UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported): | January 28, 2016 |
Cameron International Corporation
______________________________________________
(Exact Name of Registrant as Specified in its Charter)
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Delaware ___________________ (State or other jurisdiction of incorporation) | 1-13884 _________________ (Commission File Number) | 76-0451843 ___________________ (I.R.S. Employer Identification No.) |
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1333 West Loop South, Suite 1700, Houston, Texas ________________________________________ | 77027 _______________ |
(Address of Principal Executive Offices) | (Zip Code) |
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Registrant's telephone number, including area code: | (713) 513-3300 |
Not Applicable
_______________________________________________________________________
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c)) |
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Item 2.02 | Results of Operations and Financial Condition |
On January 28, 2016 Cameron International Corporation (“Cameron”) issued a press release announcing its results for the fourth quarter ended December 31, 2015. The press release is attached hereto as Exhibit 99.1 and is incorporated by reference into this item.
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Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
The following is being furnished as an exhibit to this report:
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Exhibit Number | Exhibit Title or Description |
Exhibit 99.1 | Press Release of Cameron International Corporation, dated January 28, 2016 – Cameron Fourth Quarter Earnings. |
Exhibit 99.1 to this report contains a “non-GAAP financial measure” as defined in Item 10 of Regulation S-K of the Securities Exchange Act of 1934, as amended. The non-GAAP financial measure reflects adjusted EPS. A reconciliation of adjusted EPS to the most directly comparable financial measures calculated and presented in accordance with Generally Accepted Accounting Principles in the United States (“GAAP”) is included as an attachment to the press release. The Company believes the presentation of adjusted EPS is useful to the Company’s investors because adjusted EPS can be used in analyzing the company’s on-going earnings potential and understanding certain significant items impacting the comparability of our results. In addition, adjusted EPS is a widely used benchmark in the investment community.
The presentation of this additional information is not meant to be considered in isolation or as a substitute for the Company’s financial results prepared in accordance with GAAP.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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| CAMERON INTERNATIONAL CORPORATION |
| By: /s/ Charles M. Sledge |
| Charles M. Sledge |
| Senior Vice President and Chief Financial Officer |
Date: January 28, 2016
Cameron International Corporation
Current Report on Form 8-K
Dated January 28, 2016
EXHIBIT INDEX
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Exhibit Number | Exhibit Title or Description |
| Press Release of Cameron International Corporation, dated January 28, 2016 – Cameron Third Quarter Earnings. |
Exhibit 99.1
Contact: Scott Lamb
Vice President, Investor Relations
(713) 513-3344
CAMERON ANNOUNCES RESULTS FOR FOURTH QUARTER OF 2015
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• | $1.08 fully diluted earnings per share excluding discontinued operations and other costs |
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• | 17.8% segment operating income as a percent of revenue, driven by Subsea and Drilling segments |
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• | Cash provided by operations reaches nearly $500 million |
HOUSTON, Texas, January 28, 2016 -- Cameron (NYSE: CAM) today reported fully diluted earnings per share, excluding discontinued operations and other costs, of $1.08 for the fourth quarter of 2015, compared to $1.34 for the same period of 2014.
Other costs in the fourth quarter of 2015 amounted to $115 million on a pretax basis, or $0.43 per share, primarily related to asset charges and severance, as detailed in an accompanying table.
On a GAAP basis, the Company’s fully diluted earnings per share for the fourth quarter of 2015 were $0.65, as compared to $1.28 for the same period of 2014.
For the full year 2015, the Company reported fully-diluted earnings per share, excluding discontinued operations and other costs, of $4.00, compared to $4.14 for 2014. On a GAAP basis, the Company’s 2015 fully diluted earnings per share were $2.60, as compared to $3.96 for 2014.
Commenting on the Company’s performance in the fourth quarter of 2015, President and Chief Executive Officer Scott Rowe, said, “Cameron once again delivered very strong operating results in the face of a continued downturn in the energy markets. The Company’s performance was driven by accelerated progress in the transformation of our cost structure and strong execution. In particular, the company’s Subsea segment reported an operating income margin of 23.1%, more than double that of the fourth quarter of 2014.”
Segment Performance
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• | Subsea - Relative to the fourth quarter of 2014, the segment reported an 85% increase in operating income despite lower revenues, driven in particular by strong execution on several late-stage projects as well as a greater mix of services-related work. Segment orders increased 27% versus the fourth quarter of 2014 and more than doubled as compared to the third quarter of 2015. Orders for the year totaled $2.23 billion versus $2.36 billion in 2014. |
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• | Surface - Revenues, operating income and margin all improved relative to the third quarter of 2015 but were lower than the fourth quarter of 2014 due in large part to the weakness in North American markets. |
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• | Drilling - Operating income margin increased to 21.7% in the fourth quarter of 2015 as compared to 18.5% in the fourth quarter of 2014 due to continued strong execution. Revenues and operating income declined, reflecting lower project-related backlog as well as a reduction in service activity. |
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• | Valves & Measurement - Revenues, operating income and margin all declined relative to the fourth quarter of 2014, reflecting lower volumes and pricing pressures, particularly in the North American distribution market. |
Outlook
Rowe said, “Although declines in energy prices will have a negative impact on our business in 2016, we remain focused on the factors that will drive our fundamental long-term performance: execution, customer relationships, cost reduction and technology.”
Cash Flow from Operations
The Company generated cash from operations of $497 million during the fourth quarter and $708 million for the full-year 2015. The Company ended the quarter with cash, cash equivalents and short-term investments totaling $2.4 billion.
Agreement to be Acquired by Schlumberger Limited
On August 26, 2015, Schlumberger Limited (NYSE: SLB) and Cameron jointly announced a definitive merger agreement in which the companies will combine in a stock and cash transaction. The agreement was unanimously approved by the boards of directors of both companies and, on December 17, Cameron stockholders overwhelmingly voted to adopt the merger agreement. The transaction remains subject to regulatory approvals and customary closing conditions, and is expected to close in the first quarter of 2016.
Cameron is a leading provider of flow equipment products, systems and services to worldwide oil and gas industries.
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Forward-Looking Statements
In addition to the historical data contained herein, this document includes forward-looking statements regarding the Company’s long-term performance and expectations regarding the closing of merger transaction and, if accomplished, the timing thereof, made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and subject to risk factors that are discussed in Cameron's most recent filings on Form 10-Q and 10-K, filed with the SEC, as well as other filings with the SEC available at the SEC's Internet site (http://www.sec.gov). Actual results may differ materially from those expected, estimated or projected and a closing of the merger transaction may not occur or the timing thereof could be different from that currently expected. Forward-looking statements speak only as of the date they are made, and Cameron undertakes no obligation to publicly update or revise any of them in light of new information, future events or otherwise.
Cameron
Unaudited Consolidated Condensed Results of Operations
($ and shares in millions except per share data)
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| | | | | | | | | | | | | | | | |
| | Three months ended December 31, | | Twelve months ended December 31, |
| | 2015 | | 2014 | | 2015 | | 2014 |
REVENUES | | $ | 2,079 |
| | $ | 2,804 |
| | $ | 8,782 |
| | $ | 10,381 |
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COSTS AND EXPENSES: | | | | |
| | |
| | |
Cost of sales (exclusive of depreciation and amortization shown separately below) | | 1,403 |
| | 2,009 |
| | 6,126 |
| | 7,464 |
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Selling and administrative expenses | | 261 |
| | 316 |
| | 1,082 |
| | 1,287 |
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Depreciation and amortization | | 78 |
| | 92 |
| | 342 |
| | 348 |
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Interest, net | | 33 |
| | 31 |
| | 138 |
| | 129 |
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Other costs, net | | 115 |
| | 11 |
| | 773 |
| | 73 |
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Total costs and expenses | | 1,890 |
| | 2,459 |
| | 8,461 |
| | 9,301 |
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Income from continuing operations before income taxes | | 189 |
| | 345 |
| | 321 |
| | 1,080 |
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Income tax provision | | (40 | ) | | (79 | ) | | (184 | ) | | (258 | ) |
Income from continuing operations | | 149 |
| | 266 |
| | 137 |
| | 822 |
|
Income (loss) from discontinued operations, net of income taxes | | — |
| | (4 | ) | | 431 |
| | 26 |
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Net income | | 149 |
| | 262 |
| | 568 |
| | 848 |
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Less: Net income attributable to noncontrolling interests | | 24 |
| | 8 |
| | 67 |
| | 37 |
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Net income attributable to Cameron stockholders | | $ | 125 |
| | $ | 254 |
| | $ | 501 |
| | $ | 811 |
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Amounts attributable to Cameron stockholders: | | |
| | |
| | |
| | |
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Income from continuing operations | | $ | 125 |
| | $ | 258 |
| | $ | 70 |
| | $ | 785 |
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Income (loss) from discontinued operations | | — |
| | (4 | ) | | 431 |
| | 26 |
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Net income attributable to Cameron stockholders | | $ | 125 |
| | $ | 254 |
| | $ | 501 |
| | $ | 811 |
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Earnings (loss) per common share attributable to Cameron stockholders: | | |
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Basic - | | |
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Continuing operations | | $ | 0.65 |
| | $ | 1.32 |
| | $ | 0.36 |
| | $ | 3.85 |
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Discontinued operations | | — |
| | (.02 | ) | | 2.25 |
| | .13 |
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Basic earnings per share | | $ | 0.65 |
| | $ | 1.30 |
| | $ | 2.61 |
| | $ | 3.98 |
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Diluted - | | |
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| | |
| | |
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Continuing operations | | $ | 0.65 |
| | $ | 1.30 |
| | $ | 0.36 |
| | $ | 3.83 |
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Discontinued operations | | — |
| | (.02 | ) | | 2.24 |
| | .13 |
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Diluted earnings per share | | $ | 0.65 |
| | $ | 1.28 |
| | $ | 2.60 |
| | $ | 3.96 |
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Shares used in computing earnings per common share: | | |
| | |
| | |
| | |
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Basic | | 192 |
| | 196 |
| | 192 |
| | 204 |
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Diluted | | 193 |
| | 198 |
| | 193 |
| | 205 |
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Cameron
Consolidated Condensed Balance Sheets
($ millions)
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| | | | | | | | |
| | December 31, 2015 | | December 31, 2014 |
| | (unaudited) | | |
ASSETS | | | | |
Cash and cash equivalents | | $ | 1,775 |
| | $ | 1,513 |
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Short-term investments | | 584 |
| | 113 |
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Receivables, net | | 1,964 |
| | 2,389 |
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Inventories, net | | 2,360 |
| | 2,929 |
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Other current assets | | 333 |
| | 391 |
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Assets held for sale | | 102 |
| | 217 |
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Total current assets | | 7,118 |
| | 7,552 |
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Plant and equipment, net | | 1,717 |
| | 1,964 |
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Goodwill | | 1,764 |
| | 2,461 |
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Intangibles, net | | 582 |
| | 728 |
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Other assets | | 319 |
| | 187 |
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Total assets | | $ | 11,500 |
| | $ | 12,892 |
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LIABILITIES AND STOCKHOLDERS' EQUITY | | |
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Short-term debt | | $ | 284 |
| | $ | 263 |
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Accounts payable and accrued liabilities | | 2,793 |
| | 3,748 |
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Accrued income taxes | | 127 |
| | 168 |
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Liabilities held for sale | | 2 |
| | 90 |
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Total current liabilities | | 3,206 |
| | 4,269 |
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Long-term debt | | 2,542 |
| | 2,819 |
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Deferred income taxes | | 212 |
| | 193 |
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Other long-term liabilities | | 150 |
| | 167 |
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Total liabilities | | 6,110 |
| | 7,448 |
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Stockholders’ equity: | | |
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Common stock, par value $.01 per share, 400,000,000 shares authorized, 263,111,472 shares issued at December 31, 2015 and 2014 | | 3 |
| | 3 |
|
Capital in excess of par value | | 3,265 |
| | 3,255 |
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Retained earnings | | 6,132 |
| | 5,631 |
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Accumulated other elements of comprehensive income (loss) | | (877 | ) | | (540 | ) |
Less: Treasury stock at cost, 71,931,558 shares at December 31, 2015 and 68,139,027 shares at December 31, 2014 | | (3,969 | ) | | (3,794 | ) |
Total Cameron stockholders’ equity | | 4,554 |
| | 4,555 |
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Noncontrolling interests | | 836 |
| | 889 |
|
Total equity | | 5,390 |
| | 5,444 |
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | 11,500 |
| | $ | 12,892 |
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Cameron
Unaudited Consolidated Condensed Statements of Cash Flows
($ millions)
|
| | | | | | | | | | | | | | | | |
| | Three months ended December 31, | | Twelve months ended December 31, |
| | 2015 | | 2014 | | 2015 | | 2014 |
Cash flows from operating activities: | | | | | | | | |
Net income | | $ | 149 |
| | $ | 262 |
| | $ | 568 |
| | $ | 848 |
|
Adjustments to reconcile net income to net cash provided by operating activities: | | | | |
| | | | |
|
Asset impairment and other charges | | 68 |
| | — |
| | 654 |
| | 44 |
|
Pre-tax gain on sale of compression businesses | | — |
| | — |
| | (681 | ) | | (95 | ) |
Depreciation | | 67 |
| | 78 |
| | 293 |
| | 296 |
|
Amortization | | 11 |
| | 15 |
| | 49 |
| | 64 |
|
Non-cash stock compensation expense | | 14 |
| | 11 |
| | 49 |
| | 54 |
|
Gain from remeasurement of prior interest in equity method investment | | — |
| | — |
| | — |
| | (8 | ) |
Deferred income taxes and tax benefit of stock compensation plan transactions | | 17 |
| | (8 | ) | | (50 | ) | | (48 | ) |
Changes in assets and liabilities, net of translation, and non-cash items: | | | | |
| | | | |
|
Receivables | | 145 |
| | 124 |
| | 390 |
| | 166 |
|
Inventories | | 256 |
| | 139 |
| | 362 |
| | (144 | ) |
Accounts payable and accrued liabilities | | (43 | ) | | 274 |
| | (913 | ) | | (17 | ) |
Other assets and liabilities, net | | (187 | ) | | 43 |
| | (13 | ) | | 23 |
|
Net cash provided by operating activities | | 497 |
| | 938 |
| | 708 |
| | 1,193 |
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Cash flows from investing activities: | | | | |
| | |
| | |
|
Proceeds from sales and maturities of short-term investments | | 249 |
| | 24 |
| | 923 |
| | 65 |
|
Purchases of short-term investments | | (512 | ) | | (22 | ) | | (1,394 | ) | | (137 | ) |
Capital expenditures | | (95 | ) | | (126 | ) | | (285 | ) | | (385 | ) |
Net proceeds received from sale of compression businesses, net | | — |
| | — |
| | 831 |
| | 547 |
|
Other dispositions (acquisitions), net | | — |
| | — |
| | — |
| | (7 | ) |
Proceeds from sales of plant and equipment | | 3 |
| | 2 |
| | 14 |
| | 13 |
|
Net cash provided by (used for) investing activities | | (355 | ) | | (122 | ) | | 89 |
| | 96 |
|
Cash flows from financing activities: | | | | |
| | |
| | |
|
Issuance of senior debt | | — |
| | — |
| | — |
| | 500 |
|
Debt issuance costs | | — |
| | — |
| | — |
| | (4 | ) |
Early retirement of senior notes | | — |
| | — |
| | — |
| | (253 | ) |
Short-term loan borrowings (repayments), net | | (2 | ) | | (138 | ) | | (222 | ) | | (34 | ) |
Purchase of treasury stock | | — |
| | (191 | ) | | (240 | ) | | (1,747 | ) |
Contributions from (distributions to) noncontrolling interest owners | | — |
| | (2 | ) | | (3 | ) | | (42 | ) |
Proceeds from stock option exercises, net of tax payments from stock compensation plan transactions | | 15 |
| | 1 |
| | 20 |
| | 40 |
|
Excess tax benefits from stock compensation plan transactions | | 1 |
| | — |
| | 2 |
| | 6 |
|
Principal payments on capital leases | | (3 | ) | | (5 | ) | | (18 | ) | | (20 | ) |
Net cash used for financing activities | | 11 |
| | (335 | ) | | (461 | ) | | (1,554 | ) |
Effect of translation on cash | | (5 | ) | | (26 | ) | | (74 | ) | | (35 | ) |
Increase (decrease) in cash and cash equivalents | | 148 |
| | 455 |
| | 262 |
| | (300 | ) |
Cash and cash equivalents, beginning of year | | 1,627 |
| | 1,053 |
| | 1,513 |
| | 1,813 |
|
Cash and cash equivalents, end of year | | $ | 1,775 |
| | $ | 1,513 |
| | $ | 1,775 |
| | $ | 1,513 |
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Cameron
Unaudited Supplemental Segment Financial Data
($ millions)
|
| | | | | | | | | | | | | | | | |
| | Three months ended December 31, | | Twelve months ended December 31, |
| | 2015 | | 2014 | | 2015 | | 2014 |
Revenues: | | | | | | | | |
Subsea | | $ | 706 |
| | $ | 872 |
| | $ | 2,753 |
| | $ | 3,067 |
|
Surface | | 458 |
| | 660 |
| | 1,957 |
| | 2,411 |
|
Drilling | | 590 |
| | 816 |
| | 2,708 |
| | 3,049 |
|
Valves and Measurement (V&M) | | 363 |
| | 528 |
| | 1,548 |
| | 2,125 |
|
Elimination of intersegment revenues | | (38 | ) | | (72 | ) | | (184 | ) | | (271 | ) |
Consolidated revenues | | $ | 2,079 |
| | $ | 2,804 |
| | $ | 8,782 |
| | $ | 10,381 |
|
Segment operating income before interest and income taxes: | | |
| | |
| | |
| | |
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Subsea | | $ | 163 |
| | $ | 88 |
| | $ | 407 |
| | $ | 207 |
|
Surface | | 54 |
| | 123 |
| | 264 |
| | 427 |
|
Drilling | | 128 |
| | 151 |
| | 528 |
| | 474 |
|
V&M | | 30 |
| | 81 |
| | 177 |
| | 393 |
|
Elimination of intersegment earnings | | (4 | ) | | (21 | ) | | (36 | ) | | (74 | ) |
Segment operating income before interest and income taxes | | 371 |
| | 422 |
| | 1,340 |
| | 1,427 |
|
Corporate items: | | |
| | |
| | |
| | |
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Corporate expenses | | (34 | ) | | (35 | ) | | (108 | ) | | (145 | ) |
Interest, net | | (33 | ) | | (31 | ) | | (138 | ) | | (129 | ) |
Other costs, net | | (115 | ) | | (11 | ) | | (773 | ) | | (73 | ) |
Consolidated income from continuing operations before income taxes | | $ | 189 |
| | $ | 345 |
| | $ | 321 |
| | $ | 1,080 |
|
Orders: | | |
| | |
| | |
| | |
|
Subsea | | $ | 656 |
| | $ | 518 |
| | $ | 2,228 |
| | $ | 2,356 |
|
Surface | | 396 |
| | 560 |
| | 1,770 |
| | 2,480 |
|
Drilling | | 169 |
| | 419 |
| | 1,107 |
| | 2,449 |
|
V&M | | 315 |
| | 509 |
| | 1,418 |
| | 2,091 |
|
Consolidated orders | | $ | 1,536 |
| | $ | 2,006 |
| | $ | 6,523 |
| | $ | 9,376 |
|
|
| | | | | | | | |
| | December 31, | | December 31, |
Backlog (at end of period): | | 2015 | | 2014 |
Subsea | | $ | 3,421 |
| | $ | 4,263 |
|
Surface | | 884 |
| | 1,025 |
|
Drilling | | 1,611 |
| | 3,327 |
|
V&M | | 701 |
| | 921 |
|
Consolidated backlog | | $ | 6,617 |
| | $ | 9,536 |
|
Cameron
Reconciliation of GAAP to Non-GAAP Financial Information
($ millions, except per share amounts)
|
| | | | | | | | |
| | Three Months Ended December 31, 2015 |
| | After Tax | | Diluted EPS(1) |
Net income attributable to Cameron from continuing operations | | $ | 125 |
| | $ | 0.65 |
|
Adjustments: | | |
| | |
|
Asset charges & loss on disposal of assets | | 50 |
| | |
Facility closures & severance | | 32 |
| | |
|
All other | | 1 |
| | |
Net income attributable to Cameron, excluding charges | | $ | 208 |
| | $ | 1.08 |
|
(1) Based on 193 million diluted shares
|
| | | | | | | | |
| | Three Months Ended December 31, 2014 |
| | After Tax | | Diluted EPS(1) |
Net income attributable to Cameron from continuing operations | | $ | 258 |
| | $ | 1.30 |
|
Adjustments: | | |
| | |
|
Asset charges & loss on disposal of assets | | 1 |
| | |
|
Facilities closures and severance | | 3 |
| | |
All other | | 4 |
| | |
Net income attributable to Cameron, excluding charges | | $ | 266 |
| | $ | 1.34 |
|
(1) Based on 198 million diluted shares
Cameron
Reconciliation of GAAP to Non-GAAP Financial Information
($ millions, except per share amounts)
|
| | | | | | | | |
| | Twelve months ended December 31, 2015 |
| | After Tax | | Diluted EPS(1) |
Net income attributable to Cameron from continuing operations | | $ | 70 |
| | $ | 0.36 |
|
Adjustments: | | |
| | |
|
Asset charges and loss on disposal of assets | | 616 |
| | |
Facility closures and severance | | 63 |
| | |
All other | | 23 |
| | |
Net income attributable to Cameron, excluding charges | | $ | 772 |
| | $ | 4.00 |
|
(1) Based on 193 million diluted shares
|
| | | | | | | | |
| | Twelve months ended December 31, 2014 |
| | After Tax | | Diluted EPS(1) |
Net income attributable to Cameron from continuing operations | | $ | 785 |
| | $ | 3.83 |
|
Adjustments: | | |
| | |
|
Asset charges and loss on disposal of assets | | 52 |
| | |
Facility closures, severance, and restructuring | | 10 |
| | |
All other | | 2 |
| | |
Net income attributable to Cameron, excluding charges | | $ | 849 |
| | $ | 4.14 |
|
(1) Based on 205 million diluted shares
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