PENSION AND OTHER POST-RETIREMENT BENEFIT PLANS

We have funded and unfunded defined benefit pension plans which provide defined benefits based on years of service and final average salary.

On December 31, 2017, we amended the retirement plans (the “Plans”) to freeze benefit accruals for all participants of the Plans as of December 31, 2017. After that date, participants in the Plans will no longer accrue any further benefits and participants’ benefits under the Plans will be determined based on credited service and eligible earnings as of December 31, 2017.

Foreign-based employees are eligible to participate in TechnipFMC-sponsored or government-sponsored benefit plans to which we contribute. Several of the foreign defined benefit pension plans sponsored by us provide for employee contributions; the remaining plans are noncontributory. The most significant of these plans are in the Netherlands, France, Norway and the United Kingdom.

We have other post-retirement benefit plans covering substantially all of our U.S. employees who were hired prior to January 1, 2003. The post-retirement health care plans are contributory; the post-retirement life insurance plans are noncontributory.

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

The funded status of our U.S. Pension Plans, certain foreign pension plans and U.S. post-retirement health care and life insurance benefit plans, together with the associated balances recognized in our consolidated balance sheets as of December 31, 2018 and 2017, were as follows:



	Pensions												Other Post-retirement Benefits
	2018						2017						2018			2017
(In millions)	U.S.			Int’l			U.S.			Int’l
Accumulated benefit obligation	$	598.1		$	664.3		$	659.8		$	769.9
Projected benefit obligation at January 1	$	659.8		$	898.1		$	—		$	399.6		$	10.0		$	0.9
Service cost	0.2			21.2			10.3			21.0			—			—
Interest cost	23.8			20.9			26.7			19.6			0.4			0.3
Actuarial (gain) loss	(47.9		)	(40.0		)	56.2			(13.5		)	(0.2		)	0.8
Amendments	0.3			2.7			0.2			—			0.1			—
Curtailments	—			(4.0		)	(67.9		)	(2.8		)	—			—
Settlements	(5.3		)	(89.0		)	—			(13.5		)	(0.1		)	—
Foreign currency exchange rate changes	—			(25.7		)	—			68.9			—			—
Plan participants’ contributions	—			1.2			—			1.4			—			—
Benefits paid	(32.8		)	(31.7		)	(27.5		)	(27.6		)	(0.5		)	(0.6		)
Acquisition/Business Combination/Divestiture	—			—			661.9			432.3			—			7.7
Other	—			(0.3		)	(0.1		)	12.7			(0.2		)	0.9
Projected benefit obligation at December 31	598.1			753.4			659.8			898.1			9.5			10.0
Fair value of plan assets at January 1	576.4			699.2			—			229.7			—			—
Actual return on plan assets	(70.7		)	(16.0		)	60.4			63.3			—			—
Company contributions	—			18.5			—			19.1			—			—
Foreign currency exchange rate changes	—			(20.9		)	—			50.4			—			—
Settlements	—			(87.6		)	—			(7.0		)	—			—
Plan participants’ contributions	—			1.2			—			1.4			—			—
Benefits paid	(28.3		)	(23.3		)	(24.8		)	(21.5		)	—			—
Acquisition/Business Combination/Divestiture	—			—			540.8			361.4			—			—
Other	—			(0.5		)	—			2.4			—			—
Fair value of plan assets at December 31	477.4			570.6			576.4			699.2			—			—
Funded status of the plans (liability) at December 31	$	(120.7	)	$	(182.8	)	$	(83.4	)	$	(198.9	)	$	(9.5	)	$	(10.0	)



	Pensions												Other Post-retirement Benefits
	2018						2017						2018			2017
(In millions)	U.S.			Int’l			U.S.			Int’l
Current portion of accrued pension and other post-retirement benefits	$	(5.5	)	$	(7.9	)	$	(5.4	)	$	(4.1	)	$	(0.7	)	$	(0.7	)
Accrued pension and other post-retirement benefits, net of current portion	(115.2		)	(174.9		)	(78.0		)	(194.8		)	(8.8		)	(9.3		)
Funded status recognized in the consolidated balance sheets at December 31	$	(120.7	)	$	(182.8	)	$	(83.4	)	$	(198.9	)	$	(9.5	)	$	(10.0	)

The following table summarizes the pre-tax amounts in accumulated other comprehensive (income) loss at December 31, 2018 and 2017 that have not been recognized as components of net periodic benefit cost:



	Pensions								Other Post-retirement Benefits
	2018				2017				2018		2017
(In millions)	U.S.		Int’l		U.S.		Int’l
Pre-tax amounts recognized in accumulated other comprehensive (income) loss
Unrecognized actuarial (gain) loss	$	73.2	$	43.7	$	0.1	$	21.2	$	0.6	$	0.8
Unrecognized prior service (credit) cost	—		7.0		0.2		5.5		—		—
Accumulated other comprehensive (income) loss at December 31	$	73.2	$	50.7	$	0.3	$	26.7	$	0.6	$	0.8

The following tables summarize the projected and accumulated benefit obligations and fair values of plan assets where the projected or accumulated benefit obligation exceeds the fair value of plan assets at December 31, 2018 and 2017:



	Pensions								Other Post-retirement Benefits
	2018				2017				2018		2017
(In millions)	U.S.		Int’l		U.S.		Int’l
Plans with underfunded or non-funded projected benefit obligation
Aggregate projected benefit obligation	$	598.1	$	621.1	$	659.8	$	744.3	$	9.5	$	9.9
Aggregate fair value of plan assets	$	477.4	$	439.8	$	576.4	$	558.0	$	—	$	—



	Pensions								Other Post-retirement Benefits
	2018				2017				2018		2017
(In millions)	U.S.		Int’l		U.S.		Int’l
Plans with underfunded or non-funded accumulated benefit obligation
Aggregate accumulated benefit obligation	$	598.1	$	269.2	$	659.8	$	212.5	$	—	$	—
Aggregate fair value of plan assets	$	477.4	$	126.6	$	576.4	$	82.2	$	—	$	—

The following table summarizes the components of net periodic benefit cost (income) for the years ended December 31, 2018, 2017 and 2016:



	Pensions																	Other Post-retirement Benefits
	2018						2017						2016					2018		2017		2016
(In millions)	U.S.			Int’l			U.S.			Int’l			U.S.		Int’l
Components of net periodic benefit cost (income)
Service cost	$	0.2		$	21.2		$	10.3		$	21.0		$	—	$	11.7		$	—	$	—	$	—
Interest cost	23.8			20.9			26.7			19.6			—		10.9			0.4		0.3		—
Expected return on plan assets	(50.1		)	(41.2		)	(45.5		)	(36.3		)	—		(8.2		)	—		—		—
Settlement cost	0.4			0.4			—			1.5			—		—			—		—		—
Curtailment benefit	—			(3.8		)	(26.8		)	—			—		(10.7		)	—		—		—
Amortization of net actuarial loss (gain)	—			0.6			—			2.5			—		1.0			—		—		—
Amortization of prior service cost (credit)	—			1.3			—			1.0			—		0.7			—		—		—
Net periodic benefit cost (income)	$	(25.7	)	$	(0.6	)	$	(35.3	)	$	9.3		$	—	$	5.4		$	0.4	$	0.3	$	—

The following table summarizes changes in plan assets and benefit obligations recognized in other comprehensive income (loss) for the years ended December 31, 2018, 2017 and 2016:



	Pensions																	Other Post-retirement Benefits
	2018						2017						2016					2018			2017			2016
(In millions)	U.S.			Int’l			U.S.			Int’l			U.S.		Int’l
Changes in plan assets and benefit obligations recognized in other comprehensive income (loss)
Net actuarial gain (loss) arising during period	$	(73.5	)	$	(15.3	)	$	26.7		$	43.3		$	—	$	(10.5	)	$	—		$	(0.8	)	$	—
Prior service (cost) credit arising during period	0.2			(2.7		)	(0.2		)	0.1			—		0.1			—			—			—
Settlements and curtailments	0.4			(3.4		)	(26.8		)	1.5			—		(10.7		)	—			—			—
Amortization of net actuarial loss (gain)	—			0.6			—			2.5			—		1.0			—			—			—
Amortization of prior service cost (credit)	—			1.3			—			1.0			—		0.7			—			—			—
Other	—			1.4			—			(5.1		)	—		17.6			(0.1		)	—			—
Total recognized in other comprehensive income (loss)	$	(72.9	)	$	(18.1	)	$	(0.3	)	$	43.3		$	—	$	(1.8	)	$	(0.1	)	$	(0.8	)	$	—

Included in accumulated other comprehensive income (loss) at December 31, 2018, are noncash, pre-tax charges which have not yet been recognized in net periodic benefit cost (income). The estimated amounts expected to be amortized from the portion of each component of accumulated other comprehensive income (loss) as a component of net period benefit cost (income), during the next fiscal year are as follows:



	Pensions				Other Post-retirement Benefits
(In millions)	U.S.		Int’l
Net actuarial losses (gains)	$	1.8	$	0.9	$	—
Prior service cost (credit)	$	—	$	1.2	$	—

Key assumptions - The following weighted-average assumptions were used to determine the benefit obligations:



	Pensions								Other Post-retirement Benefits
	2018				2017				2018		2017
	U.S.		Int’l		U.S.		Int’l
Discount rate	4.40	%	2.54	%	3.70	%	2.42	%	5.04	%	4.33	%
Rate of compensation increase	N/A		2.24	%	N/A		2.37	%	4.00	%	4.00	%

The following weighted-average assumptions were used to determine net periodic benefit cost:



	Pensions											Other Post-retirement Benefits
	2018				2017				2016			2018		2017		2016
	U.S.		Int’l		U.S.		Int’l		U.S.	Int’l
Discount rate	3.70	%	2.39	%	4.30	%	2.37	%	N/A	2.80	%	4.33	%	4.05	%	2.20	%
Rate of compensation increase	N/A		2.39	%	4.00	%	2.39	%	N/A	2.30	%	4.00	%	4.00	%	3.00	%
Expected rate of return on plan assets	8.57	%	4.90	%	9.00	%	6.24	%	N/A	2.80	%	N/A		N/A		N/A

Our estimate of expected rate of return on plan assets is primarily based on the historical performance of plan assets, current market conditions, our asset allocation and long-term growth expectations.

Plan assets - Our pension investment strategy emphasizes maximizing returns consistent with balancing risk. Excluding our international plans with insurance-based investments, 99% of our total pension plan assets represent the U.S. qualified plan, the U.K. plan and the Netherlands plan. These plans are primarily invested in equity securities to maximize the long-term returns of the plans. The investment managers of these assets, including the hedge funds and limited partnerships, use Graham and Dodd fundamental investment analysis to select securities that have a margin of safety between the price of the security and the estimated value of the security. This value-oriented approach tends to mitigate the risk of a large equity allocation.

The following is a description of the valuation methodologies used for the pension plan assets. There have been no changes in the methodologies used at December 31, 2018 and 2017.


•	Cash is valued at cost, which approximates fair value.


•	Equity securities are comprised of common stock and preferred stock. The fair values of equity securities are valued at the closing price reported on the active market on which the securities are traded.


•	Fair values of registered investment companies and common/collective trusts are valued based on quoted market prices, which represent the net asset value (“NAV”) of shares held. Registered investment companies primarily include investments in emerging market bonds. Common/collective trusts primarily includes money market instruments with short maturities.


•	Insurance contracts are valued at book value, which approximates fair value, and is calculated using the prior-year balance plus or minus investment returns and changes in cash flows.


•	The fair values of hedge funds are valued using the NAV as determined by the administrator or custodian of the fund. The funds primarily invest in U.S. and international equities, debt securities and other hedge funds.


•	The fair values of limited partnerships are valued using the NAV as determined by the administrator or custodian of the fund. The partnerships primarily invest in U.S. and international equities and debt securities.


•	Real estate and other investments primarily consists of real estate investment trusts and other investments. These investments are measured at quoted market prices, which represent the NAV of the securities held in such funds at year end.

Our pension plan assets measured at fair value on a recurring basis are as follows at December 31, 2018 and 2017. Refer to “Fair value measurements” in Note 1 to these consolidated financial statements for a description of the levels.



(In millions)	U.S.								International
December 31, 2018	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Cash and cash equivalents	$	46.8	$	46.8	$	—	$	—	$	11.1	$	11.1	$	—	$	—
Equity securities
U.S. companies	109.4		109.4		—		—		92.2		92.2		—		—
International companies	8.5		8.5		—		—		186.8		186.8		—		—
Registered investment companies ^(a)	32.6		—		—		—		44.4		—		—		—
Common/collective trusts ^(a)	11.7		—		—		—		10.0		—		—		—
Insurance contracts	—		—		—		—		125.0		—		125.0		—
Hedge funds ^(a)	176.5		—		—		—		99.1		—		—		—
Limited partnerships ^(a)	89.7		—		—		—		—		—		—		—
Real estate and other investments	2.2		2.2		—		—		1.2		1.2		—		—
Total assets	$	477.4	$	166.9	$	—	$	—	$	569.8	$	291.3	$	125.0	$	—

December 31, 2017
Cash and cash equivalents	$	41.2	$	41.2	$	—	$	—	$	4.8	$	4.8	$	—	$	—
Equity securities
U.S. companies	131.7		131.7		—		—		106.9		106.9		—		—
International companies	33.7		33.7		—		—		216.7		216.7		—		—
Registered investment companies ^(a)	33.6		—		—		—		72.6		—		—		—
Common/collective trusts ^(a)	31.2		—		—		—		13.0		—		—		—
Insurance contracts	—		—		—		—		208.2		—		208.2		—
Hedge funds ^(a)	194.3		—		—		—		74.7		—		—		—
Limited partnerships^(a)	109.7		—		—		—		—		—		—		—
Real estate and other investments	0.8		0.8		—		—		1.5		1.5		—		—
Total assets	$	576.2	$	207.4	$	—	$	—	$	698.4	$	329.9	$	208.2	$	—


(a)	Certain investments that are measured at fair value using net asset value per share (or its equivalent) have not been classified in the fair value hierarchy.

Contributions - We expect to contribute approximately $2.7 million to our international pension plans, representing primarily the Netherlands qualified pension plans and U.K. qualified pension plans. We do not expect to make any contributions to our U.S. Qualified Pension Plan and our U.S. Non-Qualified Defined Benefit Pension Plan in 2019. All of the contributions are expected to be in the form of cash. In 2018 and 2017, we contributed $18.5 million and $19.1 million to all pension plans, respectively.

Estimated future benefit payments - The following table summarizes expected benefit payments from our various pension and post-retirement benefit plans through 2028. Actual benefit payments may differ from expected benefit payments.



	Pensions				Other Post-retirement Benefits
(In millions)	U.S.		International
2019	$	34.9	$	28.3	$	0.7
2020	$	35.2	$	30.4	$	0.7
2021	$	35.7	$	31.8	$	0.7
2022	$	35.1	$	32.0	$	0.6
2023	$	33.7	$	33.8	$	0.6
2024-2028	$	175.8	$	189.3	$	2.7

Savings plans - The TechnipFMC Retirement Savings Plan (“Qualified Plan”), a qualified salary reduction plan under Section 401(k) of the Internal Revenue Code, is a defined contribution plan. Additionally, we have a non-qualified deferred compensation plan, the Non-Qualified Plan, which allows certain highly compensated employees the option to defer the receipt of a portion of their salary. We match a portion of the participants’ deferrals to both plans. Both plans relate to FMC Technologies, Inc.

Participants in the Non-Qualified Plan earn a return based on hypothetical investments in the same options as our 401(k) plan, including TehnipFMC plc stock. Changes in the market value of these participant investments are reflected as an adjustment to the deferred compensation liability with an offset to other income (expense), net. As of December 31, 2018 and 2017, our liability for the Non-Qualified Plan was $22.8 million and $29.4 million, respectively, and was recorded in other non-current liabilities. We hedge the financial impact of changes in the participants’ hypothetical investments by purchasing the investments that the participants have chosen. With the exception of TechnipFMC plc stock, which is maintained at its cost basis, changes in the fair value of these investments are recognized as an offset to other income (expense), net. As of December 31, 2018 and 2017, we had investments for the Non-Qualified Plan totaling $21.4 million and $25.1 million at fair market value, respectively. As of December 31, 2018 and 2017, TechnipFMC stock held in trust of $2.4 million and $4.8 million at its cost basis, respectively. Refer to Note 22 to these consolidated financial statements for fair value disclosure of the Non-Qualified Plan investments.

We recognized expense of $31.8 million and $20.3 million for matching contributions to these plans in 2018 and 2017, respectively. Additionally, we recognized expense of $14.3 million and $12.5 million for non-elective contributions in 2018 and 2017, respectively.