Annual report pursuant to Section 13 and 15(d)

OPERATING SEGMENTS (Tables)

v2.4.0.8
OPERATING SEGMENTS (Tables)
12 Months Ended
Dec. 31, 2013
Segment Reporting [Abstract]  
Financial information regarding reportable operating segments
Summarized financial information regarding our reportable operating segments at December 31, is shown in the table below:
In millions
 
Engine
 
Components
 
Power
Generation
 
Distribution
 
Non-segment
Items(1)
 
Total
2013
 
 
 
 
 
 
 
 
 
 
 
 
External sales
 
$
8,270

 
$
3,151

 
$
2,154

 
$
3,726

 
$

 
$
17,301

Intersegment sales
 
1,743

 
1,191

 
877

 
23

 
(3,834
)
 

Total sales
 
10,013

 
4,342

 
3,031

 
3,749

 
(3,834
)
 
17,301

Depreciation and amortization(2)
 
205

 
96

 
50

 
54

 

 
405

Research, development and engineering expenses
 
416

 
218

 
73

 
6

 

 
713

Equity, royalty and interest income from investees
 
136

 
28

 
32

 
165

 

 
361

Interest income
 
16

 
3

 
6

 
2

 

 
27

Segment EBIT
 
1,041

 
527

 
218

 
388

(4) 
(14
)
 
2,160

Net assets
 
4,323

 
1,885

 
1,801

 
1,637

 

 
9,646

Investments and advances to equity investees
 
419

 
140

 
110

 
262

 

 
931

Capital expenditures
 
372

 
141

 
106

 
57

 

 
676

2012
 
 
 
 
 
 
 
 
 
 
 
 
External sales
 
$
9,101

 
$
2,809

 
$
2,163

 
$
3,261

 
$

 
$
17,334

Intersegment sales
 
1,632

 
1,203

 
1,105

 
16

 
(3,956
)
 

Total sales
 
10,733

 
4,012

 
3,268

 
3,277

 
(3,956
)
 
17,334

Depreciation and amortization(2)
 
192

 
82

 
47

 
34

 

 
355

Research, development and engineering expenses
 
433

 
213

 
76

 
6

 

 
728

Equity, royalty and interest income from investees
 
127

 
29

 
40

 
188

 

 
384

Interest income
 
11

 
3

 
9

 
2

 

 
25

Segment EBIT(3)
 
1,248

 
426

 
285

 
369

(4) 
(25
)
 
2,303

Net assets
 
3,373

 
1,830

 
1,582

 
1,392

 

 
8,177

Investments and advances to equity investees
 
401

 
127

 
88

 
281

 

 
897

Capital expenditures
 
399

 
134

 
95

 
62

 

 
690

2011
 
 
 
 
 
 
 
 
 
 
 
 
External sales
 
$
9,649

 
$
2,886

 
$
2,492

 
$
3,021

 
$

 
$
18,048

Intersegment sales
 
1,658

 
1,177

 
1,006

 
23

 
(3,864
)
 

Total sales
 
11,307

 
4,063

 
3,498

 
3,044

 
(3,864
)
 
18,048

Depreciation and amortization(2)
 
181

 
73

 
42

 
25

 

 
321

Research, development and engineering expenses
 
397

 
175

 
54

 
3

 

 
629

Equity, royalty and interest income from investees
 
166

 
31

 
47

 
172

 

 
416

Interest income
 
18

 
5

 
8

 
3

 

 
34

Segment EBIT
 
1,384

 
470

 
373

 
386

 
102

 
2,715

Net assets
 
3,167

 
1,467

 
1,547

 
1,123

 

 
7,304

Investments and advances to equity investees
 
398

 
123

 
79

 
238

 

 
838

Capital expenditures
 
339

 
141

 
87

 
55

 

 
622

____________________________________________________
(1) 
Includes intersegment sales and profit in inventory eliminations and unallocated corporate expenses. There were no significant unallocated corporate expenses for the year ended December 31, 2013. The year ended December 31, 2012, included a $6 million gain ($4 million after-tax) related to adjustments from our 2011 divestitures and a $20 million charge ($12 million after-tax) related to legal matters. The year ended December 31, 2011, included a $68 million gain ($37 million after-tax) and a $53 million gain ($33 million after-tax) related to the Component segment sales of certain assets and liabilities from our exhaust and light-duty filtration businesses, respectively, and a $38 million gain ($24 million after-tax) related to the insurance settlement regarding the June 2008 flood in Southern Indiana. The gains and losses have been excluded from segment results as they were not considered in our evaluation of operating results for the years ended December 31, 2012 and 2011.
(2) 
Depreciation and amortization as shown on a segment basis excludes the amortization of debt discount and deferred costs that are included in the Consolidated Statements of Income as "Interest expense."
(3) 
Segment EBIT included restructuring and other charges for each business segment of $20 million (Engine), $6 million (Components), $12 million (Power Generation) and $14 million (Distribution). See NOTE 19, "RESTRUCTURING AND OTHER CHARGES," for additional detail.
(4) 
Distribution segment EBIT for the year ended December 31, 2013, included a $7 million gain and $5 million gain for the fair value adjustment resulting from the acquisitions of a controlling interest in Northwest and Rocky Mountain, respectively. Distribution segment EBIT for the year ended December 31, 2012, included a $7 million gain on the fair value adjustment resulting from the acquisition of a controlling interest in Central Power. See NOTE 2, "ACQUISITIONS AND DIVESTITURES," for additional detail.
Reconciliation of segment information
A reconciliation of our segment information to the corresponding amounts in the Consolidated Statements of Income is shown in the table below:
 
 
Years ended December 31,
In millions
 
2013
 
2012
 
2011
Total EBIT
 
$
2,160

 
$
2,303

 
$
2,715

Less: Interest expense
 
41

 
32

 
44

Income before income taxes
 
$
2,119

 
$
2,271

 
$
2,671

Reconciliation of segment information from net assets to total assets
 
 
December 31,
In millions
 
2013
 
2012
 
2011
Net assets for operating segments
 
$
9,646

 
$
8,177

 
$
7,304

Liabilities deducted in arriving at net assets
 
5,103

 
4,913

 
4,832

Pension and other postretirement benefit adjustments excluded from net assets
 
(346
)
 
(977
)
 
(928
)
Deferred tax assets not allocated to segments
 
292

 
410

 
435

Debt-related costs not allocated to segments
 
33

 
25

 
25

Total assets
 
$
14,728

 
$
12,548

 
$
11,668

Net sales attributed to geographic areas based on the location of the customer
The tables below present certain segment information by geographic area. Net sales attributed to geographic areas were based on the location of the customer. Long-lived assets include property, plant and equipment, net of depreciation, investments and advances to equity investees and other assets, excluding deferred tax assets.
In millions
 
Years ended as of December 31,
Net Sales
 
2013
 
2012
 
2011
United States
 
$
8,382

 
$
8,107

 
$
7,354

China
 
1,194

 
1,056

 
1,452

Brazil
 
882

 
798

 
1,286

India
 
630

 
757

 
859

Mexico
 
556

 
692

 
631

United Kingdom
 
453

 
660

 
727

Canada
 
655

 
642

 
653

Other foreign countries
 
4,549

 
4,622

 
5,086

Total net sales
 
$
17,301

 
$
17,334

 
$
18,048

Long-lived assets attributed to geographic areas
In millions
 
Years ended as of December 31,
Long-lived assets
 
2013
 
2012
 
2011
United States
 
$
2,606

 
$
2,440

 
$
2,218

China
 
646

 
589

 
520

India
 
330

 
243

 
203

United Kingdom
 
319

 
339

 
318

Brazil
 
172

 
170

 
151

Netherlands
 
138

 
130

 
111

Mexico
 
87

 
77

 
72

Germany
 
69

 
49

 
47

Canada
 
68

 
69

 
64

Korea
 
37

 
37

 
27

Turkey
 
28

 
29

 
19

Romania
 
27

 
15

 
10

Australia
 
18

 
25

 
34

Singapore
 
17

 
16

 
9

United Arab Emirates
 
15

 
16

 
14

France
 
13

 
13

 
13

Other foreign countries
 
34

 
33

 
32

Total long-lived assets
 
$
4,624

 
$
4,290

 
$
3,862