National Oilwell Varco 2014 Annual Report Download

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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15 (d) of the Act. Yes ¨ No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to
be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to
submit and post such files). Yes x No ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form
10-K. ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the
definitions of large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer x Accelerated filer ¨

Table of contents

  • Page 1
    ... No.) 7909 Parswood Circle Drive, Houston, Texas 77036-6565 (Tddress of principal executive offices) (713) 346-7500 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Tct: Common Stocs, par value $.01 New Yors Stocs Exchange (Title...

  • Page 2
    ... 28, 2014 was $35.4 billion. As of February 12, 2015, there were 409,935,076 shares of the Company's common stock ($0.01 par value) outstanding. Documents Incorporated by Reference Portions of the Proxy Statement in connection with the 2015 Annual Meeting of Stockholders are incorporated in Part III...

  • Page 3
    ... the New York Stock Exchange under the symbol "NOV". The Company operates through four reporting segments: Rig Systems, Rig Aftermarket, Wellbore Technologies and Completion & Production Solutions. On May 30, 2014, the Company completed the previously announced spin-off of its distribution business...

  • Page 4
    ... and gas companies and oilfield service companies. The following table sets forth the contribution to our total revenues of our four reporting segments (in millions): Years Ended December 31, 2014 2013 2012 Revenue: Rig Systems Rig Aftermarket Wellbore Technologies Completion & Production Solutions...

  • Page 5
    .... Rig Systems sells the large "mud pumps" that are used to pump drilling mud through the drill stem, down and back up the hole. Wellbore Technologies sells and rents solids control equipment; and provides solids control, waste management and drilling fluids services. Many operators internally coat...

  • Page 6
    .... During drilling operations the drilling rig and related equipment and tools are subject to severe stresses, pressures and temperatures, as well as a corrosive environment, and require regular repair and maintenance. Rig Aftermarket supplies spare parts and can dispatch field service engineers with...

  • Page 7
    ... many complex rig processes. Equipment and technologies in Rig Systems include: power transmission systems, like drives and generators; substructures, derricks, and masts; pipe lifting, racking, rotating, and assembly systems; pressure control equipment, including blowout preventers; cranes; and rig...

  • Page 8
    .... Over the past five years considerable focus has been placed on robustness and reliability in the fundamental design of the equipment with extensive testing being performed in a new R&D facility opened in 2012. In 2013, the Company acquired the T3 BOP product line, further expanding its market...

  • Page 9
    ...must work together from multiple vendors. Customers and Competition. Rig Systems sells directly to drilling contractors, rig fabricators, well servicing companies, pressure pumping companies, national oil companies, major and independent oil and gas companies, and also through distribution companies...

  • Page 10
    ... offshore rigs, and drilling rig components manufactured by the Company's Rig Systems segment. The segment provides spare parts, repair, and rentals as well as technical support, field service and first well support, field engineering, and customer training through a network of aftermarket service...

  • Page 11
    ... solids control and waste management equipment and services, drilling fluids, premium drill pipe, wired pipe, tubular inspection and coating services, instrumentation, downhole tools, and drill bits. The Wellbore Technologies segment focuses on oil and gas companies and supports drilling contractors...

  • Page 12
    ... drill bit, suspend and release cuttings, and transmit hydraulic energy to drilling tools and bit. Wellsite Services provides water and oil based drilling fluids Portable Power. The Portable Power division provides rental generators, lighting and other accessories for use in the upstream oil and gas...

  • Page 13
    ... the wellbore, and various power and control systems. Coiled tubing is typically used with sophisticated pressure control equipment which permits the operator to perform workover operations on a live well. The Completion & Production Solutions segment manufactures and sells both coiled tubing units...

  • Page 14
    ...markets by designing, manufacturing and distributing key products including pumping technologies (reciprocating, multistage surface, and progressive cavity pumps), process equipment (dynamic oil recovery, water treatment, sand handling, separation and crude / gas handling), artificial lift solutions...

  • Page 15
    ..., although orders for new equipment and aftermarket spare parts may be modestly affected by holiday schedules. There can be no guarantee that seasonal effects will not influence future sales in these segments. In Canada, Wellbore Technologies and Completion & Production Solutions typically realized...

  • Page 16
    .... Products within Wellbore Technologies and Completion & Production Solutions are rented and sold worldwide through our own sales force and through commissioned representatives. The Company's Rig Systems and Rig Aftermarket segments' customers include drilling contractors, shipyards and other rig...

  • Page 17
    ...Rig Aftermarket provides comprehensive aftermarket products and services to support land rigs and offshore rigs, and drilling rig components manufactured by Rig Systems. Primary facilities are located in Houston, Texas; Lafayette, and New Iberia, Louisiana; Aberdeen and Montrose, Scotland; Singapore...

  • Page 18
    ..., or that the Company will earn a profit on backlog work. Backlog for Rig Systems at December 31, 2014, 2013 and 2012, was $12.5 billion, $15.0 billion and $10.9 billion, respectively. Backlog for Completion & Production Solutions at December 31, 2014, 2013 and 2012 was $1.8 billion, $1.6 billion...

  • Page 19
    ...customers, which could reduce demand for our products. There are risks associated with certain contracts for our drilling equipment. As of December 31, 2014, we had a backlog of capital equipment to be manufactured, assembled, tested and delivered by Rig Systems and Completion & Production Solutions...

  • Page 20
    ... petroleum companies located in some of the countries in which we operate have adopted policies or regulations which may give local nationals in these countries competitive advantages. Competition in our industry could lead to lower revenues and earnings. We have aggressively expanded our businesses...

  • Page 21
    ... sanctions. Approximately 70% of our revenues in 2014 were derived from operations outside the United States (based on revenue destination). Our foreign operations include significant operations in Argentina, Canada, Brazil, Europe, the Middle East, China, Africa, Nigeria, Southeast Asia, Russia...

  • Page 22
    ... in worldwide oil and gas prices or drilling; a significant reduction in profitability or cash flow of oil and gas companies or drilling contractors; a significant reduction in worldwide well remediation activity; a significant reduction in capital investment by other oilfield service companies; or...

  • Page 23
    ...gas drilling activity and result in a corresponding decline in the demand for our products and services, which could adversely impact our operating results and financial condition. We had revenues of greater than 10% of total revenue from one of our customers during the years ended December 31, 2013...

  • Page 24
    ... mechanism on a drilling rig. It is essentially a large winch that spools off or takes in the drilling line and thus raises or lowers the drill stem and bit. 22 Blowout Blowout Preventer (BOP) Blowout Preventer (BOP) Stack Closed Loop Drilling Systems Coiled Tubing Cuttings Directional Well...

  • Page 25
    ...drive unit, the drill pipe is also raised or lowered. A percussion tool operated manually or hydraulically to deliver a heavy downward blow to free a stuck drill stem. A specially compounded liquid circulated through the wellbore during rotary drilling operations. A conduit used in offshore drilling...

  • Page 26
    ...pressure reciprocating pump used to circulate the mud on a drilling rig. The mechanical process of ensuring that the inside threads on a piece of drill pipe comply with API standards. Equipment used in: 1. The act of preventing the entry of formation fluids into a wellbore. 2. The act of controlling...

  • Page 27
    ... the top-drive unit's drive shaft. Rotary slips fit around the drill pipe and wedge against the master bushing to support the pipe. Drill collar slips fit around a drill collar and wedge against the master bushing to support the drill collar. Power slips are pneumatically or hydraulically actuated...

  • Page 28
    ...of remedial operations on a producing oil well to try to increase production. Examples of workover jobs are deepening, plugging back, pulling and resetting liners, and squeeze cementing. A borehole; the hole drilled by the bit. A wellbore may have casing in it or it may be open (uncased); or part of...

  • Page 29
    ... Ulsan, South Korea Orange, California Houston, Texas Rig Tftermarset: Houston, Texas Lafayette, Louisiana Aberdeen, Scotland Singapore Dubai, UAE Wellbore Technologies: Navasota, Texas Conroe, Texas Manufacturing Plant of Drilling Equipment West Little York Manufacturing Facility, Repairs, Service...

  • Page 30
    ...all arising in the ordinary course of business, with respect to commercial, product liability and employee matters. Although no assurance can be ...financial position, results of operations or cash flows. See Note 12 to the Consolidated Financial Statements. ITEM 4. MINE STFETY DISCLOSURES Information...

  • Page 31
    ... for the years ended December 31, 2014 and 2013, respectively. The declaration and payment of future dividends is at the discretion of the Company's Board of Directors and will be dependent upon the Company's results of operations, financial condition, capital requirements, future outlook and other...

  • Page 32
    ... weighted based on the market capitalization of each company. The results shown in the graph below are not necessarily indicative of future performance. 12/09 12/10 12/11 12/12 12/13 12/14 National Oilwell Varco, Inc. S&P 500 S&P Oil & Gas Equipment & Services $100.00 100.00 100.00 $153.97...

  • Page 33
    ... Years Ended December 31, 2013 (1) 2012 (2) 2011 (in millions, except per share data) 2014 2010 Operating Data: Revenue Operating profit Income from continuing operations before income taxes Income from continuing operations Income from discontinued operations Net income attributable to Company...

  • Page 34
    ... Rig Aftermarket, Wellbore Technologies and Completion & Production Solutions. See Item 1. "Business", for a discussion of each of these business segments. Unless indicated otherwise, results of operations are presented in accordance with accounting principles generally accepted in the United States...

  • Page 35
    ...72 per mmbtu. Average rig activity worldwide increased 5% for the full year in 2014 compared to 2013. The average crude oil price for the fourth quarter of 2014 was $73.16 per barrel, and natural gas was $3.77 per mmbtu. At February 6, 2015, there were 1,456 rigs actively drilling in North America...

  • Page 36
    ... international drilling activity, which saw international rig counts (as measured by Baker Hughes) increase 3% from 2013. This enabled all four of the Company's reporting segments to post higher year-over-year revenues in 2014. For its fourth quarter ended December 31, 2014, the Company generated...

  • Page 37
    ... rigs requiring spare parts, repairs and services has grown. Internal capacity expansions and acquisitions have enabled the group to increase production to better accommodate the large installed base of drilling equipment. Wellbore Technologies The Company's Wellbore Technologies segment generated...

  • Page 38
    ... first part of 2015, and as a result, our outlook for the Company's Wellbore Technologies and Completion and Production Solutions segments remains cautious. In order to keep contracted rigs running, our customers could begin to reposition components and consumables, including drill pipe, bits, jars...

  • Page 39
    ... the Company's revenue and operating profit by operating segment in 2014 and 2013 (in millions): Years Ended December 31, 2014 2013 Variance $ % Revenue: Rig Systems Rig Aftermarket Wellbore Technologies Completion & Production Solutions Eliminations Total Revenue Operating Profit: Rig Systems Rig...

  • Page 40
    ... items included in operating profit for Completion & Production Solutions were $10 million for the year ended December 31, 2014 and $82 million for the year ended December 31, 2013. Completion & Production Solutions monitors its capital equipment backlog to plan its business. New orders are added to...

  • Page 41
    ... the Company's revenue and operating profit by operating segment in 2013 and 2012 (in millions): Years Ended December 31, 2013 2012 Variance $ % Revenue: Rig Systems Rig Aftermarket Wellbore Technologies Completion & Production Solutions Eliminations Total Revenue Operating Profit: Rig Systems Rig...

  • Page 42
    ... of NOV Flexibles which was acquired in June of 2012. This was offset by the decline in pressure pumping equipment resulting from reduced capital spending by service companies. Operating profit from Completion & Production Solutions was $613 million for the year ended December 31, 2013 compared to...

  • Page 43
    .... Intercompany transactions within each reporting segment are eliminated within each reporting segment. Interest and financial costs Interest and financial costs were $111 million for the year ended December 31, 2013 compared to $49 million for the year ended December 31, 2012. This increase is...

  • Page 44
    ..., 2014 2013 2014 Years Ended December 31, 2014 2013 2012 Reconciliation of operating profit: GAAP operating profit Litigation gain (1): Wellbore Technologies Other costs (2): Rig Systems Rig Aftermarket Wellbore Technologies Completion & Production Solutions Eliminations and other Operating profit...

  • Page 45
    ... (3) Included in Wellbore Technologies revenue and operating profit for the year ended December 31, 2013, is a $102 million gain resulting from a legal settlement. Other items primarily include items such as impairment charges, transaction costs and the amortization of backlog and inventory that...

  • Page 46
    .... The Company remains in a strong financial position, with resources available to reinvest in existing businesses, strategic acquisitions and capital expenditures to meet short- and longterm objectives. The Company believes that cash on hand, cash generated from expected results of operations and...

  • Page 47
    ...of acquiring Robbins & Myers during the first quarter of 2013. For the acquisition of Robbins & Myers, the Company borrowed approximately $1.4 billion under the $3.5 billion revolving credit facility and used approximately $1.1 billion of cash on hand to fund the acquisition. By the end of 2013, the...

  • Page 48
    ... years, totaling approximately $230 million. This lease becomes effective in 2016. As of December 31, 2014, the Company had $115 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...

  • Page 49
    ... Contracts The Company uses the percentage-of-completion method to account for certain long-term construction contracts in the Rig Systems segment. These longterm construction contracts include the following characteristics the contracts include custom designs for customer specific applications...

  • Page 50
    ... impact on the Company's financial results for the periods covered in this report, changes in worldwide oil and gas activity, or the development of new technologies which make older drilling technologies obsolete, could require the Company to record additional allowances to reduce the value of its...

  • Page 51
    ..., working capital needs, customer needs to replace aging equipment, increased complexity of drilling, new technology, and existing backlog among other items which impact the individual reporting unit projections. Cash flows beyond the specific operating plans were estimated using a terminal value...

  • Page 52
    ... or services. ASU No. 2014-09 is effective for fiscal years beginning after December 15, 2016, and for interim periods within those fiscal years. The Company is currently assessing the impact of the adoption of ASU No. 2014-09 on its consolidated financial position and results of operations. Forward...

  • Page 53
    ... functional currency, which exposes us to changes in foreign currency exchange rates that impact income. During the years ended December 31, 2014, 2013 and 2012, the Company reported foreign currency gains (losses) were $20 million, ($24) million and ($18) million, respectively. Gains and losses are...

  • Page 54
    Functional Currency Ts of December 31, 2014 2015 2016 Total December 31, 2013 GBP USD Buy USD/Sell GBP: Notional amount to buy (in British Pounds Sterling) Average USD to GBP contract rate Fair Value at December 31, 2014 in U.S. dollars Sell USD/Buy GBP: Notional amount to buy (in British ...

  • Page 55
    ... exposures totaling $427 million as of December 31, 2014, excluding trade receivables and payables, which approximate fair value. These market risk sensitive instruments consisted of cash balances and overdraft facilities. The Company estimates that a hypothetical 10% movement of all applicable...

  • Page 56
    ...Act is accumulated and communicated to the Company's management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in...

  • Page 57
    ... for the 2015 Annual Meeting of Stockholders. Securities Authorized for Issuance Under Equity Compensation Plans. The following table sets forth information as of our fiscal year ended December 31, 2014, with respect to compensation plans under which our common stock may be issued: Number of...

  • Page 58
    ... Arranger and Joint Book Runner. (Exhibit 10.1) (3) National Oilwell Varco Long-Term Incentive Plan, as amended and restated. (4)* Form of Employee Stock Option Agreement. (Exhibit 10.1) (5) Form of Non-Employee Director Stock Option Agreement. (Exhibit 10.2) (5) Form of Performance-Based Restricted...

  • Page 59
    ... Annual Report on Form 10-K for the period ended December 31, 2014 formatted in eXtensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Cash Flows, and (iv) Notes to the Consolidated Financial Statements...

  • Page 60
    ...2015 Chairman, President and Chief Executive Officer February 17, 2015 Senior Vice President and Chief Financial Officer Vice President, Corporate Controller and Chief Accounting Officer Director February 17, 2015 February 17, 2015 Director February 17, 2015 Director February 17, 2015 Director...

  • Page 61
    ...also has audited the Company's Consolidated Financial Statements included in this Annual Report on Form 10-K. /s/ Clay C. Williams Clay C. Williams Chairman, President and Chief Executive Officer /s/ Jeremy D. Thigpen Jeremy D. Thigpen Senior Vice President and Chief Financial Officer Houston, Texas...

  • Page 62
    ..., comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2014 of National Oilwell Varco, Inc., and our report dated February 17, 2015, expressed an unqualified opinion thereon. /s/ ERNST & YOUNG LLP Houston, Texas February 17, 2015 60

  • Page 63
    ... information set forth therein. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), National Oilwell Varco, Inc.'s internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control...

  • Page 64
    ... Stockholders' equity: Common stock - par value $.01; 1 billion shares authorized; 418,977,608 and 428,433,703 shares issued and outstanding at December 31, 2014 and December 31, 2013 Additional paid-in capital Accumulated other comprehensive loss Retained earnings Total Company stockholders' equity...

  • Page 65
    ..., except per share data) Years Ended December 31, 2014 2013 2012 Revenue Sales Services Total Cost of revenue Cost of sales Cost of services Total Gross profit Selling, general and administrative Intangible asset impairment Operating profit Interest and financial costs Interest income Equity income...

  • Page 66
    NTTIONTL OILWELL VTRCO, INC. CONSOLIDTTED STTTEMENTS OF COMPREHENSIVE INCOME (In millions) Years Ended December 31, 2014 2013 2012 Net income Other comprehensive income (loss) (net of tax): Currency translation adjustments Derivative financial instruments Change in defined benefit plans ...

  • Page 67
    ..., plant and equipment Business acquisitions, net of cash acquired Cash distributed in spin-off Other, net Net cash used in continuing investing activities Discontinued operations Net cash used in investing activities Cash flows from financing activities: Borrowings against lines of credit and...

  • Page 68
    ...tax benefit from stock-based compensation Balance at December 31, 2013 Net income Other comprehensive loss, net Cash dividends, $1.64 per common share Dividends to noncontrolling interests Noncontrolling interest contribution Disposal of noncontrolling interest, net Spin-off of distribution business...

  • Page 69
    ...1, 2014, reorganized the Rig Technology, Petroleum Services & Supplies and remaining operations of Distribution & Transmission reporting segments into four new reporting segments. The new reporting segments are Rig Systems, Rig Aftermarket, Wellbore Technologies and Completion & Production Solutions...

  • Page 70
    ...the years ended December 31, 2014, 2013 and 2012. Intangible Assets The Company has approximately $8.5 billion of goodwill and $4.4 billion of identified intangible assets at December 31, 2014. Goodwill is identified by segment as follows (in millions): Completion & Production Solutions Rig Systems...

  • Page 71
    The net book values of identified intangible assets are identified by segment as follows (in millions): Completion & Production Solutions Rig Systems Rig Tftermarset Wellbore Technologies Discontinued Operations Total Balance at December 31, 2012 Additions to intangible assets Amortization ...

  • Page 72
    ... Company uses the percentage-of-completion method to account for certain long-term construction contracts in the Rig Systems and Completion & Production Solutions segments. These long-term construction contracts include the following characteristics the contracts include custom designs for customer...

  • Page 73
    ... delivery to the Company's customer storage location or to a third-party storage facility. For sales transactions where title and risk of loss have transferred to the customer but the supporting documentation does not meet the criteria for revenue recognition prior to the products being in the...

  • Page 74
    ...in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect reported and contingent amounts of assets and liabilities as of the date of the financial statements and reported amounts of revenues and expenses during...

  • Page 75
    ...The Company had stock options outstanding that were anti-dilutive totaling 8 million, 7 million, and 5 million at December 31, 2014, 2013 and 2012, respectively. Recently Issued Accounting Standards In April 2014, the Financial Accounting Standards Board issued Accounting Standard Update No. 2014-08...

  • Page 76
    ... either directly or indirectly for substantially the full term of the asset or liability) in the fair value hierarchy as the fair value is based on publicly available foreign exchange and interest rates at each financial reporting date. At December 31, 2014, the net fair value of the Company...

  • Page 77
    ... income (expense), net in current earnings. The Company had the following outstanding foreign currency forward contracts that hedge the fair value of nonfunctional currency monetary accounts (in millions): Currency Denomination December 31, December 31, 2014 2013 Foreign Currency Norwegian Krone...

  • Page 78
    ...Portion and Tmount Excluded from Effectiveness Testing) (b) Years Ended December 31, 2014 2013 Derivatives Designated as Hedging Instruments under TSC Topic 815 Tmount of Gain (Loss) Recognized in OCI on Derivatives (Effective Portion) (a) Years Ended December 31, 2014 2013 Location of Gain (Loss...

  • Page 79
    ... 20, 2013, the Company completed its acquisition of all of the shares of Robbins & Myers, Inc. ("R&M"), a U.S.-based designer and manufacturer of products and systems for the oil and gas industry. Under the merger agreement for this transaction, R&M shareholders received $60.00 in cash for each...

  • Page 80
    ... its Completion & Production Solutions segment from the date of acquisition. All the shares of Wilson Distribution Holdings ("Wilson"), a U.S.-based distributor of pipe, valves and fittings as well as mill, tool and safety products and services, acquired on May 31, 2012. The Company reported the...

  • Page 81
    ... of accounting and, accordingly, the results of operations of each business are included in the consolidated results of operations from the date of acquisition. A summary of the acquisitions follows (in millions): Years Ended December 31, 2014 2013 2012 Fair value of assets acquired, net of cash...

  • Page 82
    ... consist of (in millions): December 31, 2014 2013 Accrued vendor costs Customer prepayments and billings Compensation Fair value of derivatives Warranty Taxes (non income) Insurance Accrued commissions Interest Other Total 8. Costs and Estimated Earnings on Uncompleted Contracts Costs and estimated...

  • Page 83
    ... that are under various bilateral committed letter of credit facilities. Other letters of credit are issued as bid bonds, advanced payment bonds and performance bonds. At December 31, 2014 and 2013, the fair value of the Company's unsecured Senior Notes approximated $2,974 million and $3,023 million...

  • Page 84
    ... Kingdom, Norway, Germany and the Netherlands and defined postretirement plans in the United States, using a measurement date of December 31, 2014 and 2013, is as follows (in millions): Pension benefits 2014 2013 Postretirement 2014 2013 Tt year end Benefit obligation at beginning of year Service...

  • Page 85
    ... net periodic benefit costs are as follows: 3.40% - 3.90% 2.10% - 3.60% N/A 2.00% - 4.20% 4.65% 3.50% - 4.40% N/A 2.00% - 4.40% 2014 Years Ended December 31, 2013 2012 Discount rate: United States plan International plans Salary increase: United States plan International plans Expected return...

  • Page 86
    ... of changes in the fair value of the Plan's Level 3 assets (in millions): Level 3 Plan Tssets Balance at December 31, 2012 Actual return on plan assets still held at reporting date Purchases, sales and settlements Currency translation adjustments Balance at December 31, 2013 Actual return on plan...

  • Page 87
    ... resulting from the process of translating the entities' financial statements into the reporting currency are reported in other comprehensive income or loss in accordance with ASC Topic 830 "Foreign Currency Matters" ("ASC Topic 830"). For the years ended December 31, 2014 and 2013 a majority of...

  • Page 88
    ... was other comprehensive loss of $233 million (net of tax of $89 million) for the year ended December 31, 2014, other comprehensive loss of $37 million (net of tax of $18 million) for the year ended December 31, 2013, and other comprehensive income of $99 million (net of tax of $39 million) for the...

  • Page 89
    ... gain was included in revenue of the Company's Wellbore Technologies segment. In addition, we are involved in various other claims, regulatory agency audits and pending or threatened legal actions involving a variety of matters. As of December 31, 2014, the Company recorded an immaterial amount for...

  • Page 90
    .... Cash dividends aggregated $703 million and $389 million for the years ended December 31, 2014 and 2013, respectively. The declaration and payment of future dividends is at the discretion of the Company's Board of Directors and will be dependent upon the Company's results of operations, financial...

  • Page 91
    Stock Options The following summarizes options activity: Years Ended December 31, 2013 Tverage Number Exercise of Price Shares 2014 Tverage Number Exercise of Price Shares 2012 Tverage Number Exercise of Price Shares Shares under option at beginning of year Granted Spin-off Cancelled Exercised ...

  • Page 92
    ... and restricted stock units to officers and key employees in addition to stock options. On February 25, 2014, the Company granted 426,272 shares of restricted stock and restricted stock units with a fair value of $69.00 per share; and performance share awards to senior management employees with...

  • Page 93
    ...: Years Ended December 31, 2013 WeightedTverage Number Grant Date of Fair Value Units 2014 Number of Units WeightedTverage Grant Date Fair Value 2012 Number of Units WeightedTverage Grant Date Fair Value Nonvested at beginning of year Granted Spin-off Vested Cancelled Nonvested at end of year...

  • Page 94
    ... rate was as follows (in millions): Years Ended December 31, 2014 2013 2012 Federal income tax at U.S. statutory rate Foreign income tax rate differential State income tax, net of federal benefit Nondeductible expenses Tax benefit of manufacturing deduction Foreign dividends, net of foreign tax...

  • Page 95
    ... Sheet at December 31, 2014. The Company is subject to taxation in the United States, various states and foreign jurisdictions. The Company has significant operations in the United States, Norway, Canada, the United Kingdom, the Netherlands, France and Denmark. Tax years that remain subject to...

  • Page 96
    ... realizes the benefit of these net operating loss carryforwards, the valuation allowance of $7 million would reduce future income tax expense. Outside the United States, the Company has $381 million of net operating loss carryforwards as of December 31, 2014, of which $5 million will expire in 2015...

  • Page 97
    ...; cranes; pipe lifting, racking, rotating, and assembly systems; fluid transfer technologies, such as mud pumps; pressure control equipment, including blowout preventers; power transmission systems, including drives and generators; and rig instrumentation and control systems. Rig Systems primarily...

  • Page 98
    ... of the use of the products or services (in millions): Years Ended December 31, 2013 2012 2014 United States South Korea China Brazil Singapore Norway United Kingdom Canada Other Countries Total The following table presents long-lived assets by country based on the location (in millions): $ 6,097...

  • Page 99
    Business Segments: Completion & Production Solutions Rig Systems Rig Tftermarset Wellbore Technologies Eliminations (1) Discontinued Operations Total December 31, 2014: Revenues Operating profit Capital expenditures Depreciation and amortization Goodwill Total assets December 31, 2013: ...

  • Page 100
    ...-off") of its distribution business into an independent public company named NOW Inc., which trades on the New York Stock Exchange under the symbol "DNOW". After the close of the New York Stock Exchange on May 30, 2014, the stockholders of record as of May 22, 2014 (the "Record Date") received one...

  • Page 101
    ... table presents selected financial information, through May 30, 2014, regarding the results of operations of our distribution business, which is reported as discontinued operations (in millions): Years Ended December 31, 2014 2013 2012 Revenue from discontinued operations Income from discontinued...

  • Page 102
    ... Income from continuing operations Income from discontinued operations Net income attributable to Company Cash dividends per share Year ended December 31, 2013 Revenue Gross profit Income from continuing operations Income from discontinued operations Net income attributable to Company Per share data...

  • Page 103
    ... OILWELL VTRCO, INC. VTLUTTION TND QUTLIFYING TCCOUNTS Years Ended December 31, 2014, 2013 and 2012 (in millions) Tdditions (Deductions) charged to costs and expenses Balance beginning of year Charge off's and other Balance end of year Allowance for doubtful accounts: 2014 2013 2012 Allowance...

  • Page 104
    ... APL Management Pte Ltd APL Norway AS APL Technology AS ASEP Group Holding BV ASEP Middle East FZE ASEP Otomotiv Sanayi Ticaret Ltd. Aswan National Oilwell Varco (a limited liability company) Big Red Tubulars Limited Black Max Argentina S.A. Bolenco Corporation Bondstrand Corporation Bondstrand...

  • Page 105
    ...) Drilling Products Co., Ltd Grant Prideco (Singapore) Pte Ltd Grant Prideco AB TCA Holding LLC Grant Prideco Asia (Singapore) Pte Ltd Grant Prideco de Venezuela, S.A. 2 United States United Kingdom United Kingdom Belarus United Arab Emirates Colombia Netherlands Netherlands Mexico Norway United...

  • Page 106
    ... Pumps New Zealand Company Monoflo NOV S.A.I.C. Morinoak International Limited Moyno de Mexico, S.A. de C.V. Moyno, Inc. Mustang Capital Corp. National Oilwell (U.K.) Limited National Oilwell Algerie 3 United States United States United States Netherlands Jersey Mauritius Netherlands United States...

  • Page 107
    ... Varco Norway Manufacturing AS National Oilwell Varco Peru SRL National Oilwell Varco Petroleum Equipment (Shanghai) Co., Ltd. National Oilwell Varco Pte. Ltd. National Oilwell Varco Rig Equipment Trading (Shanghai) Co., Ltd. National Oilwell Varco Solutions S.A. de C.V. National Oilwell Varco UK...

  • Page 108
    ...NOV Expatriate Services, Inc. NOV Far East B.V. NOV FGS Maylasia Sdn Bhd NOV FGS SINGAPORE (PTE.) LTD NOV Fiber Glass Systems B.V. NOV Fiber Glass Systems Fabricacao De Tubos E Conexoes Ltda NOV Flexibles Equipamentos E Servicos Ltda. NOV Flexibles Holding ApS NOV Flexibles UK Ltd. NOV Fluid Control...

  • Page 109
    ... South Africa Tanzania Russian Federation Nigeria Netherlands Netherlands Singapore United States United States Saudi Arabia Cayman Islands Mexico Italy Netherlands Netherlands United Arab Emirates Nigeria United States United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom...

  • Page 110
    Name State or Country of Incorporation Procon Engineering Ltd. Profab Engineering Pte Ltd Profab Services Pte. Ltd. PSX Corporation PT H-Tech Oilfield Equipment PT National Oilwell Varco PT PROFAB INDONESIA Quality Tubing FSC R&M C.V. R&M Canada Cooperatief U.A. R&M Canada Holding B.V. R&M Energy ...

  • Page 111
    ... Services, Inc. 8 India United States Mexico United States United States United States United Kingdom Bermuda China China United States United States Mexico Oman United States Venezuela United Kingdom Norway United States United States Bolivia Germany France Austria Canada United Kingdom Argentina...

  • Page 112
    ... State or Country of Incorporation Vetco Saudi Arabia Ltd. Vetco Services Sendirian Berhad Vetco Technology GmbH Voest Alpine Middle East Free Zone Establishment Voest Alpine Tubulars Gmbh Voest Alpine Tubulars GmbH & Co KG Woolley, Inc. XL Systems Antilles, N.V. XL Systems Europe B.V. XL Systems...

  • Page 113
    ... our reports dated February 17, 2015, with respect to the consolidated financial statements and schedule of National Oilwell Varco, Inc., and the effectiveness of internal control over financial reporting of National Oilwell Varco, Inc., included in this Annual Report (Form 10-K) for the year ended...

  • Page 114
    ...C. Williams, certify that: 1. I have reviewed this annual report on Form 10-K of National Oilwell Varco, Inc. for the fiscal year ended December 31, 2014; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make...

  • Page 115
    ...Thigpen, certify that: 1. I have reviewed this annual report on Form 10-K of National Oilwell Varco, Inc. for the fiscal year ended December 31, 2014; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the...

  • Page 116
    ... the Annual Report of National Oilwell Varco, Inc. (the "Company") on Form 10-K for the year ended December 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Clay C. Williams, Chairman, President and Chief Executive Officer of the Company, certify...

  • Page 117
    ... the Annual Report of National Oilwell Varco, Inc. (the "Company") on Form 10-K for the year ended December 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jeremy D. Thigpen, Senior Vice President and Chief Financial Officer of the Company, certify...

  • Page 118
    ...and Consumer Protection Act (the "Dodd-Frank Act"). As required by the reporting requirements of the Dodd-Frank Act, as amended, the table below presents the following information for the year ended December 31, 2014. (in whole dollars) (Unaudited) Received Notice of Potential to have Patterns Under...

  • Page 119