01—Abstract
Summary
Summary of the 10-K filed January 13, 2017. Cited figures are marked; the original filing is the authoritative source.
This 10-K filing for TechnipFMC plc, filed on January 13, 2017, details the formation of the company as a result of the impending merger between FMC Technologies, Inc. (FMCTI) and Technip S.A.
As of December 31, 2016, TechnipFMC was a newly formed entity that had not yet commenced operations, with its primary purpose being the facilitation of this business combination. The filing highlights the significant legal, regulatory, and operational complexities involved in merging these two major oil and gas service companies, including extensive risk factors related to the successful consummation of the merger, potential tax implications in both the U.S. and U.K., and the challenges of integrating two large organizations. Investors should note that as of the filing date, the merger was slated for completion on January 16, 2017.
The report emphasizes that TechnipFMC's financial statements for the period ending December 31, 2016, reflect only its formation activities and nominal financial position, not the operational results of the combined entities. Key risks include potential termination fees, disruption to ongoing businesses, integration challenges, and the impact of foreign currency fluctuations and global economic uncertainties, such as Brexit. The successful integration and realization of expected synergies are critical for the future performance of the combined entity.
02—Key points
Key Highlights
- TechnipFMC plc was established in late 2015 as the entity through which FMC Technologies, Inc. (FMCTI) and Technip S.A. would combine.
- As of December 31, 2016, TechnipFMC had not commenced operations and its financial statements reflect only its formation costs and nominal assets/liabilities.
- The merger between FMCTI and Technip was expected to close on January 16, 2017, creating a new leader in subsea, surface, and onshore/offshore oil and gas services.
- Significant risks are detailed, including the possibility of the merger failing to close (with potential termination fees), integration challenges, and the impact of various global economic and political factors (e.g., Brexit).
- The filing addresses potential U.S. and U.K. tax implications, including the risk of TechnipFMC being treated as a U.S. domestic corporation for tax purposes under Section 7874.
- Post-merger, TechnipFMC shares will trade on both the NYSE and Euronext Paris, with former Technip shareholders expected to own approximately 51.1% and former FMCTI shareholders approximately 48.9% of the combined entity.
- The company's financial statements for the period ending December 31, 2016, show minimal activity with a net loss of $11.9 thousand, primarily related to formation expenses.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2016, TechnipFMC plc kept $0.04.
- Revenue$9.20B100.0%
- Cost of revenue$-00.0%
- Gross profit$9.20B100.0%
- Operating costs−$8.43B91.7%
- Operating income$766.1M8.3%
- Interest, other & tax−$372.8M4.1%
- Net income$393.3M4.3%
Where FY2016 revenue went
$9.20B- Other operating costs: $7.76B, 84% of revenue
- Net income: $393.3M, 4.3% of revenue
- Cost of revenue: $0, 0.0% of revenue
- R&D: $105.4M, 1.1% of revenue
- SG&A: $572.6M, 6.2% of revenue
- Interest, other & tax: $372.8M, 4.1% of revenue
Kept 4.3% as net incomeNet income $393.3M · 4.3%Cost of revenue $0 · 0.0%R&D $105.4M · 1.1%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2016filed January 13, 2017Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $9.20B$11.47B | −19.8% |
| Cost of Revenue | $0$112.10M | −100.0% |
| Gross Profit | $9.20B$11.36B | −19.0% |
| R&D Expenses | $105.40M$95.50M | +10.4% |
| SG&A Expenses | $572.60M$689.60M | −17.0% |
| Operating Expenses | $8.74B$11.20B | −21.9% |
| Operating Income | $766.10M$553.60M | +38.4% |
| Interest Expense | $114.10M$148.90M | −23.4% |
| Net Income | $393.30M$14.40M | +2631.3% |
| EPS (Basic) | $3.29$0.13 | +2430.8% |
| EPS (Diluted) | $3.16$0.13 | +2330.8% |
| Shares Outstanding (Basic) | 119.40M114.90M | +3.9% |
| Shares Outstanding (Diluted) | 125.10M127.30M | −1.7% |
05—Questions
Frequently Asked Questions
What is the current operational status of TechnipFMC plc as of the filing date?
As of December 31, 2016, TechnipFMC plc had not commenced any business operations. Its activities were limited to those incidental to its formation and the preparations for the business combination with FMC Technologies, Inc. and Technip S.A. Its financial statements reflect only these formation-related activities.
When is the merger between FMC Technologies and Technip expected to be completed?
The merger was expected to close on January 16, 2017, as indicated by the Technip Merger Order obtained on December 21, 2016. However, the filing also notes that consummation is subject to customary termination rights as specified in the business combination agreement.
What are the main risks highlighted for investors concerning the merger?
Key risks include the potential failure of the merger to close, which could result in significant termination fees for either party. There are also substantial risks related to the integration of the two complex organizations, potential negative impacts on stock price due to share sales post-merger, challenges in retaining key employees, disruptions to business relationships, and significant merger-related costs. Additionally, there are notable tax risks concerning TechnipFMC's classification as a foreign corporation for U.S. tax purposes and potential impacts from Brexit.
What is the expected ownership structure of TechnipFMC after the merger?
Upon completion of the mergers, it is expected that former Technip stockholders will own approximately 51.1% of TechnipFMC on a fully diluted basis, and former FMC Technologies stockholders will own approximately 48.9%.
06—Continue