National Oilwell Varco 2015 Annual Report Download - page 43

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Table of Contents

Years Ended December 31, 2015 and December 31, 2014
The following table summarizes the Company’s revenue and operating profit (loss) by operating segment in 2015 and 2014 (in millions):
 
 
Revenue:
Rig Systems $ 6,964 $ 9,848 $(2,884) (29.3%)
Rig Aftermarket 2,515 3,222 (707) (21.9%)
Wellbore Technologies 3,718 5,722 (2,004) (35.0%)
Completion & Production Solutions 3,365 4,645 (1,280) (27.6%)
Eliminations (1,805) (1,997) 192 (9.6%)
Total Revenue $ 14,757 $ 21,440 $(6,683) (31.2%)
Operating Profit (Loss):
Rig Systems $ 1,206 $ 1,996 $ (790) (39.6%)
Rig Aftermarket 605 882 (277) (31.4%)
Wellbore Technologies (1,613) 937 (2,550) (272.1%)
Completion & Production Solutions 161 690 (529) (76.7%)
Eliminations and other (749) (892) 143 (16.0%)
Total Operating Profit (Loss) $ (390) $ 3,613 $(4,003) (110.8%)
Operating Profit (Loss)%:
Rig Systems 17.3% 20.3%
Rig Aftermarket 24.1% 27.4%
Wellbore Technologies (43.4%) 16.4%
Completion & Production Solutions 4.8% 14.9%
Total Operating Profit (Loss)% (2.6%) 16.9%
Rig Systems
Revenue from Rig Systems for the year ended December 31, 2015 was $6,964 million, a decrease of $2,884 million (29.3%) compared to the year ended
December 31, 2014. The decrease was due to lower land rig shipments and delayed delivery dates of certain offshore projects.
Operating profit from Rig Systems was $1,206 million for the year ended December 31, 2015, a decrease of $790 million (39.6%) compared to 2014.
Operating profit percentage decreased to 17.3%, from 20.3% in 2014. Operating profit percentage decreased primarily due to lower volumes. Despite the
strong fall off in revenue, strategic cost management efforts significantly reduced the decline in operating profit percentage.
Included in operating profit are certain restructuring and other items related to costs associated with a Voluntary Early Retirement Plan established by the
Company during the first quarter of 2015 and costs related to severance and facility closures. Restructuring and other items included in operating profit for
Rig Systems were $105 million for the year ended December 31, 2015 and nil for the year ended December 31, 2014.
The Rig Systems segment monitors its capital equipment backlog to plan its business. New orders are added to backlog only when the Company receives a
firm written order for major drilling rig components or a signed contract related to a construction project. The capital equipment backlog was $6.1 billion at
December 31, 2015, a decrease of $6.4 billion, or 52%, from backlog of $12.5 billion at December 31, 2014. Numerous factors may affect the timing of
revenue out of backlog. Considering these factors, the Company reasonably expects
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