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Financial Instruments and Risk ConcentrationIn the normal course of business, we manage risks associated with foreign exchangerates and interest rates through a variety of strategies, including the use of hedgingtransactions. As a matter of policy, we do not use derivative instruments unless there isan underlying exposure.Other financial instruments that potentially subject us to concentrations of credit risk areprincipally cash and cash equivalents and accounts receivable. The carrying values ofcash and cash equivalents and bank borrowings approximate their fair values due to theshort maturity of those instruments or the short-term duration of the associated interestrate periods. Accounts receivable are generated from a broad group of customers,primarily from within the energy industry, which is our major source of revenue. Due totheir short-term nature, carrying values of our accounts receivable and accounts payableapproximate fair market value.One customer in Angola owed us $40 million at December 31, 2011 and $56 million atDecember 31, 2010, all of which is overdue. We completed the work on the contractsrelated to this receivable in the first quarter of 2010. Based on our past history with thiscustomer, we believe this receivable ultimately will be collected. During 2011, based onour current estimate of when the receivable will be collected, we reduced the net carryingvalue of the receivable by $3 million to reflect a present value estimate and reclassified$22 million to Other non-current assets on our balance sheet at December 31, 2011,which represents the amount we believe will be collected more than one year from thebalance sheet date. The $3 million adjustment was charged against our earnings as areduction of revenue in our Subsea Projects segment.48 Oceaneering International, Inc.
7. OPERATIONS BY BUSINESS SEGMENT AND GEOGRAPHIC AREABusiness Segment InformationWe are a global oilfield provider of engineered services and products, primarily to theoffshore oil and gas industry, with a focus on deepwater applications. Through the use ofour applied technology expertise, we also serve the defense and aerospace industries.Our Oil and Gas business consists of Remotely Operated Vehicles ("ROVs"), SubseaProducts, Subsea Projects and Asset Integrity. Our ROV segment provides submersiblevehicles operated from the surface to support offshore oil and gas exploration, productionand construction activities. Our Subsea Products segment supplies a variety of built-toorderspecialty subsea hardware. Our Subsea Projects segment provides multiservicevessels, oilfield diving and support vessel operations, which are used primarily ininspection, repair and maintenance and installation activities, and a mobile offshoreproduction system, through a 50% interest in an entity which holds a 75% interest in thesystem. With the acquisition of AGR FO in December 2011, we also operate andmaintain offshore and onshore oil and gas production facilities, provide subseaengineering services, and operate an offshore logistics supply base in Australia. OurAsset Integrity segment, which was previously named Inspection, provides asset integritymanagement and assessment services and nondestructive testing and inspection. Werenamed Inspection to Asset Integrity to more appropriately describe the services we areproviding after our acquisition of AGR FO. Our Advanced Technologies businessprovides project management, engineering services and equipment for applications innon-oilfield markets. Unallocated Expenses are those not associated with a specificbusiness segment. These consist of expenses related to our incentive and deferredcompensation plans, including restricted stock and bonuses, as well as other generalexpenses, including corporate administrative expenses.There are no differences in the basis of segmentation or in the basis of measurement ofsegment profit or loss in the year ended December 31, 2011 from those used in ourconsolidated financial statements for the years ended December 31, 2010 and 2009,except for the change in the name of Inspection to Asset Integrity.2011 Annual Report 49
Page 3 and 4: Financial Highlights($ in thousands
Page 5 and 6: In December we secured a three-year
Page 7: 2011 Financial SectionOceaneering I
Page 10 and 11: Oceaneering Common StockOur common
Page 12 and 13: Management's Discussion and Analysi
Page 14 and 15: Critical Accounting Policies and Es
Page 16 and 17: We establish valuation allowances t
Page 18 and 19: In 2009, we used $162 million in in
Page 20 and 21: For 2011, our ROV revenue and opera
Page 22 and 23: We earn equity income from our 50%
Page 24 and 25: Controls and ProceduresDisclosure C
Page 26 and 27: In our opinion, Oceaneering Interna
Page 28 and 29: OCEANEERING INTERNATIONAL, INC. AND
Page 34 and 35: for marine services equipment (such
Page 36 and 37: segment and its Australian assets a
Page 38 and 39: Revenue in Excess of Amounts Billed
Page 40 and 41: elationship and, if it is, the type
Page 42 and 43: December 31,(in thousands) 2011 201
Page 44 and 45: in entities or jurisdictions that h
Page 46 and 47: 4. SELECTED BALANCE SHEET AND INCOM
Page 48 and 49: On January 6, 2012, we entered into
Page 52 and 53: The table that follows presents Rev
Page 54 and 55: The following table presents Assets
Page 56 and 57: Geographic Operating AreasThe follo
Page 58 and 59: equirements. The Compensation Commi
Page 60 and 61: in 2011, 2010 and 2009 were subject
Page 62 and 63: Forward-Looking StatementsAll state
Page 64: Oceaneering International, Inc.1191

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