SEGMENT INFORMATION

12 Months Ended

Sep. 30, 2012

SEGMENT INFORMATION

SEGMENT INFORMATION

NOTE 15 SEGMENT INFORMATION

        We operate principally in the contract drilling industry. Our contract drilling business includes the following reportable operating segments: U.S. Land, Offshore and International Land. The contract drilling operations consist mainly of contracting Company-owned drilling equipment primarily to large oil and gas exploration companies. To provide information about the different types of business activities in which we operate, we have included Offshore and International Land, along with our U.S. Land reportable operating segment, as separate reportable operating segments. Additionally, each reportable operating segment is a strategic business unit which is managed separately. Our primary international areas of operation include Colombia, Ecuador, Argentina, Tunisia, Bahrain, Abu Dhabi and other South American countries. Other includes additional non-reportable operating segments. Revenues included in Other consist primarily of rental income. Consolidated revenues and expenses reflect the elimination of all material intercompany transactions.

        We evaluate segment performance based on income or loss from operations (segment operating income) before income taxes which includes:

• •

  revenues from external and internal customers

  •

  direct operating costs

  •

  depreciation and

  •

  allocated general and administrative costs

but excludes corporate costs for other depreciation, income from asset sales and other corporate income and expense.

        General and administrative costs are allocated to the segments based primarily on specific identification and, to the extent that such identification is not practical, on other methods which we believe to be a reasonable reflection of the utilization of services provided.

        Segment operating income for all segments is a non-GAAP financial measure of our performance, as it excludes certain general and administrative expenses, corporate depreciation, income from asset sales and other corporate income and expense. We consider segment operating income to be an important supplemental measure of operating performance for presenting trends in our core businesses. We use this measure to facilitate period-to-period comparisons in operating performance of our reportable segments in the aggregate by eliminating items that affect comparability between periods. We believe that segment operating income is useful to investors because it provides a means to evaluate the operating performance of the segments on an ongoing basis using criteria that are used by our internal decision makers. Additionally, it highlights operating trends and aids analytical comparisons. However, segment operating income has limitations and should not be used as an alternative to operating income or loss, a performance measure determined in accordance with GAAP, as it excludes certain costs that may affect our operating performance in future periods.

        Summarized financial information of our reportable segments for continuing operations for each of the years ended September 30, 2012, 2011 and 2010 is shown in the following table:

(in thousands)	External Sales		Inter- Segment			Total Sales			Segment Operating Income (Loss)			Depreciation		Total Assets		Additions to Long-Lived Assets
2012
Contract Drilling
U.S. Land	$	2,678,475	$	—		$	2,678,475		$	906,968		$	332,723	$	4,422,297	$	991,966
Offshore		189,086		—			189,086			41,775			13,455		160,135		8,547
International Land		270,027		—			270,027			20,366			30,701		467,538		52,864
		3,137,588		—			3,137,588			969,109			376,879		5,049,970		1,053,377
Other		14,214		841			15,055			(8,824	)		10,670		663,496		29,301
		3,151,802		841			3,152,643			960,285			387,549		5,713,466		1,082,678
Eliminations		—		(841	)		(841	)		—			—		—		—
Total	$	3,151,802	$	—		$	3,151,802		$	960,285		$	387,549	$	5,713,466	$	1,082,678
2011
Contract Drilling
U.S. Land	$	2,100,508	$	—		$	2,100,508		$	691,615		$	264,127	$	3,719,387	$	694,249
Offshore		201,417		—			201,417			45,291			14,684		151,656		7,092
International Land		226,849		—			226,849			19,711			28,018		333,142		20,638
		2,528,774		—			2,528,774			756,617			306,829		4,204,185		721,979
Other		15,120		829			15,949			(7,682	)		8,639		792,177		8,368
		2,543,894		829			2,544,723			748,935			315,468		4,996,362		730,347
Eliminations		—		(829	)		(829	)		—			—		—		—
Total	$	2,543,894	$	—		$	2,543,894		$	748,935		$	315,468	$	4,996,362	$	730,347
2010
Contract Drilling
U.S. Land	$	1,412,495	$	—		$	1,412,495		$	404,278		$	211,652	$	3,257,382	$	305,206
Offshore		202,734		—			202,734			53,069			12,519		132,342		9,982
International Land		247,179		—			247,179			48,271			29,938		411,339		23,865
		1,862,408		—			1,862,408			505,618			254,109		3,801,063		339,053
Other		12,754		814			13,568			(6,765	)		8,549		454,037		6,211
		1,875,162		814			1,875,976			498,853			262,658		4,255,100		345,264
Eliminations		—		(814	)		(814	)		—			—		—		—
Total	$	1,875,162	$	—		$	1,875,162		$	498,853		$	262,658	$	4,255,100	$	345,264

        The following table reconciles segment operating income to income from continuing operations before income taxes as reported on the Consolidated Statements of Income:

	Years Ended September 30,
	2012			2011			2010
	(in thousands)
Segment operating income	$	960,285		$	748,935		$	498,853
Income from asset sales		19,223			13,903			4,992
Corporate general and administrative costs and corporate depreciation		(69,909	)		(60,327	)		(52,049	)
Operating income		909,599			702,511			451,796
Other income (expense)
Interest and dividend income		1,380			1,951			1,811
Interest expense		(8,653	)		(17,355	)		(17,158	)
Gain on sale of investment securities		—			913			—
Other		254			(953	)		1,787
Total unallocated amounts		(7,019	)		(15,444	)		(13,560	)
Income from continuing operations before income taxes	$	902,580		$	687,067		$	438,236

        The following table presents revenues from external customers and long-lived assets by country based on the location of service provided:

	Years Ended September 30,
	2012		2011		2010
	(in thousands)
Revenues
United States	$	2,864,570	$	2,276,118	$	1,572,139
Colombia		82,247		74,504		57,533
Argentina		54,317		44,205		55,855
Ecuador		56,448		42,598		52,115
Other Foreign		94,220		106,469		137,520
Total	$	3,151,802	$	2,543,894	$	1,875,162
Long-Lived Assets
United States	$	4,039,770	$	3,423,185	$	2,973,712
Argentina		81,886		78,221		91,322
Colombia		84,389		67,369		59,798
Ecuador		38,265		28,439		27,772
Other Foreign		107,261		79,856		122,416
Total	$	4,351,571	$	3,677,070	$	3,275,020

        Long-lived assets are comprised of property, plant and equipment.

        Revenues from one customer accounted for approximately 12.0 percent of total operating revenues during the year ended September 30, 2012, and 12.5 percent for years ended September 30, 2011 and 2010. Revenues from another customer accounted for approximately 10.2 percent, 4.5 percent and 4.6 percent of total operating revenues during the years ended September 30, 2012, 2011 and 2010, respectively. Collectively, the receivables from these customers were approximately $108.4 million and $70.5 million at September 30, 2012 and 2011, respectively.