National Oilwell Varco 1998 Annual Report Download

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1998:
Three Stories
1998 ANNUAL REPORT

Table of contents

  • Page 1
    1998: Three Stories 1 9 9 8 A N N U A L R E P O R T

  • Page 2
    ... cancellation of management agreements and expenses related to special incentive plans that terminated upon the occurrence of the initial public offering of its common stock. (5) National Oilwell recorded extraordinary losses in September 1997 of $623,000 (net of $376,000 income tax benefit) and in...

  • Page 3
    ...land, extended reach and performance drilling. National Oilwell provides distribution services through its network of approximately 125 distribution service centers located in the United States, Canada and near major drilling and production activity worldwide. The Company also offers outsourcing and...

  • Page 4
    .... He was a dedicated and valued member of the board, and the directors, management and employees of National Oilwell would like to express our great respect and gratitude for his service. He will be missed. Sincerely, Joel V. Staff Chairman, President and Chief Executive Officer March 1999

  • Page 5
    ... the time spent in procurement and logistics. Their goal was to develop an alliance partnership with a provider who would manage their supply chain, operate their warehouses and help reduce their net capital employed. Deutag wanted to free up their personnel for higher value added activities, and...

  • Page 6
    ...spend more time focusing > "This alliance logistics efforts core competencies." Jeremy Thigpen Alliance Coordinator on their respective in Algeria, Nigeria, Venezuela, Thailand, Bangladesh, Oman and Azerbaijan. Together, Deutag and National Oilwell established benchmarks against which the success...

  • Page 7
    ... Heave Compensating Drawworks N page 10 ow and again, a new product sets sail with the ability to dramatically impact drilling efficiency. Such was the case on October 4, 1998, when the Deepwater Pathfinder, a drillship commissioned and owned by Conoco and R&B Falcon, left Koje, South Korea on...

  • Page 8
    ... possible through the companies' joint efforts. National Oilwell now offers Hitec's Cyberbase drilling control systems with its line of conventional drawworks. This is a powerful alliance, with a vision toward complete automation of the rig floor. page 13 This new drawworks system, which combines...

  • Page 9
    ...and interviewed customers, vendors and best-in-class service providers, it was evident that this could only be accomplished by transforming our supply chain management capabilities and significantly changing the way we do business. Thus, in 1998, a major initiative was launched which centered around...

  • Page 10
    ... Oilwell's future as the leading provider of enhanced supply chain services is secure. page 17 Distribution Group to be live before the end of the year. The Delta Revolution Team is also responsible for the identification of innovative business practices that will improve the procurement process...

  • Page 11
    ...27.5 Products and Technology The Products and Technology segment designs and manufactures a large line of proprietary products, including drawworks, mud pumps, power swivels, electrical control systems and reciprocating pumps, as well as complete land drilling and well servicing rigs and structural...

  • Page 12
    ... levels of the Company's alliance partners and other customers. Incremental sales of maintenance, repair and operating supplies ($34.2 million), tubular products ($58.0 million), drilling spares ($8.1 million) and fluid end expendable parts and related pumps ($8.0 million) accounted for the majority...

  • Page 13
    ...of a new information system for the Distribution Services group. National Oilwell believes it has sufficient existing manufacturing capacity to meet currently anticipated demand through 1999 for its products and services. On September 25, 1997, National Oilwell entered into a new five-year unsecured...

  • Page 14
    ... balance sheets of National-Oilwell, Inc., as of December 31, 1998 and 1997, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility...

  • Page 15
    ... options exercised Proceeds from debt related to acquisition of Company Other Net cash provided (used) by financing activities Effect of exchange rate losses on cash Increase (decrease) in cash and equivalents Cash and cash equivalents, beginning of year Change in cash to conform fiscal year end...

  • Page 16
    ... effect on National Oilwell's consolidated financial statements. On April 25, 1997, National Oilwell purchased the drilling controls business of Ross Hill Controls and its affiliate, Hill Graham Controls Limited, for $19.2 million in cash. This business involves the manufacture, sale and service of...

  • Page 17
    Notes to Consolidated Financial Statements On May 29, 1998, National Oilwell acquired all of the capital stock of Phoenix Energy Products Holdings, Inc. for approximately $115 million in a business combination which was accounted for under the purchase method of accounting. Phoenix manufactures and...

  • Page 18
    ... for the years ended December 31, 1998, 1997 and 1996 was $10.3 million, $9.0 million and $10.5 million. National Oilwell's minimum rental commitments for operating leases at December 31, 1998, excluding future payments applicable to facilities to be closed as part of the 1998 Special Charge, were...

  • Page 19
    ... 1996, prior to National Oilwell becoming a public company, 1,882,606 shares of restricted common stock were purchased by executive officers. These shares are subject to restrictions on transferability and are not entitled to receive cash dividends or distributions until such restrictions lapse...

  • Page 20
    ... owner. On May 29, 1998, National Oilwell acquired Phoenix Energy Products Holdings, Inc., an affiliate of First Reserve Corporation, as more fully described in note 1. N O T E 1 5 BUSINESS SEGMENTS AND GEOGRAPHIC AREAS During the fourth quarter of 1998, the Company recorded a special charge...

  • Page 21
    ... Financial Statements No single customer accounted for 10% or more of consolidated revenues during the three years ended December 31, 1998. Summarized financial information is as follows (in thousands): Business Segments: Products and Technology Downhole Products Distribution Services Corporate...

  • Page 22
    ... Executive Vice President Bruce M. Rothstein Managing Director, First Reserve Corporation Ernst & Young LLP Houston, Texas Corporate Data Exchange Listing Stock Transfer Agent and Registrar New York Stock Exchange Symbol: NOI Design: Savage Design Group, Inc., Houston, Texas Annual Meeting...

  • Page 23
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