National Oilwell Varco 2010 Annual Report Download - page 43

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Liquidity and Capital Resources
At December 31, 2010, the Company had cash and cash equivalents of $3,333 million, and total debt of $887 million. At December 31, 2009,
cash and cash equivalents were $2,622 million and total debt was $883 million. A significant portion of the consolidated cash balances are
maintained in accounts in various foreign subsidiaries and, if such amounts were transferred among countries or repatriated to the U.S., such
amounts may be subject to additional tax obligations. Rather than repatriating this cash, the Company may choose to borrow against its credit
facility. The Companys outstanding debt at December 31, 2010 consisted of $200 million of 5.65% Senior Notes due 2012, $200 million of
7.25% Senior Notes due 2011, $150 million of 6.5% Senior Notes due 2011, $150 million of 5.5% Senior Notes due 2012, $151 million of
6.125% Senior Notes due 2015, and other debt of $36 million.
There were no borrowings against the Companys unsecured revolving credit facility, and there were $477 million in outstanding letters of credit
issued under the facility, resulting in $1,523 million of funds available under the Companys unsecured revolving credit facility at December 31,
2010.
The Company had $1,366 million of additional outstanding letters of credit at December 31, 2010, primarily in Norway, that are essentially under
various bilateral committed letter of credit facilities. Other letters of credit are issued as bid bonds and performance bonds. The Senior Notes
contain reporting covenants and the credit facility contains a financial covenant regarding maximum debt to capitalization. The Company was in
compliance with all covenants at December 31, 2010.
The following table summarizes our net cash flows provided by operating activities, net cash used in investing activities and net cash used in
financing activities for the periods presented (in millions):
Years Ended December 31,
2010 2009 2008
Net cash provided by operating activities $1,542 $2,095 $ 2,294
Net cash used in investing activities (743) (552) (2,473)
Net cash used in financing activities (102) (491) (74)
Operating Activities
Net cash flow provided by operating activities decreased by $553 million to $1,542 million in 2010 compared to net cash provided by operating
activities of $2,095 million in 2009. The primary reason for the decrease is the reduction of customer financing on projects during 2010, as
backlog declined $1,395 million from $6,406 million to $5,011 million during 2010. Customer financing, as the net of prepayments, billings in
excess of costs, less costs in excess of billings, was down approximately $737 million from December 31, 2009. Also, increased business activity
in 2010 resulted in higher working capital and lower cash balance as accounts receivable increased $189 million.
Before changes in operating assets and liabilities, net of acquisitions, cash was provided by operations in 2010 primarily through net income of
$1,659 million plus depreciation and amortization of $507 million. Dividends from the Companys unconsolidated affiliate were $17 million less
$36 million in equity income from the Companys unconsolidated affiliate. During 2010, net changes in operating assets and liabilities, net of
acquisitions, decreased cash provided by operating activities by $609 million.
The Company received $33 million and $94 million in dividends from its unconsolidated affiliate in 2010 and 2009, respectively. The portion
included in operating activities in 2010 and 2009 was $17 million and $86 million, respectively. The remainder of $16 million and $8 million was
included in investing activities in 2010 and 2009, respectively.
Investing Activities
Net cash used in investing activities was $743 million in 2010 compared to net cash used in investing of $552 million in 2009. The primary
reason for the increase in cash used in investing activities in 2010 related to the absence of business divestitures during 2010 which was an
increase to cash provided in 2009. Acquisitions in 2010 decreased to approximately $556 million compared to $573 million used in 2009 and
capital expenditures decreased to approximately $232 million compared to $250 million used in 2009. The decreases in cash used in investing
activities were offset by an increase in the portion of a dividend received by the Companys unconsolidated affiliate in 2010 that related to
investing activities. 43