National Oilwell Varco 2015 Annual Report Download - page 45

Download and view the complete annual report

Please find page 45 of the 2015 National Oilwell Varco annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 123

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123

Table of Contents
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. Restructuring and other items included in operating profit for Completion & Production Solutions 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 for major completion and production components or a signed contract related to a construction project. The capital
equipment backlog was $969 million at December 31, 2015, a decrease of $810 million, or 46% from backlog of $1,780 million at December 31, 2014.
Numerous factors may affect the timing of revenue out of backlog. Considering these factors, the Company reasonably expects approximately $778 million
of revenue out of backlog in 2016 and approximately $191 million of revenue out of backlog in 2017 and thereafter. At December 31, 2015, approximately
75% of the capital equipment backlog was for offshore products and approximately 87% of the capital equipment backlog was destined for international
markets.
Eliminations
Eliminations in operating profit were $749 million for the year ended December 31, 2015 compared to $892 million for the year ended December 31, 2014.
This change is primarily due to lower intersegment sales. Sales from one segment to another generally are priced at estimated equivalent commercial selling
prices; however, segments originating an external sale are credited with the full profit to the company. Eliminations include intercompany transactions
conducted between the four reporting segments that are eliminated in consolidation. Intercompany transactions within each reporting segment are eliminated
within each reporting segment.
Other income (expense), net
Other income (expense), net were expenses of $123 million for the year ended December 31, 2015 compared to expenses of $90 million for the year ended
December 31, 2014. The increase was primarily due to higher foreign exchange losses.
Provision for income taxes
The effective tax rate for the year ended December 31, 2015 was (30.2)%, compared to 29.7% for 2014. Compared to the U.S. statutory rate, the effective tax
rate was positively impacted in the period by a domestic loss, the effect of lower tax rates on income earned in foreign jurisdictions, a reduction of deferred
taxes due to decreases in statutory tax rates of foreign jurisdictions, and foreign exchange losses for tax reporting in Norway. The effective tax rate was
negatively impacted by additional U.S. tax on foreign dividends net of foreign tax credits, the recognition and settlement of an uncertain tax position in a
foreign jurisdiction, and nondeductible expenses. The nondeductible expenses primarily consist of non-deductible goodwill impaired during the year ended
December 31, 2015.
44