and cash equivalents $ 6,896.1
$ 6,269.3
Trade receivables, net of allowances of $106.7 in 2017 and $85.6 in 2016 2,724.3
2,024.5
Costs and estimated earnings in excess of billings on uncompleted contracts 1,317.9
485.8
Inventories, net (Note 6) 930.7
334.7
Derivative financial instruments (Note 17) 125.9
47.2
Income taxes receivable 391.3
265.0
Advances paid to suppliers 619.2
711.5
Other current assets (Note 7) 1,129.6
799.2
Total current assets 14,135.0
10,937.2
Investments in equity affiliates 229.4
177.8
Property, plant and equipment, net of accumulated depreciation of $2,008.9 in 2017 and $1,691.8 in 2016
3,950.0
2,620.1
Goodwill 8,896.0
3,718.3
Intangible assets, net of accumulated amortization of $446.9 in 2017 and $245.9 in 2016 1,391.8
173.7
Deferred income taxes 562.1
621.6
Derivative financial instruments (Note 17) 84.1
190.8
Other assets 379.8
250.2
Total assets $ 29,628.2
$ 18,689.7
Liabilities and equity
Short-term debt and current portion of long-term debt (Note 10) $ 473.2
$ 683.6
Accounts payable, trade 4,647.7
3,837.7
Advance payments 137.9
411.1
Billings in excess of costs and estimated earnings on uncompleted contracts 3,026.4
3,323.0
Accrued payroll 438.5
307.7
Derivative financial instruments (Note 17) 106.3
183.0
Income taxes payable 315.1
317.5
Other current liabilities (Note 9) 2,436.3
1,825.3
Total current liabilities 11,581.4
10,888.9
Long-term debt, less current portion (Note 10) 3,167.4
1,869.3
Accrued pension and other post-retirement benefits, less current portion 352.1
160.8
Derivative financial instruments (Note 17) 59.7
227.7
Deferred income taxes 269.9
130.5
Other liabilities (Note 11) 472.8
300.6
Commitments and contingent liabilities (Note 12)

Stockholders’ equity (Note 13):
Ordinary shares, $1.00 par value and €0.7625 in 2017 and 2016, respectively; 525.0 shares and 119.2 shares authorized in 2017 and 2016, respectively; 467.1 shares and 119.2 shares issued in 2017 and 2016, respectively; 0.1 and 3.2 shares canceled in 2017 and 2016, respectively; 467.0 and 118.9 shares outstanding in 2017 and 2016, respectively 467.1
114.7
Ordinary shares held in employee benefit trust, at cost; 0.1 shares in 2017 (5.0 ) —
Treasury stock, at cost; no shares and 0.3 shares in 2017 and 2016, respectively —
(44.5 )
Capital in excess of par value of ordinary shares 10,529.8
2,694.7
Retained earnings 3,683.3
3,416.1
Accumulated other comprehensive loss (945.8 ) (1,057.4 )
Total TechnipFMC plc stockholders’ equity 13,729.4
5,123.6
Noncontrolling interests (4.5 ) (11.7 )
Total equity 13,724.9
5,111.9
Total liabilities and equity $ 29,628.2
$ 18,689.7

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

TECHNIPFMC PLC AND CONSOLIDATED SUBSIDIARIES

CONDENSED CONSOLIDATED ~~STATEMENTS OF CASH FLOWS~~BALANCE SHEETS (UNAUDITED)

(In millions) Nine Months Ended
September 30,
2017 2016
Cash provided (required) by operating activities:
Net income $ 261.7
$ 526.1
Adjustments to reconcile net income to cash provided (required) by operating activities:
Depreciation 276.8
209.9
Amortization 184.9
13.7
Employee benefit plan and stock-based compensation costs 30.5
15.9
Unrealized (gain) loss on derivative instruments and foreign exchange (70.5 ) 18.2
Deferred income tax provision (benefit) 3.5
(79.3 )
Impairments (Note 5) 9.0
—
Other (15.4 ) (32.4 )
Changes in operating assets and liabilities, net of effects of acquisitions:
Trade receivables, net and costs in excess of billings 225.8
(727.8 )
Inventories, net 198.0
68.4
Accounts payable, trade 150.2
131.2
Advance payments and billings in excess of costs (1,195.3 ) (72.5 )
Income taxes payable (receivable), net (88.1 ) 118.6
Other assets and liabilities, net 307.9
78.4
Cash provided by operating activities 279.0
268.4
Cash provided (required) by investing activities:
Capital expenditures (170.4 ) (107.6 )
Cash acquired in merger of FMC Technologies, Inc. and Technip S.A. (Note 2) 1,479.2
—
Cash divested from deconsolidation —
(89.8 )
Proceeds from sale of assets 13.6
10.1
Other 12.0
—
Cash provided (required) by investing activities 1,334.4
(187.3 )
Cash provided (required) by financing activities:
Net decrease in short-term debt (28.4 ) (4.5 )
Net increase (decrease) in commercial paper (363.0 ) —
Proceeds from issuance of long-term debt 7.3
449.6
Repayments of long-term debt (547.2 ) (765.2 )
Purchase of treasury stock (1.3 ) (151.3 )
Dividends paid —
(112.4 )
Payments related to taxes withheld on stock-based compensation (46.6 ) —
Other (76.9 ) 0.3
Cash required by financing activities (1,056.1 ) (583.5 )
Effect of changes in foreign exchange rates on cash and cash equivalents 69.5
121.8
Increase (decrease) in cash and cash equivalents 626.8
(380.6 )
Cash and cash equivalents, beginning of period 6,269.3
3,178.0
Cash and cash equivalents, end of period $ 6,896.1
$ 2,797.4



(In millions, except par value data)	September 30, 2019			December 31, 2018
Assets
Cash and cash equivalents	$	4,504.4		$	5,540.0
Trade receivables, net of allowances of $109.7 in 2019 and $119.6 in 2018	2,150.0			2,469.7
Contract assets	1,503.0			1,295.0
Inventories, net (Note 9)	1,411.9			1,251.2
Derivative financial instruments (Note 19)	106.2			95.7
Income taxes receivable	340.2			284.3
Advances paid to suppliers	233.5			189.7
Other current assets (Note 10)	744.2			655.6
Total current assets	10,993.4			11,781.2
Investments in equity affiliates	433.3			394.5
Property, plant and equipment, net of accumulated depreciation of $2,054.0 in 2019 and $2,068.5 in 2018	3,092.0			3,259.8
Operating lease right-of-use assets (Note 5)	904.5			—
Goodwill	7,577.3			7,607.6
Intangible assets, net of accumulated amortization of $728.3 in 2019 and $658.1 in 2018	1,105.6			1,176.7
Deferred income taxes	333.7			232.4
Derivative financial instruments (Note 19)	46.1			18.3
Other assets	293.8			314.0
Total assets	$	24,779.7		$	24,784.5

Liabilities and equity
Short-term debt and current portion of long-term debt (Note 13)	$	299.4		$	67.4
Operating lease liabilities (Note 5)	224.3			—
Accounts payable, trade	2,556.4			2,600.3
Contract liabilities	4,122.5			4,085.1
Accrued payroll	402.1			394.7
Derivative financial instruments (Note 19)	226.3			138.4
Income taxes payable	94.0			81.9
Other current liabilities (Note 10)	1,471.0			1,771.6
Total current liabilities	9,396.0			9,139.4
Long-term debt, less current portion (Note 13)	3,608.8			4,124.3
Operating lease liabilities (Note 5)	743.4			—
Deferred income taxes	172.6			209.2
Accrued pension and other post-retirement benefits, less current portion	272.3			298.9
Derivative financial instruments (Note 19)	108.0			44.9
Other liabilities	316.3			540.4
Total liabilities	14,617.4			14,357.1
Commitments and contingent liabilities (Note 17)
Mezzanine equity
Redeemable noncontrolling interest (Note 20)	38.5			38.5
Stockholders’ equity (Note 14)
Ordinary shares, $1.00 par value; 618.3 shares and 618.3 shares authorized in 2019 and 2018, respectively; 447.1 shares and 450.5 shares issued and outstanding in 2019 and 2018, respectively; 4.0 and 14.8 shares canceled in 2019 and 2018, respectively	447.1			450.5
Ordinary shares held in employee benefit trust, at cost; nil and 0.1 shares in 2019 and 2018, respectively	—			(2.4		)
Capital in excess of par value of ordinary shares	10,169.7			10,197.0
Retained earnings	901.6			1,072.2
Accumulated other comprehensive loss	(1,439.5		)	(1,359.7		)
Total TechnipFMC plc stockholders’ equity	10,078.9			10,357.6
Noncontrolling interests	44.9			31.3
Total equity	10,123.8			10,388.9
Total liabilities and equity	$	24,779.7		$	24,784.5

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

TECHNIPFMC PLC AND CONSOLIDATED SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)



(In millions)	Nine Months Ended
	September 30,
	2019			2018
Cash provided (required) by operating activities
Net income	$	18.2		$	335.7
Adjustments to reconcile net income to cash provided (required) by operating activities
Depreciation	282.5			276.3
Amortization	96.0			136.2
Impairments	127.5			14.1
Employee benefit plan and share-based compensation costs	54.2			27.1
Deferred income tax provision (benefit), net	(122.6		)	(44.6		)
Unrealized loss on derivative instruments and foreign exchange	108.2			19.0
Income from equity affiliates, net of dividends received	(49.6		)	(67.3		)
Other	307.6			58.9
Changes in operating assets and liabilities, net of effects of acquisitions
Trade receivables, net and contract assets	(23.0		)	(25.9		)
Inventories, net	(190.6		)	(259.6		)
Accounts payable, trade	19.4			(938.2		)
Contract liabilities	124.8			(18.6		)
Income taxes payable (receivable), net	(45.3		)	(91.8		)
Other current assets and liabilities, net	(431.1		)	416.6
Other noncurrent assets and liabilities, net	13.2			(182.6		)
Cash provided (required) by operating activities	289.4			(344.7		)

Cash provided (required) by investing activities
Capital expenditures	(368.4		)	(255.2		)
Payment to acquire debt securities	(59.7		)	—
Proceeds from sale of debt securities	18.9			—
Acquisitions, net of cash acquired	—			(103.4		)
Cash divested from deconsolidation	—			(7.5		)
Proceeds from sale of assets	5.6			7.9
Proceeds from repayment of advance to joint venture	46.4			—
Cash required by investing activities	(357.2		)	(358.2		)

Cash required by financing activities
Net decrease in short-term debt	(28.5		)	(29.5		)
Net (decrease) increase in commercial paper	(255.5		)	309.3
Proceeds from issuance of long-term debt	96.2			2.5
Purchase of ordinary shares	(92.7		)	(384.2		)
Dividends paid	(174.7		)	(179.2		)
Settlements of mandatorily redeemable financial liability	(443.7		)	(124.2		)
Other	—			2.3
Cash required by financing activities	(898.9		)	(403.0		)
Effect of changes in foreign exchange rates on cash and cash equivalents	(68.9		)	(78.2		)
Decrease in cash and cash equivalents	(1,035.6		)	(1,184.1		)
Cash and cash equivalents, beginning of period	5,540.0			6,737.4
Cash and cash equivalents, end of period	$	4,504.4		$	5,553.3

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

TECHNIPFMC PLC AND CONSOLIDATED SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)

THREE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018

(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, 2016 $ 114.7
$ (44.5 ) $ 2,694.7
$ 3,416.1
$ (1,057.4 ) $ (11.7 ) $ 5,111.9
Net income (loss) —
—
—
267.2
—
(5.5 ) 261.7
Other comprehensive income —
—
—
—
111.6
0.7
112.3
Issuance of ordinary shares due to the merger of FMC Technologies and Technip 351.9
(6.6 ) 7,825.4
—
—
—
8,170.7
Cancellation of treasury stock (Note 13) (0.1 ) 44.5
(26.6 ) —
—
—
17.8
Net sales of ordinary shares for employee benefit trust —
1.6
—
—
—
—
1.6
Issuance of ordinary shares 0.6
—
—
—
—
—
0.6
Stock-based compensation (Note 16) —
—
34.9
—
—
—
34.9
Other

—
1.4
—
—
12.0
13.4
Balance as of September 30, 2017 $ 467.1
$ (5.0 ) $ 10,529.8
$ 3,683.3
$ (945.8 ) $ (4.5 ) $ 13,724.9



(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 June 30, 2018	$	457.5		$	(3.9	)	$	10,335.5		$	3,334.5		$	(1,180.1	)	$	22.4		$	12,965.9
Net income (loss)	—			—			—			136.9			—			(2.7		)	134.2
Other comprehensive loss	—			—			—			—			(133.8		)	(0.2		)	(134.0		)
Cancellation of treasury shares	(4.6		)	—			(104.3		)	(33.3		)	—			—			(142.2		)
Net sales of ordinary shares for employee benefit trust	—			1.5			—			—			—			—			1.5
Cash dividends declared ($0.13 per share)	—			—			—			(59.0		)	—			—			(59.0		)
Share-based compensation	—			—			15.9			—			—			—			15.9
Balance as of September 30, 2018	$	452.9		$	(2.4	)	$	10,247.1		$	3,379.1		$	(1,313.9	)	$	19.5		$	12,782.3

Balance as of June 30, 2019	$	446.5		$	—		$	10,152.4		$	1,084.0		$	(1,348.3	)	$	45.8		$	10,380.4
Net income (loss)	—			—			—			(119.1		)	—			3.8			(115.3		)
Other comprehensive loss	—			—			—			—			(91.2		)	(4.4		)	(95.6		)
Cancellation of treasury shares	—			—			(2.6		)	—			—			—			(2.6		)
Issuance of ordinary shares	0.6			—			—			—			—			—			0.6
Cash dividends declared ($0.13 per share)	—			—			—			(58.1		)	—			—			(58.1		)
Share-based compensation	—			—			19.9			—			—			—			19.9
Other	—			—			—			(5.2		)	—			(0.3		)	(5.5		)
Balance as of September 30, 2019	$	447.1		$	—		$	10,169.7		$	901.6		$	(1,439.5	)	$	44.9		$	10,123.8

TECHNIPFMC PLC AND CONSOLIDATED SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)

NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018



(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, 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)	—			—			—			337.7			—			(2.0		)	335.7
Other comprehensive income (loss)	—			—			—			—			(310.2		)	0.8			(309.4		)
Cancellation of treasury shares	(12.3		)	—			(278.0		)	(93.9		)	—			—			(384.2		)
Issuance of ordinary shares	0.1			—			0.1			—			—			—			0.2
Net sales of ordinary shares for employee benefit trust	—			2.4			—			—			—			—			2.4
Cash dividends declared ($0.39 per share)	—			—			—			(179.2		)	—			—			(179.2		)
Share-based compensation	—			—			41.7			—			—			—			41.7
Other	—			—			—			—			—			(0.9		)	(0.9		)
Balance as of September 30, 2018	$	452.9		$	(2.4	)	$	10,247.1		$	3,379.1		$	(1,313.9	)	$	19.5		$	12,782.3

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)	—			—			—			(1.2		)	—			19.4			18.2
Other comprehensive loss	—			—			—			—			(79.8		)	(3.1		)	(82.9		)
Cancellation of treasury shares	(4.0		)	—			(88.7		)	—			—			—			(92.7		)
Issuance of ordinary shares	0.6			—			—			—			—			—			0.6
Net sales of ordinary shares for employee benefit trust	—			2.4			—			—			—			—			2.4
Cash dividends declared ($0.39 per share)	—			—			—			(174.7		)	—			—			(174.7		)
Share-based compensation	—			—			61.4			—			—			—			61.4
Other	—			—			—			3.5			—			(2.7		)	0.8
Balance as of September 30, 2019	$	447.1		$	—		$	10,169.7		$	901.6		$	(1,439.5	)	$	44.9		$	10,123.8

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

TECHNIPFMC PLC AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1. BASIS OF PRESENTATION ~~AND~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited condensed consolidated financial statements of TechnipFMC plc and its consolidated subsidiaries (“TechnipFMC” or the “Company”) have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) and rules and regulations of the Securities and Exchange Commission (“SEC”) pertaining to interim financial information. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP have been condensed or omitted. These unaudited condensed consolidated financial statements should be read together with our audited consolidated financial statements contained in our Annual Report on Form 10-K (“Form 10-K”) for the year ended December 31, 2018.

Our accounting policies are in accordance with GAAP. 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 of revenue and expenses during the reporting period. Ultimate results could differ from our estimates.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments as well as adjustments to our financial position pursuant to a business combination, necessary for a fair statement of our financial condition and operating results as of and for the periods presented. Revenue, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the results and trends in these financial statements may not be representative of the results that may be expected for the year ending December 31, ~~2017.~~2019.

Reclassifications – Certain prior-year amounts have been reclassified to conform to the current year’s presentation.

Revision of Prior Period Financial Statements - In ~~this Quarterly Report on Form 10-Q, we are reporting~~connection with the ~~results of our operations for the three months and nine months ended September 30, 2017, which consist~~preparation of 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 three months and nine months ended September 30, 2016 and as of December 31, 2016. Refer to Note 2 for further information related to the merger of FMC Technologies and Technip.

~~Principles of consolidation—The~~condensed 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 assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results 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 related to income taxes; and estimates related to contingencies, including liquidated damages.~~

~~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 affiliate’s operating and financial policies. The cost method of accounting is used where significant influence over the affiliate is not present.

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 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 reported in other assets on the consolidated balance sheets. Where no active market exists and where no other valuation method can be used, these financial assets are maintained at historical cost, less any accumulated impairment losses.

~~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~~—Revenue is generally recognized once the following four criteria are met: i) persuasive evidence of an arrangement exists, ii) delivery of the equipment has occurred (which is upon shipment or when customer-specific acceptance requirements are met) or services have been rendered, iii) the price of the equipment or service is fixed or determinable, and iv) collectability is reasonably assured. We record our sales net of any value added, sales or use tax.

For certain construction-type manufacturing and assembly projects that involve significant design and engineering efforts to satisfy detailed customer specifications, revenue is recognized using the percentage of completion method of accounting. Under the percentage of completion method, revenue is recognized as work progresses on each contract. We apply the ratio of costs incurred to date to total estimated contract costs at completion or ~~on physical progress defined for the main deliverables under the contracts~~. If it is not possible to form a reliable estimate of progress toward completion, no revenue or costs are recognized until the project is complete or substantially complete. Any expected losses on construction-type contracts in progress are charged to earnings, in total, in the period the losses are identified.

Modifications to construction-type contracts, referred to as “change orders,” effectively change the provisions of the original contract, and may, for example, alter the specifications or design, method or manner of performance, equipment, materials, sites and/or period for completion of the work. If a change order represents a firm price commitment from a customer, we account for the revised estimate as if it had been included in the original estimate, effectively recognizing the pro rata impact of the new estimate on our calculation of progress toward completion in the period in which the firm commitment is received. If a change order is unpriced: (1) we include the costs of contract performance in our calculation of progress toward completion in the period in which the costs are incurred or become probable; and (2) when it is determined that the revenue is probable of recovery, we include the change order revenue, limited to the costs incurred to date related to the change order, in our calculation of progress toward completion. Unpriced change orders included in revenue were immaterial to our consolidated revenue for all periods presented. Margin is not recorded on unpriced change orders unless realization is assured beyond a reasonable doubt. The assessment of realization may be based upon our previous experience with the customer or based upon our receipt of a firm price commitment from the customer.

Progress billings are generally issued upon completion of certain phases of the work as stipulated in the contract. Revenue in excess of progress billings are reported in costs and estimated earnings in excess of billings on uncompleted contracts in our condensed consolidated balance sheets. Progress billings and cash collections in excess of revenue recognized on a contract are classified as billings in excess of costs and estimated earnings on uncompleted contracts and advance payments, respectively, in our condensed consolidated balance sheets. Revenue generated from the installation portion of construction-type contracts is included in service and product revenue in our condensed consolidated statements of income.

~~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. Inventory costs include those costs directly attributable to products, including all manufacturing overhead, but excluding costs to distribute. The first-in, first-out (“FIFO”) or weighted average methods are used to determine the cost for most other inventories. Cost for a significant portion of the U.S. domiciled inventories is determined on the last-in, first-out (“LIFO”) method. Write-down on inventories are recorded when the net realizable value of inventories is lower than their net book value.

~~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). 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. The test compares the fair value of the reporting unit (measured as the present value of expected future cash flows) to its carrying amount. If the fair value of the reporting unit is less than its carrying amount, then an impairment loss is recorded.

~~Debt instruments—~~Debt instruments include convertible and synthetic bonds, senior and private placement notes and other borrowings. Issuance fees and redemption premium on all debt instruments are included in the cost of debt in the condensed consolidated balance sheets, as an adjustment to the nominal amount of the 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.~~

~~Stock-based employee compensation~~—The measurement of stock-based compensation expense on restricted stock 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, after taking into account estimated forfeitures, or the period beginning at the start of the service period and ending when an employee becomes eligible for retirement.

~~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 condensed consolidated balance sheets.

~~Treasury shares~~—Treasury shares held are recorded as a reduction to stockholders’ equity using the cost method. Any gain or loss related to the sale of treasury shares is included in stockholders’ equity. Canceled treasury shares are accounted for using the constructive retirement method.

~~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 hyperinflationary 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 exchanges 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.

~~Derivative instruments—~~Derivatives are recognized on the condensed 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 condensed consolidated statements of income, as they occur and offset gains or losses on the remeasurement of the related asset or liability.

~~NOTE 2. MERGER OF FMC TECHNOLOGIES AND TECHNIP~~

~~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 $9.2 million and $87.2 million in~~ the three and nine months ended September 30, ~~2017, respectively,~~2019, we identified errors in our previously issued financial statements related to the classification between service revenue, product revenue and ~~$14.0 million~~the related cost of sales. The correction had no effect on the reported total revenues, consolidated net income (loss) or stockholders’ equity for any periods previously presented.

In accordance with Staff Accounting Bulletin (“SAB”) No. 99, Materiality, and ~~$30.7 million~~SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, we evaluated the errors and, based on an analysis of quantitative and qualitative factors, determined that the related impact was not material to our consolidated financial statements for any prior annual or interim period. Therefore, amendments of previously filed reports are not required.

In accordance with Accounting Standards Codification (“ASC”) 250, Accounting Changes and Error Corrections, we corrected the errors for the three and nine months ended September 30, ~~2016.~~2018 by revising the condensed consolidated financial statements appearing herein. Periods not presented herein will be revised, as applicable, in future filings.

~~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~~effects 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 ⁽¹⁾
0.5
Shares of TechnipFMC issued 114.4
Value per share of Technip as of January 16, 2017 ⁽²⁾
$ 71.4
Total purchase consideration $ 8,170.7

~~_______________________~~

⁽¹⁾

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.


⁽²⁾	~~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 preliminary fair values of the assets acquired and liabilities assumed at the acquisition date. The purchase price allocation is subject to~~ revision as additional information about fair value of assets and liabilities becomes available. Additional information that existed as of the acquisition date but at that time was unknown to us may become known during the remainder of the measurement period. As part of the ongoing review of the purchase price allocation, a $210.0 million adjustment to deferred tax balances was recorded during the third quarter of 2017 which reduced goodwill. This adjustment had no impact to theon our condensed consolidated statements of ~~income.~~income for the three and nine months ended September 30, 2018 are as follows:



	Three Months Ended							Nine Months Ended
	September 30, 2018							September 30, 2018
(In millions, except per share data)	As Previously Reported		Adjustments			As Revised		As Previously Reported		Adjustments			As Revised
Revenue
Service revenue	$	2,487.9	$	(211.0	)	$	2,276.9	$	7,159.2	$	(542.3	)	$	6,616.9
Product revenue	595.2		211.0			806.2		1,907.3		542.3			2,449.6
Total revenue	3,143.8		—			3,143.8		9,229.9		—			9,229.9

Costs and expenses
Cost of service revenue	2,046.6		(186.4		)	1,860.2		5,846.0		(357.6		)	5,488.4
Cost of product revenue	481.0		186.4			667.4		1,559.9		357.6			1,917.5
Total costs and expenses	2,863.7		—			2,863.7		8,527.2		—			8,527.2

Net income (loss) attributable to TechnipFMC plc	$	136.9	$	—		$	136.9	$	337.7	$	—		$	337.7

Earnings (loss) per share attributable to TechnipFMC plc (Note 8)
Basic	$	0.30	$	—		$	0.30	$	0.73	$	—		$	0.73
Diluted	$	0.30	$	—		$	0.30	$	0.73	$	—		$	0.73

Weighted average shares outstanding (Note 8)
Basic	454.5		—			454.5		460.0		—			460.0
Diluted	459.0		—			459.0		464.0		—			464.0

Leases – The majority of our leases are operating leases. We account for leases in accordance with ASC Topic 842, Leases, which we adopted on January 1, 2019 using the modified retrospective method. Refer to Note 5 for further discussion of the adoption, including the impact on our 2019 financial statements.

NOTE 2. PLANNED SPIN-OFF TRANSACTION

On August 26, 2019, we announced that our Board of Directors had unanimously approved a plan to separate our Onshore/Offshore segment, loading systems and process automation businesses into an independent, publicly traded company (“Technip Energies”). The transaction is expected to be tax free to certain shareholders where permissible, including the U.S. We expect to complete the transaction in the first half of 2020, subject to general market conditions, regulatory approvals, consultation of employee representatives, where applicable, and final ~~purchase price allocation~~approval from our Board of Directors. Upon completion of the separation, the historical results of Technip Energies will be ~~based on final appraisals~~presented as discontinued operations as the separation represents a strategic shift in operations with a major impact to our consolidated financial statements. We have incurred $9.4 million of separation costs associated with the planned transaction for the three months ended September 30, 2019.

NOTE 3. BUSINESS COMBINATION TRANSACTIONS

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 riserless light well intervention (“RLWI”) project management and ~~other analysis of fair values of acquired assets~~engineering services for plug and ~~liabilities.~~

(In millions)
Assets:
Cash $ 1,479.2
Accounts receivable 1,247.4
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
Deferred income taxes 67.0
Other long-term assets 167.3
Total identifiable assets acquired 6,830.7
Liabilities:
Short-term and current portion of long-term debt 319.5
Accounts payable, trade 386.0
Advance payments 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 226.8
Other long-term liabilities 138.7
Total liabilities assumed 3,781.1
Net identifiable assets acquired 3,049.6
Goodwill 5,121.1
Net assets acquired $ 8,170.7

~~Segment Allocation of Goodwill~~

~~Goodwill is preliminary due to~~abandonment, riserless coiled tubing, and well completion operations. In connection with the ~~draft status~~acquisition of the ~~purchase valuation.~~controlling interest, TechnipFMC and Island Offshore entered into a strategic cooperation agreement to deliver RLWI services on a global 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 ~~allocation to the reporting segments based on the draft valuation is as follows:~~acquisition was completed for total cash

(In millions) Allocated Goodwill
Subsea $ 2,508.2
Onshore/Offshore 1,622.9
Surface Technologies 990.0
Total $ 5,121.1

~~Goodwill is calculated as the excess~~consideration 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~~$42.4 million. 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
Backlog 175.0
2
Customer relationships 285.0
10
Tradenames 635.0
20
Software 55.3
Various
Total identifiable intangible assets acquired $ 1,390.3

~~FMC Technologies’ results of operations have been included in our~~we recorded redeemable financial ~~statements for periods subsequent~~liability equal to the ~~consummation~~fair value of a written put option and we 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 ~~Merger on January 16, 2017. FMC Technologies contributed revenues and a net loss~~outstanding shares of ~~$2,522.6 million and $130.1 million, respectively, for~~Technip Offshore Finland Oy. The total gain before tax recognized in the ~~period from January 17, 2017 through September 30, 2017.~~third quarter of 2018 was $27.8 million.

~~Pro Forma Impact of~~Additional acquisitions during the ~~Merger (unaudited)~~

The following unaudited supplemental pro forma results present consolidated information as if the Merger 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 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 three and nine months ended September 30, ~~2017 was also used to calculate~~2018 totaled $61.0 million in consideration paid. There were no acquisitions or disposals during the ~~diluted earnings per share for the three and~~ nine months ended September 30, ~~2016.~~

Three Months Ended September 30, Nine Months Ended September 30,
(In millions, except per share data)
2017
Actual

2016
Pro Forma

2017
Pro Forma

2016
Pro Forma
Revenue $ 4,140.9
$ 3,454.8
$ 11,486.8
$ 10,587.2
Net income attributable to TechnipFMC adjusted for dilutive effects $ 121.0
$ 306.9
$ 182.4
$ 436.1
Diluted earnings per share $ 0.26
$ 0.65
$ 0.39
$ 0.93
2019.

NOTE 3.4. NEW ACCOUNTING STANDARDS

Recently Adopted Accounting Standards under GAAP

Effective January 1, ~~2017,~~2019, we adopted (1) Accounting Standards Update (“ASU”) No. ~~2016-09,~~ “2016-02, Leases (Topic 842).”, (2) ASU 2018-01, “Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842.” (3) ASU 2018-10, “Codification Improvements to ~~Employee Share-Based Payment Accounting.~~Topic 842, Lease.”~~Among other amendments, this update requires that excess tax benefits or deficiencies be recognized as income tax expense or benefit in the income statement~~, (4)ASU 2018-20, “Narrow-scope Improvements for Lessors.”, (5) ASU 2018-11, “Leases (Topic 842): Targeted Improvements.”, (6) ASU No. 2019-01, “Leases (Topic 842) —Codification Improvements.”. These updates require lessees to recognize a right-of-use (“ROU”) asset and ~~eliminates the requirement~~a lease liability for virtually all of their leases. See Note 5 to reclassify excess tax benefits and deficiencies from operating activities to financing activities in the statement of cash flows. This updated guidance also gives an entity the election to either (i) estimate the forfeiture rate of employee stock-based awards or (ii) account for forfeitures as they occur. We elected to retrospectively classify excess tax benefits and deficiencies as operating activity and these amounts, which were immaterial for all periods presented, are reflected in the income taxes payable, net line item in the accompanyingour condensed consolidated statement of cash flows. In addition, we elected to continue to estimate forfeitures on the grant date to account for the estimated number of awards for which the requisite service period will not be rendered. The adoptionfinancial statements of this ~~update did not have a material impact on our consolidated financial statements.~~Quarterly Report for more information.

Effective January 1, ~~2017,~~2019, we adopted ASU No. ~~2015-11, “Simplifying the Measurement of Inventory.” This update requires in scope inventory to be measured at the lower of cost or net realizable value rather than at the lower of cost or market under~~

~~existing guidance. We adopted the updated guidance prospectively. The adoption of this update did not have a material impact on our consolidated financial statements.~~

~~Effective January 1, 2017, we adopted ASU No. 2014-15, “Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern.~~” This update states that substantial doubt exists if it is probable that an entity will be unable to meet its current and future obligations. Disclosures are required if conditions give rise to substantial doubt. However, management will need to assess if its plans will alleviate substantial doubt to determine the specific disclosures. We adopted this guidance prospectively. The adoption of this update concerns disclosure only as it relates to our consolidated financial statements.

~~Effective September 30, 2017, we early adopted ASU No. 2017-04,~~ ~~“Simplifying the Test for Goodwill Impairment.”~~ This update eliminates step two from the goodwill impairment test. An annual or interim goodwill test should be performed by comparing the fair value of a reporting unit with its carrying amount. Income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit should also be considered when measuring any applicable goodwill impairment loss. This updated guidance also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and if it fails that qualitative assessment, to perform step two of the goodwill impairment test. Any goodwill amount allocated to a reporting unit with a zero or negative carrying amount net of assets is required to be disclosed. The adoption of this update did not have a material impact on our consolidated financial statements.

~~Recently Issued Accounting Standards~~

~~In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09,~~ ~~“Revenue from Contracts with Customers.”~~ 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. The ASU will supersede most existing GAAP related to revenue recognition and will supersede some cost guidance in existing GAAP related to construction-type and production-type contract accounting. Additionally, the ASU will significantly increase disclosures related to revenue recognition. In August 2015, the FASB issued ASU No. 2015-14 which deferred the effective date of ASU No. 2014-09 by one year, and as a result, is now effective for us on January 1, 2018. In March 2016, the 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. Early application is permitted to the original effective date of January 1, 2017. 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. As part of our assessment work-to-date, we have formed an implementation work team, conducted training for the relevant staff regarding the potential impacts the new ASU's revenue recognition model 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. During the remainder of 2017, we will quantify the potential impacts to the financial statements upon adoption of the ASU, as well as advance design and implementation of required processes, systems and internal control changes necessary to address the impacts identified in the assessment. We are currently unable to reasonably estimate the impact the new revenue recognition criteria will have on our consolidated financial statements and related disclosures. Our evaluation of the new guidance is ongoing, which includes investigating and understanding the impact of adoption on earnings from equity method investments. We intend to adopt the new standard utilizing the modified retrospective method which will result in a cumulative effect adjustment as of January 1, 2018.

~~In January 2016, the FASB issued 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 under the equity method of accounting to be measured at fair value with changes in fair value recognized in net income. An entity may choose to measure 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. The amendments in this ASU are effective for us on January 1, 2018. 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. Early adoption is not permitted. We are currently evaluating the impact of this ASU on our consolidated financial statements.

~~In February 2016, the FASB issued ASU No. 2016-02,~~ ~~“Leases.”~~ ~~This update requires that a lessee recognize in the statement of financial position a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset~~

for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. 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. The impacts that adoption of the ASU is expected to have on our consolidated financial statements and related disclosures are being evaluated. Additionally, we have not determined the effect of the ASU on our internal control over financial reporting or other changes in business practices and processes.

~~In June 2016, the FASB issued ASU 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 permitted. We are currently evaluating the impact of this ASU on our consolidated financial statements.

~~In August 2016, the FASB issued 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 effective for us on January 1, 2018 and 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. Early adoption is permitted. We are currently evaluating the impact of this ASU on our consolidated statements of cash flows.

~~In October 2016, the FASB issued 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 effective for us on January 1, 2018 and are required to be adopted on a modified retrospective basis. Early adoption is permitted. We are currently evaluating the impact of this ASU on our consolidated financial statements.

~~In January 2017, the FASB issued 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 effective for us on January 1, 2018 and are required to be adopted prospectively. Early adoption is permitted. We are currently evaluating the impact of this ASU on our consolidated financial statements.

~~In February 2017, the FASB issued ASU 2017-05,~~ ~~“Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets.”~~ This update defines an in-substance nonfinancial asset, unifies guidance related to partial sales of nonfinancial assets, eliminates rules specifically addressing the sale of real estate, removes exceptions to the financial asset derecognition model, and clarifies the accounting for contributions of nonfinancial assets to joint ventures. The amendments in this ASU are effective for us January 1, 2018 and are required to be adopted with either a full retrospective approach or a modified retrospective approach. We are currently evaluating the impact of this ASU on our consolidated financial statements.

~~In March 2017, the FASB issued 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 is 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. Early adoption is permitted. 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. We are currently evaluating the impact of this ASU on our consolidated financial statements.

~~In May 2017, the FASB issued 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. We are currently evaluating the impact of this ASU on our consolidated financial statements.

~~In July 2017, the FASB issued ASU No. 2017-11, “~~(Part I) Accounting for Certain Financial Instruments with Down Round Features; (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception.” This update allows companies to exclude a down round feature when determining whether a financial instrument (or embedded conversion feature) is considered indexed to the entity’s own stock. As a result, financial instruments (or embedded conversion features) with down round features may no longer be required to be accounted for as derivative liabilities. An entity will recognize the value of a down round feature only when it is triggered and the strike price has been adjusted downward. For equity-classified freestanding financial instruments, an entity will treat the value of the effect of the down round as a dividend and a reduction of income available to common shareholders in computing basic earnings per share. For convertible instruments with embedded conversion features containing down round provisions, entities will recognize the value of the down round as a beneficial conversion discount to be amortized to earnings. The amendments in this ASU are effective for us January 1, 2019. Early adoption is permitted. The guidance in this ASU is to be applied using a full or modified retrospective approach. 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~~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. The adoption of this update did not have an impact on our consolidated financial statements.

Effective January 1, 2019, we adopted 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 adoption of this update did not have an impact on our consolidated financial statements.

Effective January 1, 2019, we adopted 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 adoption of this update did not have a material impact on our consolidated financial statements.

Recently Issued Accounting Standards under GAAP

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” 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 (1)

loans, accounts receivable, trade receivables and other financial assets measured at amortized cost, (2) 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. In May 2019, the FASB issued a new update ASU No.2019-05, that eases transition to the credit losses standard by providing the option to measure certain types of assets at fair value, allowing an option for preparers to irrevocably elect the fair value option for eligible financial assets measured at amortized cost basis on an instrument-by-instrument basis. 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 do not anticipate a material impact to our consolidated financial statements as a result of the adoption of this ASU.

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 do not anticipate a material impact to our consolidated financial statements as a result of the adoption of this ASU.

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. The adoption of this update concerns presentation and disclosure only as it relates to 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 post-retirement plans. The amendments in this ASU are effective for us January 1, 2021. Early adoption is permitted. The amendments in this update are 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 are required to be adopted either retrospectively or prospectively. We do not anticipate a material impact to our consolidated financial statements as a result of the adoption of this ASU.

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 are 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 do not anticipate a material impact to our consolidated financial statements as a result of the adoption of this ASU.

In April 2019, the FASB issued 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 (1) ASU No. 2016-01, “Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Liabilities.”, (2) ASU No. 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.”, and (3) ASU No. 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.” Early adoption is permitted. The amendments in this update to ASU No. 2016-01 and No. 2016-13 are required to be adopted on a modified retrospective basis. The amendments in this update to ASU No. 2017-12 are required to be adopted either retrospectively or prospectively. This new update will be effective on January 1, 2020. We do not anticipate a material impact to our consolidated financial statements as a result of the adoption of this ASU.

NOTE ~~4. EARNINGS PER SHARE~~5. LEASES

AIn February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). Lessees are required to recognize a right-of-use (“ROU”) asset and a lease liability for all outstanding leases excluding short-term leases. The liability is equal to the present value of the remaining lease payments. The ROU asset is based on the liability, subject to certain adjustments (e.g., initial direct costs, payments made by the lessee prior to lease commencement and any lessor incentives). For income statement purposes, lessees are required to classify leases as either operating or finance leases. Operating leases result in straight-line expense while finance leases result in a front-loaded expense pattern. Lessor accounting is largely unchanged but has been updated to align with certain changes to the lessee model and the new revenue recognition standard.

Topic 842 was subsequently amended to provide practical expedient for transition and targeted improvements to the new lease standard. The FASB issued in March 2019, ASU 2019-01, “Leases (Topic 842): Codification Improvements” to clarify certain transition disclosure requirements. The Company adopted the new lease standard as of January 1, 2019, using a modified retrospective transition method and applying the new standard to all leases through a cumulative-effect adjustment to beginning retained earnings in the period of adoption. In our first annual period after adoption, the year ending December 31, 2019, the comparative periods will not be restated and will be presented under legacy lease accounting guidance in effect for those periods, Topic 840.

The new standard provides a number of practical expedients specific to transition. We have elected the “package of practical expedients”, which permits us not to reassess (1) whether any expired or existing arrangements are or contain leases, (2) the lease classification for any expired or existing leases, and (3) any initial direct costs for any existing leases as of the effective date.

The new standard also provides practical expedients for an entity’s ongoing accounting, including a practical expedient which allows lessees and lessors to elect to not separate lease and non-lease components. We have elected 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 have elected the practical expedient available for lessors to not separate lease and non-lease components for vessels. The Company also elected not to recognize right of use assets and lease liabilities on the balance sheet for short-term leases, which have a lease term of 12 months or less and do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise. Lease cost of short-term leases are recognized on a straight-line basis over the lease term and disclosed within our financial statements. We believe short-term lease commitments are not materially different than the short-term lease cost for the period.

Adoption of the new lease accounting guidance had a material impact on our consolidated balance sheets but did not have a material impact on our consolidated income statements. We recognized on January 1, 2019, (1) a lease liability of approximately $1,189.6 million which represents the present value of the remaining lease payments, discounted using the Company’s applicable weighted average incremental borrowing rates, and (2) an ROU asset of approximately $1,115.5 million which represents the lease liability of $1,189.6 million adjusted for accrued and prepaid rent, lease incentives, and other balances. The impact was recorded as an adjustment to increase retained earnings by approximately $1.8 million.

In connection with the adoption of the new lease standard, we corrected our balance sheet as of January 1, 2016 to include an additional $42.0 million of liabilities of which $5.0 million and $37.0 million was other current liabilities and other liabilities, respectively, with a corresponding decrease in retained earnings to reflect additional rent

expense which was not historically recorded prior to fiscal 2016. Accordingly, the revised other current liabilities, other liabilities retained earnings balances as of January 1, 2016 were $1,044.4 million, $131.3 million, and $3,231.4 million, respectively. These historical errors are not material to any prior interim or annual financial statements.

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.

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) on 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. At the date of adoption and September 30, 2019, we determined that there were no residual value guarantees which were probable of being owed. Our leases do not contain any material restrictive covenants.

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. The Company 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.

The Company 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 profit or loss and are disclosed as ‘variable lease cost’ 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.

The Company currently subleases certain of its leased real estate and vessels to third parties. It is expected that most subleases will be classified as operating leases by the sublessor under GAAP.

The following table is a summary of the Company’s components of net lease cost for the three and nine months ended September 30, 2019:



	Three Months Ended		Nine Months Ended
(In millions)	September 30, 2019		September 30, 2019
Operating lease cost including variable costs	$	90.0	$	273.4
Short-term lease costs	4.1		19.0
Less: sublease income	2.5		6.5
Net lease cost	$	91.6	$	285.9

Supplemental cash flow information related to leases for the nine months ended September 30, 2019 is as follows:



	Nine Months Ended
(In millions)	September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	289.4

Right-of-use assets obtained in exchange for lease liabilities
Operating leases	36.3

Supplemental balance sheet information related to leases as of September 30, 2019 is as follows:



(In millions, except lease term and discount rate)	September 30, 2019
Weighted average remaining lease term
Operating leases	7.0 years

Weighted average discount rate
Operating leases	4.4	%

The following table is a summary of the maturity of lease liabilities under operating leases as of September 30, 2019:



(in millions)	Operating Leases
2019	$	305.0
2020	230.2
2021	129.1
2022	101.2
2023	77.2
Thereafter	334.6
Total lease payments	1,177.3
Less: Imputed interest ^(a)	209.6
Total lease liabilities ^(b)	$	967.7

Note: For leases commencing 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 $224.3 million for operating leases.

At December 31, 2018, future minimum rental payments under noncancellable operating leases under ASC Topic 840 were:



(In millions)
2019	$	329.8
2020	286.1
2021	192.3
2022	123.8
2023	102.1
Thereafter	485.6
Total lease payment	1,519.7
Less income from sub-leases	25.6
Net minimum operating lease payments	$	1,494.1

As of September 30, 2019, we have an additional operating lease for our future office building in Paris, France, that has not yet commenced for $236.2 million. This operating lease will commence in fiscal year 2021 with a lease term of 10 years.

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 ASC 606. If the lease component is predominant in our contracts, we account for the contracts under the lease guidance in ASC 842. 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 lessor 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 the Company’s components of lease revenue for the three and nine months ended September 30, 2019:



	Three Months Ended		Nine Months Ended
(In millions)	September 30, 2019		September 30, 2019
Operating lease revenue including variable revenue	$	85.7	$	200.9

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
2019	$	6.2
2020	14.9
2021	17.5
2022	18.0
2023	2.5
Thereafter	—
Total undiscounted cash flows	$	59.1

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.

Disaggregation of Revenue

The Company disaggregates revenue by geographic location and contract types. The tables also include a reconciliation of the ~~number of shares used~~disaggregated revenue with the reportable segments.

The following tables present products and services revenue by geography for each reportable segment for the ~~basic~~three and ~~diluted~~nine months ended September 30, 2019 and 2018:



	Reportable Segments
	Three Months Ended
	September 30, 2019						September 30, 2018
(In millions)	Subsea		Onshore/ Offshore		Surface Technologies		Subsea		Onshore/ Offshore		Surface Technologies
Europe, Russia, Central Asia	$	390.8	$	682.4	$	55.5	$	421.4	$	831.5	$	66.0
America	513.1		156.9		171.0		437.4		89.4		208.3
Asia Pacific	171.0		311.7		50.3		118.2		300.6		34.1
Africa	143.6		158.6		14.9		162.5		54.8		16.3
Middle East	81.2		286.7		61.7		38.8		256.2		47.6
Total products and services revenue	$	1,299.7	$	1,596.3	$	353.4	$	1,178.3	$	1,532.5	$	372.3



	Reportable Segments
	Nine Months Ended
	September 30, 2019						September 30, 2018
(In millions)	Subsea		Onshore/ Offshore		Surface Technologies		Subsea		Onshore/ Offshore		Surface Technologies
Europe, Russia, Central Asia	$	1,250.0	$	1,975.2	$	171.3	$	1,136.3	$	2,537.9	$	172.5
America	1,232.0		514.2		564.1		1,219.3		253.0		653.3
Asia Pacific	448.4		889.1		139.4		368.1		906.5		85.9
Africa	663.2		330.1		41.1		703.9		202.3		43.4
Middle East	352.0		727.8		183.5		89.1		548.6		146.4
Total products and services revenue	$	3,945.6	$	4,436.4	$	1,099.4	$	3,516.7	$	4,448.3	$	1,101.5

The following tables represent revenue by contract type for each reportable segment for the three and nine months ended September 30, 2019 and 2018:



	Reportable Segments
	Three Months Ended
	September 30, 2019						September 30, 2018
(In millions)	Subsea		Onshore/ Offshore		Surface Technologies		Subsea^(b)		Onshore/ Offshore		Surface Technologies
Services	$	743.8	$	1,596.3	$	69.5	$	674.2	$	1,532.5	$	70.2
Products	555.9		—		283.9		504.1		—		302.1
Total products and services revenue	1,299.7		1,596.3		353.4		1,178.3		1,532.5		372.3
Lease^(a)	42.5		—		43.2		30.8		—		29.9
Total revenue	$	1,342.2	$	1,596.3	$	396.6	$	1,209.1	$	1,532.5	$	402.2



	Reportable Segments
	Nine Months Ended
	September 30, 2019						September 30, 2018
(In millions)	Subsea		Onshore/ Offshore		Surface Technologies		Subsea^(b)		Onshore/ Offshore		Surface Technologies
Services	$	2,359.6	$	4,436.4	$	213.5	$	1,983.6	$	4,448.3	$	185.0
Products	1,586.0		—		885.9		1,533.1		—		916.5
Total products and services revenue	3,945.6		4,436.4		1,099.4		3,516.7		4,448.3		1,101.5
Lease^(a)	90.6		—		110.3		90.0		—		73.4
Total revenue	$	4,036.2	$	4,436.4	$	1,209.7	$	3,606.7	$	4,448.3	$	1,174.9


(a)	Represents revenue not subject to ASC Topic 606. See Note 5 to our condensed consolidated financial statements of this Quarterly Report for additional disclosure related to lease revenue.


(b)	We revised the condensed consolidated statement of operations to correct the classification of service revenue and product revenue in the amount of $211.0 million and $542.3 million for the three and nine months ended September 30, 2018, respectively. See Note 1 to our condensed consolidated financial statements of this Quarterly Report for additional disclosure related to the revision.

Contract Balances

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, costs and estimated earnings ~~per share calculation~~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 September 30, 2019 and December 31, 2018:



(In millions)	September 30, 2019			December 31, 2018			$ change			% change
Contract assets	$	1,503.0		$	1,295.0		$	208.0		16.1
Contract (liabilities)	(4,122.5		)	(4,085.1		)	(37.4		)	(0.9	)
Net contract assets (liabilities)	$	(2,619.5	)	$	(2,790.1	)	$	170.6		6.1

The increase in our contract assets from December 31, 2018 to September 30, 2019 was ~~as follows:~~primarily due to the timing of milestones.

Three Months Ended Nine Months Ended
September 30, September 30,
(In millions, except per share data) 2017 2016 2017 2016
Net income attributable to TechnipFMC plc $ 121.0
$ 302.4
$ 267.2
$ 527.1
After-tax interest expense related to dilutive shares —
0.4
—
1.1
Net income attributable to TechnipFMC plc adjusted for dilutive effects 121.0
302.8
267.2
528.2
Weighted average number of shares outstanding 467.2
121.0
466.8
119.6
Dilutive effect of restricted stock units 0.7
—
0.1
—
Dilutive effect of stock options —
—
0.1
—
Dilutive effect of performance shares 1.8
0.7
1.3
0.5
Dilutive effect of convertible bonds —
5.2
—
5.2
Total shares and dilutive securities 469.7
126.9
468.3
125.3

Basic earnings per share attributable to TechnipFMC plc $ 0.26
$ 2.50
$ 0.57
$ 4.41
Diluted earnings per share attributable to TechnipFMC plc $ 0.26
$ 2.39
$ 0.57
$ 4.22

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 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 three months ended September 30, 2019 and 2018 that were included in the contract liabilities balance at December 31, 2018 and 2017 was $503.6 million and $678.1 million, respectively, and $1,984.4 million and $2,115.8 million for the nine months ended September 30, 2019 and 2018, respectively.

In addition, revenue recognized for the three months ended September 30, 2019 and 2018 from our performance obligations satisfied in previous periods had a favorable impact of $281.7 million and an favorable impact of $182.5 million, respectively, and favorable impacts of $775.1 million and $489.2 million for the nine months ended September 30, 2019 and 2018, respectively. This primarily relates to changes in the estimated costs to complete certain projects.

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 September 30, 2019, the aggregate amount of the transaction

price allocated to order backlog was $24,115.3 million. The Company expects to recognize revenue on approximately 15.6% of the order backlog through 2019 and 84.4% thereafter.

The following table details the order backlog for each business segment as of September 30, 2019:



(In millions)	2019		2020		Thereafter
Subsea	$	1,425.6	$	4,251.0	$	2,979.2
Onshore/Offshore	2,084.5		5,254.4		7,691.9
Surface Technologies	257.2		171.5		—
Total remaining unsatisfied performance obligations	$	3,767.3	$	9,676.9	$	10,671.1

NOTE 7. BUSINESS SEGMENTS

Management’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 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 - designs and manufactures 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 products and 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) from equity method investments is included in computing segment operating profit. 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, and other revenue and other expense, net.

Segment revenue and segment operating profit were as follows:



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(In millions)	2019			2018			2019			2018
Segment revenue
Subsea	$	1,342.2		$	1,209.1		$	4,036.2		$	3,606.7
Onshore/Offshore	1,596.3			1,532.5			4,436.4			4,448.3
Surface Technologies	396.6			402.2			1,209.7			1,174.9
Total revenue	$	3,335.1		$	3,143.8		$	9,682.3		$	9,229.9

Segment operating profit (loss)
Subsea	$	(79.6	)	$	79.7		$	65.0		$	210.0
Onshore/Offshore	284.6			243.4			714.3			617.6
Surface Technologies	6.1			51.9			42.1			134.0
Total segment operating profit	$	211.1		$	375.0		$	821.4		$	961.6

Corporate items
Corporate expense^(a)	$	(128.8	)	$	(68.1	)	$	(361.4	)	$	(200.9	)
Net interest expense	(116.5		)	(106.0		)	(345.3		)	(244.3		)
Total corporate items	(245.3		)	(174.1		)	(706.7		)	(445.2		)
Income (loss) before income taxes^(b)	$	(34.2	)	$	200.9		$	114.7		$	516.4


(a)	Corporate expense primarily includes corporate staff expenses, legal reserve, share-based compensation expenses, other employee benefits, certain foreign exchange gains and losses, merger transaction, integration expenses, and separation expenses.


(b)	Includes amounts attributable to noncontrolling interests.

Segment assets were as follows:



(In millions)	September 30, 2019			December 31, 2018
Segment assets
Subsea	$	11,817.0		$	11,037.8
Onshore/Offshore	4,231.4			4,355.2
Surface Technologies	2,992.5			2,825.6
Intercompany eliminations	(30.6		)	(26.4		)
Total segment assets	19,010.3			18,192.2
Corporate ^(a)	5,769.4			6,592.3
Total assets	$	24,779.7		$	24,784.5


(a)	Corporate includes cash, deferred income tax balances, legal provisions, property, plant and equipment not associated with a specific segment, pension assets, the fair value of derivative financial instruments, and LIFO adjustments.

NOTE ~~5. IMPAIRMENT, RESTRUCTURING AND OTHER EXPENSE~~8. EARNINGS PER SHARE

~~Impairment, restructuring~~A reconciliation of the number of shares used for the basic and ~~other expense~~diluted earnings per share calculation was as follows:



	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(In millions, except per share data)	2019			2018		2019			2018
Net income (loss) attributable to TechnipFMC plc	$	(119.1	)	$	136.9	$	(1.2	)	$	337.7

Weighted average number of shares outstanding	446.9			454.5		448.6			460.0
Dilutive effect of restricted stock units	—			1.2		—			1.0
Dilutive effect of stock options	—			0.1		—			0.1
Dilutive effect of performance shares	—			3.2		—			2.9
Total shares and dilutive securities	446.9			459.0		448.6			464.0

Basic earnings (loss) per share attributable to TechnipFMC plc	$	(0.27	)	$	0.30	$	—		$	0.73
Diluted earnings (loss) per share attributable to TechnipFMC plc	$	(0.27	)	$	0.30	$	—		$	0.73

Three Months Ended Nine Months Ended
September 30, September 30,
(In millions) 2017 2016 2017 2016
Subsea $ 22.8
$ 3.7
$ 35.5
$ 24.0
Onshore/Offshore 28.9
5.2
0.9
69.8
Surface Technologies 7.8
—
12.0
—
Corporate and other (0.1 ) 1.3
8.4
15.9
Total impairment, restructuring and other expense $ 59.4
$ 10.2

$ 56.8
$ 109.7

~~Asset impairments—~~We conduct impairment tests on long-lived assets whenever events 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 sum of the undiscounted cash flows expected to result from the use and eventual disposition over the asset’s remaining useful life. Our review of recoverability of the carrying value of our assets considers several assumptions including the intended use and service potential of the asset.

~~Restructuring and other~~—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 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. In the nine months ended September 30, 2016, as part of our restructuring plan, we divested and deconsolidated our wholly owned subsidiaries Technip Germany Holding GmBH and Technip Germany GmBH.

NOTE 6.9. INVENTORIES

Inventories consisted of the following:



(In millions)	September 30, 2019		December 31, 2018
Raw materials	$	366.9	$	366.4
Work in process	250.5		146.4
Finished goods	794.5		738.4
Inventories, net	$	1,411.9	$	1,251.2

(In millions) September 30,
2017 December 31,
2016
Raw materials $ 250.8
$ 272.9
Work in process 175.1
36.1
Finished goods 587.8
64.6
1,013.7
373.6
Valuation adjustments (83.0 ) (38.9 )
Inventories, net $ 930.7
$ 334.7

NOTE 7.10. OTHER CURRENT ASSETS & OTHER CURRENT LIABILITIES

Other current assets consisted of the following:



(In millions)	September 30, 2019		December 31, 2018
Value-added tax receivables	$	389.5	$	305.8
Prepaid expenses	96.9		91.3
Other taxes receivables	87.4		85.0
Sundry receivables	81.5		87.0
Asset held for sale	17.6		9.6
Other	71.3		76.9
Total other current assets	$	744.2	$	655.6

(In millions) September 30,
2017 December 31, 2016
Value added tax receivables $ 484.3
$ 319.4
Other tax receivables 183.6
124.9
Prepaid expenses 132.1
106.4
Other 329.6
248.5
Other current assets $ 1,129.6
$ 799.2

Other current liabilities consisted of the following:



(In millions)	September 30, 2019		December 31, 2018
Warranty accruals and project contingencies	292.4		418.2
Value added tax and other taxes payable	219.8		214.3
Legal provisions	214.0		418.2
Redeemable financial liability	196.3		173.0
Provisions	103.5		135.5
Social security liability	101.1		112.3
Compensation accrual	71.7		87.3
Liabilities held for sale	21.0		16.2
Current portion of accrued pension and other post-retirement benefits	12.8		14.0
Other accrued liabilities	238.4		182.6
Total other current liabilities	$	1,471.0	$	1,771.6

NOTE 8.11. EQUITY METHOD INVESTMENTS

Our income ~~(loss)~~ from equity affiliates included in each of our reporting segments was as follows:


	Three Months Ended					Nine Months Ended					Three Months Ended				Nine Months Ended
	September 30,					September 30,					September 30,				September 30,
(In millions)	2017			2016		2017			2016		2019		2018		2019		2018
Subsea	$	18.7		$	37.1	$	40.4		$	27.1	$	23.3	$	15.7	$	49.5	$	52.0
Onshore/Offshore	(1.4		)	30.3		(1.0		)	45.7		2.6		0.7		4.5		18.6
Surface Technologies	—			—		—			—
Income from equity affiliates	$	17.3		$	67.4	$	39.4		$	72.8	$	25.9	$	16.4	$	54.0	$	70.6

Summarized financial information for our equity method investments is presented below:



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In millions)	2019		2018		2019			2018
Revenue	$	624.2	$	250.7	$	1,693.4		$	792.8
Gross profit	76.6		51.7		167.4			163.0
Net income (loss)	46.1		34.2		(60.9		)	97.0



(in millions)	September 30, 2019		December 31, 2018
Current assets	$	1,498.2	$	1,217.0
Noncurrent assets	4,364.8		4,026.7
Current liabilities	1,740.7		1,511.9
Noncurrent liabilities	1,475.9		1,177.2

NOTE ~~9. OTHER CURRENT LIABILITIES~~12. RELATED PARTY TRANSACTIONS

Receivables, 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 consolidated joint ventures, were as follows:

~~Other current liabilities~~Trade receivables consisted of receivables due from following related parties:



(In millions)	September 30, 2019		December 31, 2018
TP JGC Coral France SNC	$	38.9	$	31.6
TTSJV WLL	27.4		—
Technip Odebrecht PLSV CV	11.3		10.9
Anadarko Petroleum Company	4.5		4.9
Others	11.2		14.3
Total trade receivables	$	93.3	$	61.7

TP JGC Coral France SNC, TTSJV W.L.L. and Technip Odebrecht PLSV CV are equity method affiliates.

A member of our Board of Directors (the “Director”) served on the Board of Directors of Anadarko Petroleum Company (“Anadarko”) until August 2019. In August 2019, Anadarko was acquired by Occidental Petroleum Corporation (“Occidental”). As a result, the Director no longer serves as a member of the Board of Directors of Anadarko. The Director is not an officer or director of Occidental.

Trade payables consisted of payables due to following related parties:



(In millions)	September 30, 2019		December 31, 2018
Chiyoda	$	25.3	$	70.0
JGC Corporation	15.0		69.5
IFP Energies nouvelles	1.2		2.4
Dofcon Navegacao	0.2		2.5
Anadarko Petroleum Company	0.1		0.7
Magma Global Limited	—		0.6
Others	5.0		2.9
Total trade payables	$	46.8	$	148.6

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 Board of Directors is an executive officer of IFP Energies nouvelles.

Additionally, our note receivables balance was $79.0 million and $130.0 million at September 30, 2019 and December 31, 2018, respectively. The balance includes $76.3 million and $119.9 million with Dofcon Brasil AS at September 30, 2019 and December 31, 2018, respectively. Dofcon Brasil AS is a variable interest entity and accounted for as an equity method affiliate. These are included in other noncurrent assets on our consolidated balance sheets.

Revenue consisted of amount from following related parties:



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In millions)	2019		2018		2019		2018
TTSJV W.L.L.	$	27.9	$	—	$	107.4	$	—
TP JGC Coral France SNC	17.7		26.4		95.4		87.8
Anadarko Petroleum Company	26.3		33.6		67.1		109.1
Techdof Brasil AS	5.2		—		8.5		—
Dofcon Navegacao	1.4		—		7.1		—
JGC Corporation	0.4		—		6.4		—
Technip Odebrecht PLSV CV	2.1		—		6.1		—
Storengy	3.7		—		5.0		—
Altus Intervention	3.9		—		3.9		—
Others	3.7		12.8		11.6		28.7
Total revenue	$	92.3	$	72.8	$	318.5	$	225.6

Expenses consisted of amount to following related parties:



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In millions)	2019		2018		2019		2018
Chiyoda	$	7.7	$	3.2	$	25.3	$	14.3
JGC Corporation	1.0		19.6		19.9		39.2
Serimax Holdings SAS	—		—		17.7		—
Arkema S.A.	6.4		—		16.2		—
Magma Global Limited	—		—		3.2		—
IFP Energy nouvelles	1.8		0.8		2.8		3.1
Creowave OY	2.0		—		2.0		—
Amaja Oil	1.9		—		1.9		—
Jumbo Shipping	—		—		1.8		—
Altus Intervention	1.4		—		1.4		—
Competentia	0.8		—		1.3		—
Others	6.8		6.5		14.1		10.2
Total expenses	$	29.8	$	30.1	$	107.6	$	66.8

Serimax Holdings SAS is an equity affiliate. Amaja Oil is a joint venture partner. We own a minority interest in a Creowave OY joint venture.

Members of our Board of Directors serve on the Board of Directors for Arkema S.A., Altus Intervention, Jumbo Shipping, Competentia, and Storengy.

NOTE 13. DEBT

Long-term debt consisted of the following:



(In millions)	September 30, 2019			December 31, 2018
Revolving credit facility	$	—		$	—
Bilateral credit facilities	—			—
Commercial paper	1,639.7			1,916.1
Synthetic bonds due 2021	476.1			490.9
3.45% Senior Notes due 2022	500.0			500.0
5.00% 2010 Private placement notes due 2020	218.2			229.0
3.40% 2012 Private placement notes due 2022	163.6			171.8
3.15% 2013 Private placement notes due 2023	141.8			148.9
3.15% 2013 Private placement notes due 2023	136.4			143.1
4.00% 2012 Private placement notes due 2027	81.8			85.9
4.00% 2012 Private placement notes due 2032	109.1			114.5
3.75% 2013 Private placement notes due 2033	109.1			114.5
Bank borrowings	312.1			265.2
Other	29.6			23.2
Unamortized issuing fees	(9.3		)	(11.4		)
Total debt	3,908.2			4,191.7
Less: current borrowings	299.4			67.4
Long-term debt	$	3,608.8		$	4,124.3

(In millions) September 30,
2017 December 31, 2016
Accruals on completed contracts $ 306.6
$ 271.9
Deferred income on contracts 414.9
407.6
Contingencies related to contracts 439.7
370.1
Other taxes payable 261.7
143.5
Social security liability 110.6
66.3
Redeemable financial liability 77.0
33.7
Other 825.8
532.2
Total other current liabilities $ 2,436.3
$ 1,825.3

~~NOTE 10. DEBT~~

~~Long-term debt consisted of the following:~~

(In millions) September 30,
2017 December 31,
2016
Revolving credit facility $ —
$ —
Bilateral credit facilities —
—
Commercial paper 839.8
210.8
Synthetic bonds due 2021 490.9
428.0
Convertible bonds due 2017 —
524.5
2.00% Senior Notes due 2017 300.0
—
3.45% Senior Notes due 2022 500.0
—
5.00% Notes due 2020 236.3
209.7
3.40% Notes due 2022 177.9
158.0
3.15% Notes due 2023 153.3
136.1
3.15% Notes due 2023 148.1
131.4
4.00% Notes due 2027 88.9
79.0
4.00% Notes due 2032 114.1
101.2
3.75% Notes due 2033 114.8
101.8
Bank borrowings 437.0
452.1
Other 39.5
20.3
Total long-term debt 3,640.6
2,552.9
Less: current portion (473.2 ) (683.6 )
Long-term debt, less current portion $ 3,167.4
$ 1,869.3

~~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. and Technip Eurocash SNC (the “Borrowers”) with JPMorgan Chase Bank, National Association, 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. The facility expires in January 2022.

~~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~~Bilateral credit facilities ~~of this type, including financial covenants.~~

~~Bilateral credit facilities~~—- We have access to ~~four~~a €100.0 million bilateral credit ~~facilities~~facility expiring in ~~the aggregate of €340.0 million. The~~May 2021. Two bilateral ~~credit facilities consist of:~~

~~two~~ credit facilities of €80.0 million each ~~expiring in May 2019;~~

and a bilateral credit facility of ~~€80.0~~€60.0 million ~~expiring in June 2019; and~~

~~a credit facility of €100.0 million expiring~~expired in May ~~2021.~~and June 2019, respectively.

~~Each~~The 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 revolving 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 debt in the ~~condensed~~ consolidated balance sheets as of September 30, ~~2017~~2019 and December 31, ~~2016.~~2018. Commercial paper borrowings are issued at market interest rates. As of September 30, ~~2017,~~2019, our commercial paper borrowings had a weighted average interest rate of ~~1.56%~~2.52% on the U.S. dollar denominated borrowings and (0.26)% on the Euro denominated borrowings.

~~Synthetic bonds—On~~Bank borrowings - In January ~~25, 2016,~~2019, we ~~issued €375.0 million principal amount of 0.875% convertible bonds with~~executed 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 andsale-leaseback transaction to finance the purchase of a deepwater dive support vessel, Deep Discoverer (the “Vessel”) for the ~~call options.~~full transaction price of $116.8 million. The ~~Synthetic Bonds are~~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 lessor of the Vessel. It is a variable interest entity, which is fully consolidated in our ~~unsecured obligations.~~condensed consolidated financial statements. The ~~Synthetic Bonds will rank equally in right~~transaction was funded through debt of ~~payment with all of our existing and future unsubordinated debt.~~

~~The Synthetic Bonds issued~~$96.2 million which is primarily long-term, expiring 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 €48.8355.8, 2031.

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 3,464.6193 and a conversion price of €28.8632. 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.

~~Convertible bonds~~—On December 15, 2011, we issued 5,178,455 bonds convertible (the “2011-2017 Convertible Bonds”) into and/or exchangeable for new or existing shares (“OCEANE”) for approximately €497.6 million with a maturity date of January 1, 2017. Net proceeds from the issuance were used to partially restore our cash balance position following the acquisition of Global Industries, Ltd. in December 2011 for a cash consideration of $936.4 million.

~~At maturity, all outstanding amounts under the 2011-2017 Convertible Bonds were repaid.~~

~~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.

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 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 ~~11. OTHER LIABILITIES~~14. STOCKHOLDERS’ EQUITY

During the three months ended December 31, 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 asset acquisition upon our obtaining control and recognized a net gain of $7.7 millionCash dividends paid 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 three and nine months ended September 30, 2017 reflect the consolidated results of operations related to these entities.

In addition to the recognition of an intangible asset related to the acquired asset in the underlying 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, for which $33.7 million was recorded as other current liabilities. During the three and nine month periods ended September 30, 2017 we revalued the liability to reflect current expectations about the obligation. We recognized a loss of $73.3 million and $202.9 million for the three months and the nine months ended September 30, ~~2017, respectively. Changes in~~2019 was $174.7 million. Cash dividends paid during the ~~fair value~~nine months ended September 30, 2018 was $179.2 million.

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 dividends require the ~~financial liability~~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 ~~recorded as interest expense on the condensed consolidated statements~~not permitted to pay dividends out of ~~income. Refer to Note 9~~share capital, which includes share premium.

In December 2018, our Board of Directors authorized an extension of our share repurchase program for further information regarding our other current liabilities. Refer to Note 18 for further information regarding the fair value measurement assumptions of the mandatorily redeemable financial liability and related changes in its fair value.

~~NOTE 12. COMMITMENTS AND CONTINGENT LIABILITIES~~

~~Contingent liabilities associated with guarantees—In the ordinary course of business, we enter into standby letters of credit, performance bonds, surety bonds and other guarantees with financial institutions~~$300.0 million for the ~~benefit~~purchase of ordinary shares. We repurchased 4.0 million of ordinary shares for a total consideration of $92.7 million during the nine months ended September 30, 2019 under our ~~customers, vendors~~authorized share repurchase program. 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 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~~comprehensive income (loss) consisted of the following:

(In millions) September 30, 2017
Financial guarantees ⁽¹⁾
$ 839.6
Performance guarantees ⁽²⁾
3,733.8
Maximum potential undiscounted payments $ 4,573.4



(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 Noncontrolling interest
December 31, 2018	$	(1,234.4	)	$	(32.9	)	$	(92.4	)	$	(1,359.7	)	$	(4.0	)
Other comprehensive income (loss) before reclassifications, net of tax	(40.7		)	(32.1		)	1.4			(71.4		)	(3.1		)
Reclassification adjustment for net losses (gains) included in net income (loss), net of tax	—			(10.7		)	2.3			(8.4		)	—
Other comprehensive income (loss), net of tax	(40.7		)	(42.8		)	3.7			(79.8		)	(3.1		)
September 30, 2019	$	(1,275.1	)	$	(75.7	)	$	(88.7	)	$	(1,439.5	)	$	(7.1	)

~~_______________________~~ Reclassifications out of accumulated other comprehensive income (loss) consisted of the following:



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(In millions)	2019			2018			2019			2018
Details about Accumulated Other Comprehensive Income (loss) Components	Amount Reclassified out of Accumulated Other Comprehensive Loss												Affected Line Item in the Condensed Consolidated Statements of Income
Gains on foreign currency translation	$	—		$	41.1		$	—		$	41.1		Other income (expense), net

Gains (losses) on hedging instruments
Foreign exchange contracts	$	(3.1	)	$	(0.8	)	$	(15.6	)	$	2.8		Revenue
	1.6			1.1			6.5			6.2			Cost of sales
	—			(0.1		)	0.1			(0.1		)	Selling, general and administrative expense
	23.3			4.8			21.9			0.1			Other income (expense), net
	21.8			5.0			12.9			9.0			Income (loss) before income taxes
	4.7			1.2			2.2			1.8			Provision for income taxes (Note 17)
	$	17.1		$	3.8		$	10.7		$	7.2		Net income (loss)
Pension and other post-retirement benefits
Amortization of prior service credit (cost)	(1.0		)	(0.3		)	(2.7		)	(0.6		)	(a)
	(1.0		)	(0.3		)	(2.7		)	(0.6		)	Income (loss) before income taxes
	(0.1		)	—			(0.4		)	—			Provision for income taxes (Note 17)
	$	(0.9	)	$	(0.3	)	$	(2.3	)	$	(0.6	)	Net income (loss)

⁽¹⁾

(a)

~~Financial guarantees represent contracts that contingently require a guarantor to make payments to a guaranteed party based on changes~~These accumulated other comprehensive income components are included in ~~an underlying agreement that is related to an asset, a liability, or an equity security~~the computation of ~~the guaranteed party. These tend to be drawn down only if there is a failure to fulfill our financial obligations.~~


⁽²⁾	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.net periodic pension cost.

~~Contingent liabilities associated with legal matters—~~

NOTE 15. SHARE-BASED COMPENSATION

Under the TechnipFMC plc Incentive Award Plan (the “Plan”), we grant certain incentives and awards to officers, employees, non-employee directors and consultants of TechnipFMC and its subsidiaries. Awards may include share options, share appreciation rights, performance stock units, restricted stock units, restricted shares or other awards authorized under the Plan. Under the Plan, 24.1 million ordinary shares were authorized for awards.

We ~~are involved in various pending or potential legal actions or disputes in~~recognize compensation expense and the ~~ordinary course of our business. Management is unable to predict~~corresponding tax benefits for awards under the ~~ultimate outcome of these actions because of their inherent uncertainty. However, management believes that~~Plan. Share-based compensation expense for non-vested share options and time-based and performance-based restricted stock units $19.9 million and $15.9 million for 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.~~three months ended September 30, 2019 and 2018, respectively, and $61.4 million and $41.7 million for the nine months ended September 30, 2019 and 2018, respectively.

NOTE ~~13. STOCKHOLDERS’ EQUITY~~16. IMPAIRMENT, RESTRUCTURING AND OTHER EXPENSES

~~There~~Impairment, restructuring and other expenses were ~~no cash dividends declared~~as follows:



	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(In millions)	2019		2018			2019		2018
Subsea	$	131.2	$	5.0		$	138.0	$	19.1
Onshore/Offshore	5.2		(0.2		)	11.1		(5.8		)
Surface Technologies	0.7		1.3			3.4		8.0
Corporate and other	3.2		3.6			13.5		11.3
Total impairment, restructuring and other expenses	$	140.3	$	9.7		$	166.0	$	32.6

Restructuring charges during ~~the nine months ended September 30, 2017 and 2016.~~

Dividends paid during the nine months ended September 30, 2016 for dividends declared for the year ended December 31, 2015 were €236.6 million. The dividends were paid partially in cash and shares. Dividends paid in cash and shares were €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). As of September 30, 2017 we had distributable reserves in excess of $10.1 billion.

~~The following is a summary of our capital stock activity for the nine months ended September 30, 2017 and 2016:~~

(Number of shares in millions) Ordinary Shares Issued
Ordinary Shares
Held in
Employee
Benefit Trust
Treasury Stock
Balance as of December 31, 2015 119.0
—
0.8
Stock awards 0.1
—
(0.3 )
Treasury stock purchases —
—
2.6
Dividends paid 3.2
—
—
Balance as of September 30, 2016 122.3
—
3.1

Balance as of December 31, 2016 119.2
—
0.3
Net capital increases due to the merger of FMC Technologies and Technip 347.4
—
—
Stock awards 0.6
—
—
Treasury stock cancellation due to the merger of FMC Technologies and Technip —
—
(0.3 )
Treasury stock purchases —
—
0.1
Treasury stock cancellations (0.1 ) —
(0.1 )
Net stock purchased for (sold from) employee benefit trust —
0.1
—
Balance as of September 30, 2017 467.1
0.1
—

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. We repurchased $3.6 million of ordinary shares during the nine months ended September 30, 2017 under our authorized share repurchase program. Based upon the remaining share authorization amount and the closing stock price as of September 30, 2017, approximately 18.4 million ordinary shares could be subject to repurchase. 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 loss consisted of the following:~~

(In millions)
Foreign Currency
Translation
Available-For-Sale Securities Hedging Instruments Defined Pension and Other Post-retirement Benefits
Accumulated Other
Comprehensive Loss
Accumulated other comprehensive loss as of December 31, 2016 $ (849.8 ) $ —
$ (126.9 ) $ (80.7 ) $ (1,057.4 )
Other comprehensive income (loss) before reclassifications, net of tax (34.7 ) —
74.9
(4.0 ) 36.2
Reclassification adjustment for net losses (gains) included in net income, net of tax —
—
74.3
1.8
76.1
Other comprehensive income (loss), net of tax (34.7 ) —
149.2
(2.2 ) 112.3
Accumulated other comprehensive income (loss) (884.5 ) —
22.3
(82.9 ) (945.1 )
Accumulated other comprehensive income attributable to noncontrolling interest (0.7 ) —
—
—
(0.7 )
Accumulated other comprehensive income (loss) attributable to TechnipFMC as of September 30, 2017 $ (885.2 ) $ —
$ 22.3
$ (82.9 ) $ (945.8 )

~~Reclassifications out of accumulated other comprehensive loss consisted of the following:~~

Three Months Ended Nine Months Ended
(In millions) September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
Details about Accumulated Other Comprehensive Loss Components
Amount Reclassified out of Accumulated Other
Comprehensive Loss
Affected Line Item in the Condensed Consolidated Statements of Income
Gains (losses) on available-for-sale securities $ —
$ —
$ —
$ —
Other expense, net

Gains (losses) on hedging instruments
Foreign exchange contracts: $ (6.3 ) $ —
$ (31.6 ) $ —
Revenue
0.2
—
1.7
—
Cost of sales
0.5
—
0.7
—
Selling, general and administrative expense
—
—
(0.1 ) —
Research and development expense
(20.4 ) (18.1 ) (70.6 ) (107.9 ) Other (expense), net
(26.0 ) (18.1 ) (99.9 ) (107.9 ) Income before income taxes
(6.3 ) (4.3 ) (25.6 ) (31.5 ) Provision (benefit) for income taxes
$ (19.7 ) $ (13.8 ) $ (74.3 ) $ (76.4 ) Net income
Defined pension and other post-retirement benefits
Amortization of actuarial gain (loss) $ (0.7 ) $ (0.2 ) $ (1.9 ) $ (0.7 )
^(a)
Amortization of prior service credit (cost) (0.3 ) (0.2 ) (0.6 ) (0.6 )
^(a)
(1.0 ) (0.4 ) (2.5 ) (1.3 ) Income before income taxes
(0.3 ) (0.1 ) (0.7 ) (0.4 ) Provision (benefit) for income taxes
$ (0.7 ) $ (0.3 ) $ (1.8 ) $ (0.9 ) Net income

~~_______________________~~



~~(a)~~	~~These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see Note 15 for additional details).~~

~~NOTE 14. INCOME TAXES~~

As a result of the Merger described in Note 2, 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 19.3% 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. The Merger transaction was generally a non-taxable event for the significant jurisdictions in which we operate.

Our income tax provision (benefit) for the three months ended September 30, 2017 and 2016, reflected effective tax rates of 48.6% and 25.4%, respectively. Our income tax provision (benefit) for the nine months ended September 30, 2017 and 2016, reflected effective tax rates of 48.8% and 22.6%, respectively. The year-over-year increases in the effective tax rate were primarily due to an unfavorable change in the forecasted country mix of earnings and increases in our valuation allowances due to additional losses generated for which no tax benefit is expected to be realized. In addition, individual tax items, combined with lower profitability in the current period, had a greater impact on the effective rate in the three and nine months ended September 30, ~~2017 as compared to the same periods in 2016.~~

~~The effective income tax rate was different from the statutory income tax rate due to the following:~~

Three Months Ended September 30, Nine Months Ended September 30,
(In millions) 2017 2016 2017 2016
Statutory income tax rate 19.3 % 34.4 % 19.3 % 34.4 %
Net difference resulting from:
Foreign earnings subject to different tax rates 10.8 % (14.2 )% 9.4 % (17.9 )%
Branch profits tax 0.5 % — % (1.4 )% — %
Deemed dividends 0.4 % — % 1.4 % — %
State, local and provincial tax 2.6 % 2.0 % 5.1 % 3.3 %
Valuation allowance 12.9 % 5.2 % 13.9 % 7.0 %
Other 2.1 % (2.0 )% 1.1 % (4.2 )%
Effective tax rate 48.6 % 25.4 % 48.8 % 22.6 %

~~NOTE 15. PENSION AND OTHER POST-RETIREMENT BENEFITS~~

~~The components~~2019 and 2018 primarily consisted of ~~net periodic benefit cost were as follows:~~

Pension Benefits
Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(In millions) U.S. Int’l U.S. Int’l U.S. Int’l U.S. Int’l
Service cost $ 2.7
$ 5.9
$ —
$ 2.9
$ 7.6
$ 15.8
$ —
$ 8.8
Interest cost 7.0
5.5
—
2.7
19.7
15.0
—
8.2
Expected return on plan assets (12.7 ) (9.7 ) —
(2.1 ) (35.9 ) (26.7 ) —
(6.3 )
Amortization of prior service cost (credit) —
0.3
—
0.2
—
0.6
—
0.6
Amortization of actuarial loss (gain), net —
0.7
—
0.2
—
1.9
—
0.7
Curtailment cost —
—
—
—
—
—
—
0.1
Net periodic benefit cost $ (3.0 ) $ 2.7
$ —
$ 3.9
$ (8.6 ) $ 6.6
$ —
$ 12.1

Other Post-retirement Benefits
Three Months Ended September 30, Nine Months Ended September 30,
(In millions) 2017 2016 2017 2016
Interest cost $ 0.1
$ —
$ 0.2
$ —
Net periodic benefit cost $ 0.1
$ —
$ 0.2
$ —

~~During the nine months ended September 30, 2017, we contributed $2.5 million to our U.S. pension benefit plans~~severance and ~~$24.9 million to our international pension benefit plans.~~

~~NOTE 16. STOCK-BASED COMPENSATION~~

On January 11, 2017, we adopted the 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 stock options, stock appreciation rights, performance units, restricted stock units, restricted stock or other awards authorized under the Plan. All awards are subject to the Plan’s provisions, including all stock-based grants previously issued by FMC Technologies and Technip prior to consummation of the Merger. Under the Plan, 24.1 million ordinary shares were authorized for awards.employee related costs.

We ~~recognize compensation expense and the corresponding tax benefits for awards under the Plan. Stock-based compensation expense for nonvested stock units was $10.2~~recorded a $125.1 million ~~and $5.5 million~~vessel impairment charge in Subsea for the three months ended September 30, ~~2017~~2019. See Note 21 for further details.

NOTE 17. COMMITMENTS AND CONTINGENT LIABILITIES

Contingent liabilities associated with guarantees - In the ordinary course of business, we enter into standby letters of credit, performance bonds, surety bonds and other guarantees with financial institutions for the benefit of our customers, vendors and other parties. The majority of these financial instruments expire within 5 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 consisted of the following:



(In millions)	September 30, 2019		December 31, 2018
Financial guarantees^(a)	$	924.2	$	750.4
Performance guarantees^(b)	4,773.1		4,047.6
Maximum potential undiscounted payments	$	5,697.3	$	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 and tax matters - We are involved in various pending or potential legal and tax 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, ~~respectively,~~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, ~~$34.9~~with regard to FMC Technologies, a related investigation by the U.S. Securities and Exchange Commission (“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 (“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 ~~$14.9~~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.

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 September 30, 2019 and December 31, 2018, and that the ultimate resolution of such matters will not materially affect our consolidated financial position, results of operations, or cash flows.

NOTE 18. INCOME TAXES

Our provision for income taxes for the three months ended September 30, 2019 and 2018 reflected effective tax rates of (237.1)% and 33.2%, respectively. The year-over-year increase in the effective tax rate for the three months ended September 30, 2019 and September 30, 2018 was primarily due to the increased impact of losses (including certain asset impairments) in jurisdictions with a full valuation allowance and an unfavorable change in earnings mix. Our provision for income tax for the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018 reflect effective tax rates of 84.1% and 35.0%, respectively.

~~NOTE 17. DERIVATIVE FINANCIAL INSTRUMENTS~~

For 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 anticipated foreign currency purchases and sales createdyear-over-year increase in the ~~normal course of business and not for trading purposes where the objective is solely to generate profit.~~

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~~tax 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 September 30, 2017, we held the following material net positions:

Net Notional Amount
Bought (Sold)
(In millions) USD Equivalent
Australian dollar 293.9
233.6
Brazilian real 755.6
238.6
British pound 233.9
315.7
Canadian dollar (188.4 ) (151.2 )
Euro 641.7
761.2
Japanese yen (1,507.6 ) (13.4 )
Malaysian ringgit 259.5
61.8
Norwegian krone (1,567.2 ) (196.9 )
Singapore dollar 65.0
48.0
U.S. dollar (1,259.1 ) (1,259.1 )

~~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. At September 30, 2017, our portfolio of these instruments included the following material net positions:~~

Net Notional Amount
Bought (Sold)
(In millions) USD Equivalent
Norwegian krone (339.5 ) (42.7 )
U.S. dollar 49.2
49.2

Fair value amounts for all outstanding derivative instruments have been determined using available market information and commonly accepted valuation methodologies. Refer to Note 18 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.~~

September 30, 2017 December 31, 2016
(In millions) Assets Liabilities Assets Liabilities
Derivatives designated as hedging instruments:
Foreign exchange contracts:
Current – Derivative financial instruments $ 109.7
$ 83.9
$ 47.2
$ 183.0
Long-term – Derivative financial instruments 33.5
4.8
10.7
47.6
Total derivatives designated as hedging instruments 143.2
88.7
57.9
230.6
Derivatives not designated as hedging instruments:
Foreign exchange contracts:
Current – Derivative financial instruments 16.2
22.4
—
—
Long-term – Derivative financial instruments 3.3
7.6
—
—
Total derivatives not designated as hedging instruments 19.5
30.0
—
—
Long-term – Derivative financial instruments
– Synthetic Bonds – Call Option Premium
47.3
—
180.1
—
Long-term – Derivative financial instruments
– Synthetic Bonds – Embedded Derivatives
—
47.3
—
180.1
Total derivatives $ 210.0
$ 166.0
$ 238.0
$ 410.7

~~We recognized a gain of $10.8 million and a loss of $2.3 million for the three months ended September 30, 2017 and 2016, respectively, and a gain of $26.9 million and a loss of $2.1 million~~ for the nine months ended September 30, ~~2017~~2019 and ~~2016, respectively,~~2018 was primarily due to ~~hedge ineffectiveness as it was probable that~~ the ~~original~~increased impact of losses (including certain asset impairments) in jurisdictions with a full valuation allowance and an unfavorable change in forecasted ~~transaction would not occur. Cash flow derivative hedges~~earnings mix, offset in part by recognized tax benefits related to the finalization of ~~forecasted transactions, net~~previously estimated tax liabilities based on the filing of tax ~~which qualify for hedge accounting, resulted~~returns in ~~an accumulated other comprehensive gain~~certain jurisdictions and the release of ~~$22.3 million and~~ a ~~loss~~valuation allowance previously recorded against certain deferred tax assets in Brazil.

Our effective tax rate can fluctuate depending on our country mix of ~~$126.9 million at September 30, 2017, and December 31, 2016, respectively. We expect~~earnings, since our foreign earnings are generally subject to ~~transfer an approximate $25.7 million gain from accumulated OCI to earnings during~~higher tax rates than in 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 2020.~~United Kingdom.

~~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 Income
Gain (Loss) Recognized in
Income
Three Months Ended September 30, Nine Months Ended September 30,
(In millions) 2017 2016 2017 2016
Other income (expense), net $ 12.2
$ 25.5
$ 61.9
$ 37.0

The following tables present the location of gains (losses) on the consolidated statements of other comprehensive income and/or the consolidated statements of income related to derivative instruments designated as cash flow hedges.

Gain (Loss) Recognized in
OCI (Effective Portion)
Three Months Ended September 30, Nine Months Ended September 30,
(In millions) 2017 2016 2017 2016
Foreign exchange contracts $ 38.3
$ (51.2 ) $ 98.7
$ (14.8 )

Location of Cash Flow Hedge Gain (Loss) Reclassified from
Accumulated OCI into Income
Gain (Loss) Reclassified from Accumulated
OCI into Income (Effective Portion)
Three Months Ended September 30, Nine Months Ended September 30,
(In millions) 2017 2016 2017 2016
Foreign exchange contracts:
Revenue $ (6.3 ) $ —
$ (31.6 ) $ —
Cost of sales 0.2
—
1.7
—
Selling, general and administrative expense 0.5
—
0.7
—
Research and development expense —
—
(0.1 ) —
Other income (expense), net (20.4 ) (18.1 ) (70.6 ) (107.9 )
Total $ (26.0 ) $ (18.1 ) $ (99.9 ) $ (107.9 )

Location of Cash Flow Hedge Gain (Loss) Recognized in Income Gain (Loss) Recognized in Income (Ineffective Portion
and Amount Excluded from Effectiveness Testing)
Three Months Ended September 30, Nine Months Ended September 30,
(In millions) 2017 2016 2017 2016
Foreign exchange contracts:
Revenue $ 3.7
$ —
$ 7.9
$ —
Cost of sales (2.8 ) —
(7.3 ) —
Other income (expense), net 10.6
1.7
24.6
(2.9 )
Total $ 11.5
$ 1.7
$ 25.2
$ (2.9 )

~~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)
Three Months Ended September 30, Nine Months Ended September 30,
(In millions) 2017 2016 2017 2016
Foreign exchange contracts:
Revenue $ 0.7
$ —
$ 0.7
$ —
Cost of sales 0.1
—
(0.4 ) —
Other income (expense), net (5.6 ) 1.1
26.6
(1.4 )
Total $ (4.8 ) $ 1.1
$ 26.9
$ (1.4 )

~~Balance Sheet Offsetting~~—We execute derivative contracts only 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 September 30, 2017 and December 31, 2016, we had no collateralized derivative contracts. The following tables present both gross information and net information of recognized derivative instruments:

September 30, 2017 December 31, 2016
(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 $ 210.0
$ (33.3 ) $ 176.7
$ 238.0
$ (57.9 ) $ 180.1

September 30, 2017 December 31, 2016
(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 liabilities $ 166.0
$ (33.3 ) $ 132.7
$ 410.7
$ (57.9 ) $ 352.8

NOTE ~~18.~~19. DERIVATIVE FINANCIAL INSTRUMENTS

For 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 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.

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 September 30, 2019, we held the following material net positions:



	Net Notional Amount Bought (Sold)
(In millions)			USD Equivalent
Euro	987.4		1,077.2
Brazilian real	634.2		152.3
British pound	291.1		358.3
Norwegian krone	1,525.1		168.1
Malaysian ringgit	382.0		91.2
Singapore dollar	90.6		65.5
Japanese yen	4,155.0		38.5
Australian dollar	165.1		111.6
Mexican peso	(300.0	)	(15.2	)
Canadian dollar	(83.3	)	(63.0	)
U.S. dollar	(1,264.0	)	(1,264.0	)

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 September 30, 2019, our portfolio of these instruments included the following material net positions:



	Net Notional Amount Bought (Sold)
(In millions)			USD Equivalent
Brazilian real	6.6		1.6
Euro	(4.9	)	(5.3	)
U.S. dollar	2.8		2.8

Fair value amounts for all outstanding derivative instruments have been determined using available market information and commonly accepted valuation methodologies. See Note 20 to our condensed consolidated financial statements of this Quarterly Report 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:



	September 30, 2019				December 31, 2018
(In millions)	Assets		Liabilities		Assets		Liabilities
Derivatives designated as hedging instruments
Foreign exchange contracts
Current - Derivative financial instruments	$	97.5	$	217.6	$	83.8	$	127.7
Long-term - Derivative financial instruments	30.4		92.3		9.0		35.6
Total derivatives designated as hedging instruments	127.9		309.9		92.8		163.3
Derivatives not designated as hedging instruments
Foreign exchange contracts
Current - Derivative financial instruments	8.7		8.7		11.9		10.7
Long-term - Derivative financial instruments	—		—		0.1		0.1
Total derivatives not designated as hedging instruments	8.7		8.7		12.0		10.8
Long-term - Derivative financial instruments - Synthetic Bonds - Call Option Premium	15.7		—		9.2		—
Long-term - Derivative financial instruments - Synthetic Bonds - Embedded Derivatives	—		15.7		—		9.2
Total derivatives	$	152.3	$	334.3	$	114.0	$	183.3

Cash flow derivative hedges of forecasted transactions, net of tax, which qualify for hedge accounting, resulted in accumulated other comprehensive losses of $75.7 million and $33.0 million at September 30, 2019 and December 31, 2018, respectively. We expect to transfer an approximately $48.0 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.



	Gain (Loss) Recognized in OCI
	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(In millions)	2019			2018		2019			2018
Foreign exchange contracts	$	(47.0	)	$	16.5	$	(44.0	)	$	(24.0	)

The following represents the effect of cash flow hedge accounting on the consolidated statements of income for the three and nine months ended September 30, 2019 and 2018:



(In millions)	Three Months Ended September 30, 2019											Three Months Ended September 30, 2018
Total amount of income (expense) presented in the consolidated statements of income associated with hedges and derivatives	Revenue			Cost of sales			Selling, general and administrative expense		Other income (expense), net			Revenue			Cost of sales		Selling, 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	$	(3.1	)	$	1.6		$	—	$	23.3		$	(0.8	)	$	1.1	$	(0.1	)	$	4.8
Amounts excluded from effectiveness testing	2.6			(2.9		)	—		(8.6		)	(5.7		)	6.1		—			(26.6		)
Total cash flow hedge gain (loss) recognized in income	(0.5		)	(1.3		)	—		14.7			(6.5		)	7.2		(0.1		)	(21.8		)

Gain (loss) recognized in income on derivatives not designated as hedging instruments	(0.1		)	0.1			—		(19.4		)	—			0.2		—			(5.3		)
Total	$	(0.6	)	$	(1.2	)	$	—	$	(4.7	)	$	(6.5	)	$	7.4	$	(0.1	)	$	(27.1	)



(In millions)	Nine Months Ended September 30, 2019											Nine Months Ended September 30, 2018
Total amount of income (expense) presented in the consolidated statements of income associated with hedges and derivatives	Revenue			Cost of sales			Selling, general and administrative expense		Other income (expense), net			Revenue			Cost of sales		Selling, 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)	$	(15.6	)	$	6.5		$	0.1	$	21.9		$	2.8		$	6.2	$	(0.1	)	$	0.1
Amounts excluded from effectiveness testing	1.5			(5.1		)	—		(30.7		)	(4.9		)	4.1		—			(23.4		)
Total cash flow hedge gain (loss) recognized in income	(14.1		)	1.4			0.1		(8.8		)	(2.1		)	10.3		(0.1		)	(23.3		)

Gain (loss) recognized in income on derivatives not designated as hedging instruments	(1.2		)	—			—		(14.4		)	(0.9		)	0.4		—			(6.9		)
Total	$	(15.3	)	$	1.4		$	0.1	$	(23.2	)	$	(3.0	)	$	10.7	$	(0.1	)	$	(30.2	)

Balance Sheet Offsetting - We execute derivative contracts only 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 September 30, 2019 and December 31, 2018, we had no collateralized derivative contracts. The following tables present both gross information and net information of recognized derivative instruments:



	September 30, 2019							December 31, 2018
(In millions)	Gross Amount Recognized		Gross Amounts Not Offset, But Permitted Under Master Netting Agreements			Net Amount		Gross Amount Recognized		Gross Amounts Not Offset, But Permitted Under Master Netting Agreements			Net Amount
Derivative assets	$	152.3	$	(136.4	)	$	15.9	$	114.0	$	(105.9	)	$	8.1
Derivative liabilities	$	334.3	$	(136.4	)	$	197.9	$	183.3	$	(105.9	)	$	77.4

NOTE 20. FAIR VALUE MEASUREMENTS

Assets and liabilities measured at fair value on a recurring basis were as follows:



	September 30, 2019								December 31, 2018
(In millions)	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Assets
Investments
Equity securities^(a)	$	50.7	$	50.7	$	—	$	—	$	40.4	$	40.4	$	—	$	—
Money market fund	1.6		—		1.6		—		1.6		—		1.6		—
Stable value fund^(b)	2.2		—		—		—		0.5		—		—		—
Held-to-maturity debt securities	60.0		—		60.0		—		20.0		—		20.0		—
Derivative financial instruments
Synthetic bonds - call option premium	15.7		—		15.7		—		9.2		—		9.2		—
Foreign exchange contracts	136.6		—		136.6		—		104.8		—		104.8		—
Assets held for sale	17.6		—		—		17.6		9.6		—		—		9.6
Total assets	$	284.4	$	50.7	$	213.9	$	17.6	$	186.1	$	40.4	$	135.6	$	9.6
Liabilities
Redeemable financial liability	$	288.8	$	—	$	—	$	288.8	$	408.5	$	—	$	—	$	408.5
Derivative financial instruments
Synthetic bonds - embedded derivatives	15.7		—		15.7		—		9.2		—		9.2		—
Foreign exchange contracts	318.6		—		318.6		—		174.1		—		174.1		—
Liabilities held for sale	21.0		—		—		21.0		16.2		—		—		16.2
Total liabilities	$	644.1	$	—	$	334.3	$	309.8	$	608.0	$	—	$	183.3	$	424.7

September 30, 2017 December 31, 2016
(In millions) Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3
Assets
Investments:
Nonqualified Plan:
Traded securities ⁽¹⁾
$ 27.5
$ 27.5
$ —
$ —
$ —
$ —
$ —
$ —
Money market fund 1.9
—
1.9
—
—
—
—
—
Stable value fund ⁽²⁾
0.8
—

Available-for-sale securities 24.6
24.6
—
—
27.9
27.9
—
—
Derivative financial instruments:
Synthetic bonds - call option premium 47.3
—
47.3
—
180.1
—
180.1
—
Foreign exchange contracts 162.7
—
162.7
—
57.9
—
57.9
—
Total assets $ 264.8
$ 52.1
$ 211.9
$ —
$ 265.9
$ 27.9
$ 238.0
$ —
Liabilities
Redeemable financial liability $ 301.1
$ —
$ —
$ 301.1
$ 174.8
$ —
$ —
$ 174.8
Derivative financial instruments:
Synthetic bonds - embedded derivatives 47.3
—
47.3
—
180.1
—
180.1
—
Foreign exchange contracts 118.7
—
118.7
—
230.6
—
230.6
—
Total liabilities $ 467.1
$ —
$ 166.0
$ 301.1
$ 585.5
$ —
$ 410.7
$ 174.8

~~_______________________~~


⁽¹⁾ (a)	Includes ~~equity securities,~~ fixed income and other investments measured at fair value.


⁽²⁾ (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.

~~Non-qualified plan—~~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. ~~Our stable~~

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.

~~Available-for-sale investments—~~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.

Assets and liabilities held for sale - The fair value ~~measurement~~ of our ~~available-for-sale investments is based on quoted prices~~assets and liabilities held for sale was determined using a market approach that ~~we have~~took into consideration the ~~ability to access in public markets.~~expected sales price.

Mandatorily redeemable financial ~~liability—We determined~~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. As part of this transaction, we recognized the fair value of the mandatorily redeemable financial liability using a discounted cash flow model. ~~Refer to Note 11 for further information related to this liability.~~ The key ~~assumption~~assumptions used in applying the income approach isare the selected discount rates and the expected dividends to be distributed in the future to the noncontrolling interest holders. Expected dividends to be distributed isare 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 $408.5 million was recognized as of December 31, 2018 to account for the fair value of the non-controlling interests. See Note 10 to our condensed consolidated financial statements of this Quarterly Report for additional disclosure related to the short-term portion of the mandatorily redeemable financial liability.

A decrease of one percentage point in the discount rate would have increased the liability by ~~$6.3~~$2.8 million as of September 30, ~~2017.~~2019. 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.

~~Changes~~

Change in the fair value of our Level 3 mandatorily redeemable financial liability is recorded as interest expense on the consolidated statements of income and is presented ~~below. Since~~below:



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(In millions)	2019			2018			2019			2018
Balance at beginning of period	$	412.8		$	308.1		$	408.5		$	312.0
Less: Gains (losses) recognized in net interest expense	(99.1		)	(93.2		)	(324.0		)	(213.5		)
Less: Settlements	223.1			—			443.7			124.2
Balance at end of period	$	288.8		$	401.3		$	288.8		$	401.3

Redeemable noncontrolling interest - In the ~~liability was created during~~first quarter of 2018, we acquired a 51% share in Island Offshore. The noncontrolling interest is recorded as mezzanine equity at fair value. The fair value measurement is based upon significant unobservable inputs not observable in the ~~three months ended~~market and is consequently classified as a Level 3 fair value measurement. As of September 30, 2019 and December 31, ~~2016, no changes in~~2018, the fair value ~~are presented~~of our redeemable noncontrolling interest was $38.5 million. See Note 3 to our condensed consolidated financial statements of this Quarterly Report for additional disclosure related to the ~~prior period.~~acquisition.

(In millions)
Nine Months Ended
September 30, 2017
Balance at beginning of period $ 174.8
Less: Gains (losses) recognized in profit and loss statement (202.9 )
Less: Settlements 76.6
Balance at end of period $ 301.1

Derivative financial ~~instruments—~~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.

At the present 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.

~~Refer~~See Note 19 to ~~Note 17~~our condensed consolidated financial statements of this Quarterly Report for additional disclosure related to derivative financial instruments.

Other fair value ~~disclosures:~~disclosures

Fair value of debt— - The respective carrying value and fair value of our Synthetic ~~Bonds,~~bonds and our Senior Notes and private placement notes ~~are~~on a combined basis as ~~follows:~~of September 30, 2019 was $1,926.8 million and $2,085.0 million, respectively. The respective carrying value and fair value of our Synthetic bonds and our Senior Notes and private placement notes on a combined basis as of December 31, 2018 were $1,998.6 million and $2,109.7 million.

September 30, 2017 December 31, 2016
(In millions)
Carrying Amount ⁽¹⁾

Fair Value ⁽²⁾

Carrying Amount ⁽¹⁾

Fair Value ⁽²⁾
Synthetic bonds due 2021 $ 490.9
$ 619.4
$ 428.0
$ 663.2
2.00% Senior Notes due 2017 300.0
300.0
—
—
3.45% Senior Notes due 2022 500.0
501.5
—
—
5.00% Notes due 2020 236.3
263.7
209.7
237.7
3.40% Notes due 2022 177.9
194.5
158.0
177.6
3.15% Notes due 2023 153.3
165.1
136.1
152.0
3.15% Notes due 2023 148.1
160.5
131.4
142.5
4.00% Notes due 2027 88.9
98.6
79.0
89.5
4.00% Notes due 2032 114.1
135.1
101.2
122.9
3.75% Notes due 2033 114.8
121.9
101.8
103.4

~~_______________________~~


⁽¹⁾	~~Carrying amounts are shown net of unamortized debt discounts and premiums and unamortized debt issuance costs.~~


⁽²⁾	Fair values are based on Level 1 quoted market rates, except for the 4.00% Notes due 2027 which is based on Level 2, quoted market rates on similar liabilities with an appropriate credit spread applied.

Other fair value ~~disclosures—~~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—~~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~~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 19. BUSINESS SEGMENTS~~

Upon completion of the Merger, we reorganized our reporting structure and aligned our segments and the underlying businesses to execute the strategy of TechnipFMC. As a result, we report the results of operations in the following segments: Subsea, Onshore/Offshore and Surface Technologies.

~~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 deepwater exploration and production of crude oil and natural gas.

~~Onshore/Offshore~~—designs and builds onshore facilities related to the production, treatment 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 for companies in the oil and gas industry.

~~Surface Technologies~~—designs and manufactures systems and provides services used by oil and gas companies involved in land and offshore 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 for exploration companies in the oil and gas industry.

Total revenue by segment includes intersegment sales, which are made at prices approximating those that the selling entity is able to obtain on external sales. Segment operating profit is defined as total segment revenue less segment operating expenses. Income (loss) from equity method investments is included in computing segment operating profit. Refer to Note 8 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, and other revenue and other expense, net.

~~Segment revenue and segment operating profit were as follows:~~

Three Months Ended Nine Months Ended
September 30, September 30,
(In millions) 2017 2016 2017 2016
Segment revenue
Subsea $ 1,478.2
$ 1,560.3
$ 4,585.2
$ 4,624.7
Onshore/Offshore 2,308.1
815.4
5,885.0
2,527.2
Surface Technologies 353.9
—
902.3
—
Other revenueand intercompany eliminations
0.7
—
1.4
—
Total revenue $ 4,140.9
$ 2,375.7
$ 11,373.9
$ 7,151.9
Income before income taxes:
Segment operating profit (loss):

Subsea $ 102.8
$ 282.0
$ 393.1
$ 669.9
Onshore/Offshore 206.4
70.9
553.7
139.8
Surface Technologies 49.0
—
29.4
—
Total segment operating profit 358.2
352.9
976.2
809.7
Corporate items:
Corporate expense ⁽¹⁾
(42.3 ) 51.7
(224.3 ) (108.4 )
Net interest expense (86.3 ) (0.4 ) (240.5 ) (21.4 )
Total corporate items (128.6 ) 51.3
(464.8 ) (129.8 )
Income before income taxes ⁽²⁾
$ 229.6
$ 404.2
$ 511.4
$ 679.9

~~_______________________~~


⁽¹⁾	Corporate expense primarily includes corporate staff expenses, stock-based compensation expenses, other employee benefits, certain foreign exchange gains and losses, and merger-related transaction expenses.


⁽²⁾	~~Includes amounts attributable to noncontrolling interests.~~

~~Segment assets were as follows:~~

(In millions) September 30, 2017 December 31, 2016
Segment assets:
Subsea $ 13,757.6
$ 7,823.1
Onshore/Offshore 5,114.5
3,229.3
Surface Technologies 2,413.6
—
Intercompany eliminations (17.0 ) —
Total segment assets 21,268.7
11,052.4
Corporate ⁽¹⁾
8,359.5
7,637.3
Total assets $ 29,628.2
$ 18,689.7

~~_______________________~~


⁽¹⁾	Corporate includes cash, LIFO adjustments, deferred income tax balances, property, plant and equipment not associated with a specific segment, pension assets and the fair value of derivative financial instruments.

NOTE ~~20.~~21. SUBSEQUENT EVENT

~~Dividends declared~~—OnIn October ~~25, 2017,~~2019, we ~~announced~~entered into an agreement to obtain voting control interests of legal entities that own the interest in Technip Odebrecht, currently accounted for as an equity method investment in our Board of Directors had authorized and declared an initial quarterly cash dividend of $0.13 per ordinary share to be paid to shareholders of record as of November 21, 2017. The ex-dividend date will be November 20, 2017, and the payment dateSubsea segment. This transaction is expected to beclose by December 31, 2019.

In November 2019, we announced our intent to sell our G1201 vessel as part of our overall strategy to optimize the profile and size of our subsea fleet. We entered into a Memorandum of Agreement (MOA), which is subject to certain conditions precedent to complete the transaction. We expect to complete the sale in December 2019, as these conditions are met, including delivery of the vessel in December 2019.

Due to this transaction we reviewed the carrying value of the G1200 vessel, the sister vessel to the G1201, of similar design, asset class and functionality, as of September 30, 2019. As a result of this assessment, an impairment charge of $125.1 million was recorded on ~~or shortly after December 1, 2017.~~

the two vessels.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

BUSINESS OUTLOOK

Overall ~~Outlook—~~Outlook - The price of crude oil ~~recovered in 2016 when compared to~~has been on a gradual upward trend since the ~~prior year, and the price has remained stable throughout much of 2017. Nonetheless, the oil and gas industry continues to experience the overall impacts of the steep decline in crude oil prices~~cyclical trough experienced in ~~prior years and there are some lingering uncertainties in the crude oil~~early 2016, although with continued price outlook. Despite OPEC’s implementation of a cap on crude oil production in 2017, uncertainty in the crude oil price outlook remains as to the effectiveness and duration of both concurrent OPEC and non-OPEC production cuts, the associated impact on worldwide production, and inventory levels.volatility. The sustainability of the ~~crude oil~~ price recovery and business activity levels is dependent on ~~a number of~~several variables, ~~but many analysts continue~~including geopolitical stability, OPEC’s actions to ~~believe the market corrections necessary to address the oversupply of crude oil are~~regulate its production capacity, changes in ~~place~~demand patterns, and ~~beginning to contribute to sustainable industry improvement. As~~international sanctions and tariffs. However, as long-term demand ~~rises~~is forecast to rise and base production continues to naturally decline, we believe ~~commodity prices should continue to demonstrate an ability for continued improvement, increasing both~~the macroeconomic backdrop will provide our ~~cash flows and the~~customers with greater confidence ~~of our customers~~ to increase their investments in new sources of oil and natural gas production.

~~Subsea—~~Subsea - The ~~low~~impact of the crude oil price ~~environment over~~decline earlier this decade and the ~~last two years~~subsequent low price environment led many of our customers to reduce their capital spending plans orand defer new ~~deepwater~~offshore projects. ~~We began to reduce~~During this period, we lowered our cost base through reductions in both workforce and ~~adjust~~physical manufacturing ~~capacity~~capacity. These actions led to ~~align~~improved cost efficiency and helped mitigate some of the negative impacts to our ~~operations with~~operating profit caused by the ~~anticipated decreases in~~lower activity ~~in 2016 due~~and reduced pricing. However, we remain committed to ~~delayed Subsea project inbound,~~further developing and to mitigate the impact to operating margins. We have benefited from these restructuring actions by attaining more cost-effective manufacturing and we continue to take additional actions as business activity continues to slow. Subsea revenue will decrease in 2017 for the third consecutive year. However, even with lower Subsea revenue expectations, the operational improvements and cost reductions made in the prior year, combined with additional actions taken in the current year, have protected operating margins in 2017, while still providing us with the capability to respond to the eventual market recovery. We also recognize the need to continue to investinvesting in our people and assets to ensure ~~that~~ we ~~preserve~~have the core competencies and capabilities ~~that are delivering the strong results in 2017 and will be needed to respond to~~necessary for continued success during the market recovery.

Our lowered cost base combined with the aggressive cost reductions taken by our customers ~~are continuing to take aggressive actions to improve their~~has caused project economics to improve. Many current and wefuture offshore projects are ~~monitoring customer activity in the context of~~deemed to be economic at current oil ~~prices. The risk~~pricing level. While customer investment decisions can be delayed for a variety of project sanctioning delays continues to be high in the current environment, however, project economics have improved considerably now, and consequently, many offshore discoveries could be developed economically at today’s crude oil prices. Wereasons, we continue to work closely with our customers through early engagement in front end engineering and ~~believe that with~~design (FEED) studies and the use of our unique ~~business model we~~integrated approach to subsea development (iEPCI™) to allow more project final investment decisions through the cycle. iEPCI™ can ~~further~~support clients’ initiatives to improve subsea project economics by helping to reduce their project break-even levels by offering cost-effective approaches to their project developments, including customer acceptance of integrated business models to help achieve the cost-reduction goalscost and accelerate ~~achievement of~~time to first oil. In the long term, we continue to believe that ~~deep-water development~~offshore and deepwater developments will remain a significant part of our customers’ portfolios. ~~However, further delays~~

The outlook for the subsea industry continues to improve. We remain encouraged by the increased level of client engagement and project tendering. We have experienced growth in ~~project sanctions in~~both the ~~near term would lead us~~volume and value of subsea projects that have the potential for sanctioning over the intermediate term. Increased activity will also benefit the industry’s underutilized manufacturing and vessel capacity that has contributed to ~~take further actions to ensure our cost base is aligned with~~ the ~~market outlook.~~pricing pressure.

Onshore/~~Offshore—The~~ Offshore ~~market faces many of the same constraints as the Subsea business due to industry challenges to improve project economics. Meanwhile,~~ - Onshore market activity continues to provide a tangible set of opportunities, ~~and in particular~~particularly for natural gas monetization projects, as natural gas continues to take a larger share of global energy demand. ~~Activity~~Market conditions for liquefied natural gas (“LNG”) have improved as rising demand continues to rebalance an oversupplied market, which is driving an improved outlook.

We are engaged in LNG is fueled by the potential for sustained modest natural gas prices, representing an important opportunity set for our business. We remain confident that the industry will make further LNG investments in the near to intermediate term. We also see opportunities for refining and petrochemical projects - areas that we know well. As Onshore market activity levels remain stable, it provides our business with the opportunity to remain actively engaged in and pursuing front-end engineeringFEED studies ~~which~~across multiple geographies. These FEED studies provide ~~the~~a platform for early engagement with clients ~~which~~and can significantly de-risk project ~~execution. Market opportunities for downstream front-end engineering studies and full~~execution while also supporting our pursuit of the engineering, procurement and construction contract.

Since June of 2019, a total of five LNG projects have been sanctioned or awarded initial scope ahead of final investment decision. Two of these projects - Arctic LNG 2 and Rovuma LNG - were awarded to TechnipFMC and our partners. We see potential for additional liquefaction and regasification capacity to be sanctioned in the near and intermediate term. As an industry leader, we are ~~most prevalent~~well positioned for this growth and are actively pursuing several opportunities.

Additionally, we continue to selectively pursue refining, petrochemical, and fertilizer project opportunities in the Middle East, Africa, Asia, and ~~Asia markets in LNG, refining and petrochemicals.~~North American markets.

Surface ~~Technologies—While~~Technologies - After a period of rapid growth, the North America ~~rig count~~unconventional market is undergoing near-term volatility. Completions activity was reduced in the second half of 2018, stemming from pipeline take-away capacity constraints and ~~operating~~exhaustion of operator capital budgets for exploration and production. Hydraulic fracturing activity ~~have steadily improved over~~slowed, particularly in the ~~last year, the recovery has been constrained~~Permian basin.

North American activity continued to ~~certain oil and gas producing basins that have the ability to generate acceptable returns. The market recovery began~~decline in ~~late 2016 in North America and has continued through~~ the first nine months of ~~2017. To our benefit, we have experienced stronger demand for pressure control equipment~~2019 in both drilling and completions-related activities. Reduced operator spending, mainly driven by ~~this~~ increased capital discipline and by oil-price volatility, has also negatively impacted equipment and services pricing as the market adjusts to the excess capacity created by the lower activity. ~~The pace of~~

~~improvement is likely to slow with expectations of more moderate rig count growth. However, our restructuring actions taken in 2016 have reduced costs, and accordingly,~~Despite the near-term volatility, we are ~~presently capturing the economic benefits of the higher activity levels.~~ continuing to introduce new, innovative commercial models in North America.

Activity in our ~~international surface~~Surface Technologies business outside of North America has been ~~strong but continues to experience competitive pricing pressure. Pricing~~more resilient. Activity has ~~stabilized but~~increased in the first nine months of 2019 compared with first nine months of 2018 and we ~~have not seen significant recovery. We~~ expect ~~this competitive pricing environment~~activity to continue ~~and~~ to ~~have some negative impact on operating margins into~~be strong throughout the ~~first half~~remainder of ~~2018.~~2019.

~~Pro Forma Results of Operations~~

Unaudited supplemental pro forma results of operations for the three months and nine months ended September 30, 2016 present consolidated information as if (i) the Merger and (ii) the consolidation of legal onshore/offshore contract entities which own and account for the design, engineering and construction of the Yamal LNG plant (“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. In order to provide comparability to the prior year pro forma results, the impact of purchase price accounting adjustments have been reflected on an equal basis.

~~Refer to Note 2 for further information related to the Merger and refer to Note 11 for further information related to Yamal.~~

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 three and nine months ended September 30, 2017 to pro forma results of operations for the three and nine months ended September 30, 2016.

CONSOLIDATED RESULTS OF OPERATIONS OF TECHNIPFMC PLC

THREE MONTHS ENDED SEPTEMBER 30, ~~2017~~2019 AND ~~2016~~

2018

Three Months Ended September 30,
Change
(2017 vs. 2016 Pro Forma)
(In millions, except %) 2017
2016
Pro Forma**
2016 $ %
Revenue $ 4,140.9
$ 5,038.2
$ 2,375.7
(897.3 ) (17.8 )
Costs and expenses:
Cost of sales 3,468.2
4,294.7
1,931.0
(826.5 ) (19.2 )
Selling, general and administrative expense 284.4
282.8
143.0
1.6
0.6
Research and development expense 51.1
45.3
22.0
5.8
12.8
Impairment, restructuring and other expense 59.4
34.0
10.2
25.4
74.7
Merger transaction and integration costs 9.2
44.6
14.0
(35.4 ) (79.4 )
Total costs and expenses 3,872.3
4,701.4
2,120.2
(829.1 ) (17.6 )
Other income (expense), net 30.0
81.0
81.7
(51.0 ) (63.0 )
Net interest expense (86.3 ) (13.9 ) (0.4 ) (72.4 ) *
Income from equity affiliates 17.3
46.5
67.4
(29.2 ) (62.8 )
Income before income taxes 229.6
450.4
404.2
(220.8 ) (49.0 )
Provision for income taxes 111.7
110.4
102.5
1.3
1.2
Income from continuing operations 117.9
340.0
301.7
(222.1 ) (65.3 )
Loss from discontinued operations, net of income taxes —
(14.0 ) —
14.0
*
Net income 117.9
326.0
301.7
(208.1 ) (63.8 )
Net loss attributable to noncontrolling interests 3.1
1.0
0.7
2.1
*
Net income attributable to TechnipFMC plc $ 121.0
$ 327.0
$ 302.4
(206.0 ) (63.0 )

~~_______________________~~



*	~~Not meaningful~~
**	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 three months ended September 30, 2016.



	Three Months Ended
	September 30,						Change
(In millions, except %)	2019			2018			$		%
Revenue	$	3,335.1		$	3,143.8		191.3		6.1

Costs and expenses
Cost of sales	2,726.4			2,558.5			167.9		6.6
Selling, general and administrative expense	298.1			250.6			47.5		19.0
Research and development expense	40.6			38.6			2.0		5.2
Impairment, restructuring and other expenses (Note 16)	140.3			9.7			130.6		1,346.4
Separation costs (Note 2)	9.4			—			9.4		n/a
Merger transaction and integration costs	6.2			6.3			(0.1	)	(1.6	)
Total costs and expenses	3,221.0			2,863.7			357.3		12.5

Other income (expense), net	(57.7		)	10.4			(68.1	)	(654.8	)
Income from equity affiliates (Note 11)	25.9			16.4			9.5		57.9
Net interest expense	(116.5		)	(106.0		)	(10.5	)	(9.9	)
Income (loss) before income taxes	(34.2		)	200.9			(235.1	)	(117.0	)
Provision for income taxes (Note 18)	81.1			66.7			14.4		21.6
Net income (loss)	(115.3		)	134.2			(249.5	)	(185.9	)
Net (income) loss attributable to noncontrolling interests	(3.8		)	2.7			(6.5	)	(240.7	)
Net income (loss) attributable to TechnipFMC plc	$	(119.1	)	$	136.9		(256.0	)	(187.0	)

Revenue

Revenue ~~decreased $897.3~~increased $191.3 million or 6.1% in the third quarter of ~~2017~~2019 compared to the ~~prior-year~~third quarter onof 2018, primarily as a ~~pro forma basis, primarily resulting from a sharp decline~~result of increased project activity. Subsea revenue increased year-over-year with higher project-related activity and increased demand in ~~Subsea activities~~services. Onshore/Offshore revenue also increased with recent awards in the ~~Europe~~downstream, petrochemical, and ~~Africa region~~offshore sectors as well as a first contribution from Arctic LNG, partially offset by lower activity on Yamal LNG as the project nears completion. Surface Technologies’ revenue decreased modestly due to lower ~~order~~sales in North America resulting from lower drilling and completion activity, during 2015 and 2016, leading to a lower backlog of business coming into the current year. Revenue also modestly decreased for Onshore/Offshore businesses year-over-year on a pro forma basis, due to the completion of several projects since the prior year period, partiallylargely offset by ~~increased activity~~revenue growth in ~~the Middle East and Africa regions. Partially offsetting the net decreases in Subsea and Onshore/Offshore were the benefits of increased Surface well completion activities in North America.~~international markets.

Gross ~~profit~~Profit

Gross profit (revenue less cost of sales) ~~increased~~ as a percentage of sales decreased modestly to ~~16.2%~~18.3% in the third quarter of ~~2017,~~2019, from ~~14.8%~~18.6% in the prior-year quarter 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 and a more favorable cost structure, the successful progression of several major projects with good margin performance, and improved product mix related to fluid control sales.prior year period.

Selling, ~~general~~General and ~~administrative expense~~Administrative Expense

Selling, general and administrative expense increased ~~$1.6~~$47.5 million year-over-year, onprimarily as a ~~pro forma basis, resulting from higher expenses associated with long-term incentive plans and new grants, partially offset~~result of increased corporate expense driven largely by ~~the benefit of lower headcount across all reporting segments and decreased sales commissions.~~

accelerated IT spending.

Impairment, Restructuring and Other Expenses

In the $140.3 million of restructuring and ~~other expense~~

~~Impairment, restructuring and other expense increased by $25.4 million year-over-year on a pro forma basis. Impairment, restructuring and other expense for~~impairment charges during the third quarter of ~~2017 included $8.2~~2019, we recorded a $125.1 million ofvessel impairment ~~expense. In recent years, we have implemented restructuring plans across our businesses to reduce costs and better align our workforce with anticipated activity levels. In~~charge in Subsea for the ~~current period we have also incurred expenses of $10.9 million due to lost productivity associated with the impacts of Hurricane Harvey.~~three months ended September 30, 2019. See Note 21 for further details.

Merger ~~transaction~~Transaction and ~~integration costs~~Integration Costs

~~Merger transaction and~~We incurred integration costs of ~~$9.2~~$6.2 million ~~were incurred in~~during the third quarter of ~~2017~~2019, primarily due to integration expenses associated with the Merger. A significant portion of the expenses recorded in the period are related to facility lease termination charges, with a substantially lower portion related to integration activities pertaining to combining the two legacy companies.

Separation Costs

We have incurred $9.4 million of separation costs associated with the preparation of the spin-off transaction during the third quarter 2019. Refer to Note 2 ~~to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.~~for further information regarding the planned spin-off transaction.

Other ~~income~~Income (expense), ~~net~~Net

Other income (expense), net, primarily reflects foreign currency gains and losses, including gains and losses associated with the remeasurement of net cash positions. In the third quarter of ~~2017,~~2019, we recognized ~~$19.3~~$53.2 million of net foreign exchange ~~gains,~~losses, compared ~~with $83.5~~to $34.4 million of net foreign exchange ~~gains~~losses in the ~~prior year period.~~third quarter of 2018. Foreign exchange losses resulted from the devaluation of unhedged currencies, primarily the Angolan Kwanza.

Net ~~interest expense~~Interest Expense

~~The increase in interest expense was due to the changes in the fair value of the financial liability.~~ During ~~the~~ three ~~month period~~months ended September 30, ~~2017,~~2019, we revalued the mandatorily redeemable financial liability to reflect current expectations about the obligation and recognized a ~~loss~~charge of ~~$73.3 million.~~$99.1 million to reflect the incremental liability to our partners. Refer to Note ~~11 for further information regarding our other liabilities. Refer to Note 18~~20 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 lower by $4.6 million on a net basis compared to three months ended September 30, 2018.

Provision ~~(benefit)~~ for ~~income taxes~~Income Taxes

~~Our income~~The effective tax ~~provision~~rate was (237.1)% and 33.2% for the ~~third quarter of 2017~~three months ended September 30, 2019 and ~~the third quarter of 2016 on a historical basis reflected effective tax rates of 48.6% and 25.4%,~~2018, respectively. The year-over-year increase in the effective tax rate was primarily due to the increased impact of losses (including certain asset impairments) in jurisdictions with a full valuation allowance and an unfavorable change in ~~the forecasted~~earnings mix.

Our effective tax rate can fluctuate depending on our country mix of earnings, ~~and increases in~~since our ~~valuation allowance due~~foreign earnings are generally subject to ~~additional losses generated during the year for which no~~higher tax ~~benefit is expected to be realized. In addition, individual tax items, combined with lower profitability~~rates than in the ~~current period, had a greater impact on the effective rate in the three months ended September 30, 2017 as compared to the same period in 2016.~~United Kingdom.

CONSOLIDATED RESULTS OF OPERATIONS OF TECHNIPFMC PLC

NINE MONTHS ENDED SEPTEMBER 30, ~~2017~~2019 AND ~~2016~~

2018

Nine Months Ended September 30,
Change
(2017 vs. 2016 Pro Forma)
(In millions, except %) 2017
2016
Pro Forma**
2016 $ %
Revenue $ 11,373.9
$ 14,689.1
$ 7,151.9
$ (3,315.2 ) (22.6 )
Costs and expenses:
Cost of sales 9,610.5
12,648.4
5,863.7
(3,037.9 ) (24.0 )
Selling, general and administrative expense 806.5
934.9
434.0
(128.4 ) (13.7 )
Research and development expense 143.6
157.3
67.8
(13.7 ) (8.7 )
Impairment, restructuring and other expense 56.8
185.1
109.7
(128.3 ) (69.3 )
Merger transaction and integration costs 87.2
61.3
30.7
25.9
42.3
Total costs and expenses 10,704.6
13,987.0
6,505.9
(3,282.4 ) (23.5 )
Other income (expense), net 43.2
(28.8 ) (17.5 ) 72.0
*
Net interest expense (240.5 ) (14.5 ) (21.4 ) (226.0 ) *
Income from equity affiliates 39.4
28.9
72.8
10.5
36.3
Income from continuing operations before income taxes 511.4
687.7
679.9
(176.3 ) (25.6 )
Provision for income taxes 249.7
196.3
153.8
53.4
27.2
Income from continuing operations 261.7
491.4
526.1
(229.7 ) (46.7 )
Loss from discontinued operations, net of income taxes —
(14.0 ) —
14.0
*
Net income 261.7
477.4
526.1
(215.7 ) (45.2 )
Net loss attributable to noncontrolling interests 5.5
1.4
1.0
4.1
*
Net income attributable to TechnipFMC plc $ 267.2
$ 478.8
$ 527.1
$ (211.6 ) (44.2 )

~~_______________________~~



*	~~Not meaningful~~
**	~~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 nine months ended September 30, 2016.~~



	Nine Months Ended
	September 30,						Change
(In millions, except %)	2019			2018			$		%
Revenue	$	9,682.3		$	9,229.9		452.4		4.9

Costs and expenses
Cost of sales	7,883.5			7,505.3			378.2		5.0
Selling, general and administrative expense	919.7			835.1			84.6		10.1
Research and development expense	110.0			133.3			(23.3	)	(17.5	)
Impairment, restructuring and other expenses (Note 16)	166.0			32.6			133.4		409.2
Separation costs (Note 2)	9.4			—			9.4		n/a
Merger transaction and integration costs	31.2			20.9			10.3		49.3
Total costs and expenses	9,119.8			8,527.2			592.6		6.9

Other income (expense), net	(156.5		)	(12.6		)	(143.9	)	(1,142.1	)
Income from equity affiliates (Note 11)	54.0			70.6			(16.6	)	(23.5	)
Net interest expense	(345.3		)	(244.3		)	(101.0	)	(41.3	)
Income (loss) before income taxes	114.7			516.4			(401.7	)	(77.8	)
Provision for income taxes (Note 18)	96.5			180.7			(84.2	)	(46.6	)
Net income (loss)	18.2			335.7			(317.5	)	(94.6	)
Net (income) loss attributable to noncontrolling interests	(19.4		)	2.0			(21.4	)	(1,070.0	)
Net income (loss) attributable to TechnipFMC plc	$	(1.2	)	$	337.7		(338.9	)	(100.4	)

Revenue

Revenue ~~decreased $3,315.2~~increased $452.4 million or 4.9% in the first nine months of ~~2017~~2019 compared to the prior-year period, onprimarily as a ~~pro forma basis,~~result of improved project activity. Subsea revenue increased year-over-year with higher project-related activity and increased demand in services. Onshore/Offshore revenue was stable as a decrease in revenues from projects progressing towards completion, primarily ~~resulting from a sharp decline in Subsea activities~~Yamal LNG, was largely offset by increased project activity in the Europe and Africa region due to lower order activity during 2015 and 2016, leading to a lower backlog of business coming into the current year. The decrease was also attributable to the completion of several projects and lower 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 the year impacting our Middle East ~~North America~~ and ~~South America businesses.~~Asia Pacific regions. Surface Technologies revenue increased primarily as a result of improving order backlog from international markets, primarily in the Asia Pacific and Middle East regions.

Gross ~~profit~~Profit

Gross profit (revenue less cost of sales) ~~increased~~ as a percentage of sales ~~to 15.5%~~remained flat at 18.6% in the first nine months of ~~2017, from 13.9%~~2019, and 18.7% 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 and a lower overall cost structure, the successful progression of several major projects with good gross margin performance and the benefit of a better product mix.period.

Selling, ~~general~~General and ~~administrative expense~~Administrative Expense

Selling, general and administrative expense ~~decreased $128.4~~increased $84.6 million year-over-year, onprimarily as a ~~pro forma basis, resulting from lower headcount across all reporting segments and decreased sales commissions.~~

result of increased corporate expense driven largely by accelerated IT spending as well as additional performance incentive compensation awards.

Impairment, Restructuring and Other Expense

In the $166.0 million of restructuring and ~~other expense~~

~~Impairment, restructuring and other expense decreased by $128.3 million year-over-year on a pro forma basis. Impairment, restructuring and other expense for~~impairment charges during the first nine months of ~~2017 included $9.0~~2019, we recorded a $125.1 million ofvessel impairment ~~expense.~~

In recent years, we have implemented restructuring plans across our businesses to reduce costs and better align our workforce with anticipated activity levels. Thus, we previously incurred significant restructuring expensescharge in ~~2016. In~~Subsea for the current period we have also incurred expenses of $10.9 million due to lost productivity associated with the impacts of Hurricane Harvey. In recent years, we have implemented restructuring plans across our businesses to reduce costs and better align our workforce with anticipated activity levels. Thus, we previously incurred significant restructuring expenses in 2016.nine months ended September 30, 2019. See Note 21 for further details.

Merger ~~transaction~~Transaction and ~~integration costs~~Integration Costs

We incurred merger transaction and integration costs of ~~$87.2~~$31.2 million during the first nine months of ~~2017~~2019, primarily 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 related~~ to integration activities pertaining to combining the two legacy companies.

Separation Costs

We have incurred $9.4 million of separation costs associated with the preparation of the spin-off transaction during

nine months of 2019. Refer to Note 2 ~~to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.~~for further information regarding the planned spin-off transaction.

Other ~~income~~Income (expense), ~~net~~Net

Other income (expense), net, primarily reflects foreign currency gains and losses, including gains and losses associated with the remeasurement of net cash positions. In the first nine months of ~~2017,~~2019, we recognized ~~$0.3~~$82.8 million of net foreign exchange ~~gains,~~losses, compared with ~~$13.6~~$77.7 million of net foreign exchange ~~losses~~loss in the prior year period. Additionally we recognized $91.0 million for the global resolution to pay the Department of Justice. Refer to Note 17 for further information regarding the global resolution.

Net Interest Expense

Net interest expense

~~The increase~~ increased $101.0 million in ~~interest expense was~~the first nine months of 2019 compared to 2018, primarily due to the ~~changes~~change in the fair value of the redeemable financial liability. ~~During~~We revalued the ~~nine month period ended September 30, 2017 we revalued the~~mandatorily redeemable financial liability to reflect current expectations about the obligation and recognized a ~~loss~~charge of ~~$202.9~~$324.0 million. ~~Refer to~~See Note ~~11 for further information regarding our other liabilities. Refer to Note 18~~20 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 lower by $9.5 million on a net basis as compared to the same period in 2018.

Provision for ~~income taxes~~Income Taxes

~~Our income~~The effective tax ~~provisions~~rate was 84.1% and 35.0% for the ~~first~~ nine months ~~of 2017~~ended September 30, 2019 and ~~2016 reflected effective tax rates of 48.8% and 22.6%, respectively~~. 2018, respectively.The year-over-year increase in the effective tax rate was primarily due to the increased impact of losses (including certain asset impairments) in jurisdictions with a full valuation allowance and an unfavorable change in forecasted earnings mix, offset in part by recognized tax benefits related to the ~~forecasted~~finalization of previously estimated tax liabilities based on the filing of tax returns in certain jurisdictions and the release of a valuation allowance previously recorded against certain deferred tax assets in Brazil.

Our effective tax rate can fluctuate depending on our country mix of earnings, ~~and increases in~~since our ~~valuation allowance due~~foreign earnings are generally subject to ~~additional losses generated during the year for which no~~higher tax ~~benefit is expected to be realized. In addition, individual tax items, combined with lower profitability~~rates than in the ~~current period, had a greater impact on the effective rate in the nine months ended September 30, 2017 as compared to the same period in 2016.~~United Kingdom.

SEGMENT RESULTS OF OPERATIONS OF TECHNIPFMC PLC

THREE MONTHS ENDED SEPTEMBER 30, ~~2017~~2019 AND ~~2016~~2018

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~~See Note 197 to our condensed consolidated financial statements ~~included in Part I, Item 1~~ of this Quarterly Report ~~on Form 10-Q~~ for ~~further~~more information.

Subsea


	Three Months Ended September 30,									Favorable/(Unfavorable) (2017 vs. 2016 Pro Forma)				Three Months Ended
(In millions, except %)	2017			2016 Pro Forma			2016			$		%
														September 30,						Favorable/(Unfavorable)
(In millions, except % and pts.)														2019			2018			$		%
Revenue	$	1,478.2		$	2,346.6		$	1,560.3		(868.4	)	(37.0	)	$	1,342.2		$	1,209.1		133.1		11.0
Operating profit	$	102.8		$	357.7		$	282.0		(254.9	)	(71.3	)
Operating profit (loss)														$	(79.6	)	$	79.7		(159.3	)	(199.9	)

Operating profit as a percentage of revenue	7.0		%	15.2		%	18.1		%			(8.2	) pts.	(5.9		)%	6.6		%			(12.5) pts.

Subsea revenue ~~decreased $868.4~~increased $133.1 million or 11.0% year-over-year, ~~on a pro forma basis,~~ primarily dueto ~~lower~~higher project-related activity and growth in Subsea services. Revenue growth was negatively impacted by the timing of key project ~~activity~~milestones, shifting recognition of some anticipated revenue to future periods. The increase in ~~the Europe and Africa region and lower activity in our Europe, Africa and North America~~ Subsea services businesses. The lower project activity was substantially due to the reduced backlog levels at the beginning of the period as a result of slower project awards in 2015 and 2016. Additionally, the decrease in revenue was ~~attributable to the completion of several projects during the third quarter of 2017.~~

~~Subsea operating profit as a percent of revenue decreased year-over-year on a pro forma basis~~driven by higher installation, well intervention and was driven primarily by lower project and subsea service activity levels, reduced vessel utilization, and a $18.2 million increase on a pro forma basis in impairment, restructuring and other severance charges.asset refurbishment activities.

Operating profit indecreased from the ~~third~~prior-year quarter ~~of 2017 included $22.8 million of impairment, restructuring and other severance charges compared to $4.6 million in the third quarter of 2016 on a pro forma basis.~~

~~Onshore/Offshore~~

Three Months Ended September 30, Favorable/(Unfavorable) (2017 vs. 2016 Pro Forma)
(In millions, except %) 2017
2016
Pro Forma
2016 $ %
Revenue $ 2,308.1
$ 2,398.8
$ 815.4
(90.7 ) (3.8 )
Operating profit $ 206.4
$ 118.6
$ 70.9
87.8
74.0

Operating profit as a percentage of revenue 8.9 % 4.9 % 8.7 % 4.0 pts.

Onshore/Offshore revenue decreased $90.7 million year-over-year on a pro forma basis. In December 2016, we increased our stake in the Yamal joint venture and became the controlling shareholder, resulting in full consolidation of the joint venture into the consolidated financial statements. Revenues declined due to ~~lower activity in North America due to~~a higher mix of early phase projects, the ~~delivery of several projects in 2016 and early 2017, partially offset by increased activity in the Middle East and Asia Pacific.~~

Onshore/Offshore operating profit as a percentage of revenue increased year-over-year on a pro forma basis, primarily due to the successful progression of several major projects, including Yamal and Prelude FLNG.

Operating profit in the third quarter of 2017 included $28.9 million of impairment, restructuring and other severance charges compared to $5.2 million in the third quarter of 2016 on a pro forma basis.

~~Surface Technologies~~

Three Months Ended September 30, Favorable/(Unfavorable) (2017 vs. 2016 Pro Forma)
(In millions, except %) 2017
2016
Pro Forma
2016 $ %
Revenue $ 353.9
$ 295.2
$ —
58.7
19.9
Operating profit (loss) $ 49.0
$ (17.4 ) $ —
66.4
*

Operating profit (loss) as a percentage of revenue 13.8 % (5.9 )%

19.7

~~_______________________~~


*	~~Not meaningful~~

Surface Technologies revenue increased $58.7 million year-over-year on a pro forma basis. Revenue increased in our surface international and surface Americas businesses year-over-year on a pro forma basis, partially offset by a decrease in revenue in our loading systems and measurement solutions businesses. The increase was driven primarily by higher activity in North America due to improved rig count and completion intensity, partially offset by the flow-through to revenueimpact of more competitively priced backlog and a vessel impairment charge of $125.1 million. See Note 21 for further details regarding the vessel impairment.

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

Onshore/Offshore



	Three Months Ended
	September 30,						Favorable/(Unfavorable)
(In millions, except % and pts.)	2019			2018			$	%
Revenue	$	1,596.3		$	1,532.5		63.8	4.2
Operating profit	$	284.6		$	243.4		41.2	16.9

Operating profit as a percentage of revenue	17.8		%	15.9		%		1.9 pts.

Onshore/Offshore revenue increased $63.8 million or 4.2% year-over-year due to increased activity on recent awards in ~~international markets~~the downstream, petrochemical, and ~~lower activity~~offshore sectors, more than offsetting a reduction in revenue from Yamal LNG as the project nears completion.

Operating profit increased versus the prior-year quarter, due to incremental profit related to strong execution on Yamal LNG with close out of sub-contracts.

Refer to ‘Non-GAAP Measures’ for further information regarding our ~~measurement solutions and loading systems businesses~~segment operating results.

Surface Technologies



	Three Months Ended
	September 30,						Favorable/(Unfavorable)
(In millions, except % and pts.)	2019			2018			$		%
Revenue	$	396.6		$	402.2		(5.6	)	(1.4	)
Operating profit	$	6.1		$	51.9		(45.8	)	(88.2	)

Operating profit as a percentage of revenue	1.5		%	12.9		%			(11.4) pts.

Surface Technologies ~~operating profit as a percent of~~ revenue ~~increased~~decreased $5.6 million or 1.4% year-over-year, ~~on a pro forma basis~~primarily driven by lower sales in North America resulting from further reductions in drilling and ~~was driven primarily~~completion activity, largely offset by ~~increased volume~~revenue growth in ~~flowline and well service pump products in our surface Americas business, and a $7.4 million decrease in impairment, restructuring and other severance charges.~~international markets.

Operating profit decreased versus the prior-year quarter primarily due to further declines in ~~the third quarter of 2017 included $7.8 million of impairment, restructuring~~volume and ~~other severance charges compared~~pricing in North America

Refer to ~~$15.2 million in 2016 on a pro forma basis.~~‘Non-GAAP Measures’ for further information regarding our segment operating results.

Corporate Items


											Three Months Ended
	Three Months Ended September 30,							Favorable/(Unfavorable) (2017 vs. 2016 Pro Forma)			September 30,						Favorable/(Unfavorable)
(In millions, except %)	2017			2016 Pro Forma		2016		$		%	2019			2018			$		%
Corporate expense	$	(42.3	)	$	5.4	$	51.7	(47.7	)	*	$	(128.8	)	$	(68.1	)	(60.7	)	(89.1	)

~~_______________________~~


*	~~Not meaningful~~

~~Corporate expense increased year-over-year on a proforma basis.~~ Corporate expense in the third quarter ~~of 2017~~was $128.8 million. This included ~~$13.2~~charges and credits totaling $18.2 million of ~~business combination transaction~~expense resulting from net legal provisions of $0.6 million, $9.4 million of expense primarily related to merger integration and ~~integration costs~~$9.4 million expense related to the ~~Merger~~planned spin-off transaction. Excluding charges and ~~$19.3~~credits, corporate expense was $110.6 million which included $53.2 million of foreign ~~currency~~ exchange ~~gains.~~losses.

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

SEGMENT RESULTS OF OPERATIONS OF TECHNIPFMC PLC

NINE MONTHS ENDED SEPTEMBER 30, ~~2017~~2019 AND ~~2016~~2018

Subsea


														Nine Months Ended
	Nine Months Ended September 30,									Favorable/(Unfavorable) (2017 vs. 2016 Pro Forma)				September 30,						Favorable/(Unfavorable)
(In millions, except %)	2017 ⁽¹⁾			2016 Pro Forma			2016			$		%		2019			2018			$		%
Revenue	$	4,585.2		$	7,126.4		$	4,624.7		(2,541.2	)	(35.7	)	$	4,036.2		$	3,606.7		429.5		11.9
Operating profit	$	393.1		$	836.3		$	669.9		(443.2	)	(53.0	)	$	65.0		$	210.0		(145.0	)	(69.0	)

Operating profit as a percent of revenue	8.6		%	11.7		%	14.5		%			(3.1	) pts.
Operating profit as a percentage of revenue														1.6		%	5.8		%			(4.2) pts.

~~_______________________~~


⁽¹⁾	Due to the Merger, there were 8.5 months included in the first nine months of 2017 for legacy FMC Technologies, compared with nine months in 2016. Refer to Note 2 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Subsea revenue increased $429.5 million or 11.9% year-over-year, primarily dueto higher project-related activity and growth in Subsea services. Integrated project activity continues to represent an increasing share of revenue.The increase in Subsea services revenue was driven by higher installation, well intervention and asset refurbishment activities.

Operating profit decreased ~~$2,541.2 million~~ year-over-year, ~~on a pro forma basis~~ primarily due to ~~lower project~~more competitively priced backlog and a vessel impairment charge of $125.1 million. See Note 21 for further details regarding the vessel impairment.

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

Onshore/Offshore



	Nine Months Ended
	September 30,						Favorable/(Unfavorable)
(In millions, except %)	2019			2018			$		%
Revenue	$	4,436.4		$	4,448.3		(11.9	)	(0.3	)
Operating profit	$	714.3		$	617.6		96.7		15.7

Operating profit as a percentage of revenue	16.1		%	13.9		%			2.2 pts.

Onshore/Offshore revenue decreased $11.9 million or 0.3% year-over-year. Revenue from Yamal LNG declined as we moved closer to completion, largely offset by increased activity on recent awards in the ~~Europe~~downstream, petrochemical and ~~Africa region~~offshore sectors. Projects awarded in recent quarters are in early stages of completion and ~~lower activity~~will contribute more significantly in ~~our Europe, Africa and North America Subsea services businesses. The lower project activity was substantially~~subsequent quarters as the projects progress.

Operating profit increased year-over-year, primarily due to strong project execution across many portfolio projects, primarily Yamal LNG, and a bonus for completion of key milestones on Yamal LNG.

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

Surface Technologies



	Nine Months Ended
	September 30,						Favorable/(Unfavorable)
(In millions, except %)	2019			2018			$		%
Revenue	$	1,209.7		$	1,174.9		34.8		3.0
Operating profit	$	42.1		$	134.0		(91.9	)	(68.6	)

Operating profit as a percentage of revenue	3.5		%	11.4		%			(7.9) pts.

Surface Technologies revenue increased $34.8 million or 3.0% year-over-year, primarily driven by higher demand for pressure control equipment outside the ~~reduced backlog levels at the beginning of~~Americas. North American revenue declined in the period as a result of ~~slower project awards in 2015 and 2016. Additionally, the decrease in revenue was attributable to the completion of several projects during the first nine months of 2017,~~ lower ~~subsea service activity, and lower vessel utilization~~activity.

Operating profit decreased year-over-year, ~~on a pro forma basis~~ primarily due to ~~high vessel campaigns~~the continued decline in ~~Africa~~completions-related activity, resulting in unfavorable product line mix and ~~Asia~~a weaker pricing environment in the ~~prior year.~~North America market.

~~Subsea~~Refer to ‘Non-GAAP Measures’ for further information regarding our segment 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. Excluding impairment, restructuring and other severance charges, on a comparable basis, operating profit as a percentage of revenue improved slightly year-over-year on a pro forma basis due to a better project mix and execution.results.

Subsea operating profit for the first nine months of 2017 included $35.5 million in restructuring, impairment and other severance charges compared to $29.6 million in the prior year on a pro forma basis.

~~Onshore/Offshore~~

Corporate Items

Nine Months Ended September 30, Favorable/(Unfavorable) (2017 vs. 2016 Pro Forma)
(In millions, except %) 2017
2016
Pro Forma
2016 $ %
Revenue $ 5,885.0
$ 6,629.1
$ 2,527.2
(744.1 ) (11.2 )
Operating profit $ 553.7
$ 239.5
$ 139.8
314.2
131.2

Operating profit as a percent of revenue 9.4 % 3.6 % 5.5 % 5.8 pts.



	Nine Months Ended
	September 30,						Favorable/(Unfavorable)
(In millions, except %)	2019			2018			$		%
Corporate expense	$	(361.4	)	$	(200.9	)	(160.5	)	(79.9	)

Onshore/Offshore revenue decreased $744.1 million year-over-year. In December 2016, we increased our stake in the Yamal joint venture and became the controlling shareholder, resulting in full consolidation of the joint venture into the consolidated financial statements. Revenues were lower due to reduced project activity across all geographical regions. Additionally, the decrease in revenue was attributable to lower activity in North America and South America due to the delivery of several projects in 2016 and early 2017.

Onshore/Offshore operating profit as a percentage of revenue increased year-over-year on a pro forma basis due to a favorable mix of project margins, successful progression of several major projects including Yamal and Prelude FLNG, and the successful resolution of contract disputes.

Operating profit in the first nine months of 2017 compared to the first nine months of 2016 on a pro forma basis was favorably impacted by a decrease of $68.9 million related to impairment, restructuring and other severance charges in the prior year.

~~Surface Technologies~~

Nine Months Ended September 30, Favorable/(Unfavorable) (2017 vs. 2016 Pro Forma)
(In millions, except %) 2017
2016
Pro Forma
2016 $ %
Revenue $ 902.3
$ 948.6
$ —
(46.3 ) (4.9 )
Operating profit (loss) $ 29.4
$ (116.7 ) $ —
146.1
*

Operating profit (loss) as a percent of revenue 3.3 % (12.3 )% 15.6 pts.

~~_______________________~~


*	~~Not meaningful~~

Surface Technologies revenue decreased $46.3 million year-over-year on a pro forma basis. Revenue decreased in our surface international, measurement solutions and loading systems businesses year-over-year on a pro forma basis, partially offset by an increase in revenue in our surface Americas businesses. The decrease was driven primarily by the flow-through to revenue of more competitively priced backlog in international markets and lower activity in our measurement solutions and loading systems businesses.

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 $48.9 million decrease in impairment, restructuring and other severance charges.

~~Operating profit in the first nine months of 2017 included $12.0 million of impairment, restructuring and other severance charges compared to $60.9 million in 2016 on a pro forma basis.~~

~~Corporate Items~~

Nine Months Ended September 30, Favorable/(Unfavorable) (2017 vs. 2016 Pro Forma)
(In millions, except %) 2017
2016
Pro Forma
2016 $ %
Corporate expense $ (224.3 ) $ (256.9 ) $ (108.4 ) 32.6
*

~~_______________________~~


*	~~Not meaningful~~

~~Corporate expense decreased year-over-year on a proforma basis.~~ Corporate expense in the ~~first~~ nine months ended September 30, 2019 was $361.4 million. This includes charges and credits totaling $108.7 million resulting from net legal provisions of ~~2017 primarily reflected $8.4~~$54.6 million, $44.7 million of ~~impairment, restructuring~~expense primarily related to merger integration and ~~other severance charges and $87.2~~$9.4 million ~~of business combination transaction and integration costs~~expense related to the ~~Merger.~~planned spin-off transaction. Excluding charges and credits, corporate expense was $252.7 million which included $82.8 million of foreign exchange losses.

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

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 (“Adjusted Depreciation and amortization”); Earnings before net interest expense, income taxes, depreciation and amortization, excluding charges and credits ("Adjusted EBITDA"); and net (debt) 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.

CONSOLIDATED RESULTS OF OPERATIONS OF TECHNIPFMC PLC

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES



	Three Months Ended
	September 30, 2019
	Net income (loss) attributable to TechnipFMC plc			Net income (loss) attributable to noncontrolling interests		Provision for income taxes			Net interest expense		Income (loss) before net interest expense and income taxes (Operating profit)			Depreciation and amortization			Earnings before net interest expense, income taxes, depreciation and amortization (EBITDA)
TechnipFMC plc, as reported	$	(119.1	)	$	3.8	$	81.1		$	116.5	$	82.3		$	141.6		$	223.9

Charges and (credits):
Impairment and other charges	126.1			—		0.2			—		126.3			—			126.3
Restructuring and other severance charges	12.3			—		1.7			—		14.0			—			14.0
Business combination transaction and integration costs	6.1			—		0.1			—		6.2			—			6.2
Separation costs	7.5			—		1.9			—		9.4			—			9.4
Legal provision, net	(0.6		)	—		—			—		(0.6		)	—			(0.6		)
Purchase price accounting adjustment	6.5			—		2.0			—		8.5			(8.5		)	—
Valuation allowance	15.0			—		(15.0		)	—		—			—			—
Adjusted financial measures	$	53.8		$	3.8	$	72.0		$	116.5	$	246.1		$	133.1		$	379.2

Diluted earnings (loss) per share attributable to TechnipFMC plc, as reported	$	(0.27	)
Adjusted diluted earnings per share attributable to TechnipFMC plc	$	0.12



	Three Months Ended
	September 30, 2018
	Net income (loss) attributable to TechnipFMC plc			Net income (loss) attributable to noncontrolling interests			Provision for income taxes			Net interest expense		Income (loss) before net interest expense and income taxes (Operating profit)			Depreciation and amortization			Earnings before net interest expense, income taxes, depreciation and amortization (EBITDA)
TechnipFMC plc, as reported	$	136.9		$	(2.7	)	$	66.7		$	106.0	$	306.9		$	142.0		$	448.9

Charges and (credits):
Impairment and other charges	0.3			—			1.3			—		1.6			—			1.6
Restructuring and other severance charges	4.7			—			3.4			—		8.1			—			8.1
Business combination transaction and integration costs	3.3			—			3.0			—		6.3			—			6.3
Gain on divestitures	(21.1		)	—			(10.5		)	—		(31.6		)	—			(31.6		)
Purchase price accounting adjustment	15.7			—			4.8			—		20.5			(23.3		)	(2.8		)
Adjusted financial measures	$	139.8		$	(2.7	)	$	68.7		$	106.0	$	311.8		$	118.7		$	430.5

Diluted earnings per share attributable to TechnipFMC plc, as reported	$	0.30
Adjusted diluted earnings per share attributable to TechnipFMC plc	$	0.31

CONSOLIDATED RESULTS OF OPERATIONS OF TECHNIPFMC PLC

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES



	Nine Months Ended
	September 30, 2019
	Net income attributable to TechnipFMC plc			Net income (loss) attributable to noncontrolling interests		Provision for income taxes		Net interest expense		Income before net interest expense and income taxes (Operating profit)		Depreciation and amortization			Earnings before net interest expense, income taxes, depreciation and amortization (EBITDA)
TechnipFMC plc, as reported	$	(1.2	)	$	19.4	$	96.5	$	345.3	$	460.0	$	378.5		$	838.5

Charges and (credits):
Impairment and other charges	127.0			—		0.5		—		127.5		—			127.5
Restructuring and other severance charges	30.6			—		7.9		—		38.5		—			38.5
Business combination transaction and integration costs	24.8			—		6.4		—		31.2		—			31.2
Separation costs	7.5			—		1.9		—		9.4		—			9.4
Reorganization	19.2			—		6.1		—		25.3		—			25.3
Legal provision, net	54.6			—		—		—		54.6		—			54.6
Purchase price accounting adjustment	19.5			—		6.0		—		25.5		(25.5		)	—
Valuation allowance	(25.3		)	—		25.3		—		—		—			—
Adjusted financial measures	$	256.7		$	19.4	$	150.6	$	345.3	$	772.0	$	353.0		$	1,125.0

Diluted earnings (loss) per share attributable to TechnipFMC plc, as reported	$	—
Adjusted diluted earnings per share attributable to TechnipFMC plc	$	0.57



	Nine Months Ended
	September 30, 2018
	Net income (loss) attributable to TechnipFMC plc			Net income (loss) attributable to noncontrolling interests			Provision for income taxes			Net interest expense		Income before net interest expense and income taxes (Operating profit)			Depreciation and amortization			Earnings before net interest expense, income taxes, depreciation and amortization (EBITDA)
TechnipFMC plc, as reported	$	337.7		$	(2.0	)	$	180.7		$	244.3	$	760.7		$	412.5		$	1,173.2

Charges and (credits):
Impairment and other charges	9.4			—			4.7			—		14.1			—			14.1
Restructuring and other severance charges	12.3			—			6.2			—		18.5			—			18.5
Business combination transaction and integration costs	13.9			—			7.0			—		20.9			—			20.9
Gain on divestitures	(21.1		)	—			(10.5		)	—		(31.6		)	—			(31.6		)
Purchase price accounting adjustment	50.9			—			15.6			—		66.5			(67.3		)	(0.8		)
Adjusted financial measures	$	403.1		$	(2.0	)	$	203.7		$	244.3	$	849.1		$	345.2		$	1,194.3

Diluted earnings per share attributable to TechnipFMC plc, as reported	$	0.73
Adjusted diluted earnings per share attributable to TechnipFMC plc	$	0.87

CONSOLIDATED RESULTS OF OPERATIONS OF TECHNIPFMC PLC

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES



	Three Months Ended
	September 30, 2019
	Subsea			Onshore/ Offshore			Surface Technologies			Corporate and Other			Total
Revenue	$	1,342.2		$	1,596.3		$	396.6		$	—		$	3,335.1

Operating profit (loss), as reported (pre-tax)	$	(79.6	)	$	284.6		$	6.1		$	(128.8	)	$	82.3

Charges and (credits):
Impairment and other charges	126.3			—			—			—			126.3
Restructuring and other severance charges	4.9			5.2			0.7			3.2			14.0
Business combination transaction and integration costs	—			—			—			6.2			6.2
Separation costs	—			—			—			9.4			9.4
Legal provision, net	—			—			—			(0.6		)	(0.6		)
Purchase price accounting adjustments - amortization related	8.5			—			—			—			8.5
Subtotal	139.7			5.2			0.7			18.2			163.8

Adjusted Operating profit (loss)	60.1			289.8			6.8			(110.6		)	246.1

Adjusted Depreciation and amortization	79.0			14.4			37.6			2.1			133.1

Adjusted EBITDA	$	139.1		$	304.2		$	44.4		$	(108.5	)	$	379.2

Operating profit margin, as reported	(5.9		)%	17.8		%	1.5		%				2.5		%

Adjusted Operating profit margin	4.5		%	18.2		%	1.7		%				7.4		%

Adjusted EBITDA margin	10.4		%	19.1		%	11.2		%				11.4		%

CONSOLIDATED RESULTS OF OPERATIONS OF TECHNIPFMC PLC

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES



	Three Months Ended
	September 30, 2018
	Subsea			Onshore/ Offshore			Surface Technologies			Corporate and Other			Total
Revenue	$	1,209.1		$	1,532.5		$	402.2		$	—		$	3,143.8

Operating profit (loss), as reported (pre-tax)	$	79.7		$	243.4		$	51.9		$	(68.1	)	$	306.9

Charges and (credits):
Impairment and other charges	1.4			—			0.2			—			1.6
Restructuring and other severance charges	3.6			(0.2		)	1.1			3.6			8.1
Business combination transaction and integration costs	—			—			—			6.3			6.3
Gain on divestitures	(3.3		)	(28.3		)	—			—			(31.6		)
Purchase price accounting adjustments - non-amortization related	(3.5		)	—			0.9			(0.2		)	(2.8		)
Purchase price accounting adjustments - amortization related	23.4			—			(0.1		)	—			23.3
Subtotal	21.6			(28.5		)	2.1			9.7			4.9

Adjusted Operating profit (loss)	101.3			214.9			54.0			(58.4		)	311.8

Adjusted Depreciation and amortization	87.2			12.4			18.5			0.6			118.7

Adjusted EBITDA	$	188.5		$	227.3		$	72.5		$	(57.8	)	$	430.5

Operating profit margin, as reported	6.6		%	15.9		%	12.9		%				9.8		%

Adjusted Operating profit margin	8.4		%	14.0		%	13.4		%				9.9		%

Adjusted EBITDA margin	15.6		%	14.8		%	18.0		%				13.7		%

CONSOLIDATED RESULTS OF OPERATIONS OF TECHNIPFMC PLC

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES



	Nine Months Ended
	September 30, 2019
	Subsea			Onshore/ Offshore			Surface Technologies			Corporate and Other			Total
Revenue	$	4,036.2		$	4,436.4		$	1,209.7		$	—		$	9,682.3

Operating profit (loss), as reported (pre-tax)	$	65.0		$	714.3		$	42.1		$	(361.4	)	$	460.0

Charges and (credits):
Impairment and other charges	126.9			—			0.6			—			127.5
Restructuring and other severance charges	11.1			11.1			2.8			13.5			38.5
Business combination transaction and integration costs	—			—			—			31.2			31.2
Separation costs	—			—			—			9.4			9.4
Reorganization	—			25.3			—			—			25.3
Legal provision, net	—			—			—			54.6			54.6
Purchase price accounting adjustments - amortization related	25.5			—			—			—			25.5
Subtotal	163.5			36.4			3.4			108.7			312.0

Adjusted Operating profit (loss)	228.5			750.7			45.5			(252.7		)	772.0

Adjusted Depreciation and amortization	236.6			30.2			75.7			10.5			353.0

Adjusted EBITDA	$	465.1		$	780.9		$	121.2		$	(242.2	)	$	1,125.0

Operating profit margin	1.6		%	16.1		%	3.5		%				4.8		%

Adjusted Operating profit margin	5.7		%	16.9		%	3.8		%				8.0		%

Adjusted EBITDA margin	11.5		%	17.6		%	10.0		%				11.6		%

CONSOLIDATED RESULTS OF OPERATIONS OF TECHNIPFMC PLC

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES



	Nine Months Ended
	September 30, 2018
	Subsea			Onshore/ Offshore			Surface Technologies			Corporate and Other			Total
Revenue	$	3,606.7		$	4,448.3		$	1,174.9		$	—		$	9,229.9

Operating profit (loss), as reported (pre-tax)	$	210.0		$	617.6		$	134.0		$	(200.9	)	$	760.7

Charges and (credits):
Impairment and other charges	8.6			—			1.6			3.9			14.1
Restructuring and other severance charges	10.5			(5.8		)	6.4			7.4			18.5
Business combination transaction and integration costs	—			—			—			20.9			20.9
Gain on divestitures	(3.3		)	(28.3		)	—			—			(31.6		)
Purchase price accounting adjustments - non-amortization related	(6.1		)	—			5.7			(0.4		)	(0.8		)
Purchase price accounting adjustments - amortization related	67.7			—			(0.4		)	—			67.3
Subtotal	77.4			(34.1		)	13.3			31.8			88.4

Adjusted Operating profit (loss)	287.4			583.5			147.3			(169.1		)	849.1

Adjusted Depreciation and amortization	264.3			29.7			48.1			3.1			345.2

Adjusted EBITDA	$	551.7		$	613.2		$	195.4		$	(166.0	)	$	1,194.3

Operating profit margin, as reported	5.8		%	13.9		%	11.4		%				8.2		%

Adjusted Operating profit margin	8.0		%	13.1		%	12.5		%				9.2		%

Adjusted EBITDA margin	15.3		%	13.8		%	16.6		%				12.9		%

INBOUND ORDERS AND ORDER BACKLOG

Inbound ~~orders—~~orders - Inbound orders represent the estimated sales value of confirmed customer orders received during the reporting period.


									Inbound Orders
	Inbound Orders								Three Months Ended				Nine Months Ended
	Three Months Ended September 30,				Nine Months Ended September 30,				September 30,				September 30,
(In millions)	2017		2016		2017		2016		2019		2018		2019		2018
Subsea	$	979.8	$	550.8	$	3,418.8	$	1,881.3	$	1,509.9	$	1,553.9	$	6,820.3	4,297.9
Onshore/Offshore	1,153.0		1,155.6		2,938.7		2,497.6		696.0		1,666.1		11,966.0		5,816.5
Surface Technologies	329.1		—		846.9		—		404.7		427.2		1,188.3		1,251.5
Total inbound orders	$	2,461.9	$	1,706.4	$	7,204.4	$	4,378.9	$	2,610.6	$	3,647.2	$	19,974.6	$	11,365.9

Order ~~backlog—~~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” Note 6 to our condensed consolidated financial statements of this Quarterly Report for more information on order backlog.


	Order Backlog						Order Backlog
(In millions)	September 30, 2017		December 31, 2016		September 30, 2016		September 30, 2019		December 31, 2018
Subsea	$	5,948.9	$	4,909.0	$	5,662.9	$	8,655.8	$	5,999.6
Onshore/Offshore	7,559.3		11,834.9		8,035.9		15,030.8		8,090.5
Surface Technologies	394.2		—		—		428.7		469.9
Total order backlog	$	13,902.4	$	16,743.9	$	13,698.8	$	24,115.3	$	14,560.0

~~Subsea.~~Subsea -Order backlog for Subsea at September 30, ~~2017,~~2019 increased by ~~$1,039.9 million~~$2.7 billion compared to December 31, ~~2016.~~2018. Subsea backlog of ~~$5.9~~$8.7 billion at September 30, ~~2017,~~2019 was composed of various subsea projects, including ~~Total’s Kaombo; Petrobras’~~Anadarko Golfinho; Petrobras pipelay support ~~vessel~~vessels and ~~pre-salt tree awards; Mellitah’s Bahr Essalam; Shell’s Appomattox; Eni’s Coral; Woodside’s Greater Enfield; Statoil’s Peregrino~~Mero I; Eni Coral and Merakes; Lundin Solveig and Rolvsnes; Equinor Johan Sverdrup Phase ~~II;~~2; Neptune Cara & Gioa and ~~BP’s Shah Deniz.~~Seagull; Energean Karish; Reliance MJ1; BP Thunderhorse South Extension 2; and ExxonMobil Liza Phase 2.

Onshore/~~Offshore.~~Offshore -Onshore/Offshore order backlog at September 30, ~~2017, decreased~~2019 increased by ~~$4.3~~$6.9 billion compared to December 31, ~~2016.~~2018. Onshore/Offshore backlog of ~~$7.6~~$15.0 billion was composed of various projects, including Arctic LNG 2, Yamal LNG; ~~Enoc’s Jebel Ali~~Midor refinery expansion; ~~Sibur’s Zapsib-2; Total’s Martin Linge; Adma Opco’s Umm Lulu Phase 2; Shell’s Prelude FLNG;~~BP Tortue FPSO; ExxonMobil Beaumont refinery expansion; Long Son Petrochemicals; Energean Karish; HURL fertilizer plants; Neste bio-diesel expansion; and ~~Eni’s Ghana onshore receiving gas terminal.~~HPCL Visakh refinery.

Surface Technologies - Order backlog for Surface Technologies at September 30, 2019 decreased by $41.2 million compared to December 31, 2018. 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 backlog
(In millions)	September 30, 2019
Subsea	$	842.1
Onshore/Offshore	2,632.0
Total order backlog	$	3,474.1

LIQUIDITY AND CAPITAL RESOURCES

Most of our cash is ~~held in the treasury centralizing companies of~~managed centrally and flowed through centralized bank accounts controlled and maintained by TechnipFMC globally and in ~~foreign~~many operating jurisdictions to best meet the liquidity needs of our global operations. ~~Cash held~~Under current U.S. law, as amended by ~~subsidiaries of our U.S. domiciled companies could be repatriated~~the Tax Cuts and Jobs Act, signed into law on December 22, 2017, any repatriation to the United States ~~but under current law, any such repatriation~~in the form of a dividend would generally be eligible for a 100% dividend received deduction and therefore would not be subject to U.S. federal income tax, as adjusted for applicable foreign tax credits. We have provided for U.S. federal income taxes on earnings not distributed to the U.S. parent companies where we have determined that such earnings are not indefinitely reinvested.tax.

We expect to meet the continuing funding requirements of our global operations with cash generated by such operations ~~cash from earnings of operations that are not indefinitely reinvested in the jurisdictions where generated~~ and our existing revolving credit facility. ~~We would make a provision for additional U.S. tax due to repatriated cash required to fund U.S. operations not previously provided, which may be material to our cash flows and results of operations.~~

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 condensed consolidated balance ~~sheets.~~sheets:

(In millions) September 30, 2017 December 31, 2016
Cash and cash equivalents $ 6,896.1
$ 6,269.3
Less: Short-term debt and current portion of long-term debt 473.2
683.6
Less: Long-term debt, less current portion 3,167.4
1,869.3
Net (debt) cash $ 3,255.5
$ 3,716.4

The gross change in the debt and cash components of our net (debt) cash position was primarily due to the Merger. Refer to Note 2 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.



(In millions)	September 30, 2019			December 31, 2018
Cash and cash equivalents	$	4,504.4		$	5,540.0
Short-term debt and current portion of long-term debt	(299.4		)	(67.4		)
Long-term debt, less current portion	(3,608.8		)	(4,124.3		)
Net cash	$	596.2		$	1,348.3

Cash Flows

We generated ~~$279.0~~$289.4 million ~~and $268.4 million in~~of cash ~~flows~~ from operating activities during the nine months ended September 30, ~~2017 and 2016, respectively. The slight increase in~~2019 as compared to $344.7 million cash ~~provided~~used by operating activities during the same period in 2018. The change was primarily due to the change in trade receivables, costs in excess of billings, advance payments and billings in excess of costs. Our working capital balances can vary significantly depending on the payment and delivery terms on key contracts in our portfolio of projects.

~~Investing activities provided $1,334.4 million and used $187.3 million~~a decrease in cash ~~flows~~paid to settle trade payables during the nine months ended September 30, ~~2017~~2019 and ~~2016, respectively. The~~an increase in ~~cash provided~~contract liabilities, partially offset by ~~investing~~a decrease in other current liabilities.

Investing activities ~~was due to the Merger. Refer to Note 2 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.~~

~~Financing activities used $1,056.1~~consumed $357.2 million and ~~$583.5~~$358.2 million inof cash ~~flows~~ during the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively. The ~~decrease in~~ cash ~~flows from financing~~consumed by investing activities ~~was due to the payments related to taxes withheld on stock-based compensation~~remained flat.

Financing activities used $898.9 million and ~~a decrease in our commercial paper position~~$403.0 million of cash during the nine months ended September 30, ~~2017.~~

2019 and 2018, respectively. The increase in cash used by financing activities was primarily due to repayments of commercial papers and settlements of mandatorily redeemable financial liability during the nine months ended September 30, 2019.

Debt and Liquidity

Credit Facility— - The following is a summary of our revolving credit facility at September 30, ~~2017:~~

2019:

(In millions)
Description
Amount
Debt
Outstanding

Commercial
Paper
Outstanding ^(a)

Letters
of
Credit

Unused
Capacity
Maturity
Five-year revolving credit facility $ 2,500.0
$ —
$ 839.8
$ —
$ 1,660.2
January 2022

~~_______________________~~



(In millions) Description	Amount		Debt Outstanding		Commercial Paper Outstanding^(a)		Letters of Credit		Unused Capacity		Maturity
Five-year revolving credit facility	$	2,500.0	$	—	$	1,639.7	$	—	$	860.3	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 ~~$839.8~~$1,639.7 million of commercial paper issued under our facility at September 30, ~~2017.~~2019. 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 condensed consolidated balance sheets at September 30, ~~2017.~~2019.

As of September 30, ~~2017,~~2019, we were in compliance with all restrictive covenants under our revolving credit facility.

~~Refer to~~See Note 1013 to our condensed consolidated financial statements ~~included in Part I, Item 1~~ of this Quarterly Report ~~on Form 10-Q~~ for ~~further~~more information related to our credit facility.

Credit Risk Analysis

Valuations of derivative assets and liabilities reflect the 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 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.

Additional information about credit risk is incorporated herein by reference to Note 1820 to our condensed consolidated financial statements ~~included in Part I, Item 1~~ of this Quarterly ~~Report on Form 10-Q.~~Report.

Outlook

Historically, we have generated our liquidity and capital resources primarily through operations and, when needed, through our credit facility. We have ~~$1,660.2~~$860.3 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 businesses. However, management believes, based on our current financial condition, existing backlog levels and current expectations for future market conditions, that we will continue to meet our short- and long-term liquidity needs with a combination of cash on hand, cash generated from operations and access to capital markets. While we will continue to reach payment milestones on our projects, we expect our consolidated operating cash flow in 2017 to decrease as a result of the negative impact the decline in commodity prices and the corresponding impact the industry downturn is having on our overall business in terms of the number of new projects awarded and the payment terms and conditions of such project awards. Given the protracted downturn in the oilfield services industry, some key customers have requested the possibility of deferred payments. Additionally, our primary customer in Brazil has requested some re-scheduling of backlog deliveries in order to better match equipment deliveries with their operating schedule requirements and to better align cash flow capabilities. Consequently, any payment deferrals, discounts on pricing, or material product delivery delays that may ultimately be mutually agreed to with our key customers may adversely affect our results of operations and cash flows.

We project spending approximately ~~$250~~$350.0 million in ~~2017~~2019 for capital ~~expenditures, largely towards maintenance expenditures in our subsea service business. However, projected~~expenditures. Projected capital expenditures for ~~2017~~2019 do not include any contingent capital that may be needed to respond to a contract ~~award.~~award and exclude $80.0 million in spending in the first quarter related to the purchase of a deepwater dive support vessel, Deep Discoverer, that was subsequently funded through a sale-leaseback transaction.

Our board of directors has authorized $500 million for repurchase of shares to be executed over the remainder of 2017 and 2018. Also, on October 25, 2017, it was announced that our Board of Directors has authorized and declared an initial quarterly cash dividend of $0.13 per ordinary share. We implemented a court-approved reduction of our capital, which completed on June 29, 2017, in order to create distributable profits to support the payment of possible future dividends or future share repurchases.

During the remainder of 2017, we expect to make contributions of approximately $2.9 million to our international pension plans. 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. Additionally, we expect to make payments of approximately $1.6 million to our U.S. Non-Qualified Defined Benefit Pension Plan during the remainder of 2017.

CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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 1Refer to our ~~consolidated financial statements included in Part I, Item I of this Quarterly~~Annual Report on Form ~~10-Q~~10-K for the year ended December 31, 2018 for a ~~description~~discussion of our ~~significant~~critical accounting ~~policies.~~

~~Percentage of Completion Method of Accounting~~

~~We recognize revenue on construction-type manufacturing projects using~~estimates. During the percentage of completion method of accounting whereby revenue is recognized as work progresses on each contract. There are several acceptable methods under GAAP of measuring progress toward completion. Most frequently, we use the ratio of costs incurred to date to total estimated contract costs at completion to measure progress toward completion.

We execute contracts with our customers that clearly describe the equipment, systems and/or services that we will provide and the amount of consideration we will receive. 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.

~~A significant portion of our total revenue recognized under the percentage of completion method of accounting relates~~nine months ended September 30, 2019, there were no changes 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.identified critical accounting estimates.

Total estimated contract cost affects both the revenue recognized in a period as well as the reported profit or loss on a project. The determination of profit or loss on a contract requires consideration of contract revenue, change orders and claims, less costs incurred to date and estimated costs to complete. Profits are recognized based on the estimated project profit multiplied by the percentage complete. Revenue Recognition

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 contracts under the percentage of completion method of accounting 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 using the percentage of completion method of accounting is sensitive to changes inimpact on our ~~estimates of total contract costs.~~

~~The total estimated contract cost in the percentage of completion method of accounting is a critical accounting estimate because it can materially affect revenue and~~operating profit and requires us to make judgments about matters that are uncertain. 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, that can affect the accuracy of our cost estimates, and ultimately, our future profitability.

~~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 an allowance reducing 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 the expected realizability of a deferred tax asset would require that we adjust the valuation allowance applied against the gross value of our total deferred tax assets, resulting in a change to net income.

As of September 30, 2017, we believe that it is not more likely than not that we will generate future taxable income in certain jurisdictions in which we have cumulative net operating losses and, therefore, we have provided a valuation allowance against the related deferred tax assets. As of September 30, 2017, we believe that it is more likely than not that we will have future taxable income in the United States to utilize our deferred tax assets. Therefore, we have not provided a valuation allowance against the cumulative net operating loss.

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~~changes in contract estimates related to projects that were in progress at 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~~prior year end is presented below.

Our ~~pension~~operating profit was positively impacted by approximately $289.0 million and ~~other post-retirement (health care~~$721.3 million for the three and ~~life insurance) obligations are described~~nine months ended September 30, 2019, respectively, comprised of $225.3 million and $63.7 million for the three months ended September 30, 2019 and $482.2 million and $239.1 million for the nine months ended September 30, 2019 in ~~Note 15 to~~ our ~~consolidated financial statements included~~Onshore/Offshore and Subsea segments, respectively.

Our operating profit was positively impacted by approximately $180.5 million and $471.6 million for the three and nine months ended September 30, 2018, respectively, comprised of $143.6 million and $36.9 million for the three months ended September 30, 2018 and $367.0 million and $104.6 million for the nine months ended September 30, 2018 in ~~Part I, Item I of this Quarterly Report on Form 10-Q.~~our Onshore/Offshore and Subsea segments, respectively.

The ~~determination of the projected benefit obligations~~changes in contract estimates are attributed to better than expected performance throughout our execution 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 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. These measures are critical accounting estimates because they are subject to management’s judgment and can materially affect net income.

The discount rate affects the interest cost component of net periodic pension cost and the calculation of the projected benefit obligation. The discount rate is based on rates at which the pension benefit obligation could be effectively settled on a present value basis. Discount rates are derived by identifying a theoretical settlement portfolio of long-term, high quality (“AA” rated) corporate bonds at our determination date that is sufficient to provide for the projected pension benefit payments. A single discount rate is determined that results in a discounted value of the pension benefit payments that equate to the market value of the selected bonds. The resulting discount rate is reflective of both the current interest rate environment and the pension’s distinct liability characteristics. Significant changes in the discount rate, such as those caused by changes in the yield curve, the mix of bonds available in the market, the duration of selected bonds and the timing of expected benefit payments, may result in volatility in our pension expense and pension liabilities.

The expected long-term rate of return on plan assets is a component of net periodic pension cost. Our estimate of the expected long-term 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. The difference between the expected return and the actual return on

~~plan assets is amortized over the expected remaining service life of employees, resulting in a lag time between the market’s performance and its impact on plan results.~~

Holding other assumptions constant, 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 2016 Pension Expense Before Income Taxes Increase (Decrease) in Projected Benefit Obligation at December 31, 2016
50 basis point decrease in discount rate $ 0.3
$ 29.4
50 basis point increase in discount rate $ (0.2 ) $ (27.0 )
50 basis point decrease in expected long-term rate of return on plan assets $ —
—
50 basis point increase in expected long-term rate of return on plan assets $ —
—

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.

~~Impairment of Goodwill~~

Goodwill is not subject to amortization but is tested for impairment 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. 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.

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.

~~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. Any significant change in key assumptions may cause the acquisition accounting to be revised. Business combinations are described in Note 2 to our consolidated financial statements included in Part I, Item I of this Quarterly Report on Form 10-Q.

~~OFF-BALANCE SHEET ARRANGEMENTS~~

~~Information related to guarantees is incorporated herein by reference from Note 12 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.~~projects.

OTHER MATTERS

On March 28, 2016, FMC Technologies received an inquiry from the U.S. Department of Justice (“DOJ”) related to the ~~DOJ’s~~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”). ~~We are cooperating with the DOJ’s and U.S. Securities and Exchange Commission’s inquiries.~~ On March 29, 2016, Technip S.A. also received an inquiry from the DOJ related to Unaoil. We ~~are cooperating~~cooperated with the ~~DOJ’s inquiry.~~DOJ's investigations and, with regard to FMC Technologies, a related investigation by the U.S. Securities and Exchange Commission (“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.~~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~~cooperated with the DOJ in its ~~inquiry~~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.

~~RECENTLY ISSUED ACCOUNTING STANDARDS~~

~~Refer to Note 3 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.~~

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~We are subject to financial~~For quantitative and qualitative disclosures about market ~~risks, including fluctuations~~risk affecting TechnipFMC, see Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in ~~foreign currency exchange rates and interest rates. In order to manage and mitigate~~ our Annual Report on Form 10-K for the year ended December 31, 2018. Our exposure to ~~these risks, we may use derivative financial instruments in accordance with established policies and procedures. We do~~market risk has not ~~use derivative financial instruments where the objective is to generate profits solely from trading activities. At September 30, 2017 and~~changed materially since December 31, ~~2016, substantially all of our derivative holdings consisted of foreign currency forward contracts and foreign currency instruments embedded in purchase and sale contracts.~~2018.

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 at September 30, 2017, would have changed our revenue and income before income taxes attributable to TechnipFMC by approximately 5% and 8%, 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 positions 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.

~~Interest Rate Risk~~

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. Based on our portfolio as of September 30, 2017, 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 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of September 30, ~~2017,~~2019, and under the direction of our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures, as defined in ~~Rules~~Rule 13a-15(e) ~~and 15d-15(e)~~ under the Exchange Act. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded as of September 30, ~~2017,~~2019, that our disclosure controls and procedures were not effective because of the material ~~weakness~~weaknesses in our internal control over financial reporting ~~described below.~~that were disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018 (“Form 10-K”).

As ~~previously reported,~~disclosed in Part II, Item 9A, “Controls and Procedures” in our Form 10-K, we did not maintain effective controls relating to the calculation of temporary gains and losses from natural hedges on certain of its projects and related foreign exchange adjustments, and this control deficiency resultedidentified material weaknesses in the restatement of our interim Condensed Consolidated Financial Statements as of, and for, the three month period ended March 31, 2017. Management determined that this control deficiency constituted a material weakness in our internal control over financial reporting in the following areas:


(i)	Period-End Financial Reporting

In certain locations, we did not design and ~~as a result, has concluded that our internal control~~maintain effective controls over the period-end financial reporting ~~was~~process. We have ineffective controls over the documentation, authorization, and review of adjustments to and reconciliations of financial information.


(ii)	Accounting for Income Taxes

We did not design and maintain effective ascontrols over the completeness, accuracy, and presentation of ~~September 30, 2017. Additionally, this control deficiency could result in misstatements~~our accounting for income taxes, including the income tax provision and related income tax assets and liabilities.

Status of Remediation Efforts

In response to the material weaknesses identified and described above, our management, with the oversight of the ~~consolidated financial statements that would result~~Audit Committee of our Board of Directors, will continue through 2019 to dedicate significant efforts and resources to further improve our control environment and to take steps to remediate these material weaknesses.

Changes in ~~a material misstatement that would not be prevented or detected.~~Internal Controls over Financial Reporting

~~Management has taken corrective actions to address the material weakness, including the~~Except for changes in connection with our implementation of ~~controls to ensure~~ the accurate remeasurement of gains and losses due to foreign currency impact for the purpose of external reporting. Management has also 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. With successful operation of these modifications, we expect to test these modifications to determine timing of full remediation ~~in subsequent quarters.~~

~~Other than the changes in our internal control over financial reporting implemented after March 31, 2017 to address the material weakness noted~~measures or as described above, there were no changes in our internal control over financial reporting during the three months ended September 30, ~~2017~~2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART ~~II—~~II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

WeA purported shareholder class action filed in 2017 and amended in January 2018 and captioned Prause v. TechnipFMC, et al., No. 4:17-cv-02368 (S.D. Texas) is pending in the U.S. District Court for the Southern District 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.

In addition to the above-referenced matter, 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.

ITEM 1A. RISK FACTORS

In addition to our risk factors previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2018, the following risk factors were identified or modified:

The ~~Company has identified~~proposed separation and spin-off transaction announced on August 26, 2019 is contingent upon the satisfaction of a ~~material weakness in its disclosure controls~~number of conditions, may require significant time and ~~procedures~~attention of our management, and ~~internal control over financial reporting. If~~may not achieve the intended results.

As previously disclosed, our ~~remedial measures are insufficient~~Board of Directors unanimously approved a plan to ~~address the material weakness, or if one or~~separate into two independent, publicly traded companies. For more ~~additional material weaknesses or significant deficiencies in~~information, please refer to Note 2 to our ~~disclosure controls and procedures or internal control over financial reporting are discovered or occur in the future, our~~condensed consolidated financial statements of this Quarterly Report. The completion of the transaction, which is expected to be structured as a spin-off of our Onshore/Offshore segment, including Genesis, a leader in front-end engineering and design, as well as Loading Systems, a leader in cryogenic material transfer products, and Cybernetix, a technology leader in process automation, is contingent upon the final approval of our Board of Directors as well as market conditions and the receipt of regulatory approvals, which are beyond our control, as well as consultation of employee representatives, where applicable. We may ~~contain material misstatements~~also choose to abandon the spin-off at any time. For these and ~~we could~~other reasons, the spin-off may not be ~~required~~completed in the expected timeframe or at all. Additionally, the execution of the proposed spin-off will likely continue to ~~further restate~~require significant time and attention of our ~~financial results,~~management, which could ~~have a material adverse effect on our financial condition, results of operations and cash flows.~~

~~Management identified a material weakness in~~impact other strategic initiatives. Our employees may also be uncertain about their future roles within the ~~Company’s disclosure controls and procedures and internal control over financial reporting as of March 31, 2017 relating to~~separate companies pending the ~~rates used in calculations of foreign currency effects on certain~~completion of the Company’s engineering and construction projects and related ownership interests. We did not have sufficient controls in place to provide reasonable assurance that a material error would be prevented or detected related to the rates used in calculations of foreign currency effects on certain of the Company’s engineering and construction projects and related foreign exchange adjustments. This deficiency in the design of our controls resulted in a material error in our financial statements.

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 annual or interim financial statements will not be prevented or detected on a timely basis. As a result of this material weakness, our chief executive officer and chief financial officer have concluded that, as of September 30, 2017, our disclosure controls and procedures were not effective at a reasonable assurance level. As a result of the material weakness, management has concluded that our internal control over financial reporting was not effective as of September 30, 2017.

The Company has reviewed the process to calculate the foreign currency remeasurement effect and has implemented revisions and additional controls designed to ensure that similar computational errors will not recur. To remediate the material weakness in our internal control over financial reporting, the Company will establish policies and procedures for the review, approval and application of GAAP to, and disclosure with respect to, calculations of foreign currency effects.

If our remedial measures are insufficient to address the material weakness, 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 could be required to further restate our financial results,spin-off, which could ~~have a material adverse effect on our financial condition, results of operations and cash flows, restrict our ability~~lead to ~~access~~departures. In addition, if the capital markets, require significant resources to correct the weaknesses or deficiencies, subject us to fines, penalties or judgments, harm the our reputation or otherwise cause a decline in investor confidence and cause a decline in the market price of our stock.

We cannot provide absolute assurance that additional material weaknesses or significant deficiencies in our disclosure controls and procedures or internal control over financial reporting will not be identified in the future. Any failure to maintain or implement required new or improved controls, or any difficulties we encounter in their implementation, could result in additional significant deficiencies or material weaknesses, cause us to fail to meet our periodic reporting obligations or result in material misstatements in 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 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 a decline in our stock price.

~~Unanticipated changes relating to competitive factors in our industry, including ongoing industry consolidation, may impact our results of operations.~~

~~Our industry, including our customers and competitors, has experienced unanticipated changes in recent years. Moreover, the industry~~spin-off is undergoing consolidation, which may affect demand for our products and services as a result of price concessions or decreased customer capital spending. This consolidation activity could have a significant negative impact on our results of operations, financial condition 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.

~~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 are substantially dependent on conditions in the oil and gas industry, including (i) the level of exploration, development and production activity, (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. 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.

~~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;~~

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

~~political and economic uncertainty and socio-political unrest;~~

~~available excess production capacity within the Organization of Petroleum Exporting Countries (“OPEC”) and the level of oil production by non-OPEC countries;~~

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

~~technological advances affecting energy consumption;~~

~~potential acceleration of the development of alternative fuels;~~

~~access to capital and credit markets, which may affect our customers’ activity levels and spending for our products and services; 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. The current downturn in the oil and gas industry has resulted in a reduction in demand for oilfield services and could further adversely affect our financial condition, results of operations or cash flows.

~~Our success depends on our ability to implement new technologies and services.~~

Our success depends on the ongoing development and implementation of new product designs, including the processes used by us to produce or 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 or other protection of our intellectual property rights,completed, we may not ~~be able to continue to develop our services, products and related technologies to meet evolving industry requirements, and if so, at prices acceptable to our customers.~~

~~The industries in which we operate or have operated expose us to potential liabilities, including the installation or use of our products.~~

We are subject to potential liabilities arising from equipment malfunctions, equipment misuse, personal injuries and natural disasters, the occurrence of which may result in 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,realize its expected benefits. Any such ~~potential liabilities~~difficulties 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 the types of businesses which we operate, 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. Actual expenses incurred in executing a fixed-price contract 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;~~

~~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 or subcontractors 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. As a result, 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. Depending on the size of a project, variations from estimated contract performance could have a significant impact on our financial condition, results of operations or cash flows.

New capital asset construction projects for vessels and plants 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 seek to continuously upgrade and develop our asset base. Such projects are subject to risks of delay and cost overruns which are inherent to any large construction project and which 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;~~

~~issues regarding the design and engineering; 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.

~~Disruptions in the timely delivery of our backlog could affect our future sales, profitability, and our 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 on 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, particularly in light of the current industry environment where customers may seek to improve their returns or cash flows.

~~We face risks relating to 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 heavily depend on certain suppliers for raw materials or semi-finished goods. Any difficulty faced by us in hiring 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.

Any delay on the part of subcontractors, suppliers or joint venture partners in the completion of work, any failure on the part of a subcontractor, supplier or joint venture partner to meet its obligations, or any other event attributable to a subcontractor, supplier or joint venture partner that is beyond our control or not foreseeable by us could lead to delays in the overall progress of the project and/or generate significant extra costs. We are exposed to risks presented by the activities of our subcontractors, suppliers and joint venture partners in connection with the performance of their obligations for a project. 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.

Based on these potential issues, we could be required to compensate our customers. 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 would be potentially obligated to assume our defaulting partner’s obligations, Even if we were entitled to make a claim for these extra costs against the defaulting supplier, subcontractor or joint venture partner, we could 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 an inability 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 transmit through sensitive maritime areas. Such risks have the potential to significant harm 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.

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, health and safety, labor and employment, import/export control, 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 FCPA, the U.K. Bribery Act of 2010 (the “Bribery Act”), 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 will be exposed to a risk of violating anti-corruption laws and sanctions regulations. Some of the international locations in which we will 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.

While we believe we have a strong compliance program, including procedures to minimize and detect fraud in a timely manner, and continue efforts to improve our systems of internal controls, we can provide no assurance that the 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, and, as a result, we could be subject 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. 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, or the issuance of orders enjoining our operations. 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, could adversely affect our business and operating results by increasing our costs, limiting the demand for our products and services or restricting our operations.

~~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 such as North Africa, West Africa, the Middle East, and the Commonwealth of Independent States, 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, terrorist attacks, cyber-terrorism, military activity and wars;~~

~~supply disruptions in key oil producing countries;~~

~~the ability of OPEC to set and maintain production levels and pricing;~~

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

~~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;~~

~~changes in, and the administration of, laws and regulations;~~

~~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.~~

Our shares were issued into the facilities of The Depository Trust Company (“DTC”) with respect to shares listed on the New York Stock Exchange (“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. While we would pursue alternative arrangements to preserve the listing and maintain trading, any such disruption could have a material adverse effect on the trading price of our shares.

~~The results of the United Kingdom’s referendum on 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, USA; and in London, United Kingdom, with worldwide operations, including material business operations in Europe. In June 2016, a majority of voters in the United Kingdom elected to withdraw from the European Union in a national referendum (“Brexit”). The referendum was advisory, and the terms of any withdrawal are subject to a negotiation period that could last at least two years after the government of the United Kingdom formally initiated its withdrawal process in the first quarter of 2017. Nevertheless, Brexit has created significant uncertainty about the future relationship between the United Kingdom and the European Union and has given rise to calls for certain regions within the United Kingdom to preserve their place in the European Union by separating from the United Kingdom as well as for the governments of other E.U. member states to consider 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. Lack of clarity about applicable future laws, regulations or treaties as the United Kingdom negotiates the terms of a withdrawal, as well as the operation of any such rules pursuant to any withdrawal terms, 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 decrease foreign direct investment in the United Kingdom. For example, withdrawal from the European Union could, depending on the negotiated terms of withdrawal, eliminate the benefit of certain tax-related E.U. directives currently applicable to U.K. 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.

If the United Kingdom and the European Union are unable to negotiate 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 among 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, and 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.

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 organized under the laws of 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 if, to the extent that, the distribution does not reduce the amount of those assets to less that that aggregate.

Following the merger, we capitalized our reserves arising out of the merger by the allotment and issuance by TechnipFMC of a bonus share, which was paid up using such reserves, such that the amount of such reserves so applied, less the nominal value of the bonus share, applied as share premium and accrued to our share premium account. We implemented a court-approved reduction of our capital by way of a cancellation of the bonus share and share premium account in the amount of $10,177,554,182, which 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 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.

~~We may not be able to pay dividends or repurchase shares of our ordinary shares in accordance with our announced intent or at all.~~

The Board of Directors’ determinations regarding dividends and share repurchases will depend on a variety of 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 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 September 30, 2017, after giving effect to the Merger, our total debt would have been $3.6 billion. We also have the capacity under our $2.5 billion credit facility and bilateral facilities 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;

~~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 failure 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.

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

The terms of our financing are, in part, dependent 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 time or that a rating will not be lowered or withdrawn entirely by a rating agency. Factors that 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 access the debt capital markets, refinance our existing 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 increase in the level of our indebtedness and related interest costs may increase our vulnerability to adverse general economic and industry conditions and may affect our ability to obtain additional financing.

~~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, no assurance can be given that the nature and amount of that insurance will 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. Royalty payments under licenses from third parties, if available, would increase our costs. If a license were not available, 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. Additionally, developing non-infringing technologies would increase our costs.

~~Currency exchange rate fluctuations could adversely affect our financial condition, results of operations or cash flows.~~

We conduct operations around the world in a number of 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 earnings and may also affect the book value of our assets and liabilities and related equity. We do not hedge translation impacts on earnings, and our efforts to engage in hedging transactions to minimize our current exchange rate exposure for transaction impacts may not be successful. Moreover, certain currencies, 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.

~~We may not realize the cost savings, synergies and other benefits expected from the merger of FMC Technologies and Technip.~~

The combination of two independent companies is a complex, costly and time-consuming process. As a result, we will be required to devote significant 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 to realize the anticipated benefits of the merger could cause an interruption of our operations and could seriously harm our results of operations. In addition, the overall integration of Technip and FMC Technologies may result in material unanticipated problems, expenses, liabilities, competitive responses, loss of client relationships and diversion of management’s attention, and may cause our stock prices to decline. The difficulties of combining the operations of Technip and FMC Technologies include, but is 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, which may prove to be incompatible;~~

~~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 will be 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 or sales or growth opportunities that we expect. These benefits may not be achieved within the anticipated time frame, or at all. As a result, we cannot assure that the combination of Technip and FMC Technologies will result in the realization of the full benefits expected from the merger.

~~We may incur significant merger-related costs.~~

We have incurred and expect to incur a number of non-recurring direct and indirect costs associated with the merger. In addition to the cost and expenses associated with the consummation of the merger, there are also processes, policies, procedures, operations, technologies and systems that must be integrated in connection with the merger and the integration of Technip and FMC Technologies. While both Technip and FMC Technologies have assumed that a certain level of expenses would be incurred in connection with 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. There may also be significant additional unanticipated costs in connection with the merger that we may not recoup. These costs and expenses could reduce the realization of efficiencies and strategic benefits we expect to achieve from the merger. Although we expect that these benefits will offset the transaction expenses and implementation costs over time, this net benefit may not be achieved in the near term or at all.

~~A failure of our IT infrastructure 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. Despite our implementation of security measures, our systems are vulnerable to damages from computer viruses, natural disasters, incursions by intruders or hackers, failures in hardware or software, power fluctuations, cyber terrorists and other similar disruptions. Additionally, we rely on third parties to support the operation of our IT hardware and software infrastructure, and in certain instances, utilize web-based applications. Although no such material incidents have occurred to date, the failure 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, reputational harm, 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 damage caused by these disruptions or security breaches in the future.

~~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 is generally considered a U.S. “domestic” corporation (or U.S. tax resident) if it is organized in the United States, and a corporation is generally considered a “foreign” corporation (or non-U.S. tax resident) if it is not a U.S. domestic corporation. Because we are an entity incorporated in England and Wales, we would generally be classified as a foreign corporation (or non-U.S. tax resident) under these rules. Section 7874 provides an exception under which a foreign incorporated entity may, in certain circumstances, be treated as a U.S. domestic corporation for U.S. federal income tax purposes.

Unless we have satisfied the substantial business activities exception, as defined in Section 7874 and described in more detail below (the “Substantial Business Activities Exception”), we will be treated as a U.S. domestic corporation (that is, as a U.S. tax resident) for U.S. federal income tax purposes under Section 7874 if the percentage (by vote or value) of our shares considered to be held by former holders of FMCTI Shares after the merger by reason of holding FMCTI Shares for purposes of Section 7874 (the “Section 7874 Percentage”) is (i) 60% or more (if, as expected, the Third Country Rule (defined below) applies) or (ii) 80% or more (if the Third Country Rule does not apply). In order for us to satisfy the Substantial Business Exception, at least 25% of the employees (by headcount and compensation), real and tangible assets and gross income of our expanded affiliated group must be based, located and derived, respectively, in the United Kingdom. The Substantial Business Activities Exception is not expected to be satisfied. In addition, the IRS and the U.S. Department of the Treasury have issued a rule that generally provides that if (i) there is an acquisition of a domestic company by a foreign company in which the Section 7874 Percentage is at least 60%, and (ii) in a related acquisition, such foreign acquiring company acquires another foreign

corporation and the foreign acquiring company is not subject to tax as a resident in the foreign country in which the acquired foreign corporation was subject to tax as a resident prior to the transactions, then the foreign acquiring company will be treated as a U.S. domestic company for U.S. federal income tax purposes (the “Third Country Rule”). Because we are a tax resident in the United Kingdom and not a tax resident in France as Technip was, we expect that we would be treated as a U.S. domestic corporation for U.S. federal income tax purposes under the Third Country Rule if the Section 7874 Percentage were at least 60%.

In addition, if the Section 7874 Percentage is calculated to be at least 60%, Section 7874 and the rules related thereto may impose an excise tax under Section 4985 of the Code (the “Section 4985 Excise Tax”) on the gain recognized by certain “disqualified individuals” (including officers and directors of a U.S. company) on certain stock-based compensation held thereby at a rate equal to 15%, even if the Third Country Rule were to apply such that we were treated as a U.S. domestic corporation for U.S. federal income tax purposes. We may, if we determine that it is appropriate, provide disqualified individuals with a payment with respect to the excise tax, so that, on a net after-tax basis, they would be in the same position as if no such excise tax had been applied.

We believe that the Section 7874 Percentage was less than 60% such that the Third Country Rule is not expected to apply to us and the Section 4985 Excise Tax is not expected to apply to any such “disqualified individuals.” However, the calculation of the Section 7874 Percentage is complex and is subject to detailed U.S. Treasury regulations (the application of which is uncertain in various respects and would be impacted by changes in such U.S. Treasury regulations). In addition, there can be no assurance that there will not be a change in law, including with retroactive effect, which might cause us to be treated as a U.S. domestic corporation for U.S. federal income tax purposes. Accordingly, we cannot assure you that the IRS will agree with our position and/or would not successfully challenge our status as a foreign corporation.

~~U.S. tax laws and/or IRS 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 and U.S. Treasury regulations promulgated thereunder may adversely affect our ability to engage in certain future acquisitions of U.S. businesses in exchange for our equity or to otherwise restructure the non-U.S. members of our group, which 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. These 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 tax laws of numerous jurisdictions, and challenges to the interpretations 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.

In addition, the U.S. Congress, the U.K. Government, the Organization for Economic Co-operation and Development, 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. One example is in the area of “base erosion and profit shifting” where payments are made between affiliates from a jurisdiction with high tax rates to a jurisdiction with lower tax rates. Additionally, recent legislative proposals would treat us as a U.S. domestic corporation if our management and control of TechnipFMC and its affiliates were determined to be located primarily in the United States and/or would reduce the Section 7874 Percentage threshold at or above which we would be treated as a U.S. domestic corporation. Thus, the tax laws in the United States, the United Kingdom and other countries in which we and our affiliates do business could change on a retroactive basis and any such changes could adversely affect us. Furthermore, the interpretation and application of domestic or international tax laws made by us and by our subsidiaries could differ from that of the relevant governmental authority, which could result in administrative or judicial procedures, actions or sanctions, which could be material.

~~We may not qualify for benefits under the 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 the tax treaties between the United Kingdom and other countries, notably the United States. However, our ability to qualify for such benefits will depend on whether we are treated as a U.K. tax resident and upon the requirements contained in each treaty and the applicable domestic laws, as the case may be, on the facts and circumstances surrounding our operations and management, and on the relevant interpretation of the tax authorities and courts. The failure by us or our subsidiaries to qualify for benefits under the tax treaties entered into between the United Kingdom and other countries could result in adverse tax consequences to us and could result in certain tax consequences of owning and disposing of our shares.

We intend to operate so as 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 England and Wales. English law currently provides that we will be regarded as being 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 Technip 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 due to the French tax authorities having deemed that certain strategic decisions of TechnipFMC have been taken at the level of our French permanent establishment rather than in the United Kingdom. Any such claim would need to be settled between the French and the U.K. tax authorities pursuant to the mutual assistance procedure provided for by the tax treaty dated June 19, 2008 concluded between France and the United Kingdom, and there is no assurance that these authorities would reach an agreement that we will remain exclusively a U.K. tax resident, which could materially and adversely affect our business, financial condition, results of operations and future prospects. 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 different tax consequences of owning and disposing of our shares.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

We had no unregistered sales of equity securities during the three months ended September 30, ~~2017.~~2019.

The following table summarizes repurchases of our ordinary shares during the three months ended September 30, ~~2017.~~2019.

~~ISSUER PURCHASES OF EQUITY SECURITIES~~

Issuer Purchases of Equity Securities

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)
July 1, 2017—July 31, 2017 590
$ 28.22
—
—
August 1, 2017—August 31, 2017 300
$ 25.58
—
—
September 1, 2017—September 30, 2017 130,240
$ 27.47
129,800
18,375,011
Total 131,130
129,800
18,375,011

~~_______________________~~



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)
July 1, 2019 - July 31, 2019	36,000	$	25.27	36,000	14,286,427
August 1, 2019 - August 31, 2019	—	$	—	—	14,286,427
September 1, 2019 - September 30, 2019	—	$	—	—	14,286,427
Total	36,000			36,000	14,286,427

(a)

Represents ~~129,800 shares of~~36,000 ordinary shares repurchased and canceled and 1,330 ordinary shares purchased and held in an employee benefit trust established for the FMC Technologies, Inc. Non-Qualified Savings and Investment Plan. In addition to these shares purchased on the open market, we sold 7,730 shares of registered ordinary shares held in this trust, as directed by the beneficiaries during the three months ended September 30, 2017.canceled.

(b)

In ~~April 2017, we announced a repurchase plan approved by~~December 2018, our Board of Directors ~~authorizing up to $500 million to repurchase shares~~authorized an extension 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.~~for $300.0 million for the purchase of ordinary shares.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

~~Not applicable.~~None.

ITEM 5. OTHER INFORMATION

~~Disclosures pursuant~~Within the second quarter 2018, management decided to ~~Section 13(r)~~wind down all business in Iran, with the exception of seeking to collect outstanding receivables for work previously completed. Since the ~~Securities Exchange Act~~second quarter 2018, the Company has not and will not accept any new work in Iran.

Pursuant to section 13(r) of the Exchange Act, two of our non-U.S. subsidiaries ~~have~~had contracts with entities in Iran. ~~We have~~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. We are~~Iran and also ~~providing~~provided engineering and design services for the construction of an ethylene plant in ~~Iran, which is expected to be completed by the end of 2018. All activities were conducted, and will be conducted, outside the United States by non-U.S. entities in compliance with applicable law.~~Iran. We have not received noany revenue under either ~~contract~~of these contracts for the ~~three and nine months~~quarter ended September 30, ~~2017.~~2019. The expected ~~gross~~ revenue ~~from~~related to services performed prior to contract termination for the olefins plant and the ethylene plant is ~~250,000~~260,000 Euros and ~~8,000,000~~4,000,000 Euros, respectively, which is less than ~~0.18%~~0.1% of our ~~pro forma~~ revenues for the fiscal year ended December 31, ~~2016. Net profit from the two contracts is unknown at this time.~~

~~Position of Chief Operating Officer~~

~~On November 6, 2017, we announced that Julian Waldron, currently Executive Vice President~~2018. We also had a non-binding arrangement with an engineering, procurement, and ~~Chief Operating Officer of TechnipFMC, will transition to the role of Special Advisor, Integration and Efficiency Program, effective immediately.~~

~~Rule 14a-8 Stockholder Proposal Deadline~~

~~The deadline for stockholder proposals to be included~~construction company in ~~the proxy statement and form of proxy pursuant to Rule 14a-8~~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.

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, ~~Annual General Meeting of Shareholders is December 15, 2017.~~

we withdrew all pending bids in Iran and will not accept a contract award related to such a project.

ITEM 6. ~~EXHIBITS~~

~~Information required by this item is incorporated herein by reference from the section entitled “Index of Exhibits” of this Quarterly Report on Form 10-Q for the period ended September 30, 2017.~~

~~INDEX OF~~ EXHIBITS



Exhibit ~~No.~~Number		Exhibit Description
~~2.1~~31.1		Business Combination Agreement, dated as of June 14, 2016, by and among FMC Technologies, Inc., TechnipFMC plc (f/k/a FMC Technologies SIS Limited) and Technip S.A. (incorporated by reference from Annex A-1 to the Registration Statement on Form S-4, as amended, filed on October 21, 2016) (File No. 333-213067)
~~3.1~~	~~Articles of Association of TechnipFMC plc (incorporated by reference from Exhibit 3.1 to the Current Report on Form 8-K filed on January 17, 2017) (File No. 001-37983)~~
~~4.1~~	Indenture, dated March 29, 2017, between TechnipFMC plc and U.S. Bank National Association (incorporated by reference from Exhibit 4.1 to the Current Report on Form 8-K filed on March 30, 2017) (File No. 001-37983)
~~4.2~~	First Supplemental Indenture, dated March 29, 2017, between TechnipFMC plc and U.S. Bank National Association, as trustee (including the form of 2.00% Senior Notes due 2017) (incorporated by reference from Exhibit 4.2 to the Current Report on Form 8-K filed on March 30, 2017) (File No. 001-37983)
~~4.3~~	Second Supplemental Indenture, dated March 29, 2017, between TechnipFMC plc and U.S. Bank National Association, as trustee (including the form of 3.45% Senior Notes due 2022) (incorporated by reference from Exhibit 4.3 to the Current Report on Form 8-K filed on March 30, 2017) (File No. 001-37983)
~~4.4~~	Registration Rights Agreement, dated March 29, 2017, between TechnipFMC plc, and each of Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wells Fargo Securities, LLC, as dealer managers (incorporated by reference from Exhibit 4.4 to the Current Report on Form 8-K filed on March 30, 2017) (File No. 001-37983)
~~10.1~~	Form of Restricted Stock Unit Grant Agreement pursuant to the TechnipFMC plc Incentive Award Plan (Employee) (incorporated by reference from Exhibit 10.1 to the Quarterly Report on Form 10-Q filed on August 4, 2017) (File No. 001-37983)
~~10.2~~	Form of Restricted Stock Unit Grant Agreement pursuant to the TechnipFMC plc Incentive Award Plan (Non-Employee Director) (incorporated by reference from Exhibit 10.2 to the Quarterly Report on Form 10-Q filed on August 4, 2017) (File No. 001-37983)
~~10.3~~	Form of Performance Stock Unit Grant Agreement pursuant to the TechnipFMC plc Incentive Award Plan (Employee) (incorporated by reference from Exhibit 10.3 to the Quarterly Report on Form 10-Q filed on August 4, 2017) (File No. 001-37983)
~~10.4~~	~~Performance Stock Unit Grant Agreement pursuant to the TechnipFMC plc Incentive Award Plan (Employee)~~
~~10.5~~	Form of NonQualified Stock Option Grant Agreement pursuant to the TechnipFMC plc Incentive Award Plan (Employee) (incorporated by reference from Exhibit 10.4 to the Quarterly Report on Form 10-Q filed on August 4, 2017) (File No. 001-37983)
~~31.1~~	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a).
31.2		Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a).
32.1*		Certification of Chief Executive Officer Under Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. ~~1350~~1350.
32.2*		Certification of Chief Financial Officer Under Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. ~~1350~~1350.
101.INS		XBRL 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.SCH		Inline XBRL Taxonomy Extension Schema ~~Document~~Document.
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase ~~Document~~Document.
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase ~~Document~~Document.
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase ~~Document~~Document.
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase ~~Document~~Document.
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).



*	Furnished with this Quarterly Report on Form ~~10-Q~~10-Q.

SIGNATURE

Pursuant to the requirements 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)




/s/ ~~Maryann T. Mannen~~	Krisztina Doroghazi
~~Maryann T. Mannen~~	Krisztina Doroghazi
~~Executive~~Senior Vice President, Controller and Chief ~~Financial~~Accounting Officer ~~(Principal Financial~~ (Principal Accounting Officer and a Duly Authorized Officer)

Date: November ~~8, 2017~~12, 2019

7263



(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 ⁽¹⁾	0.5
Shares of TechnipFMC issued	114.4
Value per share of Technip as of January 16, 2017 ⁽²⁾	$	71.4
Total purchase consideration	$	8,170.7



(In millions)
Assets:
Cash	$	1,479.2
Accounts receivable	1,247.4
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
Deferred income taxes	67.0
Other long-term assets	167.3
Total identifiable assets acquired	6,830.7
Liabilities:
Short-term and current portion of long-term debt	319.5
Accounts payable, trade	386.0
Advance payments	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	226.8
Other long-term liabilities	138.7
Total liabilities assumed	3,781.1
Net identifiable assets acquired	3,049.6
Goodwill	5,121.1
Net assets acquired	$	8,170.7



(In millions)	Allocated Goodwill
Subsea	$	2,508.2
Onshore/Offshore	1,622.9
Surface Technologies	990.0
Total	$	5,121.1



(In millions, except estimated useful lives)	Fair Value		Estimated Useful Lives
Acquired technology	$	240.0	10
Backlog	175.0		2
Customer relationships	285.0		10
Tradenames	635.0		20
Software	55.3		Various
Total identifiable intangible assets acquired	$	1,390.3



(In millions)	September 30, 2017			December 31, 2016
Raw materials	$	250.8		$	272.9
Work in process	175.1			36.1
Finished goods	587.8			64.6
	1,013.7			373.6
Valuation adjustments	(83.0		)	(38.9		)
Inventories, net	$	930.7		$	334.7



(In millions)	September 30, 2017
Financial guarantees ⁽¹⁾	$	839.6
Performance guarantees ⁽²⁾	3,733.8
Maximum potential undiscounted payments	$	4,573.4



(Number of shares in millions)	Ordinary Shares Issued		Ordinary Shares Held in Employee Benefit Trust	Treasury Stock
Balance as of December 31, 2015	119.0		—	0.8
Stock awards	0.1		—	(0.3	)
Treasury stock purchases	—		—	2.6
Dividends paid	3.2		—	—
Balance as of September 30, 2016	122.3		—	3.1

Balance as of December 31, 2016	119.2		—	0.3
Net capital increases due to the merger of FMC Technologies and Technip	347.4		—	—
Stock awards	0.6		—	—
Treasury stock cancellation due to the merger of FMC Technologies and Technip	—		—	(0.3	)
Treasury stock purchases	—		—	0.1
Treasury stock cancellations	(0.1	)	—	(0.1	)
Net stock purchased for (sold from) employee benefit trust	—		0.1	—
Balance as of September 30, 2017	467.1		0.1	—



(In millions)	Foreign Currency Translation			Available-For-Sale Securities		Hedging Instruments			Defined Pension and Other Post-retirement Benefits			Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss as of December 31, 2016	$	(849.8	)	$	—	$	(126.9	)	$	(80.7	)	$	(1,057.4	)
Other comprehensive income (loss) before reclassifications, net of tax	(34.7		)	—		74.9			(4.0		)	36.2
Reclassification adjustment for net losses (gains) included in net income, net of tax	—			—		74.3			1.8			76.1
Other comprehensive income (loss), net of tax	(34.7		)	—		149.2			(2.2		)	112.3
Accumulated other comprehensive income (loss)	(884.5		)	—		22.3			(82.9		)	(945.1		)
Accumulated other comprehensive income attributable to noncontrolling interest	(0.7		)	—		—			—			(0.7		)
Accumulated other comprehensive income (loss) attributable to TechnipFMC as of September 30, 2017	$	(885.2	)	$	—	$	22.3		$	(82.9	)	$	(945.8	)



	Pension Benefits
	Three Months Ended September 30,											Nine Months Ended September 30,
	2017						2016					2017						2016
(In millions)	U.S.			Int’l			U.S.		Int’l			U.S.			Int’l			U.S.		Int’l
Service cost	$	2.7		$	5.9		$	—	$	2.9		$	7.6		$	15.8		$	—	$	8.8
Interest cost	7.0			5.5			—		2.7			19.7			15.0			—		8.2
Expected return on plan assets	(12.7		)	(9.7		)	—		(2.1		)	(35.9		)	(26.7		)	—		(6.3		)
Amortization of prior service cost (credit)	—			0.3			—		0.2			—			0.6			—		0.6
Amortization of actuarial loss (gain), net	—			0.7			—		0.2			—			1.9			—		0.7
Curtailment cost	—			—			—		—			—			—			—		0.1
Net periodic benefit cost	$	(3.0	)	$	2.7		$	—	$	3.9		$	(8.6	)	$	6.6		$	—	$	12.1



	Other Post-retirement Benefits
	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2017		2016		2017		2016
Interest cost	$	0.1	$	—	$	0.2	$	—
Net periodic benefit cost	$	0.1	$	—	$	0.2	$	—



Location of Fair Value Hedge Gain (Loss) Recognized in Income	Gain (Loss) Recognized in Income
	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2017		2016		2017		2016
Other income (expense), net	$	12.2	$	25.5	$	61.9	$	37.0



Location of Cash Flow Hedge Gain (Loss) Reclassified from Accumulated OCI into Income	Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)
	Three Months Ended September 30,						Nine Months Ended September 30,
(In millions)	2017			2016			2017			2016
Foreign exchange contracts:
Revenue	$	(6.3	)	$	—		$	(31.6	)	$	—
Cost of sales	0.2			—			1.7			—
Selling, general and administrative expense	0.5			—			0.7			—
Research and development expense	—			—			(0.1		)	—
Other income (expense), net	(20.4		)	(18.1		)	(70.6		)	(107.9		)
Total	$	(26.0	)	$	(18.1	)	$	(99.9	)	$	(107.9	)

Location of Cash Flow Hedge Gain (Loss) Recognized in Income	Gain (Loss) Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing)
	Three Months Ended September 30,						Nine Months Ended September 30,
(In millions)	2017			2016			2017			2016
Foreign exchange contracts:
Revenue	$	3.7		$	—		$	7.9		$	—
Cost of sales	(2.8		)	—			(7.3		)	—
Other income (expense), net	10.6			1.7			24.6			(2.9		)
Total	$	11.5		$	1.7		$	25.2		$	(2.9	)



(In millions)	Nine Months Ended September 30, 2017
Balance at beginning of period	$	174.8
Less: Gains (losses) recognized in profit and loss statement	(202.9		)
Less: Settlements	76.6
Balance at end of period	$	301.1



	Three Months Ended September 30,									Change (2017 vs. 2016 Pro Forma)
(In millions, except %)	2017			2016 Pro Forma**			2016			$		%
Revenue	$	4,140.9		$	5,038.2		$	2,375.7		(897.3	)	(17.8	)
Costs and expenses:
Cost of sales	3,468.2			4,294.7			1,931.0			(826.5	)	(19.2	)
Selling, general and administrative expense	284.4			282.8			143.0			1.6		0.6
Research and development expense	51.1			45.3			22.0			5.8		12.8
Impairment, restructuring and other expense	59.4			34.0			10.2			25.4		74.7
Merger transaction and integration costs	9.2			44.6			14.0			(35.4	)	(79.4	)
Total costs and expenses	3,872.3			4,701.4			2,120.2			(829.1	)	(17.6	)
Other income (expense), net	30.0			81.0			81.7			(51.0	)	(63.0	)
Net interest expense	(86.3		)	(13.9		)	(0.4		)	(72.4	)	*
Income from equity affiliates	17.3			46.5			67.4			(29.2	)	(62.8	)
Income before income taxes	229.6			450.4			404.2			(220.8	)	(49.0	)
Provision for income taxes	111.7			110.4			102.5			1.3		1.2
Income from continuing operations	117.9			340.0			301.7			(222.1	)	(65.3	)
Loss from discontinued operations, net of income taxes	—			(14.0		)	—			14.0		*
Net income	117.9			326.0			301.7			(208.1	)	(63.8	)
Net loss attributable to noncontrolling interests	3.1			1.0			0.7			2.1		*
Net income attributable to TechnipFMC plc	$	121.0		$	327.0		$	302.4		(206.0	)	(63.0	)



(In millions, except basis points)	Increase (Decrease) in 2016 Pension Expense Before Income Taxes			Increase (Decrease) in Projected Benefit Obligation at December 31, 2016
50 basis point decrease in discount rate	$	0.3		$	29.4
50 basis point increase in discount rate	$	(0.2	)	$	(27.0	)
50 basis point decrease in expected long-term rate of return on plan assets	$	—		—
50 basis point increase in expected long-term rate of return on plan assets	$	—		—



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)
July 1, 2017—July 31, 2017	590	$	28.22	—	—
August 1, 2017—August 31, 2017	300	$	25.58	—	—
September 1, 2017—September 30, 2017	130,240	$	27.47	129,800	18,375,011
Total	131,130			129,800	18,375,011