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Business Segments and Geographic Areas
 12 Months Ended
Dec. 31, 2012
Business Segments and Geographic Areas

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; wireline trucks; cranes; flexible pipe for offshore production applications; 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 drill pipe, tubing, casing, 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, wired drill pipe, transfer pumps, solids control systems, drilling motors, drilling fluids, 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 pipe, maintenance, repair and operating supplies and spare parts to drill sites and production locations, pipeline operations, and processing plants worldwide. In addition to its comprehensive field location network, which supports land drilling operations throughout North America, the segment supports major land and offshore operations for all the major oil and gas producing regions throughout the world. The segment employs advanced information technologies to provide complete procurement, materials management and logistics services to its customers around the globe. The segment also has a global reach in oil and gas, waste water treatment, chemical, food and beverage, paper and pulp, mining, agriculture, and a variety of municipal markets and is a leading producer of water transmission pipe, fabricated steel products and 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 10% and 12% of total revenue from one of its customers for the years ended December 31, 2012 and 2011, 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.

 

Geographic Areas:

The following table presents consolidated revenues by country based on sales destination of the use of the products or services (in millions):

 

     Years Ended December 31,  
     2012      2011      2010  

United States

    $ 8,297       $ 5,449       $ 4,104   

South Korea

      3,121         2,257         2,616   

Canada

      1,319         913         656   

Singapore

      1,118         721         491   

Norway

      736         689         495   

China

      533         430         366   

United Kingdom

      523         465         421   

Brazil

      503         397         262   

Other Countries

      3,891         3,337         2,745   
  

 

 

     

 

 

     

 

 

  

Total

    $ 20,041       $ 14,658       $ 12,156   
  

 

 

     

 

 

     

 

 

  

The following table presents long-lived assets by country based on the location (in millions):

 

     December 31,  
     2012      2011  

United States

    $ 1,606       $ 1,493   

Denmark

      174         3   

United Kingdom

      173         131   

Brazil

      162         92   

Canada

      131         113   

South Korea

      112         97   

Singapore

      93         86   

Other Countries

      494         430   
  

 

 

     

 

 

  

Total

    $ 2,945       $ 2,445   
  

 

 

     

 

 

  

 

Business Segments:

 

 

     Rig
Technology		      Petroleum
Services  &
Supplies		      Distribution  &
Transmission		      Unallocated/
Eliminations		     Total  

December 31, 2012:

              

Revenues

    $ 10,107       $ 6,967       $ 3,927       $ (960 )    $ 20,041   

Operating profit (1)

      2,335         1,501         185         (464 )      3,557   

Capital expenditures

      150         310         64         59        583   

Depreciation and amortization

      148         424         25         31        628   

Goodwill

      2,386         4,333         453         —          7,172   

Total assets

      11,758         13,463         2,784         3,479        31,484   

December 31, 2011:

              

Revenues

    $ 7,788       $ 5,654       $ 1,873       $ (657 )    $ 14,658   

Operating profit (1)

      2,053         1,072         135         (323 )      2,937   

Capital expenditures

      125         299         17         42        483   

Depreciation and amortization

      120         397         14         24        555   

Goodwill

      1,959         4,089         103         —          6,151   

Total assets

      8,375         13,019         1,420         2,701        25,515   

December 31, 2010:

              

Revenues

    $ 6,965       $ 4,182       $ 1,546       $ (537 )    $ 12,156   

Operating profit (1)

      2,064         585         78         (280 )      2,447   

Capital expenditures

      59         152         2         19        232   

Depreciation and amortization

      95         384         7         21        507   

Goodwill

      1,854         3,859         77         —          5,790   

Total assets

      7,778         11,807         923         2,542        23,050   

 

(1) Included in operating profit are other costs related to acquisitions, such as the amortization of backlog and inventory that was stepped up to fair value during purchase accounting. Other costs by segment are as follows (in millions):

 

     Years Ended December 31,  
     2012      2011      2010  

Other costs:

         

Rig Technology

    $ 45       $ 17       $ 8   

Petroleum Services & Supplies

      18         23         9   

Distribution & Transmission

      68         1         1   
  

 

 

     

 

 

     

 

 

  

Total other costs

    $ 131       $ 41       $ 18   
  

 

 

     

 

 

     

 

 

  

For the year ended December 31, 2012, 2011 and 2010, other costs included in operating profit were $131 million, $41 million and $18 million, respectively. Certain other costs are included in other income (expense), net as well as interest and financial costs and were $12 million, nil and $27 million for the years ended December 31, 2012, 2011 and 2010, respectively.