National Oilwell Varco 2010 Annual Report Download - page 88

12. Commitments and Contingencies
We are involved in various claims, regulatory agency audits and pending or threatened legal actions involving a variety of matters. The total
liability on these matters at December 31, 2010 cannot be determined; however, in our opinion, any ultimate liability, to the extent not otherwise
provided for, will not materially affect our financial position, cash flow or results of operations.
Our business is affected both directly and indirectly by governmental laws and regulations relating to the oilfield service industry in general, as
well as by environmental and safety regulations that specifically apply to our business. Although we have not incurred material costs in
connection with our compliance with such laws, there can be no assurance that other developments, such as new environmental laws, regulations
and enforcement policies hereunder may not result in additional, presently unquantifiable, costs or liabilities to us.
We have received federal grand jury subpoenas and subsequent inquiries from governmental agencies requesting records related to our
compliance with export trade laws and regulations. We have cooperated fully with agents from the Department of Justice, the Bureau of Industry
and Security, the Office of Foreign Assets Control, and U.S. Immigration and Customs Enforcement in responding to the inquiries. We have also
cooperated with an informal inquiry from the Securities and Exchange Commission in connection with the inquiries previously made by the
aforementioned federal agencies. We have conducted our own internal review of this matter. At the conclusion of our internal review in the
fourth quarter of 2009, we identified possible areas of concern and discussed these areas of concern with the relevant agencies. We are currently
negotiating a potential resolution with the agencies involved related to these matters. We currently anticipate that any administrative fine or
penalty agreed to as part of a resolution would be within established accruals, and would not have a material effect on our financial position or
results of operations. To the extent a resolution is not negotiated as anticipated, we cannot predict the timing or effect that any resulting
government actions may have on our financial position, cash flow or results of operations.
The Company leases certain facilities and equipment under operating leases that expire at various dates through 2066. These leases generally
contain renewal options and require the lessee to pay maintenance, insurance, taxes and other operating expenses in addition to the minimum
annual rentals. Rental expense related to operating leases approximated $215 million, $199 million, and $184 million in 2010, 2009 and 2008,
respectively.
Future minimum lease commitments under noncancellable operating leases with initial or remaining terms of one year or more at December 31,
2010 are payable as follows (in millions):
2011 $ 130
2012 94
2013 72
2014 56
2015 49
Thereafter 238
Total future lease commitments $ 639
13. Common Stock
National Oilwell Varco has authorized 500 million shares of $.01 par value common stock. We also have authorized 10 million shares of $.01 par
value preferred stock, none of which is issued or outstanding.
On November 17, 2010, the Companys Board of Directors approved a cash dividend of $0.11 per share. The cash dividend was paid on
December 17, 2010 to each stockholder of record on December 3, 2010. Cash dividends aggregated $46 million and $172 million for the three
and twelve months ended December 31, 2010, respectively, and $460 million for both the three and twelve months ended December 31, 2009.
The declaration and payment of future dividends is at the discretion of the Companys Board of Directors and will be dependent upon the
Companys results of operations, financial condition, capital requirements and other factors deemed relevant by the Companys Board of
Directors.
Stock Options
Under the terms of National Oilwell Varcos Long-Term Incentive Plan, as amended, 25.5 million shares of common stock are authorized for the
grant of options to officers, key employees, non-employee directors and other persons. Options granted under our stock option plan generally vest
over a three-year period starting one year from the date of grant and expire ten years from the date of grant. The purchase price of options granted
may not be less than the closing market price of National Oilwell Varco common stock on the date of grant. At December 31, 2010,
approximately 8 million shares were available for future grants. 85