Business Segments

12 Months Ended

Dec. 31, 2014

Business Segments [Abstract]

Business Segments

Note 16: Business Segments

The Company’s segment reporting changed in 2014 resulting in the business being organized into four segments – Subsea, Surface, Drilling and Valves & Measurement (V&M).  Historical information by segment for 2012 and 2013 has been retrospectively revised to conform to the 2014 presentation.

The Subsea segment includes the operations of OneSubsea, a business jointly owned by Cameron (60%) and Schlumberger (40%).  The Subsea segment delivers integrated solutions, products, systems and services to the subsea oil and gas market, including integrated subsea production systems involving wellheads, subsea trees, manifolds and flowline connectors, subsea processing systems for the enhanced recovery of hydrocarbons, control systems, connectors and services designed to maximize reservoir recovery and extend the life of each field.

The Surface segment provides onshore and offshore platform wellhead systems and processing solutions, including valves, chokes, actuators, Christmas trees and aftermarket services to oil and gas operators.  Rental equipment and artificial lift technologies are also provided, as well as products and services involving shale gas production.

One of the major services provided by the Surface segment is CAMSHALE™ Production Solutions, which specializes in shale gas production.  In this process, intense pressure from fracing fluid (usually a mixture of water and sand) is used to crack surrounding shale.  Once the fractures are made, the water is removed from the well bore and the sand is left behind to hold the fractures open.  Oil and natural gas then moves out of the fractures, into the well bore, and up to the surface.

The Drilling segment provides drilling equipment and aftermarket services to shipyards, drilling contractors, exploration & production operators and rental tool companies.  Products fall into two broad categories: pressure control equipment and rotary drilling equipment and are designed for either onshore or offshore applications.  Such products include drilling equipment packages, blowout preventers (BOPs), BOP control systems, connectors, riser systems, valve and choke manifold systems, topdrives, mud pumps, pipe handling equipment, rig designs and rig kits.

The V&M segment businesses serve portions of the upstream, midstream and downstream markets.  These businesses provide valves and measurement systems that are primarily used to control, direct and measure the flow of oil and gas as they are moved from individual wellheads through flow lines, gathering lines and transmission systems to refineries, petrochemical plants and industrial centers for processing. Products include gate valves, butterfly valves, Orbit® brand rising stem ball valves, double block and bleed valves, plug valves, globe valves, check valves, actuators, chokes and aftermarket parts and services as well as measurement equipment products such as totalizers, turbine meters, flow computers, chart recorders, ultrasonic flow meters and sampling systems.

The Company’s primary customers are oil and gas majors, national oil companies, independent producers, engineering and construction companies, drilling contractors, rental companies, geothermal energy and independent power producers, pipeline operators, major chemical, petrochemical and refining companies, natural gas processing and transmission companies, compression leasing companies, durable goods manufacturers, utilities and air separation companies.

The Company markets its equipment through a worldwide network of sales and marketing employees supported by agents and distributors in selected international locations. Due to the extremely technical nature of many of the products, the marketing effort is further supported by a staff of engineering employees.

The Company expenses all research and product development and enhancement costs as incurred, or if incurred in connection with a product ordered by a customer, when the revenue associated with the product is recognized. For the years ended December 31, 2014, 2013 and 2012, research and product development expenditures, including amounts incurred on projects designed to enhance or add to its existing product offerings, totaled approximately $128 million, $83 million and $63 million, respectively. The Subsea segment accounted for 58%, 44% and 47% of each respective year’s total costs.

Summary financial data by segment follows:

	Year Ended December 31,
(dollars in millions)	2014			2013			2012
Revenues:
Subsea	$	3,067		$	2,813		$	2,061
Surface		2,411			2,077			1,859
Drilling		3,049			2,327			1,807
V&M		2,125			2,105			2,168
Elimination of intersegment revenues		(271	)		(184	)		(100	)
Consolidated revenues	$	10,381		$	9,138		$	7,795
Depreciation and amortization:
Subsea	$	113		$	85		$	57
Surface		126			106			85
Drilling		60			60			46
V&M		49			47			50
Consolidated depreciation and amortization	$	348		$	298		$	238
Segment operating income before interest and income taxes:
Subsea	$	207		$	152		$	72
Surface		427			367			315
Drilling		474			311			329
V&M		393			414			396
Elimination of intersegment earnings		(74	)		(35	)		(21	)
Segment operating income before interest and income taxes		1,427			1,209			1,091
Corporate items:
Corporate expenses		(145	)		(162	)		(126	)
Interest, net		(129	)		(100	)		(90	)
Other costs		(73	)		(92	)		(33	)
Consolidated income from continuing operations before income taxes	$	1,080		$	855		$	842
Capital expenditures:
Subsea	$	70		$	80		$	82
Surface		125			156			132
Drilling		38			111			97
V&M		49			58			30
Corporate		96			102			69
Discontinued operations		7			13			17
Consolidated capital expenditures	$	385		$	520		$	427
Total assets:
Subsea	$	5,571		$	5,897		$	3,364
Surface		2,756			2,705			2,307
Drilling		3,011			3,076			2,413
V&M		1,633			1,765			1,743
Corporate		581			844			1,376
Discontinued operations		217			616			615
Elimination of intersegment investments		(877	)		(654	)		(660	)
Consolidated total assets	$	12,892		$	14,249		$	11,158

For internal management reporting, and therefore in the above segment information, “Corporate items” include governance expenses associated with the Company’s corporate office, as well as all of the Company’s interest income, interest expense, certain litigation expense managed by the Company’s General Counsel, foreign currency gains and losses from certain derivative and intercompany lending activities managed by the Company’s centralized Treasury function, all of the Company’s pension settlement costs, asset impairment and restructuring expenses, acquisition-related costs and various other unusual or one-time costs that are not considered a component of segment operating income. Consolidated interest income and expense are treated as a corporate item because cash equivalents, short-term investments and debt, including location, type, currency, etc., are managed on a worldwide basis by the Corporate Treasury Department.

Customer revenue by shipping location and long-lived assets by country were as follows:

	Year Ended December 31,
(dollars in millions)	2014		2013		2012
Revenues:
United States	$	4,689	$	4,311	$	4,058
United Kingdom		964		822		612
Other foreign countries		4,728		4,005		3,125
Total revenues	$	10,381	$	9,138	$	7,795

	December 31,
(dollars in millions)	2014		2013		2012
Long-lived assets:
United States	$	2,367	$	2,670	$	2,532
United Kingdom		219		197		170
Other foreign countries		2,567		2,999		1,323
Total long-lived assets	$	5,153	$	5,866	$	4,025