STOCKHOLDERS' EQUITY AND EQUITY-BASED INCENTIVE PLANS

9 Months Ended

Sep. 30, 2019

Stockholders Equity Note [Abstract]

STOCKHOLDERS' EQUITY AND EQUITY-BASED INCENTIVE PLANS

NOTE 19—STOCKHOLDERS’ EQUITY AND EQUITY-BASED INCENTIVE PLANS

Shares Outstanding and Treasury Shares―The changes in the number of shares outstanding and treasury shares held by us are as follows (in millions):

	Nine Months Ended September 30,
	2019			2018
Shares outstanding
Beginning balance		181			95
Common stock issued		2			2
Shares issued in the Combination (Note 3, Business Combination)		-			85
Purchase of common stock		(1	)		(1	)
Ending balance		182			181
Shares held as Treasury shares
Beginning balance		3			3
Purchase of common stock		1			1
Retirement of common stock		(1	)		(1	)
Ending balance		3			3
Ordinary shares issued at the end of the period (1)		185			183

^{(1) Amounts in this table may not sum due to rounding.}

Combination—As discussed in Note 3, Business Combination, we issued 84.5 million shares of McDermott common stock to the former CB&I shareholders. Additionally, effective as of the Combination Date, unvested and unexercised stock-settled equity-based awards (which included 2.1 million of CB&I restricted stock units and stock options to purchase 0.1 million shares of CB&I’s common stock) were canceled and converted into comparable McDermott stock-settled awards with generally the same terms and conditions as those prior to the Combination Date. The restricted stock units generally vest over a period ranging from three to four years from the original grant date. 

Stock-Based Compensation Expense―During the three months ended September 30, 2019 and 2018, we recognized $5 million and $9 million, respectively, and during the nine months ended September 30, 2019 and 2018, we recognized $16 million and $24 million, respectively, of stock-based compensation expense, primarily within SG&A in our Statements of Operations. In addition, we recognized $26 million of expense in the second quarter of 2018 as a result of accelerated vesting for employees terminated in connection with the Combination, which was recorded within Restructuring and integration costs in our Statements of Operations.

In addition, during the three months ended September 30, 2019 and 2018, we recognized $3 million of income and $1 million of expense, respectively, and during the nine months ended September 30, 2019 and 2018, we recognized $2 million and $6 million, respectively, of compensation expense associated with awards classified as liability awards as of the end of those respective periods.

Accumulated Other Comprehensive (Loss) Income―The components of AOCI included in stockholders’ equity are as follows:

	September 30, 2019			December 31, 2018
	(In millions)
Foreign currency translation adjustments ("CTA")	$	(120	)	$	(73	)
Net unrealized loss on derivative financial instruments		(108	)		(40	)
Defined benefit pension and other postretirement plans		6			6
Accumulated other comprehensive loss	$	(222	)	$	(107	)

The following table presents the components of AOCI and the amounts that were reclassified during the periods indicated:

	Foreign currency translation adjustments			Net unrealized loss on derivative financial instruments (1)			Defined benefit pension and other postretirement plans		TOTAL
	(In millions)
December 31, 2017	$	(49	)	$	(2	)	$	-	$	(51	)
Other comprehensive income before reclassification		(20	)		(16	)		-		(36	)
Amounts reclassified from AOCI (2)		-			3			-		3
Net current period other comprehensive income		(20	)		(13	)		-		(33	)
September 30, 2018	$	(69	)	$	(15	)	$	-	$	(84	)
December 31, 2018		(73	)		(40	)		6		(107	)
Other comprehensive income before reclassification		(47	)		(81	)		-		(128	)
Amounts reclassified from AOCI (2)		-			13			-		13
Net current period other comprehensive income		(47	)		(68	)		-		(115	)
September 30, 2019	$	(120	)	$	(108	)	$	6	$	(222	)

⁽¹⁾ Refer to Note 17, Derivative Financial Instruments, for additional details.

^{(2) Amounts are net of tax, which was not material during the nine months ended September 30, 2019 and 2018.}

Noncontrolling Interest―In 2002, P.T. Sarana Interfab Mandiri (“PTSIM”) acquired a 25% participating interest in our subsidiary, PT McDermott Indonesia (“PTMI”). After two years, PTSIM had the option to sell its interest to us for $5 million plus PTSIM’s share of PTMI undistributed earnings to the date of such sale. In January 2019, McDermott and PTSIM entered into framework agreement, restructuring the PTMI shareholders agreement, whereby PTSIM waived its put option right and exchanged its participating interest in PTMI for a non-participating interest in exchange for a payment of approximately $29 million. During the nine months ended September 30, 2019, we paid the first two installments totaling approximately $15 million and have a remaining liability of approximately $14 million as of September 30, 2019, payable in early 2020.