National Oilwell Varco 2003 Annual Report Download - page 8

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7
compete based on service and price. Competition in our industry could lead to lower revenues and
earnings.
Because Some of Our Products are Used in Potentially Hazardous Activities, We Face Potential
Product Liability and Warranty Claims.
Customers use some of our products in potentially hazardous drilling, completion and
production applications that can cause:
• injury or loss of life;
• damage to property, equipment or the environment; and
• suspension of operations.
We may be named as a defendant in product liability or other lawsuits asserting
potentially large claims if an accident occurs at a location where our equipment and services have
been used. We are currently party to various legal and administrative proceedings. The outcome
of any such legal or administrative proceedings could have an adverse effect on our financial
condition.
The Location of Some of our Customers in Foreign Markets that may have Unstable Economies or
Governments Could Have a Negative Impact on Our Revenues and Earnings.
Some of our revenues depend upon customers in the Middle East, Africa, Southeast Asia,
South America and other international markets. These revenues are subject to risks of instability
of foreign economies and governments. Laws and regulations limiting exports to particular
countries can affect our sales, and sometimes export laws and regulations of one jurisdiction
contradict those of another.
National-Oilwell Sells Products and Services Outside the United States. Changes in Foreign
Currency Exchange Rates Could Have a Negative Impact on our Revenues and Earnings.
We are exposed to the risks of changes in exchange rates between the U.S. dollar and
foreign currencies. Our Norwegian companies enter into foreign exchange forward contracts,
primarily between the Norwegian kroner and the US dollar, to hedge cash flows on certain
significant contracts. Our decisions regarding the need for hedging foreign currencies in Norway
and other countries can adversely affect our operating results.
Our Growth Could Cause Difficulties Integrating Operations that We Acquire.
We have made 39 acquisitions since April 1997, including nine in 2003 and four in 2002.
We do not know whether suitable acquisition candidates will be available on reasonable terms or
if we will have access to adequate funds to complete any desired acquisition. In addition, we may
not be able to successfully integrate the operations of the acquired companies. Combining
organizations could interrupt the activities of some or all of our businesses and have a negative
impact on operations.
Our Indebtedness Could Limit Our Ability to Borrow Additional Funds and/or Make Us Vulnerable
to General Adverse Economic and Industry Conditions.