National Oilwell Varco 2011 Annual Report Download - page 47

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Index to Financial Statements
Investing Activities
Net cash used in investing activities was $1,458 million in 2011 compared to net cash used in investing activities of $743 million in 2010. Net cash used in investing activities
continued to primarily be the result of acquisition activity and capital expenditures both of which increased in 2011 compared to 2010. The Company used $1,038 million for
the purpose of strategic acquisitions in 2011 compared to $556 million in 2010. In addition, due to the continued growth in the Company worldwide both internally and
through acquisition, the Company used $483 million in 2011 for capital expenditure compared to $232 million in 2010. During 2011, the Company used its cash on hand to
fund its acquisitions and capital expenditures.
Financing Activities
Net cash used in financing activities was $464 million in 2011 compared to cash used in financing activities of $102 million in 2010. The $362 million increase in cash used in
financing activities in 2011 primarily related to the repayment of $150 million in Senior Notes that were due late in the first quarter of 2011, $200 million in Senior Notes that
were due in the second quarter of 2011 as well as $20 million in other current borrowings repaid during 2011. The Company increased its dividend slightly to $191 million in
2011 compared to $172 million in 2010. The increase in cash used was partially offset by $96 million in proceeds from stock options exercised during 2011 compared to
$73 million in proceeds from stock options exercised during 2010.
The effect of the change in exchange rates on cash flows resulted in a negative impact of $19 million and a positive impact of $14 million in 2011 and 2010, respectively.
A summary of the Companys outstanding contractual obligations at December 31, 2011 is as follows (in millions):
$00,0000000 $00,0000000 $00,0000000 $00,0000000 $00,0000000
Payment Due by Period
Total
Less
than 1
Year 1-3
Years 4-5
Years After 5
Years
Contractual Obligations:
Total debt $ 510 $ 351 $ 6 $ 153 $
Operating leases 717 150 198 127 242
Total Contractual Obligations $ 1,227 $ 501 $ 204 $ 280 $ 242
Commercial Commitments:
Standby letters of credit $ 2,725 $ 1,388 $ 967 $ 248 $ 122
As of December 31, 2011, the Company had $131 million of unrecognized tax benefits. This represents the tax benefits associated with various tax positions taken, or
expected to be taken, on domestic and international tax returns that have not been recognized in our financial statements due to uncertainty regarding their resolution. Due to
the uncertainty of the timing of future cash flows associated with these unrecognized tax benefits, we are unable to make reasonably reliable estimates of the period of cash
settlement, if any, with the respective taxing authorities. Accordingly, unrecognized tax benefits have been excluded from the contractual obligations table above. For further
information related to unrecognized tax benefits, see Note 14 to the Consolidated Financial Statements included in this Report.
We intend to pursue additional acquisition candidates, but the timing, size or success of any acquisition effort and the related potential capital commitments cannot be
predicted. We expect to fund future cash acquisitions and capital expenditures primarily with cash flow from operations and borrowings, including the unborrowed portion of
the credit facility or new debt issuances, but may also issue additional equity either directly or in connection with acquisitions. There can be no assurance that additional
financing for acquisitions will be available at terms acceptable to us or at all.
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