National Oilwell Varco 2010 Annual Report Download - page 41

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Years Ended December 31, 2009 and December 31, 2008
The following table summarizes the Companyî‚€s revenue and operating profit by operating segment in 2009 and 2008. The actual results include
results from Grant Prideco operations from the acquisition date of April 21, 2008 (in millions):
Years Ended December 31, Variance
2009 2008 $ %
Revenue:
Rig Technology $ 8,093 $ 7,528 $ 565 7.5%
Petroleum Services & Supplies 3,745 4,651 (906) (19.5)%
Distribution Services 1,350 1,772 (422) (23.8)%
Eliminations (476) (520) 44 (8.5)%
Total Revenue $ 12,712 $ 13,431 $ (719) (5.4)%
Operating Profit:
Rig Technology $ 2,283 $ 1,970 $ 313 15.9%
Petroleum Services & Supplies 301 1,044 (743) (71.2)%
Distribution Services 50 130 (80) (61.5)%
Unallocated expenses and eliminations (319) (226) (93) 41.2%
Total Operating Profit $ 2,315 $ 2,918 $ (603) (20.7)%
Operating Profit %:
Rig Technology 28.2% 26.2%
Petroleum Services & Supplies 8.0% 22.4%
Distribution Services 3.7% 7.3%
Total Operating Profit % 18.2% 21.7%
Rig Technology
Rig Technology revenue for the year ended December 31, 2009 was $8,093 million, an increase of $565 million (7.5%) compared to 2008.
Revenue out of backlog increased $934 million or 18% from 2008 due to an increase in the number of large rig projects delivered this year.
Non-backlog revenue decreased $369 million or 17% compared to 2008, largely due to lower spare parts and capital equipment sales as North
American land drillers and pressure pumpers decreased their capital spending in 2009.
Operating profit from Rig Technology was $2,283 million for the year ended December 31, 2009, an increase of $313 million (15.9%) over the
same period of 2008. Operating profit percentage increased to 28.2%, up from 26.2% in 2008 primarily due to the increased manufacturing
efficiencies and revision of cost estimates on large rig projects as a result of favorable pricing from vendors.
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
$6.4 billion at December 31, 2009, a decrease of $4.7 billion (42.3%) from backlog of $11.1 billion at December 31, 2008.
Petroleum Services & Supplies
Revenue from Petroleum Services & Supplies was $3,745 million for 2009 compared to $4,651 million for 2008, a decrease of $906 million
(19.5%). The decrease was primarily attributable to a 42% decline in North American average rig count activity in 2009 compared to 2008.
Operating profit from Petroleum Services & Supplies was $301 million for 2009 compared to $1,044 million for 2008, a decrease of $743 million
(71.2%). Operating profit percentage decreased to 8.0% down from 22.4% in 2008. The decrease was primarily due to reduced North American
rig count activity combined with strong price competition. In addition, a $147 million impairment charge was incurred on the carrying value of a
trade name associated with this segment in the second quarter of 2009. 41