Baker Hughes 2014 Annual Report Download - page 31

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services and the design of specialized products to meet specific customer needs. We have technology centers
located in the U.S. (several in Houston, Texas and surrounding areas and one in Claremore, Oklahoma), Germany
(Celle), Russia (Novosibirsk), and Saudi Arabia (Dhahran). For information regarding the total amount of research
and development expense in each of the three years in the period ended December 31, 2014, see Note 1.
"Summary of Significant Accounting Policies" of the Notes to Consolidated Financial Statements in Item 8 herein.
We have followed a policy of seeking patent and trademark protection in numerous countries and regions
throughout the world for products and methods that appear to have commercial significance. We believe our
patents, trademarks, and related intellectual property rights are adequate for the conduct of our business, and
aggressively pursue protection of our intellectual property rights against infringement worldwide. Additionally, the
Company considers the quality and timely delivery of its products, the service it provides to its customers and the
technical knowledge and skills of its personnel to be other important components of the portfolio of capabilities and
assets supporting its ability to compete. No single patent or trademark is considered to be critical to our business.
SEASONALITY
Our operations can be affected by seasonal weather, which can temporarily affect the delivery and performance
of our products and services, as well as customers’ budgetary cycles. Examples of seasonal events which can
impact our business include:
• The severity and duration of both the summer and the winter in North America can have a significant impact
on activity levels. In Canada, the timing and duration of the spring thaw directly affects activity levels, which
reach seasonal lows during the second quarter and build through the third and fourth quarters to a seasonal
high in the first quarter.
• Adverse weather conditions such as hurricanes and typhoons can disrupt coastal and offshore drilling and
production operations.
• Severe weather during the winter months normally results in reduced activity levels in the North Sea and
Russia generally in the first quarter.
• Scheduled repair and maintenance of offshore facilities in the North Sea can reduce activity in the second
and third quarters.
• Many of our international oilfield customers increase orders for certain products and services in the fourth
quarter.
• Our Industrial Services segment typically experiences lower sales during the first and fourth quarters of the
year due to the Northern Hemisphere winter.
RAW MATERIALS
We purchase various raw materials and component parts for use in manufacturing our products and delivering
our services. The principal materials we purchase include, but are not limited to, steel alloys (including chromium
and nickel), titanium, barite, beryllium, copper, lead, tungsten carbide, synthetic and natural diamonds, gels, sand
and other proppants, printed circuit boards and other electronic components and hydrocarbon-based chemical feed
stocks. These materials are generally available from multiple sources and may be subject to price volatility. While
we generally do not experience significant or long-term shortages of these materials, we have from time to time
experienced temporary shortages of particular raw materials. In addition, we normally do not carry inventories of
such materials in excess of those reasonably required to meet our production schedules. We do not expect
significant interruptions in the supply of raw materials, but there can be no assurance that there will be no price or
supply issues over the long-term.
EMPLOYEES
As of December 31, 2014, we had approximately 62,000 employees, of which the majority are outside the U.S.
Less than 10% of these employees are represented under collective bargaining agreements or similar-type labor
arrangements.