National Oilwell Varco 2012 Annual Report Download - page 16

Index to Financial Statements
by the Company. This business unit also includes the manufacturing of polyvinyl chloride and polyethylene sheet lining for the protection of concrete pipe and cast-in-place
concrete structures from the corrosive effects of sewer gases, acids and industrial chemicals. Additionally, the business unit manufactures large-diameter towers for the U.S.
wind-energy market. Wind towers are sold to wind turbine manufacturers. Competition is based on price, quality, delivery schedule and service.
Within the Transmission business unit the Infrastructure Products business supplies ready-mix concrete, crushed and sized basaltic aggregates, dune sand and concrete pipe,
primarily to the construction industry in Hawaii, and also manufactures and markets concrete and steel poles for highway, street and outdoor area lighting and for traffic
signals nationwide in the U.S. Ample raw materials for the aggregates and concrete products are typically available locally in Hawaii, and the business has exclusive rights to
quarries containing many years reserves. Within its market there are competitors for each of the business units products. However no single competitor offers the full range
of products sold by the Company in Hawaii. Sales of poles are nationwide, but with a stronger concentration in the western and southeastern U.S. Marketing of poles is
handled by the business own sales force and by outside sales agents. Competition for poles is mainly based on price and quality, but with some consideration for service and
delivery.
Within the Transmission business unit the Mono business serves its customers in its various industrial markets by engineering systems solutions, and manufacturing key
products including progressing cavity pumps, grinders, screens, filters, well-head drives, hydraulic pumping units, plunger lift systems and production automation
systems. This business is highly diversified through its presence in oil and gas, and industrial markets which include waste water treatment, mining, chemical processing,
paper and pulp, agriculture, food and beverage among others. The Mono business supports its customers through direct sales, in partnership with over 700 channels to market
and through National Oilwell Varcos own elaborate network of supply stores.
Customers and Competition. The primary customers for Distribution Services include drilling contractors, well servicing companies, major and independent oil and gas
companies, and national oil companies. Customers for Transmission include local, state and federal agencies, developers and general contractors. Competitors for Distribution
Services include Wilson Supply (a division of Schlumberger, Ltd.); CE Franklin; McJunkin Red Man; Edgen Murry II, LP; Ferguson Enterprises, Inc. (a subsidiary of
Wolseley, plc); WESCO International Inc.; KS Energy Limited; Apex Distribution, Inc.; and a number of large regional or product specific competitors. Competitors for
Transmission include Northwestern Pipe Company and a number of regional competitors for water pipelines. Vestas, Katana Summit, and Trinity are competitors for wind
towers. Valmont, Skycast and Stresscrete are competitors for pole products.
2011 Acquisitions and Other Investments
In 2011, the Company made the following acquisitions:
Acquisition Form Operating Segment Date of Transaction
Christensen Roder Productos E Servicos De Petroleo LTDA. Stock Petroleum Services & Supplies January 2011
Capital Valves Limited Stock Distribution & Transmission February 2011
Merpro Group Limited Stock Petroleum Services & Supplies April 2011
Conner Steel Products Holding Company Stock Rig Technology; Petroleum Services & Supplies May 2011
Barracuda Ventures Pte Ltd Stock Rig Technology July 2011
Khalil Al Sayegh General Maintenance Company Asset Petroleum Services & Supplies July 2011
Ameron International Corporation Stock Distribution & Transmission; Petroleum Services & Supplies October 2011
Scomi Oiltools, Inc. Asset Petroleum Services & Supplies November 2011
Scomi Oiltools De Mexico S. De R.L. De C.V. Asset Petroleum Services & Supplies November 2011
XL Hardbanding & Fabrication, Inc. Asset Petroleum Services & Supplies November 2011
The Company paid an aggregate purchase price of $1,038 million, net of cash acquired for acquisitions in 2011.
Seasonal Nature of the Companys Business
Historically, the level of some of the Companys segments have followed seasonal trends to some degree. In general the Rig Technology segment has 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 this segment.
In Canada, the Petroleum Services & Supplies segment has typically realized high first quarter activity levels, as operators take advantage of the winter freeze to gain access to
remote drilling and production areas. In past years, certain Canadian businesses within Petroleum Services & Supplies and Distribution & Transmission have declined during
the second quarter due to warming weather conditions which resulted in thawing, softer ground, difficulty accessing drill sites, and road bans that curtailed drilling activity
(Canadian Breakup). However, these segments have typically rebounded in the third and fourth quarter. Petroleum Services & Supplies activity in both the U.S. and
Canada sometimes increases during the third quarter and then peaks in the fourth quarter as operators spend the remaining drilling and/or production capital budgets for that
year. Petroleum Services & Supplies revenues in the
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