National Oilwell Varco 2002 Annual Report Download - page 12

Download and view the complete annual report

Please find page 12 of the 2002 National Oilwell Varco annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 49

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Introduction
National Oilwell is a worldwide leader in the design, manufacture and sale of drilling systems, drilling equipment
and downhole products as well as the distribution to the oil and gas industry of maintenance, repair and operating
products. Our revenues and operating results are directly related to the level of worldwide oil and gas drilling and
production activities and the profitability and cash flow of oil and gas companies and drilling contractors, which in
turn are affected by current and anticipated prices of oil and gas. Oil and gas prices have been and are likely to
continue to be volatile. See “Risk Factors”.
We conduct our operations through the following segments:
Products and Technology
Our Products and Technology segment is a global leader in the design and manufacture of complete land drilling
and workover rigs, and for drilling related systems on offshore rigs. Technology has increased the desirability of
one vendor assuming responsibility for the entire suite of components used in the drilling process, as mechanical
and hydraulic components are replaced by or augmented with integrated computerized systems. In addition to
traditional components such as drawworks, mud pumps, top drives, derricks, cranes, jacking and mooring systems,
and other structural components, we provide automated pipehandling, control and electrical power systems. We
have also developed new technology for drawworks and mud pumps applicable to the highly demanding offshore
markets.
Distribution Services
Our Distribution Services segment provides maintenance, repair and operating supplies and spare parts from our
network of distribution service centers to drill site and production locations throughout North America and to
offshore contractors worldwide. Increasingly, this business also is expanding to locations outside North America,
including the Middle East, Southeast Asia, and South America. Using our information technology platforms and
processes, we can provide complete procurement, inventory management, and logistics services to our customers.
Products are purchased from numerous manufacturers and vendors, including our Products and Technology
segment.
Results of Operations
Operating results by segment, which have been restated to reflect a business combination accounted for under the
pooling-of-interests method during 2000, are as follows (in millions):
Year Ended December 31,
2002 2001 2000
Revenues:
Products and Technology 917.3$ 1,120.9$ 683.5$
Distribution Services 686.2 707.8 521.3
Eliminations (81.5) (81.3) (54.8)
Total 1,522.0$ 1,747.4$ 1,150.0$
Operating Income:
Products and Technology 127.0$ 171.0$ 61.0$
Distribution Services 18.1 28.5 12.9
Corporate (10.8) (10.2) (11.3)
134.3 189.3 62.6
Special Charge - - 14.1
Total 134.3$ 189.3$ 48.5$
10