National Oilwell Varco 2012 Annual Report Download - page 97

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Index to Financial Statements
15. Business Segments and Geographic Areas
The Companys operations consist of three reportable segments: Rig Technology, Petroleum Services & Supplies and Distribution & Transmission. Within the three reporting
segments, the Company has aggregated two business units under Rig Technology, nine business units under Petroleum Services & Supplies and two under Distribution &
Transmission for a total of 13 business units, one of which was added during 2011 as a result of the Companys acquisition of Ameron. Prior to the Companys acquisition of
Ameron in October 2011, the Companys Distribution & Transmission segment was called Distribution Services with one business unit. Distribution Services was expanded
as a result of certain business operations of the Ameron acquisition adding an additional business unit to the segment called Transmission and changing the name of the
segment to Distribution & Transmission. The Company has aggregated each of its business units in one of the three reporting segments based on the guidelines of ASC Topic
280, Segment Reporting (ASC Topic 280).
Rig Technology: The Rig Technology segment designs, manufactures, sells and services complete systems for the drilling, completion, and servicing of oil and gas wells. The
segment offers a comprehensive line of highly-engineered equipment that automates complex well construction and management operations, such as offshore and onshore
drilling rigs; derricks; pipe lifting, racking, rotating and assembly systems; rig instrumentation systems; coiled tubing equipment and pressure pumping units; well workover
rigs; wireline winches; cranes; and turret mooring systems and other products for Floating Production, Storage and Offloading vessels and other offshore vessels and
terminals.
Petroleum Services & Supplies: The Petroleum Services & Supplies segment provides a variety of consumable goods and services used to drill, complete, remediate and
workover oil and gas wells and service flowlines and other oilfield tubular goods. The segment manufactures, rents and sells a variety of products and equipment used to
perform drilling operations, including drill pipe, transfer pumps, solids control systems, drilling motors, drill bits, reamers and other downhole tools, and mud pump
consumables. Oilfield tubular services include the provision of inspection and internal coating services and equipment for drill pipe, line pipe, tubing, casing and pipelines;
and the design, manufacture and sale of coiled tubing pipe and advanced fiberglass composite pipe for application in highly corrosive environments.
Distribution & Transmission: The Distribution & Transmission segment provides maintenance, repair and operating supplies and spare parts to drill site and production
locations worldwide. In addition to its comprehensive network of field locations supporting land drilling operations throughout North America. The segment also supports
major offshore drilling contractors through locations in Mexico, the Middle East, Europe, Southeast Asia and South America. Distribution & Transmission employs advanced
information technologies to provide complete procurement, inventory management and logistics services to its customers around the globe. Demand for the segments
services is determined primarily by the level of drilling, servicing, and oil and gas production activities. Additionally, the Distribution & Transmission segment has global
reach in oil and gas, waste water treatment, chemical, food and beverage, paper and pulp, mining, agriculture, and a variety of municipal markets as well as being a leading
producers of water transmission lines and fabricated steel products, such as wind towers, specialized materials and products used in infrastructure projects.
The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies of the Company. The Company evaluates
performance of each reportable segment based upon its operating income, excluding non-recurring items.
The Company had revenues of 12% and 17% of total revenue from one of its customers for the years ended December 31, 2011 and 2010, respectively. This customer,
Samsung Heavy Industries, is a shipyard acting as a general contractor for its customers, who are drillship owners and drilling contractors. This shipyards customers have
specified that the Companys drilling equipment be installed on their drillships and have required the shipyard to issue contracts to the Company.
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