National Oilwell Varco 2003 Annual Report Download - page 41

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In November 2002, we sold $200 million of 5.65% unsecured senior notes due November 15,
2012. Interest is payable on May 15 and November 15 of each year. In March 2001, we sold $150
million of 6.50% unsecured senior notes due March 15, 2011, with interest payable on March 15
and September 15 of each year. In June 1998, we sold $150 million of 6.875% unsecured senior
notes due July 1, 2005, with interest payments due on January 1 and July 1.
At December 31, 2003, we had two committed credit facilities, a North American and a
Norwegian facility, totaling $313 million. Both facilities are available for general corporate
purposes and acquisitions, including letters of credit and performance bonds.
Our North American facility is a three-year unsecured $175 million revolving credit facility
with availability up to $50 million for issuance of letters of credit that expires July 31, 2005.
At December 31, 2003, borrowings against this facility totaled $40 million and there were $15
million in outstanding letters of credit. Interest (1.6% @ 12/31/03) is based upon prime or
Libor plus 0.5% subject to a ratings based grid.
Our Norwegian facility, which expires in 2006, has multi-currency term loans and revolving
credit facilities totaling $138 million, with $38 million available for letter of credit purposes.
At December 31, 2003, borrowings against this facility totaled $70 million, including $40
million in term loans with $15 million due in May 2004, and there were $25 million in
outstanding letters of credit. Interest (3.4% @ 12/31/03) is based upon a pre-agreed percentage
point spread from either the prime interest rate, NIBOR or EURIBOR. In February 2004, we
reduced this facility by $44 million to $94 million and borrowed $40 million against the North
American facility to repay all the term loans.
We also have additional uncommitted credit facilities totaling $134 million that are used
primarily for letters of credit, bid bonds and performance bonds. At December 31, 2003, there
were no borrowings against these additional credit facilities and there were $35 million in
outstanding letters of credit and performance bonds.
The senior notes contain reporting covenants and the credit facilities contain financial covenants
and ratios regarding maximum debt to capital and minimum interest coverage. We were in
compliance with all covenants governing these facilities at December 31, 2003.
6. Employee Benefit Plans
We have benefit plans covering substantially all of our employees. Defined-contribution benefit
plans cover most of the U.S. and Canadian employees and benefits are based on years of service,
a percentage of current earnings and matching of employee contributions. Employees in our
Norwegian operations can elect to participate in a defined-contribution plan in lieu of a local
defined benefit plan. For the years ended December 31, 2003, 2002 and 2001, pension expense
for defined-contribution plans was $13.1 million, $9.1 million and $6.0 million, and all funding is
current.
Certain retired or terminated employees of predecessor or acquired companies participate in a
defined benefit plan in the United States. None of the participants in this plan are eligible to
accrue benefits. In addition, approximately 160 U.S. retirees and spouses participate in defined
benefit health care plans of predecessor or acquired companies that provide postretirement
medical and life insurance benefits. Active employees are ineligible to participate in any of these
defined benefit plans. Our subsidiaries in the United Kingdom and Norway also have defined
benefit pension plans covering virtually all of their employees.