National Oilwell Varco 2015 Annual Report Download

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Table of Contents
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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15 (d) of the Act. Yes ¨ No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and
posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files). Yes x No ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s
knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large
accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer x Accelerated filer ¨
Non-accelerated filer ¨ (Do not check if a smaller reporting company) Smaller Reporting Company ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
The aggregate market value of voting and non-voting common stock held by non-affiliates of the registrant as of June 30, 2015 was $18.7 billion. As of February 12, 2016, there
were 375,800,956 shares of the Company’s common stock ($0.01 par value) outstanding.

Portions of the Proxy Statement in connection with the 2016 Annual Meeting of Stockholders are incorporated in Part III of this report.

Table of contents

  • Page 1
    ...12317 NTTIONTL OILWELL VTRCO, INC. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 76-0475815 (IRS Employer Identification No.) (Tddress of principal executive offices) 7909 Parswood Circle Drive, Houston, Texas 77036...

  • Page 2
    .... The Company's principal executive offices are located at 7909 Parkwood Circle Drive, Houston, Texas 77036, its telephone number is (713) 346-7500. Further information about the Company's products and services can be found on its website at: http://www.nov.com . The Company's annual reports on Form...

  • Page 3
    ... and gas companies and oilfield service companies. The following table sets forth the contribution to our total revenue of our four reporting segments (in millions): Years Ended December 31, 2014 2013 2015 Revenue: Rig Systems Rig Aftermarket Wellbore Technologies Completion & Production Solutions...

  • Page 4
    ... activity increase cash flows available for oil and gas companies, drilling contractors, oilfield service companies, and manufacturers of oil country tubular goods ("OCTG") to invest in capital equipment that the Company sells. In 2010, as the financial crisis of the preceding three years eased and...

  • Page 5
    ... to drill directionally, including horizontally. The Company sells and rents drilling motors, agitators, drill bits, downhole tools and drill pipe through Wellbore Technologies, and sells top drives through Rig Systems. Heavy drilling fluids, or "drilling muds", are pumped down the drill stem...

  • Page 6
    .... During drilling operations the drilling rig and related equipment and tools are subject to severe stresses, pressures and temperatures, as well as a corrosive environment, and require regular repair and maintenance. Rig Aftermarket supplies spare parts and can dispatch field service engineers with...

  • Page 7
    Table of Contents Equipment and technologies in Rig Systems include: power transmission systems, like drives and generators; substructures, derricks, and masts; pipe lifting, racking, rotating, and assembly systems; pressure control equipment, including blowout preventers; cranes; and rig ...

  • Page 8
    ... years considerable focus has been placed on robustness and reliability in the fundamental design of the equipment with extensive testing being performed in an R&D facility opened in 2012. In 2013, the Company acquired the T3 BOP product line, further expanding its market offering of reliable, field...

  • Page 9
    ...'s Rig Systems segment. The segment provides spare parts, repair, and rentals as well as technical support, field service and first well support, field engineering, and customer training through a network of aftermarket service and repair facilities strategically located in major areas of drilling...

  • Page 10
    ...engineers actively support rig equipment and technologies on location. Based across a global network of aftermarket service and repair facilities, field service engineers can be deployed to operating sites worldwide to resolve equipment issues, whether structural, mechanical, electrical, or software...

  • Page 11
    ... consolidation of key acquisitions. The Company manufactures fixed cutter and roller cone drill bits and services its customer base in virtually every significant oil and gas producing region of the world. The Company designs, manufacturers and services a wide array of downhole motors which are...

  • Page 12
    ... while drilling, control downhole pressure, lubricate and cool the drill bit, suspend and release cuttings, and transmit hydraulic energy to drilling tools and bits. Wellsite Services provides water and oil based drilling fluids Portable Power Generation. The Portable Power division provides rental...

  • Page 13
    ... and Competition. Customers for Wellbore Technologies include major and independent oil and gas companies, national oil companies, drilling and workover contractors, oilfield equipment and product distributors and other manufacturers, oilfield service companies, steel mills, rental companies, and...

  • Page 14
    ...markets by designing, manufacturing and distributing key products including pumping technologies (reciprocating, multistage surface, and progressive cavity pumps), process equipment (dynamic oil recovery, water treatment, sand handling, separation and crude / gas handling), artificial lift solutions...

  • Page 15
    ... realignment of the structure of Robbins & Myers, Inc. ("R&M") and distribution of R&M's equity ownership in certain subsidiaries to Grant Prideco, Inc. ("Grant Prideco"), a direct subsidiary of the Company; (c) realignment of business units of Ameron International Corporation ("Ameron") including...

  • Page 16
    ... revenue information. Research and New Product Development and Intellectual Property The Company believes that it has been a leader in the development of new technology and equipment to enhance the safety and productivity of drilling and well servicing processes and that its sales and earnings...

  • Page 17
    ... aftermarket products and services to support land rigs and offshore rigs, and drilling rig components manufactured by Rig Systems. Primary facilities are located in Houston, Texas; New Iberia, Louisiana; Aberdeen, Scotland; Singapore; and Dubai, UAE. Wellbore Technologies designs, manufactures...

  • Page 18
    ..., or that the Company will earn a profit on backlog work. Backlog for Rig Systems at December 31, 2015, 2014 and 2013, was $6.1 billion, $12.5 billion and $15.0 billion, respectively. Backlog for Completion & Production Solutions at December 31, 2015, 2014 and 2013 was $1.0 billion, $1.8 billion...

  • Page 19
    ... production, the number of well completions, capital expenditures of other oilfield service companies and the level of workover activity. Drilling and workover activity can fluctuate significantly in a short period of time, particularly in the United States and Canada. The willingness of oil and gas...

  • Page 20
    ... major product lines. Certain of these competitors may have greater financial, technical, manufacturing and marketing resources than us, and may be in a better competitive position. The following competitive actions can each affect our revenue and earnings price changes; new product and technology...

  • Page 21
    ... revenues in 2015 were derived from operations outside the United States (based on revenue destination). Our foreign operations include significant operations in Argentina, Canada, Brazil, Europe, the Middle East, China, Africa, Nigeria, Southeast Asia, Russia, Latin America and other international...

  • Page 22
    ... backlog. Sanctions imposed by the United States, European Union and other countries could adversely impact our business activities in or related to Russia and certain Russian companies, including prohibitions of certain sales of goods and services, delays in executing construction or manufacturing...

  • Page 23
    ...not limited to) a significant sustained reduction in worldwide oil and gas prices or drilling; a significant sustained reduction in profitability or cash flow of oil and gas companies or drilling contractors; a significant sustained reduction in capital investment by other oilfield service companies...

  • Page 24
    ... to indemnify our customers in the normal course of business, which is normally the case. We may not have adequate insurance for potential environmental, product or personal injury liabilities. While we maintain liability insurance, this insurance is subject to coverage limits. In addition, certain...

  • Page 25
    ... natural gas drilling activity and result in a corresponding decline in the demand for our products and services, which could adversely impact our operating results and financial condition. We had revenues of greater than 10% of total revenue from one of our customers during the year ended December...

  • Page 26
    ... the internal diameter of the wellbore. This is typically done with under-reamers, reamers, or hole openers. A solids control system in which the drilling mud is reconditioned and recycled through the drilling process on the rig itself. 25 Beam pump Bit Blowout Blowout Preventer (BOP) Blowout...

  • Page 27
    ... through the wellbore during rotary drilling operations. A conduit used in offshore drilling through which the drill bit and other tools are passed from the rig on the water's surface to the sea floor. All members in the assembly used for rotary drilling from the swivel to the bit, including the...

  • Page 28
    ... the flow of hydrocarbons. A floor-mounted combination of a spinning wrench and a torque wrench. The Iron Roughneck moves into position hydraulically and eliminates the manual handling involved with suspended individual tools. A mobile bottom-supported offshore drilling structure with columnar...

  • Page 29
    ... weight on the bit in spite of vertical motion of a floating offshore drilling rig. A large, high-pressure reciprocating pump used to circulate the mud on a drilling rig. The mechanical process of ensuring that the inside threads on a piece of drill pipe comply with API standards. Equipment used in...

  • Page 30
    ...of the rotary table when it is necessary to disconnect the drill stem from the kelly or from the top-drive unit's drive shaft. Rotary slips fit around the drill pipe and 29 Rotary table Rotating blowout preventer (Rotating Head) Safety clamps Shaker Shale shaker Slim-hole completions (Slim-hole...

  • Page 31
    ... length of casing, tubing, sucker rods, or drill pipe run into a hole. A special steel pumping rod. Several rods screwed together make up the link between the pumping unit on the surface and the pump at the bottom of the well. A system of devices installed on a floating offshore drilling rig to...

  • Page 32
    ...a producing oil well to try to increase production. Examples of workover jobs are deepening, plugging back, pulling and resetting liners, and squeeze cementing. A borehole; the hole drilled by the bit. A wellbore may have casing in it or it may be open (uncased); or part of it may be cased, and part...

  • Page 33
    ... worldwide as of December 31, 2015, including the following principal manufacturing, service, distribution and administrative facilities: Building Size (SqFt) Property Size (Tcres) Lease Termination Date Location Description Owned Rig Systems: Houston, Texas Houston, Texas Ulsan, South Korea...

  • Page 34
    ... We own or lease approximately 300 repair and manufacturing facilities that refurbish and manufacture new equipment and parts, 400 service centers that provide inspection and equipment rental and 135 engineering, sales and administration facilities. ITEM 3. LEGTL PROCEEDINGS We have various...

  • Page 35
    ... Repurchases During the third quarter of 2015 the Company completed its $3 billion share repurchase program. As shares were repurchased, they were constructively retired and returned to an unissued state. During the years ended December 31, 2015 and 2014, the Company repurchased 44.0 million and 11...

  • Page 36
    ...assumes $100 invested on December 31, 2010 in National Oilwell Varco, Inc., the S&P 500 Index and the S&P Oil & Gas Equipment & Services Index. It also assumes reinvestment of all dividends. The peer group is weighted based on the market capitalization of each company. The results shown in the graph...

  • Page 37
    ...of Contents ITEM 6. SELECTED FINTNCITL DTTT Years Ended December 31, 2014 2013 (1) 2012 (2) (in millions, except per share data) 2015 2011 Operating Data: Revenue Operating profit (loss) Income (loss) from continuing operations before income taxes Income (loss) from continuing operations Income...

  • Page 38
    ... drill cuttings separation, management and disposal systems and services; and provide expendables and spare parts used in conjunction with our large installed base of equipment. We also manufacture coiled tubing and high pressure fiberglass and composite tubing, and sell and rent advanced in-line...

  • Page 39
    ... end of 2015. EXECUTIVE SUMMTRY National Oilwell Varco, Inc. generated revenue of $14.8 billion in 2015, a decrease of 31% from the prior year due to declining oil and gas prices resulting in reduced drilling activity and demand for oilfield equipment and services. Average 2015 worldwide rig count...

  • Page 40
    ... equipment and services slowed and rig counts declined rapidly. For the fourth quarter of 2015, the average number of active rigs drilling worldwide decreased 44% year-over-year, with a 60% decline in the North American market alone. Segment Performance Rig Systems The Company's Rig Systems segment...

  • Page 41
    ... capital equipment components including top drives, blowout preventers and offshore cranes. Year-end backlog for the segment was $6.1 billion a 24% decline sequentially and a 52% decrease year-over-year. Rig Aftermarket The Company's Rig Aftermarket segment generated $2.5 billion in revenue and...

  • Page 42
    ... across our four business segments. Likewise, our global customer base includes national oil companies, international oil companies, onshore and offshore drilling contractors and others whose strategies and reactions to low commodity prices vary. Our Completion & Production Solutions segment is...

  • Page 43
    ... in 2015 and 2014 (in millions): Years Ended December 31, 2015 2014 Variance $ % Revenue: Rig Systems Rig Aftermarket Wellbore Technologies Completion & Production Solutions Eliminations Total Revenue Operating Profit (Loss): Rig Systems Rig Aftermarket Wellbore Technologies Completion & Production...

  • Page 44
    ... to severance and facility closures. Restructuring and other items included in operating profit for Wellbore Technologies were $117 million for the year ended December 31, 2015 and $6 million for the year ended December 31, 2014. Completion & Production Solutions Revenue from Completion & Production...

  • Page 45
    ...were $101 million for the year ended December 31, 2015 and $10 million for the year ended December 31, 2014. The Completion & Productions Solutions segment monitors its capital equipment backlog to plan its business. New orders are added to backlog only when the Company receives a firm written order...

  • Page 46
    ... 2014 and 2013 (in millions): Years Ended December 31, 2014 2013 Variance $ % Revenue: Rig Systems Rig Aftermarket Wellbore Technologies Completion & Production Solutions Eliminations Total Revenue Operating Profit Rig Systems Rig Aftermarket Wellbore Technologies Completion & Production Solutions...

  • Page 47
    ... spare parts, repairs and services as a result of high levels of drilling activity and our large installed base of equipment. Operating profit from Rig Aftermarket was $882 million for the year ended December 31, 2014, an increase of $153 million (21.0%) compared to 2013. Operating profit percentage...

  • Page 48
    ... reporting segment. Other income (expense), net Other income (expense), net were expenses of $90 million for the year ended December 31, 2014 compared to expenses of $39 million for the year ended December 31, 2013. The increase was primarily due to losses on the sale of certain non-core industrial...

  • Page 49
    ... 30, 2015 2014 2015 Years Ended December 31, 2015 2014 2013 Reconciliation of operating profit (loss): GAAP operating profit (loss) Litigation gain (1): Wellbore Technologies Goodwill and other intangible asset write-downs (2): Rig Systems Wellbore Technologies Completion & Production Solutions...

  • Page 50
    ...costs related to severance and facility closures; items related to acquisitions, such as transaction costs, the amortization of backlog and inventory that was stepped up to fair value during purchase accounting; the costs of the spin-off of the Company's distribution business and certain legal costs...

  • Page 51
    ... the purpose of acquiring Robbins & Myers during 2013. Capital expenditures however increased to $699 million during 2014 compared to $614 million during 2013. In addition, the Company's cash and cash equivalents decreased $253 million as a result of the spin-off of its distribution business on May...

  • Page 52
    ...the years ended December 31, 2015, 2014 and 2013, respectively. During the third quarter of 2015 the Company completed its $3 billion share repurchase program. As shares were repurchased, they were constructively retired and returned to an unissued state. During the years ended December 31, 2015 and...

  • Page 53
    ... and materially impact the Company's future reported earnings. Historically, the Company's estimates have been reasonably dependable regarding the recognition of revenues and gross profits on percentage-of-completion contracts. For the years ended December 31, 2015 and 2014, the difference between...

  • Page 54
    ... are usually limited. The Company's inventory consists of specialized spare parts, work in process, and raw materials to support ongoing manufacturing operations and the Company's large installed base of specialized equipment used throughout the oilfield. Customers rely on the Company to stock these...

  • Page 55
    ... issues, competitor analysis, capital spending requirements, working capital needs, customer needs to replace aging equipment, increased complexity of drilling, new technology, and existing backlog among other items which impact the individual reporting unit projections. Cash flows beyond the...

  • Page 56
    ..., the Company's Rig Offshore, Dynamic Drilling Solutions, Process and Flow Technologies and Fiberglass reporting units each had calculated fair values that were between 15% and 30% in excess of the respective carrying values. We continue to monitor the cash flows for these reporting units as they...

  • Page 57
    .... Should the Company make a distribution from the unremitted earnings of these subsidiaries, the Company may be required to record additional taxes. Unremitted earnings of these subsidiaries were $8,187 million and $5,874 million at December 31, 2015 and 2014, respectively. The Company makes...

  • Page 58
    ... that entities recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. ASU No. 2014-09 is effective for fiscal years beginning after December...

  • Page 59
    ...and liabilities not denominated in the functional currency, which exposes us to changes in foreign currency exchange rates that impact income. During the years ended December 31, 2015, 2014 and 2013, the Company reported foreign currency gains (losses) of ($47) million, $20 million and ($24) million...

  • Page 60
    ... of Contents The following table details the Company's foreign currency exchange risk grouped by functional currency and their expected maturity periods as of December 31, 2015 (in millions except for rates): December 31, 2015 2017 Total December 31, 2014 Functional Currency 2016 CTD Buy USD...

  • Page 61
    ... exposures totaling $323 million as of December 31, 2015, excluding trade receivables and payables, which approximate fair value. These market risk sensitive instruments consisted of cash balances and overdraft facilities. The Company estimates that a hypothetical 10% movement of all applicable...

  • Page 62
    ...2015 and 2013, respectively. The reporting currency of all of the Company's Venezuelan entities is the U.S. dollar. The Company's remaining net investment in Venezuela... or at the U.S. prime rate. Under our credit facility, we may, at our option, fix the interest rate for certain borrowings based on a...

  • Page 63
    ...) Internal Control Over Financial Reporting (a) Management's annual report on internal control over financial reporting. The Company's management report on internal control over financial reporting is set forth in this annual report on Page 67 and is incorporated herein by reference. (b) Changes in...

  • Page 64
    ... Authorized for Issuance Under Equity Compensation Plans. The following table sets forth information as of our fiscal year ended December 31, 2015, with respect to compensation plans under which our common stock may be issued: Number of securities remaining available for equity compensation...

  • Page 65
    ...., the financial institutions signatory thereto, including Wells Fargo Bank, N.A., as Administrative Agent, the other agents named therein, and the lenders parties thereto. (Exhibit 10.1) (4) National Oilwell Varco Long-Term Incentive Plan, as amended and restated. (5)* Form of Employee Stock Option...

  • Page 66
    ... Annual Report on Form 10-K for the period ended December 31, 2015 formatted in eXtensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Cash Flows, and (iv) Notes to the Consolidated Financial Statements...

  • Page 67
    ... of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. NATIONAL OILWELL VARCO, INC. Dated: February 19, 2016 By: /s/ CLAY C. WILLIAMS Clay C. Williams Chairman, President and Chief Executive Officer Pursuant to the requirements...

  • Page 68
    Table of Contents MTNTGEMENT'S REPORT ON INTERNTL CONTROL OVER FINTNCITL REPORTING National Oilwell Varco, Inc.'s management is responsible for establishing and maintaining adequate internal control over financial reporting. National Oilwell Varco, Inc.'s internal control system was designed to ...

  • Page 69
    ... sheets as of December 31, 2015 and 2014, and the related consolidated statements of income, comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2015 of National Oilwell Varco, Inc., and our report dated February 19, 2016, expressed...

  • Page 70
    ... information set forth therein. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), National Oilwell Varco, Inc.'s internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control...

  • Page 71
    ...' equity: Common stock-par value $.01; 1 billion shares authorized; 375,764,794 and 418,977,608 shares issued and outstanding at December 31, 2015 and December 31, 2014 Additional paid-in capital Accumulated other comprehensive loss Retained earnings Total Company stockholders' equity Noncontrolling...

  • Page 72
    ...of Contents NTTIONTL OILWELL VTRCO, INC. CONSOLIDTTED STTTEMENTS OF INCOME (LOSS) (In millions, except per share data) Years Ended December 31, 2015 2014 2013 Revenue Sales Services Total Cost of revenue Cost of sales Cost of services Total Gross profit Selling, general and administrative Goodwill...

  • Page 73
    ... OILWELL VTRCO, INC. CONSOLIDTTED STTTEMENTS OF COMPREHENSIVE INCOME (LOSS) (In millions) Years Ended December 31, 2015 2014 2013 Net income (loss) Other comprehensive income (loss) (net of tax): Currency translation adjustments Derivative financial instruments Change in defined benefit plans...

  • Page 74
    ...) Years Ended December 31, 2015 2014 2013 Cash flows from operating activities: Income (loss) from continuing operations Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Deferred income taxes Stock-based compensation Excess tax benefit...

  • Page 75
    ..., net Spin-off of distribution business Stock-based compensation Common stock issued Withholding taxes Share repurchases Excess tax benefit from stock-based compensation Balance at December 31, 2014 Net loss Other comprehensive income (loss), net Cash dividends, $1.84 per common share Dividends to...

  • Page 76
    ...1, 2014, reorganized the Rig Technology, Petroleum Services & Supplies and remaining operations of Distribution & Transmission reporting segments into four new reporting segments. The new reporting segments are Rig Systems, Rig Aftermarket, Wellbore Technologies and Completion & Production Solutions...

  • Page 77
    ...the years ended December 31, 2015, 2014 and 2013. Intangible Assets The Company has approximately $7.0 billion of goodwill and $3.8 billion of identified intangible assets at December 31, 2015. Goodwill is identified by segment as follows (in millions): Completion & Production Solutions Rig Systems...

  • Page 78
    ... five years. Included in intangible assets are $384 million of indefinite-lived trade names. The net book values of identified intangible assets are identified by segment as follows (in millions): Completion & Production Solutions Rig Systems Rig Tftermarset Wellbore Technologies Discontinued...

  • Page 79
    ... issues, competitor analysis, capital spending requirements, working capital needs, customer needs to replace aging equipment, increased complexity of drilling, new technology, and existing backlog among other items which impact the individual reporting unit projections. Cash flows beyond the...

  • Page 80
    ... do not generally include right of return or other similar provisions or other significant post delivery obligations. Except for certain construction contracts and drill pipe sales described below, the Company records revenue at the time its manufacturing process is complete, the customer has been...

  • Page 81
    ... reported earnings. The asset, "Costs in excess of billings," represents revenues recognized in excess of amounts billed. The liability, "Billings in excess of costs," represents billings in excess of revenues recognized. Drill Pipe Sales For drill pipe sales, if requested in writing by the customer...

  • Page 82
    ... guidance the fair value of stock option grants and restricted stock is amortized to expense using the straight-line method over the shorter of the vesting period or the remaining employee service period. The Company provides compensation benefits to employees and non-employee directors under share...

  • Page 83
    ... Years Ended December 31, 2015 2014 2013 Numerator: Income (loss) from continuing operations Income from discontinued operations Net income (loss) attributable to Company Denominator: Basic-weighted average common shares outstanding Dilutive effect of employee stock options and other unvested stock...

  • Page 84
    ... that entities recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. ASU No. 2014-09 is effective for fiscal years beginning after December...

  • Page 85
    ... nonfunctional currency cash flows from forecasted revenues and expenses (in millions): Currency Denomination December 31, December 31, 2015 2014 Foreign Currency Norwegian Krone U.S. Dollar Euro Danish Krone Singapore Dollar British Pound Sterling Canadian Dollar Non-designated Hedging Strategy...

  • Page 86
    ...net Tmount of Gain (Loss) Recognized in Income on Derivatives Years Ended December 31, 2015 2014 (97) (61) (97) (61) The Company expects that $(223) million of the Accumulated Other Comprehensive Income (Loss) will be reclassified into earnings within the next twelve months with an offset by gains...

  • Page 87
    ... businesses acquired and other intangible assets that do not qualify for separate recognition, such as assembled workforce in place at the date of acquisition. Goodwill resulting from the acquisitions is not deductible for tax purposes. 2014 In the year ended December 31, 2014, the Company completed...

  • Page 88
    ... of each business are included in the consolidated statements of income from the date of acquisition. A summary of the acquisitions follows (in millions): Years Ended December 31, 2014 2013 2015 Fair value of assets acquired, net of cash acquired Cash paid, net of cash acquired Liabilities assumed...

  • Page 89
    ... consist of (in millions): December 31, 2015 2014 Accrued vendor costs Customer prepayments and billings Fair value of derivatives Warranty Compensation Taxes (non income) Insurance Accrued commissions Interest Other Total 8. Costs and Estimated Earnings on Uncompleted Contracts Costs and estimated...

  • Page 90
    ... the U.S. and Canadian employees, and benefits are based on years of service, a percentage of current earnings and matching of employee contributions. We also have defined contribution plans in Norway and the United Kingdom. For the years ended December 31, 2015, 2014 and 2013, expenses for defined...

  • Page 91
    ... the local economic conditions. The assumption rates used for benefit obligations are as follows: Years Ended December 31, 2015 2014 Discount rate: United States plan International plans Salary increase: United States plan International plans 90 3.40% - 3.90% 2.10% - 3.60% N/A 2.00% - 4.20% 3.40...

  • Page 92
    ... used for net periodic benefit costs are as follows: Years Ended December 31, 2014 2015 2013 Discount rate: United States plan International plans Salary increase: United States plan International plans Expected return on assets: United States plan International plans 3.70% - 4.20% 2.20% - 3.70...

  • Page 93
    ...assumptions about risk). The following table sets forth a summary of changes in the fair value of the Plan's Level 3 assets (in millions): Level 3 Plan Tssets Balance at December 31, 2013 Actual return on plan assets still held at reporting date Purchases, sales and settlements Currency translation...

  • Page 94
    ...): Years Ended December 31, 2014 Defined Derivative Currency Benefit Financial Translation Plans Tdjustments Instruments $ - $ (26) $ - - 43 - Revenue Cost of revenue Selling, general, and administrative Other income (expense), net Tax effect Currency Translation Tdjustments $ - - 2015 Derivative...

  • Page 95
    ... our shipyard customers, their customers, entities providing financing for our shipyard customers and/or entities in the supply chain. We consummated a settlement with a shipyard customer on December 28, 2015 concerning seven contracts for the supply of drilling equipment packages for drillship...

  • Page 96
    ... Stocs National Oilwell Varco has authorized 1 billion shares of $0.01 par value common stock. The Company also has authorized 10 million shares of $0.01 par value preferred stock, none of which is issued or outstanding. Cash dividends aggregated $710 million and $703 million for the years ended...

  • Page 97
    ...of National Oilwell Varco common stock on the date of grant. At December 31, 2015, approximately 6.2 million shares were available for future grants. We also have inactive stock option plans that were acquired in connection with the acquisitions of Varco International, Inc. in 2005 and Grant Prideco...

  • Page 98
    ...information regarding outstanding options at December 31, 2015 and changes during 2015 with regard to options under all stock option plans: Weighted Tverage Remaining Contractual Term (years) Shares WeightedTverage Exercise Price Tggregate Intrinsic Value Outstanding at December 31, 2014 Granted...

  • Page 99
    ... an officer of the Company and vest over a three-year period from the grant date. The following summary presents information regarding outstanding restricted shares: Years Ended December 31, 2014 WeightedTverage Grant Number Date Fair of Units Value 2015 WeightedTverage Grant Date Fair Value 2013...

  • Page 100
    ... was as follows (in millions): Years Ended December 31, 2014 2013 2015 Federal income tax at U.S. statutory rate Foreign income tax rate differential State income tax, net of federal benefit Nondeductible expenses Tax benefit of manufacturing deduction Foreign dividends, net of foreign tax credits...

  • Page 101
    ...): 2015 2014 2013 Unrecognized tax benefit at beginning of year Additions based on tax positions related to the current year Reductions for tax positions of prior years Settlements of audits Reductions for lapse of applicable statutes of limitations Unrecognized tax benefit at end of year $115...

  • Page 102
    ... or financial condition of the Company. 15. Business Segments and Geographic Treas The Company's operations are organized into four reportable segments: Rig Systems, Rig Aftermarket, Wellbore Technologies and Completion & Production Solutions. Within the four reporting segments, the Company has...

  • Page 103
    ...cranes; pipe lifting, racking, rotating, and assembly systems; fluid transfer technologies, such as mud pumps; pressure control equipment, including blowout preventers; power transmission systems, including drives and generators; and rig instrumentation and control systems. Rig Systems supports land...

  • Page 104
    ... the Company. Geographic Areas: The following table presents consolidated revenues by country based on sales destination of the use of the products or services (in millions): Years Ended December 31, 2014 2013 2015 United States South Korea China Singapore United Kingdom Brazil Norway Canada Other...

  • Page 105
    ... Business Segments: Completion & Production Solutions Rig Systems Rig Tftermarset Wellbore Technologies Eliminations (1) Discontinued Operations Total December 31, 2015: Revenue Operating profit (loss) Capital expenditures Depreciation and amortization Goodwill Total assets December 31, 2014...

  • Page 106
    ... operations. The following table presents selected financial information, through May 30, 2014, regarding the results of operations of our distribution business, which is reported as discontinued operations (in millions): Years Ended December 31, 2014 2013 Revenue from discontinued operations...

  • Page 107
    ... OILWELL VTRCO, INC. VTLUTTION TND QUTLIFYING TCCOUNTS Years Ended December 31, 2015, 2014 and 2013 (in millions) Tdditions (Deductions) charged to costs and expenses Balance beginning of year Charge off's and other Balance end of year Allowance for doubtful accounts: 2015 2014 2013 Allowance...

  • Page 108
    ... France SAS APL Management Pte Ltd APL Norway AS APL Technology AS ASEP Group Holding BV ASEP Otomotiv Sanayi Ticaret Ltd. Aswan National Oilwell Varco (a limited liability company) Big Red Tubulars Industries LLC Big Red Tubulars Limited Black Max Argentina S.A. Bolenco Corporation Bondstrand Ltd...

  • Page 109
    ... Grant Prideco Asia (Singapore) Pte Ltd Grant Prideco de Venezuela, S.A. Grant Prideco European Holding, LLC Grant Prideco Finance, LLC Grant Prideco Holding, LLC Grant Prideco III C.V. 2 United Arab Emirates Netherlands Netherlands Mexico China Norway United States Netherlands United States Canada...

  • Page 110
    ... Russian Federation China Singapore United States United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom New Zealand Argentina Mexico United States United States United Kingdom Algeria Venezuela United States Canada Poland Mexico China Thailand United Arab Emirates

  • Page 111
    ... United States Korea, Republic of Mexico Argentina Oman Norway Peru China Singapore China Mexico United Kingdom United States United States Singapore Australia Netherlands Netherlands Mauritius Barbados Cayman Islands Malaysia Mexico Mexico Cyprus Brazil Mexico Australia France United Arab Emirates...

  • Page 112
    ... Services, Inc. NOV Far East B.V. NOV FGS Maylasia Sdn Bhd NOV FGS Singapore (Pte.) Ltd NOV Fiber Glass Systems B.V. NOV Fiber Glass Systems Fabricacao De Tubos E Conexoes Ltda NOV Flexibles Equipamentos E Servicos Ltda. NOV Flexibles Holding ApS NOV Flexibles UK Ltd. NOV Floating Production...

  • Page 113
    ... Limited NOV Process & Flow Technologies US, Inc. NOV Rig Solutions Pte. Ltd. NOV Rigstore, Inc. NOV Romania, LLC NOV Saudi Arabia Co., Ltd. NOV Saudi Arabia Trading Co. Ltd. NOV Services Ltd. NOV Servicios de Personal Mexico, S. de R.L. de C.V. NOV Tuboscope Italia S.R.l. NOV Tuboscope Middle East...

  • Page 114
    ... Ltd. Profab Engineering Pte. Ltd. Profab Services Pte Ltd PSX Corporation PT H-Tech Oilfield Equipment PT National Oilwell Varco PT PROFAB INDONESIA Quality Tubing FSC R&M C.V. R&M Canada Cooperatief U.A. R&M Canada Holding B.V. R&M Energy Systems Australia Pty Ltd. R&M Energy Systems de Argentina...

  • Page 115
    ... International, Inc. T-3 Energy Services Mexico, S. de R.L. de C.V. T-3 Energy Services, LLC T-3 Investment Corporation IV T-3 Mexican Holdings, Inc. Techdrill Limited Telluride Insurance Limited Tianjin Grant Prideco TPCO Oilfield Products Co., Ltd. Tianjin Grant TPCO Drilling Tools Company Limited...

  • Page 116
    ... XL Systems International, Inc. XL Systems, L.P. 9 United States Brazil Venezuela United Kingdom United States United States United States Germany Switzerland United States Saudi Arabia Brunei Darussalam United States United Arab Emirates United States Austria Austria United States United States...

  • Page 117
    ... of internal control over financial reporting of National Oilwell Varco, Inc., included in this Annual Report (Form 10-K) for the year ended December 31, 2015. Form Description S-8 S-8 S-8 S-8 S-8 S-8 S-8 S-4 S-8 S-3 S-8 National-Oilwell, Inc. Stock Award and Long Term Incentive Plan, Value...

  • Page 118
    ... affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 19...

  • Page 119
    ...Bayardo, eertify that: 1. I have reviewed this annual report on Form 10-K of National Oilwell Vareo, Ine. for the fiseal year ended Deeember 31, 2015; 2. Based on my knowledge, this report does not eontain any untrue statement of a material faet or omit to state a material faet neeessary to make the...

  • Page 120
    ... the Annual Report of National Oilwell Varco, Inc. (the "Company") on Form 10-K for the year ended December 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Clay C. Williams, Chairman, President and Chief Executive Officer of the Company, certify...

  • Page 121
    ... the Annual Report of National Oilwell Varco, Inc. (the "Company") on Form 10-K for the year ended December 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jose A. Bayardo, Senior Vice President and Chief Financial Officer of the Company, certify...

  • Page 122
    ... mine safety data is provided pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"). As required by the reporting requirements of the Dodd-Frank Act, as amended, the table below presents the following information for the year ended December 31, 2015. (in...

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