item 14 principal accounting fees services following summary fees incurred kpmg llp year ended december 31 2016 fees incurred period december 9 2015 december 31 2015 audit services fees kpmg llp related audits technipfmc’s consolidated financial statements included annual report form 10k approved audit committee fmcti technipfmc’s sole shareholder parent fees disclosed paid fmcti part iv item 15item 14 principal accounting fees services information required item incorporated herein reference sections entitled “proposal 6 ratification us auditor” proxy statement 2019 annual general meeting shareholders part iv item 15item 14 principal accounting fees services information required item incorporated herein reference sections entitled “proposal 5 ratification us auditor” proxy statement 2020 annual general meeting shareholders part iv item 15nanitem 14 principal accounting fees services information required item incorporated herein reference sections entitled “proposal 5 ratification us auditor” proxy statement 2018 annual meeting shareholders part iv item 15 item 7 management’s discussion analysis financial condition results operations may 19 2016 fmcti technip announced intention combine transaction boards directors fmcti technip believe represents compelling opportunity create new global leader subsea surface onshoreoffshore systems services oil gas industry capacity redefine production oil gas continued growth innovation technipfmc formed incorporated december 9 2015 laws england wales private limited company name fmc technologies sis limited purpose facilitating business combination fmcti technip technipfmc august 4 2016 legal name fmc technologies sis limited changed technipfmc limited january 11 2017 subsequently reregistered technipfmc plc public limited company incorporated laws england wales technipfmc commence operations significant assets liabilities conduct activities incidental formation matters contemplated business combination agreement period december 9 2015 technipfmc’s date incorporation december 31 2016 liquidity capital resources refer audited consolidated financial statements notes thereto included part ii item 8 annual report form 10k offbalance sheet arrangements offbalance sheet arrangements year ended december 31 2016 period december 9 2015 december 31 2015 item 7aitem 7 management’s discussion analysis financial condition results operations executive overview global leader oil gas projects technologies systems services manufacturing operations worldwide strategically located facilitate efficient delivery products technologies systems services customers report results operations following segments subsea onshoreoffshore surface technologies management’s determination company’s reporting segments made basis strategic priorities corresponds manner chief executive officer reviews evaluates operating performance make decisions resource allocations segment description products services annual financial data segment found part item 1 “business” note 5 consolidated financial statements part ii item 8 annual report form 10k discussion analysis consolidated results operations results operations segments years ended december 31 2018 2017 2016 follows focus economic industryspecific drivers key risk factors affecting business segments formulate strategic plans make decisions related allocating capital human resources results segments primarily driven changes capital spending oil gas companies largely depend upon current anticipated future crude oil natural gas demand production volumes consequently commodity prices use crude oil natural gas prices indicator demand additionally use onshore offshore rig count indicator demand consequently influences level worldwide production activity spending decisions also focus key risk factors determining overall strategy making decisions capital allocation factors include risks associated global economic outlook product obsolescence competitive environment address risks business strategies incorporate continuing development leading edge technologies cultivating strong customer relationships subsea segment affected changes commodity prices trends deepwater oil natural gas production onshoreoffshore segment impacted change commodity prices population growth demand natural gas although onshore market typically resilient changes impacting segment subsea onshoreoffshore segments benefit current market fundamentals supporting demand new liquefied natural gas facilities onshoreoffshore also benefits construction petrochemical fertilizer plants surface technologies segment primarily affected changes commodity prices trends landbased shallow water oil natural gas production including trends shale production developed close working relationships customers results reflect ability build longterm alliances oil natural gas companies provide solutions needs timely costeffective manner believe closely working customers enhance competitive advantage improve operating results strengthen market positions evaluate operating results consider business segment performance indicators like segment revenue operating profit capital employed addition level inbound orders order backlog significant proportion revenue recognized percentage completion method accounting cash receipts arrangements typically occur milestones achieved stated contract terms consequently timing revenue recognition always correlated timing customer payments aim structure contracts receive advance payments typically use fund engineering efforts inventory purchases working capital excluding cash net debt cash therefore key performance indicators cash flows segments serve customers around world 2018 approximately 90 total sales recognized outside united states evaluate international markets pursue opportunities fit technological capabilities strategies business outlook overall outlook following steep decline prior years price crude oil gradual upward trend since cyclical trough experienced early 2016 though price crude oil remains quite volatile addition sustainability price recovery business activity levels dependent several variables including geopolitical stability opec’s actions regulate production capacity changes demand patterns international sanctions tariffs however longterm demand forecast rise base production continues naturally decline believe macroeconomic backdrop provide customers greater confidence increase investments new sources oil natural gas production subsea impact low crude oil price environment last three years led many customers reduce capital spending plans defer new offshore projects period lowered cost base reductions workforce well manufacturing helped align operations anticipated reductions activity order mitigate negative impact operating profit realizing benefits restructuring actions greater cost efficiency notably manufacturing operations taken additional actions 2018 balanced reductions need preserve capacity preparation increased market activity higher order inbound industry conditions continue improve operational improvements made downturn providing us capability respond increase order activity despite reductions personnel manufacturing capacity however subsea industry continues underutilized manufacturing vessel capacity may lead continued pricing pressure also recognize need develop invest people ensure core competencies capabilities necessary continued success market recovery lowered cost base combined aggressive cost reductions taken customers caused project economics improve many current future offshore projects deemed economic prices experienced third quarter customer investment decisions delayed variety reasons continue work closely customers early engagement feed studies use unique integrated approach subsea development iepci allow project final investment decisions cycle iepci™ support clients’ initiatives improve subsea project economics helping reduce cost accelerate time first oil long term continue believe offshore deepwater developments remain significant part customers’ portfolios onshoreoffshore onshore market activity continues provide tangible set opportunities particularly natural gas monetization projects natural gas continues take larger share global energy demand market conditions liquefied natural gas “lng” improved rising demand continues rebalance oversupplied market driving improved outlook business confident pace lng investments continue grow near intermediate term industry leader well positioned growth new liquefaction regasification capacity actively engaged several lng feed studies across multiple geographies feed studies provide platform early engagement clients significantly derisk project execution also supporting pursuit engineering procurement construction “epc” contract additionally continue selectively pursue refining petrochemical fertilizer project opportunities middle east africa asia north american markets surface technologies period rapid growth north america unconventional market undergoing nearterm volatility drilling activity proved resilient completions activity reduced stemming pipeline takeaway capacity constraints exhaustion operator capital budgets exploration production hydraulic fracturing activity slowed sequentially particularly permian basin 2018 constraints prove transitory though operator budgets renew pipeline takeaway capacity improves expect improvement activity second half 2019 despite nearterm volatility continuing introduce new innovative commercial models north america activity surface business outside north america resilient continues experience pressure competitive pricing however growth prospects markets expected improve 2019 pro forma results operations unaudited supplemental pro forma results operations year ended december 31 2016 present consolidated information merger ii consolidation legal onshoreoffshore contract entities account design engineering construction yamal completed january 1 2016 pro forma results include potential synergies cost savings expected benefits transactions accordingly pro forma results considered indicative results would occurred transactions consummated january 1 2016 indicative future results refer note 2 note 14 consolidated financial statements included part ii item 8 annual report form 10k information related merger yamal respectively due size aforementioned transactions relative size historical results operations purposes comparability management’s discussion consolidated segment results operations provided basis comparing actual results operations year ended december 31 2017 pro forma results operations year ended december 31 2016 actual results year ended december 31 2016 represent technip consolidated results operations refer “pro forma results operations” information related presentation transactions included pro forma results year ended december 31 2016 2018 compared 2017 revenue decreased 25 billion 2018 compared prioryear period primarily result declining project activity subsea project activity declined africa asia pacific north america onshoreoffshore activity also declined projects progressed towards completion driven primarily yamal lng partially offset increase project activity middle east asia pacific surface technologies’ revenue increased primarily result strong demand north american land market recovery gross profit gross profit revenue less cost sales increased percentage sales 182 2018 168 prioryear increase gross profit percentage sales primarily due realization cost reduction opportunities certain projects lower overall cost structure due cost reduction synergy initiatives successful progression several major projects strong economic performance benefit better product service mix selling general administrative expense selling general administrative expense increased 797 million yearoveryear fmc technologies operations prior merger date january 17 2017 excluded 2017 fmc technologies selling general administrative expenses period 630 million comparable basis selling general administrative expense increased 167 million primarily due increased tendering costs related increasing number feed studies future project awards impairment restructuring expense incurred impairment restructuring expense 18 billion primarily driven 14 billion impairment goodwill 3729 million impairment vessels refer note 17 consolidated financial statements included part ii item 8 annual report form 10k additional information related impairments merger transaction integration costs incurred integration costs 365 million 2018 refer note 2 consolidated financial statements included part ii item 8 annual report form 10k additional information related merger income expense net income expense net primarily reflects 2800 million legal provisions 1165 million net foreign exchange losses associated remeasurement net cash positions foreign currency derivatives net interest expense year ended december 31 2018 revalued mandatorily redeemable financial liability reflect current expectations obligation recognized loss 3223 million refer note 22 information regarding fair value measurement assumptions mandatorily redeemable financial liability related changes fair value net interest expense excluding fair value measurement mandatorily redeemable financial liability also includes interest income expenses higher 172 million net basis compared 2017 provision income taxes effective tax rate 284 2018 803 2017 effective tax rate 2018 significantly impacted impairments partially taxeffective nondeductible legal provision change effective tax rate 2018 compared 2017 excluding items primarily attributable unfavorable change actual country mix earnings 2017 compared 2016 pro forma revenue decreased 40 billion 2017 compared prioryear period pro forma basis primarily resulting sharp decline subsea activities europe africa region due lower order activity 2015 2016 resulting lower backlog business coming 2017 decrease also attributable completion several projects combined lower subsea vessel utilization revenue also decreased across onshoreoffshore businesses yearoveryear pro forma basis primarily driven lower levels project backlog coming 2017 middle east north america south america regions gross profit gross profit revenue less cost sales increased percentage sales 168 2017 141 prioryear pro forma basis improvement gross profit percentage sales primarily due reduction cost sales yearoveryear pro forma basis result realization cost reduction opportunities certain projects lower overall cost structure due cost reduction synergy initiatives successful progression several major projects strong economic performance benefit better product service mix selling general administrative expense selling general administrative expense decreased 1690 million yearoveryear pro forma basis resulting lower headcount across reporting segments due part benefit merger synergies decreased sales commissions due reduced revenue impairment restructuring expense impairment restructuring expense decreased 2521 million yearoveryear pro forma basis impairment restructuring expense 2017 included 1572 million restructuring expense 343 million impairment expense comparable periods pro forma basis implemented restructuring plans across segments reduce costs better align workforce anticipated activity levels thus previously incurred significant restructuring expenses 2016 pro forma basis 2017 continued align capacity expected operating activity levels 2018 beyond also negatively impacted hurricane harvey result incurred expenses 109 million due lost productivity merger transaction integration costs incurred merger transaction integration costs 1018 million 2017 due merger significant portion expenses recorded period related transaction leased facility termination fees lower portion still material related integration activities pertaining combining two legacy companies refer note 2 consolidated financial statements included part ii item 8 annual report form 10k information related merger income expense net income expense net primarily reflects foreign currency gains losses include gains losses associated remeasurement net cash positions well foreign currency derivatives 2017 incurred 401 million additional net foreign exchange losses compared 2016 net interest expense increase interest expense due changes fair value mandatorily redeemable financial liability year ended december 31 2017 revalued liability reflect current expectations obligation recognized loss 2937 million refer note 22 information regarding fair value measurement assumptions mandatorily redeemable financial liability related changes fair value provision income taxes income tax provisions 2017 2016 historical basis reflected effective tax rates 803 327 respectively yearoveryear increase effective tax rate primarily due increases valuation allowance due additional losses generated year tax benefit expected realized unfavorable change actual country mix earnings addition due us legislation passed fourth quarter 2017 incurred onetime deemed repatriation transition tax 1487 million unfavorable tax provision impact 189 million revaluation us deferred individual tax assets liabilities operating results business segments segment operating profit defined total segment revenue less segment operating expenses certain items excluded computing segment operating profit included corporate items refer note 5 consolidated financial statements included part ii item 8 annual report form 10k information report results operations us dollars however earnings generated various currencies worldwide order provide worldwide consolidated results earnings subsidiaries functioning local currencies translated us dollars based upon average exchange rate period us dollar results reported reflect actual economics period reported upon variances prior periods include impact translating earnings different rates subsea due merger 115 months included year ended 2017 legacy fmc technologies compared twelve months pro forma 2016 refer note 2 consolidated financial statements included part ii item 8 annual report form 10k information related merger 2018 compared 2017 subsea revenue decreased 10 billion yearoveryear primarily due projects africa asia pacific north america regions progressed towards completion partially offset increased activity europe subsea revenue continued negatively impacted prior period lower inbound orders related market downturn subsea operating profit excluding 17842 million asset impairment charges totaled 2547 million compared prioryear’s operating profit 4605 million reduction primarily due anticipated revenue decline related prior period lower inbound orders partially offset merger synergies cost reduction activities successful completion key project milestones additionally 2018 included 17842 million asset impairment charges primarily related impairment goodwill certain vessels refer note 17 consolidated financial statements included part ii item 8 annual report form 10k additional information related asset impairments refer ‘nongaap measures’ information regarding segment operating results 2017 compared 2016 pro forma subsea revenue decreased 33 billion yearoveryear pro forma basis primarily due lower overall activity europe africa north america regions result reduced backlog 2015 2016 additionally decrease revenue attributable completion several projects first nine months 2017 lower vessel utilization yearoveryear pro forma basis primarily due high vessel campaigns africa asia prior year continue current year similar levels subsea operating profit percent revenue decreased yearoveryear pro forma basis due lower revenue subsea projects business across subsea regions onshoreoffshore 2018 compared 2017 onshoreoffshore revenue decreased 18 billion yearoveryear decrease primarily driven major projects including yamal lng silbur martin linge progressed towards completion decrease partially offset energean karish project awarded early 2018 feed work arctic lng project increased work process technology business operating profit yearoveryear favorably impacted reduced costs strong project execution bonus achievements yamal lng due completion key milestones ahead schedule additionally 2018 favorably impacted 34 million related settlements restructured projects operations onshoreoffshore operating profit percentage revenue increased 135 compared 2017 refer ‘nongaap measures’ information regarding segment operating results 2017 compared 2016 pro forma onshoreoffshore revenue decreased 7855 million yearoveryear decrease revenue attributable lower activity north america due delivery several projects 2016 early 2017 well reduced activity yamal partially offset increases projects prelude flng middle east operating profit operating profit percentage revenue year ended 2017 favorable compared year ended 2016 pro forma basis comparison benefited successful progression several major projects including yamal prelude flng successful resolution certain contract disputes addition yearoveryear performances favorably impacted decrease 2097 million related impairment restructuring expense surface technologies b due merger 115 months included year ended 2017 legacy fmc technologies compared twelve months pro forma 2016 refer note 2 consolidated financial statements included part ii item 8 annual report form 10k b prior merger reported business two segments subsea onshoreoffshore result merger addition fmc technologies began reporting business three segments actual results operations 2016 include surface technologies 2018 compared 2017 surface technologies revenue increased 3176 million yearoveryear primarily driven increased activity north american market solid growth north america reflected increased demand flowline hydraulic fracturing services wellhead systems pressure control equipment services outside north america revenue also increased yearoveryear primarily driven increased demand pressure control equipment services surface technologies operating profit percent revenue increased significantly yearoveryear increase primarily driven increased volume north america cost reductions partially offset continued international pricing pressure additionally 2018 included 138 million impairment restructuring severance charges compared 192 million prior year surface technologies operating profit percentage revenue increased 109 compared 2017 refer ‘nongaap measures’ information regarding segment operating results 2017 compared 2016 pro forma surface technologies revenue increased 224 million yearoveryear pro forma basis lower revenue surface international measurement solutions loading systems businesses yearoveryear pro forma basis offset revenue increase surface americas business increase surface americas driven primarily higher rig count positive impact flowline well service pump revenues surface technologies operating profit percent revenue increased yearoveryear pro forma basis driven primarily increased volume flowline well service pump products surface americas business 488 million decrease impairment restructuring severance charges corporate items 2018 compared 2017 corporate expense increased 2353 million yearoveryear increase due primarily legal provision 2800 million recorded 2018 see note 18 consolidated financial statements included part ii item 8 annual report form 10k offsetting increase 653 million less integration costs 244 million less restructuring costs 2017 refer ‘nongaap measures’ information regarding segment operating results 2017 compared 2016 pro forma corporate expense decreased 74 million yearoveryear pro forma basis decrease primarily attributable reduction business combination transaction integration costs 344 million 2017 compared 2016 pro forma basis nongaap measures addition financial results determined accordance us generally accepted accounting principles gaap provide nongaap financial measures defined item 10 regulation sk securities exchange act 1934 amended net income excluding charges credits well measures derived excluding charges credits income net interest expense taxes excluding charges credits adjusted operating profit depreciation amortization excluding charges credits earnings net interest expense income taxes depreciation amortization excluding charges credits adjusted ebitda net cash nongaap financial measures management believes exclusion charges credits financial measures enables investors management effectively evaluate technipfmcs operations consolidated results operations periodoverperiod identify operating trends could otherwise masked misleading investors management excluded items measures also used management performance measures determining certain incentive compensation foregoing nongaap financial measures considered addition substitute superior measures financial performance prepared accordance gaap following reconciliation comparable financial measures gaap nongaap financial measures inbound orders order backlog inbound orders inbound orders represent estimated sales value confirmed customer orders received reporting period order backlog order backlog calculated estimated sales value unfilled confirmed customer orders reporting date see “transaction price allocated remaining unsatisfied performance obligations” note 4 consolidated financial statements included part ii item 8 annual report form 10k information order backlog subsea order backlog subsea december 31 2018 decreased 2043 million december 31 2017 subsea backlog 60 billion december 31 2018 composed various subsea projects including petrobras’ pipelay support vessel presalt tree awards eni coral project total’s kaombo vng’s fenja peregrino phase ii bp’s shah deniz onshoreoffshore order backlog december 31 2018 increased 17 billion compared december 31 2017 onshoreoffshore backlog 81 billion composed various projects including yamal long son epc contract energean karish project hurl ammonia fertilizer projects neste biodiesel expansion project singapore nonconsolidated backlog nonconsolidated backlog reflects proportional share backlog related joint ventures consolidated due minority ownership position liquidity capital resources cash managed centrally flowed centralized bank accounts controlled maintained technipfmc us jurisdictions best meet liquidity needs global operations current us law amended tax cuts jobs act tcja signed law december 22 2017 repatriation us form dividend would eligible 100 dividend received deduction therefore would subject us federal income tax expect meet continuing funding requirements global operations cash generated operations commercial paper programs existing revolving credit facility net debt cash net debt cash nongaap financial measure reflecting cash equivalents net debt management uses nongaap financial measure evaluate capital structure financial leverage believe net debt net cash meaningful financial measure may assist investors understanding financial condition recognizing underlying trends capital structure net debt cash considered alternative meaningful cash equivalents determined accordance gaap indicator operating performance liquidity following table provides reconciliation cash equivalents net debt cash utilizing details classifications consolidated balance sheets cash flows cash flows years threeyear period ended december 31 2018 follows operating cash flows 2018 used 1854 million cash flows operating activities compared 2107 million generated 2017 resulting 3961 million decrease compared 2017 cash flows operating activities 2017 2831 million lower 2016 working capital balances vary significantly depending payment delivery terms key contracts portfolio projects yearoveryear changes operating cash flow primarily due changes trade receivables net contract assets accounts payable trade investing cash flows investing activities used 4602 million cash 2018 primarily due capital expenditures 3681 million business acquisitions 1049 million cash provided investing activities 2017 12500 million primarily reflecting cash acquired merger refer note 2 consolidated financial statements included part ii item 8 annual report form 10k information related merger cash provided investing activities 2016 31105 million primarily reflecting cash acquired acquisition refer note 9 consolidated financial statements included part ii item 8 annual report form 10k information related acquisition consolidation legal onshoreoffshore contract entities account yamal financing cash flows financing activities used 4448 million 2018 decrease 6100 million cash required financing activities primarily due repayments longterm debt 2017 financing activities used 10548 million 2017 increase 5202 million cash required financing activities primarily due decrease proceeds issuance longterm debt 2016 increase settlements mandatorily redeemable liability increase payments taxes withheld sharebased compensation offset increased borrowings commercial paper 2017 debt liquidity total borrowings december 31 2018 2017 comprised following summary revolving credit facility december 31 2018 commercial paper program ability access 15 billion €10 billion financing commercial paper dealers available capacity revolving credit facility reduced outstanding commercial paper committed credit available revolving credit facility provides ability issue commercial paper obligations longterm basis 19161 million commercial paper issued facilities december 31 2018 ability intent refinance obligations longterm basis commercial paper borrowings classified longterm debt accompanying consolidated balance sheets december 31 2018 revolving credit facility contains customary covenants defined credit facility agreement includes financial covenant requiring total capitalization ratio exceed 60 end financial quarter facility agreement also contains covenants restricting ability subsidiaries ability incur additional liens indebtedness enter asset sales make certain investments december 31 2018 compliance restrictive covenants revolving credit facility refer note 13 note 14 consolidated financial statements included part ii item 8 annual report form 10k information related credit facility mandatorily redeemable liability respectively credit risk analysis valuations derivative assets liabilities reflect fair value instruments including values associated counterparty risk values must also take account credit standing thus including valuation derivative instrument value net credit differential counterparties derivative contract methodology includes impact counterparty credit standing adjustments derivative assets liabilities related credit risk material period presented use income approach valuation technique measure fair value foreign currency derivative instruments recurring basis approach calculates present value future cash flow measuring change derivative contract rate published market indicative currency rate multiplied contract notional values credit risk incorporated reducing derivative’s fair value asset positions result multiplying present value portfolio counterparty’s published credit spread portfolios liability position adjusted calculation however spread representing credit spread used credit spread credit spread counterparties publicly available approximated using spread similar companies industry similar size credit rating time creditriskrelated contingent features agreements financial institutions would require us post collateral derivative positions liability position additional information credit risk incorporated herein reference note 22 consolidated financial statements included part ii item 8 annual report form 10k outlook historically generated liquidity capital resources primarily operations needed credit facility 5839 million capacity available revolving credit facility expect utilize working capital needs temporarily increase volatility credit equity commodity markets creates uncertainty business payment deferrals discounts pricing granted clients prior years may adversely affect results operations cash flows 2019 beyond project spending approximately 350 million 2019 capital expenditures however projected capital expenditures 2019 include contingent capital may needed respond contract award implemented uk courtapproved reduction capital completed june 29 2017 order create distributable profits support payment future dividends future share repurchases board directors authorized 500 million repurchase shares completed 2018 board directors authorized extension program adding 300 million december 2018 total 800 million ordinary shares also october 23 2018 announced board directors authorized declared quarterly cash dividend 013 per ordinary share 2019 expect make contributions approximately 27 million international pension plans representing primarily netherlands qualified pension plans uk actual contribution amounts dependent upon plan investment returns changes pension obligations regulatory environments economic factors update pension estimates annually fourth quarter frequently upon occurrence significant events expect make contributions us qualified pension plan us nonqualified defined benefit pension plan 2019 contractual obligations following summary contractual obligations december 31 2018 available debt dependent upon compliance covenants including negative covenants related liens total capitalization ratio violation covenants events default waived cured changes credit rating could material impact ability maintain committed financing arrangements due intent ability refinance commercial paper obligations longterm basis revolving credit facility variable interest rates associated debt instruments interest senior notes included table 2018 paid 990 million interest charges net interest capitalized b lease office space manufacturing facilities various types manufacturing data processing equipment leases real estate generally provide payment property taxes insurance repairs us substantially leases classified operating leases addition 2014 entered construction operating lease agreements finance construction manufacturing office facilities located houston tx january 2016 construction facilities completed operating lease commenced upon expiration lease term september 2021 option renew lease purchase facilities remarket facilities behalf lessor including certain guarantees residual value remarketing option c normal course business enter agreements suppliers purchase raw materials services agreements include requirement supplier provide products services specifications require us make firm purchase commitment supplier substantially commitments associated purchases made fulfill customers’ orders costs associated agreements ultimately reflected cost sales consolidated statements income expect contribute approximately 27 million international pension plans 2019 required contributions future years depend factors cannot determined time additionally expect pay directly beneficiaries approximately 90 million international unfunded pension plan 55 million us nonqualified unfunded pension plan 2019 e reasonably possible 13 million liabilities unrecognized tax benefits settled 2019 amount reflected income taxes payable consolidated balance sheet december 31 2018 although unrecognized tax benefits contractual obligations presented table represent demands liquidity f contractual obligations represent mandatorily redeemable financial liability fourth quarter 2016 obtained voting control interests legal onshoreoffshore contract entities account design engineering construction yamal lng plant prior amendments contractual terms provided us voting interest control accounted entities equity method accounting based previously held interests entities mandatorily redeemable financial liability 1748 million recognized december 31 2016 account fair value noncontrolling interests year ended december 31 2018 revalued liability reflect current expectations obligation refer note 22 information regarding fair value measurement assumptions mandatorily redeemable financial liability related changes fair value offbalance sheet arrangements following summary offbalance sheet arrangements december 31 2018 collateral performance certain sales contracts part agreements insurance companies liable letters credit surety bonds bank guarantees ability generate revenue certain contracts dependent upon ability obtain offbalance sheet financial instruments offbalance sheet financial instruments may renewed revised released based changes underlying commitment historically commercial commitments drawn upon material extent consequently management believes reasonably likely material claims commitments however financial instruments become unavailable us operations liquidity could negatively impacted critical accounting estimates preparation financial statements conformity gaap requires management make certain estimates judgments assumptions future events affect reported amounts assets liabilities date financial statements reported amounts revenue expenses periods presented related disclosures accompanying notes financial statements management reviewed critical accounting estimates audit committee board directors believe following critical accounting estimates used preparing financial statements address important accounting areas nature estimates assumptions material due levels subjectivity judgment necessary account highly uncertain matters susceptibility matters change see note 1 consolidated financial statements included part ii item 8 annual report form 10k description significant accounting policies revenue recognition majority revenue derived longterm contracts span several years account revenue accordance accounting standard codification “asc” topic 606 revenues contracts customers unit account asc topic 606 performance obligation contract’s transaction price allocated distinct performance obligation recognized revenue performance obligation satisfied performance obligations satisfied time work progresses point time significant portion total revenue recognized time relates onshoreoffshore subsea segments primarily entire range onshore facilities fixed floating offshore oil gas facilities subsea exploration production equipment projects involve design engineering manufacturing construction assembly complex customerspecific systems control transferring time revenue recognized based extent progress towards completion performance obligation selection method measure progress towards completion requires judgment based nature products services provided generally use costtocost measure progress contracts best depicts transfer control customer occurs incur costs contracts costtocost measure progress extent progress towards completion measured based ratio costs incurred date total estimated costs completion performance obligation revenues including estimated fees profits recorded proportionally costs incurred due nature work required performed many performance obligations estimation total revenue cost completion complex subject many variables requires significant judgment common longterm contracts contain award fees incentive fees provisions either increase decrease transaction price include estimated amounts transaction price believe enforceable right modification amount estimated reliably realization probable estimated amounts included transaction price extent probable significant reversal cumulative revenue recognized occur uncertainty associated variable consideration resolved execute contracts customers clearly describe equipment systems andor services analyzing drawings specifications contract requirements project engineers estimate total contract costs based experience similar projects adjust estimates specific risks associated project technical risks associated new design costs associated specific risks estimated assessing probability conditions arising specific risks affect total cost complete project work project begins assumptions form basis calculation total project cost examined regular basis estimates updated reflect current information management’s best judgment adjustments estimates contract revenue total contract cost extent progress toward completion often required work progresses contract experience gained even though scope work required contract may change nature accounting longterm contracts refinements estimating process changing conditions new developments continuous characteristic process consequently amount revenue recognized time sensitive changes estimates total contract costs many factors including limited ability properly execute engineering design phases consistent customers’ expectations availability costs labor material resources productivity weather affect accuracy cost estimates ultimately future profitability operating profit year ended december 31 2018 negatively impacted approximately 67 million result changes contract estimates related projects progress december 31 2017 year ended december 31 2018 recognized changes estimates impact margin amounts 51 million 59 million 43 million onshoreoffshore subsea surface technologies segments respectively changes contract estimates attributed better expected performance throughout execution projects accounting income taxes income tax expense deferred tax assets liabilities reserves uncertain tax positions reflect management’s best assessment estimated future taxes paid subject income taxes united kingdom numerous foreign jurisdictions significant judgments estimates required determining consolidated income tax expense determining current income tax provision assess temporary differences resulting differing treatments items tax accounting purposes differences result deferred tax assets liabilities recorded consolidated balance sheets maintain deferred tax assets must assess likelihood assets recovered adjustments future taxable income extent believe recovery likely establish valuation allowance record valuation allowance reduce asset value believe recoverable based expectation future taxable income believe accounting estimate related valuation allowance critical accounting estimate highly susceptible change period requires management make assumptions future income lives deferred tax assets finally impact increasing decreasing valuation allowance potentially material results operations forecasting future income requires us use significant amount judgment estimating future income use internal operating budgets longrange planning projections develop budgets longrange projections based recent results trends economic industry forecasts influencing segments’ performance backlog planned timing new product launches customer sales commitments significant changes judgment related expected realizability deferred tax asset results adjustment associated valuation allowance december 31 2018 provided valuation allowance related deferred tax assets believe likely generate future taxable income jurisdictions cumulative net operating losses calculation income tax expense involves dealing uncertainties application complex tax laws regulations numerous jurisdictions operate recognize tax benefits related uncertain tax positions judgment likely positions sustained examination including resolutions related appeals litigation based technical merits adjust liabilities uncertain tax positions judgment changes result new information previously unavailable due complexity uncertainties ultimate resolution may result payments materially different current estimates differences reflected adjustments income tax expense periods determined accounting pension postretirement benefit plans determination projected benefit obligations pension postretirement benefit plans important recorded amounts obligations consolidated balance sheet amount pension expense consolidated statements income order measure obligations expense associated pension benefits management must make variety estimates including discount rates used value certain liabilities expected return plan assets set aside fund costs rate compensation increase employee turnover rates retirement rates mortality rates factors update estimates annual basis frequently upon occurrence significant events accounting estimates bear risk change due uncertainty difficulty estimating measures different estimates used management could result recognition different amounts expense different periods time due specialized statistical nature calculations attempt anticipate future events engage thirdparty specialists assist management evaluating assumptions well appropriately measuring costs obligations associated pension benefits discount rate expected longterm rate return plan assets primarily based investment yields available historical performance plan assets respectively measures critical accounting estimates subject management’s judgment materially affect net income actuarial assumptions estimates made management determining pension benefit obligations may materially differ actual results result changing market economic conditions changes plan participant assumptions believe assumptions estimates used appropriate differences actual experience changes plan participant assumptions may materially affect financial position results operations following table illustrates sensitivity changes discount rate expected longterm return plan assets pension expense projected benefit obligation determination fair value business combinations accounting acquisition business requires allocation purchase price various assets acquired liabilities assumed respective fair values determination fair value requires use significant estimates assumptions making determinations management uses available information necessary one year acquisition closing date finalize fair value determinations tangible identifiable intangible assets acquired business combination determination fair value utilizes several valuation methodologies including discounted cash flows assumptions respect timing amount future revenue expenses associated asset assumptions made performing valuations include limited discount rates future revenues operating costs projections capital costs assumptions believed consistent used principal market participants due specialized nature calculations engage thirdparty specialists assist management evaluating assumptions well appropriately measuring fair value assets acquired liabilities assumed business combinations described note 2 consolidated financial statements included part ii item 8 annual report form 10k impairment longlived intangible assets longlived assets including vessels property plant equipment identifiable intangible assets amortized capitalized software costs reviewed impairment whenever events changes circumstances indicate carrying amount longlived asset may recoverable carrying amount longlived asset recoverable exceeds sum undiscounted cash flows expected result use eventual disposition asset determined impairment loss occurred loss measured amount carrying amount longlived asset exceeds fair value determination future cash flows well estimated fair value longlived assets involves significant estimates part management usually lack quoted market prices longlived assets fair value impaired assets typically determined based present values expected future cash flows using discount rates believed consistent used principal market participants based multiple operating cash flow validated historical market transactions similar assets possible expected future cash flows used impairment reviews related fair value calculations based judgmental assessments future productivity asset operating costs capital decisions available information date review future market conditions deteriorate beyond current expectations assumptions impairments longlived assets may identified conclude carrying amounts longer recoverable impairment goodwill represents excess cost fair market value net assets acquired business combinations goodwill subject amortization tested impairment annual basis reporting level unit frequently impairment indicators arise established october 31 date annual test impairment goodwill identify potential impairment comparing fair value applicable reporting unit net book value including goodwill net book value exceeds fair value reporting unit measure impairment comparing carrying value reporting unit fair value reporting units goodwill tested impairment using quantitative impairment test using quantitative impairment test determining fair value reporting unit judgmental nature involves use significant estimates assumptions estimate fair value reporting units using discounted future cash flow model majority estimates assumptions used discounted future cash flow model involve unobservable inputs reflecting management’s assumptions market participants would use estimating fair value business estimates assumptions include revenue growth rates operating margins used calculate projected future cash flows discount rates future economic market conditions estimates based upon assumptions believed reasonable inherently uncertain unpredictable reflect unanticipated events circumstances may occur lower fair value estimate future reporting units could result goodwill impairments factors could trigger lower fair value estimate include sustained price declines reporting unit’s products services cost increases regulatory political environment changes customer demand changes market conditions may affect certain market participant assumptions used discounted future cash flow model based internal forecasts revenues expenses specified period plus terminal value income approach assessing triggering factors quarterly also annual basis also analyze relationship market capitalization consolidated book value equity income approach estimates fair value discounting reporting unit’s estimated future cash flows using weightedaverage cost capital reflects current market conditions risk profile reporting unit arrive future cash flows use estimates economic market assumptions including growth rates revenues costs estimates future expected changes operating margins tax rates cash expenditures future revenues also adjusted match changes business strategy believe approach appropriate valuation method market multiple approach determine estimated fair value reporting units applying transaction multiples reporting unit’s projected ebitda averaging estimate similar historical calculations using either one two three year average reporting unit valuations determined primarily utilizing income approach lesser weighting attributed market multiple approach late fourth quarter 2018 oil prices fell dramatically market capitalization declined significantly together companies oil service industry shortterm event expected significant negative impact shortterm performance changing materially mediumterm longterm cash flow projections excess fair value carrying amount surface technologies onshoreoffshore reporting units ranged approximately 56 excess 200 respective carrying amounts year ended december 31 2018 recorded 13830 million goodwill impairment charges subsea reporting unit refer note 17 consolidated financial statements included part ii item 8 annual report form 10k additional disclosure related impairment goodwill year ended december 31 2018 following table presents significant estimates used management determining fair values reporting units december 31 2018 refer note 12 consolidated financial statements included part ii item 8 annual report form 10k additional information related goodwill impairment testing 2018 matters march 28 2016 fmc technologies received inquiry us department justice doj related dojs investigation whether certain services unaoil sam provided clients including fmc technologies violated us foreign corrupt practices act fcpa march 29 2016 technip sa also received inquiry doj related unaoil cooperating dojs investigations regard fmc technologies related investigation us securities exchange commission late 2016 technip sa contacted doj regarding investigation offshore platform projects awarded 2003 2007 performed brazil joint venture company technip sa minority participant also raised doj certain projects performed technip sa subsidiaries brazil 2002 2013 doj also inquired projects ghana equatorial guinea awarded technip sa subsidiaries 2008 2009 respectively cooperating doj investigation potential violations fcpa connection projects contacted brazilian authorities federal prosecution service mpf comptroller general brazil cgu attorney general brazil agu cooperating investigation concerning projects brazil also contacted french authorities parquet national financier pnf existing matters informed authorities brazil us france coordinating investigations could result global resolution matters progressed point probable estimate aggregate settlement amount authorities 2800 million taken provision fourth quarter year ended december 31 2018 matters involve negotiations law enforcement authorities three separate jurisdictions certainty global settlement reached settlement exceed current accruals authorities broad range civil criminal sanctions anticorruption laws regulations may seek impose corporations individuals appropriate circumstances including limited fines penalties modifications business practices compliance programs authorities entered agreements obtained range sanctions numerous public corporations individuals arising allegations improper payments whereby civil andor criminal penalties imposed recent civil criminal settlements included fines deferred prosecution agreements guilty pleas sanctions including requirement relevant corporation retain monitor oversee compliance anticorruption laws remedial measures applicable us well potential customer reaction remedial measures could material adverse impact business results operations financial condition recently issued accounting standards refer note 3 consolidated financial statements included part ii item 8 annual report form 10k item 7aitem 7 management’s discussion analysis financial condition results operations executive overview global leader energy projects technologies systems services manufacturing operations worldwide strategically located facilitate efficient delivery products technologies systems services customers report results operations following segments subsea onshoreoffshore surface technologies management’s determination company’s reporting segments made basis strategic priorities corresponds manner chief executive officer reviews evaluates operating performance make decisions resource allocations segment description products services annual financial data segment found part item 1 “business” note 7 consolidated financial statements part ii item 8 annual report form 10k focus economic industryspecific drivers key risk factors affecting business segments formulate strategic plans make decisions related allocating capital human resources results segments primarily driven changes capital spending oil gas companies largely depend upon current anticipated future crude oil natural gas demand production volumes consequently commodity prices use crude oil natural gas prices indicator demand additionally use onshore offshore rig count indicator demand consequently influences level worldwide production activity spending decisions also focus key risk factors determining overall strategy making decisions capital allocation factors include risks associated global economic outlook product obsolescence competitive environment address risks business strategies incorporate continuing development leading edge technologies cultivating strong customer relationships subsea segment affected changes commodity prices trends deepwater oil natural gas production onshoreoffshore segment impacted change commodity prices population growth demand natural gas although onshore market typically resilient changes impacting segment subsea onshoreoffshore segments benefit current market fundamentals supporting demand new liquefied natural gas facilities onshoreoffshore also benefits construction petrochemical fertilizer plants surface technologies segment primarily affected changes commodity prices trends landbased shallow water oil natural gas production developed close working relationships customers results reflect ability build longterm alliances oil natural gas companies provide solutions needs timely costeffective manner believe closely working customers enhance competitive advantage improve operating results strengthen market positions evaluate operating results consider business segment performance indicators like segment revenue operating profit capital employed addition level inbound orders order backlog significant proportion revenue recognized percentage completion method accounting cash receipts arrangements typically occur milestones achieved stated contract terms consequently timing revenue recognition always correlated timing customer payments aim structure contracts receive advance payments typically use fund engineering efforts inventory purchases working capital excluding cash net debt cash therefore key performance indicators cash flows segments serve customers around world 2019 approximately 78 percent total sales recognized outside united states evaluate international markets pursue opportunities fit technological capabilities strategies business outlook overall outlook price crude oil remains volatile continued trade throughout 2019 well cyclical trough experienced early 2016 continued sustainability price recovery business activity levels dependent several variables including geopolitical stability opec’s actions regulate production capacity changes demand patterns international sanctions tariffs however longterm demand forecast rise base production continues naturally decline believe macroeconomic backdrop provide customers greater confidence increase investments new sources oil natural gas production continue believe offshore deepwater developments remain significant part customers’ portfolios longterm subsea impact low crude oil price environment led many customers reduce capital spending plans defer new offshore projects response actions lowered cost base reductions workforce well manufacturing helped align operations lower activity levels order mitigate negative impact operating profit taken additional actions 2019 balanced reductions need preserve capacity order deliver current projects backlog ensure prepared increased market activity higher order inbound industry activity moves higher continued rationalization global footprint leverage benefits integrated offering providing us ability respond increased order activity despite reductions personnel manufacturing capacity actions particularly important subsea industry continues underutilized manufacturing vessel capacity may lead continued pricing pressure throughout 2020 also recognize need develop invest people ensure core competencies capabilities necessary continued success lowered cost base combined aggressive cost reductions taken customers led improvement project economics many current future offshore projects deemed economic prices experienced 2019 continue work closely customers early engagement ifeed™ use iepci™ allow project final investment decisions cycle iepci™ support clients’ initiatives improve subsea project economics helping reduce cost accelerate time first oil integrated commercial model accounts significant portion business going forward serve standard approach new business onshoreoffshore onshore market activity continues provide tangible set opportunities particularly natural gas monetization projects natural gas renewables continue take larger share global energy demand despite recent softness spot price lng longterm outlook continues remain strong given role natural gas critical energy transition fuel market experienced record level new capacity final investment decisions 2019 significantly benefitting company confident new lng investments continue near intermediate term industry leader well positioned growth new liquefaction regasification capacity well opportunities biofuels green chemistry energy alternatives actively engaged several lng feed studies across multiple geographies feed studies provide platform early engagement clients significantly derisk project execution also supporting pursuit epc contract additionally continue selectively pursue refining petrochemical fertilizer renewables project opportunities middle east africa asia north american markets offshore market activity expected benefit nearterm macro conditions continue support international growth cycle resulting increased activity offshore deepwater exploration development recent discoveries offshore fields reserves regions brazil australia east africa expected become drivers increased investment longterm gas expected become bigger portion global energy mix requiring new investments upstream industry surface technologies north american activity continued decline fourth quarter 2019 drilling completionsrelated activities impacted negatively volume prices operators adjusted spending downward context took actions reduce inventory levels cost structure terms workforce facility capacity actions extend 2020 believe initiatives launched propose new commercial offerings drive market share gain give us access new markets help us improve volume margins activity outside north america resilient continued increase fourth quarter expect activity continue grow 2020 onshore shallow water offshore consolidated results operations section form 10k generally discusses 2019 2018 items yeartoyear comparisons 2019 2018 discussions 2017 items yeartoyear comparisons 2018 2017 included form 10k found “management’s discussion analysis financial condition results operations” part ii item 7 company’s annual report form 10k year ended december 31 2018 merger transaction costs incurred first half 2019 compared 2018 revenue increased 8562 million 2019 compared prioryear period primarily result improved project activity subsea revenue increased yearoveryear higher projectrelated activity including increased revenue integrated project execution iepci increased demand subsea services onshoreoffshore revenue stable decrease revenues projects progressing towards completion primarily yamal lng largely offset increased project activity middle east asia pacific regions surface technologies revenue increased primarily result improving order backlog international markets primarily middle east asia pacific regions gross profit gross profit revenue less cost sales percentage sales increased marginally 183 2019 182 prioryear period strong project execution completion yamal lng milestones improved gross profits onshoreoffshore offset lower gross profit due competitively priced subsea backlog weaker demand north america surface technologies products services due challenged shale market selling general administrative expense selling general administrative expense increased 875 million yearoveryear primarily result increased corporate expense driven largely accelerated spending well additional performance incentive compensation awards impairment restructuring expense incurred 25 billion restructuring impairment expenses 2019 primarily driven 20 billion goodwill impairment 4954 million longlived asset impairment see note 20 details separation costs incurred 721 million associated preparation separation 2019 refer note 3 information regarding planned transaction merger transaction integration costs incurred merger transaction integration costs 312 million first half 2019 announcement planned separation transaction due continuation integration activities pertaining combining two legacy companies refer note 2 consolidated financial statements included part ii item 8 annual report form 10k additional information related merger income expense net income expense net primarily reflects foreign currency gains losses nonrecurring expenses results disposals assets 2019 recognized 1469 million net foreign exchange losses compared 1165 million net foreign exchange loss prior year period mainly due devaluation angolan kwanza active forwards market 2018 280 million legal provision made net interest expense net interest expense increased 904 million 2019 compared 2018 primarily due change fair value redeemable financial liability revalued mandatorily redeemable financial liability reflect current expectations obligation recognized charge 4231 million see note 25 information regarding fair value measurement assumptions mandatorily redeemable financial liability related changes fair value net interest expense 2019 excluding fair value measurement mandatorily redeemable financial liability decreased 104 million net basis compared 2018 provision income taxes income tax provisions 2019 2018 reflected effective tax rates 129 284 respectively yearoveryear change effective tax rate primarily due decrease amount tax expense associated movements valuation allowances release contingent tax accruals due favorable resolution income tax audits favorable change actual country mix earnings offset part impact nondeductible goodwill impairments effective tax rate fluctuate depending country mix earnings may change based changes jurisdictions operate operating results business segments section form 10k generally discusses 2019 2018 items yeartoyear comparisons 2019 2018 discussions 2017 items yeartoyear comparisons 2018 2017 included form 10k found “management’s discussion analysis financial condition results operations” part ii item 7 company’s annual report form 10k year ended december 31 2018 segment operating profit defined total segment revenue less segment operating expenses certain items excluded computing segment operating profit included corporate items refer note 7 consolidated financial statements included part ii item 8 annual report form 10k information report results operations us dollars however earnings generated various currencies worldwide order provide worldwide consolidated results earnings subsidiaries functioning local currencies translated us dollars based upon average exchange rate period us dollar results reported reflect actual economics period reported upon variances prior periods include impact translating earnings different rates subsea due merger 115 months included year ended 2017 legacy fmc technologies refer note 2 consolidated financial statements included part ii item 8 annual report form 10k information related merger 2019 compared 2018 subsea revenue increased 6830 million yearoveryear primarily due increased project revenue iepci particularly projects asia north sea mediterranean progressed towards completion partially offset decreased activity australia increase subsea services activity across globe added yearoveryear growth revenue subsea operating loss improved primarily due competitively priced backlog executed operating loss included 17986 million asset impairment charges primarily related impairment goodwill longlived assets compared 17842 million 2018 refer note 20 consolidated financial statements included part ii item 8 annual report form 10k additional information related asset impairments refer ‘nongaap measures’ information regarding segment operating results onshoreoffshore 2019 compared 2018 onshoreoffshore revenue increased 1481 million yearoveryear increase primarily driven higher activity europe middle east africa north american regions well process technology business increase partially offset lower activity yamal lng project nears completion operating profit yearoveryear favorably impacted reduced costs strong project execution bonus achievements yamal lng due completion key milestones ahead schedule additionally 2019 included 170 million restructuring expenses onshoreoffshore operating profit percentage revenue increased 153 compared 135 2018 refer ‘nongaap measures’ information regarding segment operating results surface technologies due merger 115 months included year ended 2017 legacy fmc technologies refer note 2 consolidated financial statements included part ii item 8 annual report form 10k 2019 compared 2018 surface technologies revenue increased 251 million yearoveryear primarily driven increased activity middle east asia pacific markets primarily driven increased demand drilling completion pressure control equipment services offset negative drilling completions market activity north america customers curbed capital spending surface technologies operating profit percent revenue decreased significantly yearoveryear decrease primarily due 7042 million charge impairment restructuring charges particular related goodwill compared 138 million charge prior year refer note 20 consolidated financial statements included part ii item 8 annual report form 10k additional information related impairments operating profit also negatively impacted reduced demand flowline hydraulic fracturing services wellhead systems pressure control equipment north america partially offset increased demand products services middle east asia pacific surface technologies operating profit percentage revenue decreased 406 compared 109 2018 refer ‘nongaap measures’ information regarding segment operating results corporate items 2019 compared 2018 corporate expenses excluding foreign exchange losses charges credits increased 661million shown nongaap table nongaap measures addition financial results determined accordance us generally accepted accounting principles gaap provide nongaap financial measures defined item 10 regulation sk securities exchange act 1934 amended net income excluding charges credits well measures derived including diluted earnings loss per share excluding charges credits income net interest expense taxes excluding charges credits adjusted operating profit depreciation amortization excluding charges credits earnings net interest expense income taxes depreciation amortization excluding charges credits adjusted ebitda net cash nongaap financial measures management believes exclusion charges credits financial measures enables investors management effectively evaluate technipfmcs operations consolidated results operations periodoverperiod identify operating trends could otherwise masked misleading investors management excluded items measures also used management performance measures determining certain incentive compensation foregoing nongaap financial measures considered addition substitute superior measures financial performance prepared accordance gaap following reconciliation comparable financial measures gaap nongaap financial measures december 30 2019 company completed acquisition remaining 50 percent technip odebrecht plsv cv resulted net loss 09 million recorded subsea segment net loss comprised impairment charge 842 million included within impairment charges bargain purchase gain 833 million included within restructuring charges inbound orders order backlog inbound orders inbound orders represent estimated sales value confirmed customer orders received reporting period order backlog order backlog calculated estimated sales value unfilled confirmed customer orders reporting date see “transaction price allocated remaining unsatisfied performance obligations” note 6 consolidated financial statements included part ii item 8 annual report form 10k information order backlog subsea order backlog subsea december 31 2019 increased 25 billion december 31 2018 subsea backlog 85 billion december 31 2019 composed various subsea projects including total golfinho eni coral merakes petrobras mero energean karish exxonmobil liza phase 2 neptune duva giøa p1 seagull reliance mj1 lundin edvard grieg bp thunderhorse south extension 2 equinor johan sverdrup phase 2 woodside pyxis husky west white rose onshoreoffshore order backlog december 31 2019 increased 72 billion compared december 31 2018 onshoreoffshore backlog 153 billion composed various projectsincluding arctic lng 2 yamal lng midor refinery expansion bp tortue fpso long son petrochemicals exxonmobil beaumont refinery expansion hurl fertilizer plantspetronas kasawari energean karish neste biodiesel expansion motor oil hellas new naphta complex surface technologies order backlog surface technologies december 31 2019 increased 33 million compared december 31 2018 given shortcycle nature business orders quickly converted sales revenue longer contracts typically converted within twelve months nonconsolidated backlog nonconsolidated backlog reflects proportional share backlog related joint ventures consolidated due minority ownership position liquidity capital resources cash managed centrally flowed centralized bank accounts controlled maintained technipfmc us jurisdictions best meet liquidity needs global operations expect meet continuing funding requirements global operations cash generated operations commercial paper programs existing revolving credit facility net debt cash net debt cash nongaap financial measure reflecting cash equivalents net debt management uses nongaap financial measure evaluate capital structure financial leverage believe net debt net cash meaningful financial measure may assist investors understanding financial condition recognizing underlying trends capital structure net debt cash considered alternative meaningful cash equivalents determined accordance gaap indicator operating performance liquidity following table provides reconciliation cash equivalents net debt cash utilizing details classifications consolidated balance sheets cash flows cash flows years threeyear period ended december 31 2019 follows operating cash flows 2019 generated 8485 million cash flows operating activities compared 1854 million consumed 2018 resulting 10339 million increase compared 2018 659 annual operating cash flow generated fourth quarter primarily due timing differences project milestones vendor payments investing cash flows investing activities used 4198 million 4602 million cash 2019 2018 respectively decrease cash used investing activities primarily due proceeds repayment advance joint venture 620 million decrease cash used acquisitions partially offset increased capital expenditures payment acquire debt securities 2019 purchased deepwater dive support vessel deep discoverer subsequently funded saleleaseback transaction financing cash flows financing activities used 7844 million 4448 million 2019 2018 respectively increase 3396 million cash required financing activities primarily due increased settlement mandatorily redeemable financial liability decreased borrowings commercial paper partially offset decreased purchases treasury stock 2019 debt liquidity total borrowings december 31 2019 2018 comprised following summary revolving credit facility december 31 2019 commercial paper program ability access 15 billion €10 billion financing commercial paper dealers available capacity revolving credit facility reduced outstanding commercial paper committed credit available revolving credit facility provides ability issue commercial paper obligations longterm basis 19670 million commercial paper issued facilities december 31 2019 ability intent refinance obligations longterm basis commercial paper borrowings classified longterm debt accompanying consolidated balance sheets december 31 2019 revolving credit facility contains customary covenants defined credit facility agreement includes financial covenant requiring total capitalization ratio exceed 60 end financial quarter facility agreement also contains covenants restricting ability subsidiaries ability incur additional liens indebtedness enter asset sales make certain investments december 31 2019 compliance restrictive covenants revolving credit facility refer note 16 note 17 consolidated financial statements included part ii item 8 annual report form 10k information related credit facility mandatorily redeemable liability respectively credit risk analysis purposes mitigating effect changes exchange rates hold derivative financial instruments valuations derivative assets liabilities reflect fair value instruments including values associated counterparty risk values must also take account credit standing thus including valuation derivative instrument value net credit differential counterparties derivative contract adjustments derivative assets liabilities related credit risk material period presented use income approach valuation technique measure fair value foreign currency derivative instruments recurring basis approach calculates present value future cash flow measuring change derivative contract rate published market indicative currency rate multiplied contract notional values credit risk incorporated reducing derivative’s fair value asset positions result multiplying present value portfolio counterparty’s published credit spread portfolios liability position adjusted calculation however spread representing credit spread used credit spread credit spread counterparties publicly available approximated using spread similar companies industry similar size credit rating time creditriskrelated contingent features agreements financial institutions would require us post collateral derivative positions liability position additional information credit risk incorporated herein reference note 24 note 25 consolidated financial statements included part ii item 8 annual report form 10k liquidity outlook historically generated liquidity capital resources primarily operations needed credit facility 5330 million capacity available revolving credit facility expect utilize working capital needs temporarily increase volatility credit equity commodity markets creates uncertainty business payment deferrals discounts pricing granted clients prior years may adversely affect results operations cash flows 2020 beyond project spending approximately 450 million 2020 capital expenditures however projected capital expenditures 2020 include contingent capital may needed respond contract award 2020 expect make contributions approximately 69 million international pension plans representing primarily netherlands uk pension plans actual contribution amounts dependent upon plan investment returns changes pension obligations regulatory environments economic factors update pension estimates annually fourth quarter frequently upon occurrence significant events expect make contributions us qualified pension plan us nonqualified defined benefit pension plan 2020 contractual obligations following summary contractual obligations december 31 2019 available debt dependent upon compliance covenants including negative covenants related liens total capitalization ratio violation covenants events default waived cured changes credit rating could material impact ability maintain committed financing arrangements due intent ability refinance commercial paper obligations longterm basis revolving credit facility variable interest rates associated debt instruments interest senior notes included table 2019 paid 1094 million interest charges net interest capitalized b lease office space manufacturing facilities various types manufacturing data processing equipment leases real estate generally provide payment property taxes insurance repairs us substantially leases classified operating leases addition 2014 entered construction operating lease agreements finance construction manufacturing office facilities located usa january 2016 construction facilities completed operating lease commenced upon expiration lease term september 2021 option renew lease purchase facilities remarket facilities behalf lessor including certain guarantees residual value remarketing option c normal course business enter agreements suppliers purchase raw materials services agreements include requirement supplier provide products services specifications require us make firm purchase commitment supplier substantially commitments associated purchases made fulfill customers’ orders costs associated agreements ultimately reflected cost sales consolidated statements income expect contribute approximately 69 million international pension plans 2020 required contributions future years depend factors cannot determined time additionally expect pay directly beneficiaries approximately 133 million international unfunded pension plan 55 million us nonqualified unfunded pension plan 2019 e reasonably possible 21 million liabilities unrecognized tax benefits settled 2020 amount reflected income taxes payable consolidated balance sheet december 31 2019 although unrecognized tax benefits contractual obligations presented table represent demands liquidity f contractual obligations represents share mandatorily redeemable financial liability fourth quarter 2016 obtained voting control interests legal onshoreoffshore contract entities account design engineering construction yamal lng plant prior amendments contractual terms provided us voting interest control accounted entities equity method accounting based previously held interests entities mandatorily redeemable financial liability 1748 million recognized december 31 2016 account fair value noncontrolling interests year ended december 31 2019 revalued liability reflect current expectations obligation refer note 25 information regarding fair value measurement assumptions mandatorily redeemable financial liability related changes fair value offbalance sheet arrangements following summary offbalance sheet arrangements december 31 2019 collateral performance certain sales contracts part agreements insurance companies liable letters credit surety bonds bank guarantees ability generate revenue certain contracts dependent upon ability obtain offbalance sheet financial instruments offbalance sheet financial instruments may renewed revised released based changes underlying commitment historically commercial commitments drawn upon material extent consequently management believes reasonably likely material claims commitments however financial instruments become unavailable us operations liquidity could negatively impacted critical accounting estimates preparation financial statements conformity gaap requires management make certain estimates judgments assumptions future events affect reported amounts assets liabilities date financial statements reported amounts revenue expenses periods presented related disclosures accompanying notes financial statements management reviewed critical accounting estimates audit committee board directors believe following critical accounting estimates used preparing financial statements address important accounting areas nature estimates assumptions material due levels subjectivity judgment necessary account highly uncertain matters susceptibility matters change see note 1 consolidated financial statements included part ii item 8 annual report form 10k description significant accounting policies revenue recognition majority revenue derived longterm contracts span several years account revenue accordance accounting standard codification “asc” topic 606 revenues contracts customers unit account asc topic 606 performance obligation contract’s transaction price allocated distinct performance obligation recognized revenue performance obligation satisfied performance obligations satisfied time work progresses point time significant portion total revenue recognized time relates onshoreoffshore subsea segments primarily entire range onshore facilities fixed floating offshore oil gas facilities subsea exploration production equipment projects involve design engineering manufacturing construction assembly complex customerspecific systems control transferring time revenue recognized based extent progress towards completion performance obligation selection method measure progress towards completion requires judgment based nature products services provided generally use costtocost measure progress contracts best depicts transfer control customer occurs incur costs contracts costtocost measure progress extent progress towards completion measured based ratio costs incurred date total estimated costs completion performance obligation revenues including estimated fees profits recorded proportionally costs incurred due nature work required performed many performance obligations estimation total revenue cost completion complex subject many variables requires significant judgment common longterm contracts contain award fees incentive fees provisions either increase decrease transaction price include estimated amounts transaction price believe enforceable right modification amount estimated reliably realization probable estimated amounts included transaction price extent probable significant reversal cumulative revenue recognized occur uncertainty associated variable consideration resolved execute contracts customers clearly describe equipment systems andor services analyzing drawings specifications contract requirements project engineers estimate total contract costs based experience similar projects adjust estimates specific risks associated project technical risks associated new design costs associated specific risks estimated assessing probability conditions arising specific risks affect total cost complete project work project begins assumptions form basis calculation total project cost examined regular basis estimates updated reflect current information management’s best judgment adjustments estimates contract revenue total contract cost extent progress toward completion often required work progresses contract experience gained even though scope work required contract may change nature accounting longterm contracts refinements estimating process changing conditions new developments continuous characteristic process consequently amount revenue recognized time sensitive changes estimates total contract costs many factors including limited ability properly execute engineering design phases consistent customers’ expectations availability costs labor material resources productivity weather affect accuracy cost estimates ultimately future profitability operating loss year ended december 31 2019 positively impacted approximately 11143 million result changes contract estimates related projects progress december 31 2018 year ended december 31 2019 recognized changes estimates impact margin amounts 7972 million 3247 million 76 million onshoreoffshore subsea surface technologies segments respectively changes contract estimates attributed better expected performance throughout execution projects operating profit year ended december 31 2018 positively impacted approximately 5534 million result changes contract estimates related projects progress december 31 2017 year ended december 31 2018 recognized changes estimates impact margin amounts 3792 million 1699 million 43 million onshoreoffshore subsea surface technologies segments respectively changes contract estimates attributed better expected performance throughout execution projects accounting income taxes income tax expense deferred tax assets liabilities reserves uncertain tax positions reflect management’s best assessment estimated future taxes paid subject income taxes united kingdom numerous foreign jurisdictions significant judgments estimates required determining consolidated income tax expense determining current income tax provision assess temporary differences resulting differing treatments items tax accounting purposes differences result deferred tax assets liabilities recorded consolidated balance sheets maintain deferred tax assets must assess likelihood assets recovered adjustments future taxable income extent believe recovery likely establish valuation allowance record valuation allowance reduce asset value believe recoverable based expectation future taxable income believe accounting estimate related valuation allowance critical accounting estimate highly susceptible change period requires management make assumptions future income lives deferred tax assets finally impact increasing decreasing valuation allowance potentially material results operations forecasting future income requires us use significant amount judgment estimating future income use internal operating budgets longrange planning projections develop budgets longrange projections based recent results trends economic industry forecasts influencing segments’ performance backlog planned timing new product launches customer sales commitments significant changes judgment related expected realizability deferred tax asset results adjustment associated valuation allowance december 31 2019 provided valuation allowance related deferred tax assets believe likely generate future taxable income sufficient realize assets calculation income tax expense involves dealing uncertainties application complex tax laws regulations numerous jurisdictions operate recognize tax benefits related uncertain tax positions judgment likely positions sustained examination including resolutions related appeals litigation based technical merits adjust liabilities uncertain tax positions judgment changes result new information previously unavailable due complexity uncertainties ultimate resolution may result payments materially different current estimates differences reflected adjustments income tax expense periods determined accounting pension postretirement benefit plans determination projected benefit obligations pension postretirement benefit plans important recorded amounts obligations consolidated balance sheet amount pension expense consolidated statements income order measure obligations expense associated pension benefits management must make variety estimates including discount rates used value certain liabilities expected return plan assets set aside fund costs rate compensation increase employee turnover rates retirement rates mortality rates factors update estimates annual basis frequently upon occurrence significant events accounting estimates bear risk change due uncertainty difficulty estimating measures different estimates used management could result recognition different amounts expense different periods time due specialized statistical nature calculations attempt anticipate future events engage thirdparty specialists assist management evaluating assumptions well appropriately measuring costs obligations associated pension benefits discount rate expected longterm rate return plan assets primarily based investment yields available historical performance plan assets respectively measures critical accounting estimates subject management’s judgment materially affect net income actuarial assumptions estimates made management determining pension benefit obligations may materially differ actual results result changing market economic conditions changes plan participant assumptions believe assumptions estimates used appropriate differences actual experience changes plan participant assumptions may materially affect financial position results operations following table illustrates sensitivity changes discount rate expected longterm return plan assets pension expense projected benefit obligation determination fair value business combinations accounting acquisition business requires allocation purchase price various assets acquired liabilities assumed respective fair values determination fair value requires use significant estimates assumptions making determinations management uses available information necessary one year acquisition closing date finalize fair value determinations tangible identifiable intangible assets acquired business combination determination fair value utilizes several valuation methodologies including discounted cash flows assumptions respect timing amount future revenue expenses associated asset assumptions made performing valuations include limited discount rates future revenues operating costs projections capital costs assumptions believed consistent used principal market participants due specialized nature calculations engage thirdparty specialists assist management evaluating assumptions well appropriately measuring fair value assets acquired liabilities assumed business combinations described note 2 consolidated financial statements included part ii item 8 annual report form 10k impairment longlived intangible assets longlived assets including vessels property plant equipment identifiable intangible assets amortized capitalized software costs reviewed impairment whenever events changes circumstances indicate carrying amount longlived asset may recoverable carrying amount longlived asset recoverable exceeds sum undiscounted cash flows expected result use eventual disposition asset determined impairment loss occurred loss measured amount carrying amount longlived asset exceeds fair value determination future cash flows well estimated fair value longlived assets involves significant estimates part management usually lack quoted market prices longlived assets fair value impaired assets typically determined based present values expected future cash flows using discount rates believed consistent used principal market participants based multiple operating cash flow validated historical market transactions similar assets possible expected future cash flows used impairment reviews related fair value calculations based judgmental assessments future productivity asset operating costs capital decisions available information date review future market conditions deteriorate beyond current expectations assumptions impairments longlived assets may identified conclude carrying amounts longer recoverable impairment goodwill represents excess cost fair market value net assets acquired business combinations goodwill subject amortization tested impairment annual basis reporting level unit frequently impairment indicators arise established october 31 date annual test impairment goodwill identify potential impairment comparing fair value applicable reporting unit net book value including goodwill net book value exceeds fair value reporting unit measure impairment comparing carrying value reporting unit fair value reporting units goodwill tested impairment using quantitative impairment test using quantitative impairment test determining fair value reporting unit judgmental nature involves use significant estimates assumptions estimate fair value reporting units using discounted future cash flow model majority estimates assumptions used discounted future cash flow model involve unobservable inputs reflecting management’s assumptions market participants would use estimating fair value business estimates assumptions include revenue growth rates operating margins used calculate projected future cash flows discount rates future economic market conditions estimates based upon assumptions believed reasonable inherently uncertain unpredictable reflect unanticipated events circumstances may occur lower fair value estimate future reporting units could result goodwill impairments factors could trigger lower fair value estimate include sustained price declines reporting unit’s products services cost increases regulatory political environment changes customer demand changes market conditions may affect certain market participant assumptions used discounted future cash flow model based internal forecasts revenues expenses specified period plus terminal value income approach assessing triggering factors quarterly also annual basis also analyze relationship market capitalization consolidated book value equity income approach estimates fair value discounting reporting unit’s estimated future cash flows using weightedaverage cost capital reflects current market conditions risk profile reporting unit arrive future cash flows use estimates economic market assumptions including growth rates revenues costs estimates future expected changes operating margins tax rates cash expenditures future revenues also adjusted match changes business strategy believe approach appropriate valuation method market multiple approach determine estimated fair value reporting units applying transaction multiples reporting unit’s projected ebitda averaging estimate similar historical calculations using either one two three year average reporting unit valuations determined primarily utilizing income approach lesser weighting attributed market multiple approach late fourth quarter 2019 oil prices fell dramatically market capitalization declined significantly together companies oil service industry event expected significant negative impact performance changing materially mediumterm longterm cash flow projections year ended december 31 2019 recorded 13219 million 6668 million goodwill impairment charges subsea surface technologies reporting units respectively year ended december 31 2018 recorded 13830 million goodwill impairment charges subsea reporting unit refer note 20 consolidated financial statements additional disclosure related impairment goodwill year ended december 31 2019 2018 fair value carrying amount onshoreoffshore reporting unit excess 400 carrying amount following table presents significant estimates used management determining fair values reporting units december 31 2019 refer note 15 consolidated financial statements included part ii item 8 annual report form 10k additional information related goodwill impairment testing 2019 matters march 28 2016 fmc technologies received inquiry us department justice doj related dojs investigation whether certain services unaoil sam provided clients including fmc technologies violated fcpa march 29 2016 technip sa also received inquiry doj related unaoil cooperated dojs investigations regard fmc technologies related investigation sec late 2016 technip sa contacted doj regarding investigation offshore platform projects awarded 2003 2007 performed brazil joint venture company technip sa minority participant also raised doj certain projects performed technip sa subsidiaries brazil 2002 2013 doj also inquired projects ghana equatorial guinea awarded technip sa subsidiaries 2008 2009 respectively cooperated doj investigation potential violations fcpa connection projects contacted cooperated brazilian authorities federal prosecution service “mpf” comptroller general brazil “cgu” attorney general brazil “agu” investigation concerning projects brazil also contacted cooperating french authorities parquet national financier “pnf” existing matters june 25 2019 announced global resolution pay total 3013 million doj sec mpf cguagu resolve anticorruption investigations required monitor instead provide reports anticorruption program brazilian us authorities two three years respectively part resolution entered threeyear deferred prosecution agreement “dpa” doj related charges conspiracy violate fcpa related conduct brazil unaoil addition technip usa inc us subsidiary pled guilty one count conspiracy violate fcpa related conduct brazil also provide doj reports anticorruption program term dpa brazil subsidiaries technip brasil engenharia instalações e apoio marítimo ltda flexibrás tubos flexíveis ltda entered leniency agreements mpf cguagu committed part agreements make certain enhancements compliance programs brazil twoyear selfreporting period aligns commitment cooperation transparency compliance community brazil globally september 2019 sec approved previously disclosed agreement principle sec staff issued administrative order pursuant paid sec 51 million included global resolution 3013 million date investigation pnf related historical projects equatorial guinea ghana reached resolution remain committed finding resolution pnf maintain 700 million provision related investigation continue progress discussions pnf towards resolution amount settlement could exceed provision certainty settlement pnf reached settlement exceed current accruals pnf broad range potential sanctions anticorruption laws regulations may seek impose appropriate circumstances including limited fines penalties modifications business practices compliance programs measures applicable us well potential customer reaction measures could material adverse impact business results operations financial condition cannot reach resolution pnf could subject criminal proceedings france outcome cannot predicted recently issued accounting standards refer note 4 consolidated financial statements included part ii item 8 annual report form 10k item 7ananitem 7 management’s discussion analysis financial condition results operations executive overview global leader oil gas projects technologies systems services manufacturing operations worldwide strategically located facilitate efficient delivery products technologies systems services customers report results operations following segments subsea onshoreoffshore surface technologies management’s determination company’s reporting segments made basis strategic priorities corresponds manner chief executive officer reviews evaluates operating performance make decisions resource allocations segment description products services annual financial data segment found part item 1 “business” note 22 consolidated financial statements part ii item 8 annual report form 10k discussion analysis consolidated results operations results operations segments years ended december 31 2017 2016 2015 follows focus economic industryspecific drivers key risk factors affecting business segments formulate strategic plans make decisions related allocating capital human resources results segments primarily driven changes capital spending oil gas companies largely depend upon current anticipated future crude oil natural gas demand production volumes consequently commodity prices use crude oil natural gas prices indicator demand additionally use onshore offshore rig count indicator demand consequently influences level worldwide production activity spending decisions also focus key risk factors determining overall strategy making decisions capital allocation factors include risks associated global economic outlook product obsolescence competitive environment address risks business strategies incorporate continuing development leading edge technologies cultivating strong customer relationships subsea segment primarily affected trends deepwater oil natural gas production onshoreoffshore segment affected commodity prices population growth demand natural gas subsea onshoreoffshore segments benefit construction petrochemical fertilizer plants requirements new liquefied natural gas facilities respectively surface technologies segment primarily affected trends landbased shallow water oil natural gas production including trends shale production developed close working relationships customers results reflect ability build longterm alliances oil natural gas companiesand provide solutions needs timely costeffective manner believe closely working customers enhance competitive advantage improve operating results strengthen market positions evaluate operating results consider business segment performance indicators like segment revenue operating profit capital employed addition level inbound orders order backlog significant proportion revenue recognized percentage completion method accounting cash receipts arrangements typically occur milestones achieved stated contract terms consequently timing revenue recognition always correlated timing customer payments aim structure contracts receive advance payments typically use fund engineering efforts inventory purchases working capital excluding cash net debt cash therefore key performance indicators cash flows segments serve customers around world 2017 approximately 90 total sales recognized outside united states evaluate international markets pursue opportunities fit technological capabilities strategies business outlook overall outlookthe price crude oil recovered 2017 compared prior year price steadily increased throughout last six months year nonetheless oil gas industry continues experience overall impacts steep decline crude oil prices experienced prior years lingering uncertainties crude oil price outlook despite opec’s implementation cap crude oil production 2017 ongoing uncertainty crude oil price outlook remains due concerns effectiveness duration concurrent opec nonopec production cuts impact additional production capacity entering market due expanding us shale production associated impact worldwide production continued high inventory levels sustainability 2017 crude oil price recovery business activity levels dependent number variables many analysts continue believe market corrections necessary address worldwide oversupply crude oil place contributing sustainable industry improvement longterm demand continues rise production continues naturally decline believe commodity prices demonstrate ongoing ability continued improvement increasing cash flows confidence customers increase investments new sources oil natural gas production witnessed improvements exited 2017 customers globally proceeding final investment decisions improved pace 2015 2016 subseathe impact low crude oil price environment last two years led many customers reduce capital spending plans defer new deepwater projects began reduce workforce adjust manufacturing capacity align operations anticipated decreases activity 2016 due delayed subsea project inbound orders mitigate impact operating margins continued actions 2017 realizing benefits restructuring actions attaining costeffective manufacturing expect continue take additional actions 2018 company activity continues slow nearterm mindful increased market activity levels likely experienced 2018 result improved industry economic environment likely lead increased order activity going forward operational improvements cost reductions made 2016 combined additional actions taken 2017 protected operating margins 2017 still providing us capability respond market recovery believe commenced also recognize need continue invest people ensure preserve core competencies capabilities delivered strong results 2017 necessary continued success market recovery customers continuing take aggressive actions improve project economics capitalize upon improved commodity price environment monitoring customer activity context improved oil gas prices continues risk project sanctioning delays current environment however described project economics improved considerably consequently many offshore discoveries could developed economically today’s crude oil prices accordingly continue work closely customers believe unique business model reduce project breakeven levels offering costeffective approaches project developments including customer acceptance integrated business models help achieve costreduction goals accelerate achievement first oil long term continue believe deepwater development remain significant part customers’ portfolios however delays project sanctions near term would unfortunately lead us take aggressive actions ensure cost base aligned evolving market outlook onshoreoffshorethe offshore market faces many constraints subsea business due lingering industry challenges improve project economics meanwhile onshore market activity continues provide tangible set opportunities particular natural gas projects natural gas continues take larger share global energy demand activity lng fueled potential sustained modest natural gas prices representing important opportunity set business remain confident industry make lng investments near intermediate term also see opportunities refining petrochemical projects onshore market activity levels remain stable provides business opportunity remain actively engaged pursue frontend engineering studies provide platform early engagement clients significantly derisk project execution market opportunities downstream frontend engineering studies full epc projects prevalent middle east africa asia markets lng refining petrochemicals surface technologieswhile north america rig count operating activity steadily improved since fall 2016 recovery somewhat constrained certain oil gas producing basins ability generate acceptable returns market recovery began late 2016 north america continued throughout 2017 benefit experienced sustained stronger demand pressure control equipment driven increased activity pace improvement likely slow 2018 expectations moderate rig count growth compared 2017 however restructuring actions taken 2016 2017 reduced costs allowing us capture economic benefits higher activity levels activity international surface business strengthening continues experience impact competitive pricing pressure began 2016 pricing stabilized geographies improved yet witnessed material recovery expect competitive pricing environment continue negative impact operating margins first half 2018 benefit improved pricing beginning materialize second half 2018 pro forma results operations unaudited supplemental pro forma results operations year ended december 31 2016 present consolidated information merger ii consolidation legal onshoreoffshore contract entities account design engineering construction yamal completed january 1 2016 pro forma results include potential synergies cost savings expected benefits transactions accordingly pro forma results considered indicative results would occurred transactions consummated january 1 2016 indicative future results refer note 2 note 14 consolidated financial statements included part ii item 8 annual report form 10k information related merger yamal respectively due size aforementioned transactions relative size historical results operations purposes comparability management’s discussion consolidated segment results operations provided basis comparing actual results operations year ended december 31 2017 pro forma results operations year ended december 31 2016 actual results years ended december 31 2016 2015 represent technip consolidated results operations meaningful refer “pro forma results operations” information related presentation transactions included pro forma results year ended december 31 2016 2017 compared 2016 pro forma revenue decreased 40 billion 2017 compared prioryear period pro forma basis primarily resulting sharp decline subsea activities europe africa region due lower order activity 2015 2016 resulting lower backlog business coming 2017 decrease also attributable completion several projects combined lower subsea vessel utilization revenue also decreased across onshoreoffshore businesses yearoveryear pro forma basis primarily driven lower levels project backlog coming 2017 middle east north america south america regions gross profit gross profit revenue less cost sales increased percentage sales 168 2017 141 prioryear pro forma basis improvement gross profit percentage sales primarily due reduction cost sales yearoveryear pro forma basis result realization cost reduction opportunities certain projects lower overall cost structure due cost reduction synergy initiatives successful progression several major projects strong economic performance benefit better product service mix selling general administrative expense selling general administrative expense decreased 1690 million yearoveryear pro forma basis resulting lower headcount across reporting segments due part benefit merger synergies decreased sales commissions due reduced revenue impairment restructuring expense impairment restructuring expense decreased 2521 million yearoveryear pro forma basis impairment restructuring expense 2017 included 1572 million restructuring expense 343 million impairment expense comparable periods pro forma basis implemented restructuring plans across segments reduce costs better align workforce anticipated activity levels thus previously incurred significant restructuring expenses 2016 pro forma basis 2017 continued align capacity expected operating activity levels 2018 beyond also negatively impacted hurricane harvey result incurred expenses 109 million due lost productivity merger transaction integration costs incurred merger transaction integration costs 1018 million 2017 due merger significant portion expenses recorded period related transaction leased facility termination fees lower portion still material related integration activities pertaining combining two legacy companies refer note 2 consolidated financial statements included part ii item 8 annual report form 10k information related merger income expense net income expense net primarily reflects foreign currency gains losses include gains losses associated remeasurement net cash positions well foreign currency derivatives 2017 incurred 401 million additional net foreign exchange losses compared 2016 net interest expense increase interest expense due changes fair value mandatorily redeemable financial liability year ended december 31 2017 revalued liability reflect current expectations obligation recognized loss 2937 million refer note 21 information regarding fair value measurement assumptions mandatorily redeemable financial liability related changes fair value provision income taxes income tax provisions 2017 2016 historical basis reflected effective tax rates 803 327 respectively yearoveryear increase effective tax rate primarily due increases valuation allowance due additional losses generated year tax benefit expected realized unfavorable change actual country mix earnings addition due us legislation passed fourth quarter 2017 incurred onetime deemed repatriation transition tax 1487 million unfavorable tax provision impact 189 million revaluation us deferred individual tax assets liabilities 2016 compared 2015 revenue revenues decreased 22723 million compared prioryear period primarily resulting onshoreoffshore segment contributed 16022 million overall decrease onshoreoffshore activities sharply decreased across geographical areas specifically asia pacific americas middle east subsea segment decreased 6701 million mainly due decreased activities north sea fully offset increased activities geographic regions gross profit gross profit revenue less cost sales increased percentage sales 171 2016 130 prioryear improvement gross profit primarily due favorable project mix yearoveryear components cost sales largest yearoveryear decrease purchase construction subcontracting costs projects payroll costs selling general administrative expense selling general administrative expense decreased 1170 million yearoveryear due reduction total employee headcount cessation nonessential activities impairment restructuring expense impairment restructuring expense decreased 951 million yearoveryear beginning 2015 implemented restructuring plans across businesses reduce costs better align workforce anticipated activity levels included asset impairments lease overhangs appropriate amounts disputes clients closure costs subsidiaries additional amounts ongoing projects significant portion restructuring plan implemented 2015 giving rise decrease restructuring expense yearoveryear merger transaction integration costs incurred merger transaction integration costs 926 million primarily fourth quarter 2016 due merger refer note 2 consolidated financial statements included part ii item 8 annual report form 10k information related merger income expense net income expense net primarily reflects foreign currency gains losses include gains losses associated remeasurement net cash positions well foreign currency derivatives 2016 incurred 1233 million additional net foreign exchange gains compared 2015 increase partially offset net losses disposal assets net interest expense decrease net interest expense primarily due increase interest income well slight reduction borrowings bank overdrafts 2016 provision income taxes income tax provisions 2016 2015 reflected effective tax rates 327 906 respectively yearoveryear decrease effective tax rate primarily due decreases valuation allowance due lower losses generated 2016 tax benefit expected realized favorable change actual country mix earnings operating results business segments segment operating profit defined total segment revenue less segment operating expenses certain items excluded computing segment operating profit included corporate items refer note 22 consolidated financial statements included part ii item 8 annual report form 10k information report results operations us dollars however earnings generated various currencies worldwide order provide worldwide consolidated results earnings subsidiaries functioning local currencies translated us dollars based upon average exchange rate period us dollar results reported reflect actual economics period reported upon variances prior periods include impact translating earnings different rates subsea 1 due merger 115 months included year ended 2017 legacy fmc technologies compared twelve months pro forma 2016 refer note 2 consolidated financial statements included part ii item 8 annual report form 10k information related merger 2017 compared 2016 pro forma subsea revenue decreased 33 billion yearoveryear pro forma basis primarily due lower overall activity europe africa north america regions result reduced backlog 2015 2016 additionally decrease revenue attributable completion several projects first nine months 2017 lower vessel utilization yearoveryear pro forma basis primarily due high vessel campaigns africa asia prior year continue current year similar levels subsea operating profit percent revenue decreased yearoveryear pro forma basis due lower revenue subsea projects business across subsea regions 2016 compared 2015 subsea revenue decreased 6701 million yearoveryear primarily due decelerating activity north sea completion key projects bøyla snøhvit norway middle east increased activity driven rashid c dubai united arab emirates asia pacific activity driven rampup jangkrik indonesia meanwhile subsea revenues increased brazil primarily due hightechnology supply contracts lula alto iracema sul presalt fields whereas activity remained stable americas subsea operating profit percentage revenue decreased yearoveryear primarily result reduced group fleet activity north sea 2016 despite offshore operations west africa asia pacific middle east period meanwhile manufacturing plants operated slightly lower level activity 2016 compared 2015 onshoreoffshore 2017 compared 2016 pro forma onshoreoffshore revenue decreased 7855 million yearoveryear decrease revenue attributable lower activity north america due delivery several projects 2016 early 2017 well reduced activity yamal partially offset increases projects prelude flng middle east operating profit operating profit percentage revenue year ended 2017 favorable compared year ended 2016 pro forma basis comparison benefited successful progression several major projects including yamal prelude flng successful resolution certain contract disputes addition yearoveryear performances favorably impacted decrease 2097 million related impairment restructuring expense 2016 compared 2015 onshoreoffshore revenue decreased 16 billion yearoveryear decrease sharp across geographic areas primarily result key projects nearing completion sk 316 malikai malaysia ethylene xxi mexico elsewhere revenues driven juniper project trinidad duslo ammoniac plant slovakia operating profit year ended 2016 compared year ended 2015 favorably impacted decrease 1132 million related impairment restructuring severance charges onshoreoffshore operating profit percentage revenue increased yearoveryear primarily due considerable progress yamal well costsaving measures across segment surface technologies 2 1 due merger 115 months included year ended 2017 legacy fmc technologies compared twelve months 2016 refer note 2 consolidated financial statements included part ii item 8 annual report form 10k 2 prior merger reported business two segments subsea onshoreoffshore result merger addition fmc technologies began reporting business three segments actual results operations 2016 2015 include surface technologies 2017 compared 2016 pro forma surface technologies revenue increased 224 million yearoveryear pro forma basis lower revenue surface international measurement solutions loading systems businesses yearoveryear pro forma basis offset revenue increase surface americas business increase surface americas driven primarily higher rig count positive impact flowline well service pump revenues surface technologies operating profit percent revenue increased yearoveryear pro forma basis driven primarily increased volume flowline well service pump products surface americas business 488 million decrease impairment restructuring severance charges corporate items 2017 compared 2016 pro forma corporate expense decreased 74 million yearoveryear pro forma basis decrease primarily attributable reduction business combination transaction integration costs 344 million 2017 compared 2016 pro forma basis 2016 compared 2015 corporate expense decreased 1460 million yearoveryear primarily due costsaving measures instituted corporate level inbound orders order backlog inbound ordersinbound orders represent estimated sales value confirmed customer orders received reporting period order backlogorder backlog calculated estimated sales value unfilled confirmed customer orders reporting date subsea order backlog subsea december 31 2017 increased 13 billion december 31 2016 primarily due merger subsea backlog 62 billion december 31 2017 composed various subsea projects including petrobras’ pipelay support vessel presalt tree awards eni spa coral project total’s kaombo vng’s fenja mellitah oil gas bv bahr essalam project woodside energy ltd greater enfield project statoil’s peregrino phase ii bp’s shah deniz shell’s appomattox onshoreoffshore order backlog december 31 2017 decreased 37 billion compared december 31 2016 onshoreoffshore backlog 64 billion composed various projects including yamal emirates national oil company’s jebel ali refinery expansion total’s martin linge jsc sibur holding’s zapsib2 eni’s ghana onshore receiving gas terminal adnoc offshore previously admaopco umm lulu phase 2 project shell’s prelude flng liquidity capital resources cash managed centrally flowed centralized bank accounts controlled maintained technipfmc domestically foreign jurisdictions best meet liquidity needs global operations majority cash held subsidiaries us domiciled companies could repatriated united states current us law amended tax cuts jobs act tcja signed law december 22 2017 repatriation us form dividend would eligible 100 dividend received deduction therefore would subject us federal income tax expect meet continuing funding requirements global operations cash generated operations existing revolving credit facility net debt cashnet debt cash nongaap financial measure reflecting cash equivalents net debt management uses nongaap financial measure evaluate capital structure financial leverage believe net debt net cash meaningful financial measure may assist investors understanding financial condition recognizing underlying trends capital structure net debt cash considered alternative meaningful cash equivalents determined accordance gaap indicator operating performance liquidity following table provides reconciliation cash equivalents net debt cash utilizing details classifications consolidated balance sheets gross change debt cash components net debt cash position primarily due merger refer note 2 consolidated financial statements included part ii item 8 annual report form 10k information related merger cash flows cash flows years threeyear period ended december 31 2017 follows operating cash flowsduring 2017 generated 2107 million cash flows operating activities 2831 million decrease compared 2016 cash flows operating activities 2016 2065 million lower 2015 decrease cash provided operating activities 2017 due change accounts payables advance payments billings excess costs slightly offset change trade receivables net costs excess billings yearoveryear decrease 2016 due change trade receivables net costs excess billings working capital balances vary significantly depending payment delivery terms key contracts portfolio projects investing cash flowsinvesting activities provided 13 billion 2017 primarily due merger refer note 2 consolidated financial statements included part ii item 8 annual report form 10k information related merger cash provided investing activities 2016 31 billion primarily reflecting cash acquired acquisition refer note 8 consolidated financial statements included part ii item 8 annual report form 10k information related acquisition consolidation legal onshoreoffshore contract entities account yamal cash requirements investing activities 2015 3351 million primarily reflecting capital expenditures financing cash flowsfinancing activities used 11 billion 2017 increase 5202 million cash required financing activities primarily due decrease proceeds issuance longterm debt 2016 increase settlements mandatorily redeemable liability increase payments taxes withheld sharebased compensation offset increased borrowings commercial paper 2017 financing activities used 5346 million 2016 increase 4074 million cash required financing activities 2015 driven increase net repayments 591 million longterm debt well 1868 million treasury share purchases 2016 debt liquidity total borrowings december 31 2017 2016 comprised following summary revolving credit facility december 31 2017 commercial paper program ability access 15 billion €10 billion financing commercial paper dealers available capacity revolving credit facility reduced outstanding commercial paper committed credit available revolving credit facility provides ability issue commercial paper obligations longterm basis 14504 million commercial paper issued facility december 31 2017 ability intent refinance obligations longterm basis commercial paper borrowings classified longterm debt accompanying consolidated balance sheets december 31 2017 revolving credit facility contains customary covenants defined credit facility agreement includes financial covenant requiring total capitalization ratio exceed 60 end financial quarter facility agreement also contains covenants restricting ability subsidiaries ability incur additional liens indebtedness enter asset sales make certain investments december 31 2017 compliance restrictive covenants revolving credit facility refer note 13 note 14 consolidated financial statements included part ii item 8 annual report form 10k information related credit facility mandatorily redeemable liability respectively credit risk analysis valuations derivative assets liabilities reflect fair value instruments including values associated counterparty risk values must also take account credit standing thus including valuation derivative instrument value net credit differential counterparties derivative contract methodology includes impact counterparty credit standing adjustments derivative assets liabilities related credit risk material period presented use income approach valuation technique measure fair value foreign currency derivative instruments recurring basis approach calculates present value future cash flow measuring change derivative contract rate published market indicative currency rate multiplied contract notional values credit risk incorporated reducing derivative’s fair value asset positions result multiplying present value portfolio counterparty’s published credit spread portfolios liability position adjusted calculation however spread representing credit spread used credit spread credit spread counterparties publicly available approximated using spread similar companies industry similar size credit rating time creditriskrelated contingent features agreements financial institutions would require us post collateral derivative positions liability position additional information credit risk incorporated herein reference note 21 consolidated financial statements included part ii item 8 annual report form 10k outlook historically generated liquidity capital resources primarily operations needed credit facility 10496 million capacity available revolving credit facility expect utilize working capital needs temporarily increase volatility credit equity commodity markets creates uncertainty business however management believes based current financial condition existing backlog levels current expectations future market conditions continue meet short longterm liquidity needs combination cash hand cash generated operations access capital markets continue reach payment milestones projects expect consolidated operating cash flow 2018 decrease result negative impact decline commodity prices corresponding impact industry downturn overall business terms number new projects awarded payment terms conditions project awards 2016 2017 consequently payment deferrals discounts pricing granted clients prior years may adversely affect results operations cash flows 2018 beyond project spending approximately 300 million 2018 capital expenditures largely expenditures subsea service business however projected capital expenditures 2018 include contingent capital may needed respond contract award implemented uk courtapproved reduction capital completed june 29 2017 order create distributable profits support payment future dividends future share repurchases board directors authorized 500 million repurchase shares executed remainder 2017 completed 2018 also october 25 2017 announced board directors authorized declared initial quarterly cash dividend 013 per ordinary share 2018 expect make contributions approximately 199 million pension plans actual contribution amounts dependent upon plan investment returns changes pension obligations regulatory environments economic factors update pension estimates annually fourth quarter frequently upon occurrence significant events additionally expect make payments approximately 53 million us nonqualified defined benefit pension plan 2018 contractual obligations following summary contractual obligations december 31 2017 available debt dependent upon compliance covenants including negative covenants related liens total capitalization ratio violation covenants events default waived cured changes credit rating could material impact ability maintain committed financing arrangements due intent ability refinance commercial paper obligations longterm basis revolving credit facility variable interest rates associated debt instruments interest senior notes included table 2017 paid 503 million interest charges net interest capitalized b 2014 entered construction operating lease agreements finance construction manufacturing office facilities located houston tx january 2016 construction facilities completed operating lease commenced upon expiration lease term september 2021 option renew lease purchase facilities remarket facilities behalf lessor including certain guarantees residual value remarketing option c normal course business enter agreements suppliers purchase raw materials services agreements include requirement supplier provide products services specifications require us make firm purchase commitment supplier substantially commitments associated purchases made fulfill customers’ orders costs associated agreements ultimately reflected cost sales consolidated statements income expect contribute approximately 199 million international pension plans 2018 required contributions future years depend factors cannot determined time additionally expect contribute 53 million us nonqualified defined benefit pension plan 2018 e reasonably possible 963 million liabilities unrecognized tax benefits settled 2018 amount reflected income taxes payable consolidated balance sheet december 31 2017 although unrecognized tax benefits contractual obligations presented table represent demands liquidity f contractual obligations represent mandatorily redeemable financial liability fourth quarter 2016 obtained voting control interests legal onshoreoffshore contract entities account design engineering construction yamal lng plant prior amendments contractual terms provided us voting interest control accounted entities equity method accounting based previously held interests entities mandatorily redeemable financial liability 1748 million recognized december 31 2016 account fair value noncontrolling interests year ended december 31 2017 revalued liability reflect current expectations obligation refer note 22 information regarding fair value measurement assumptions mandatorily redeemable financial liability related changes fair value offbalance sheet arrangements following summary offbalance sheet arrangements december 31 2017 collateral performance certain sales contracts part agreements insurance companies liable letters credit surety bonds bank guarantees ability generate revenue certain contracts dependent upon ability obtain offbalance sheet financial instruments offbalance sheet financial instruments may renewed revised released based changes underlying commitment historically commercial commitments drawn upon material extent consequently management believes reasonably likely material claims commitments however financial instruments become unavailable us operations liquidity could negatively impacted critical accounting estimates preparation financial statements conformity gaap requires management make certain estimates judgments assumptions future events affect reported amounts assets liabilities date financial statements reported amounts revenue expenses periods presented related disclosures accompanying notes financial statements management reviewed critical accounting estimates audit committee board directors believe following critical accounting estimates used preparing financial statements address important accounting areas nature estimates assumptions material due levels subjectivity judgment necessary account highly uncertain matters susceptibility matters change see note 1 consolidated financial statements included part ii item 8 annual report form 10k description significant accounting policies percentage completion method accounting recognize revenue constructiontype projects using percentage completion method accounting whereby revenue recognized work progresses contract several acceptable methods gaap measuring progress toward completion frequently use ratio costs incurred date total estimated contract costs completion measure progress toward completion also use alternative methods including physical progress others depending type project execute contracts customers clearly describe equipment systems andor services provide amount consideration receive analyzing drawings specifications contract requirements project engineers estimate total contract costs based experience similar projects adjust estimates specific risks associated project technical risks associated new design costs associated specific risks estimated assessing probability conditions arising specific risks affect total cost complete project work project begins assumptions form basis calculation total project cost examined regular basis estimates updated reflect current information management’s best judgment revenue recognized using percentage completion method accounting approximately 790 849 839 total revenue recognized years ended december 31 2017 2016 2015 respectively significant portion total revenue recognized percentage completion method accounting relates onshoreoffshore subsea segments primarily entire range onshore facilities fixed floating offshore oil gas facilities subsea exploration production equipment projects involve design engineering manufacturing construction assembly complex customerspecific systems total estimated contract cost affects revenue recognized period well reported profit loss project determination profit loss contract requires consideration contract revenue change orders claims less costs incurred date estimated costs complete profits recognized based estimated project profit multiplied percentage complete adjustments estimates contract revenue total contract cost extent progress toward completion often required work progresses contract experience gained even though scope work required contract may change nature accounting contracts percentage completion method accounting refinements estimating process changing conditions new developments continuous characteristic process consequently amount revenue recognized using percentage completion method accounting sensitive changes estimates total contract costs contract progress december 31 2017 1 increase decrease estimated margin earned contract would increased decreased total revenue pretax income 1946 million year ended december 31 2017 total estimated contract cost percentage completion method accounting critical accounting estimate materially affect revenue profit requires us make judgments matters uncertain many factors including limited ability properly execute engineering design phases consistent customers’ expectations availability costs labor material resources productivity weather affect accuracy cost estimates ultimately future profitability changes factors may result revisions costs income effects recognized period revisions determined factors routinely evaluated project basis throughout project term impact corresponding revisions management’s estimates contract value contract cost contract profit recorded necessary period revisions determined operating profit year ended december 31 2017 positively impacted approximately 3784 million result changes contract estimates related projects progress december 31 2016 year ended december 31 2017 recognized favorable changes estimates impact margin amounts 325 million 534 million onshoreoffshore subsea segment’s respectively changes contract estimates attributed better expected performance throughout execution projects accounting income taxes income tax expense deferred tax assets liabilities reserves uncertain tax positions reflect management’s best assessment estimated future taxes paid subject income taxes united kingdom numerous foreign jurisdictions significant judgments estimates required determining consolidated income tax expense determining current income tax provision assess temporary differences resulting differing treatments items tax accounting purposes differences result deferred tax assets liabilities recorded consolidated balance sheets maintain deferred tax assets must assess likelihood assets recovered adjustments future taxable income extent believe recovery likely establish valuation allowance record valuation allowance reduce asset value believe recoverable based expectation future taxable income believe accounting estimate related valuation allowance critical accounting estimate highly susceptible change period requires management make assumptions future income lives deferred tax assets finally impact increasing decreasing valuation allowance potentially material results operations forecasting future income requires us use significant amount judgment estimating future income use internal operating budgets longrange planning projections develop budgets longrange projections based recent results trends economic industry forecasts influencing segments’ performance backlog planned timing new product launches customer sales commitments significant changes judgment related expected realizability deferred tax asset results adjustment associated valuation allowance december 31 2017 believe likely generate future taxable income certain jurisdictions cumulative net operating losses therefore provided valuation allowance related deferred tax assets calculation income tax expense involves dealing uncertainties application complex tax laws regulations numerous jurisdictions operate recognize tax benefits related uncertain tax positions judgment likely positions sustained examination including resolutions related appeals litigation based technical merits adjust liabilities uncertain tax positions judgment changes result new information previously unavailable due complexity uncertainties ultimate resolution may result payments materially different current estimates differences reflected adjustments income tax expense periods determined currently evaluating provisions united states french tax reform enacted december 2017 fourth quarter 2017 recorded provision income taxes preliminary assessment impact tax reform necessary information analyze income tax effects tax reform provisional amount believe represents reasonable estimate accounting implications tax reform continue evaluate tax reform adjust provisional amounts additional information obtained ultimate impact tax reform may differ provisional amounts due changes interpretations assumptions well additional regulatory guidance may issued expect complete detailed analysis later fourth quarter 2018 information see note 17 consolidated financial statements accounting pension postretirement benefit plans pension postretirement health care life insurance obligations described note 18 consolidated financial statements included part ii item 8 annual report form 10k determination projected benefit obligations pension postretirement benefit plans important recorded amounts obligations consolidated balance sheet amount pension expense consolidated statements income order measure obligations expense associated pension benefits management must make variety estimates including discount rates used value certain liabilities expected return plan assets set aside fund costs rate compensation increase employee turnover rates retirement rates mortality rates factors update estimates annual basis frequently upon occurrence significant events accounting estimates bear risk change due uncertainty difficulty estimating measures different estimates used management could result recognition different amounts expense different periods time due specialized statistical nature calculations attempt anticipate future events engage thirdparty specialists assist management evaluating assumptions well appropriately measuring costs obligations associated pension benefits discount rate expected longterm rate return plan assets primarily based investment yields available historical performance plan assets respectively measures critical accounting estimates subject management’s judgment materially affect net income discount rate affects interest cost component net periodic pension cost calculation projected benefit obligation discount rate based rates pension benefit obligation could effectively settled present value basis discount rates derived identifying theoretical settlement portfolio longterm high quality “aa” rated corporate bonds determination date sufficient provide projected pension benefit payments single discount rate determined results discounted value pension benefit payments equate market value selected bonds resulting discount rate reflective current interest rate environment pension’s distinct liability characteristics significant changes discount rate caused changes yield curve mix bonds available market duration selected bonds timing expected benefit payments may result volatility pension expense pension liabilities expected longterm rate return plan assets component net periodic pension cost estimate expected longterm rate return plan assets primarily based historical performance plan assets current market conditions asset allocation longterm growth expectations difference expected return actual return plan assets amortized expected remaining service life employees resulting lag time market’s performance impact plan results holding assumptions constant following table illustrates sensitivity changes discount rate expected longterm return plan assets pension expense projected benefit obligation actuarial assumptions estimates made management determining pension benefit obligations may materially differ actual results result changing market economic conditions changes plan participant assumptions believe assumptions estimates used appropriate differences actual experience changes plan participant assumptions may materially affect financial position results operations determination fair value business combinations accounting acquisition business requires allocation purchase price various assets acquired liabilities assumed respective fair values determination fair value requires use significant estimates assumptions making determinations management uses available information necessary one year acquisition closing date finalize fair value determinations tangible identifiable intangible assets acquired business combination determination fair value utilizes several valuation methodologies including discounted cash flows assumptions respect timing amount future revenue expenses associated asset assumptions made performing valuations include limited discount rates future revenues operating costs projections capital costs assumptions believed consistent used principal market participants due specialized nature calculations engage thirdparty specialists assist management evaluating assumptions well appropriately measuring fair value assets acquired liabilities assumed business combinations described note 2 consolidated financial statements included part ii item 8 annual report form 10k inventory valuation inventory recorded lower cost net realizable value evaluate components inventory regular basis excess obsolescence record decline carrying value estimated excess obsolete inventory reduction inventory expense included cost sales period identified estimate excess obsolete inventory critical accounting estimate highly susceptible change period addition estimate requires management make judgments future demand inventory order quantify excess obsolete inventory begin preparing candidate listing components inventory quantity hand excess usage within recent twoyear period list reviewed sales engineering production materials management personnel determine whether list potential excess obsolete inventory items accurate part evaluation management considers whether change market finished goods whether future demand onhand inventory items whether components inventory incorporate obsolete technology finally assessment made historical usage inventory previously written excess obsolete adjustment estimate made based historical experience result estimate excess obsolete inventory sensitive changes assumptions future usage inventory factors could materially impact estimate include changes crude oil prices effect longevity current industry downturn would impact demand products services well changes pattern demand products offer believe inventory valuation reserve adequate properly value potential excess obsolete inventory december 31 2017 however significant changes factors mentioned could lead estimate change refer note 6 consolidated financial statements included part ii item 8 annual report form 10k additional information related inventory valuation adjustments recorded 2017 impairment longlived intangible assets longlived assets including vessels property plant equipment identifiable intangible assets amortized capitalized software costs reviewed impairment whenever events changes circumstances indicate carrying amount longlived asset may recoverable carrying amount longlived asset recoverable exceeds sum undiscounted cash flows expected result use eventual disposition asset determined impairment loss occurred loss measured amount carrying amount longlived asset exceeds fair value determination future cash flows well estimated fair value longlived assets involves significant estimates part management usually lack quoted market prices longlived assets fair value impaired assets typically determined based present values expected future cash flows using discount rates believed consistent used principal market participants based multiple operating cash flow validated historical market transactions similar assets possible expected future cash flows used impairment reviews related fair value calculations based judgmental assessments future productivity asset operating costs capital decisions available information date review future market conditions deteriorate beyond current expectations assumptions impairments longlived assets may identified conclude carrying amounts longer recoverable impairment goodwill represents excess cost fair market value net assets acquired business combinations goodwill subject amortization tested impairment annual basis reporting level unit frequently impairment indicators arise established october 31 date annual test impairment goodwill identify potential impairment comparing fair value applicable reporting unit net book value including goodwill net book value exceeds fair value reporting unit measure impairment comparing carrying value reporting unit fair value reporting units goodwill tested impairment using quantitative impairment test using quantitative impairment test determining fair value reporting unit judgmental nature involves use significant estimates assumptions estimate fair value reporting units using discounted future cash flow model majority estimates assumptions used discounted future cash flow model involve unobservable inputs reflecting management’s assumptions market participants would use estimating fair value business estimates assumptions include revenue growth rates operating margins used calculate projected future cash flows discount rates future economic market conditions estimates based upon assumptions believed reasonable inherently uncertain unpredictable reflect unanticipated events circumstances may occur lower fair value estimate future reporting units could result goodwill impairments factors could trigger lower fair value estimate include sustained price declines reporting unit’s products services cost increases regulatory political environment changes customer demand changes market conditions may affect certain market participant assumptions used discounted future cash flow model based internal forecasts revenues expenses specified period plus terminal value income approach income approach estimates fair value discounting reporting unit’s estimated future cash flows using weightedaverage cost capital reflects current market conditions risk profile reporting unit arrive future cash flows use estimates economic market assumptions including growth rates revenues costs estimates future expected changes operating margins tax rates cash expenditures future revenues also adjusted match changes business strategy believe approach appropriate valuation method riskadjusted discount rate applied future cash flows income approach 108 excess fair value carrying amount reporting units ranged approximately 15 excess 200 respective carrying amounts refer note 11 consolidated financial statements included part ii item 8 annual report form 10k additional information related goodwill impairment testing 2017 matters march 28 2016 fmc technologies received inquiry us department justice doj related dojs investigation whether certain services unaoil sam provided clients including fmc technologies violated us foreign corrupt practices act fcpa march 29 2016 technip sa also received inquiry doj related unaoil cooperating dojs investigations regard fmc technologies related investigation us securities exchange commission late 2016 technip sa contacted doj regarding investigation offshore platform projects awarded 2003 2007 performed brazil joint venture company technip sa minority participant also raised doj certain projects performed technip sa subsidiaries brazil 2002 2013 doj also inquired projects ghana equatorial guinea awarded technip sa subsidiaries 2008 2009 respectively cooperating doj investigation potential violations fcpa connection projects also contacted brazilian authorities cooperating investigation concerning projects brazil certain government investigations identified issues relating potential noncompliance applicable laws regulations including fcpa brazilian law related historic matters us authorities broad range civil criminal sanctions fcpa laws regulations may seek impose corporations individuals appropriate circumstances including limited fines penalties modifications business practices compliance programs authorities entered agreements obtained range sanctions numerous public corporations individuals arising allegations improper payments whereby civil andor criminal penalties imposed recent civil criminal settlements included fines tens hundreds millions dollars deferred prosecution agreements guilty pleas sanctions including requirement relevant corporation retain monitor oversee compliance fcpa brazilian authorities also range sanctions available recently imposed substantial fines corporations anticorruption violations remedial measures applicable us well potential customer reaction remedial measures could material adverse impact business results operations financial condition recently issued accounting standards refer note 3 consolidated financial statements included part ii item 8 annual report form 10k item 7a item 7a quantitative qualitative disclosures market risk technipfmc conduct activities incidental formation matters contemplated business combination agreement therefore incur significant interest rate risk liquidity risk credit risk foreign currency exchange rate risk relevant market risks item 8item 7a quantitative qualitative disclosures market risk subject financial market risks including fluctuations foreign currency exchange rates interest rates order manage mitigate exposure risks may use derivative financial instruments accordance established policies procedures use derivative financial instruments objective generate profits solely trading activities december 31 2018 december 31 2017 substantially derivative holdings consisted foreign currency forward contracts foreign currency instruments embedded purchase sale contracts forwardlooking disclosures address potential impacts market risks affect financial instruments include potential effects could impact business result changes foreign currency exchange rates interest rates commodity prices equity prices foreign currency exchange rate risk conduct operations around world number different currencies many significant foreign subsidiaries designated local currency functional currency earnings therefore subject change due fluctuations foreign currency exchange rates earnings foreign currencies translated us dollars hedge translation impact earnings 10 increase decrease average exchange rates foreign currencies december 31 2018 would changed revenue income taxes attributable technipfmc approximately 1346 million 57 million respectively transactions denominated currencies subsidiaries’ respective functional currencies manage exposures use derivative instruments primarily use foreign currency forward contracts hedge foreign currency fluctuation associated firmly committed forecasted foreign currency denominated payments receipts derivative instruments associated anticipated transactions usually designated qualify cash flow hedges gains losses associated instruments recorded comprehensive income time underlying transactions recognized unless cash flow contracts deemed ineffective designated cash flow hedges inception changes derivative fair value immediate impact results operations since gains losses associated instruments recorded comprehensive income anticipated transactions occur changes value derivative instrument positions offset changes value underlying transaction anticipated transaction currency functional currency entity recognized asset liability balance sheet also hedge foreign currency fluctuation assets liabilities derivative instruments netting exposures worldwide derivative instruments qualify cash flow hedges occasionally enter contracts arrangements containing terms conditions qualify embedded derivative instruments subject fluctuations foreign exchange rates situations enter derivative foreign exchange contracts hedge price cost fluctuations due movements foreign exchange rates derivative instruments designated cash flow hedges foreign currency forward contracts hedging anticipated transactions accounted cash flow hedges 10 increase value us dollar would resulted additional loss 507 million net fair value cash flow hedges reflected consolidated balance sheet december 31 2018 interest rate risk december 31 2018 commercial paper approximately 19 billion weighted average interest rate 182 using sensitivity analysis measure impact 10 adverse movement interest rate eighteen basis points would result increase interest expense 35 million assess effectiveness forward foreign currency contracts designated cash flow hedges based changes fair value attributable changes spot rates exclude impact attributable changes difference spot rate forward rate assessment hedge effectiveness recognize change fair value component immediately earnings considering difference spot rate forward rate proportional differences interest rates countries currencies traded exposure unrealized valuation forward foreign currency contracts relative changes interest rates countries results operations extent one interest rate increases 10 across tenors countries’ interest rates remain fixed assuming change discount rates would expect recognize decrease 11 million unrealized earnings period change based portfolio december 31 2018 material positions exposure interest rates united states canada australia brazil united kingdom singapore european community norway item 8item 7a quantitative qualitative disclosures market risk subject financial market risks including fluctuations foreign currency exchange rates interest rates order manage mitigate exposure risks may use derivative financial instruments accordance established policies procedures use derivative financial instruments objective generate profits solely trading activities december 31 2019 december 31 2018 substantially derivative holdings consisted foreign currency forward contracts foreign currency instruments embedded purchase sale contracts forwardlooking disclosures address potential impacts market risks affect financial instruments include potential effects could impact business result changes foreign currency exchange rates interest rates commodity prices equity prices foreign currency exchange rate risk conduct operations around world number different currencies many significant foreign subsidiaries designated local currency functional currency earnings therefore subject change due fluctuations foreign currency exchange rates earnings foreign currencies translated us dollars hedge translation impact earnings 10 increase decrease average exchange rates foreign currencies december 31 2019 would changed revenue income taxes attributable technipfmc approximately 1406 million 55 million respectively transactions denominated currencies subsidiaries’ respective functional currencies manage exposures use derivative instruments primarily use foreign currency forward contracts hedge foreign currency fluctuation associated firmly committed forecasted foreign currency denominated payments receipts derivative instruments associated anticipated transactions usually designated qualify cash flow hedges gains losses associated instruments recorded comprehensive income time underlying transactions recognized unless cash flow contracts deemed ineffective designated cash flow hedges inception changes derivative fair value immediate impact results operations since gains losses associated instruments recorded comprehensive income anticipated transactions occur changes value derivative instrument positions offset changes value underlying transaction anticipated transaction currency functional currency entity recognized asset liability balance sheet also hedge foreign currency fluctuation assets liabilities derivative instruments netting exposures worldwide derivative instruments qualify cash flow hedges occasionally enter contracts arrangements containing terms conditions qualify embedded derivative instruments subject fluctuations foreign exchange rates situations enter derivative foreign exchange contracts hedge price cost fluctuations due movements foreign exchange rates derivative instruments designated cash flow hedges foreign currency forward contracts hedging anticipated transactions accounted cash flow hedges 10 increase value us dollar would resulted additional loss 838 million net fair value cash flow hedges reflected consolidated balance sheet december 31 2019 interest rate risk december 31 2019 commercial paper approximately 20 billion weighted average interest rate 141 using sensitivity analysis measure impact 10 adverse movement interest rate eighteen basis points would result increase interest expense 28 million assess effectiveness forward foreign currency contracts designated cash flow hedges based changes fair value attributable changes spot rates exclude impact attributable changes difference spot rate forward rate assessment hedge effectiveness recognize change fair value component immediately earnings considering difference spot rate forward rate proportional differences interest rates countries currencies traded exposure unrealized valuation forward foreign currency contracts relative changes interest rates countries results operations extent one interest rate increases 10 across tenors countries’ interest rates remain fixed assuming change discount rates would expect recognize decrease 05 million unrealized earnings period change based portfolio december 31 2019 material positions exposure interest rates united states canada australia brazil united kingdom singapore european community norway item 8nanitem 7a quantitative qualitative disclosures market risk subject financial market risks including fluctuations foreign currency exchange rates interest rates order manage mitigate exposure risks may use derivative financial instruments accordance established policies procedures use derivative financial instruments objective generate profits solely trading activities december 31 2017 december 31 2016 substantially derivative holdings consisted foreign currency forward contracts foreign currency instruments embedded purchase sale contracts forwardlooking disclosures address potential impacts market risks affect financial instruments include potential effects could impact business result changes foreign currency exchange rates interest rates commodity prices equity prices foreign currency exchange rate risk conduct operations around world number different currencies many significant foreign subsidiaries designated local currency functional currency earnings therefore subject change due fluctuations foreign currency exchange rates earnings foreign currencies translated us dollars hedge translation impact earnings 10 increase decrease average exchange rates foreign currencies december 31 2017 would changed revenue income taxes attributable technipfmc approximately 9034 million 476 million respectively transactions denominated currencies subsidiaries’ respective functional currencies manage exposures use derivative instruments primarily use foreign currency forward contracts hedge foreign currency fluctuation associated firmly committed forecasted foreign currency denominated payments receipts derivative instruments associated anticipated transactions usually designated qualify cash flow hedges gains losses associated instruments recorded comprehensive income time underlying transactions recognized unless cash flow contracts deemed ineffective designated cash flow hedges inception changes derivative fair value immediate impact results operations since gains losses associated instruments recorded comprehensive income anticipated transactions occur changes value derivative instrument positions offset changes value underlying transaction anticipated transaction currency functional currency entity recognized asset liability balance sheet also hedge foreign currency fluctuation assets liabilities derivative instruments netting exposures worldwide derivative instruments qualify cash flow hedges occasionally enter contracts arrangements containing terms conditions qualify embedded derivative instruments subject fluctuations foreign exchange rates situations enter derivative foreign exchange contracts hedge price cost fluctuations due movements foreign exchange rates derivative instruments designated cash flow hedges foreign currency forward contracts hedging anticipated transactions accounted cash flow hedges 10 increase value us dollar would result additional loss 256 million net fair value cash flow hedges reflected consolidated balance sheet december 31 2017 interest rate risk december 31 2017 commercial paper approximately 15 billion weighted average interest rate 056 using sensitivity analysis measure impact 10 adverse movement interest rate nine basis points would result increase interest expense 207 million assess effectiveness forward foreign currency contracts designated cash flow hedges based changes fair value attributable changes spot rates exclude impact attributable changes difference spot rate forward rate assessment hedge effectiveness recognize change fair value component immediately earnings considering difference spot rate forward rate proportional differences interest rates countries currencies traded exposure unrealized valuation forward foreign currency contracts relative changes interest rates countries results operations extent one interest rate increases 10 across tenors countries’ interest rates remain fixed assuming change discount rates would expect recognize decrease 03 million unrealized earnings period change based portfolio december 31 2017 material positions exposure interest rates united states canada australia brazil united kingdom singapore european community norway item 8 item 8 financial statements supplementary data report independent registered public accounting firm board directors stockholder technipfmc plc audited accompanying consolidated balance sheets technipfmc plc subsidiary december 31 2016 2015 related consolidated statements comprehensive income changes stockholder’s equity cash flows year ended december 31 2016 period december 9 2015 december 31 2015 consolidated financial statements responsibility company’s management responsibility express opinion consolidated financial statements based audits conducted audits accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion consolidated financial statements referred present fairly material respects financial position technipfmc plc subsidiary december 31 2016 2015 results operations cash flows year ended december 31 2016 period december 9 2015 december 31 2015 conformity us generally accepted accounting principles kpmg llp houston texas january 13 2017 technipfmc plc consolidated statements comprehensive income accompanying notes integral part consolidated financial statements accompanying notes integral part consolidated financial statements technipfmc plc consolidated statements cash flows accompanying notes integral part consolidated financial statements technipfmc plc consolidated statements changes stockholder’s equity accompanying notes integral part consolidated financial statements technipfmc plc notes consolidated financial statements note 1 basis presentation summary significant accounting policies nature operationstechnipfmc plc “technipfmc” commence operations significant assets liabilities conduct business activities incidental formation matters contemplated definitive business combination agreement “business combination agreement” period december 9 2015 technipfmc’s date incorporation december 31 2016 technipfmc whollyowned subsidiary fmc technologies inc “fmcti” basis presentationthe consolidated financial statements prepared us dollars accordance us generally accepted accounting principles “gaap” use estimatesthe preparation financial statements conformity gaap requires management make estimates assumptions made may affect assessment disclosure assets liabilities date financial statements well income reported expenses regarding financial year estimates may revised circumstances assumptions based change new information becomes available result greater experience consequently actual result operations may differ estimates cash equivalentscash equivalents highlyliquid shortterm instruments original maturities three months less date purchase foreign currency foreign currency transactions translated functional currency exchange rate applicable transaction date closing date monetary assets liabilities stated foreign currencies translated functional currency exchange rate prevailing date resulting exchange gains losses directly recorded income statement except exchange gains losses cash accounts eligible future cash flow hedging net foreign currency investments fair value measurementdue short maturities fair value cash equivalents receivables payables considered equivalent carrying value earnings per common share “eps”basic eps computed using weightedaverage number common shares outstanding year technipfmc 50001 shares outstanding consisting one ordinary share carrying single vote 50000 nonvoting redeemable shares redeemable shares entitled economics rights refer note 5 additional disclosure related shares note 2 merger fmc technologies technip june 14 2016 fmcti technip sa french société anonyme “technip” entered definitive business combination agreement providing business combination among fmc technologies fmc technologies sis limited private limited company incorporated laws england wales whollyowned subsidiary fmcti technip august 4 2016 legal name fmc technologies sis limited changed technipfmc limited january 11 2017 subsequently reregistered technipfmc plc public limited company incorporated laws england wales business combination agreement unanimously approved board directors companies entry business combination agreement followed fmcti’s announcement may 19 2016 intention enter business combination technip effective completion merger issued outstanding ordinary share fmcti technip shares owned respective company subsidiaries converted right receive 10 20 ordinary shares new company respectively december 14 2016 fmcti technip technipfmc entered amendment 1 “amendment” business combination agreement among fmcti technip technipfmc amendment provides certain technical changes business combination agreement including certain closing mechanics fmcti technip technipfmc also entered joinder agreement “joinder” technipfmc us merger sub llc deleware limited liability company “merger sub” technipfmc holdings limited private limited company incorporated laws england wales “uk holdco” technipfmc us holdings llc delaware limited liability company “us holdco” whereby uk holdco us holdco merger sub became party business combination agreement force effect originally named therein consummation merger subject customary termination rights specified business combination agreement transaction expected close first quarter 2017 note 3 related party transactions december 27 2016 fmcti executed indemnification agreement whereby fmcti indemnified technipfmc costs liabilities nature arising date completion anticipated business combination fmcti technip note 4 commitment contingent liabilities pending legal proceedings technipfmc party property subject proceedings known technipfmc threatened contemplated note 5 stockholder’s equity technipfmc issued share capital £50001 divided one ordinary share nominal value £100 carrying single vote held fmcti “subscriber share” ii 50000 nonvoting redeemable shares nominal value £100 per share “redeemable shares” held fmcti redeemable shares entitled economic rights except amount £100 aggregate return capital windingup ii voting rights iii may transferred accordance provisions articles association technipfmc currently force iv may redeemed technipfmc nil consideration time ordinary shares redeemable shares classified equity redeemable shares may redeemed technipfmc nil consideration time therefore recognized within equity capital stockthe following summary technipfmc’s capital stock activity year ended december 31 2016 period december 9 2015 december 31 2015 december 31 2016 december 31 2015 technipfmc’s shareholder fmcti parent company note 6 expense upon formation technipfmc initial share capital contributed technipfmc result technipfmc experienced approximately 119 thousand foreign currency remeasurement losses related receivable unpaid capital fmcti contributed addition technipfmc’s formation capital 119 thousand compensate foreign currency remeasurement losses item 9item 8 financial statements supplementary data report independent registered public accounting firm board directors stockholders technipfmc plc opinions financial statements internal control financial reporting audited accompanying consolidated balance sheets technipfmc plc subsidiaries “company” december 31 2018 2017 related consolidated statements income comprehensive income changes stockholders’ equity cash flows years ended including related notes financial statement schedule valuation qualifying accounts years ended december 31 2018 2017 appearing item 15a2 collectively referred “consolidated financial statements” also audited company’s internal control financial reporting december 31 2018 based criteria established internal controlintegrated framework 2013 issued committee sponsoring organizations treadway commission coso opinion consolidated financial statements referred present fairly material respects financial position company december 31 2018 2017 results operations cash flows two years ended conformity accounting principles generally accepted united states america also opinion company maintain material respects effective internal control financial reporting december 31 2018 based criteria established internal controlintegrated framework 2013 issued coso material weaknesses internal control financial reporting existed date related design operating effectiveness internal controls period end financial reporting process ii accounting income taxes material weakness deficiency combination deficiencies internal control financial reporting reasonable possibility material misstatement annual interim financial statements prevented detected timely basis material weaknesses referred described management’s annual report internal control financial reporting appearing item 9a considered material weaknesses determining nature timing extent audit tests applied audit 2018 consolidated financial statements opinion regarding effectiveness company’s internal control financial reporting affect opinion consolidated financial statements basis opinions company’s management responsible consolidated financial statements maintaining effective internal control financial reporting assessment effectiveness internal control financial reporting included management’s report referred responsibility express opinions company’s consolidated financial statements company’s internal control financial reporting based audits public accounting firm registered public company accounting oversight board united states pcaob required independent respect company accordance us federal securities laws applicable rules regulations securities exchange commission pcaob conducted audits accordance standards pcaob standards require plan perform audits obtain reasonable assurance whether consolidated financial statements free material misstatement whether due error fraud whether effective internal control financial reporting maintained material respects audits consolidated financial statements included performing procedures assess risks material misstatement consolidated financial statements whether due error fraud performing procedures respond risks procedures included examining test basis evidence regarding amounts disclosures consolidated financial statements audits also included evaluating accounting principles used significant estimates made management well evaluating overall presentation consolidated financial statements audit internal control financial reporting included obtaining understanding internal control financial reporting assessing risk material weakness exists testing evaluating design operating effectiveness internal control based assessed risk audits also included performing procedures considered necessary circumstances believe audits provide reasonable basis opinions definition limitations internal control financial reporting company’s internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles company’s internal control financial reporting includes policies procedures pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets company ii provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures company made accordance authorizations management directors company iii provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition company’s assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also projections evaluation effectiveness future periods subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate pricewaterhousecoopers llp houston texas march 11 2019 served companys auditor since 2017 report independent registered public accounting firm board directors stockholders technipfmc plc opinion accompanying consolidated statements income comprehensive income cash flows changes stockholders’ equity year ended december 31 2016 present fairly material respects results operations cash flows technipfmc plc subsidiaries year ended december 31 2016 conformity accounting principles generally accepted united states america addition opinion financial statement schedule year ended december 31 2016 presents fairly material respects information set forth therein read conjunction related consolidated financial statements financial statements financial statement schedule responsibility company’s management responsibility express opinion financial statements financial statement schedule based audit conducted audit financial statements accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements assessing accounting principles used significant estimates made management evaluating overall financial statement presentation believe audit provides reasonable basis opinion pricewaterhousecoopers audit paris france april 2 2018 technipfmc plc consolidated subsidiaries consolidated statements income accompanying notes integral part consolidated financial statements technipfmc plc consolidated subsidiaries consolidated statements comprehensive income net income tax expense benefit 36 115 nil years ended december 31 2018 2017 2016 respectively b net income tax expense benefit 166 525 243 years ended december 31 2018 2017 2016 respectively c net income tax expense benefit 155 117 10 years ended december 31 2018 2017 2016 respectively accompanying notes integral part consolidated financial statements accompanying notes integral part consolidated financial statements technipfmc plc consolidated subsidiaries consolidated statements cash flows accompanying notes integral part consolidated financial statements technipfmc plc consolidated subsidiaries consolidated statements changes stockholders’ equity accompanying notes integral part consolidated financial statements technipfmc plc consolidated subsidiaries notes consolidated financial statements note 1 basis presentation summary significant accounting policies nature operations technipfmc plc consolidated subsidiaries “technipfmc” “we” “us” “our” global leader oil gas projects technologies systems services business segments subsea onshoreoffshore surface technologies manufacturing operations worldwide strategically located facilitate delivery products systems services customers basis presentation consolidated financial statements prepared us dollars accordance accounting principles generally accepted united states america “gaap” rules regulations securities exchange commission “sec” pertaining annual financial information preparation financial statements conformity accounting principles requires us make estimates assumptions affect reported amounts assets liabilities date financial statements reported amounts revenue expenses reporting period ultimate results could differ estimates certain prioryear amounts reclassified conform current year’s presentation annual report form 10k reporting results operations year ended december 31 2018 consist combined results operations technip sa “technip” fmc technologies inc “fmc technologies” due merger fmc technologies technip fmc technologies’ results operations included financial statements periods subsequent consummation merger january 16 2017 since technipfmc successor company technip presenting results technip’s operations year ended december 31 2016 refer note 2 information related merger fmc technologies technip principles consolidation consolidated financial statements include accounts technipfmc majorityowned subsidiaries affiliates intercompany accounts transactions eliminated consolidation use estimates preparation financial statements conformity gaap requires management make estimates assumptions affect reported amounts assets liabilities disclosures contingent assets liabilities date financial statements reported amounts revenue expenses reporting period actual results could differ estimates include limited estimates total contract profit loss longterm constructiontype contracts estimated realizable value excess obsolete inventory estimates related pension accounting estimates related fair value purposes assessing goodwill longlived assets intangible assets impairment estimates fair value business combinations estimates related income taxes investments common stock unconsolidated affiliates equity method accounting used account investments unconsolidated affiliates ability exert significant influence affiliates’ operating financial policies cost method accounting used significant influence affiliate present certain construction joint ventures use proportionate consolidation method whereby proportionate share entity’s assets liabilities revenues expenses included appropriate classifications accompanying consolidated financial statements intercompany balances transactions eliminated preparing accompanying consolidated financial statements investments unconsolidated affiliates assessed impairment whenever events changes facts circumstances indicate carrying value investments may fully recoverable condition subjectively determined temporary carrying value investment written fair value management’s assessment whether decline value temporary based ability intent hold investment whether evidence indicating carrying value investment recoverable within reasonable period time outweighs evidence contrary management generally considers investments equity method investees strategic longterm investments completes assessments impairment longterm viewpoint investments ownership less 20 represent significant investments reported assets consolidated balance sheets active market exists valuation method used financial assets maintained cost minus impairment plus minus changes resulting observable price changes orderly transactions identical similar investment issuer determine whether investments involve variable interest entity “vie” based characteristics subject entity determined vie management determines primary beneficiary entity whether consolidation vie required primary beneficiary consolidating vie must normally power direct activities significantly affect vie’s economic performance ii obligation absorb significant losses right receive significant benefits vie deemed primary beneficiary vie consolidated party’s equity interest vie accounted noncontrolling interest unconsolidated vies accounted using equity method accounting business combinations business combinations accounted using acquisition method accounting acquisition method assets acquired liabilities assumed recorded respective fair values acquisition date determining fair value assets liabilities involves significant judgment regarding methods assumptions used calculate estimated fair values purchase price allocated assets assumed liabilities identifiable intangible assets based estimated fair values excess purchase price estimated fair values net assets acquired recorded goodwill transaction related costs expensed incurred revenue recognition majority revenue derived longterm contracts span several years account revenue accordance accounting standard codification “asc” topic 606 revenue contracts customers adopted january 1 2018 using modified retrospective method refer note 4 discussion adoption including impact 2018 financial statements contract costs obtain contract incremental direct costs obtaining contract deferred amortized period contract performance longer period generally estimated life customer relationship renewals expected renewal commission commensurate initial commission classify deferred commissions current noncurrent based timing expect recognize expense current noncurrent portions deferred commissions included current assets respectively consolidated balance sheets amortization deferred commissions included selling general administrative expenses cash equivalents cash equivalents highlyliquid shortterm instruments original maturities generally three months less date purchase trade receivables net allowances allowance doubtful accounts provided receivables equal estimated uncollectible amounts estimate based historical collection experience specific review customer’s receivables balance inventories stated lower cost net realizable value except relates inventory measured using lastin firstout “lifo” method inventories stated lower cost market inventory costs include costs directly attributable products including manufacturing overhead excluding costs distribute cost significant portion us domiciled inventories determined lifo method firstin firstout “fifo” weighted average methods used determine cost remaining inventories writedown inventories recorded net realizable value inventories lower net book value property plant equipment property plant equipment recorded cost depreciation principally provided straightline basis estimated useful lives assets vessels 10 30 years buildings 10 50 years machinery equipment 3 20 years gains losses realized upon sale retirement assets recorded income expense net consolidated statements income maintenance repair costs expensed incurred expenditures extend useful lives property plant equipment capitalized depreciated estimated new remaining life asset impairment property plant equipment property plant equipment reviewed impairment whenever events changes circumstances indicate carrying value longlived asset may recoverable carrying value asset group recoverable exceeds sum undiscounted cash flows expected result use eventual disposition asset determined impairment loss occurred impairment loss measured amount carrying value longlived asset exceeds fair value longlived assets classified held sale reported lower carrying value fair value less cost sell goodwill subject amortization tested impairment annual basis frequently impairment indicators arise comparing estimated fair value reporting unit carrying value including goodwill reporting unit defined operating segment one level operating segment established october 31 date annual test impairment goodwill reporting units goodwill tested impairment using quantitative impairment test known income approach estimates fair value discounting reporting unit’s estimated future cash flows using weightedaverage cost capital reflects current market conditions risk profile reporting unit arrive future cash flows use estimates economic market assumptions including growth rates revenues costs estimates future expected changes operating margins tax rates cash expenditures future revenues also adjusted match changes business strategy fair value reporting unit less carrying amount result method impairment loss recorded lower fair value estimate future reporting units could result goodwill impairments factors could trigger lower fair value estimate include sustained price declines reporting unit’s products services cost increases regulatory political environment changes customer demand changes market conditions may affect certain market participant assumptions used discounted future cash flow model intangible assets acquired intangible assets generally amortized straightline basis estimated useful lives generally range 2 20 years acquired intangible assets indefinite lives intangible assets reviewed impairment whenever events changes circumstances indicate carrying amount intangible asset may recoverable carrying amount intangible asset recoverable exceeds sum undiscounted cash flows expected result use eventual disposition asset determined impairment loss occurred loss measured amount carrying amount intangible asset exceeds fair value capitalized software costs recorded cost capitalized software costs include purchases software internal external costs incurred application development stage software projects costs amortized straightline basis estimated useful lives internal use software useful lives range three ten years internet website costs estimated useful lives exceed three years research development expense expensed incurred research development expense includes improvement existing products services design development new products services test new technologies debt instruments debt instruments include synthetic bonds senior private placement notes borrowings issuance fees redemption premium debt instruments included cost debt consolidated balance sheets adjustment nominal amount debt loan origination costs revolving credit facilities recorded asset amortized life underlying debt fair value measurements fair value defined price would received sell asset paid transfer liability exit price orderly transaction market participants reporting date fair value framework requires categorization assets liabilities measured fair value three levels based upon assumptions inputs used price assets liabilities exception certain assets liabilities measured using net asset value practical expedient required leveled level 1 provides reliable measure fair value whereas level 3 generally requires significant management judgment three levels defined follows • level 1 unadjusted quoted prices active markets identical assets liabilities • level 2 observable inputs quoted prices included level 1 example quoted prices similar assets liabilities active markets quoted prices identical assets liabilities inactive markets • level 3 unobservable inputs reflecting management’s assumptions market participants would use pricing asset liability income taxes current income taxes provided income reported financial statement purposes adjusted transactions enter computation income taxes payable year deferred tax assets liabilities measured using enacted tax rates expected future tax consequences temporary differences carrying amounts tax basis assets liabilities valuation allowance established whenever management believes likely deferred tax assets may realizable income taxes provided equity undistributed earnings foreign subsidiaries affiliates extent determined earnings indefinitely reinvested income taxes provided earnings period longer support earnings indefinitely reinvested tax benefits related uncertain tax positions recognized likely based technical merits position sustained upon examination classify interest expense penalties recognized underpayments income taxes income tax expense sharebased employee compensation measurement sharebased compensation expense restricted share awards performance share awards based market price grant date number shares awarded used cox ross rubinstein binomial model measure fair value stock options granted prior december 31 2016 blackscholes options pricing model measure fair value stock options granted january 1 2017 stockbased compensation expense award recognized ratably applicable service period beginning start service period ending employee becomes eligible retirement taking account estimated forfeitures ordinary shares held employee benefit trust ordinary shares purchased plan administrator fmc technologies inc nonqualified savings investment plan placed trust purchased shares recorded cost classified reduction stockholders’ equity consolidated balance sheets earnings per ordinary share “eps” basic eps computed using weightedaverage number ordinary shares outstanding year use treasury stock method compute diluted eps gives effect potential dilution earnings could occurred additional shares issued awards granted incentive compensation stock plan treasury stock method assumes proceeds would obtained upon exercise awards granted incentive compensation stock plan used purchase outstanding ordinary shares average market price period convertible bonds could converted exchangeable new existing shares would additionally result dilution earnings per share ordinary shares assumed converted issuance date included compute diluted eps ifconverted method additionally net profit period adjusted converted aftertax interest expense related dilutive shares foreign currency financial statements operations us dollar functional currency located nonhighly inflationary countries translated us dollars prior consolidation assets liabilities translated exchange rate effect balance sheet date income statement accounts translated average exchange rate period operations translation gains losses recorded component accumulated comprehensive income loss stockholders’ equity foreign entity sold liquidated operations highly inflationary countries local currency functional currency inventories property plant equipment noncurrent assets converted us dollars historical exchange rates gains losses conversion included net income foreign currency effects cash equivalents debt highly inflationary economies included interest income expense certain committed anticipated future cash flows recognized assets liabilities denominated foreign currency may choose manage risk changes exchange rates compared functional currency economic netting exposures instead derivative instruments cash outflows liabilities foreign currency matched cash inflows assets currency movements exchange rates result offsetting gains losses due inherent unpredictability timing cash flows gains losses current period may economically offset gains losses future period gains losses recorded consolidated statements income period incurred gains losses remeasurement assets liabilities recognized income expense net second half 2018 argentina’s three year cumulative inflation rate exceeded 100 based published inflation data effective july 1 2018 argentina’s currency considered highly inflationary local operations argentina use us dollars functional currency monetary nonmonetary assets liabilities denominated argentina pesos remeasured us dollars gains losses resulting foreign currency transactions included current results operations event material impact company’s condensed consolidated financial statements derivative instruments derivatives recognized consolidated balance sheets fair value classification current noncurrent based upon maturity derivative instrument changes fair value derivative instruments recorded current earnings deferred accumulated comprehensive income loss depending type hedging transaction whether derivative designated effective hedge instrument accounted individually assets liabilities offset hedge accounting applied derivative deemed highly effective offsetting changes anticipated cash flows hedged item transaction changes fair value derivatives designated cash flow hedges deferred accumulated comprehensive income loss underlying transactions recognized earnings time related deferred hedging gains losses recorded earnings line hedged item effectiveness assessed inception hedge quarterly basis effectiveness forward contract cash flow hedges assessed based solely changes fair value attributable change spot rate change fair value contract related change forward rates excluded assessment hedge effectiveness changes excluded component derivative instrument along ineffectiveness identified recorded earnings incurred document risk management strategy hedge effectiveness inception term hedge also use forward contracts hedge foreign currency assets liabilities apply hedge accounting changes fair value contracts recognized income expense net consolidated statements income occur offset gains losses remeasurement related asset liability note 2 business combination transactions description merger fmc technologies technip june 14 2016 fmc technologies technip entered definitive business combination agreement providing business combination among fmc technologies fmc technologies sis limited private limited company incorporated laws england wales whollyowned subsidiary fmc technologies technip august 4 2016 legal name fmc technologies sis limited changed technipfmc limited january 11 2017 subsequently reregistered technipfmc plc public limited company incorporated laws england wales january 16 2017 business combination completed pursuant terms definitive business combination agreement technip merged technipfmc continuing surviving company “technip merger” ordinary share technip “technip shares” technip shares owned technip whollyowned subsidiaries exchanged 20 ordinary shares technipfmc subject terms definitive business combination agreement immediately following technip merger whollyowned indirect subsidiary technipfmc “merger sub” merged fmc technologies fmc technologies continuing surviving company whollyowned indirect subsidiary technipfmc “fmcti merger” share common stock fmc technologies “fmcti shares” fmcti shares owned fmc technologies technipfmc merger sub whollyowned subsidiaries exchanged 10 ordinary share technipfmc subject terms definitive business combination agreement acquisition method accounting technip identified accounting acquirer acquired 100 interest fmc technologies merger fmc technologies technip “merger” created larger diversified company better equipped respond economic industry developments better positioned develop build offerings subsea surface onshoreoffshore markets compared former companies standalone basis importantly merger brought ability combined company standardize product service offerings customers ii reduce costs customers iii provide integrated product offerings oil gas industry aim innovate markets combined company operates incurred merger transaction integration costs 365 million 1018 million 926 million years ended december 31 2018 2017 2016 respectively description fmc technologies accounting acquiree fmc technologies global provider technology solutions energy industry fmc technologies designs manufactures services technologically sophisticated systems products including subsea production processing systems surface wellhead production systems high pressure fluid control equipment measurement solutions marine loading systems energy industry subsea systems produced fmc technologies used offshore production crude oil natural gas placed seafloor control flow crude oil natural gas reservoir host processing facility additionally fmc technologies provides full range drilling completion production wellhead systems standard customengineered applications surface wellhead production systems trees used control regulate flow crude oil natural gas well used onshore offshore applications consideration transferred acquisitiondate fair value consideration transferred consisted following calculation deemed reflect share capital increase accounting acquirer fmc technologies exchange ratio 1 share technipfmc 1 share fmc technologies provided business combination agreement adjusted dividing fmc technologies exchange ratio technip exchange ratio 2 shares technipfmc 1 share technip provided business combination agreement ie 1 ⁄ 2 05 order reflect number shares technip fmc technologies stockholders would received technip issued shares b closing price technip’s ordinary shares euronext paris january 16 2017 euro converted euro us dollar exchange rate 10594 january 16 2017 assets acquired liabilities assumed following table summarizes final allocation fair values assets acquired liabilities assumed acquisition date segment allocation goodwill final allocation goodwill reporting segments based final valuation follows goodwill calculated excess consideration transferred net assets recognized represents expected revenue cost synergies combined company described goodwill recognized result acquisition deductible tax purposes acquired identifiable intangible assets identifiable intangible assets acquired include following fmc technologies’ results operations included financial statements periods subsequent consummation merger january 16 2017 fmc technologies contributed revenues net loss 34411 million 2512 million respectively period january 17 2017 december 31 2017 part ongoing review purchase price allocation 197 million adjustment deferred tax liability balance recorded first quarter 2018 increased surface technologies goodwill pro forma impact merger unaudited following unaudited supplemental pro forma results present consolidated information merger completed january 1 2016 pro forma results include potential synergies cost savings expected benefits merger accordingly pro forma results considered indicative results would occurred merger consummated january 1 2016 indicative future results comparative purposes weighted average shares outstanding used diluted earnings per share calculation year ended december 31 2017 also used calculate diluted earnings per share year ended december 31 2016 transactions february 2018 signed agreement island offshore group acquire 51 stake island offshore’s whollyowned subsidiary island offshore subsea island offshore subsea provides rlwi project management engineering services plug abandonment “pa” riserless coiled tubing well completion operations connection acquisition controlling interest technipfmc island offshore entered strategic cooperation agreement deliver rlwi services worldwide basis also include technipfmc’s rlwi capabilities island offshore subsea rebranded tios operating unit technipfmc’s rlwi activities worldwide acquisition completed april 18 2018 total cash consideration 424 million result acquisition recorded redeemable financial liability equal fair value written put option finally preliminarily increased goodwill 850 million july 18 2018 entered share sale purchase agreement poc holding oy sell 100 outstanding shares technip offshore finland oy total gain tax recognized third quarter 2018 278 million additional acquisitions including purchased interests equity method investments year ended december 31 2018 totaled 625 million consideration paid note 3 new accounting standards recently adopted accounting standards us gaap effective january 1 2018 adopted accounting standards update “asu” 201409 “revenue contracts customers topic 606” update requires entity recognize revenue depict transfer promised goods services customers amount reflects consideration entity expects entitled exchange goods services see note 4 information march 2016 financial accounting standards board “fasb” issued asu 201608 “principal versus agent considerations reporting revenue gross versus net” clarifies implementation guidance principal versus agent considerations entities permitted apply amendments either retrospectively prior reporting period presented retrospectively cumulative effect initially applying asu recognized date initial application adoption update material impact consolidated financial statements effective january 1 2018 adopted asu 201601 “recognition measurement financial assets financial liabilities” update addresses certain aspects recognition measurement presentation disclosure financial instruments among amendments update requires equity investments accounted equity method accounting measured fair value changes fair value recognized net income entity may choose measure equity investments readily determinable fair values cost minus impairment plus minus changes resulting observable price changes orderly transactions identical similar investment issuer updated guidance also simplifies impairment assessment equity investments without readily determinable fair values eliminates requirement disclose significant assumptions methods used estimate fair value financial instruments measured amortized cost updated guidance requires use exit price notion measuring fair value financial instruments disclosure purposes amendments required adopted modified retrospective basis two exceptions amendments related equity investments without readily determinable fair values requirement use exit price notion required adopted prospectively february 2018 fasb issued asu 201803 “technical corrections improvements financial instrumentsoverall subtopic 82510 recognition measurement financial assets financial liabilities” amendments clarify guidance asu 201601 following issues among things equity securities without readily determinable fair valuediscontinuation equity securities without readily determinable fair value adjustment forward contracts purchase options presentation requirements certain fair value option liabilities fair value option liabilities denominated foreign currency transition guidance equity securities without readily determinable fair value amendments asu effective conjunction adoption asu 201601 march 2018 fasb issued asu 201804 “investmentsdebt securities topic 320 regulated operations topic 980 amendments sec paragraphs pursuant sec staff accounting bulletin 117 sec release 339273” asu supersedes sec paragraphs pursuant sec staff accounting bulletin 117 brings existing guidance conformity topic 321 investmentsequity securities sec release 339273 removed regulation sx rule 3a05 special requirements public utility holding companies adoption updates material impact consolidated financial statements effective january 1 2018 adopted asu 201615 “classification certain cash receipts cash payments” update amends existing guidance statement cash flows provides guidance eight classification issues related statement cash flows amendments asu required adopted retrospectively issues impracticable adopt retrospectively amendments may adopted prospectively earliest date practicable adoption update material impact consolidated financial statements effective january 1 2018 adopted asu 201616 “intraentity transfers assets inventory” update requires income tax consequences recognized intraentity transfer asset inventory transfer occurs amendments asu required adopted modified retrospective basis adoption update material impact consolidated financial statements effective january 1 2018 adopted asu 201701 “clarifying definition business” update clarifies definition business provides screen determine set assets activities business screen requires substantially fair value gross assets acquired disposed concentrated single identifiable asset group similar identifiable assets set assets business amendments asu required adopted prospectively adoption update material impact consolidated financial statements effective january 1 2018 adopted asu 201707 “improving presentation net periodic pension cost net periodic postretirement benefit cost” update requires employers disaggregate service cost component components net benefit cost disclose amount net benefit cost included income statement capitalized assets line item updated guidance requires employers report service cost component line items compensation costs report pensionrelated costs include interest costs amortization pensionrelated costs prior periods gains losses plan assets separately exclude subtotal operating income updated guidance also allows service cost component eligible capitalization applicable amendments asu effective us january 1 2018 guidance requires adoption retrospective basis presentation service cost component components net periodic pension cost net periodic postretirement benefit cost income statement prospective basis capitalization service cost component net periodic pension cost net periodic postretirement benefit assets adoption update material impact consolidated financial statements effective january 1 2018 adopted asu 201709 “scope modification accounting” update provides clarity changes terms conditions sharebased payment award must accounted modifications amendments asu effective us january 1 2018 required adopted prospectively adoption update material impact consolidated financial statements march 2018 fasb issued asu 201805 “income taxes topic 740amendments sec paragraphs pursuant sec staff accounting bulletin 118” asu adds sec paragraphs pursuant sec staff accounting bulletin 118 expresses view staff regarding application topic 740 income taxes reporting period includes december 22 2017 date tax cuts jobs act 2017 “tax cuts jobs act” signed law amendments asu effective upon issuance adoption update material impact consolidated financial statements recently issued accounting standards us gaap lease accounting february 2016 fasb issued asu 201602 “leases topic 842” update requires lessee recognize liability make lease payments rightofuse “rou” asset representing right use underlying asset lease term similar current guidance update continues differentiate finance leases operating leases however distinction primarily relates differences manner expense recognition time classification lease payments statement cash flows updated guidance leaves accounting leases lessors largely unchanged existing gaap early application permitted entities required use modified retrospective adoption certain relief provisions leases exist entered beginning earliest comparative period financial statements adopted guidance become effective us january 1 2019 january 2018 fasb issued asu 201801 “leases topic 842 land easement practical expedient transition topic 842” amendments update permit entity elect optional transition practical expedient evaluate land easements existed expired entity’s adoption topic 842 previously accounted leases topic 840 july 2018 december 2018 fasb issued asu 201810 “codification improvements topic 842 lease” asu 201820 “narrowscope improvements lessors” respectively amendments updates affect narrow aspects guidance issued asu 201602 intended simplify adoption new standard amendments make substantive changes core provisions principles new standard considered implementation process july 2018 fasb also issued asu 201811 “leases topic 842 targeted improvements” amendments update provide entities optional transition method permits entity initially apply new leases standard adoption date recognize cumulativeeffect adjustment opening balance retained earnings period adoption addition amendments update also provide lessors practical expedient provided certain conditions met class underlying asset separate nonlease components associated lease component purposes income statement presentation plan elect practical expedient lessors account lease nonlease components within lessor contracts separately plan elect practical expedient available lessees separate lease nonlease components asset classes vessels typically include significant nonlease components adopt topic 842 january 1 2019 electing optional transition method allows cumulativeeffect adjustment period adoption result restate prior periods expect elect certain practical expedients permitted topic 842 including practical expedient shortterm leases lessee permitted make accounting policy election class underlying asset recognize lease assets lease liabilities leases term 12 months less addition expect elect package practical expedients permitted transition guidance within topic 842 among things allows us carry forward historical lease classification part assessment worktodate formed implementation work team conducted regionspecific training relevant staff regarding potential impacts topic 842 continuing contract analysis policy review engaged external resources assist us efforts completing analysis potential changes current accounting practices process implementing new lease accounting system connection adoption updated guidance also evaluating impact topic 842 internal control financial reporting changes business practices processes adoption currently expect recognize material operating liabilities corresponding rou assets approximately amount based present value lease payments yet paid current leasing standards existing operating leases lessee june 2016 fasb issued asu 201613 “financial instrumentscredit losses” update introduces new model recognizing credit losses financial instruments based estimate current expected credit losses updated guidance applies loans accounts receivable trade receivables financial assets measured amortized cost ii loan commitments offbalance sheet credit exposures iii debt securities financial assets measured fair value comprehensive income iv beneficial interests securitized financial assets amendments asu effective us january 1 2020 required adopted modified retrospective basis early adoption permitted currently evaluating impact asu consolidated financial statements november 2018 fasb also issued asu 201819 “codification improvements topic 326 financial instrumentscredit losses” update amends transition requirements scope credit losses standard issued 2016 update clarifies receivables arising operating leases within scope credit losses standard rather accounted accordance leases standard amendments asu effective us january 1 2020 required adopted modified retrospective basis early adoption permitted currently evaluating impact asu consolidated financial statements august 2017 fasb issued asu 201712 “targeted improvements accounting hedging activities” update improves financial reporting hedging relationships better portray economic results entitys risk management activities financial statements make certain targeted improvements simplify application hedge accounting guidance current gaap amendments update better align entitys risk management activities financial reporting hedging relationships changes designation measurement guidance qualifying hedging relationships presentation hedge results amendments asu effective us january 1 2019 early adoption permitted cash flow net investment hedges adoption date guidance requires modified retrospective approach amended presentation disclosure guidance required adopted prospectively currently evaluating impact asu consolidated financial statements february 2018 fasb issued asu 201802 “income statementreporting comprehensive income topic 220 reclassification certain tax effects accumulated comprehensive income aoci” update provides option reclassify stranded tax effects aoci retained earnings period effect change us federal corporate tax rate tax cuts jobs act portion thereof recorded asu requires financial statement disclosures indicate description accounting policy releasing income tax effects aoci whether election reclassify stranded income tax effects tax cuts jobs act information income tax effects reclassified amendments affect organization required apply provisions topic 220 income statementreporting comprehensive income items comprehensive income related tax effects presented comprehensive income required gaap amendments asu effective us january 1 2019 adoption update material effect consolidated financial statements june 2018 fasb issued asu 201807 “compensation stock compensation topic 718 improvements nonemployee sharebased payment accounting” update expands scope topic 718 include sharebased payment transactions acquiring goods services nonemployees amendments update specify topic 718 applies sharebased payment transactions grantor acquires goods services used consumed operations issuing sharebased payment awards amendments update also clarify topic 718 apply sharebased payments used effectively provide 1 financing issuer 2 awards granted conjunction selling goods services customers part contract accounted asc topic 606 amendments update effective us january 1 2019 early adoption permitted earlier adoption asc topic 606 currently evaluating impact asu consolidated financial statements august 2018 fasb issued asu 201813 “fair value measurement topic 820 disclosure frameworkchanges disclosure requirements fair value measurement” update modifies disclosure requirement fair value measurements topic 820 amendments asu effective us january 1 2020 early adoption permitted amendments changes unrealized gains losses range weighted average significant unobservable inputs used develop level 3 fair value measurements narrative description measurement uncertainty applied prospectively amendments applied retrospectively currently evaluating impact asu consolidated financial statements august 2018 fasb issued asu 201814 “compensationretirement benefitsdefined benefit plansgeneral subtopic 71520 disclosure frameworkchanges disclosure requirements defined benefit plans” update amends asc 715 add remove clarify disclosure requirements related defined benefit pension postretirement plans amendments asu effective us january 1 2021 early adoption permitted amendments update required adopted retrospectively currently evaluating impact asu consolidated financial statements august 2018 fasb issued asu 201815 “intangiblesgoodwill otherinternaluse software subtopic 35040 customer’s accounting implementation costs incurred cloud computing arrangement service contract consensus fasb emerging issues task force” update requires implementation costs incurred cloud computing arrangement service contract deferred would capitalized based requirements capitalizing implementation costs incurred develop obtain internaluse software amendments asu effective us january 1 2020 early adoption permitted amendments update required adopted either retrospectively prospectively currently evaluating impact asu consolidated financial statements november 2018 fasb issued asu 201818 “collaborative arrangements topic 808 clarifying interaction topic 808 topic 606” update clarifies interaction guidance certain collaborative arrangements revenue recognition financial accounting reporting standard amendments asu effective us january 1 2020 early adoption permitted amendments update required adopted retrospectively date initial application topic 606 entity recognize cumulative effect initially applying amendments adjustment opening balance retained earnings later earliest annual period presented annual period includes date entity’s initial application topic 606 currently evaluating impact asu consolidated financial statements note 4 revenue majority revenue longterm contracts associated designing manufacturing products systems providing services customers involved exploration production crude oil natural gas january 1 2018 adopted asc topic 606 gaap using modified retrospective method applied contracts completed january 1 2018 resulting 915 million reduction retained earnings results reporting periods beginning january 1 2018 presented asc topic 606 prior period amounts adjusted continue reported accordance historic accounting topic 605 significant revenue recognition criteria explained allocation transaction price performance obligations contract’s transaction price allocated distinct performance obligation recognized revenue performance obligation satisfied determine proper revenue recognition method evaluate whether two contracts combined accounted one single contract whether combined single contract accounted one performance obligation evaluation requires significant judgment contracts single performance obligation promise transfer individual goods services separately identifiable promises contracts therefore distinct variable consideration due nature work required performed many performance obligations estimation total revenue cost completion complex subject many variables requires significant judgment common longterm contracts contain variable considerations either increase decrease transaction price variability transaction price arises primarily due liquidated damages company considers experience similar transactions expectations regarding contract estimating amount variable consideration entitled determining whether estimated variable consideration constrained include estimated amounts transaction price extent probable significant reversal cumulative revenue recognized occur uncertainty associated variable consideration resolved estimates variable consideration based largely assessment anticipated performance information historical current forecasted reasonably available us payment terms progress billings generally issued upon completion certain phases work stipulated contract payment terms may either fixed lumpsum driven time materials eg daily hourly rates plus materials typically customer retains small portion contract price completion contract contracts generally result revenue recognized excess billings present contract assets balance sheet amounts billed due customers classified receivables balance sheet portion payments retained customer final contract settlement considered significant financing component intent protect customer contracts may entitled receive advance payment recognize liability advance payments excess revenue recognized present contract liabilities balance sheet advance payment typically considered significant financing component used meet working capital demands higher early stages contract protect us party failing adequately complete obligations contract warranty certain contracts include assurancetype warranty clause typically 18 36 months guarantee products comply agreed specifications servicetype warranty may also provided customer case management allocates portion transaction price warranty based estimated standalone selling price servicetype warranty revenue recognized time performance obligations satisfied time work progresses point time revenue products services transferred customers time accounted approximately 824 revenue year ended december 31 2018 respectively typically revenue recognized time using input measure eg costs incurred date relative total estimated costs completion measure progress costtocost method longterm contracts control transferring time revenue recognized based extent progress towards completion performance obligation upon adoption new standard generally use costtocost measure progress contracts best depicts transfer control customer occurs incur costs contracts costtocost measure progress extent progress towards completion measured based ratio costs incurred date total estimated costs completion performance obligation revenues including estimated fees profits recorded proportionally costs incurred expected losses constructiontype contracts progress charged earnings total period losses identified right invoice practical expedient righttoinvoice practical expedient applied performance obligation satisfied time right invoice customer amount corresponds directly value transferred customer performance completed date practical expedient used estimate variable consideration inception contract determine transaction price disclosure purposes contracts payment terms dictated daily hourly rates contracts may mixed pricing terms include fixed fee portion contracts charge customer fixed rate based time materials spent project correspond value transferred customer recognize revenue amount right invoice contract modifications contracts often modified account changes contract specifications requirements consider contract modifications exist modification either creates new changes existing enforceable rights obligations contract modifications goods services distinct existing contract due significant integration service provided context contract accounted part existing contract effect contract modification transaction price measure progress performance obligation relates recognized adjustment revenue either increase reduction revenue cumulative catchup basis revenue recognition segment following description principal activities separated reportable segments company generates revenue see note 5 detailed information reportable segments subsea segment manufactures designs products systems performs engineering procurement project management provides services used oil gas companies involved offshore exploration production crude oil natural gas systems services may sold separately combined integrated systems services offered within one contract many systems products company supplies subsea applications highly engineered meet unique demands customers’ field properties typically ordered one two years prior installation often receive advance payments progress billings customers order fund initial development working capital requirements subsea engineering procurement construction installation contracts revenue principally generated longterm contracts customers determined contracts generally one performance obligation delivered product highly customized customer field specifications generally recognize revenue time contracts customized products alternative use company enforceable right payment plus reasonable profit performance completed date subsea segment also performs array subsea services including installation services ii asset management services iii product optimization iv inspection maintenance repair services v well access intervention services revenue generally earned execution either installationtype maintenancetype contracts either contracttype management determined performance service generally represents one single performance obligation determined revenue contracts recognized time customer simultaneously receives consumes benefit services b onshoreoffshore segment designs builds onshore facilities related production treatment transformation transportation oil gas designs manufactures installs fixed floating platforms offshore production processing oil gas reserves onshore business combines design engineering procurement construction project management entire range onshore facilities onshore activity covers types onshore facilities related production treatment transportation oil gas well transformation petrochemicals ethylene polymers fertilizers onshore activities include development onshore fields refining natural gas treatment liquefaction design construction hydrogen synthesis gas production units many contracts provide combination engineering procurement construction project management installation services may last several years determined contracts nature generally one performance obligation contracts final product highly customized specifications field customer’s requirements therefore customer obtains control asset time thus revenue recognized time offshore business combines design engineering procurement construction project management within entire range fixed floating offshore oil gas facilities many first kind including development floating liquefied natural gas “flng” facilities similar onshore contracts grouped segment provide combination services may last several years determined contracts nature one performance obligation contracts final product highly customized specifications field customer’s requirements determined customer obtains control asset time thus revenue recognized time customized products alternative use us enforceable right payment plus reasonable profit performance completed date c surface technologies surface technologies segment designs manufactures supplies technologically advanced wellhead systems high pressure valves pumps used stimulation activities oilfield service companies provides installation flowback services exploration production companies provide full range drilling completion production wellhead systems standard customengineered applications pressure control product contracts design manufacture flowline products weco®chiksan® trademarks articulating frac arm manifold trailers well service pumps compact valves reciprocating pumps used well completion stimulation activities major oilfield service companies performance obligations within systems satisfied either delivery standardized product equipment delivery customized product equipment contracts standardized product equipment performance obligation management determined limited customization products sold within contracts asset delivered resold another customer revenue recognized point time upon transfer control customer acceptance provisions met contracts customized product equipment performance obligation revenue recognized time manufacturing product create asset alternative use us segment also designs manufactures services measurement products globally contracttypes include standard product equipment maintenancetype services determined contract product line represents one performance obligation revenue standard measurement equipment contracts recognized point time maintenancetype contracts typically priced daily hourly rate determined revenue contracts recognized time customer simultaneously receives consumes benefit services disaggregation revenue company disaggregates revenue geographic location contract types tables also include reconciliation disaggregated revenue reportable segments following tables present products services revenue geography reportable segment year ended december 31 2018 following tables represent revenue contract type reportable segment year ended december 31 2018 represents revenue subject asc topic 606 contract balances timing revenue recognition billings cash collections results billed accounts receivable costs estimated earnings excess billings uncompleted contracts contract assets billings excess costs estimated earnings uncompleted contracts contract liabilities consolidated balance sheets contract assets contract assets previously disclosed costs estimated earnings excess billings uncompleted contracts include unbilled amounts typically resulting sales longterm contracts revenue recognized time revenue recognized exceeds amount billed customer right payment subject passage time amounts may exceed net realizable value costs estimated earnings excess billings uncompleted contracts generally classified current contract liabilities sometimes receive advances deposits customers revenue recognized resulting contract liabilities following table provides information net contract assets liabilities december 31 2018 december 31 2017 majority change net contract assets liabilities due adoption asc topic 606 adoption resulted net reclassification net contract assets liabilities trade receivables see ‘impact primary financial statements’ certain amounts previously reported contract assets contract liabilities reclassified trade receivables december 31 2018 remaining decrease related adoption asc topic 606 contract assets december 31 2017 december 31 2018 primarily due timing milestone payments partially offset increase 57 million contract assets due acquisitions remaining increase related adoption asc topic 606 contract liabilities primarily due cash received excluding amounts recognized revenue period order determine revenue recognized period contract liabilities first allocate revenue individual contract liability balance outstanding beginning period revenue exceeds balance revenue recognized year ended december 31 2018 included contract liabilities balance december 31 2017 28146 million addition net revenue recognized year ended december 31 2018 performance obligations satisfied previous periods favorable impact 218 million primarily relates changes estimate stage completion impacted revenue transaction price allocated remaining unsatisfied performance obligations remaining unsatisfied performance obligations “rupo” “order backlog” represent transaction price products services material right work performed transaction price order backlog includes base transaction price variable consideration changes transaction price order backlog table include contracts recognize revenue amount right invoice services performed transaction price order backlog related unfilled confirmed customer orders estimated reporting date december 31 2018 aggregate amount transaction price allocated order backlog 145600 million company expects recognize revenue approximately 631 order backlog 2019 369 thereafter following table details order backlog business segment december 31 2018 impact primary financial statements impact revenues year ended december 31 2018 increase 271 million result applying asc topic 606 difference revenue recognized asc topic 606 compared asc topic 605 exists certain contracts physical progress used measure progress costtocost method best depicts transfer control customer difference exists presentation trade receivables contract assets contract liabilities upon adoption asc topic 606 recognize trade receivables unconditional right payment previously reported certain billed amounts net basis within contract assets contract liabilities legal right offset present within contract consolidated statements income year ended december 31 2018 consolidated balance sheets december 31 2018 note 5 business segments management’s determination reporting segments made basis strategic priorities within segment differences products services provide corresponds manner chief executive officer chief operating decision maker reviews evaluates operating performance make decisions resources allocated segment upon completion merger reorganized reporting structure aligned segments underlying businesses execute strategy technipfmc result report results operations following segments subsea onshoreoffshore surface technologies reportable segments • subsea manufactures designs products systems performs engineering procurement project management provides services used oil gas companies involved offshore exploration production crude oil natural gas • onshoreoffshore designs builds onshore facilities related production treatment transformation transportation oil gas designs manufactures installs fixed floating platforms production processing oil gas reserves • surface technologies designs manufactures systems provides services used oil gas companies involved land shallow water exploration production crude oil natural gas designs manufactures supplies technologically advanced high pressure valves fittings oilfield service companies also provides flowback well testing services segment operating profit defined total segment revenue less segment operating expenses income loss equity method investments included computing segment operating profit refer note 9 additional information following items excluded computing segment operating profit corporate staff expense net interest income expense associated corporate debt facilities income taxes revenue expense net segment revenue segment operating profit corporate expense primarily includes corporate staff expenses legal reserve stockbased compensation expenses employee benefits certain foreign exchange gains losses mergerrelated transaction expenses b includes amounts attributable noncontrolling interests segment assets corporate includes cash lifo adjustments deferred income tax balances legal provisions property plant equipment associated specific segment pension assets fair value derivative financial instruments geographic segment information geographic segment sales identified based country products services delivered geographic segment longlived assets represent property plant equipment net business segment information years ended december 31 2018 2017 2016 revenue jsc yamal lng exceeded 10 consolidated revenue year ended december 31 2016 revenue total exceeded 10 consolidated revenue note 6 earnings loss per share reconciliation number shares used basic diluted earnings per share calculation follows note 7 inventories consisted following amounts table reported net obsolescence reserves 975 million 708 million december 31 2018 2017 respectively net inventories accounted lifo method totaled 3872 million 3009 million december 31 2018 2017 respectively current replacement costs lifo inventories exceeded recorded values 79 million 06 million december 31 2018 2017 respectively reduction base lifo inventory 2018 note 8 current assets current liabilities current assets consisted following current liabilities consisted following note 9 equity method investments equity method accounting used account investments unconsolidated affiliates ability exert significant influence affiliates operating financial policies certain construction joint ventures use proportionate consolidation method whereby proportionate share entity’s assets liabilities revenues expenses included appropriate classifications accompanying consolidated financial statements none proportionate consolidation investments individually aggregate significant consolidated results 2018 2017 2016 equity investments follows december 31 2018 2017 income equity affiliates included reporting segments follows summarized financial informationb summarized financial information equity method investments presented 2016 major equity method investments follows technip odebrecht plsv cv “technip odebrecht” affiliated company form joint venture technip sa ocyan sa technip odebrecht formed 2011 awarded contract provide pipeline installation ships statecontrolled petroleo brasileiro sa “petrobras” work oil gas fields offshore brazil accounted 50 investment using equity method accounting results reported subsea segment dofcon brasil “dofcon” affiliated company form joint venture technip sa dof subsea founded 2006 dofcon provides pipelaying support vessels plsvs work oil gas fields offshore brazil dofcon considered vie sufficient equity finance activities without additional subordinated financial support parties primary beneficiary vie accounted 50 investment using equity method accounting results reported subsea segment serimax holdings sas “serimax” affiliated company form joint venture technip sa vallourec sa founded 2016 serimax headquartered paris france provides rigid pipes welding services work oil gas fields around world accounted 20 investment using equity method accounting results reported subsea segment magma global limited “magma global” affiliated company form collaborative agreement signed 2018 technipcoflexip uk holdings limited magma global develop hybrid flexible pipe use offshore applications part collaboration technipfmc holds minority stake accounted 25 investment using equity method investment accounting results reported subsea segment yamgaz snc “yamgaz” 2015 yamgaz affiliated company form joint venture technip jgc corporation “jgc” chiyoda international corporation “chiyoda” yamgaz formed 2013 awarded contract carry engineering procurement supply construction commissioning integrated facility natural gas liquefaction based resources south tambey gas condensate field located yamal peninsula russia fourth quarter 2016 obtained voting control interests legal onshoreoffshore contract entities account design engineering construction yamal lng plant prior amendments contractual terms provided us voting interest control accounted 50 investment using equity method accounting results reported onshoreoffshore segment subsequent transaction recorded results consolidated financial information following table presents summarized financial information equity method investments discussed fourth quarter 2016 obtained voting control interests legal onshoreoffshore entities account design engineering construction yamal result acquisition consolidation recorded 35 billion cash 6017 million advances suppliers 711 million intangibles 38 billion current liabilities 1912 million noncurrent liabilities 77 million gain b december 31 2018 2017 equity method investments longer significant individually aggregate summarized financial information 2018 2017 presented note 10 related party transactions receivables payables revenues expenses included consolidated financial statements transactions related parties defined entities related directors main shareholders well partners consolidated joint ventures follows trade receivables consisted receivables due following related parties tp jgc coral france snc technip odebrecht plsv cv equity method affiliates member board directors serves board directors anadarko petroleum company trade payables consisted payables due following related parties dofcon navegacao magma global limited equity affiliates jgc corporation chiyoda joint venture partners yamal project member board directors executive officer ifp energies nouvelles additionally note receivable balance 1300 million 1409 million december 31 2018 2017 respectively note receivables balance includes 1199 million 1149 million dofcon brasil december 31 2018 2017 respectively dofcon brasil vie accounted equity method affiliate included noncurrent assets consolidated balance sheets revenue consisted amount following related parties expenses consisted amount following related parties note 11 property plant equipment property plant equipment consisted following depreciation expense 3678 million 3702 million 2832 million 2018 2017 2016 respectively amount interest cost capitalized material years presented 2018 determined carrying amount certain vessels exceeded fair value recorded impairment refer note 17 consolidated financial statements additional information regarding impairment note 12 goodwill intangible assets goodwill record goodwill excess purchase price fair value net assets acquired acquisitions accounted purchase method accounting test goodwill impairment annually frequently circumstances indicate possible impairment identify potential impairment comparing fair value applicable reporting unit net book value including goodwill net book value exceeds fair value reporting unit measure impairment comparing carrying value reporting unit fair value test goodwill impairment comparing fair value reporting units net carrying value october 31 year impairment analysis quantitative however includes subjective estimates based assumptions regarding future growth rates interest rates operating expenses lower fair value estimate future reporting units could result goodwill impairments factors could trigger lower fair value estimate include sustained price declines reporting unit’s products services cost increases regulatory political environment changes customer demand changes market conditions may affect certain market participant assumptions used discounted future cash flow model based internal forecasts revenues expenses specified period plus terminal value income approach income approach estimates fair value discounting reporting unit’s estimated future cash flows using weightedaverage cost capital reflects current market conditions risk profile reporting unit arrive future cash flows use estimates economic market assumptions including growth rates revenues costs estimates future expected changes operating margins tax rates cash expenditures future revenues also adjusted match changes business strategy believe approach appropriate valuation method market multiple approach determine estimated fair value reporting units applying transaction multiples reporting unit’s projected ebitda averaging estimate similar historical calculations using either one two three year average reporting unit valuations determined primarily utilizing income approach lesser weighting attributed market multiple approach excess fair value carrying amount surface technologies onshoreoffshore reporting units ranged approximately 56 excess 200 respective carrying amounts year ended december 31 2018 recorded 13830 million goodwill impairment charges subsea reporting unit refer note 17 consolidated financial statements additional disclosure related impairment goodwill year ended december 31 2018 following table presents significant estimates used management determining fair values reporting units december 31 2018 recently acquired reporting units quantitative impairment test may indicate fair value substantially similar reporting unit’s carrying amount similarities value generally indication management’s estimates future cash flows associated recently acquired reporting unit remain relatively consistent assumptions used derive initial fair value discussed evaluating 2018 quantitative impairment test results management considered many factors determining whether impairment goodwill reporting unit reasonably likely occur future periods including future market conditions economic environment circumstances market declines unfavorable economic conditions loss major customer factors could increase risk impairment goodwill reporting unit future periods carrying amount goodwill reporting segment follows intangible assets components intangible assets follows connection merger recorded identifiable intangible assets acquired refer note 2 consolidated financial statements additional information regarding merger acquired identifiable intangible assets subject amortization applicable foreign currency translation adjustments recorded 1826 million 2445 million 175 million amortization expense related intangible assets years ended december 31 2018 2017 2016 respectively years 2019 2023 annual amortization expense expected follows 1264 million 2019 1212 million 2020 1165 million 2021 1124 million 2022 1075 million 2023 5927 million thereafter note 13 debt shortterm debt current portion longterm debt shortterm debt current portion longterm debt consisted following longterm debt longterm debt consisted following december 31 2018 2017 committed credit available revolving credit facility provided ability refinance commercial paper obligations longterm basis maturities debt december 31 2018 payable follows revolving credit facility january 17 2017 acceded new 25 billion senior unsecured revolving credit facility agreement “facility agreement” fmc technologies inc technip eurocash snc “borrowers” technipfmc plc “additional borrower” jpmorgan chase bank national association “jpmorgan” agent arranger sg americas securities llc arranger lenders party thereto facility agreement provides establishment multicurrency revolving credit facility includes 15 billion letter credit subfacility subject certain conditions borrowers may request aggregate commitments facility agreement increased additional 5000 million november 26 2018 entered extension extends expiration date january 2023 borrowings facility agreement bear interest following rates plus applicable margin depending currency • us dollardenominated loans bear interest borrowers’ option base rate adjusted rate linked london interbank offered rate “adjusted libor” • sterlingdenominated loans bear interest adjusted libor • eurodenominated loans bear interest euro interbank offered rate “euribor” depending credit rating technipfmc applicable margin revolving loans varies case adjusted libor euribor loans 0820 1300 ii case base rate loans 0000 0300 “base rate” highest prime rate announced jpmorgan b greater federal funds rate overnight bank funding rate plus 05 c onemonth adjusted libor plus 10 facility agreement contains usual customary covenants representations warranties events default credit facilities type including financial covenants requiring total capitalization ratio exceed 60 end financial quarter facility agreement also contains covenants restricting ability subsidiaries’ ability incur additional liens indebtedness enter asset sales make certain investments december 31 2018 compliance restrictive covenants revolving credit facility bilateral credit facilities access four bilateral credit facilities aggregate €3200 million bilateral credit facilities consist • two credit facilities €800 million expiring may 2019 • credit facility €600 million expiring june 2019 • credit facility €1000 million expiring may 2021 bilateral credit facility contains usual customary covenants representations warranties events default credit facilities type commercial paper commercial paper program ability access 15 billion €10 billion shortterm financing commercial paper dealers subject limit unused capacity facility agreement ability intent refinance obligations longterm basis commercial paper borrowings classified longterm consolidated balance sheets december 31 2018 december 31 2017 commercial paper borrowings issued market interest rates december 31 2018 commercial paper borrowings weighted average interest rate 307 us dollar denominated borrowings 024 euro denominated borrowings synthetic bonds january 25 2016 issued €3750 million principal amount 0875 convertible bonds maturity date january 25 2021 redemption par bonds converted march 3 2016 issued additional convertible bonds principal amount €750 million issued terms fully fungible assimilated bonds issued january 25 2016 issuance nondilutive cashsettled convertible bonds “synthetic bonds” linked ordinary shares backed simultaneously purchase cashsettled equity call options order hedge economic exposure potential exercise conversion rights embedded synthetic bonds synthetic bonds cash settled result issuance new ordinary shares delivery existing ordinary shares upon conversion interest synthetic bonds payable semiannually arrears january 25 july 25 year beginning july 26 2016 net proceeds synthetic bonds used general corporate purposes finance purchase call options synthetic bonds unsecured obligations synthetic bonds rank equally right payment existing future unsubordinated debt synthetic bonds issued january 25 2016 issued par synthetic bonds issued march 3 2016 issued premium 11243802 resulting adjustment 3day trading period following issuance resulting share reference price €488355 400 conversion premium applied share reference price €407940 share reference price computed using average daily volume weighted average price ordinary shares euronext paris market 10 consecutive trading days january 21 february 3 2016 initial conversion price bonds fixed €571116 synthetic bonds nominal value €1000 thousand conversion ratio 33597183 conversion price €297644 bondholder may sole option request conversion cash part bonds owns beginning november 15 2020 38th business day maturity date senior notes february 28 2017 commenced offers exchange outstanding notes issued fmc technologies 8000 million aggregate principal amount new notes issued technipfmc cash conjunction offers exchange fmc technologies solicited consents adopt certain proposed amendments indentures governing previously issued notes eliminate certain covenants restrictive provisions events defaults indentures march 29 2017 settled offers exchange consent solicitations “exchange offers” 200 senior notes due october 1 2017 “2017 fmc notes” issued fmc technologies aggregate principal amount 3000 million new 200 senior notes due october 1 2017 “2017 senior notes’ issued technipfmc cash ii 345 senior notes due october 1 2022 “2022 fmc notes” issued fmc technologies aggregate principal amount 5000 million new 345 senior notes due october 1 2022 “2022 senior notes” issued technipfmc registration rights cash pursuant exchange offers issued approximately 2154 million aggregate principal amount 2017 senior notes 4598 million aggregate principal amount 2022 senior notes collectively “senior notes” interest 2017 senior notes payable october 1 2017 interest 2022 senior notes payable semiannually arrears april 1 october 1 year beginning october 1 2017 april 3 2018 commenced offers exchange 4598 million aggregate principal amount new 345 senior notes due 2022 series b registered us securities act 1933 amended “securities act” outstanding restricted 345 senior notes due 2022 series “outstanding notes” previously issued private transaction subject registration requirements securities act “initial offering” refer exchange notes outstanding notes collectively “notes” terms senior notes governed indenture dated march 29 2017 technipfmc us bank national association trustee “trustee” amended supplemented first supplemental indenture technipfmc trustee “first supplemental indenture” relating issuance 2017 notes second supplemental indenture technipfmc trustee “second supplemental indenture” relating issuance 2022 notes maturity outstanding amounts 2017 senior notes repaid time prior july 1 2022 case 2022 notes may redeem senior notes redemption prices specified first supplemental indenture second supplemental indenture respectively time july 1 2022 may redeem 2022 notes redemption price equal 100 principal amount 2022 notes redeemed senior notes senior unsecured obligations senior notes rank equally right payment existing future unsubordinated debt rank senior right payment future subordinated debt private placement notes july 27 2010 completed private placement €2000 million aggregate principal amount 50 notes due july 2020 “2020 notes” interest 2020 notes payable annually arrears july 27 year beginning july 27 2011 net proceeds 2020 notes used partially finance 20042011 bond issue repaid maturity date may 26 2011 2020 notes contain contains usual customary covenants events default notes type event change control resulting downgrade rating notes bbb 2020 notes may redeemed early bondholder sole discretion 2020 notes unsecured obligations 2020 notes rank equally right payment existing future unsubordinated debt june 2012 completed private placement €3250 million aggregate principal amount notes issued three tranches €1500 million bearing interest 340 due june 2022 “tranche 2022 notes” €750 million bearing interest 40 due june 2027 “tranche b 2027 notes” €1000 million bearing interest 40 due june 2032 “tranche c 2032 notes” collectively “tranche 2022 notes “tranche b 2027 notes” “2012 private placement notes” interest tranche 2022 notes tranche c 2032 notes payable annually arrears june 14 year beginning june 14 2013 interest tranche b 2027 notes payable annually arrears june 15 year beginning june 15 2013 net proceeds 2012 private placement notes used general corporate purposes 2012 private placement notes contain usual customary covenants events default notes type event change control resulting downgrade rating notes bbb 2012 private placement notes may redeemed early bondholder sole discretion 2012 private placement notes unsecured obligations 2012 private placement notes rank equally right payment existing future unsubordinated debt october 2013 completed private placement €3550 million aggregate principal amount senior notes issued three tranches €1000 million bearing interest 375 due october 2033 “tranche 2033 notes” €1300 million bearing interest 315 due october 2023 “tranche b 2023 notes €1250 million bearing interest 315 due october 2023 “tranche c 2023 notes” collectively “tranche 2033 notes “tranche b 2023 notes” “2013 private placement notes” interest tranche 2033 notes payable annually arrears october 7 year beginning october 7 2014 interest tranche b 2023 notes payable annually arrears october 16 year beginning october 16 2014 interest tranche c 2023 notes payable annually arrears october 18 year beginning october 18 2014 net proceeds 2013 private placement notes used general corporate purposes 2013 private placement notes contain contains usual customary covenants events default notes type event change control resulting downgrade rating notes bbb 2013 private placement notes may redeemed early bondholder sole discretion 2013 private placement notes unsecured obligations 2013 private placement notes rank equally right payment existing future unsubordinated debt term loan december 2016 entered £1600 million term loan agreement finance deep explorer diving support vessel “dsv” maturing december 2028 loan agreement interest accrues annual rate 2813 loan agreement contains usual customary covenants events default loans type foreign committed credit committed credit lines many international subsidiaries immaterial amounts utilize facilities asset financing provide efficient daily source liquidity effective interest rates depend upon local national market note 14 liabilities fourth quarter 2016 obtained voting control interests legal onshoreoffshore contract entities account design engineering construction yamal lng plant prior amendments contractual terms provided us voting interest control accounted entities equity method accounting based previously held interests entities since nearly substantive processes perform execute obligations underlying contract conducted technipfmc noncontrolling interest holders accounted entities acquisition upon obtaining control recognized net gain 77 million 2016 december 31 2016 total assets liabilities equity related entities consolidated onto balance sheet results operations year ended december 31 2018 2017 reflect consolidated results operations related entities refer note 9 information regarding acquisition consolidation entities mandatorily redeemable financial liability 3120 million recognized december 31 2017 account fair value noncontrolling interests 697 million recorded current liabilities year ended december 31 2018 revalued liability reflect current expectations obligation resulted recognition loss 3223 million year ended december 31 2018 changes fair value financial liability recorded interest expense consolidated statements income refer note 8 information regarding current liabilities refer note 22 information regarding fair value measurement assumptions mandatorily redeemable financial liability related changes fair value note 15 stockholders’ equity dividends declared paid year ended december 31 2018 2381 million dividends declared paid year ended december 31 2017 606 million dividends declared paid year ended december 31 2016 based results year ended december 31 2015 €2366 million dividends paid cash shares amount €1008 million €1358 million respectively english public limited company required uk law available “distributable reserves” conduct share repurchases pay dividends shareholders distributable reserves statutory requirement linked us gaap reported amount eg retained earnings declaration payment dividends require authorization board directors provided dividends issued share capital may paid “distributable reserves” statutory balance sheet therefore permitted pay dividends share capital includes share premium following summary capital stock activity years ended december 31 2018 2017 2016 plan administrator nonqualified plan purchases shares ordinary shares open market shares placed trust owned subsidiary april 2017 board directors authorized repurchase 5000 million ordinary shares share repurchase program implemented share repurchase plan september 2017 board directors authorized extension program adding 3000 million december 2018 total 8000 million ordinary shares repurchased 148 million ordinary shares total consideration 4426 million year ended december 31 2018 authorized share repurchase program 5000 million part program completed december 20 2018 intend cancel repurchased shares hold treasury canceled treasury shares accounted using constructive retirement method accumulated comprehensive income loss accumulated comprehensive income loss consisted following reclassifications accumulated comprehensive income loss reclassifications accumulated comprehensive income loss consisted following accumulated comprehensive income components included computation net periodic pension cost see note 20 additional details note 16 sharebased compensation incentive compensation award plan january 11 2017 adopted technipfmc plc incentive award plan “plan” plan provides certain incentives awards officers employees nonemployee directors consultants technipfmc subsidiaries plan allows board directors make various types awards nonemployee directors compensation committee “committee” board directors make various types awards eligible individuals awards may include share options share appreciation rights performance share units restricted share units restricted shares awards authorized plan awards subject plan’s provisions including sharebased grants previously issued fmc technologies technip prior consummation merger plan 241 million ordinary shares authorized awards december 31 2018 182 million ordinary shares available future grant exercise price options determined committee cannot less fair market value ordinary shares grant date restricted share performance share unit grants generally vest three years service plan board directors authority grant nonemployee directors share options restricted shares restricted share units performance shares unless otherwise determined board directors awards nonemployee directors generally vest one year date grant restricted share units settled director ceases services board directors december 31 2018 outstanding awards active retired nonemployee directors included 1194 thousand share units measurement sharebased compensation expense restricted share awards based market price fair value grant date number shares awarded fair value performance shares estimated using combination closing stock price grant date monte carlo simulation model used cox ross rubinstein binomial model measure fair value stock options granted prior december 31 2016 blackscholes options pricing model measure fair value stock options granted january 1 2017 sharebased compensation expense award recognized ratably applicable service period beginning start service period ending employee becomes eligible retirement currently age 62 plan taking account estimated forfeitures recognize compensation expense corresponding tax benefits awards plan compensation expense plan follows 1 expense recognized year ended 2016 relates technip’s historical incentive compensation award plan december 31 2018 portion sharebased compensation expense related outstanding awards recognized future periods follows restricted share units began issuing restricted share units 2017 summary nonvested restricted share units activity follows total grant date fair value restricted stock units vested years ended december 31 2018 2017 48 million nil respectively performance shares board directors granted certain employees senior executives directors officers restricted share units vest subject achieving satisfactory performances performance shares issued prior december 31 2016 performance based results terms healthsafetyenvironment operating income recurring activities treasury generated operating activities total shareholder return “tsr” performance share units issued january 1 2017 performance based results return invested capital tsr performance share units vest based tsr fair value performance shares estimated using combination closing stock price grant date monte carlo simulation model weightedaverage fair value assumptions used measure fair value performance share units subject performanceadjusted vesting conditions monte carlo simulation model follows weightedaverage fair value based performance share units granted period b expected volatility based normalized historical volatility shares preceding period commensurate expected term option c 2017 riskfree rate expected term option based us treasury yield curve effect time grant prior 2017 risk free rate based bond yields european central bank awards subject servicebased vesting due lack historical exercise postvesting termination patterns postmerger employee base expected term estimated using simplified method awards granted 2018 2017 expected term estimated using historical exercise postvesting termination patterns awards granted 2016 summary nonvested performance share unit activity follows total grant date fair value performance share units vested years ended december 31 2018 2017 2016 70 million 333 million 75 million respectively share option awards fair value option award estimated date grant using blackscholes options pricing model cox ross rubinstein binomial model share options awarded prior 2017 granted subject performance criteria based upon certain targets tsr return capital employed operating income recurring activities subsequent share options granted time based awards vesting three year period weightedaverage fair value assumptions used measure fair value follows weightedaverage fair value based stock options granted period b expected volatility based normalized historical volatility shares preceding period commensurate expected term option c 2017 riskfree rate expected term option based us treasury yield curve effect time grant prior 2017 risk free rate based bond yields european central bank share options awarded prior 2017 valued using expected dividend yield 20 45 awarded 2017 2018 used 20 e awards subject servicebased vesting due lack historical exercise postvesting termination patterns postmerger employee base expected term estimated using simplified method awards granted 2018 2017 expected term estimated using historical exercise postvesting termination patterns awards granted 2016 following summary option transactions years ended december 31 2018 2017 2016 weightedaverage grant date fair value increase shares due merger remains 000 order recalculate new weighted average december 31 2016 nonvested shares see note 2 aggregate intrinsic value stock options outstanding stock options exercisable december 31 2018 nil respectively cash received option exercises nil €15 million years ended december 31 2018 2017 2016 respectively total intrinsic value options exercised years ended december 31 2018 2017 2016 nil respectively exercise stock options employee may choose 1 pay either directly way group savings plan stock option strike price obtain shares 2 sell shares immediately exercised stock option case employee pay strike price instead receives intrinsic value stock options cash following summarizes significant ranges outstanding exercisable options december 31 2018 note 17 impairment restructuring expense impairment restructuring expense follows asset impairments conduct impairment tests longlived assets whenever events changes circumstances indicate carrying value may recoverable carrying value longlived asset recoverable exceeds sum undiscounted cash flows expected result use eventual disposition asset’s remaining useful life review recoverability carrying value assets considers several assumptions including intended use service potential asset refer note 22 consolidated financial statements discussion method used determine fair value assets prolonged downturn energy market corresponding impact business outlook led us conclude carrying amount certain assets subsea segment exceeded fair value year ended december 31 2018 recorded 17842 million impairment charges subsea segment charges included impairment goodwill vessels 13830 million 3729 million respectively year ended december 31 2017 impairment expense primarily related leasehold improvements decommissioning vacant buildings longlived assets year ended december 31 2016 impairment expense primarily associated restructuring plan discussed restructuring 2018 2017 initiated cost cutting measures resulted restructuring expense primarily related termination lease contracts year ended december 31 2016 part restructuring plan divested deconsolidated wholly owned subsidiaries technip germany holding gmbh technip germany gmbh july 2015 result decline crude oil prices effect demand products services oilfield services industry worldwide initiated companywide reduction workforce facility consolidation “july 2015 plan” intended reduce costs better align workforce current anticipated activity levels resulted continued recognition severance costs relating termination benefits restructuring charges initial plan included workforce reduction approximately 6000 employees significant part restructuring plan focused onshoreoffshore segment reduced presence north america latin america asia europe subsea segment reduced presence north sea note 18 commitments contingent liabilities commitments associated leases lease office space manufacturing facilities various types manufacturing data processing equipment leases real estate generally provide payment property taxes insurance repairs us substantially leases classified operating leases rent expense operating leases amounted 3651 million 3692 million 3135 million 2018 2017 2016 respectively march 2014 entered construction operating lease agreements finance construction manufacturing office facilities located houston tx january 2016 construction facilities completed operating lease commenced upon expiration operating lease september 2021 option renew lease purchase facilities remarket facilities behalf lessor including certain guarantees residual value remarketing option december 31 2018 future minimum rental payments noncancellable operating leases contingent liabilities associated guarantees ordinary course business enter standby letters credit performance bonds surety bonds guarantees financial institutions benefit customers vendors parties majority financial instruments expire within five years management expect financial instruments result losses incurred would material adverse effect consolidated financial position results operations cash flows guarantees consisted following financial guarantees represent contracts contingently require guarantor make payments guaranteed party based changes underlying agreement related asset liability equity security guaranteed party tend drawn failure fulfill financial obligations b performance guarantees represent contracts contingently require guarantor make payments guaranteed party based another entitys failure perform nonfinancial obligating agreement events trigger payment performance related failure ship product provide service management believes ultimate resolution known contingencies materially affect consolidated financial position results operations cash flows contingent liabilities associated legal matters involved various pending potential legal actions disputes ordinary course business management unable predict ultimate outcome actions inherent uncertainty however management believes probable ultimate resolution matters material adverse effect consolidated financial position results operations cash flows march 28 2016 fmc technologies received inquiry us department justice doj related dojs investigation whether certain services unaoil sam provided clients including fmc technologies violated us foreign corrupt practices act fcpa march 29 2016 technip sa also received inquiry doj related unaoil cooperating dojs investigations regard fmc technologies related investigation us securities exchange commission late 2016 technip sa contacted doj regarding investigation offshore platform projects awarded 2003 2007 performed brazil joint venture company technip sa minority participant also raised doj certain projects performed technip sa subsidiaries brazil 2002 2013 doj also inquired projects ghana equatorial guinea awarded technip sa subsidiaries 2008 2009 respectively cooperating doj investigation potential violations fcpa connection projects contacted brazilian authorities federal prosecution service mpf comptroller general brazil cgu attorney general brazil agu cooperating investigation concerning projects brazil also contacted french authorities parquet national financier pnf cooperating investigation existing matters informed authorities brazil us france coordinating investigations could result global resolution matters progressed point probable estimate aggregate settlement amount authorities 2800 million taken provision fourth quarter year ended december 31 2018 matters involve negotiations law enforcement authorities three separate jurisdictions certainty global settlement reached settlement exceed current accruals authorities broad range civil criminal sanctions anticorruption laws regulations may seek impose corporations individuals appropriate circumstances including limited fines penalties modifications business practices compliance programs authorities entered agreements obtained range sanctions numerous public corporations individuals arising allegations improper payments whereby civil andor criminal penalties imposed recent civil criminal settlements included fines deferred prosecution agreements guilty pleas sanctions including requirement relevant corporation retain monitor oversee compliance anticorruption laws remedial measures applicable us well potential customer reaction remedial measures could material adverse impact business results operations financial condition contingent liabilities associated liquidated damages contracts contain provisions require us pay liquidated damages responsible failure meet specified contractual milestone dates applicable customer asserts conforming claim provisions contracts define conditions customers may make claims us liquidated damages based upon evaluation performance commercial legal analysis management believes appropriately recognized probable liquidated damages december 31 2018 2017 ultimate resolution matters materially affect consolidated financial position results operations cash flows note 19 income taxes components income loss income taxes us outside us components income loss income taxes follows provision income tax provision income taxes consisted deferred tax assets liabilities significant components deferred tax assets liabilities follows december 31 2018 2017 carrying amount net deferred tax assets related valuation allowance included impact foreign currency translation adjustments nondeductible interest december 31 2018 deferred tax assets include tax benefits related certain intercompany interest costs currently deductible may deductible future periods utilized costs become permanently nondeductible beginning 2025 management believes likely able deduct costs expiration carry forward period therefore established valuation allowance related deferred tax assets foreign tax credit carryforwards december 31 2018 deferred tax assets included us foreign tax credit carryforwards 1059 million utilized begin expire 2023 realization deferred tax assets dependent generation sufficient us taxable income prior date based longterm forecasts operating results management believes likely us earnings forecast period result sufficient us taxable income fully realize deferred tax assets therefore established valuation allowance related deferred tax assets analysis management considered effect deemed dividends expected adjustments us earnings required determining us taxable income nonus earnings subject us tax including deemed dividends us tax purposes 3076 million 2018 13 billion 2017 nil 2016 net operating loss carryforwards december 31 2018 deferred tax assets included tax benefits related net operating loss carryforwards utilized net operating loss carryforwards begin expire 2019 management believes likely able utilize certain operating loss carryforwards expiration therefore established valuation allowance related deferred tax assets majority net operating loss carryforwards brazil 2750 million saudi arabia 2710 million mexico 1855 million norway 1288 million uk 1865 million canada 785 million except canada mexico tax loss carryforwards extend indefinitely unrecognized tax benefits following table presents summary changes unrecognized tax benefits amounts reported uncertain tax positions excludes interest penalties 28 million 59 million nil december 31 2018 2017 2016 respectively interest penalties relating uncertain tax positions included tax expense consolidated financial statements reasonably possible within twelve months 13 million liabilities unrecognized tax benefits settled amount reflected income taxes payable remaining balance unrecognized tax benefits recorded long term liabilities operate numerous jurisdictions around world could subject multiple tax audits given time notably following tax years thereafter remain subject examination 2008 norway 2016 nigeria 2013 brazil 2017 france 2015 united states result merger technipfmc plc public limited company incorporated laws england wales therefore earnings subject united kingdom statutory rate 190 beginning effective date merger previously earnings subject french statutory rate 344 consolidated effective income tax rate information presented accordingly effective income tax rate reconciliation effective income tax rate different statutory federal income tax rate due following us tax cuts jobs act tcja jurisdictional tax reform included 2017 provision income taxes related deemed repatriation united states foreign earnings tax cuts jobs act tcja signed us law december 22 2017 made significant changes us federal income taxation nonus corporate subsidiaries controlled one us shareholders part changes tcja required onetime deemed repatriation accumulated nonus earnings tcja generally requires last taxable year nonus corporation beginning january 1 2018 us shareholders corporation least 10percent usowned must include income pro rata share corporation’s accumulated post1986 deferred foreign income previously subject us tax accordingly company recorded income tax expense approximately 1487 million 2017 associated deemed repatriation approximately 26 billion nonus earnings previously subject us tax company recorded additional income tax expense 118 million 2018 associated deemed repatriation approximately 307 million nonus earnings previously subject us tax company recorded current tax payable associated deemed repatriation also included 2017 provision income taxes result revaluation deferred tax attributes result changes corporate tax rates part jurisdictional tax reform tax expense revaluation us deferred tax attributes 189 million tax benefit revaluation deferred tax attributes foreign jurisdictions 97 million 2018 tax expense jurisdictional corporate tax rate reform 256 million result deemed repatriation us income tax provided undistributed earnings nonus subsidiaries company’s us affiliates december 31 2017 cumulative balance undistributed earnings approximately 29 billion december 31 2017 december 31 2018 completed analysis financial statement impact tcja recorded amounts associated 2017 final 2018 anticipated compliance filings date merger cumulative balance legacy fmc technologies foreign earnings respect provision us income taxes recorded 23 billion although parent company technipfmc since changed jurisdictions undistributed foreign earnings previously reported still liable us income taxes light 2017’s tax reform entirety previously untaxed foreign earnings taxed via deemed repatriation accounted included transition tax eliminates company’s liability earnings income tax holidays benefit income tax holidays singapore malaysia expire 2018 singapore 2020 malaysia year ended december 31 2018 tax holidays reduced provision income taxes 01 million 000 per share diluted basis note 20 pension postretirement benefit plans funded unfunded defined benefit pension plans provide defined benefits based years service final average salary december 31 2017 amended retirement plans “plans” freeze benefit accruals participants plans december 31 2017 date participants plans longer accrue benefits participants’ benefits plans determined based credited service eligible earnings december 31 2017 foreignbased employees eligible participate technipfmcsponsored governmentsponsored benefit plans contribute several foreign defined benefit pension plans sponsored us provide employee contributions remaining plans noncontributory significant plans netherlands france norway united kingdom postretirement benefit plans covering substantially us employees hired prior january 1 2003 postretirement health care plans contributory postretirement life insurance plans noncontributory required recognize funded status defined benefit postretirement plans asset liability consolidated balance sheet recognize changes funded status comprehensive income year changes occur required measure plan’s assets obligations determine funded status date consolidated balance sheet applied guidance domestic pension postretirement benefit plans well many nonus plans including united kingdom norway germany france canada pension expense measured compliance gaap nonus pension plans materially different locally reported pension expense funded status us pension plans certain foreign pension plans us postretirement health care life insurance benefit plans together associated balances recognized consolidated balance sheets december 31 2018 2017 follows following table summarizes pretax amounts accumulated comprehensive income loss december 31 2018 2017 recognized components net periodic benefit cost following tables summarize projected accumulated benefit obligations fair values plan assets projected accumulated benefit obligation exceeds fair value plan assets december 31 2018 2017 following table summarizes components net periodic benefit cost income years ended december 31 2018 2017 2016 following table summarizes changes plan assets benefit obligations recognized comprehensive income loss years ended december 31 2018 2017 2016 included accumulated comprehensive income loss december 31 2018 noncash pretax charges yet recognized net periodic benefit cost income estimated amounts expected amortized portion component accumulated comprehensive income loss component net period benefit cost income next fiscal year follows key assumptions following weightedaverage assumptions used determine benefit obligations following weightedaverage assumptions used determine net periodic benefit cost estimate expected rate return plan assets primarily based historical performance plan assets current market conditions asset allocation longterm growth expectations plan assets pension investment strategy emphasizes maximizing returns consistent balancing risk excluding international plans insurancebased investments 99 total pension plan assets represent us qualified plan uk plan netherlands plan plans primarily invested equity securities maximize longterm returns plans investment managers assets including hedge funds limited partnerships use graham dodd fundamental investment analysis select securities margin safety price security estimated value security valueoriented approach tends mitigate risk large equity allocation following description valuation methodologies used pension plan assets changes methodologies used december 31 2018 2017 • cash valued cost approximates fair value • equity securities comprised common stock preferred stock fair values equity securities valued closing price reported active market securities traded • fair values registered investment companies commoncollective trusts valued based quoted market prices represent net asset value “nav” shares held registered investment companies primarily include investments emerging market bonds commoncollective trusts primarily includes money market instruments short maturities • insurance contracts valued book value approximates fair value calculated using prioryear balance plus minus investment returns changes cash flows • fair values hedge funds valued using nav determined administrator custodian fund funds primarily invest us international equities debt securities hedge funds • fair values limited partnerships valued using nav determined administrator custodian fund partnerships primarily invest us international equities debt securities • real estate investments primarily consists real estate investment trusts investments measured quoted market prices represent nav securities held funds year end pension plan assets measured fair value recurring basis follows december 31 2018 2017 refer “fair value measurements” note 1 consolidated financial statements description levels certain investments measured fair value using net asset value per share equivalent classified fair value hierarchy contributions expect contribute approximately 27 million international pension plans representing primarily netherlands qualified pension plans uk qualified pension plans expect make contributions us qualified pension plan us nonqualified defined benefit pension plan 2019 contributions expected form cash 2018 2017 contributed 185 million 191 million pension plans respectively estimated future benefit payments following table summarizes expected benefit payments various pension postretirement benefit plans 2028 actual benefit payments may differ expected benefit payments savings plans technipfmc retirement savings plan “qualified plan” qualified salary reduction plan section 401k internal revenue code defined contribution plan additionally nonqualified deferred compensation plan nonqualified plan allows certain highly compensated employees option defer receipt portion salary match portion participants’ deferrals plans relate fmc technologies inc participants nonqualified plan earn return based hypothetical investments options 401k plan including tehnipfmc plc stock changes market value participant investments reflected adjustment deferred compensation liability offset income expense net december 31 2018 2017 liability nonqualified plan 228 million 294 million respectively recorded noncurrent liabilities hedge financial impact changes participants’ hypothetical investments purchasing investments participants chosen exception technipfmc plc stock maintained cost basis changes fair value investments recognized offset income expense net december 31 2018 2017 investments nonqualified plan totaling 214 million 251 million fair market value respectively december 31 2018 2017 technipfmc stock held trust 24 million 48 million cost basis respectively refer note 22 consolidated financial statements fair value disclosure nonqualified plan investments recognized expense 318 million 203 million matching contributions plans 2018 2017 respectively additionally recognized expense 143 million 125 million nonelective contributions 2018 2017 respectively note 21 derivative financial instruments purposes mitigating effect changes exchange rates hold derivative financial instruments hedge risks certain identifiable anticipated transactions recorded assets liabilities consolidated balance sheets types risks hedged relating variability future earnings cash flows caused movements foreign currency exchange rates policy hold derivatives purpose hedging risks associated anticipated foreign currency purchases sales created normal course business trading purposes objective solely generate profit generally enter hedging relationships changes fair values cash flows transactions hedged expected offset corresponding changes fair value derivatives derivative instruments qualify cash flow hedge effective portion gain loss derivative include time value component forward currency rate reported component comprehensive income “oci” reclassified earnings period periods hedged transaction affects earnings derivative instruments designated hedging instruments change fair value instruments reflected earnings period change occurs hold following types derivative instruments foreign exchange rate forward contracts purpose instruments hedge risk changes future cash flows anticipated purchase sale commitments denominated foreign currencies recorded assets liabilities consolidated balance sheets december 31 2018 held following material net positions foreign exchange rate instruments embedded purchase sale contracts purpose instruments match offsetting currency payments receipts particular projects comply government restrictions currency used purchase goods certain countries december 31 2018 portfolio instruments included following material net positions fair value amounts outstanding derivative instruments determined using available market information commonly accepted valuation methodologies refer note 22 consolidated financial statements disclosures related fair value measurement process accordingly estimates presented may indicative amounts would realize current market exchange may indicative gains losses may ultimately incur contracts settled following table presents location fair value amounts derivative instruments reported consolidated balance sheets recognized loss 25 million gain 253 million loss 103 million cash flow hedges years ended december 31 2018 2017 2016 respectively due hedge ineffectiveness probable original forecasted transaction would occur cash flow hedges forecasted transactions net tax resulted accumulated comprehensive income loss 330 million 285 million december 31 2018 2017 respectively expect transfer approximately 117 million loss accumulated oci earnings next 12 months anticipated transactions actually occur anticipated transactions currently hedged expected occur second half 2023 following table presents location gains losses consolidated statements income related derivative instruments designated fair value hedges following tables present location gains losses consolidated statements income related derivative instruments designated cash flow hedges following table presents location gains losses consolidated statements income related derivative instruments designated hedging instruments balance sheet offsetting execute derivative contracts counterparties consent master netting agreement permits net settlement gross derivative assets gross derivative liabilities instrument accounted individually assets liabilities offset december 31 2018 2017 collateralized derivative contracts following tables present gross information net information recognized derivative instruments note 22 fair value measurements recurring fair value measurements assets liabilities measured fair value recurring basis follows includes fixed income investments measured fair value b certain investments measured fair value using net asset value per share equivalent classified fair value hierarchy equity securities fair value measurement equity securities based quoted prices ability access public markets stable value fund money market fund stable value fund money market fund valued net asset value shares held end quarter based fair value underlying investments using information reported investment advisor quarterend assets liabilities held sale fair value assets liabilities held sale determined using market approach took consideration expected sales price mandatorily redeemable financial liability fourth quarter 2016 obtained voting control interests legal onshoreoffshore contract entities account design engineering construction yamal lng plant part transaction recognized fair value mandatorily redeemable financial liability using discounted cash flow model key assumptions used applying income approach selected discount rates expected dividends distributed future noncontrolling interest holders expected dividends distributed based noncontrolling interests’ share expected profitability underlying contract selected discount rate overall timing completion project mandatorily redeemable financial liability 3120 million recognized december 31 2017 account fair value noncontrolling interests twelve months ended december 31 2018 2017 revalued liability reflect current expectations obligation resulted recognition loss 3223 million 2937 million respectively decrease one percentage point discount rate would increased liability 54 million december 31 2018 fair value measurement based upon significant unobservable inputs observable market consequently classified level 3 fair value measurement change fair value level 3 mandatorily redeemable financial liability recorded interest expense consolidated statements income presented redeemable noncontrolling interest first quarter 2018 acquired 51 share island offshore noncontrolling interest recorded mezzanine equity fair value fair value measurement based upon significant unobservable inputs observable market consequently classified level 3 fair value measurement december 31 2018 fair value redeemable noncontrolling interest 385 million refer note 2 consolidated financial statements additional disclosure related acquisition derivative financial instruments use income approach valuation technique measure fair value foreign currency derivative instruments recurring basis approach calculates present value future cash flow measuring change derivative contract rate published market indicative currency rate multiplied contract notional values credit risk incorporated reducing derivative’s fair value asset positions result multiplying present value portfolio counterparty’s published credit spread portfolios liability position adjusted calculation however spread representing credit spread used credit spread credit spread counterparties publicly available approximated using spread similar companies industry similar size credit rating present time creditriskrelated contingent features agreements financial institutions would require us post collateral derivative positions liability position refer note 21 consolidated financial statements additional disclosure related derivative financial instruments nonrecurring fair value measurements fair value longlived nonfinancial assets longlived nonfinancial assets measured fair value nonrecurring basis purposes calculating impairment recoverable amount assets determined less book value assets fair value measurements longlived nonfinancial assets measured estimating amount timing net future cash flows level 3 unobservable inputs discounting using riskadjusted rate interest significant changes actual estimated cash flows may result changes fair value longlived nonfinancial assets refer note 17 additional disclosure related asset impairments fair value disclosures fair value debt fair value synthetic bonds senior notes private placement notes follows carrying amounts include unamortized debt discounts premiums unamortized debt issuance costs 114 million 138 million 2018 2017 respectively b fair values based level 2 quoted market rates fair value disclosures carrying amounts cash equivalents trade receivables accounts payable shortterm debt commercial paper debt associated bank borrowings credit facilities convertible bonds well amounts included current assets current liabilities meet definition financial instruments approximate fair value credit risk nature financial instruments involve risk including credit risk nonperformance counterparties financial instruments potentially subject us credit risk primarily consist trade receivables derivative contracts manage credit risk financial instruments transacting management believes financially secure counterparties requiring credit approvals credit limits monitoring counterparties’ financial condition maximum exposure credit loss event nonperformance counterparty limited amount drawn outstanding financial instrument allowances losses trade receivables established based collectibility assessments mitigate credit risk derivative contracts executing contracts counterparties consent master netting agreement permits net settlement gross derivative assets gross derivative liabilities note 23 quarterly information unaudited 1 basic diluted earnings loss per share computed independently quarters presented therefore sum quarterly basic diluted per share information may equal annual basic diluted earnings loss per share item 9item 8 financial statements supplementary data report independent registered public accounting firm board directors stockholders technipfmc plc opinions financial statements internal control financial reporting audited accompanying consolidated balance sheets technipfmc plc subsidiaries “company” december 31 2019 2018 related consolidated statements income comprehensive income changes stockholders’ equity cash flows three years period ended december 31 2019 including related notes schedule valuation qualifying accounts three years period ended december 31 2019 appearing item 15a2 collectively referred “consolidated financial statements” also audited companys internal control financial reporting december 31 2019 based criteria established internal control integrated framework 2013 issued committee sponsoring organizations treadway commission coso opinion consolidated financial statements referred present fairly material respects financial position company december 31 2019 2018 results operations cash flows three years period ended december 31 2019 conformity accounting principles generally accepted united states america also opinion company maintained material respects effective internal control financial reporting december 31 2019 based criteria established internal control integrated framework 2013 issued coso change accounting principle discussed note 1 consolidated financial statements company changed manner accounts leases 2019 basis opinions companys management responsible consolidated financial statements maintaining effective internal control financial reporting assessment effectiveness internal control financial reporting included management’s annual report internal control financial reporting appearing item 9a responsibility express opinions company’s consolidated financial statements companys internal control financial reporting based audits public accounting firm registered public company accounting oversight board united states pcaob required independent respect company accordance us federal securities laws applicable rules regulations securities exchange commission pcaob conducted audits accordance standards pcaob standards require plan perform audits obtain reasonable assurance whether consolidated financial statements free material misstatement whether due error fraud whether effective internal control financial reporting maintained material respects audits consolidated financial statements included performing procedures assess risks material misstatement consolidated financial statements whether due error fraud performing procedures respond risks procedures included examining test basis evidence regarding amounts disclosures consolidated financial statements audits also included evaluating accounting principles used significant estimates made management well evaluating overall presentation consolidated financial statements audit internal control financial reporting included obtaining understanding internal control financial reporting assessing risk material weakness exists testing evaluating design operating effectiveness internal control based assessed risk audits also included performing procedures considered necessary circumstances believe audits provide reasonable basis opinions definition limitations internal control financial reporting company’s internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles company’s internal control financial reporting includes policies procedures pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets company ii provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures company made accordance authorizations management directors company iii provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition company’s assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also projections evaluation effectiveness future periods subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate critical audit matters critical audit matters communicated matters arising current period audit consolidated financial statements communicated required communicated audit committee relate accounts disclosures material consolidated financial statements ii involved especially challenging subjective complex judgments communication critical audit matters alter way opinion consolidated financial statements taken whole communicating critical audit matters providing separate opinions critical audit matters accounts disclosures relate revenue recognition determination estimated costs complete longterm contracts described note 6 consolidated financial statements approximately 82 total revenue 13 billion year ended december 31 2019 generated longterm contracts disclosed management company’s longterm contracts control transferring time revenue recognized based extent progress towards completion performance obligation selection method measure progress towards completion requires judgment based nature products services provided company generally uses costtocost measure progress contracts best depicts transfer control customer occurs company incurs costs contracts costtocost measure progress extent progress towards completion measured based ratio costs incurred date total estimated costs completion performance obligation revenues including estimated fees profits recorded proportionally costs incurred due nature work required performed many performance obligations management’s estimation total revenue cost completion complex subject many variables requires significant judgment many factors including limited ability properly execute engineering design phases consistent customers’ expectations availability costs labor materials resources productivity weather affect accuracy cost estimates ultimately future profitability principal considerations determination performing procedures relating revenue recognition determination estimated costs complete longterm contracts critical audit matter significant judgment management developing estimated costs complete longterm contracts turn led high degree auditor judgment subjectivity effort performing procedures evaluating audit evidence related estimates costs complete addressing matter involved performing procedures evaluating audit evidence connection forming overall opinion consolidated financial statements procedures included testing effectiveness controls relating revenue recognition process including controls determination estimated costs complete longterm contracts procedures also included among others evaluating testing management’s process determining estimates costs complete sample contracts obtaining executed purchase orders agreements evaluating reasonableness significant assumptions used management evaluating reasonableness significant assumptions used involved assessing management’s ability reasonably estimate costs complete longterm contracts performing comparison estimated actual costs incurred related completed similar contracts ii evaluating timely identification circumstances may warrant modification previous cost estimate iii testing management’s process evaluate contract contingencies relative contractual terms actual progress contracts iv performing lookback analysis assess variances actual estimated costs complete goodwill impairment subsea surface technologies segments described notes 1 15 20 consolidated financial statements company’s consolidated goodwill balance 56 billion december 31 2019 goodwill associated subsea surface technologies segments 28 billion 04 billion respectively year ended december 31 2019 company recorded impairment charge relation goodwill associated subsea surface technologies segments amount 13 billion 07 billion respectively disclosed management company conducts impairment test october 31 year frequently events circumstances indicate carrying value goodwill may impaired potential impairment identified comparing fair value reporting unit net book value including goodwill management estimates fair value reporting units using income approach estimates fair value discounting reporting units’ estimated future cash flows using weightedaverage cost capital reflects current market conditions risk profile respective reporting unit arrive future cash flows management uses estimates economic market assumptions including growth rates revenues costs estimates future expected changes operating margins tax rates cash expenditures principal considerations determination performing procedures relating goodwill impairment test subsea surface technologies segments critical audit matter significant judgment management developing fair value measurement underlying reporting units turn led high degree auditor judgment subjectivity effort performing procedures evaluating audit evidence related management’s discounted cash flow models significant assumptions including weightedaverage cost capital revenue growth rates projected operating margins addition audit effort involved use professionals specialized skill knowledge assist performing procedures evaluating audit evidence obtained addressing matter involved performing procedures evaluating audit evidence connection forming overall opinion consolidated financial statements procedures included testing effectiveness controls relating management’s goodwill impairment test including controls determination fair value company’s reporting units procedures also included among others evaluating appropriateness discounted cash flow models reasonableness significant assumptions related weightedaverage cost capital revenue growth rates projected operating margins used management determining fair values reporting units subsea surface technologies segments evaluating management’s assumptions related revenue growth rates projected operating margins involved evaluating whether assumptions used management reasonable considering current past performance reporting units ii contractually secured order intake industry forecasts iii whether assumptions consistent evidence obtained areas audit professionals specialized skill knowledge used assist evaluation company’s discounted cash flow model certain significant assumptions including weightedaverage cost capital longlived asset impairments certain flexible pipe umbilical manufacturing facilities described notes 1 20 25 consolidated financial statements company’s consolidated net property plant equipment 32 billion december 31 2019 year ended december 31 2019 company recorded impairment charge relation certain flexible pipe umbilical manufacturing facilities amount 1689 million management conducts impairment tests longlived assets whenever events changes circumstances indicate carrying value may recoverable carrying value longlived asset recoverable exceeds sum undiscounted cash flows expected result use eventual disposition asset’s remaining useful life prolonged downturn energy market corresponding impact company’s business outlook led management conclude carrying amount flexible pipe umbilical manufacturing facilities exceeded fair value fair value assessment performed december 31 2019 management measured fair value estimating amount timing net future cash flows discounting using riskadjusted rate interest principal considerations determination performing procedures relating longlived asset impairments certain flexible pipe umbilical manufacturing facilities critical audit matter significant judgment management estimating future cash flows assets turn led high degree auditor judgment subjectivity effort performing procedures evaluating audit evidence obtained related management’s significant assumptions including amount timing net future cash flows addressing matter involved performing procedures evaluating audit evidence connection forming overall opinion consolidated financial statements procedures included testing effectiveness controls relating management’s longlived assets impairments including controls management’s development assumptions used estimated future cash flows procedures also included among others evaluating appropriateness method used testing completeness accuracy underlying data used estimating cash flows evaluating reasonableness significant assumptions used management developing amount timing net future cash flows evaluating management’s significant assumptions including amount timing net future cash flows involved evaluating whether significant assumptions used management reasonable considering current past performance business associated assets considering whether consistent evidence obtained areas audit spricewaterhousecoopers llp houston texas march 2 2020 served company’s auditor since 2017 technipfmc plc consolidated subsidiaries consolidated statements income accompanying notes integral part consolidated financial statements technipfmc plc consolidated subsidiaries consolidated statements comprehensive income net income tax expense benefit 79 36 115 years ended december 31 2019 2018 2017 respectively b net income tax expense benefit 69 166 525 years ended december 31 2019 2018 2017 respectively c net income tax expense benefit 203 155 117 years ended december 31 2019 2018 2017 respectively accompanying notes integral part consolidated financial statements accompanying notes integral part consolidated financial statements technipfmc plc consolidated subsidiaries consolidated statements cash flows accompanying notes integral part consolidated financial statements technipfmc plc consolidated subsidiaries consolidated statements changes stockholders’ equity accompanying notes integral part consolidated financial statements technipfmc plc consolidated subsidiaries notes consolidated financial statements note 1 basis presentation summary significant accounting policies nature operations technipfmc plc consolidated subsidiaries “technipfmc” “we” “us” “our” global leader oil gas projects technologies systems services business segments subsea onshoreoffshore surface technologies manufacturing operations worldwide strategically located facilitate delivery products systems services customers basis presentation consolidated financial statements prepared us dollars accordance accounting principles generally accepted united states america “gaap” rules regulations securities exchange commission “sec” pertaining annual financial information preparation financial statements conformity accounting principles requires us make estimates assumptions affect reported amounts assets liabilities date financial statements reported amounts revenue expenses reporting period ultimate results could differ estimates annual report form 10k reporting results operations year ended december 31 2019 consist combined results operations technip sa “technip” fmc technologies inc “fmc technologies” due merger fmc technologies technip fmc technologies’ results operations included financial statements periods subsequent consummation merger january 16 2017 refer note 2 information related merger fmc technologies technip principles consolidation consolidated financial statements include accounts technipfmc majorityowned subsidiaries affiliates intercompany accounts transactions eliminated consolidation use estimates preparation financial statements conformity gaap requires management make estimates assumptions affect reported amounts assets liabilities disclosures contingent assets liabilities date financial statements reported amounts revenue expenses reporting period actual results could differ estimates include limited estimates total contract profit loss longterm constructiontype contracts estimated realizable value excess obsolete inventory estimates related pension accounting estimates related fair value purposes assessing goodwill longlived assets intangible assets impairment estimates fair value business combinations estimates related income taxes investments common stock unconsolidated affiliates equity method accounting used account investments unconsolidated affiliates ability exert significant influence affiliates’ operating financial policies measure equity investments accounted equity method fair value recognize changes fair value net income certain construction joint ventures use proportionate consolidation method whereby proportionate share entity’s assets liabilities revenues expenses included appropriate classifications accompanying consolidated financial statements intercompany balances transactions eliminated preparing accompanying consolidated financial statements investments unconsolidated affiliates assessed impairment whenever events changes facts circumstances indicate carrying value investments may fully recoverable condition subjectively determined temporary carrying value investment written fair value management’s assessment whether decline value temporary based ability intent hold investment whether evidence indicating carrying value investment recoverable within reasonable period time outweighs evidence contrary management generally considers investments equity method investees strategic longterm investments completes assessments impairment longterm viewpoint investments ownership less 20 represent significant investments reported assets consolidated balance sheets active market exists valuation method used financial assets maintained cost minus impairment plus minus changes resulting observable price changes orderly transactions identical similar investment issuer determine whether investments involve variable interest entity “vie” based characteristics subject entity determined vie management determines primary beneficiary entity whether consolidation vie required primary beneficiary consolidating vie must normally power direct activities significantly affect vie’s economic performance ii obligation absorb significant losses right receive significant benefits vie deemed primary beneficiary vie consolidated party’s equity interest vie accounted noncontrolling interest unconsolidated vies accounted using equity method accounting business combinations business combinations accounted using acquisition method accounting acquisition method assets acquired liabilities assumed recorded respective fair values acquisition date determining fair value assets liabilities involves significant judgment regarding methods assumptions used calculate estimated fair values purchase price allocated acquired assets assumed liabilities identifiable intangible assets based estimated fair values excess purchase price estimated fair values net assets acquired recorded goodwill transaction related costs expensed incurred leases majority leases operating leases account leases accordance accounting standard codification “asc”topic 842 leases adopted january 1 2019 using modified retrospective method refer note 5 discussion adoption including impact 2019 financial statements revenue recognition majority revenue derived longterm contracts span several years account revenue accordance asc topic 606 revenue contracts customers adopted january 1 2018 using modified retrospective method refer note 6 discussion adoption including impact 2018 financial statements contract costs obtain contract incremental direct costs obtaining contract deferred amortized period contract performance longer period generally estimated life customer relationship renewals expected renewal commission commensurate initial commission classify deferred commissions current noncurrent based timing expect recognize expense current noncurrent portions deferred commissions included current assets respectively consolidated balance sheets amortization deferred commissions included selling general administrative expenses cash equivalents cash equivalents highlyliquid shortterm instruments original maturities generally three months less date purchase trade receivables net allowances allowance doubtful accounts provided receivables equal estimated uncollectible amounts estimate based historical collection experience specific review customer’s receivables balance inventories stated lower cost net realizable value except relates inventory measured using lastin firstout “lifo” method inventories stated lower cost market inventory costs include costs directly attributable products including manufacturing overhead excluding costs distribute cost significant portion us domiciled inventories determined lifo method firstin firstout “fifo” weighted average methods used determine cost remaining inventories writedown inventories recorded net realizable value inventories lower net book value property plant equipment property plant equipment recorded cost depreciation principally provided straightline basis estimated useful lives assets vessels 10 30 years buildings 10 50 years machinery equipment 3 20 years gains losses realized upon sale retirement assets recorded income expense net consolidated statements income maintenance repair costs expensed incurred expenditures extend useful lives property plant equipment capitalized depreciated estimated new remaining life asset impairment property plant equipment property plant equipment reviewed impairment whenever events changes circumstances indicate carrying value longlived asset may recoverable carrying value asset group recoverable exceeds sum undiscounted cash flows expected result use eventual disposition asset determined impairment loss occurred impairment loss measured amount carrying value longlived asset exceeds fair value longlived assets classified held sale reported lower carrying value fair value less cost sell goodwill subject amortization tested impairment annual basis frequently impairment indicators arise comparing estimated fair value reporting unit carrying value including goodwill reporting unit defined operating segment one level operating segment established october 31 date annual test impairment goodwill reporting units goodwill tested impairment using quantitative impairment test known income approach estimates fair value discounting reporting unit’s estimated future cash flows using weightedaverage cost capital reflects current market conditions risk profile reporting unit arrive future cash flows use estimates economic market assumptions including growth rates revenues costs estimates future expected changes operating margins tax rates cash expenditures future revenues also adjusted match changes business strategy fair value reporting unit less carrying amount result method impairment loss recorded lower fair value estimate future reporting units could result goodwill impairments factors could trigger lower fair value estimate include sustained price declines reporting unit’s products services cost increases regulatory political environment changes customer demand changes market conditions may affect certain market participant assumptions used discounted future cash flow model intangible assets acquired intangible assets generally amortized straightline basis estimated useful lives generally range 2 20 years acquired intangible assets indefinite lives intangible assets reviewed impairment whenever events changes circumstances indicate carrying amount intangible asset may recoverable carrying amount intangible asset recoverable exceeds sum undiscounted cash flows expected result use eventual disposition asset determined impairment loss occurred loss measured amount carrying amount intangible asset exceeds fair value capitalized software costs recorded cost capitalized software costs include purchases software internal external costs incurred application development stage software projects costs amortized straightline basis estimated useful lives internal use software useful lives range 3 10 years internet website costs estimated useful lives exceed 3 years research development expense expensed incurred research development expense includes improvement existing products services design development new products services test new technologies debt instruments debt instruments include synthetic bonds senior private placement notes borrowings issuance fees redemption premium debt instruments included cost debt consolidated balance sheets adjustment nominal amount debt loan origination costs revolving credit facilities recorded asset amortized life underlying debt fair value measurements fair value defined price would received sell asset paid transfer liability exit price orderly transaction market participants reporting date fair value framework requires categorization assets liabilities measured fair value three levels based upon assumptions inputs used price assets liabilities exception certain assets liabilities measured using net asset value practical expedient required leveled level 1 provides reliable measure fair value whereas level 3 generally requires significant management judgment three levels defined follows • level 1 unadjusted quoted prices active markets identical assets liabilities • level 2 observable inputs quoted prices included level 1 example quoted prices similar assets liabilities active markets quoted prices identical assets liabilities inactive markets • level 3 unobservable inputs reflecting management’s assumptions market participants would use pricing asset liability income taxes current income taxes provided income reported financial statement purposes adjusted transactions enter computation income taxes payable year deferred tax assets liabilities measured using enacted tax rates expected future tax consequences temporary differences carrying amounts tax basis assets liabilities valuation allowance established whenever management believes likely deferred tax assets may realizable income taxes provided equity undistributed earnings foreign subsidiaries affiliates extent determined earnings indefinitely reinvested income taxes provided earnings period longer support earnings indefinitely reinvested tax benefits related uncertain tax positions recognized likely based technical merits position sustained upon examination classify interest expense penalties recognized underpayments income taxes income tax expense sharebased employee compensation measurement sharebased compensation expense restricted share awards performance share awards based market price grant date number shares awarded use blackscholes options pricing model measure fair value stock options granted january 1 2017 stockbased compensation expense award recognized ratably applicable service period beginning start service period ending employee becomes eligible retirement taking account estimated forfeitures ordinary shares held employee benefit trust ordinary shares purchased plan administrator fmc technologies inc nonqualified savings investment plan placed trust purchased shares recorded cost classified reduction stockholders’ equity consolidated balance sheets earnings per ordinary share “eps” basic eps computed using weightedaverage number ordinary shares outstanding year use treasury stock method compute diluted eps gives effect potential dilution earnings could occurred additional shares issued awards granted incentive compensation stock plan treasury stock method assumes proceeds would obtained upon exercise awards granted incentive compensation stock plan used purchase outstanding ordinary shares average market price period foreign currency financial statements operations us dollar functional currency located nonhighly inflationary countries translated us dollars prior consolidation assets liabilities translated exchange rate effect balance sheet date income statement accounts translated average exchange rate period operations translation gains losses recorded component accumulated comprehensive income loss stockholders’ equity foreign entity sold liquidated operations highly inflationary countries local currency functional currency inventories property plant equipment noncurrent assets converted us dollars historical exchange rates gains losses conversion included net income foreign currency effects cash equivalents debt highly inflationary economies included interest income expense certain committed anticipated future cash flows recognized assets liabilities denominated foreign currency may choose manage risk changes exchange rates compared functional currency economic netting exposures instead derivative instruments cash outflows liabilities foreign currency matched cash inflows assets currency movements exchange rates result offsetting gains losses due inherent unpredictability timing cash flows gains losses current period may economically offset gains losses future period gains losses recorded consolidated statements income period incurred gains losses remeasurement assets liabilities recognized income expense net second half 2018 argentina’s three year cumulative inflation rate exceeded 100 based published inflation data effective july 1 2018 argentina’s currency considered highly inflationary local operations argentina use us dollars functional currency monetary nonmonetary assets liabilities denominated argentina pesos remeasured us dollars gains losses resulting foreign currency transactions included current results operations event material impact company’s condensed consolidated financial statements derivative instruments derivatives recognized consolidated balance sheets fair value classification current noncurrent based upon maturity derivative instrument changes fair value derivative instruments recorded current earnings deferred accumulated comprehensive income loss depending type hedging transaction whether derivative designated effective hedge instrument accounted individually assets liabilities offset hedge accounting applied derivative deemed highly effective offsetting changes anticipated cash flows hedged item transaction changes fair value derivatives designated cash flow hedges deferred accumulated comprehensive income loss underlying transactions recognized earnings time related deferred hedging gains losses recorded earnings line hedged item effectiveness assessed inception hedge quarterly basis effectiveness forward contract cash flow hedges assessed based solely changes fair value attributable change spot rate change fair value contract related change forward rates excluded assessment hedge effectiveness changes excluded component derivative instrument along ineffectiveness identified recorded earnings incurred document risk management strategy hedge effectiveness inception term hedge also use forward contracts hedge foreign currency assets liabilities apply hedge accounting changes fair value contracts recognized income expense net consolidated statements income occur offset gains losses remeasurement related asset liability reclassifications certain prioryear amounts reclassified conform current year’s presentation revision prior period financial statements connection preparation consolidated financial statements year ended december 31 2019 identified errors previously issued financial statements related classification service revenue product revenue related cost sales correction effect reported total revenues consolidated net income loss stockholders’ equity periods previously presented accordance staff accounting bulletin “sab” 99 materiality sab 108 considering effects prior year misstatements quantifying misstatements current year financial statements evaluated errors based analysis quantitative qualitative factors determined related impact material consolidated financial statements prior annual interim period therefore amendments previously filed reports required accordance asc 250 accounting changes error corrections corrected errors year ended december 31 2018 2017 revising consolidated financial statements appearing herein effects revision consolidated statements income year ended december 31 2018 2017 follows note 2 business combination transactions description merger fmc technologies technip june 14 2016 fmc technologies technip entered definitive business combination agreement providing business combination among fmc technologies fmc technologies sis limited private limited company incorporated laws england wales whollyowned subsidiary fmc technologies technip august 4 2016 legal name fmc technologies sis limited changed technipfmc limited january 11 2017 subsequently reregistered technipfmc plc public limited company incorporated laws england wales january 16 2017 business combination completed pursuant terms definitive business combination agreement technip merged technipfmc continuing surviving company “technip merger” ordinary share technip “technip shares” technip shares owned technip whollyowned subsidiaries exchanged 20 ordinary shares technipfmc subject terms definitive business combination agreement immediately following technip merger whollyowned indirect subsidiary technipfmc “merger sub” merged fmc technologies fmc technologies continuing surviving company whollyowned indirect subsidiary technipfmc “fmcti merger” share common stock fmc technologies “fmcti shares” fmcti shares owned fmc technologies technipfmc merger sub whollyowned subsidiaries exchanged 10 ordinary share technipfmc subject terms definitive business combination agreement acquisition method accounting technip identified accounting acquirer acquired 100 interest fmc technologies merger fmc technologies technip “merger” created larger diversified company better equipped respond economic industry developments better positioned develop build offerings subsea surface onshoreoffshore markets compared former companies standalone basis importantly merger brought ability combined company standardize product service offerings customers ii reduce costs customers iii provide integrated product offerings oil gas industry aim innovate markets combined company operates incurred merger transaction integration costs 312 million 365 million 1018 million years ended december 31 2019 2018 2017 respectively description fmc technologies accounting acquiree fmc technologies global provider technology solutions energy industry fmc technologies designs manufactures services technologically sophisticated systems products including subsea production processing systems surface wellhead production systems high pressure fluid control equipment measurement solutions marine loading systems energy industry subsea systems produced fmc technologies used offshore production crude oil natural gas placed seafloor control flow crude oil natural gas reservoir host processing facility additionally fmc technologies provides full range drilling completion production wellhead systems standard customengineered applications surface wellhead production systems trees used control regulate flow crude oil natural gas well used onshore offshore applications consideration transferred acquisitiondate fair value consideration transferred consisted following calculation deemed reflect share capital increase accounting acquirer fmc technologies exchange ratio 1 share technipfmc 1 share fmc technologies provided business combination agreement adjusted dividing fmc technologies exchange ratio technip exchange ratio 2 shares technipfmc 1 share technip provided business combination agreement ie 1 ⁄ 2 05 order reflect number shares technip fmc technologies stockholders would received technip issued shares b closing price technip’s ordinary shares euronext paris january 16 2017 euro converted euro us dollar exchange rate 10594 january 16 2017 assets acquired liabilities assumed following table summarizes final allocation fair values assets acquired liabilities assumed acquisition date segment allocation goodwill final allocation goodwill reporting segments based final valuation follows goodwill calculated excess consideration transferred net assets recognized represents expected revenue cost synergies combined company described goodwill recognized result acquisition deductible tax purposes acquired identifiable intangible assets identifiable intangible assets acquired include following fmc technologies’ results operations included financial statements periods subsequent consummation merger january 16 2017 fmc technologies contributed revenues net loss 34411 million 2512 million respectively period january 17 2017 december 31 2017 part ongoing review purchase price allocation 197 million adjustment deferred tax liability balance recorded first quarter 2018 increased surface technologies goodwill pro forma impact merger unaudited following unaudited supplemental pro forma results present consolidated information merger completed january 1 2016 pro forma results include potential synergies cost savings expected benefits merger accordingly pro forma results considered indicative results would occurred merger consummated january 1 2016 indicative future results transactions december 30 2019 completed acquisition remaining 50 interest technip odebrecht plsv cv “top cv” top cv formed joint venture technip sa ocyan sa provide pipeline installation ships petroleo brasileiro sa “petrobras” work oil gas fields offshore brazil results reported subsea segment using equity method accounting subsequent transaction investment became fully consolidated entity connection acquisition acquired 3910 million assets including two vessels valued 3352 million addition assumed 2399 million liabilities including 2031 million term loan valuation assets liabilities preliminary remain ongoing result acquisition recorded loss 09 million net results impairment charge 842 million bargain purchase gain 833 million included within restructuring charges february 2018 signed agreement island offshore group acquire 51 stake island offshore’s whollyowned subsidiary island offshore subsea island offshore subsea provides rlwi project management engineering services plug abandonment “pa” riserless coiled tubing well completion operations connection acquisition controlling interest technipfmc island offshore entered strategic cooperation agreement deliver rlwi services worldwide basis also include technipfmc’s rlwi capabilities island offshore subsea rebranded tios operating unit technipfmc’s rlwi activities worldwide acquisition completed april 18 2018 total cash consideration 424 million result acquisition recorded redeemable financial liability equal fair value written put option finally increased goodwill 850 million july 18 2018 entered share sale purchase agreement poc holding oy sell 100 outstanding shares technip offshore finland oy total gain tax recognized third quarter 2018 278 million additional acquisitions including purchased interests equity method investments year ended december 31 2018 totaled 625 million consideration paid note 3 planned separation transaction august 26 2019 announced board directors unanimously approved plan separate onshoreoffshore segment loading systems business independent publicly traded company “technip energies” transaction expected tax free certain shareholders permissible including us expect complete transaction second quarter 2020 subject general market conditions regulatory approvals final approval board directors upon completion separation historical results technip energies presented discontinued operations separation represents strategic shift operations major impact consolidated financial statements incurred 721 million separation costs associated planned transaction year ended december 31 2019 note 4 new accounting standards recently adopted accounting standards us gaap effective january 1 2019 adopted 1 accounting standards update “asu” “201602 leases topic 842” 2 asu 201801 “leases topic 842 land easement practical expedient transition topic 842” 3 asu 201810 “codification improvements topic 842 lease” 4 asu 201820 “narrowscope improvements lessors” 5 asu 201811 “leases topic 842 targeted improvements” 6 asu 201901 “leases topic 842 codification improvements” updates require lessees recognize rightofuse “rou” asset lease liability virtually leases see note 5 consolidated financial statements annual report information effective january 1 2019 adopted asu 201712 “targeted improvements accounting hedging activities” update improves financial reporting hedging relationships better portray economic results entity’s risk management activities financial statements make certain targeted improvements simplify application hedge accounting guidance current gaap amendments update better align entitys risk management activities financial reporting hedging relationships changes designation measurement guidance qualifying hedging relationships presentation hedge results cash flow net investment hedges adoption date guidance requires modified retrospective approach amended presentation disclosure guidance required adopted prospectively adoption update impact consolidated financial statements effective january 1 2019 adopted asu 201802 “income statementreporting comprehensive income topic 220 reclassification certain tax effects accumulated comprehensive income aoci” update provides option reclassify stranded tax effects within aoci retained earnings period effect change us federal corporate tax rate tax cuts jobs act portion thereof recorded asu requires financial statement disclosures indicate description accounting policy releasing income tax effects aoci whether election reclassify stranded income tax effects tax cuts jobs act information income tax effects reclassified amendments affect organization required apply provisions topic 220 income statementreporting comprehensive income items comprehensive income related tax effects presented comprehensive income required gaap adoption update impact consolidated financial statements effective january 1 2019 adopted asu 201807 “compensation stock compensation topic 718 improvements nonemployee sharebased payment accounting” update expands scope topic 718 include sharebased payment transactions acquiring goods services nonemployees amendments update specify topic 718 applies sharebased payment transactions grantor acquires goods services used consumed operations issuing sharebased payment awards amendments update also clarify topic 718 apply sharebased payments used effectively provide 1 financing issuer 2 awards granted conjunction selling goods services customers part contract accounted asc topic 606 adoption update material impact consolidated financial statements recently issued accounting standards us gaap june 2016 financial accounting standard board “fasb” issued asu 201613 “financial instrumentscredit losses topic 326 measurement credit losses financial instruments” update introduces new model recognizing credit losses financial instruments based estimate current expected credit losses updated guidance applies 1 loans accounts receivable trade receivables financial assets measured amortized cost 2 loan commitments offbalance sheet credit exposures iii debt securities financial assets measured fair value comprehensive income iv beneficial interests securitized financial assets may 2019 fasb issued new update asu no201905 eases transition credit losses standard providing option measure certain types assets fair value allowing option preparers irrevocably elect fair value option eligible financial assets measured amortized cost basis instrumentbyinstrument basis november 2019 fasb issued asu 201911 amendments update clarify address stakeholders’ specific issues certain aspects amendments clarifies guidance around report expected recoveries amendments asu effective us january 1 2020 required adopted modified retrospective basis early adoption permitted anticipate material impact consolidated financial statements result adoption asu november 2018 fasb also issued asu 201819 “codification improvements topic 326 financial instrumentscredit losses” update amends transition requirements scope credit losses standard issued 2016 update clarifies receivables arising operating leases within scope credit losses standard rather accounted accordance leases standard amendments asu effective us january 1 2020 required adopted modified retrospective basis early adoption permitted anticipate material impact consolidated financial statements result adoption asu august 2018 fasb issued asu 201813 “fair value measurement topic 820 disclosure frameworkchanges disclosure requirements fair value measurement” update modifies disclosure requirement fair value measurements topic 820 amendments asu effective us january 1 2020 early adoption permitted amendments changes unrealized gains losses range weighted average significant unobservable inputs used develop level 3 fair value measurements narrative description measurement uncertainty applied prospectively amendments applied retrospectively adoption update concerns presentation disclosure relates consolidated financial statements august 2018 fasb issued asu 201814 “compensationretirement benefitsdefined benefit plansgeneral subtopic 71520 disclosure frameworkchanges disclosure requirements defined benefit plans” update amends asc 715 add remove clarify disclosure requirements related defined benefit pension postretirement plans amendments asu effective us january 1 2021 early adoption permitted amendments update required adopted retrospectively currently evaluating impact asu consolidated financial statements august 2018 fasb issued asu 201815 “intangiblesgoodwill otherinternaluse software subtopic 35040 customer’s accounting implementation costs incurred cloud computing arrangement service contract consensus fasb emerging issues task force” update requires implementation costs incurred cloud computing arrangement service contract deferred would capitalized based requirements capitalizing implementation costs incurred develop obtain internaluse software amendments asu effective us january 1 2020 early adoption permitted amendments update required adopted either retrospectively prospectively anticipate material impact consolidated financial statements result adoption asu november 2018 fasb issued asu 201818 “collaborative arrangements topic 808 clarifying interaction topic 808 topic 606” update clarifies interaction guidance certain collaborative arrangements revenue recognition financial accounting reporting standard amendments asu effective us january 1 2020 early adoption permitted amendments update required adopted retrospectively date initial application topic 606 entity recognize cumulative effect initially applying amendments adjustment opening balance retained earnings later earliest annual period presented annual period includes date entity’s initial application topic 606 anticipate material impact consolidated financial statements result adoption asu april 2019 fasb issued asu 201904 “codification improvements topic 326 financial instruments credit losses topic 815 derivatives hedging topic 825 financial instruments” update clarifies improves areas guidance related recently issued standards including 1 asu 201601 “financial instrumentsoverall subtopic 82510 recognition measurement financial assets liabilities” 2 asu 201613 “financial instrumentscredit losses topic 326 measurement credit losses financial instruments” 3 asu 201712 “derivatives hedging topic 815 targeted improvements accounting hedging activities” early adoption permitted amendments update asu 201601 201613 required adopted modified retrospective basis amendments update asu 201712 required adopted either retrospectively prospectively new update effective january 1 2020 anticipate material impact consolidated financial statements result adoption asu november 2019 fasb issued asu 201910 apply changes philosophy effective dates following major updates including amendments issued issuance original update asu 201613 “financial instrumentscredit losses topic 326” “measurement credit losses financial instruments credit losses” asu 201712 “derivatives hedging topic 815” targeted improvements accounting hedging activities hedging” asu 201602 “leases topic 842 leases” anticipate material impact consolidated financial statements result adoption asu december 2019 fasb issued asu 201912 “income taxes topic 740 simplifying accounting income taxes” amendments simplify accounting income taxes removing certain exceptions general principles topic 740 update also improve simplify areas generally accepted accounting principles gaap cost complexity reduced maintaining improving usefulness information provided users financial statements update effective us january 1 2021 early adoption permitted currently evaluating impact asu consolidated financial statements january 2020 fasb issued asu 202001 investments equity securities topic 321 “investments equity method joint ventures topic 323” “derivatives hedging topic 815 clarifying interactions topic 321 topic 323 topic 815” made targeted improvements address certain aspects accounting financial instruments update clarifies company consider observable transactions require company either apply discontinue equity method accounting topic 323 investmentsequity method joint ventures purposes applying measurement alternative accordance topic 321 immediately applying upon discontinuing equity method new asu also clarifies determining accounting certain forward contracts purchased options company consider whether upon settlement exercise underlying securities would accounted equity method fair value option amendments effective us january 1 2021 early adoption permitted currently evaluating impact asu consolidated financial statements note 5 leases february 2016 fasb issued asu 201602 leases topic 842 lessees required recognize rou asset lease liability outstanding leases excluding shortterm leases liability equal present value remaining lease payments rou asset based liability subject certain adjustments eg initial direct costs payments made lessee prior lease commencement lessor incentives income statement purposes lessees required classify leases either operating finance leases operating leases result straightline expense finance leases result frontloaded expense pattern lessor accounting largely unchanged updated align certain changes lessee model new revenue recognition standard topic 842 subsequently amended provide practical expedient transition targeted improvements new lease standard fasb issued march 2019 asu 201901 “leases topic 842 codification improvements” clarify certain transition disclosure requirements company adopted new lease standard january 1 2019 using modified retrospective transition method applying new standard leases cumulativeeffect adjustment beginning retained earnings period adoption first annual period adoption year ending december 31 2019 comparative periods restated presented legacy lease accounting guidance effect periods topic 840 new standard provides number practical expedients specific transition elected “package practical expedients” permits us reassess 1 whether expired existing arrangements contain leases 2 lease classification expired existing leases 3 initial direct costs existing leases effective date new standard also provides practical expedients entity’s ongoing accounting including practical expedient allows lessees lessors elect separate lease nonlease components elected practical expedient available lessees separate lease nonlease components asset classes vessels typically include significant nonlease components elected practical expedient available lessors separate lease nonlease components vessels company also elected recognize right use assets lease liabilities balance sheet shortterm leases lease term 12 months less include option purchase underlying asset company reasonably certain exercise lease cost shortterm leases recognized straightline basis lease term disclosed within financial statements believe shortterm lease commitments materially different shortterm lease cost period adoption new lease accounting guidance material impact consolidated balance sheets material impact consolidated income statements recognized january 1 2019 1 lease liability approximately 11896 million represents present value remaining lease payments discounted using company’s applicable weighted average incremental borrowing rates 2 rou asset approximately 11155 million represents lease liability 11896 million adjusted accrued prepaid rent lease incentives balances impact recorded adjustment increase retained earnings approximately 18 million connection adoption new lease standard corrected balance sheet january 1 2016 include additional 420 million liabilities 50 million 370 million current liabilities respectively corresponding decrease retained earnings reflect additional rent expense historically recorded prior fiscal 2016 accordingly revised current liabilities retained earnings balances january 1 2016 10444 million 1313 million 32314 million respectively historical errors material prior interim annual financial statements lessee arrangements lease real estate including land buildings warehouses machineryequipment vessels vehicles various types manufacturing data processing equipment lessee perspective leases real estate generally provide payment property taxes insurance repairs us substantially leases classified operating leases determine arrangement lease inception assessing whether identified asset exists right control use identified asset operating leases included operating lease rightofuse assets operating lease liabilities current operating lease liabilities noncurrent consolidated balance sheets rightofuse assets represent right use underlying asset lease term lease liabilities represent obligation make lease payments arising lease operating lease rightofuse assets liabilities recognized commencement date based present value remaining lease payments lease term exception rare cases implicit rate readily determinable use incremental borrowing rate based information available commencement date determining present value lease payments operating lease rightofuse assets also includes lease prepayments made excludes lease incentives received lessor lease cost lease payments recognized straightline basis lease term several leases provide certain guarantees residual value estimate include determination lease payments amount probable owed residual value guarantees date adoption december 31 2019 determined residual value guarantees probable owed leases contain material restrictive covenants lease terms within lessee arrangements may include options extendrenew terminate lease andor purchase underlying asset reasonably certain exercise option company applies portfolio approach asset class determine lease term renewals leases within portfolios categorized asset class initial lease terms vary depending asset class renewal terms range 60 days 5 years asset classes temporary residential housing forklifts vehicles vessels office equipment tool rentals 15 years commercial real estate shortterm leases initial term 12 months less include purchase option recorded balance sheet lease costs shortterm leases recognized straightline basis lease term amounts related shortterm leases disclosed within financial statements company variable lease payments including adjustments lease payments based index rate consumer price index fair value adjustments lease payments common area maintenance real estate taxes insurance payments triplenet real estate leases variable lease payments depend index rate consumer price index market interest rate included measuring consideration within lease arrangements using payments’ base rate index variable payments depend index rate recognized profit loss disclosed ‘variable lease cost’ period incurred adopted practical expedient separate lease nonlease components asset classes except vessels significant nonlease components company currently subleases certain leased real estate vessels third parties expected subleases classified operating leases sublessor gaap following table summary company’s components net lease cost year ended december 31 2019 supplemental cash flow information related leases year ended december 31 2019 follows supplemental balance sheet information related leases december 31 2019 follows following table summary maturity lease liabilities operating leases december 31 2019 note leases commencing prior 2019 minimum lease payments exclude payments landlords real estate taxes common area maintenance calculated using interest rate lease b includes current portion 2751 million operating leases december 31 2018 future minimum rental payments noncancellable operating leases asc topic 840 december 31 2019 additional operating lease future office building paris france yet commenced 2362 million operating lease commence fiscal year 2021 lease term 10 years lessor arrangements lease real estate including land buildings warehouses machineryequipment vessels lessor perspective determine arrangement lease inception assessing whether identified asset exists customer right control use identified asset use implicit rate lessor arrangements elected practical expedient available lessors separate lease nonlease components vessels nonlease component predominant contracts account contracts revenue recognition guidance asc 606 lease component predominant contracts account contracts lease guidance asc 842 estimate amount expect derive underlying asset following end lease term based remaining economic life lessor arrangements generally include residual value guarantees recognize lessee payments lessor costs taxes insurance net basis lessee pays costs directly third party amount paid lessee readily determinable following table summary company’s components lease revenue year ended december 31 2019 following table summary maturity analysis undiscounted cash flows received annual basis first five years total amounts remaining years note 6 revenue majority revenue longterm contracts associated designing manufacturing products systems providing services customers involved exploration production crude oil natural gas january 1 2018 adopted asc topic 606 gaap using modified retrospective method applied contracts completed january 1 2018 resulting 915 million reduction retained earnings results reporting periods beginning january 1 2018 presented asc topic 606 prior period amounts adjusted continue reported accordance historic accounting topic 605 significant revenue recognition criteria explained allocation transaction price performance obligations contract’s transaction price allocated distinct performance obligation recognized revenue performance obligation satisfied determine proper revenue recognition method evaluate whether two contracts combined accounted one single contract whether combined single contract accounted one performance obligation evaluation requires significant judgment contracts single performance obligation promise transfer individual goods services separately identifiable promises contracts therefore distinct variable consideration due nature work required performed many performance obligations estimation total revenue cost completion complex subject many variables requires significant judgment common longterm contracts contain variable considerations either increase decrease transaction price variability transaction price arises primarily due liquidated damages company considers experience similar transactions expectations regarding contract estimating amount variable consideration entitled determining whether estimated variable consideration constrained include estimated amounts transaction price extent probable significant reversal cumulative revenue recognized occur uncertainty associated variable consideration resolved estimates variable consideration based largely assessment anticipated performance information historical current forecasted reasonably available us payment terms progress billings generally issued upon completion certain phases work stipulated contract payment terms may either fixed lumpsum driven time materials eg daily hourly rates plus materials typically customer retains small portion contract price completion contract contracts generally result revenue recognized excess billings present contract assets balance sheet amounts billed due customers classified receivables balance sheet portion payments retained customer final contract settlement considered significant financing component intent protect customer contracts may entitled receive advance payment recognize liability advance payments excess revenue recognized present contract liabilities balance sheet advance payment typically considered significant financing component used meet working capital demands higher early stages contract protect us party failing adequately complete obligations contract warranty certain contracts include assurancetype warranty clause typically 18 36 months guarantee products comply agreed specifications servicetype warranty may also provided customer case management allocates portion transaction price warranty based estimated standalone selling price servicetype warranty revenue recognized time performance obligations satisfied time work progresses point time revenue products services transferred customers time accounted approximately 817 revenue year ended december 31 2019 respectively typically revenue recognized time using input measure eg costs incurred date relative total estimated costs completion measure progress costtocost method longterm contracts control transferring time revenue recognized based extent progress towards completion performance obligation upon adoption new standard generally use costtocost measure progress contracts best depicts transfer control customer occurs incur costs contracts costtocost measure progress extent progress towards completion measured based ratio costs incurred date total estimated costs completion performance obligation revenues including estimated fees profits recorded proportionally costs incurred expected losses constructiontype contracts progress charged earnings total period losses identified right invoice practical expedient righttoinvoice practical expedient applied performance obligation satisfied time right invoice customer amount corresponds directly value transferred customer performance completed date practical expedient used estimate variable consideration inception contract determine transaction price disclosure purposes contracts payment terms dictated daily hourly rates contracts may mixed pricing terms include fixed fee portion contracts charge customer fixed rate based time materials spent project correspond value transferred customer recognize revenue amount right invoice contract modifications contracts often modified account changes contract specifications requirements consider contract modifications exist modification either creates new changes existing enforceable rights obligations contract modifications goods services distinct existing contract due significant integration service provided context contract accounted part existing contract effect contract modification transaction price measure progress performance obligation relates recognized adjustment revenue either increase reduction revenue cumulative catchup basis revenue recognition segment following description principal activities separated reportable segments company generates revenue see note 7 detailed information reportable segments subsea segment manufactures designs products systems performs engineering procurement project management provides services used oil gas companies involved offshore exploration production crude oil natural gas systems services may sold separately combined integrated systems services offered within one contract many systems products company supplies subsea applications highly engineered meet unique demands customers’ field properties typically ordered one two years prior installation often receive advance payments progress billings customers order fund initial development working capital requirements subsea engineering procurement construction installation contracts revenue principally generated longterm contracts customers determined contracts generally one performance obligation delivered product highly customized customer field specifications generally recognize revenue time contracts customized products alternative use company enforceable right payment plus reasonable profit performance completed date subsea segment also performs array subsea services including installation services ii asset management services iii product optimization iv inspection maintenance repair services v well access intervention services revenue generally earned execution either installationtype maintenancetype contracts either contracttype management determined performance service generally represents one single performance obligation determined revenue contracts recognized time customer simultaneously receives consumes benefit services b onshoreoffshore segment designs builds onshore facilities related production treatment transformation transportation hydrocarbons renewable feedstock designs manufactures installs fixed floating platforms offshore production processing oil gas reserves onshore business combines design engineering procurement construction project management entire range onshore facilities onshore activity covers types onshore facilities related production treatment transportation oil gas well transformation petrochemicals ethylene polymers fertilizers onshore activities include development onshore fields refining natural gas treatment liquefaction design construction hydrogen synthesis gas production units many contracts provide combination engineering procurement construction project management installation services may last several years determined contracts nature generally one performance obligation contracts final product highly customized specifications field customer’s requirements therefore customer obtains control asset time thus revenue recognized time offshore business combines design engineering procurement construction project management within entire range fixed floating offshore oil gas facilities many first kind including development floating liquefied natural gas “flng” facilities similar onshore contracts grouped segment provide combination services may last several years determined contracts nature one performance obligation contracts final product highly customized specifications field customer’s requirements determined customer obtains control asset time thus revenue recognized time customized products alternative use us enforceable right payment plus reasonable profit performance completed date c surface technologies surface technologies segment designs manufactures supplies technologically advanced wellhead systems high pressure valves pumps used stimulation activities oilfield service companies provides installation flowback services exploration production companies provide full range drilling completion production wellhead systems standard customengineered applications pressure control product contracts design manufacture flowline products weco®chiksan® trademarks articulating frac arm manifold trailers well service pumps compact valves reciprocating pumps used well completion stimulation activities major oilfield service companies performance obligations within systems satisfied either delivery standardized product equipment delivery customized product equipment contracts standardized product equipment performance obligation management determined limited customization products sold within contracts asset delivered resold another customer revenue recognized point time upon transfer control customer acceptance provisions met contracts customized product equipment performance obligation revenue recognized time manufacturing product create asset alternative use us segment also designs manufactures services measurement products globally contracttypes include standard product equipment maintenancetype services determined contract product line represents one performance obligation revenue standard measurement equipment contracts recognized point time maintenancetype contracts typically priced daily hourly rate determined revenue contracts recognized time customer simultaneously receives consumes benefit services disaggregation revenue company disaggregates revenue geographic location contract types tables also include reconciliation disaggregated revenue reportable segments following tables present products services revenue geography reportable segment year ended december 31 2019 2018 following tables represent revenue contract type reportable segment year ended december 31 2019 2018 represents revenue subject asc topic 606 b revised consolidated statement operations correct classification service revenue product revenue amount 7074 million year ended december 31 2018 see note 1 consolidated financial statements included part ii item 8 annual report form 10k additional disclosure related revision contract balances timing revenue recognition billings cash collections results billed accounts receivable costs estimated earnings excess billings uncompleted contracts contract assets billings excess costs estimated earnings uncompleted contracts contract liabilities consolidated balance sheets contract assets contract assets previously disclosed costs estimated earnings excess billings uncompleted contracts include unbilled amounts typically resulting sales longterm contracts revenue recognized time revenue recognized exceeds amount billed customer right payment subject passage time amounts may exceed net realizable value costs estimated earnings excess billings uncompleted contracts generally classified current contract liabilities sometimes receive advances deposits customers revenue recognized resulting contract liabilities following table provides information net contract assets liabilities december 31 2019 december 31 2018 increase contract assets december 31 2018 december 31 2019 primarily due timing milestones remaining increase contract liabilities primarily due additional cash received excluding amounts recognized revenue period order determine revenue recognized period contract liabilities first allocate revenue individual contract liability balance outstanding beginning period revenue exceeds balance revenue recognized year ended december 31 2019 included contract liabilities balance december 31 2018 24140 million revenue recognized year ended december 31 2018 included contract liabilities balance december 31 2017 28146 million addition net revenue recognized year ended december 31 2019 2018 performance obligations satisfied previous periods favorable impact 11765 million 5969 million respectively primarily relates changes estimate stage completion impacted revenue transaction price allocated remaining unsatisfied performance obligations remaining unsatisfied performance obligations “rupo” “order backlog” represent transaction price products services material right work performed transaction price order backlog includes base transaction price variable consideration changes transaction price order backlog table include contracts recognize revenue amount right invoice services performed transaction price order backlog related unfilled confirmed customer orders estimated reporting date december 31 2019 aggregate amount transaction price allocated order backlog 242511 million company expects recognize revenue approximately 474 order backlog 2020 526 thereafter following table details order backlog business segment december 31 2019 note 7 business segments management’s determination reporting segments made basis strategic priorities within segment differences products services provide corresponds manner chief executive officer chief operating decision maker reviews evaluates operating performance make decisions resources allocated segment upon completion merger reorganized reporting structure aligned segments underlying businesses execute strategy technipfmc result report results operations following segments subsea onshoreoffshore surface technologies reportable segments • subsea manufactures designs products systems performs engineering procurement project management provides services used oil gas companies involved offshore exploration production crude oil natural gas • onshoreoffshore designs builds onshore facilities related production treatment transformation transportation hydrocarbons designs manufactures installs fixed floating platforms production processing oil gas reserves • surface technologies designs manufactures systems provides services used oil gas companies involved land shallow water exploration production crude oil natural gas designs manufactures supplies technologically advanced high pressure valves fittings oilfield service companies also provides flowback well testing services segment operating profit defined total segment revenue less segment operating expenses income loss equity method investments included computing segment operating profit refer note 12 additional information following items excluded computing segment operating profit corporate staff expense net interest income expense associated corporate debt facilities income taxes revenue expense net segment revenue segment operating profit corporate expense primarily includes corporate staff expenses legal reserve stockbased compensation expenses employee benefits certain foreign exchange gains losses merger transaction integration expenses separation expenses b includes amounts attributable noncontrolling interests years ended december 31 2019 2018 2017 revenue jsc yamal lng exceeded 10 consolidated revenue segment assets corporate includes cash lifo adjustments deferred income tax balances property plant equipment associated specific segment pension assets fair value derivative financial instruments geographic segment information geographic segment sales identified based country products services delivered geographic segment longlived assets represent property plant equipment net business segment information note 8 earnings loss per share reconciliation number shares used basic diluted earnings per share calculation follows note 9 inventories consisted following amounts table reported net obsolescence reserves 1357 million 975 million december 31 2019 2018 respectively net inventories accounted lifo method totaled 3866 million 3872 million december 31 2019 2018 respectively current replacement costs lifo inventories exceeded recorded values 109 million 79 million december 31 2019 2018 respectively reduction base lifo inventory 2019 note 10 current assets current liabilities current assets consisted following current liabilities consisted following note 11 warranty obligations warranties excluded estimated total costs measurement progress accrued transfer control goods services customer refer note 6 consolidated financial statements additional information regarding warranties accrued warranties december 31 2019 1935 million 2019 new warranty expenses 788 million adjustments existing accruals 575 million claims paid 622 million note 12 equity method investments equity method accounting used account investments unconsolidated affiliates ability exert significant influence affiliates operating financial policies certain construction joint ventures use proportionate consolidation method whereby proportionate share entity’s assets liabilities revenues expenses included appropriate classifications accompanying consolidated financial statements none proportionate consolidation investments individually aggregate significant consolidated results 2019 2018 2017 equity investments follows december 31 2019 2018 major equity method investments follows top cv affiliated company form joint venture technip sa ocyan sa formerly known odebrecht technip odebrecht formed 2011 awarded contract provide pipeline installation ships statecontrolled petrobras work oil gas fields offshore brazil december 30 2019 completed acquisition remaining 50 interest top cv prior acquisition accounted 50 investment using equity method accounting results reported subsea segment subsequent transaction recorded results consolidated financial information dofcon brasil “dofcon” affiliated company form joint venture technip sa dof subsea founded 2006 dofcon provides pipelaying support vessels plsvs work oil gas fields offshore brazil dofcon considered vie sufficient equity finance activities without additional subordinated financial support parties primary beneficiary vie accounted 50 investment using equity method accounting results reported subsea segment serimax holdings sas “serimax” affiliated company form joint venture technip sa vallourec sa founded 2016 serimax headquartered paris france provides rigid pipes welding services work oil gas fields around world accounted 20 investment using equity method accounting results reported subsea segment magma global limited “magma global” affiliated company form collaborative agreement signed 2018 technipcoflexip uk holdings limited magma global develop hybrid flexible pipe use offshore applications part collaboration technipfmc holds minority stake accounted 25 investment using equity method investment accounting results reported subsea segment income equity affiliates included reporting segments follows note 13 related party transactions receivables payables revenues expenses included consolidated financial statements transactions related parties defined entities related directors main shareholders well partners consolidated joint ventures follows trade receivables consisted receivables due following related parties tp jgc coral france snc ttsjv wll equity method affiliates top cv previously equity method affiliate member board directors “director” served board directors anadarko petroleum company “anadarko” august 2019 august 2019 anadarko acquired occidental petroleum corporation “occidental” result director longer serves member board directors anadarko director officer director occidental trade payables consisted payables due following related parties dofcon navegacao magma global limited equity method affiliates jgc corporation chiyoda joint venture partners yamal project member board directors executive officer ifp energies nouvelles additionally note receivable balance 652 million 1300 million december 31 2019 2018 respectively note receivables balance includes 625 million 1199 million dofcon brasil december 31 2019 2018 respectively dofcon brasil vie accounted equity method affiliate included assets consolidated balance sheets revenue consisted amount following related parties member board directors serve board directors storengy expenses consisted amount following related parties serimax holdings sas equity affiliate amaja oil joint venture partner minority interest creowave oy joint venture members board directors serve board directors arkema sa altus intervention jumbo shipping competentia note 14 property plant equipment property plant equipment consisted following depreciation expense 3835 million 3678 million 3702 million 2019 2018 2017 respectively amount interest cost capitalized material years presented 2019 2018 determined carrying amount certain longlived assets exceeded fair value recorded impairment refer note 20 consolidated financial statements additional information regarding impairment january 2019 purchased deepwater dive support vessel deep discoverer 1168 million purchase vessel funded debt refer note 16 consolidated financial statements additional information december 2019 completed sale g1201 vessel part overall strategy optimize profile size subsea fleet result sale net loss 71 million included income expense net consolidated statements income note 15 goodwill intangible assets goodwill record goodwill excess purchase price fair value net assets acquired acquisitions accounted purchase method accounting test goodwill impairment annually frequently circumstances indicate possible impairment identify potential impairment comparing fair value applicable reporting unit net book value including goodwill net book value exceeds fair value reporting unit measure impairment comparing carrying value reporting unit fair value test goodwill impairment comparing fair value reporting units net carrying value october 31 year impairment analysis quantitative however includes subjective estimates based assumptions regarding future growth rates interest rates operating expenses lower fair value estimate future reporting units could result goodwill impairments factors could trigger lower fair value estimate include sustained price declines reporting unit’s products services cost increases regulatory political environment changes customer demand changes market conditions may affect certain market participant assumptions used discounted future cash flow model based internal forecasts revenues expenses specified period plus terminal value income approach income approach estimates fair value discounting reporting unit’s estimated future cash flows using weightedaverage cost capital reflects current market conditions risk profile reporting unit arrive future cash flows use estimates economic market assumptions including growth rates revenues costs estimates future expected changes operating margins tax rates cash expenditures future revenues also adjusted match changes business strategy believe approach appropriate valuation method market multiple approach determine estimated fair value reporting units applying transaction multiples reporting unit’s projected ebitda averaging estimate similar historical calculations using either one two three year average reporting unit valuations determined primarily utilizing income approach market multiple approach part company’s annual goodwill impairment test company’s market capitalization compared estimate fair value reporting segment technipfmc’s market capitalization testing date declined significantly compared prioryear’s assessment driven part greater geopolitical uncertainty lower commodity prices result estimate business fair value could supported market capitalization testing date year ended december 31 2019 recorded 13219 million 6668 million goodwill impairment charges subsea surface technologies reporting units respectively year ended december 31 2018 recorded 13830 million goodwill impairment charges subsea reporting unit refer note 20 consolidated financial statements additional disclosure related impairment goodwill year ended december 31 2019 2018 fair value carrying amount onshoreoffshore reporting unit excess 400 carrying amount following table presents significant estimates used management determining fair values reporting units years ended december 31 2019 2018 recently acquired reporting units quantitative impairment test may indicate fair value substantially similar reporting unit’s carrying amount similarities value generally indication management’s estimates future cash flows associated recently acquired reporting unit remain relatively consistent assumptions used derive initial fair value discussed evaluating 2019 quantitative impairment test results management considered many factors determining whether impairment goodwill reporting unit reasonably likely occur future periods including future market conditions economic environment circumstances market declines unfavorable economic conditions loss major customer factors could increase risk impairment goodwill reporting unit future periods carrying amount goodwill reporting segment follows intangible assets components intangible assets follows recorded 1261 million 1826 million 2445 million amortization expense related intangible assets years ended december 31 2019 2018 2017 respectively years 2020 2024 annual amortization expense expected follows 125 million 2020 120 million 2021 115 million 2022 112 million 2023 109 million 2024 507 million thereafter note 16 debt shortterm debt current portion longterm debt shortterm debt current portion longterm debt consisted following longterm debt longterm debt consisted following maturities debt december 31 2019 payable follows revolving credit facility january 17 2017 acceded new 25 billion senior unsecured revolving credit facility agreement “facility agreement” fmc technologies inc technip eurocash snc “borrowers” technipfmc plc “additional borrower” jpmorgan chase bank national association “jpmorgan” agent arranger sg americas securities llc arranger lenders party thereto facility agreement provides establishment multicurrency revolving credit facility includes 15 billion letter credit subfacility subject certain conditions borrowers may request aggregate commitments facility agreement increased additional 5000 million november 26 2018 entered extension extends expiration date january 2023 borrowings facility agreement bear interest following rates plus applicable margin depending currency • us dollardenominated loans bear interest borrowers’ option base rate adjusted rate linked london interbank offered rate “adjusted libor” • sterlingdenominated loans bear interest adjusted libor • eurodenominated loans bear interest euro interbank offered rate “euribor” depending credit rating technipfmc applicable margin revolving loans varies case adjusted libor euribor loans 0820 1300 ii case base rate loans 0000 0300 “base rate” highest prime rate announced jpmorgan b greater federal funds rate overnight bank funding rate plus 05 c onemonth adjusted libor plus 10 facility agreement contains usual customary covenants representations warranties events default credit facilities type including financial covenants requiring total capitalization ratio exceed 60 end financial quarter facility agreement also contains covenants restricting ability subsidiaries’ ability incur additional liens indebtedness enter asset sales make certain investments december 31 2019 compliance restrictive covenants revolving credit facility bilateral credit facilities access €1000 million bilateral credit facility expiring may 2021 two bilateral credit facilities €800 million bilateral credit facility €600 million expired may june 2019 respectively bilateral credit facility contains usual customary covenants representations warranties events default credit facilities type commercial paper commercial paper program ability access 15 billion €10 billion shortterm financing commercial paper dealers subject limit unused capacity facility agreement ability intent refinance obligations longterm basis commercial paper borrowings classified longterm consolidated balance sheets december 31 2019 december 31 2018 commercial paper borrowings issued market interest rates december 31 2019 commercial paper borrowings weighted average interest rate 223 us dollar denominated borrowings 028 euro denominated borrowings synthetic bonds january 25 2016 issued €3750 million principal amount 0875 convertible bonds maturity date january 25 2021 redemption par bonds converted march 3 2016 issued additional convertible bonds principal amount €750 million issued terms fully fungible assimilated bonds issued january 25 2016 issuance nondilutive cashsettled convertible bonds “synthetic bonds” linked ordinary shares backed simultaneously purchase cashsettled equity call options order hedge economic exposure potential exercise conversion rights embedded synthetic bonds synthetic bonds cash settled result issuance new ordinary shares delivery existing ordinary shares upon conversion interest synthetic bonds payable semiannually arrears january 25 july 25 year beginning july 26 2016 net proceeds synthetic bonds used general corporate purposes finance purchase call options synthetic bonds unsecured obligations synthetic bonds rank equally right payment existing future unsubordinated debt synthetic bonds issued january 25 2016 issued par synthetic bonds issued march 3 2016 issued premium 11244 resulting adjustment 3day trading period following issuance resulting share reference price €488355 400 conversion premium applied share reference price €407940 share reference price computed using average daily volume weighted average price ordinary shares euronext paris market 10 consecutive trading days january 21 february 3 2016 initial conversion price bonds fixed €571116 synthetic bonds nominal value €1000 thousand conversion ratio 33373493 conversion price €299639 bondholder may sole option request conversion cash part bonds owns beginning november 15 2020 38th business day maturity date senior notes april 3 2018 commenced offers exchange 4598 million aggregate principal amount new 345 senior notes due october 1 2022 “senior notes” series b registered us securities act 1933 amended “securities act” outstanding restricted 345 senior notes due 2022 series “outstanding notes” previously issued private transaction subject registration requirements securities act “initial offering” refer exchange notes outstanding notes collectively “notes” terms senior notes governed indenture dated march 29 2017 technipfmc us bank national association trustee “trustee” amended supplemented first supplemental indenture technipfmc trustee “first supplemental indenture” relating issuance 2017 notes second supplemental indenture technipfmc trustee “second supplemental indenture” relating issuance 2022 notes time prior july 1 2022 case 2022 notes may redeem senior notes redemption prices specified first supplemental indenture second supplemental indenture respectively time july 1 2022 may redeem 2022 notes redemption price equal 100 principal amount 2022 notes redeemed senior notes senior unsecured obligations senior notes rank equally right payment existing future unsubordinated debt rank senior right payment future subordinated debt private placement notes july 27 2010 completed private placement €2000 million aggregate principal amount 50 notes due july 2020 “2020 notes” interest 2020 notes payable annually arrears july 27 year beginning july 27 2011 net proceeds 2020 notes used partially finance 20042011 bond issue repaid maturity date may 26 2011 2020 notes contain contains usual customary covenants events default notes type event change control resulting downgrade rating notes bbb 2020 notes may redeemed early bondholder sole discretion 2020 notes unsecured obligations 2020 notes rank equally right payment existing future unsubordinated debt june 2012 completed private placement €3250 million aggregate principal amount notes issued three tranches €1500 million bearing interest 340 due june 2022 “tranche 2022 notes” €750 million bearing interest 40 due june 2027 “tranche b 2027 notes” €1000 million bearing interest 40 due june 2032 “tranche c 2032 notes” collectively “tranche 2022 notes “tranche b 2027 notes” “2012 private placement notes” interest tranche 2022 notes tranche c 2032 notes payable annually arrears june 14 year beginning june 14 2013 interest tranche b 2027 notes payable annually arrears june 15 year beginning june 15 2013 net proceeds 2012 private placement notes used general corporate purposes 2012 private placement notes contain usual customary covenants events default notes type event change control resulting downgrade rating notes bbb 2012 private placement notes may redeemed early bondholder sole discretion 2012 private placement notes unsecured obligations 2012 private placement notes rank equally right payment existing future unsubordinated debt october 2013 completed private placement €3550 million aggregate principal amount senior notes issued three tranches €1000 million bearing interest 375 due october 2033 “tranche 2033 notes” €1300 million bearing interest 315 due october 2023 “tranche b 2023 notes €1250 million bearing interest 315 due october 2023 “tranche c 2023 notes” collectively “tranche 2033 notes “tranche b 2023 notes” “2013 private placement notes” interest tranche 2033 notes payable annually arrears october 7 year beginning october 7 2014 interest tranche b 2023 notes payable annually arrears october 16 year beginning october 16 2014 interest tranche c 2023 notes payable annually arrears october 18 year beginning october 18 2014 net proceeds 2013 private placement notes used general corporate purposes 2013 private placement notes contain contains usual customary covenants events default notes type event change control resulting downgrade rating notes bbb 2013 private placement notes may redeemed early bondholder sole discretion 2013 private placement notes unsecured obligations 2013 private placement notes rank equally right payment existing future unsubordinated debt term loan december 2016 entered £1600 million term loan agreement finance deep explorer diving support vessel “dsv” maturing december 2028 loan agreement interest accrues annual rate 2813 loan agreement contains usual customary covenants events default loans type december 30 2019 completed acquisition remaining 50 interest technip odebrecht connection acquisition assumed liabilities included 2031 million term loan 160 million due june 30 2020 remaining balance due september 30 2020 immediately following acquisition paid 131 million towards outstanding balance debt fully collateralized two vessels coral atlantico deep star previously referred estrela mar bank borrowings january 2019 executed saleleaseback transaction finance purchase deepwater dive support vessel deep discoverer “vessel” full transaction price 1168 million saleleaseback agreement “charter” entered french jointstock company owned credit industrial et commercial “cic” formed sole purpose purchase act lessor vessel variable interest entity fully consolidated condensed consolidated financial statements transaction funded debt 962 million primarily longterm expiring january 8 2031 foreign committed credit committed credit lines many international subsidiaries immaterial amounts utilize facilities asset financing provide efficient daily source liquidity effective interest rates depend upon local national market note 17 liabilities fourth quarter 2016 obtained voting control interests legal onshoreoffshore contract entities account design engineering construction yamal lng plant part transaction recognized fair value mandatorily redeemable financial liability mandatorily redeemable financial liability 2688 million 4085 million recognized december 31 2019 2018 respectively account fair value noncontrolling interests 1291 million 1730 million respectively recorded current liabilities year ended december 31 2019 revalued liability reflect current expectations obligation resulted recognition expense 4231 million year ended december 31 2019 changes fair value financial liability recorded interest expense consolidated statements income refer note 10 information regarding current liabilities refer note 25 information regarding fair value measurement assumptions mandatorily redeemable financial liability related changes fair value note 18 stockholders’ equity dividends declared paid years ended december 31 2019 2018 2017 2328 million 2381 million 606 million respectively english public limited company required uk law available “distributable reserves” conduct share repurchases pay dividends shareholders distributable reserves statutory requirement linked us gaap reported amount eg retained earnings declaration payment dividends require authorization board directors provided dividends issued share capital may paid “distributable reserves” statutory balance sheet therefore permitted pay dividends share capital includes share premium november 27 2019 redeemed 50000 redeemable shares £1 cancelled one deferred ordinary share £1 capital technipfmc following summary capital stock activity years ended december 31 2019 2018 2017 plan administrator nonqualified plan purchases shares ordinary shares open market shares placed trust owned subsidiary april 2017 board directors authorized repurchase 5000 million ordinary shares share repurchase program implemented share repurchase plan september 2017 board directors authorized extension program adding 3000 million december 2018 total 8000 million ordinary shares repurchased 40 million ordinary shares total consideration 927 million year ended december 31 2019 authorized share repurchase program 5000 million part program completed december 20 2018 intend cancel repurchased shares hold treasury canceled treasury shares accounted using constructive retirement method accumulated comprehensive income loss accumulated comprehensive income loss consisted following reclassifications accumulated comprehensive income loss reclassifications accumulated comprehensive income loss consisted following accumulated comprehensive income components included computation net periodic pension cost see note 23 additional details note 19 sharebased compensation incentive compensation award plan january 11 2017 adopted technipfmc plc incentive award plan “plan” plan provides certain incentives awards officers employees nonemployee directors consultants technipfmc subsidiaries plan allows board directors make various types awards nonemployee directors compensation committee “committee” board directors make various types awards eligible individuals awards may include share options share appreciation rights performance share units restricted share units restricted shares awards authorized plan awards subject plan’s provisions including sharebased grants previously issued fmc technologies technip prior consummation merger plan 241 million ordinary shares authorized awards december 31 2019 144 million ordinary shares available future grant exercise price options determined committee cannot less fair market value ordinary shares grant date restricted share performance share unit grants generally vest three years service plan board directors authority grant nonemployee directors share options restricted shares restricted share units performance shares unless otherwise determined board directors awards nonemployee directors generally vest one year date grant restricted share units settled director ceases services board directors december 31 2019 outstanding awards active retired nonemployee directors included 834 thousand share units measurement sharebased compensation expense restricted share awards based market price fair value grant date number shares awarded fair value performance shares estimated using combination closing stock price grant date monte carlo simulation model use blackscholes options pricing model measure fair value stock options granted january 1 2017 sharebased compensation expense award recognized ratably applicable service period beginning start service period ending employee becomes eligible retirement currently age 62 plan taking account estimated forfeitures recognize compensation expense corresponding tax benefits awards plan compensation expense plan follows december 31 2019 portion sharebased compensation expense related outstanding awards recognized future periods follows restricted share units summary nonvested restricted share units activity follows total grant date fair value restricted stock units vested years ended december 31 2019 2018 102 million 48 million respectively performance shares board directors granted certain employees senior executives directors officers restricted share units vest subject achieving satisfactory performances performance share units issued january 1 2017 performance based results return invested capital total shareholder return “tsr” performance share units vest based tsr fair value performance shares estimated using combination closing stock price grant date monte carlo simulation model weightedaverage fair value assumptions used measure fair value performance share units subject performanceadjusted vesting conditions monte carlo simulation model follows weightedaverage fair value based performance share units granted period b expected volatility based normalized historical volatility shares preceding period commensurate expected term option c 2017 riskfree rate expected term option based us treasury yield curve effect time grant awards subject servicebased vesting due lack historical exercise postvesting termination patterns postmerger employee base expected term estimated using simplified method awards granted 2019 2018 2017 summary nonvested performance share unit activity follows total grant date fair value performance share units vested years ended december 31 2019 2018 2017 133 million 70 million 333 million respectively share option awards fair value option award estimated date grant using blackscholes options pricing model share options awarded prior 2017 granted subject performance criteria based upon certain targets tsr return capital employed operating income recurring activities subsequent share options granted time based awards vesting three years weightedaverage fair value assumptions used measure fair value follows weightedaverage fair value based stock options granted period b expected volatility based normalized historical volatility shares preceding period commensurate expected term option c 2017 riskfree rate expected term option based us treasury yield curve effect time grant prior 2017 risk free rate based bond yields european central bank share options awarded 2019 2018 2017 valued using expected dividend yield 26 20 respectively e awards subject servicebased vesting due lack historical exercise postvesting termination patterns postmerger employee base expected term estimated using simplified method awards granted 2019 2018 2017 following summary option transactions years ended december 31 2019 2018 2017 weightedaverage grant date fair value increase shares due merger remains 000 order recalculate new weighted average december 31 2016 nonvested shares see note 2 aggregate intrinsic value stock options outstanding stock options exercisable december 31 2019 04 million nil respectively cash received option exercises nil years ended december 31 2019 2018 2017 respectively total intrinsic value options exercised years ended december 31 2019 2018 2017 nil respectively exercise stock options employee may choose 1 pay either directly way group savings plan stock option strike price obtain shares 2 sell shares immediately exercised stock option case employee pay strike price instead receives intrinsic value stock options cash following summarizes significant ranges outstanding exercisable options december 31 2019 note 20 impairment restructuring expense impairment restructuring expense follows asset impairments conduct impairment tests longlived assets whenever events changes circumstances indicate carrying value may recoverable carrying value longlived asset recoverable exceeds sum undiscounted cash flows expected result use eventual disposition asset’s remaining useful life review recoverability carrying value assets considers several assumptions including intended use service potential asset refer note 25 consolidated financial statements discussion method used determine fair value assets prolonged downturn energy market corresponding impact business outlook led us conclude carrying amount certain assets subsea surface technologies segments exceeded fair value year ended december 31 2019 recorded 24841 million impairment charges included impairment goodwill 13219 million 6668 million subsea surface technologies segments respectively charges also included 4954 million asset impairments including 1538 million related vessels 1689 million related flexible pipe umbilical manufacturing facilities year ended december 31 2018 recorded 17842 million impairment charges subsea segment charges included impairment goodwill vessels 13830 million 3729 million respectively year ended december 31 2017 impairment expense primarily related leasehold improvements decommissioning vacant buildings longlived assets restructuring december 2019 initiated companywide reduction workforce intended reduce costs better align workforce current anticipated activity levels resulted recognition severance costs relating termination benefits restructuring charges initial plan included workforce reduction approximately 1600 employees restructuring charges related global initiative 324 million december 30 2019 company completed acquisition remaining 50 top cv resulted net loss 09 million recorded subsea segment net loss comprised impairment charge 842 million included within impairment charges bargain purchase gain 833 million included within restructuring charges 2018 2017 initiated cost cutting measures resulting recognition severance costs related employee termination benefits expenses related consolidation facilities nonrecurring charges note 21 commitments contingent liabilities contingent liabilities associated guarantees ordinary course business enter standby letters credit performance bonds surety bonds guarantees financial institutions benefit customers vendors parties majority financial instruments expire within five years management expect financial instruments result losses incurred would material adverse effect consolidated financial position results operations cash flows guarantees consisted following financial guarantees represent contracts contingently require guarantor make payments guaranteed party based changes underlying agreement related asset liability equity security guaranteed party tend drawn failure fulfill financial obligations b performance guarantees represent contracts contingently require guarantor make payments guaranteed party based another entitys failure perform nonfinancial obligating agreement events trigger payment performancerelated failure ship product provide service management believes ultimate resolution known contingencies materially affect consolidated financial position results operations cash flows contingent liabilities associated legal matters involved various pending potential legal tax actions disputes ordinary course business management unable predict ultimate outcome actions inherent uncertainty however management believes probable ultimate resolution matters material adverse effect consolidated financial position results operations cash flows march 28 2016 fmc technologies received inquiry us department justice “doj” related dojs investigation whether certain services unaoil sam provided clients including fmc technologies violated us foreign corrupt practices act “fcpa” march 29 2016 technip sa also received inquiry doj related unaoil cooperated dojs investigations regard fmc technologies related investigation sec late 2016 technip sa contacted doj regarding investigation offshore platform projects awarded 2003 2007 performed brazil joint venture company technip sa minority participant also raised doj certain projects performed technip sa subsidiaries brazil 2002 2013 doj also inquired projects ghana equatorial guinea awarded technip sa subsidiaries 2008 2009 respectively cooperated doj investigation potential violations fcpa connection projects contacted cooperated brazilian authorities federal prosecution service “mpf” comptroller general brazil “cgu” attorney general brazil “agu” investigation concerning projects brazil also contacted cooperating french authorities parquet national financier “pnf” investigation existing matters june 25 2019 announced global resolution pay total 3013 million doj sec mpf cguagu resolve anticorruption investigations required monitor instead provide reports anticorruption program brazilian us authorities two three years respectively part resolution entered threeyear deferred prosecution agreement “dpa” doj related charges conspiracy violate fcpa related conduct brazil unaoil addition technip usa inc us subsidiary pled guilty one count conspiracy violate fcpa related conduct brazil also provide doj reports anticorruption program term dpa brazil subsidiaries technip brasil engenharia instalações e apoio marítimo ltda flexibrás tubos flexíveis ltda entered leniency agreements mpf cguagu committed part agreements make certain enhancements compliance programs brazil twoyear selfreporting period aligns commitment cooperation transparency compliance community brazil globally september 2019 sec approved previously disclosed agreement principle sec staff issued administrative order pursuant paid sec 51 million included global resolution 3013 million date investigation pnf related historical projects equatorial guinea ghana reached resolution remain committed finding resolution pnf maintain 700 million provision related investigation continue progress discussions pnf towards resolution amount settlement could exceed provision certainty settlement pnf reached settlement exceed current accruals pnf broad range potential sanctions anticorruption laws regulations may seek impose appropriate circumstances including limited fines penalties modifications business practices compliance programs measures applicable us well potential customer reaction measures could material adverse impact business results operations financial condition cannot reach resolution pnf could subject criminal proceedings france outcome cannot predicted contingent liabilities associated liquidated damages contracts contain provisions require us pay liquidated damages responsible failure meet specified contractual milestone dates applicable customer asserts conforming claim provisions contracts define conditions customers may make claims us liquidated damages based upon evaluation performance commercial legal analysis management believes appropriately recognized probable liquidated damages december 31 2019 2018 ultimate resolution matters materially affect consolidated financial position results operations cash flows note 22 income taxes components income loss income taxes us outside us components income loss income taxes follows provision income tax provision income taxes consisted deferred tax assets liabilities significant components deferred tax assets liabilities follows december 31 2019 2018 carrying amount net deferred tax assets related valuation allowance included impact foreign currency translation adjustments nondeductible interest december 31 2019 deferred tax assets include tax benefits related certain intercompany interest costs currently deductible may deductible future periods utilized costs become permanently nondeductible beginning 2025 management believes likely able deduct costs expiration carry forward period therefore established valuation allowance related deferred tax assets foreign tax credit carryforwards december 31 2019 deferred tax assets included us foreign tax credit carryforwards 1353 million utilized begin expire 2024 realization deferred tax assets dependent generation sufficient us taxable income prior date based longterm forecasts operating results management believes likely us earnings forecast period result sufficient us taxable income fully realize deferred tax assets therefore established valuation allowance related deferred tax assets analysis management considered effect deemed dividends expected adjustments us earnings required determining us taxable income nonus earnings subject us tax including deemed dividends us tax purposes 38 million 2019 3076 million 2018 13 billion 2017 net operating loss carryforwards december 31 2019 deferred tax assets included tax benefits related net operating loss carryforwards utilized net operating loss carryforwards begin expire 2020 management believes likely able utilize certain operating loss carryforwards expiration therefore established valuation allowance related deferred tax assets majority net operating loss carryforwards brazil canada malaysia mexico netherlands norway saudi arabia uk united states except canada mexico netherlands tax loss carryforwards extend indefinitely certain adjustments valuation allowance net increase valuation allowance december 31 2018 december 31 2019 includes certain adjustments impact net tax expense adjustments include 1059 million deferred tax assets recorded 2019 related certain previously unrecorded tax credits netherlands malaysia subject full valuation allowance addition company wrote 420 million fully valued deferred tax assets including 330 million recorded certain affiliates sold 2018 2019 company also reclassified 179 million fully valued deferred tax assets future tax benefits based uncertain tax positions unrecognized tax benefits following table presents summary changes unrecognized tax benefits amounts reported uncertain tax positions excludes interest penalties 01 million 28 million 59 million december 31 2019 2018 2017 respectively interest penalties relating uncertain tax positions included tax expense consolidated financial statements reasonably possible within twelve months 21 million liabilities unrecognized tax benefits settled amount reflected income taxes payable remaining balance unrecognized tax benefits recorded long term liabilities operate numerous jurisdictions around world could subject multiple tax audits given time notably following tax years thereafter remain subject examination 2010 norway 2016 nigeria 2015 brazil 2017 france 2016 united states technipfmc plc public limited company incorporated laws england wales therefore earnings subject united kingdom statutory rate 190 2019 2018 193 2017 effective income tax rate reconciliation effective income tax rate different statutory uk income tax rate due following us tax cuts jobs act tcja jurisdictional tax reform included 2017 2018 provisions income taxes related deemed repatriation united states foreign earnings tax cuts jobs act tcja signed us law december 22 2017 made significant changes us federal income taxation nonus corporate subsidiaries controlled one us shareholders part changes tcja required deemed repatriation accumulated nonus earnings tcja generally requires last taxable year nonus corporation beginning january 1 2018 us shareholders corporation least 10percent usowned must include income pro rata share corporation’s accumulated post1986 deferred foreign income previously subject us tax accordingly company recorded income tax expense approximately 1487 million 2017 associated deemed repatriation approximately 26 billion nonus earnings previously subject us tax company recorded additional income tax expense 118 million 2018 associated deemed repatriation approximately 307 million nonus earnings previously subject us tax result deemed repatriation us income tax provided undistributed earnings nonus subsidiaries company’s us affiliates december 31 2017 cumulative balance undistributed earnings approximately 29 billion december 31 2017 also included 2017 provision income taxes result revaluation deferred tax attributes result changes corporate tax rates part jurisdictional tax reform tax expense revaluation us deferred tax attributes 189 million tax benefit revaluation deferred tax attributes foreign jurisdictions 97 million 2018 tax expense jurisdictional corporate tax rate reform 256 million income tax holidays benefit income tax holidays singapore malaysia expire 2023 singapore 2020 malaysia year ended december 31 2019 tax holidays reduced provision income taxes 34 million 001 per share diluted basis note 23 pension postretirement benefit plans funded unfunded defined benefit pension plans provide defined benefits based years service final average salary december 31 2017 amended us retirement plans “plans” freeze benefit accruals participants plans december 31 2017 date participants plans longer accrue benefits participants’ benefits plans determined based credited service eligible earnings december 31 2017 foreignbased employees eligible participate technipfmcsponsored governmentsponsored benefit plans contribute several foreign defined benefit pension plans sponsored us provide employee contributions remaining plans noncontributory significant plans netherlands france united kingdom postretirement benefit plans covering substantially us unionized employees postretirement health care plans contributory postretirement life insurance plans noncontributory required recognize funded status defined benefit postretirement plans asset liability consolidated balance sheet recognize changes funded status comprehensive income year changes occur required measure plan’s assets obligations determine funded status date consolidated balance sheet applied guidance domestic pension postretirement benefit plans well many nonus plans including united kingdom germany france canada pension expense measured compliance gaap nonus pension plans materially different locally reported pension expense funded status us pension plans certain foreign pension plans us postretirement health care life insurance benefit plans together associated balances recognized consolidated balance sheets december 31 2019 2018 follows following table summarizes pretax amounts accumulated comprehensive income loss december 31 2019 2018 recognized components net periodic benefit cost following tables summarize projected accumulated benefit obligations fair values plan assets projected accumulated benefit obligation exceeds fair value plan assets december 31 2019 2018 following table summarizes components net periodic benefit cost income years ended december 31 2019 2018 2017 following table summarizes changes plan assets benefit obligations recognized comprehensive income loss years ended december 31 2019 2018 2017 included accumulated comprehensive income loss december 31 2019 noncash pretax charges yet recognized net periodic benefit cost income estimated amounts expected amortized portion component accumulated comprehensive income loss component net period benefit cost income next fiscal year follows key assumptions following weightedaverage assumptions used determine benefit obligations following weightedaverage assumptions used determine net periodic benefit cost estimate expected rate return plan assets primarily based historical performance plan assets current market conditions asset allocation longterm growth expectations plan assets pension investment strategy emphasizes maximizing returns consistent balancing risk excluding international plans insurancebased investments 99 total pension plan assets represent us qualified plan uk plan netherlands plan plans primarily invested equity securities maximize longterm returns plans investment managers assets including hedge funds limited partnerships use graham dodd fundamental investment analysis select securities margin safety price security estimated value security valueoriented approach tends mitigate risk large equity allocation following description valuation methodologies used pension plan assets changes methodologies used december 31 2019 2018 • cash valued cost approximates fair value • equity securities comprised common stock preferred stock fair values equity securities valued closing price reported active market securities traded • fair values registered investment companies commoncollective trusts valued based quoted market prices represent net asset value “nav” shares held registered investment companies primarily include investments emerging market bonds commoncollective trusts primarily includes money market instruments short maturities • insurance contracts valued book value approximates fair value calculated using prioryear balance plus minus investment returns changes cash flows • fair values hedge funds valued using nav determined administrator custodian fund funds primarily invest us international equities debt securities hedge funds • fair values limited partnerships valued using nav determined administrator custodian fund partnerships primarily invest us international equities debt securities • real estate investments primarily consists real estate investment trusts investments measured quoted market prices represent nav securities held funds year end pension plan assets measured fair value recurring basis follows december 31 2019 2018 refer “fair value measurements” note 1 consolidated financial statements description levels certain investments measured fair value using net asset value per share equivalent classified fair value hierarchy contributions expect contribute approximately 69 million international pension plans representing primarily netherlands qualified pension plans uk qualified pension plans expect make contributions us qualified pension plan us nonqualified defined benefit pension plan 2020 contributions expected form cash 2019 2018 contributed 69 million 185 million pension plans respectively estimated future benefit payments following table summarizes expected benefit payments various pension postretirement benefit plans 2028 actual benefit payments may differ expected benefit payments savings plans technipfmc retirement savings plan “qualified plan” qualified salary reduction plan section 401k internal revenue code defined contribution plan additionally nonqualified deferred compensation plan nonqualified plan allows certain highly compensated employees option defer receipt portion salary match portion participants’ deferrals plans relate fmc technologies inc participants nonqualified plan earn return based hypothetical investments options 401k plan including technipfmc plc stock “fti stock fund” march 2019 fti stock fund removed nonqualified plan changes market value participant investments reflected adjustment deferred compensation liability offset income expense net december 31 2019 2018 liability nonqualified plan 263 million 228 million respectively recorded liabilities hedge financial impact changes participants’ hypothetical investments purchasing investments participants chosen exception technipfmc plc stock maintained cost basis changes fair value investments recognized offset income expense net december 31 2019 2018 investments nonqualified plan totaling 263 million 214 million fair market value respectively december 31 2019 2018 technipfmc stock held trust nil 24 million cost basis respectively refer note 25 consolidated financial statements fair value disclosure nonqualified plan investments recognized expense 340 million 318 million matching contributions plans 2019 2018 respectively additionally recognized expense 132 million 143 million nonelective contributions 2019 2018 respectively note 24 derivative financial instruments purposes mitigating effect changes exchange rates hold derivative financial instruments hedge risks certain identifiable anticipated transactions recorded assets liabilities consolidated balance sheets types risks hedged relating variability future earnings cash flows caused movements foreign currency exchange rates policy hold derivatives purpose hedging risks associated anticipated foreign currency purchases sales created normal course business trading purposes objective solely generate profit generally enter hedging relationships changes fair values cash flows transactions hedged expected offset corresponding changes fair value derivatives derivative instruments qualify cash flow hedge effective portion gain loss derivative include time value component forward currency rate reported component comprehensive income “oci” reclassified earnings period periods hedged transaction affects earnings derivative instruments designated hedging instruments change fair value instruments reflected earnings period change occurs hold following types derivative instruments foreign exchange rate forward contracts purpose instruments hedge risk changes future cash flows anticipated purchase sale commitments denominated foreign currencies recorded assets liabilities consolidated balance sheets december 31 2019 held following material net positions foreign exchange rate instruments embedded purchase sale contracts purpose instruments match offsetting currency payments receipts particular projects comply government restrictions currency used purchase goods certain countries december 31 2019 portfolio instruments included following material net positions fair value amounts outstanding derivative instruments determined using available market information commonly accepted valuation methodologies refer note 25 consolidated financial statements disclosures related fair value measurement process accordingly estimates presented may indicative amounts would realize current market exchange may indicative gains losses may ultimately incur contracts settled following table presents location fair value amounts derivative instruments reported consolidated balance sheets cash flow hedges forecasted transactions net tax qualify hedge accounting resulted accumulated comprehensive losses 58 million 330 million december 31 2019 2018 respectively expect transfer approximately 36 million loss accumulated oci earnings next 12 months anticipated transactions actually occur anticipated transactions currently hedged expected occur second half 2023 following tables present location gains losses consolidated statements income related derivative instruments designated cash flow hedges following represents effect cash flow hedge accounting consolidated statements income year ended december 31 2019 2018 2017 balance sheet offsetting execute derivative contracts counterparties consent master netting agreement permits net settlement gross derivative assets gross derivative liabilities instrument accounted individually assets liabilities offset december 31 2019 2018 collateralized derivative contracts following tables present gross information net information recognized derivative instruments note 25 fair value measurements recurring fair value measurements assets liabilities measured fair value recurring basis follows includes fixed income investments measured fair value b certain investments measured fair value using net asset value per share equivalent classified fair value hierarchy equity securities availableforsale securities fair value measurement traded securities availableforsalesecurities based quoted prices ability access public markets stable value fund money market fund stable value fund money market fund valued net asset value shares held end quarter based fair value underlying investments using information reported investment advisor quarterend heldtomaturity debt securities heldtomaturity debt securities consist government bonds investments stated amortized cost approximates fair value assets liabilities held sale fair value assets liabilities held sale determined using market approach took consideration expected sales price mandatorily redeemable financial liability fourth quarter 2016 obtained voting control interests legal onshoreoffshore contract entities account design engineering construction yamal lng plant part transaction recognized fair value mandatorily redeemable financial liability using discounted cash flow model key assumptions used applying income approach selected discount rates expected dividends distributed future noncontrolling interest holders expected dividends distributed based noncontrolling interests’ share expected profitability underlying contract selected discount rate overall timing completion project mandatorily redeemable financial liability 2688 million 4085 million 3120 million recognized december 31 2019 2018 2017 respectively account fair value noncontrolling interests year ended december 31 2019 2018 2017 revalued liability reflect current expectations obligation resulted recognition loss 4231 million 3223 million 2937million respectively decrease one percentage point discount rate would increased liability 34 million december 31 2019 fair value measurement based upon significant unobservable inputs observable market consequently classified level 3 fair value measurement change fair value level 3 mandatorily redeemable financial liability recorded interest expense consolidated statements income presented redeemable noncontrolling interest first quarter 2018 acquired 51 share island offshore noncontrolling interest recorded mezzanine equity fair value fair value measurement based upon significant unobservable inputs observable market consequently classified level 3 fair value measurement december 31 2019 fair value redeemable noncontrolling interest 411 million refer note 2 consolidated financial statements additional disclosure related acquisition derivative financial instruments use income approach valuation technique measure fair value foreign currency derivative instruments recurring basis approach calculates present value future cash flow measuring change derivative contract rate published market indicative currency rate multiplied contract notional values credit risk incorporated reducing derivative’s fair value asset positions result multiplying present value portfolio counterparty’s published credit spread portfolios liability position adjusted calculation however spread representing credit spread used credit spread credit spread counterparties publicly available approximated using spread similar companies industry similar size credit rating present time creditriskrelated contingent features agreements financial institutions would require us post collateral derivative positions liability position refer note 24 consolidated financial statements additional disclosure related derivative financial instruments nonrecurring fair value measurements fair value longlived nonfinancial assets longlived nonfinancial assets measured fair value nonrecurring basis purposes calculating impairment recoverable amount assets determined less book value assets 2019 recorded certain longlived asset impairments primarily related vessels machinery equipment subsea segment due intent sell g1201 vessel subsequently signed memorandum agreement moa third party reviewed carrying value sister vessel g1200 september 30 2019 result assessment impairment charge recorded two vessels bring carrying value combined fair value 1040 million september 30 2019 fair value measurements vessels based transaction price moa level 2 observable input per fair value hierarchy remaining longlived assets impaired 2019 measured fair value estimating amount timing net future cash flows level 3 unobservable inputs discounting using riskadjusted rate interest 108 december 31 2019 impaired assets recorded fair value 2385 million refer note 20 additional disclosure related asset impairments fair value disclosures fair value debt fair value synthetic bonds senior notes private placement notes follows carrying amounts include unamortized debt discounts premiums unamortized debt issuance costs 91 million 114 million 2019 2018 respectively b fair values based level 2 quoted market rates fair value disclosures carrying amounts cash equivalents trade receivables accounts payable shortterm debt commercial paper debt associated bank borrowings credit facilities convertible bonds well amounts included current assets current liabilities meet definition financial instruments approximate fair value credit risk nature financial instruments involve risk including credit risk nonperformance counterparties financial instruments potentially subject us credit risk primarily consist trade receivables derivative contracts manage credit risk financial instruments transacting management believes financially secure counterparties requiring credit approvals credit limits monitoring counterparties’ financial condition maximum exposure credit loss event nonperformance counterparty limited amount drawn outstanding financial instrument allowances losses trade receivables established based collectibility assessments mitigate credit risk derivative contracts executing contracts counterparties consent master netting agreement permits net settlement gross derivative assets gross derivative liabilities note 26 quarterly information unaudited 1 basic diluted earnings loss per share computed independently quarters presented therefore sum quarterly basic diluted per share information may equal annual basic diluted earnings loss per share item 9nanitem 8 financial statements supplementary data report independent registered public accounting firm board directors shareholders technipfmc plc opinion financial statements audited accompanying consolidated balance sheet technipfmc plc subsidiaries “the company” december 31 2017 related consolidated statement income comprehensive income cash flows changes stockholders’ equity year ended december 31 2017 including related notes financial statement schedule listed index appearing item 15a2 collectively referred “consolidated financial statements” opinion consolidated financial statements present fairly material respects financial position company december 31 2017 results operations cash flows year period ended december 31 2017 conformity accounting principles generally accepted united states america basis opinion consolidated financial statements responsibility companys management responsibility express opinion company’s consolidated financial statements based audits public accounting firm registered public company accounting oversight board united states “pcaob” required independent respect company accordance us federal securities laws applicable rules regulations securities exchange commission pcaob conducted audits consolidated financial statements accordance standards pcaob standards require plan perform audit obtain reasonable assurance whether consolidated financial statements free material misstatement whether due error fraud company required engaged perform audit internal control financial reporting part audit required obtain understanding internal control financial reporting purpose expressing opinion effectiveness companys internal control financial reporting accordingly express opinion audits included performing procedures assess risks material misstatement consolidated financial statements whether due error fraud performing procedures respond risks procedures included examining test basis evidence regarding amounts disclosures consolidated financial statements audits also included evaluating accounting principles used significant estimates made management well evaluating overall presentation consolidated financial statements believe audits provide reasonable basis opinion pricewaterhousecoopers llp houston texas april 2 2018 served companys auditor since 2017 report independent registered public accounting firm board directors shareholders technipfmc plc opinion accompanying consolidated balance sheets related consolidated statements income comprehensive income cash flows changes stockholders’ equity present fairly material respects financial position technipfmc plc subsidiaries december 31 2016 results operations cash flows two years period ended december 31 2016 conformity accounting principles generally accepted united states america addition opinion financial statement schedule listed index appearing item 15a2 presents fairly material respects information set forth therein read conjunction related consolidated financial statements financial statements financial statement schedule responsibility company’s management responsibility express opinion financial statements financial statement schedule based audits conducted audits financial statements accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements assessing accounting principles used significant estimates made management evaluating overall financial statement presentation believe audits provide reasonable basis opinion pricewaterhousecoopers audit paris france april 2 2018 technipfmc plc consolidated subsidiaries consolidated statements income accompanying notes integral part consolidated financial statements technipfmc plc consolidated subsidiaries consolidated statements comprehensive income 1 net income tax expense benefit 115 nil years ended december 31 2017 2016 2015 respectively 2 net income tax expense benefit 525 243 47 years ended december 31 2017 2016 2015 respectively 3 net income tax expense benefit 117 10 93 years ended december 31 2017 2016 2015 respectively accompanying notes integral part consolidated financial statements accompanying notes integral part consolidated financial statements technipfmc plc consolidated subsidiaries consolidated statements cash flows accompanying notes integral part consolidated financial statements technipfmc plc consolidated subsidiaries consolidated statements changes stockholders’ equity accompanying notes integral part consolidated financial statements technipfmc plc consolidated subsidiaries notes consolidated financial statements note 1 basis presentation summary significant accounting policies nature operationstechnipfmc plc consolidated subsidiaries “technipfmc” “we” “us” “our” global leader oil gas projects technologies systems services business segments subsea onshoreoffshore surface technologies manufacturing operations worldwide strategically located facilitate delivery products systems services customers basis presentationour consolidated financial statements prepared us dollars accordance accounting principles generally accepted united states america “gaap” rules regulations securities exchange commission “sec” pertaining annual financial information annual report form 10k reporting results operations year ended december 31 2017 consist combined results operations technip sa “technip” fmc technologies inc “fmc technologies” due merger fmc technologies technip fmc technologies’ results operations included financial statements periods subsequent consummation merger january 16 2017 since technipfmc successor company technip presenting results technip’s operations years ended december 31 2016 december 31 2015 december 31 2016 refer note 2 information related merger fmc technologies technip principles consolidationthe consolidated financial statements include accounts technipfmc majorityowned subsidiaries affiliates intercompany accounts transactions eliminated consolidation use estimatesthe preparation financial statements conformity gaap requires management make estimates assumptions affect reported amounts assets liabilities disclosures contingent assets liabilities date financial statements reported amounts revenue expenses reporting period actual results could differ estimates include limited estimates total contract profit loss longterm constructiontype contracts estimated realizable value excess obsolete inventory estimates related pension accounting estimates related fair value purposes assessing goodwill longlived assets intangible assets impairment estimate fair value business combinations estimates related income taxes investments common stock unconsolidated affiliatesthe equity method accounting used account investments unconsolidated affiliates ability exert significant influence affiliates operating financial policies cost method accounting used significant influence affiliate present certain construction joint ventures use proportionate consolidation method whereby proportionate share entity’s assets liabilities revenues expenses included appropriate classifications accompanying consolidated financial statements intercompany balances transactions eliminated preparing accompanying consolidated financial statements investments unconsolidated affiliates assessed impairment whenever events changes facts circumstances indicate carrying value investments may fully recoverable condition subjectively determined temporary carrying value investment written fair value management’s assessment whether decline value temporary based ability intent hold investment whether evidence indicating carrying value investment recoverable within reasonable period time outweighs evidence contrary management generally considers investments equity method investees strategic longterm investments completes assessments impairment longterm viewpoint investments ownership less 20 represent significant investments reported assets consolidated balance sheets active market exists valuation method used financial assets maintained historical cost less accumulated impairment losses determine whether investments involve variable interest entity “vie” based characteristics subject entity determined vie management determines primary beneficiary entity whether consolidation vie required primary beneficiary consolidating vie must normally power direct activities significantly affect vie’s economic performance ii obligation absorb significant losses right receive significant benefits vie deemed primary beneficiary vie consolidated party’s equity interest vie accounted noncontrolling interest unconsolidated vies accounted using equity method accounting business combinationsbusiness combinations accounted using acquisition method accounting acquisition method assets acquired liabilities assumed recorded respective fair values acquisition date determining fair value assets liabilities involves significant judgment regarding methods assumptions used calculate estimated fair values purchase price allocated assets assumed liabilities identifiable intangible assets based estimated fair values excess purchase price estimated fair values net assets acquired recorded goodwill transaction related costs expensed incurred revenue recognitionrevenue generally recognized following four criteria met persuasive evidence arrangement exists ii delivery equipment occurred upon shipment customerspecific acceptance requirements met services rendered iii price equipment service fixed determinable iv collectibility reasonably assured record sales net value added sales use tax certain constructiontype manufacturing assembly projects involve significant design engineering efforts satisfy detailed customer specifications revenue recognized using percentage completion method accounting percentage completion method revenue recognized work progresses contract apply ratio costs incurred date total estimated contract costs completion physical progress defined main deliverables contracts possible form reliable estimate progress toward completion revenue costs recognized project complete substantially complete expected losses constructiontype contracts progress charged earnings total period losses identified modifications constructiontype contracts referred “change orders” effectively change provisions original contract may example alter specifications design method manner performance equipment materials sites andor period completion work change order represents firm price commitment customer account revised estimate included original estimate effectively recognizing pro rata impact new estimate calculation progress toward completion period firm commitment received change order unpriced 1 include costs contract performance calculation progress toward completion period costs incurred become probable 2 determined revenue probable recovery include change order revenue limited costs incurred date related change order calculation progress toward completion unpriced change orders included revenue immaterial consolidated revenue periods presented margin recorded unpriced change orders unless realization assured beyond reasonable doubt assessment realization may based upon previous experience customer based upon receipt firm price commitment customer progress billings generally issued upon completion certain phases work stipulated contract revenue excess progress billings reported costs estimated earnings excess billings uncompleted contracts consolidated balance sheets progress billings cash collections excess revenue recognized contract classified billings excess costs estimated earnings uncompleted contracts advance payments respectively consolidated balance sheets operating profit year ended december 31 2017 positively impacted approximately 3784 million result changes contract estimates related projects progress december 31 2016 year ended december 31 2017 recognized favorable changes estimates impact margin amounts 3250 million 534 million onshoreoffshore subsea segment’s respectively changes contract estimates attributed better expected performance throughout execution projects cash equivalentscash equivalents highlyliquid shortterm instruments original maturities generally three months less date purchase trade receivables net allowancesan allowance doubtful accounts provided receivables equal estimated uncollectible amounts estimate based historical collection experience specific review customer’s receivables balance inventoriesinventories stated lower cost net realizable value except relates inventory measured using lastin firstout “lifo” method inventories stated lower cost market inventory costs include costs directly attributable products including manufacturing overhead excluding costs distribute cost significant portion us domiciled inventories determined lifo method firstin firstout “fifo” weighted average methods used determine cost remaining inventories writedown inventories recorded net realizable value inventories lower net book value property plant equipmentproperty plant equipment recorded cost depreciation principally provided straightline basis estimated useful lives assets vessels10 30 years buildings10 50 years machinery equipment3 20 years gains losses realized upon sale retirement assets recorded income expense net consolidated statements income maintenance repair costs expensed incurred expenditures extend useful lives property plant equipment capitalized depreciated estimated new remaining life asset impairment property plant equipmentproperty plant equipment reviewed impairment whenever events changes circumstances indicate carrying value longlived asset may recoverable carrying value asset group recoverable exceeds sum undiscounted cash flows expected result use eventual disposition asset determined impairment loss occurred impairment loss measured amount carrying value longlived asset exceeds fair value longlived assets classified held sale reported lower carrying value fair value less cost sell goodwillgoodwill subject amortization tested impairment annual basis frequently impairment indicators arise comparing estimated fair value reporting unit carrying value including goodwill reporting unit defined operating segment one level operating segment established october 31 date annual test impairment goodwill reporting units goodwill tested impairment using quantitative impairment test known income approach estimates fair value discounting reporting unit’s estimated future cash flows using weightedaverage cost capital reflects current market conditions risk profile reporting unit arrive future cash flows use estimates economic market assumptions including growth rates revenues costs estimates future expected changes operating margins tax rates cash expenditures future revenues also adjusted match changes business strategy fair value reporting unit less carrying amount result method impairment loss recorded lower fair value estimate future reporting units could result goodwill impairments factors could trigger lower fair value estimate include sustained price declines reporting unit’s products services cost increases regulatory political environment changes customer demand changes market conditions may affect certain market participant assumptions used discounted future cash flow model intangible assetsour acquired intangible assets generally amortized straightline basis estimated useful lives generally range 2 20 years acquired intangible assets indefinite lives intangible assets reviewed impairment whenever events changes circumstances indicate carrying amount intangible asset may recoverable carrying amount intangible asset recoverable exceeds sum undiscounted cash flows expected result use eventual disposition asset determined impairment loss occurred loss measured amount carrying amount intangible asset exceeds fair value capitalized software costs recorded cost capitalized software costs include purchases software internal external costs incurred application development stage software projects costs amortized straightline basis estimated useful lives internal use software useful lives range three ten years internet website costs estimated useful lives exceed three years debt instrumentsdebt instruments include convertible synthetic bonds senior private placement notes borrowings issuance fees redemption premium debt instruments included cost debt consolidated balance sheets adjustment nominal amount debt loan origination costs revolving credit facilities recorded asset amortized life underlying debt fair value measurementsfair value defined price would received sell asset paid transfer liability exit price orderly transaction market participants reporting date fair value framework requires categorization assets liabilities measured fair value three levels based upon assumptions inputs used price assets liabilities exception certain assets liabilities measured using net asset value practical expedient required leveled level 1 provides reliable measure fair value whereas level 3 generally requires significant management judgment three levels defined follows • level 1 unadjusted quoted prices active markets identical assets liabilities • level 2 observable inputs quoted prices included level 1 example quoted prices similar assets liabilities active markets quoted prices identical assets liabilities inactive markets • level 3 unobservable inputs reflecting management’s assumptions market participants would use pricing asset liability income taxescurrent income taxes provided income reported financial statement purposes adjusted transactions enter computation income taxes payable year deferred tax assets liabilities measured using enacted tax rates expected future tax consequences temporary differences carrying amounts tax basis assets liabilities valuation allowance established whenever management believes likely deferred tax assets may realizable income taxes provided equity undistributed earnings foreign subsidiaries affiliates extent determined earnings indefinitely reinvested income taxes provided earnings period longer support earnings indefinitely reinvested tax benefits related uncertain tax positions recognized likely based technical merits position sustained upon examination classify interest expense penalties recognized underpayments income taxes income tax expense sharebased employee compensationthe measurement sharebased compensation expense restricted share awards performance share awards based market price grant date number shares awarded used cox ross rubinstein binomial model measure fair value stock options granted prior december 31 2016 blackscholes options pricing model measure fair value stock options granted january 1 2017 stockbased compensation expense award recognized ratably applicable service period beginning start service period ending employee becomes eligible retirement taking account estimated forfeitures ordinary shares held employee benefit trustour ordinary shares purchased plan administrator fmc technologies inc nonqualified savings investment plan placed trust purchased shares recorded cost classified reduction stockholders’ equity consolidated balance sheets treasury sharestreasury shares held recorded reduction stockholders’ equity using cost method gain loss related sale treasury shares included stockholders’ equity canceled treasury shares accounted using constructive retirement method shares repurchased excess par allocate value capital excess par value ordinary shares retained earnings using weighted average method identify net original issue proceeds cost shares repurchased earnings per ordinary share “eps”basic eps computed using weightedaverage number ordinary shares outstanding year use treasury stock method compute diluted eps gives effect potential dilution earnings could occurred additional shares issued awards granted incentive compensation stock plan treasury stock method assumes proceeds would obtained upon exercise awards granted incentive compensation stock plan used purchase outstanding ordinary shares average market price period convertible bonds could converted exchangeable new existing shares would additionally result dilution earnings per share ordinary shares assumed converted issuance date included compute diluted eps ifconverted method additionally net profit period adjusted converted aftertax interest expense related dilutive shares foreign currencyfinancial statements operations us dollar functional currency located nonhighly inflationary countries translated us dollars prior consolidation assets liabilities translated exchange rate effect balance sheet date income statement accounts translated average exchange rate period operations translation gains losses recorded component accumulated comprehensive income loss stockholders’ equity foreign entity sold liquidated operations highly inflationary countries local currency functional currency inventories property plant equipment noncurrent assets converted us dollars historical exchange rates gains losses conversion included net income foreign currency effects cash equivalents debt hyperinflationary economies included interest income expense certain committed anticipated future cash flows recognized assets liabilities denominated foreign currency may choose manage risk changes exchange rates compared functional currency economic netting exposures instead derivative instruments cash outflows liabilities foreign currency matched cash inflows assets currency movements exchanges rates result offsetting gains losses due inherent unpredictability timing cash flows gains losses current period may economically offset gains losses future period gains losses recorded consolidated statements income period incurred gains losses remeasurement assets liabilities recognized income expense net derivative instrumentsderivatives recognized consolidated balance sheets fair value classification current noncurrent based upon maturity derivative instrument changes fair value derivative instruments recorded current earnings deferred accumulated comprehensive income loss depending type hedging transaction whether derivative designated effective hedge instrument accounted individually assets liabilities offset hedge accounting applied derivative deemed highly effective offsetting changes anticipated cash flows hedged item transaction changes fair value derivatives designated cash flow hedges deferred accumulated comprehensive income loss underlying transactions recognized earnings time related deferred hedging gains losses recorded earnings line hedged item effectiveness assessed inception hedge quarterly basis effectiveness forward contract cash flow hedges assessed based solely changes fair value attributable change spot rate change fair value contract related change forward rates excluded assessment hedge effectiveness changes excluded component derivative instrument along ineffectiveness identified recorded earnings incurred document risk management strategy hedge effectiveness inception term hedge also use forward contracts hedge foreign currency assets liabilities apply hedge accounting changes fair value contracts recognized income expense net consolidated statements income occur offset gains losses remeasurement related asset liability note 2 merger fmc technologies technip description merger fmc technologies technip june 14 2016 fmc technologies technip entered definitive business combination agreement providing business combination among fmc technologies fmc technologies sis limited private limited company incorporated laws england wales whollyowned subsidiary fmc technologies technip august 4 2016 legal name fmc technologies sis limited changed technipfmc limited january 11 2017 subsequently reregistered technipfmc plc public limited company incorporated laws england wales january 16 2017 business combination completed pursuant terms definitive business combination agreement technip merged technipfmc continuing surviving company “technip merger” ordinary share technip “technip shares” technip shares owned technip whollyowned subsidiaries exchanged 20 ordinary shares technipfmc subject terms definitive business combination agreement immediately following technip merger whollyowned indirect subsidiary technipfmc “merger sub” merged fmc technologies fmc technologies continuing surviving company whollyowned indirect subsidiary technipfmc “fmcti merger” share common stock fmc technologies “fmcti shares” fmcti shares owned fmc technologies technipfmc merger sub whollyowned subsidiaries exchanged 10 ordinary share technipfmc subject terms definitive business combination agreement acquisition method accounting technip identified accounting acquirer acquired 100 interest fmc technologies merger fmc technologies technip “merger” created larger diversified company better equipped respond economic industry developments better positioned develop build offerings subsea surface onshoreoffshore markets compared former companies standalone basis importantly merger brought ability combined company standardize product service offerings customers ii reduce costs customers iii provide integrated product offerings oil gas industry aim innovate markets combined company operates incurred merger transaction integration costs 1018 million 926 million years ended december 31 2017 2016 respectively description fmc technologies accounting acquiree fmc technologies global provider technology solutions energy industry fmc technologies designs manufactures services technologically sophisticated systems products including subsea production processing systems surface wellhead production systems high pressure fluid control equipment measurement solutions marine loading systems energy industry subsea systems produced fmc technologies used offshore production crude oil natural gas placed seafloor control flow crude oil natural gas reservoir host processing facility additionally fmc technologies provides full range drilling completion production wellhead systems standard customengineered applications surface wellhead production systems trees used control regulate flow crude oil natural gas well used onshore offshore applications consideration transferred acquisitiondate fair value consideration transferred consisted following 1 calculation deemed reflect share capital increase accounting acquirer fmc technologies exchange ratio 1 share technipfmc 1 share fmc technologies provided business combination agreement adjusted dividing fmc technologies exchange ratio technip exchange ratio 2 shares technipfmc 1 share technip provided business combination agreement ie 1 ⁄ 2 05 order reflect number shares technip fmc technologies stockholders would received technip issued shares 2 closing price technip’s ordinary shares euronext paris january 16 2017 euro converted euro us dollar exchange rate 10594 january 16 2017 assets acquired liabilities assumed following table summarizes final allocation fair values assets acquired liabilities assumed acquisition date segment allocation goodwill final allocation goodwill reporting segments based final valuation follows goodwill calculated excess consideration transferred net assets recognized represents expected revenue cost synergies combined company described goodwill recognized result acquisition deductible tax purposes acquired identifiable intangible assets identifiable intangible assets acquired include following fmc technologies’ results operations included financial statements periods subsequent consummation merger january 16 2017 fmc technologies contributed revenues net loss 34411 million 2512 million respectively period january 17 2017 december 31 2017 pro forma impact merger unaudited following unaudited supplemental pro forma results present consolidated information merger completed january 1 2016 pro forma results include potential synergies cost savings expected benefits merger accordingly pro forma results considered indicative results would occurred merger consummated january 1 2016 indicative future results comparative purposes weighted average shares outstanding used diluted earnings per share calculation year ended december 31 2017 also used calculate diluted earnings per share year ended december 31 2016 note 3 new accounting standards recently adopted accounting standards effective january 1 2017 adopted accounting standards update “asu” 201609 “improvements employee sharebased payment accounting” among amendments update requires excess tax benefits deficiencies recognized income tax expense benefit income statement eliminates requirement reclassify excess tax benefits deficiencies operating activities financing activities statement cash flows updated guidance also gives entity election either estimate forfeiture rate employee stockbased awards ii account forfeitures occur elected retrospectively classify excess tax benefits deficiencies operating activity amounts immaterial periods presented reflected income taxes payable net line item accompanying consolidated statement cash flows addition elected continue estimate forfeitures grant date account estimated number awards requisite service period rendered adoption update material impact consolidated financial statements effective january 1 2017 adopted asu 201511 “simplifying measurement inventory” update requires scope inventory measured lower cost net realizable value rather lower cost market existing guidance adopted updated guidance prospectively adoption update material impact consolidated financial statements effective january 1 2017 adopted asu 201415 “disclosure uncertainties entity’s ability continue going concern” update states substantial doubt exists probable entity unable meet current future obligations disclosures required conditions give rise substantial doubt however management need assess plans alleviate substantial doubt determine specific disclosures company adopted standard 2017 management believe substantial doubt entitys ability continue going concern effective september 30 2017 early adopted asu 201704 “simplifying test goodwill impairment” update eliminates step two goodwill impairment test annual interim goodwill test performed comparing fair value reporting unit carrying amount income tax effects tax deductible goodwill carrying amount reporting unit also considered measuring applicable goodwill impairment loss updated guidance also eliminates requirements reporting unit zero negative carrying amount perform qualitative assessment fails qualitative assessment perform step two goodwill impairment test goodwill amount allocated reporting unit zero negative carrying amount net assets required disclosed adoption update material impact consolidated financial statements recently issued accounting standards may 2014 financial accounting standards board “fasb” issued asu 201409 “revenue contracts customers topic 606” update requires entity recognize revenue depict transfer promised goods services customers amount reflects consideration entity expects entitled exchange goods services asu supersede existing gaap related revenue recognition supersede cost guidance existing gaap related constructiontype productiontype contract accounting additionally asu significantly increase disclosures related revenue recognition august 2015 fasb issued asu 201514 deferred effective date asu 201409 one year result effective us january 1 2018 march 2016 fasb issued asu 201608 “principal versus agent considerations reporting revenue gross versus net” clarifies implementation guidance principal versus agent considerations early application permitted original effective date january 1 2017 entities permitted apply amendments either retrospectively prior reporting period presented retrospectively cumulative effect initially applying asu recognized date initial application new standard requires companies identify contractual performance obligations determine whether revenue recognized point time based control goods services transfer customer result expect changes presentation financial statements including 1 timing revenue recognition 2 changes classification revenue costs performed detailed review contract portfolio representative different businesses compared historical accounting policies practices new standard course 2017 formed implementation work team conducted training relevant staff regarding detailed overview key changes within new standard engaged external resources assist us efforts establishing new policies procedures controls establishing appropriate presentation disclosure changes adopted new revenue recognition guidance using modified retrospective transition method effective quarter ending march 31 2018 applying guidance contracts customers substantially complete january 1 2018 financial results reporting periods january 1 2018 presented new guidance financial results prior periods continue reported accordance prior guidance historical accounting policy evaluated impact new guidance substantial portion contracts customers including identification differences result new requirements based analysis performed date anticipate significant changes revenue recognition believe guidance surrounding identification contracts performance obligations measurement variable consideration material impact revenue recognition arrangements expect disclosures related revenue recognition expand address new quantitative qualitative requirements regarding nature amount timing revenue contracts customers additional information related contract assets liabilities january 2016 fasb issued asu 201601 “recognition measurement financial assets financial liabilities” update addresses certain aspects recognition measurement presentation disclosure financial instruments among amendments update requires equity investments accounted equity method accounting measured fair value changes fair value recognized net income entity may choose measure equity investments readily determinable fair values cost minus impairment plus minus changes resulting observable price changes orderly transactions identical similar investment issuer updated guidance also simplifies impairment assessment equity investments without readily determinable fair values eliminates requirement disclose significant assumptions methods used estimate fair value financial instruments measured amortized cost updated guidance requires use exit price notion measuring fair value financial instruments disclosure purposes amendments asu effective us january 1 2018 amendments required adopted modified retrospective basis two exceptions amendments related equity investments without readily determinable fair values requirement use exit price notion required adopted prospectively early adoption permitted currently evaluating impact asu consolidated financial statements february 28 2018 fasb issued asu 201803 “technical corrections improvements financial instrumentsoverallsubtopic82510recognition measurement financial assets financial liabilities clarifies guidance asu 201601 financial instrumentsoverall subtopic 82510” amendments clarify guidance asu 201601 financial instrumentsoverall subtopic 82510 following issues among things equity securities without readily determinable fair valuediscontinuation equity securities without readily determinable fair value adjustments forward contracts purchase options presentation requirements certain fair value option liabilities fair value option liabilities denominated foreign currency transition guidance equity securities without readily determinable fair value amendments asu effective us january 1 2018 conjunction adoption asu 201601 currently evaluating impact asu consolidated financial statements february 2016 fasb issued asu 201602 “leases” update requires lessee recognize statement financial position liability make lease payments rightofuse asset representing right use underlying asset lease term leases term 12 months less lessee permitted make accounting policy election class underlying asset recognize lease assets lease liabilities similar current guidance update continues differentiate finance leases operating leases however distinction primarily relates differences manner expense recognition time classification lease payments statement cash flows updated guidance leaves accounting leases lessors largely unchanged existing gaap early application permitted entities required use modified retrospective adoption certain relief provisions leases exist entered beginning earliest comparative period financial statements adopted guidance become effective us january 1 2019 impacts adoption asu expected consolidated financial statements related disclosures evaluated additionally determined effect asu internal control financial reporting changes business practices processes june 2016 fasb issued asu 201613 “financial instrumentscredit losses” update introduces new model recognizing credit losses financial instruments based estimate current expected credit losses updated guidance applies loans accounts receivable trade receivables financial assets measured amortized cost ii loan commitments offbalance sheet credit exposures iii debt securities financial assets measured fair value comprehensive income iv beneficial interests securitized financial assets amendments asu effective us january 1 2020 required adopted modified retrospective basis early adoption permitted currently evaluating impact asu consolidated financial statements august 2016 fasb issued asu 201615 “classification certain cash receipts cash payments” update amends existing guidance statement cash flows provides guidance eight classification issues related statement cash flows amendments asu effective us january 1 2018 required adopted retrospectively issues impracticable adopt retrospectively amendments may adopted prospectively earliest date practicable early adoption permitted asu expected material impact consolidated financial statements october 2016 fasb issued asu 201616 “intraentity transfers assets inventory” update requires income tax consequences recognized intraentity transfer asset inventory transfer occurs amendments asu effective us january 1 2018 required adopted modified retrospective basis early adoption permitted asu expected material impact consolidated financial statements january 2017 fasb issued asu 201701 “clarifying definition business” update clarifies definition business provides screen determine set assets activities business screen requires substantially fair value gross assets acquired disposed concentrated single identifiable asset group similar identifiable assets set assets business amendments asu effective us january 1 2018 required adopted prospectively early adoption permitted asu expected material impact consolidated financial statements february 2017 fasb issued asu 201705 “clarifying scope asset derecognition guidance accounting partial sales nonfinancial assets” update defines insubstance nonfinancial asset unifies guidance related partial sales nonfinancial assets eliminates rules specifically addressing sale real estate removes exceptions financial asset derecognition model clarifies accounting contributions nonfinancial assets joint ventures amendments asu effective us january 1 2018 required adopted either full retrospective approach modified retrospective approach asu expected material impact consolidated financial statements march 2017 fasb issued asu 201707 “improving presentation net periodic pension cost net periodic postretirement benefit cost” update requires employers disaggregate service cost component components net benefit cost disclose amount net benefit cost included income statement capitalized assets line item updated guidance requires employers report service cost component line items compensation costs report pensionrelated costs include interest costs amortization pensionrelated costs prior periods gains losses plan assets separately exclude subtotal operating income updated guidance also allows service cost component eligible capitalization applicable amendments asu effective us january 1 2018 early adoption permitted guidance requires adoption retrospective basis presentation service cost component components net periodic pension cost net periodic postretirement benefit cost income statement prospective basis capitalization service cost component net periodic pension cost net periodic postretirement benefit assets adopt asu january 1 2018 asu expected material impact consolidated financial statements may 2017 fasb issued asu 201709 “scope modification accounting” update provides clarity changes terms conditions sharebased payment award must accounted modifications amendments asu effective us january 1 2018 required adopted prospectively adopt asu january 1 2018 asu expected material impact consolidated financial statements august 2017 fasb issued asu 201712 “targeted improvements accounting hedging activities” update improves financial reporting hedging relationships better portray economic results entitys risk management activities financial statements make certain targeted improvements simplify application hedge accounting guidance current gaap amendments update better align entitys risk management activities financial reporting hedging relationships changes designation measurement guidance qualifying hedging relationships presentation hedge results amendments asu effective us january 1 2019 early adoption permitted cash flow net investment hedges adoption date guidance requires modified retrospective approach amended presentation disclosure guidance required adopted prospectively currently evaluating impact asu consolidated financial statements february 14 2018 fasb issued asu 201802 “income statementreporting comprehensive income topic 220 reclassification certain tax effects accumulated comprehensive income aoci” amendments provide option reclassify stranded tax effects aoci retained earnings period effect change us federal corporate tax rate tax cuts jobs act portion thereof recorded asu requires financial statement disclosures indicate description accounting policy releasing income tax effects aoci whether election reclassify stranded income tax effects tax cuts jobs act information income tax effects reclassified amendments affect organization required apply provisions topic 220 income statementreporting comprehensive income items comprehensive income related tax effects presented comprehensive income required gaap amendments asu effective us january 1 2019 currently evaluating impact asu consolidated financial statements note 4 earnings per share reconciliation number shares used basic diluted earnings per share calculation follows note 5 impairment restructuring expense impairment restructuring expense follows asset impairmentswe conduct impairment tests longlived assets whenever events changes circumstances indicate carrying value may recoverable carrying value longlived asset recoverable exceeds sum undiscounted cash flows expected result use eventual disposition asset’s remaining useful life review recoverability carrying value assets considers several assumptions including intended use service potential asset 2017 impairment expense primarily related leasehold improvements decommissioning vacant buildings longlived assets 2016 2015 impairment expense primarily associated restructuring plan discussed restructuring otherin july 2015 result decline crude oil prices effect demand products services oilfield services industry worldwide initiated companywide reduction workforce facility consolidation “july 2015 plan” intended reduce costs better align workforce current anticipated activity levels resulted continued recognition severance costs relating termination benefits restructuring charges initial plan included workforce reduction approximately 6000 employees significant part restructuring plan focused onshoreoffshore segment reduced presence north america latin america asia europe subsea segment reduced presence north sea additionally 2017 initiated cost cutting measures resulted restructuring expense primarily related termination lease contracts year ended december 31 2016 part restructuring plan divested deconsolidated wholly owned subsidiaries technip germany holding gmbh technip germany gmbh note 6 inventories consisted following amounts table reported net obsolescence reserves 708 million 388 million december 31 2017 2016 respectively net inventories accounted lifo method totaled 3009 million december 31 2017 net inventories accounted lifo method december 31 2016 current replacement costs lifo inventories exceeded recorded values 06 million december 31 2017 reduction base lifo inventory 2017 note 7 current assets current assets consisted following note 8 equity method investments equity method accounting used account investments unconsolidated affiliates ability exert significant influence affiliates operating financial policies certain construction joint ventures use proportionate consolidation method whereby proportionate share entity’s assets liabilities revenues expenses included appropriate classifications accompanying consolidated financial statements none proportionate consolidation investments individually aggregate significant consolidated results 2017 2016 2015 equity investments follows december 31 2017 income loss equity affiliates included reporting segments follows summarized financial information2summarized financial information equity method investments presented 2016 2015 major equity method investments follows technip odebrecht technip odebrecht plsv cv “technip odebrecht” affiliated company form joint venture technip sa odebrecht oleo gas technip odebrecht formed 2011 awarded contract provide pipeline installation ships statecontrolled petroleo brasileiro sa “petrobras” work oil gas fields offshore brazil accounted 50 investment using equity method accounting results reported subsea segment dofcon brasil “dofcon” affiliated company form joint venture technip sa dof subsea founded 2006 dofcon provides pipelaying support vessels plsvs work oil gas fields offshore brazil dofcon considered vie sufficient equity finance activities without additional subordinated financial primarily beneficiary vie accounted 50 investment using equity method accounting results reported subsea segment serimax holdings sas “serimax” affiliated company form joint venture technip sa vallourec sa founded 2016 serimax headquartered paris france provides rigid pipes welding services work oil gas fields around world accounted 20 investment using equity method accounting results reported subsea segment fstp brasil fstp brasil ltda “fstp brasil” affiliated company form joint venture technip brasil engenharia instalações e apoio marítimo ltda keppel fels brasil sa fstp brasil formed 2003 operate engineering construction manufacture repair offshore platforms vessels segments especially oil natural gas companies accounted 25 investment using equity method accounting results reported subsea segment yamgaz 2015 yamgaz affiliated company form joint venture technip jgc corporation “jgc” chiyoda international corporation “chiyoda” yamgaz formed 2013 awarded contract carry engineering procurement supply construction commissioning integrated facility natural gas liquefaction based resources south tambey gas condensate field located yamal peninsula russia fourth quarter 2016 obtained voting control interests legal onshoreoffshore contract entities account design engineering construction yamal lng plant prior amendments contractual terms provided us voting interest control accounted 50 investment using equity method accounting results reported onshoreoffshore segment subsequent transaction recorded results consolidated financial information following table presents summarized financial information equity method investments 1 discussed fourth quarter 2016 obtained voting control interests legal onshoreoffshore entities account design engineering construction yamal result acquisition consolidation recorded 35 billion cash 6017 million advances suppliers 711 million intangibles 38 billion current liabilities 1912 million noncurrent liabilities 77 million gain 2 december 31 2017 equity method investments longer significant individually aggregate summarized financial information 2017 presented note 9 related party transactions receivables payables revenues expenses included consolidated financial statements transactions related parties defined entities related directors main shareholders well partners consolidated joint ventures follows member board directors serves board directors anadarko table includes trade receivable balances 223 million anadarko december 31 2017 well 425 million tp jgc coral france snc 138 million technip odebrecht plsv cv companies equity method affiliates trade receivables balance december 31 2016 includes 988 million 258 million dofcon brasil technip odebrecht plsv cv respectively equity method affiliates balance trade payables includes 524 million jgc corporation 483 million chiyoda jv partners yamal project december 31 2017 trade payables balance december 31 2016 includes 503 million 643 million jgc corporation chiyoda respectively 460 million heerema joint venture partner one consolidated subsidiaries note receivables balance includes 1149 million 1042 million dofcon brasil december 31 2017 2016 respectively dofcon brasil vie accounted equity method affiliate included noncurrent assets consolidated balance sheets revenue table includes 1113 million anadarko 699 million tp jgc coral france snc equity method affiliate year ended december 31 2017 revenue years ended december 31 2016 2015 included 1967 million 2724 million respectively yamgaz equity method affiliate time expense activity year ended december 31 2017 includes 468 million jgc corporation 441 million chiyoda expense activity year ended december 31 2016 includes 713 million heerema year ended december 31 2015 expense activity individually significant related party note 10 property plant equipment property plant equipment consisted following depreciation expense 3702 million 2832 million 3153 million 2017 2016 2015 respectively amount interest cost capitalized material years presented note 11 goodwill intangible assets goodwillwe record goodwill excess purchase price fair value net assets acquired acquisitions accounted purchase method accounting test goodwill impairment annually frequently circumstances indicate possible impairment identify potential impairment comparing fair value applicable reporting unit net book value including goodwill net book value exceeds fair value reporting unit measure impairment comparing carrying value reporting unit fair value test goodwill impairment comparing fair value reporting units net carrying value october 31 year impairment analysis quantitative however includes subjective estimates based assumptions regarding future growth rates interest rates operating expenses lower fair value estimate future reporting units could result goodwill impairments factors could trigger lower fair value estimate include sustained price declines reporting unit’s products services cost increases regulatory political environment changes customer demand changes market conditions may affect certain market participant assumptions used discounted future cash flow model based internal forecasts revenues expenses specified period plus terminal value income approach income approach estimates fair value discounting reporting unit’s estimated future cash flows using weightedaverage cost capital reflects current market conditions risk profile reporting unit arrive future cash flows use estimates economic market assumptions including growth rates revenues costs estimates future expected changes operating margins tax rates cash expenditures future revenues also adjusted match changes business strategy believe approach appropriate valuation method riskadjusted discount rate applied future cash flows 108 excess fair value carrying amount reporting units ranged approximately 15 excess 200 respective carrying amounts carrying amount goodwill reporting segment follows intangible assetsthe components intangible assets follows connection merger recorded identifiable intangible assets acquired refer note 2 consolidated financial statements additional information regarding merger acquired identifiable intangible assets subject amortization applicable foreign currency translation adjustments recorded 2445 million 175 million 234 million amortization expense related intangible assets years ended december 31 2017 2016 2015 respectively years 2018 2022 annual amortization expense expected follows 1735 million 2018 1241 million 2019 1148 million 2020 1091 million 2021 1066 million 2022 7057 million thereafter note 12 current liabilities current liabilities consisted following note 13 debt shortterm debt current portion longterm debtshortterm debt current portion longterm debt consisted following longterm debtlongterm debt consisted following 1 december 31 2017 2016 committed credit available revolving credit facility provided ability refinance commercial paper obligations longterm basis maturities debt december 31 2017 payable follows revolving credit facilityon january 17 2017 acceded new 25 billion senior unsecured revolving credit facility agreement “facility agreement” fmc technologies inc technip eurocash snc “borrowers” jpmorgan chase bank national association agent arranger sg americas securities llc arranger lenders party thereto facility agreement provides establishment multicurrency revolving credit facility includes 15 billion letter credit subfacility subject certain conditions borrowers may request aggregate commitments facility agreement increased additional 5000 million facility expires january 2022 borrowings facility agreement bear interest following rates plus applicable margin depending currency • us dollardenominated loans bear interest borrowers’ option base rate adjusted rate linked london interbank offered rate “adjusted libor” • sterlingdenominated loans bear interest adjusted libor • eurodenominated loans bear interest euro interbank offered rate “euribor” depending credit rating technipfmc applicable margin revolving loans varies case adjusted libor euribor loans 0820 1300 ii case base rate loans 0000 0300 “base rate” highest prime rate announced jpmorgan b greater federal funds rate overnight bank funding rate plus 05 c onemonth adjusted libor plus 10 facility agreement contains usual customary covenants representations warranties events default credit facilities type including financial covenants requiring total capitalization ratio exceed 60 end financial quarter facility agreement also contains covenants restricting ability subsidiaries ability incur additional liens indebtedness enter asset sales make certain investments bilateral credit facilitieswe access four bilateral credit facilities aggregate €3400 million bilateral credit facilities consist • two credit facilities €800 million expiring may 2019 • credit facility €800 million expiring june 2019 • credit facility €1000 million expiring may 2021 bilateral credit facility contains usual customary covenants representations warranties events default credit facilities type commercial paperunder commercial paper program ability access 15 billion €10 billion shortterm financing commercial paper dealers subject limit unused capacity facility agreement ability intent refinance obligations longterm basis commercial paper borrowings classified longterm consolidated balance sheets december 31 2017 december 31 2016 commercial paper borrowings issued market interest rates december 31 2017 commercial paper borrowings weighted average interest rate 178 us dollar denominated borrowings 027 euro denominated borrowings synthetic bondson january 25 2016 issued €3750 million principal amount 0875 convertible bonds maturity date january 25 2021 redemption par bonds converted march 3 2016 issued additional convertible bonds principal amount €750 million issued terms fully fungible assimilated bonds issued january 25 2016 issuance nondilutive cashsettled convertible bonds “synthetic bonds” linked ordinary shares backed simultaneously purchase cashsettled equity call options order hedge economic exposure potential exercise conversion rights embedded synthetic bonds synthetic bonds cash settled result issuance new ordinary shares delivery existing ordinary shares upon conversion interest synthetic bonds payable semiannually arrears january 25 july 25 year beginning july 26 2016 net proceeds synthetic bonds used general corporate purposes finance purchase call options synthetic bonds unsecured obligations synthetic bonds rank equally right payment existing future unsubordinated debt synthetic bonds issued january 25 2016 issued par synthetic bonds issued march 3 2016 issued premium 11243802 resulting adjustment 3day trading period following issuance resulting share reference price €488355 400 conversion premium applied share reference price €407940 share reference price computed using average daily volume weighted average price ordinary shares euronext paris market 10 consecutive trading days january 21 february 3 2016 initial conversion price bonds fixed €571116 synthetic bonds nominal value €1000 thousand conversion ratio 34646193 conversion price €288632 bondholder may sole option request conversion cash part bonds owns beginning november 15 2020 38th business day maturity date convertible bondson december 15 2011 issued 5178455 bonds convertible “20112017 convertible bonds” andor exchangeable new existing shares “oceane” approximately €4976 million maturity date january 1 2017 net proceeds issuance used partially restore cash balance position following acquisition global industries ltd december 2011 cash consideration 9364 million maturity outstanding amounts 20112017 convertible bonds repaid senior noteson february 28 2017 commenced offers exchange outstanding notes issued fmc technologies 8000 million aggregate principal amount new notes issued technipfmc cash conjunction offers exchange fmc technologies solicited consents adopt certain proposed amendments indentures governing previously issued notes eliminate certain covenants restrictive provisions events defaults indentures march 29 2017 settled offers exchange consent solicitations “exchange offers” 200 senior notes due october 1 2017 “2017 fmc notes” issued fmc technologies aggregate principal amount 3000 million new 200 senior notes due october 1 2017 “2017 senior notes’ issued technipfmc cash ii 345 senior notes due october 1 2022 “2022 fmc notes” issued fmc technologies aggregate principal amount 5000 million new 345 senior notes due october 1 2022 “2022 senior notes” issued technipfmc registration rights cash pursuant exchange offers issued approximately 2154 million aggregate principal amount 2017 senior notes 4598 million aggregate principal amount 2022 senior notes collectively “senior notes” interest 2017 senior notes payable october 1 2017 interest 2022 senior notes payable semiannually arrears april 1 october 1 year beginning october 1 2017 terms senior notes governed indenture dated march 29 2017 technipfmc us bank national association trustee “trustee” amended supplemented first supplemental indenture technipfmc trustee “first supplemental indenture” relating issuance 2017 notes second supplemental indenture technipfmc trustee “second supplemental indenture” relating issuance 2022 notes maturity outstanding amounts 2017 senior notes repaid time prior july 1 2022 case 2022 notes may redeem senior notes redemption prices specified first supplemental indenture second supplemental indenture respectively time july 1 2022 may redeem 2022 notes redemption price equal 100 principal amount 2022 notes redeemed senior notes senior unsecured obligations senior notes rank equally right payment existing future unsubordinated debt rank senior right payment future subordinated debt private placement noteson july 27 2010 completed private placement €2000 million aggregate principal amount 50 notes due july 2020 “2020 notes” interest 2020 notes payable annually arrears july 27 year beginning july 27 2011 net proceeds 2020 notes used partially finance 20042011 bond issue repaid maturity date may 26 2011 2020 notes contain contains usual customary covenants events default notes type event change control resulting downgrade rating notes bbb 2020 notes may redeemed early bondholder sole discretion 2020 notes unsecured obligations 2020 notes rank equally right payment existing future unsubordinated debt june 2012 completed private placement €3250 million aggregate principal amount notes issued three tranches €1500 million bearing interest 340 due june 2022 “tranche 2022 notes” €750 million bearing interest 40 due june 2027 “tranche b 2027 notes” €1000 million bearing interest 40 due june 2032 “tranche c 2032 notes” collectively “tranche 2022 notes “tranche b 2027 notes” “2012 private placement notes” interest tranche 2022 notes tranche c 2032 notes payable annually arrears june 14 year beginning june 14 2013 interest tranche b 2027 notes payable annually arrears june 15 year beginning june 15 2013 net proceeds 2012 private placement notes used general corporate purposes 2012 private placement notes contain usual customary covenants events default notes type event change control resulting downgrade rating notes bbb 2012 private placement notes may redeemed early bondholder sole discretion 2012 private placement notes unsecured obligations 2012 private placement notes rank equally right payment existing future unsubordinated debt october 2013 completed private placement €3550 million aggregate principal amount senior notes issued three tranches €1000 million bearing interest 375 due october 2033 “tranche 2033 notes” €1300 million bearing interest 315 due october 2023 “tranche b 2023 notes €1250 million bearing interest 315 due october 2023 “tranche c 2023 notes” collectively “tranche 2033 notes “tranche b 2023 notes” “2013 private placement notes” interest tranche 2033 notes payable annually arrears october 7 year beginning october 7 2014 interest tranche b 2023 notes payable annually arrears october 16 year beginning october 16 2014 interest tranche c 2023 notes payable annually arrears october 18 year beginning october 18 2014 net proceeds 2013 private placement notes used general corporate purposes 2013 private placement notes contain contains usual customary covenants events default notes type event change control resulting downgrade rating notes bbb 2013 private placement notes may redeemed early bondholder sole discretion 2013 private placement notes unsecured obligations 2013 private placement notes rank equally right payment existing future unsubordinated debt term loanin december 2016 entered £1600 million term loan agreement finance deep explorer diving support vessel “dsv” maturing december 2028 loan agreement interest accrues annual rate 2813 loan agreement contains usual customary covenants events default loans type foreign committed creditwe committed credit lines many international subsidiaries immaterial amounts utilize facilities asset financing provide efficient daily source liquidity effective interest rates depend upon local national market note 14 liabilities fourth quarter 2016 obtained voting control interests legal onshoreoffshore contract entities account design engineering construction yamal lng plant prior amendments contractual terms provided us voting interest control accounted entities equity method accounting based previously held interests entities since nearly substantive processes perform execute obligations underlying contract conducted technipfmc noncontrolling interest holders accounted entities acquisition upon obtaining control recognized net gain 77 million 2016 december 31 2016 total assets liabilities equity related entities consolidated onto balance sheet results operations year ended december 31 2017 reflect consolidated results operations related entities refer note 8 information regarding acquisition consolidation entities mandatorily redeemable financial liability 1748 million recognized december 31 2016 account fair value noncontrolling interests 337 million recorded current liabilities year ended december 31 2017 revalued liability reflect current expectations obligation resulted recognition loss 2937 million year ended december 31 2017 changes fair value financial liability recorded interest expense consolidated statements income refer note 12 information regarding current liabilities refer note 21 information regarding fair value measurement assumptions mandatorily redeemable financial liability related changes fair value note 15 commitments contingent liabilities commitments associated leaseswe lease office space manufacturing facilities various types manufacturing data processing equipment leases real estate generally provide payment property taxes insurance repairs us substantially leases classified operating leases rent expense operating leases amounted 3692 million 3135 million 3816 million 2017 2016 2015 respectively march 2014 entered construction operating lease agreements finance construction manufacturing office facilities located houston tx january 2016 construction facilities completed operating lease commenced upon expiration operating lease september 2021 option renew lease purchase facilities remarket facilities behalf lessor including certain guarantees residual value remarketing option december 31 2017 future minimum rental payments noncancellable operating leases contingent liabilities associated guaranteesin ordinary course business enter standby letters credit performance bonds surety bonds guarantees financial institutions benefit customers vendors parties majority financial instruments expire within five years management expect financial instruments result losses incurred would material adverse effect consolidated financial position results operations cash flows guarantees consisted following 1 financial guarantees represent contracts contingently require guarantor make payments guaranteed party based changes underlying agreement related asset liability equity security guaranteed party tend drawn failure fulfill financial obligations 2 performance guarantees represent contracts contingently require guarantor make payments guaranteed party based another entitys failure perform nonfinancial obligating agreement events trigger payment performance related failure ship product provide service management believes ultimate resolution known contingencies materially affect consolidated financial position results operations cash flows contingent liabilities associated legal matterswe involved various pending potential legal actions disputes ordinary course business management unable predict ultimate outcome actions inherent uncertainty however management believes probable ultimate resolution matters material adverse effect consolidated financial position results operations cash flows march 28 2016 fmc technologies received inquiry us department justice doj related dojs investigation whether certain services unaoil sam provided clients including fmc technologies violated us foreign corrupt practices act fcpa march 29 2016 technip sa also received inquiry doj related unaoil cooperating dojs investigations regard fmc technologies related investigation us securities exchange commission late 2016 technip sa contacted doj regarding investigation offshore platform projects awarded 2003 2007 performed brazil joint venture company technip sa minority participant also raised doj certain projects performed technip sa subsidiaries brazil 2002 2013 doj also inquired projects ghana equatorial guinea awarded technip sa subsidiaries 2008 2009 respectively cooperating doj investigation potential violations fcpa connection projects also contacted brazilian authorities cooperating investigation concerning projects brazil certain government investigations identified issues relating potential noncompliance applicable laws regulations including fcpa brazilian law related historic matters us authorities broad range civil criminal sanctions fcpa laws regulations may seek impose corporations individuals appropriate circumstances including limited fines penalties modifications business practices compliance programs authorities entered agreements obtained range sanctions numerous public corporations individuals arising allegations improper payments whereby civil andor criminal penalties imposed recent civil criminal settlements included fines tens hundreds millions dollars deferred prosecution agreements guilty pleas sanctions including requirement relevant corporation retain monitor oversee compliance fcpa brazilian authorities also range sanctions available recently imposed substantial fines corporations anticorruption violations remedial measures applicable us well potential customer reaction remedial measures could material adverse impact business results operations financial condition contingent liabilities associated liquidated damagessome contracts contain provisions require us pay liquidated damages responsible failure meet specified contractual milestone dates applicable customer asserts conforming claim provisions contracts define conditions customers may make claims us liquidated damages based upon evaluation performance commercial legal analysis management believes appropriately recognized probable liquidated damages december 31 2017 2016 ultimate resolution matters materially affect consolidated financial position results operations cash flows note 16 stockholders’ equity dividends declared paid year ended december 31 2017 606 million dividends declared paid year ended december 31 2016 based results year ended december 31 2015 €2366 million dividends paid cash shares amount €1008 million €1358 million respectively dividends declared paid year ended december 31 2015 based results year ended december 31 2014 €2258 million dividends paid cash shares amount €889 million €1369 million respectively english public limited company required uk law available “distributable reserves” conduct share repurchases pay dividends shareholders distributable reserves statutory requirement linked us gaap reported amount eg retained earnings december 31 2017 distributable reserves excess 101 billion following summary capital stock activity years ended december 31 2017 2016 2015 plan administrator nonqualified plan purchases shares ordinary shares open market shares placed trust owned fmc technologies april 2017 board directors authorized repurchase 5000 million ordinary shares share repurchase program implemented share repurchase plan september 2017 repurchased 585 million ordinary shares year ended december 31 2017 authorized share repurchase program intend cancel repurchased shares hold treasury canceled treasury shares accounted using constructive retirement method accumulated comprehensive income lossaccumulated comprehensive income loss consisted following reclassifications accumulated comprehensive income lossreclassifications accumulated comprehensive income loss consisted following accumulated comprehensive income components included computation net periodic pension cost see note 18 additional details note 17 income taxes components income loss income taxesus outside us components income loss income taxes follows provision income taxthe provision income taxes consisted deferred tax assets liabilitiessignificant components deferred tax assets liabilities follows december 31 2017 2016 carrying amount net deferred tax assets related valuation allowance included impact foreign currency translation adjustments nondeductible interest december 31 2017 deferred tax assets include tax benefits related certain intercompany interest costs currently deductible may deductible future periods utilized costs become permanently nondeductible beginning 2025 management believes likely able deduct costs expiration carry forward period therefore established valuation allowance related deferred tax assets foreign tax credit carryforwards december 31 2017 deferred tax assets included us foreign tax credit carryforwards 349 million utilized begin expire 2024 realization deferred tax assets dependent generation sufficient us taxable income prior date based longterm forecasts operating results management believes likely us earnings forecast period result sufficient us taxable income fully realize deferred tax assets therefore established valuation allowance related deferred tax assets analysis management considered effect deemed dividends expected adjustments us earnings required determining us taxable income nonus earnings subject us tax including deemed dividends us tax purposes 14 billion 2017 nil 2016 2015 net operating loss carryforwards december 31 2017 deferred tax assets included tax benefits related net operating loss carryforwards utilized net operating loss carryforwards begin expire 2018 management believes likely able utilize certain operating loss carryforwards expiration therefore established valuation allowance related deferred tax assets majority net operating loss carryforwards came brazil entity 3156 million saudi arabia entity 1968 million mexico entity 1270 million france entity 932 million uk entity 1210 million finland entity 577 million except statutory carryforward loss time limit ie finland mexico tax loss carryforwards extend indefinitely unrecognized tax benefitsthe following table presents summary changes unrecognized tax benefits associated interest penalties1 1 unrecognized tax benefits prior 2016 december 31 2017 2016 2015 963 million 166 million nil respectively unrecognized tax benefits recognized would affect annual effective tax rate reasonably possible within twelve months significant portion unrecognized tax benefits related certain tax reporting positions taken prior periods could decrease due either expiration statute limitations certain jurisdictions resolution current income tax examinations included additions tax positions related purchase accounting 452 million potential adjustments intercompany interest expense pertaining financing structure norway operate numerous jurisdictions around world could subject multiple tax audits given time notably following tax years thereafter remain subject examination 2006 norway 2013 nigeria 2012 brazil 2014 united states result merger technipfmc plc public limited company incorporated laws england wales therefore earnings subject united kingdom statutory rate 193 beginning effective date merger previously earnings subject french statutory rate 344 consolidated effective income tax rate information presented accordingly merger transaction generally nontaxable event significant jurisdictions operate date merger company recorded 3063 million deferred tax liability related purchase accounting effective income tax rate reconciliationthe effective income tax rate different statutory federal income tax rate due following us tax cuts jobs act tcja jurisdictional tax reform included 2017 provision income taxes related deemed repatriation united states foreign earnings tax cuts jobs act tcja signed us law december 22 2017 made significant changes us federal income taxation nonus corporate subsidiaries controlled one us shareholders part changes tcja required onetime deemed repatriation accumulated nonus earnings tcja generally requires last taxable year nonus corporation beginning january 1 2018 us shareholders corporation least 10percent usowned must include income pro rata share corporation’s accumulated post1986 deferred foreign income previously subject us tax accordingly company recorded income tax expense approximately 1487 million 2017 associated deemed repatriation approximately 29 billion nonus earnings previously subject us tax company recorded current tax payable associated deemed repatriation also included 2017 provision income taxes result revaluation deferred tax attributes result changes corporate tax rates part jurisdictional tax reform tax expense revaluation us deferred tax attributes 189 million tax benefit revaluation deferred tax attributes foreign jurisdictions 97 million january 17 2017 company recorded deferred tax asset 777 million related carryforward usforeign tax credits deferred tax asset offset valuation allowance 777 million resulting net carrying value deferred tax asset related carryforward us foreign tax credits zero january 17 2017 deemed repatriation allowed utilization 321 million foreign tax credit carryforwards accordingly company recorded tax benefit 321 million fourth quarter 2017 related utilization tax assets december 31 2017 company recorded deferred tax asset 349 million related carryforward us foreign tax credits deferred tax asset offset valuation allowance 349 million resulting net carrying value deferred tax asset associated carryforward us foreign tax credits zero december 31 2017 result deemed repatriation us income tax provided undistributed earnings nonus subsidiaries company’s us affiliates december 31 2017 cumulative balance undistributed earnings approximately 29 billion december 31 2017 currently evaluating provisions united states tax reform enacted december 2017 fourth quarter 2017 recorded provision income taxes preliminary assessment impact tax reform necessary information analyze income tax effects tax reform provisional amount believe represents reasonable estimate accounting implications tax reform continue evaluate tax reform adjust provisional amounts additional information obtained ultimate impact tax reform may differ provisional amounts due changes interpretations assumptions well additional regulatory guidance may issued expect complete detailed analysis later fourth quarter 2018 date merger cumulative balance legacy fmc technologies foreign earnings respect provision us income taxes recorded 23 billion although parent company technipfmc since changed jurisdictions undistributed foreign earnings previously reported would still liable us income taxes light 2017’s tax reform entirety previously untaxed foreign earnings taxed via deemed repatriation accounted included transition tax eliminates company’s liability earnings income tax holidays benefit income tax holidays singapore malaysia expire 2018 singapore 2020 malaysia year ended december 31 2017 tax holidays reduced provision income taxes 44 million 001 per share diluted basis note 18 pension postretirement benefit plans funded unfunded defined benefit pension plans provide defined benefits based years service final average salary december 31 2017 amended retirement plans “plans” freeze benefit accruals participants plans december 31 2017 date participants plans longer accrue benefits participants’ benefits plans determined based credited service eligible earnings december 31 2017 foreignbased employees eligible participate technipfmcsponsored governmentsponsored benefit plans contribute several foreign defined benefit pension plans sponsored us provide employee contributions remaining plans noncontributory significant plans netherlands france norway united kingdom postretirement benefit plans covering substantially us employees hired prior january 1 2003 postretirement health care plans contributory postretirement life insurance plans noncontributory required recognize funded status defined benefit postretirement plans asset liability consolidated balance sheet recognize changes funded status comprehensive income year changes occur required measure plan’s assets obligations determine funded status date consolidated balance sheet applied guidance domestic pension postretirement benefit plans well many nonus plans including united kingdom norway germany france canada pension expense measured compliance gaap nonus pension plans materially different locally reported pension expense funded status us pension plans certain foreign pension plans us postretirement health care life insurance benefit plans together associated balances recognized consolidated balance sheets december 31 2017 2016 follows following table summarizes pretax amounts accumulated comprehensive income loss december 31 2017 2016 recognized components net periodic benefit cost following tables summarize projected accumulated benefit obligations fair values plan assets projected accumulated benefit obligation exceeds fair value plan assets december 31 2017 2016 following table summarizes components net periodic benefit cost income years ended december 31 2017 2016 2015 following table summarizes changes plan assets benefit obligations recognized comprehensive income loss years ended december 31 2017 2016 2015 included accumulated comprehensive income loss december 31 2017 noncash pretax charges yet recognized net periodic benefit cost income estimated amounts expected amortized portion component accumulated comprehensive income loss component net period benefit cost income next fiscal year follows key assumptionsthe following weightedaverage assumptions used determine benefit obligations following weightedaverage assumptions used determine net periodic benefit cost estimate expected rate return plan assets primarily based historical performance plan assets current market conditions asset allocation longterm growth expectations plan assetsour pension investment strategy emphasizes maximizing returns consistent balancing risk excluding international plans insurancebased investments 98 total pension plan assets represent us qualified plan uk plan norway plan netherlands plan plans primarily invested equity securities maximize longterm returns plans investment managers assets including hedge funds limited partnerships use graham dodd fundamental investment analysis select securities margin safety price security estimated value security valueoriented approach tends mitigate risk large equity allocation following description valuation methodologies used pension plan assets changes methodologies used december 31 2017 2016 • cash valued cost approximates fair value • equity securities comprised common stock preferred stock fair values equity securities valued closing price reported active market securities traded • fair values registered investment companies commoncollective trusts valued based quoted market prices represent net asset value “nav” shares held registered investment companies primarily include investments emerging market bonds commoncollective trusts primarily includes money market instruments short maturities • insurance contracts valued book value approximates fair value calculated using prioryear balance plus minus investment returns changes cash flows • fair values hedge funds valued using nav determined administrator custodian fund funds primarily invest us international equities debt securities hedge funds • fair values limited partnerships valued using nav determined administrator custodian fund partnerships primarily invest us international equities debt securities • real estate investments primarily consists real estate investment trusts investments measured quoted market prices represent nav securities held funds year end pension plan assets measured fair value recurring basis follows december 31 2017 2016 refer “fair value measurements” note 1 consolidated financial statements description levels 1 certain investments measured fair value using net asset value per share equivalent classified fair value hierarchy contributionswe expect contribute approximately 199 million international pension plans representing primarily uk qualified pension plans approximately 53 million us nonqualified defined benefit pension plan 2018 expect make contributions us qualified pension plan 2018 contributions expected form cash 2017 2016 contributed 191 million 30 million pension plans respectively estimated future benefit paymentsthe following table summarizes expected benefit payments various pension postretirement benefit plans 2025 actual benefit payments may differ expected benefit payments savings plansthe fmc technologies inc savings investment plan “qualified plan” qualified salary reduction plan section 401k internal revenue code defined contribution plan additionally nonqualified deferred compensation plan nonqualified plan allows certain highly compensated employees option defer receipt portion salary match portion participants’ deferrals plans relate fmc technologies inc therefore 2017 amounts presented participants nonqualified plan earn return based hypothetical investments options 401k plan including tehnipfmc plc stock changes market value participant investments reflected adjustment deferred compensation liability offset income expense net december 31 2017 liability nonqualified plan 294 million recorded noncurrent liabilities hedge financial impact changes participants’ hypothetical investments purchasing investments participants chosen exception technipfmc plc stock maintained cost basis changes fair value investments recognized offset income expense net december 31 2017 investments nonqualified plan totaling 251 million fair market value technipfmc stock held trust 48 million cost basis refer note 18 consolidated financial statements fair value disclosure nonqualified plan investments recognized expense 203 million matching contributions plans 2017 additionally recognized expense 125 million nonelective contributions 2017 note 19 sharebased compensation incentive compensation award planon january 11 2017 adopted technipfmc plc incentive award plan “plan” plan provides certain incentives awards officers employees nonemployee directors consultants technipfmc subsidiaries plan allows board directors make various types awards nonemployee directors compensation committee “committee” board directors make various types awards eligible individuals awards may include share options share appreciation rights performance share units restricted share units restricted shares awards authorized plan awards subject plan’s provisions including sharebased grants previously issued fmc technologies technip prior consummation merger plan 241 million ordinary shares authorized awards exercise price options determined committee cannot less fair market value ordinary shares grant date restricted share performance share unit grants generally vest three years service plan board directors authority grant nonemployee directors share options restricted shares restricted share units performance shares unless otherwise determined board directors awards nonemployee directors generally vest date annual shareholder meeting following date grant restricted share units settled director ceases services board directors december 31 2017 outstanding awards active retired nonemployee directors included 649 thousand share units measurement sharebased compensation expense restricted share awards performance share awards based market price grant date number shares awarded used cox ross rubinstein binomial model measure fair value stock options granted prior december 31 2016 blackscholes options pricing model measure fair value stock options granted january 1 2017 sharebased compensation expense award recognized ratably applicable service period beginning start service period ending employee becomes eligible retirement currently age 62 plan taking account estimated forfeitureswe recognize compensation expense corresponding tax benefits awards plan compensation expense nonvested share units plan follows december 31 2017 portion sharebased compensation expense related outstanding awards recognized future periods follows restricted share units summary nonvested restricted share units awarded employees december 31 2017 changes year presented following summarizes values restricted share unit activity employees1 1 began issuing restricted share units 2017 performance shares board directors granted certain employees senior executives directors officers shares subject achieving satisfactory performances performance shares issued prior december 31 2016 performance based results terms healthsafetyenvironment operating income recurring activities treasury generated operating activities total shareholder return performance shares issued january 1 2017 performance based results return investment shareholder value summary nonvested performance share units awarded employees december 31 2017 changes year presented 1 weightedaverage grant date fair value increase shares due merger remains 000 order recalculate new weighted average december 31 2016 nonvested shares see note 2 following summarizes values performance share activity employees share option awards fair value option award estimated date grant using blackscholes options pricing model cox ross rubinstein binomial model expected volatility based normalized historical volatility shares preceding period commensurate expected term option 2017 riskfree rate expected term option based us treasury yield curve effect time grant prior 2017 risk free rate based bond yields european central bank share options awarded prior 2017 valued using expected dividend yield 20 45 awarded 2017 used 20 share options awarded prior 2017 granted subject performance criteria based upon certain targets total shareholder return capital employed operating income recurring activities subsequent share options granted time based awards vesting three year period weighted average assumptions option awards granted years ended december 31 2017 2016 2015 follows years ended december 31 2017 2016 2015 granted 7984 thousand 5951 thousand 5686 thousand options respectively weighted average grantdate fair value options granted years ended december 31 2017 2016 2015 879 €770 €601 respectively following summary option transactions years ended december 31 2017 2016 2015 1 weightedaverage grant date fair value increase shares due merger remains 000 order recalculate new weighted average december 31 2016 nonvested shares see note 2 aggregate intrinsic value stock options outstanding stock options exercisable december 31 2017 125 million nil respectively nil 255 thousand 5617 thousand options exercised years ended december 31 2017 2016 2015 respectively cash received option exercises nil €15 million €213 million years ended december 31 2017 2016 2015 respectively total intrinsic value options exercised years ended december 31 2017 2016 2015 nil €129 million respectively exercise stock options employee may choose 1 pay either directly way group savings plan stock option strike price obtain shares 2 sell shares immediately exercised stock option case employee pay strike price instead receives intrinsic value stock options cash following summarizes additional information concerning outstanding exercisable options december 31 2017 note 20 derivative financial instruments purposes mitigating effect changes exchange rates hold derivative financial instruments hedge risks certain identifiable anticipated transactions recorded assets liabilities consolidated balance sheets types risks hedged relating variability future earnings cash flows caused movements foreign currency exchange rates policy hold derivatives purpose hedging risks associated anticipated foreign currency purchases sales created normal course business trading purposes objective solely generate profit generally enter hedging relationships changes fair values cash flows transactions hedged expected offset corresponding changes fair value derivatives derivative instruments qualify cash flow hedge effective portion gain loss derivative include time value component forward currency rate reported component comprehensive income “oci” reclassified earnings period periods hedged transaction affects earnings derivative instruments designated hedging instruments change fair value instruments reflected earnings period change occurs hold following types derivative instruments foreign exchange rate forward contracts purpose instruments hedge risk changes future cash flows anticipated purchase sale commitments denominated foreign currencies recorded assets liabilities consolidated balance sheets december 31 2017 held following material net positions foreign exchange rate instruments embedded purchase sale contracts purpose instruments match offsetting currency payments receipts particular projects conduct business internationally recognized traded currencies december 31 2017 portfolio instruments included following material net positions fair value amounts outstanding derivative instruments determined using available market information commonly accepted valuation methodologies refer note 21 consolidated financial statements disclosures related fair value measurement process accordingly estimates presented may indicative amounts would realize current market exchange may indicative gains losses may ultimately incur contracts settled following table presents location fair value amounts derivative instruments reported consolidated balance sheets recognized gain 253 million losses 103 million 90 million cash flow hedges years ended december 31 2017 2016 2015 respectively due hedge ineffectiveness probable original forecasted transaction would occur cash flow hedges forecasted transactions net tax resulted accumulated comprehensive income 285 million accumulated comprehensive loss 1265 million december 31 2017 2016 respectively expect transfer approximately 230 million income accumulated oci earnings next 12 months anticipated transactions actually occur anticipated transactions currently hedged expected occur second half 2020 following table presents location gains losses consolidated statements income related derivative instruments designated fair value hedges following tables present location gains losses consolidated statements income related derivative instruments designated cash flow hedges following table presents location gains losses consolidated statements income related derivative instruments designated hedging instruments balance sheet offsettingwe execute derivative contracts counterparties consent master netting agreement permits net settlement gross derivative assets gross derivative liabilities instrument accounted individually assets liabilities offset december 31 2017 2016 collateralized derivative contracts following tables present gross information net information recognized derivative instruments note 21 fair value measurements assets liabilities measured fair value recurring basis follows 1 includes equity securities fixed income investments measured fair value 2 certain investments measured fair value using net asset value per share equivalent classified fair value hierarchy nonqualified planthe fair value measurement traded securities based quoted prices ability access public markets stable value fund money market fund valued net asset value shares held end quarter based fair value underlying investments using information reported investment adviser quarterend availableforsale investmentsthe fair value measurement availableforsale investments based quoted prices ability access public markets investmentsheldtomaturity investments included investments line item consolidated balance sheet carried amortized cost assets liabilities held salethe fair value assets liabilities held sale determined using market approach took consideration expected sales price december 31 2017 mandatorily redeemable financial liabilitywe determined fair value mandatorily redeemable financial liability using discounted cash flow model refer note 14 information related liability key assumption used applying income approach selected discount rates expected dividends distributed future noncontrolling interest holders expected dividends distributed based noncontrolling interests’ share expected profitability underlying contract selected discount rate overall timing completion project decrease one percentage point discount rate would increased liability 66 million december 31 2017 fair value measurement based upon significant unobservable inputs observable market consequently classified level 3 fair value measurement changes fair value level 3 mandatorily redeemable financial liability presented since liability created three months ended december 31 2016 changes fair value presented prior period derivative financial instrumentswe use income approach valuation technique measure fair value foreign currency derivative instruments recurring basis approach calculates present value future cash flow measuring change derivative contract rate published market indicative currency rate multiplied contract notional values credit risk incorporated reducing derivative’s fair value asset positions result multiplying present value portfolio counterparty’s published credit spread portfolios liability position adjusted calculation however spread representing credit spread used credit spread credit spread counterparties publicly available approximated using spread similar companies industry similar size credit rating time creditriskrelated contingent features agreements financial institutions would require us post collateral derivative positions liability position refer note 20 consolidated financial statements additional disclosure related derivative financial instruments assets measured fair value nonrecurring basis follows fair value longlived nonfinancial assetslonglived nonfinancial assets measured fair value nonrecurring basis purposes calculating impairment recoverable amount assets determined less book value assets fair value measurements longlived nonfinancial assets measured estimating amount timing net future cash flows level 3 unobservable inputs discounting using riskadjusted rate interest significant increases decreases actual estimated cash flows may result changes fair value longlived nonfinancial assets refer note 5 additional disclosure related asset impairments fair value disclosures fair value debtthe fair value synthetic bonds senior notes private placement notes follows 1 carrying amounts shown net unamortized debt discounts premiums unamortized debt issuance costs 138 million 142 million 2017 2016 respectively 2 fair values based level 2 quoted market rates fair value disclosuresthe carrying amounts cash equivalents trade receivables accounts payable shortterm debt commercial paper debt associated bank borrowings credit facilities convertible bonds well amounts included current assets current liabilities meet definition financial instruments approximate fair value credit riskby nature financial instruments involve risk including credit risk nonperformance counterparties financial instruments potentially subject us credit risk primarily consist trade receivables derivative contracts manage credit risk financial instruments transacting management believes financially secure counterparties requiring credit approvals credit limits monitoring counterparties’ financial condition maximum exposure credit loss event nonperformance counterparty limited amount drawn outstanding financial instrument allowances losses trade receivables established based collectibility assessments mitigate credit risk derivative contracts executing contracts counterparties consent master netting agreement permits net settlement gross derivative assets gross derivative liabilities note 22 business segments management’s determination reporting segments made basis strategic priorities within segment differences products services provide corresponds manner chief executive officer chief operating decision maker reviews evaluates operating performance make decisions resources allocated segment upon completion merger reorganized reporting structure aligned segments underlying businesses execute strategy technipfmc result report results operations following segments subsea onshoreoffshore surface technologies reportable segments • subseamanufactures designs products systems performs engineering procurement project management provides services used oil gas companies involved deepwater exploration production crude oil natural gas • onshoreoffshoredesigns builds onshore facilities related production treatment transportation oil gas designs manufactures installs fixed floating platforms production processing oil gas reserves companies oil gas industry • surface technologiesdesigns manufactures systems provides services used oil gas companies involved land offshore exploration production crude oil natural gas designs manufactures supplies technologically advanced high pressure valves fittings oilfield service companies also provides flowback well testing services exploration companies oil gas industry total revenue segment includes intersegment sales made prices approximating selling entity able obtain external sales segment operating profit defined total segment revenue less segment operating expenses income loss equity method investments included computing segment operating profit refer note 8 additional information following items excluded computing segment operating profit corporate staff expense net interest income expense associated corporate debt facilities income taxes revenue expense net segment revenue segment operating profit 1 corporate expense primarily includes corporate staff expenses stockbased compensation expenses employee benefits certain foreign exchange gains losses mergerrelated transaction expenses 2 includes amounts attributable noncontrolling interests segment assets 3 corporate includes cash lifo adjustments deferred income tax balances property plant equipment associated specific segment pension assets fair value derivative financial instruments geographic segment information geographic segment sales identified based location products services delivered geographic segment longlived assets represent property plant equipment net business segment information years ended december 31 2017 2016 2015 revenue jsc yamal lng exceeded 10 consolidated revenue year ended december 31 2016 revenue total exceeded 10 consolidated revenue note 23 quarterly information unaudited item 9 item 15 exhibits financial statement schedules following documents filed part annual report form 10k 1 following financial statements technipfmc plc filed part annual report form 10k part ii item 8 report independent registered public accounting firm consolidated financial statements consolidated statements comprehensive income year ended december 31 2016 period december 9 2015 december 31 2015 consolidated balance sheets december 31 2016 2015 consolidated statements cash flows year ended december 31 2016 period december 9 2015 december 31 2015 consolidated statements changes stockholder’s equity year ended december 31 2016 period december 9 2015 december 31 2015 notes consolidated financial statements 2 exhibits see “index exhibits” filed part annual report form 10k signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized technipfmc plc registrant tore halvorsen tore halvorsen chief executive officer chief financial officer chief accounting officer director date january 13 2017 pursuant requirements securities exchange act 1934 report signed following persons behalf registrant capacities date indicated date signature january 13 2017 tore halvorsen tore halvorsen chief executive officer chief financial officer chief accounting officer director principal executive officer principal financial officer principal accounting officer index exhibits furnished form 10kitem 15 exhibits financial statement schedules following documents filed part annual report form 10k 1 following consolidated financial statements technipfmc plc subsidiaries filed part annual report form 10k part ii item 8 reports independent registered public accounting firm consolidated financial statements consolidated statements income years ended december 31 2018 2017 2016 consolidated statements comprehensive income years ended december 31 2018 2017 2016 consolidated balance sheets december 31 2018 2017 consolidated statements cash flows years ended december 31 2018 2017 2016 consolidated statements changes stockholders’ equity years ended december 31 2018 2017 2016 notes consolidated financial statements 2 financial statement schedule see “schedule ii valuation qualifying accounts” included herein schedules omitted absence conditions required information called shown consolidated financial statements notes thereto part ii item 8 annual report form 10k 3 exhibits see “index exhibits” filed part annual report form 10k schedule iivaluation qualifying accounts “additions charged accounts” includes translation adjustments b “deductions adjustments” includes writeoffs net recoveries increases allowances offset increases deferred tax assets reductions allowances credited expense see accompanying report independent registered public accounting firm item 16 summary none index exhibits indicates management contract compensatory plan arrangement furnished form 10k signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized technipfmc plc registrant krisztina doroghazi krisztina doroghazi senior vice president controller chief accounting officer principal accounting officer duly authorized officer date march 11 2019 pursuant requirements securities exchange act 1934 report signed following persons behalf registrant capacities dates indicateditem 15 exhibits financial statement schedules following documents filed part annual report form 10k 1 following consolidated financial statements technipfmc plc subsidiaries filed part annual report form 10k part ii item 8 reports independent registered public accounting firm consolidated financial statements consolidated statements income years ended december 31 2019 2018 2017 consolidated statements comprehensive income years ended december 31 2019 2018 2017 consolidated balance sheets december 31 2019 2018 consolidated statements cash flows years ended december 31 2019 2018 2017 consolidated statements changes stockholders’ equity years ended december 31 2019 2018 2017 notes consolidated financial statements 2 financial statement schedule see “schedule ii valuation qualifying accounts” included herein schedules omitted absence conditions required information called shown consolidated financial statements notes thereto part ii item 8 annual report form 10k 3 exhibits see “index exhibits” filed part annual report form 10k schedule iivaluation qualifying accounts “additions charged accounts” includes translation adjustments b “deductions adjustments” includes writeoffs net recoveries increases allowances offset increases deferred tax assets reductions allowances credited expense see accompanying report independent registered public accounting firm item 16 summary none index exhibits indicates management contract compensatory plan arrangement furnished form 10k signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized technipfmc plc registrant krisztina doroghazi krisztina doroghazi senior vice president controller chief accounting officer principal accounting officer duly authorized officer date march 2 2020 pursuant requirements securities exchange act 1934 report signed following persons behalf registrant capacities dates indicatednanitem 15 exhibits financial statement schedules following documents filed part annual report form 10k 1 following consolidated financial statements technipfmc plc subsidiaries filed part annual report form 10k part ii item 8 report independent registered public accounting firm consolidated financial statements consolidated statements income years ended december 31 2017 2016 2015 consolidated statements comprehensive income years ended december 31 2017 2016 2015 consolidated balance sheets december 31 2017 2016 consolidated statements cash flows years ended december 31 2017 2016 2015 consolidated statements changes stockholders’ equity years ended december 31 2017 2016 2015 notes consolidated financial statements 2 financial statement schedule related report independent registered public accounting firm see “schedule iivaluation qualifying accounts” related report independent registered public accounting firm included herein schedules omitted absence conditions required information called shown consolidated financial statements notes thereto part ii item 8 annual report form 10k 3 exhibits see “index exhibits” filed part annual report form 10k schedule iivaluation qualifying accounts “additions charged accounts” includes translation adjustments b “deductions adjustments” includes writeoffs net recoveries reductions allowances credited expense see accompanying report independent registered public accounting firm item 16 summary none index exhibits indicates management contract compensatory plan arrangement furnished form 10k signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized technipfmc plc registrant maryann mannen maryann mannen executive vice president chief financial officer principal financial officer duly authorized officer date april 2 2018 pursuant requirements securities exchange act 1934 report signed following persons behalf registrant capacities date indicated