National Oilwell Varco 2010 Annual Report Download - page 44

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Financing Activities
Net cash used in financing activities was $102 million in 2010 compared to net cash used in financing activities of $491 million in 2009. The
decrease in cash used in financing activities in 2010 primarily related to a decrease in cash dividends to approximately $172 million compared to
approximately $460 million in cash dividends paid in 2009. This decrease was partially offset by an increase in proceeds from stock options
exercised to $73 million and an increase in excess tax benefit from exercise of stock options to $10 million in 2010 compared to $8 million in
proceeds from stock options exercised and $1 million in excess tax benefit from exercise of stock options in 2009. Payments on debt decreased to
approximately $16 million in 2010 compared to $47 million in 2009. For 2010, the Company used its cash on hand to fund its acquisitions.
The effect of the change in exchange rates on cash flows was a positive $14 million and $27 million in 2010 and 2009, respectively.
We believe cash on hand, cash generated from operations and amounts available under the credit facility and from other sources of debt will be
sufficient to fund operations, working capital needs, capital expenditure requirements and financing obligations. At December 31, 2010, the
Company had $1,523 million of available funds under its revolving credit facility. We also believe increases in capital expenditures caused by
any need to increase manufacturing capacity can be funded from operations or through existing available debt financing.
A summary of the Companyî‚€s outstanding contractual obligations at December 31, 2010 is as follows (in millions):
Payment Due by Period
Less After
than 1 1-3 4-5 5
Total Year Years Years Years
Contractual Obligations:
Total debt $ 887 $ 373 $ 360 $ 153 $ 1
Operating leases 639 130 166 105 238
Total Contractual Obligations $ 1,526 $ 503 $ 526 $ 258 $ 239
Commercial Commitments:
Standby letters of credit $ 1,843 $ 1,224 $ 609 $ 8 $ 2
As of December 31, 2010, the Company had $118 million of unrecognized tax benefits. This represents the tax benefits associated with various
tax positions taken, or expected to be taken, on domestic and international tax returns that have not been recognized in our financial statements
due to uncertainty regarding their resolution. Due to the uncertainty of the timing of future cash flows associated with these unrecognized tax
benefits, we are unable to make reasonably reliable estimates of the period of cash settlement, if any, with the respective taxing authorities.
Accordingly, unrecognized tax benefits have been excluded from the contractual obligations table above. For further information related to
unrecognized tax benefits, see Note 14 to the Consolidated Financial Statements included in this Report.
We intend to pursue additional acquisition candidates, but the timing, size or success of any acquisition effort and the related potential capital
commitments cannot be predicted. We expect to fund future cash acquisitions and capital spending primarily with cash flow from operations and
borrowings, including the unborrowed portion of the credit facility or new debt issuances, but may also issue additional equity either directly or
in connection with acquisitions. There can be no assurance that additional financing for acquisitions will be available at terms acceptable to us or
at all. 44