National Oilwell Varco 2015 Annual Report Download - page 16

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Table of Contents
peaks in the fourth quarter as operators spend the remaining drilling and/or production capital budgets for that year. Wellbore Technologies and
Completion & Production Solutions revenues in the Rocky Mountain region sometimes decline in the late fourth quarter or early first quarter due to harsh
winter weather. The Company’s fiberglass and composite tubulars business in China has typically declined in the first quarter due to the impact of weather on
manufacturing and installation operations, and due to business slowdowns associated with the Chinese New Year. In general, Rig Systems and Rig
Aftermarket have not experienced significant seasonal fluctuation, although orders for new equipment and aftermarket spare parts may be modestly affected
by holiday schedules. There can be no guarantee that seasonal effects will not influence future sales in these segments.
The Company anticipates that the seasonal trends described above will continue. However, there can be no guarantee that spending by the Company’s
customers will continue to follow patterns seen in the past.

Substantially all of Rig Systems’ capital equipment and Rig Aftermarket’s spare parts sales, and a large portion of our smaller pumps and parts sales, are made
through our direct sales force and distribution service centers. Sales to foreign oil companies are often made with or through representative arrangements.
Products within Wellbore Technologies and Completion & Production Solutions are rented and sold worldwide through our own sales force and through
commissioned representatives.
Completion & Production Solutions’ customers are predominantly service companies and oil and gas companies. Demand for the Company’s Completion &
Production Solutions segment products depends on the level of oilfield completions and workover activity by oilfield service companies and drilling
contractors and capital spending plans by oil and gas companies and oilfield service companies.
The Company’s foreign operations, which include significant operations in Canada, Europe, Russia, the Far East, the Middle East, Africa and Latin America,
are subject to the risks normally associated with conducting business in foreign countries, including foreign currency exchange risks and uncertain political
and economic environments, which may limit or disrupt markets, restrict the movement of funds or result in the deprivation of contract rights or the taking of
property without fair compensation. Government-owned petroleum companies located in some of the countries in which the Company operates have adopted
policies (or are subject to governmental policies) giving preference to the purchase of goods and services from companies that are majority-owned by local
nationals. As a result of such policies, the Company relies on joint ventures, license arrangements and other business combinations with local nationals in
these countries. In addition, political considerations may disrupt the commercial relationship between the Company and such government-owned petroleum
companies. Although the Company has not experienced any material problems in foreign countries arising from nationalistic policies, political instability,
economic instability or currency restrictions, there can be no assurance that such a problem will not arise in the future. See Note 15 to the Consolidated
Financial Statements for information regarding geographic revenue information.

The Company believes that it has been a leader in the development of new technology and equipment to enhance the safety and productivity of drilling and
well servicing processes and that its sales and earnings have been dependent, in part, upon the successful introduction of new or improved products. Through
its internal development programs and certain acquisitions, the Company has assembled an extensive array of technologies protected by a substantial number
of trade and service marks, patents, trade secrets, and other proprietary rights.
As of December 31, 2015, the Company held a substantial number of United States patents and had additional patent applications pending. As of this date,
the Company also had foreign patents and patent applications pending relating to inventions covered by the United States patents. Additionally, the
Company maintains a substantial number of trade and service marks and maintains a number of trade secrets. Expiration dates of such patents range from
2016 to 2035.
15