SEGMENT REPORTING

9 Months Ended

Sep. 30, 2019

NOTE 23—SEGMENT REPORTING

We disclose the results of each of our reportable segments in accordance with ASC 280, Segment Reporting. Each of the reportable segments is separately managed by a senior executive who is a member of our Executive Committee (“EXCOM”). Our EXCOM is led by our Chief Executive Officer, who is the chief operating decision maker (“CODM”). Discrete financial information is available for each of the segments, and the EXCOM uses the operating results of each of the reportable segments for performance evaluation and resource allocation.

Upon completion of the Combination, during the second quarter of 2018, we reorganized our operations around five operating segments. This reorganization is intended to better serve our global clients, leverage our workforce, help streamline operations, and provide enhanced growth opportunities. Our five operating groups are: NCSA; EARC; MENA; APAC; and Technology. We also report certain corporate and other non-operating activities under the heading “Corporate and Other.” Corporate and Other primarily reflects corporate expenses, certain centrally managed initiatives (such as restructuring charges), impairments, year-end mark-to-market pension actuarial gains and losses, costs not attributable to a particular reportable segment and unallocated direct operating expenses associated with the underutilization of vessels, fabrication facilities and engineering resources.

Intersegment sales are recorded at prices we generally establish by reference to similar transactions with unaffiliated customers and were not material during the three and nine months ended September 30, 2019 or 2018 and are eliminated upon consolidation.

Operating Information by Segment

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
	(In millions)
Revenues:
NCSA	$	1,090		$	1,516		$	3,729		$	2,609
EARC		248			77			588			151
MENA		520			473			1,299			1,287
APAC		125			75			413			332
Technology		138			148			440			253
Total revenues	$	2,121		$	2,289		$	6,469		$	4,632

Operating (loss) income (1):
Segment operating income (loss):
NCSA	$	(1,405	)	$	97		$	(1,317	)	$	148
EARC		(250	)		(13	)		(239	)		(24	)
MENA		69			89			164			256
APAC		1			9			16			125
Technology		30			20			100			45
Total segment operating income		(1,555	)		202			(1,276	)		550
Corporate		(129	)		(73	)		(456	)		(308	)
Total operating (loss) income	$	(1,684	)	$	129		$	(1,732	)	$	242

Goodwill impairment ⁽²⁾:
NCSA	$	1,111		$	-		$	1,111		$	-
EARC		259			-			259			-
MENA		-			-			-			-
Technology		-			-			-			-
Total goodwill impairment	$	1,370		$	-		$	1,370		$	-

Depreciation and amortization:
NCSA	$	16		$	21		$	47		$	37
EARC		3			5			10			8
MENA		14			19			39			35
APAC		3			3			10			12
Technology		17			45			54			59
Corporate		10			14			40			36
Total depreciation and amortization	$	63		$	107		$	200		$	187

Capital expenditures ⁽³⁾:
NCSA	$	1		$	2		$	6		$	4
EARC		1			-			2			-
MENA		3			2			11			9
APAC		1			4			6			9
Technology		1			-			1			-
Corporate		25			11			39			40
Total Capital expenditures	$	32		$	19		$	65		$	62

Assets by Segment


	September 30, 2019			December 31, 2018
	(In millions)
Segment assets:
NCSA	$	2,355		$	3,257
EARC		1,008			1,169
MENA		1,657			1,472
APAC		1,169			1,147
Technology		2,747			2,752
Corporate ⁽⁴⁾		(182	)		(357	)
Total assets	$	8,754		$	9,440

(1)

Operating results for NCSA and EARC for the three and nine months ended September 30, 2019 include the impacts of the goodwill and intangible assets impairments discussed below. In addition, NCSA operating results for the nine months ended September 30, 2019 include a $101 million loss on the sale of APP, discussed in Note 4, Acquisition and Disposition Transactions.

Corporate operating results for the three and nine months ended September 30, 2019 included:

•

$14 million and $103 million of restructuring and integration costs, respectively;

•

$14 million and $29 million of transaction costs, respectively; and

•

$18 million of vessel and marine operations related impairment charges, see Note 16, Fair Value Measurements.

Corporate operating results for the three and nine months ended September 30, 2018 included:

•

$31 million and $106 million of restructuring and integration costs, respectively; and

•

$5 million and $45 million of transaction costs, respectively.

See Note 11, Restructuring and Integration Costs and Transaction Costs, for further discussion.

⁽²⁾

^{Represents impairment of goodwill associated with our NCSA and EARC reporting units, resulting from our interim impairment assessment during the third quarter of 2019. In addition, in the third quarter of 2019 we recorded $143 million of impairment associated with NCSA intangible assets. The goodwill impairment values are included within the applicable operating segment’s operating loss. See Note 9, Goodwill and Other Intangible Assets, for further discussion.}

⁽³⁾	^{Capital expenditures reported represent cash purchases. As of September 30, 2019, we had approximately $127 million of accrued and unpaid capital expenditures reported in property, plant and equipment; the balance as of September 30, 2018 was not material.}

⁽⁴⁾	^{Corporate assets as of September 30, 2019 and December 31, 2018 include negative cash balances associated with our international cash pooling program.}