SEGMENT INFORMATION

12 Months Ended

Sep. 30, 2013

SEGMENT INFORMATION

SEGMENT INFORMATION

NOTE 14 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, U.A.E. 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, 2013, 2012 and 2011 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
2013
Contract Drilling
U.S. Land	$	2,785,449	$	—		$	2,785,449		$	932,591		$	391,072	$	4,743,644	$	726,206
Offshore		221,863		—			221,863			53,064			13,766		149,128		4,470
International Land		366,841		—			366,841			44,595			36,000		486,914		51,193
		3,374,153		—			3,374,153			1,030,250			440,838		5,379,686		781,869
Other		13,461		858			14,319			(8,602	)		14,785		881,436		9,872
		3,387,614		858			3,388,472			1,021,648			455,623		6,261,122		791,741
Eliminations		—		(858	)		(858	)		—			—		—		—
Total	$	3,387,614	$	—		$	3,387,614		$	1,021,648		$	455,623	$	6,261,122	$	791,741
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

        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,
	2013			2012			2011
	(in thousands)
Segment operating income	$	1,021,648		$	960,285		$	748,935
Income from asset sales		18,923			19,223			13,903
Corporate general and administrative costs and corporate depreciation		(83,910	)		(69,909	)		(60,327	)
Operating income		956,661			909,599			702,511
Other income (expense)
Interest and dividend income		1,653			1,380			1,951
Interest expense		(6,129	)		(8,653	)		(17,355	)
Gain on sale of investment securities		162,121			—			913
Other		(9	)		254			(953	)
Total unallocated amounts		157,636			(7,019	)		(15,444	)
Income from continuing operations before income taxes	$	1,114,297		$	902,580		$	687,067

        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,
	2013		2012		2011
	(in thousands)
Revenues
United States	$	3,011,760	$	2,864,570	$	2,276,118
Colombia		100,052		82,247		74,504
Argentina		73,208		54,317		44,205
Ecuador		67,890		56,448		42,598
Other Foreign		134,704		94,220		106,469
Total	$	3,387,614	$	3,151,802	$	2,543,894
Long-Lived Assets
United States	$	4,345,950	$	4,039,770	$	3,423,185
Argentina		83,149		81,886		78,221
Colombia		81,315		84,389		67,369
Ecuador		63,894		38,265		28,439
Other Foreign		101,795		107,261		79,856
Total	$	4,676,103	$	4,351,571	$	3,677,070

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

        Revenues from one customer accounted for approximately 10.8 percent, 5.7 percent and 2.6 percent of total operating revenues during the years ended September 30, 2013, 2012 and 2011, respectively. Revenues from another customer accounted for approximately 10.5 percent, 9.6 percent and 11.5 percent of total operating revenues during the years ended September 30, 2013, 2012 and 2011, respectively. Collectively, the receivables from these customers were approximately $101.6 million and $109.9 million at September 30, 2013 and 2012, respectively.