Baker Hughes 2014 Annual Report Download - page 84

Baker Hughes Incorporated
Notes to Consolidated Financial Statements
59
NOTE 3. ACQUISITIONS AND DECONSOLIDATION
In September 2014, we completed the acquisition of the pipeline and specialty services business of
Weatherford International Ltd. ("PSS") for total cash consideration of $248 million, subject to the finalization of the
post-closing working capital adjustments. PSS provides an expanded range of pre-commissioning, deepwater and
in-line inspection services worldwide and is included in our Industrial Services segment. The transaction has been
accounted for using the acquisition method of accounting and accordingly, assets acquired and liabilities assumed
were recorded at their fair values as of the acquisition date. As a result of the acquisition, we recorded
approximately $73 million of goodwill and approximately $37 million of intangible assets. Pro forma results of
operations for this acquisition have not been presented because the effect of this acquisition was not material to our
consolidated financial statements.
During the fourth quarter of 2014, we sold a portion of our ownership interest in a jointly owned legal entity, and
as a result, we no longer have a controlling financial interest. Accordingly, we deconsolidated this joint venture
which resulted in a net gain of $34 million. The net gain is primarily the result of the carrying amount of the
noncontrolling interest in equity exceeding the carrying amount of the net assets, and was included in MG&A
expenses in the statement of operations.
NOTE 4. SEGMENT INFORMATION
We are a supplier of oilfield services, products, technology and systems to the worldwide oil and natural gas
business, referred to as oilfield operations, which are managed through operating segments that are aligned with
our geographic regions. We also provide services and products to the downstream chemicals, and process and
pipeline services, referred to as Industrial Services.
During 2014, certain North African entities previously reported in our Middle East/Asia Pacific segment were
realigned and are now reported within our Europe/Africa/Russia Caspian segment to reflect how we manage the
business. Accordingly, all prior segment disclosures have been recast to reflect this realignment.
The performance of our operating segments is evaluated based on profit before tax, which is defined as income
before income taxes and before the following: net interest expense, corporate expenses, and certain gains and
losses not allocated to the operating segments.
The following table presents revenue and profit (loss) before tax by segment at December 31:
2014 2013 2012
Segments Revenue Profit (Loss) Before Tax Revenue Profit (Loss) Before Tax Revenue Profit (Loss) Before Tax
North America $ 12,078 $ 1,466 $ 10,878 $ 968 $ 10,836 $ 1,268
Latin America 2,236 290 2,307 66 2,399 197
Europe/Africa/Russia Caspian 4,417 621 4,041 591 3,810 605
Middle East/Asia Pacific 4,456 675 3,859 457 3,099 294
Industrial Services 1,364 119 1,279 135 1,217 131
Total Operations 24,551 3,171 22,364 2,217 21,361 2,495
Corporate and other — (250) — (268) — (303)
Interest expense, net — (232) — (234) — (210)
Litigation settlements —(62) — — — —
Total $ 24,551 $ 2,627 $ 22,364 $ 1,715 $ 21,361 $ 1,982