National Oilwell Varco 2010 Annual Report Download - page 39

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Results of Operations
Years Ended December 31, 2010 and December 31, 2009
The following table summarizes the Companyî‚€s revenue and operating profit by operating segment in 2010 and 2009 (in millions):
Years Ended December 31, Variance
2010 2009 $ %
Revenue:
Rig Technology $ 6,965 $ 8,093 $ (1,128) (13.9)%
Petroleum Services & Supplies 4,182 3,745 437 11.7%
Distribution Services 1,546 1,350 196 14.5%
Eliminations (537) (476) (61) 12.8%
Total Revenue $ 12,156 $ 12,712 $ (556) (4.4)%
Operating Profit:
Rig Technology $ 2,064 $ 2,283 $ (219) (9.6)%
Petroleum Services & Supplies 585 301 284 94.4%
Distribution Services 78 50 28 56.0%
Unallocated expenses and eliminations (280) (319) 39 (12.2)%
Total Operating Profit $ 2,447 $ 2,315 $ 132 5.7%
Operating Profit %:
Rig Technology 29.6% 28.2%
Petroleum Services & Supplies 14.0% 8.0%
Distribution Services 5.0% 3.7%
Total Operating Profit % 20.1% 18.2%
Rig Technology
Rig Technology revenue for the year ended December 31, 2010 was $6,965 million, a decrease of $1,128 million (13.9%) compared to 2009,
primarily due to the decrease of revenue out of backlog of $1,048 million. Non-backlog revenue decreased 4.3% primarily due to lower capital
equipment shipments in 2010.
Operating profit from Rig Technology was $2,064 million for the year ended December 31, 2010, a decrease of $219 million (9.6%) over the
same period of 2009. Operating profit percentage increased to 29.6%, up from 28.2% in 2009 primarily due to lower costs than originally
estimated on large rig projects as well as improved manufacturing efficiencies.
The Rig Technology segment monitors its capital equipment backlog to plan its business. New orders are added to backlog only when we receive
a firm written order for major drilling rig components or a signed contract related to a construction project. The capital equipment backlog was
$5.0 billion at December 31, 2010, a decrease of $1.4 billion (21.8%) from backlog of $6.4 billion at December 31, 2009. Approximately
$4.0 billion of the current backlog is expected to be delivered in 2011.
Petroleum Services & Supplies
Revenue from Petroleum Services & Supplies was $4,182 million for 2010 compared to $3,745 million for 2009, an increase of $437 million
(11.7%). The increase was primarily attributable to a 41.9% increase in average rig count activity in the U.S. market in 2010 compared to 2009.
Operating profit from Petroleum Services & Supplies was $585 million for 2010 compared to $301 million for 2009, an increase of $284 million
(94.4%). Operating profit percentage increased to 14.0% up from 8.0% in 2009. The 2009 results included a $147 million impairment charge on
the carrying value of a trade name associated with this segment. In addition, strong domestic demand fueled by an increase in domestic rig count
contributed to the increase in revenue and resulting improvement in operating profit.
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