15. Business Segments and Geographic Areas

Effective April 1, 2014, the Company’s operations were reorganized into four reportable segments: Rig Systems, Rig Aftermarket, Wellbore Technologies and Completion & Production Solutions. Within the four reporting segments, the Company has aggregated two business units under Rig Systems, one business unit under Rig Aftermarket, six business units under Wellbore Technologies and six business units under Completion & Production Solutions for a total of 15 business units. The Company has aggregated each of its business units in one of the four reporting segments based on the guidelines of ASC Topic 280, “Segment Reporting” (“ASC Topic 280”).

Rig Systems

The Company’s Rig Systems segment makes and supports the capital equipment and integrated systems needed to drill oil and gas wells on land and offshore. The segment designs, manufactures, and sells land rigs, offshore drilling equipment packages, including installation and commissioning services, and drilling rig components that mechanize and automate the rig process and functionality.

Equipment and technologies in Rig Systems include: substructures, derricks, and masts; cranes; pipe lifting, racking, rotating, and assembly systems; fluid transfer technologies, such as mud pumps; pressure control equipment, including blowout preventers; power transmission systems, including drives and generators; and rig instrumentation and control systems.

The Rig Systems segment primarily supports land and offshore drillers. Demand for Rig Systems products primarily depends on drilling contractors’ and oil and gas companies’ capital spending plans, specifically capital expenditures on rig construction and refurbishment.

Rig Aftermarket

The Company’s Rig Aftermarket segment provides comprehensive aftermarket products and services to support land rigs and offshore rigs, and drilling rig components manufactured by the Rig Systems segment.

The segment provides spare parts, repair, and rentals as well as technical support, field service and first well support, field engineering, and customer training through a network of aftermarket service and repair facilities strategically located in major areas of drilling operations.

The Rig Aftermarket segment primarily supports land and offshore drillers. Demand for Rig Aftermarket products and services primarily depends on overall levels of oilfield drilling activity, which drives demand for spare parts, service, and repair for Rig System’s large installed base of equipment; and secondarily on drilling contractors’ and oil and gas companies’ capital spending plans, specifically capital expenditures on rig refurbishment and re-certification.

Wellbore Technologies

The Company’s Wellbore Technologies segment designs, manufactures, rents, and sells a variety of equipment and technologies used to perform drilling operations, and offers services that optimize their performance, including: solids control and waste management equipment and services, drilling fluids, premium drill pipe, wired pipe, tubular inspection and coating services, instrumentation, downhole tools, and drill bits.

The Wellbore Technologies segment focuses on oil and gas companies and supports drilling contractors, oilfield service companies, and oilfield rental companies. Demand for Wellbore Technologies products and services primarily depends on the level of oilfield drilling activity by oil and gas companies, drilling contractors, and oilfield service companies.

Completion & Production Solutions

The Company’s Completion & Production Solutions segment integrates technologies for well completions and oil and gas production. The segment designs, manufactures, and sells equipment and technologies needed for hydraulic fracture stimulation, including pressure pumping trucks and pumps, blenders, sanders, hydration units, injection units, flowline, manifolds and wellheads; well intervention, including coiled tubing units, coiled tubing, and wireline units and tools; onshore production, including composite pipe, surface transfer and progressive cavity pumps, and artificial lift systems; and offshore production, including floating production systems and subsea production technologies.

The Completion & Production Solutions segment primarily supports service companies and oil and gas companies. Demand for Completion & Production Solutions products depends on the level of oilfield completions and workover activity by oilfield service companies and drilling contractors and capital spending plans by oil and gas companies and oilfield service companies.

The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies of the Company. The Company evaluates performance of each reportable segment based upon its operating income, excluding non-recurring items.

The Company had revenues of 11%, 11% and 13% of total revenue from one of its customers for the years ended December 31, 2013, 2012, and 2011, respectively. This customer, Samsung Heavy Industries, is a shipyard acting as a general contractor for its customers, who are drillship owners and drilling contractors. This shipyard’s customers have specified that the Company’s drilling equipment be installed on their drillships and have required the shipyard to issue contracts to the Company.

Geographic Areas:

The following table presents consolidated revenues by country based on sales destination of the use of the products or services (in millions):


	Years Ended December 31,
	2013		2012		2011
United States	$	5,140	$	6,040	$	4,532
South Korea		3,219		3,121		2,257
Singapore		1,850		1,118		721
Norway		1,102		736		689
China		1,007		533		430
Brazil		811		503		397
United Kingdom		705		523		465
Canada		625		728		608
Other Countries		4,762		3,892		3,376

Total	$	19,221	$	17,194	$	13,475

The following table presents long-lived assets by country based on the location (in millions):


	December 31,
	2013		2012
United States	$	1,830	$	1,606
Brazil		270		162
United Kingdom		200		173
Denmark		166		174
Canada		123		131
South Korea		115		112
Mexico		101		87
Singapore		94		93
Other Countries		509		407

Total	$	3,408	$	2,945

Business Segments:


	Rig Systems		Rig Aftermarket		Wellbore Technologies		Completion & Production Solutions		Eliminations(1)			Discontinued Operations		Total
December 31, 2013:
Revenues	$	8,450	$	2,692	$	5,211	$	4,309	$	(1,441	)	$	—	$	19,221
Operating profit		1,594		729		915		613		(652	)		—		3,199
Capital expenditures		61		24		226		212		91			—		614
Depreciation and amortization		82		26		420		210		—			—		738
Goodwill		1,279		906		4,425		2,106		—			333		9,049
Total assets		7,654		2,475		11,862		7,287		3,351			2,183		34,812
December 31, 2012:
Revenues	$	7,077	$	2,138	$	5,184	$	3,994	$	(1,199	)	$	—	$	17,194
Operating profit		1,685		594		983		684		(557	)		—		3,389
Capital expenditures		81		13		247		169		59			—		569
Depreciation and amortization		64		18		389		145		—			—		616
Goodwill		1,097		649		3,769		1,314		—			343		7,172
Total assets		6,563		1,930		11,032		6,192		3,394			2,373		31,484
December 31, 2011:
Revenues	$	5,686	$	1,876	$	4,455	$	2,483	$	(1,025	)	$	—	$	13,475
Operating profit		1,562		528		726		456		(463	)		—		2,809
Capital expenditures		70		10		245		103		51			—		479
Depreciation and amortization		61		14		381		93		—			—		549
Goodwill		943		556		3,683		917		—			52		6,151
Total assets		4,743		1,569		10,799		4,020		3,555			829		25,515

(1)

Sales from one segment to another generally are priced at estimated equivalent commercial selling prices; however, segments originating an external sale are credited with the full profit to the company. Eliminations include intercompany transactions conducted between the four reporting segments that are eliminated in consolidation. Intercompany transactions within each reporting segment are eliminated within each reporting segment. Also included in the eliminations column are capital expenditures and total assets related to corporate. Corporate assets consist primarily of cash and fixed assets.