NOV (NOV) 10-K 26 Feb 10 2009 FY Annual report Financial data

Document and Company Informatio

Document and Company Information (USD $)
In Billions, except Share data	12 Months Ended Dec. 31, 2009	Feb. 16, 2010	Jun. 30, 2009
Document and Company Information [Abstract]
Entity Registrant Name	NATIONAL OILWELL VARCO INC
Entity Central Index Key	0001021860
Document Type	10-K
Document Period End Date	2009-12-31
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			13.7
Entity Common Stock, Shares Outstanding		418,452,756

Consolidated Balance Sheets

Consolidated Balance Sheets (USD $)
In Millions	Dec. 31, 2009	Dec. 31, 2008
Current assets:
Cash and cash equivalents	$2,622	$1,543
Receivables, net	2,187	3,136
Inventories, net	3,490	3,806
Costs in excess of billings	740	618
Deferred income taxes	290	271
Prepaid and other current assets	269	283
Total current assets	9,598	9,657
Property, plant and equipment, net	1,836	1,677
Deferred income taxes	92	126
Goodwill	5,489	5,225
Intangibles, net	4,052	4,300
Investment in unconsolidated affiliate	393	421
Other assets	72	73
Total assets	21,532	21,479
Current liabilities:
Accounts payable	584	852
Accrued liabilities	2,267	2,376
Billings in excess of costs	1,090	2,161
Current portion of long-term debt and short-term borrowings	7	4
Accrued income taxes	226	230
Total current liabilities	4,174	5,623
Long-term debt	876	870
Deferred income taxes	2,091	2,134
Other liabilities	163	128
Total liabilities	7,304	8,755
Stockholders' equity:
Common stock - par value $.01; 418,451,731 and 417,350,924 shares issued and outstanding at December 31, 2009 and December 31, 2008	4	4
Additional paid-in capital	8,214	7,989
Accumulated other comprehensive income (loss)	90	(161)
Retained earnings	5,805	4,796
Total Company stockholders' equity	14,113	12,628
Noncontrolling interests	115	96
Total stockholders' equity	14,228	12,724
Total liabilities and stockholders' equity	$21,532	$21,479

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) (USD $)
	Dec. 31, 2009	Dec. 31, 2008
Stockholders' equity:
Common stock, par value	0.01	0.01
Common stock, shares issued	418,451,731	417,350,924
Common stock, shares outstanding	418,451,731	417,350,924

Consolidated Statements of Inco

Consolidated Statements of Income (USD $)
In Millions, except Per Share data	12 Months Ended Dec. 31, 2009	12 Months Ended Dec. 31, 2008	12 Months Ended Dec. 31, 2007
Revenue
Sales	$10,812	$11,162	$7,873
Services	1,900	2,269	1,916
Total	12,712	13,431	9,789
Cost of revenue
Cost of sales	7,297	7,784	5,675
Cost of services	1,631	1,575	1,284
Total	8,928	9,359	6,959
Gross profit	3,784	4,072	2,830
Selling, general and administrative	1,322	1,154	786
Intangible asset impairment	147	0	0
Operating profit	2,315	2,918	2,044
Interest and financial costs	(53)	(67)	(50)
Interest income	9	45	53
Equity income in unconsolidated affiliate	47	42	0
Other income (expense), net	(110)	23	(18)
Income before income taxes	2,208	2,961	2,029
Provision for income taxes	735	993	676
Net income	1,473	1,968	1,353
Net income attributable to noncontrolling interests	4	16	16
Net income attributable to Company	$1,469	$1,952	$1,337
Net income attributable to Company per share:
Basic	3.53	4.91	3.77
Diluted	3.52	4.9	3.76
Weighted average shares outstanding:
Basic	416	397	354
Diluted	417	399	355

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (USD $)
In Millions	12 Months Ended Dec. 31, 2009	12 Months Ended Dec. 31, 2008	12 Months Ended Dec. 31, 2007
Cash flows from operating activities:
Net income	$1,473	$1,968	$1,353
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	490	402	214
Stock-based compensation	68	67	43
Excess tax benefit from the exercise of stock options	(1)	(37)	(23)
Equity income in unconsolidated affiliate	(47)	(42)	0
Dividend from unconsolidated affiliate	86	0	0
Intangible asset impairment	147	0	0
Other	(99)	82	48
Change in operating assets and liabilities, net of acquisitions:
Receivables	1,033	(626)	(465)
Inventories	468	(643)	(758)
Costs in excess of billings	(122)	25	(335)
Prepaid and other current assets	23	230	(144)
Accounts payable	(361)	95	84
Billings in excess of costs	(1,071)	765	832
Other assets/liabilities, net	8	8	339
Net cash provided by operating activities	2,095	2,294	1,188
Cash flows from investing activities:
Purchases of property, plant and equipment	(250)	(379)	(252)
Business acquisitions, net of cash acquired	(573)	(3,008)	(324)
Business divestitures, net of cash disposed	0	801	0
Sale of equity interest, net	251	0	0
Dividend from unconsolidated affiliate	8	113	0
Other, net	12	0	1
Net cash used in investing activities	(552)	(2,473)	(575)
Cash flows from financing activities:
Borrowings against lines of credit and other debt	7	2,731	47
Payments against lines of credit and other debt	(47)	(2,920)	(11)
Dividends paid	(460)	0	0
Excess tax benefits from exercise of stock options	1	37	23
Proceeds from stock options exercised	8	78	91
Net cash provided by (used in) financing activities	(491)	(74)	150
Effect of exchange rates on cash	27	(46)	122
Increase (decrease) in cash equivalents	1,079	(299)	885
Cash and cash equivalents, beginning of period	1,543	1,842	957
Cash and cash equivalents, end of period	2,622	1,543	1,842
Cash payments during the period for:
Interest	56	76	57
Income taxes	$929	$1,261	$703

Consolidated Statements of Stoc

Consolidated Statements of Stockholders Equity and Comprehensive Income (USD $)
In Millions	Total Company Stockholders' Equity	Common Stock	Additional Paid in Capital	Accumulated Other Comprehensive Income (Loss)	Retained Earnings	Noncontrolling Interests	Total
Beginning Balance, shares at Dec. 31, 2006		351
Beginning Balance at Dec. 31, 2006	$5,023	$3	$3,460	$46	$1,514	$36	$5,059
Net income	1,337				1,337	16	1,353
Other comprehensive income:
Currency translation adjustments	136			136			136
Derivative financial instruments	18			18			18
Change in defined benefit plans	(5)			(5)			(5)
Comprehensive income	1,486						1,502
Adoption of FIN48	(5)				(5)		(5)
Noncontrolling interest contribution						11	11
Stock-based compensation	43		43				43
Common stock issued	91		91				91
Common stock issued, shares		5
Excess tax benefit of options exercised	23		23				23
Ending Balance at Dec. 31, 2007	6,661	3	3,617	195	2,846	63	6,724
Ending Balance, shares at Dec. 31, 2007		356
Net income	1,952				1,952	16	1,968
Other comprehensive income:
Currency translation adjustments	(176)			(176)			(176)
Derivative financial instruments	(160)			(160)			(160)
Change in defined benefit plans	(20)			(20)			(20)
Comprehensive income	1,596						1,612
Adoption of FAS158, net of tax	(2)				(2)		(2)
Stock issued in acquisition	4,191	1	4,190				4,191
Stock issued in acquisition, shares		57
Acquired noncontrolling interests						25	25
Dividends to noncontrolling interests						(8)	(8)
Stock-based compensation	67		67				67
Common stock issued	78		78				78
Common stock issued, shares		4
Excess tax benefit of options exercised	37		37				37
Ending Balance at Dec. 31, 2008	12,628	4	7,989	(161)	4,796	96	12,724
Ending Balance, shares at Dec. 31, 2008		417
Net income	1,469				1,469	4	1,473
Other comprehensive income:
Currency translation adjustments	100			100			100
Derivative financial instruments	160			160			160
Change in defined benefit plans	(9)			(9)			(9)
Comprehensive income	1,720						1,724
Cash dividends, $1.10 per common share	(460)				(460)		(460)
Dividends to noncontrolling interests						(13)	(13)
Noncontrolling interest contribution						28	28
Gain on sale of equity interest, net of tax	148		148				148
Stock-based compensation	68		68				68
Common stock issued	8		8				8
Common stock issued, shares		1
Excess tax benefit of options exercised	1		1				1
Ending Balance at Dec. 31, 2009	$14,113	$4	$8,214	$90	$5,805	$115	$14,228
Ending Balance, shares at Dec. 31, 2009		418

1_Consolidated Statements of St

Consolidated Statements of Stockholders Equity and Comprehensive Income (Parenthetical) (USD $)
	Retained Earnings	Total
Cash dividends, per common share	1.1	1.1

Organization and Basis of Prese

Organization and Basis of Presentation
	12 Months Ended Dec. 31, 2009 USD / shares
Organization and Basis of Presentation [Abstract]
Organization and Basis of Presentation	1. Organization and Basis of Presentation Nature of Business We design, construct, manufacture and sell comprehensive systems, components, and products used in oil and gas drilling and production, provide oilfield services and supplies, and distribute products and provide supply chain integration services to the upstream oil and gas industry. Our revenues and operating results are directly related to the level of worldwide oil and gas drilling and production activities and the profitability and cash flow of oil and gas companies, drilling contractors and oilfield service companies, which in turn are affected by current and anticipated prices of oil and gas. Oil and gas prices have been and are likely to continue to be volatile. Basis of Consolidation The accompanying Consolidated Financial Statements include the accounts of National Oilwell Varco, Inc. and its majority-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. Investments that are not wholly-owned, but where we exercise control, are fully consolidated with the equity held by minority owners and their portion of net income (loss)reflected as noncontrolling interests in the accompanying consolidated financial statements. On January1, 2009, the Company adopted ASC Topic 810, Consolidations and reclassified noncontrolling interests in the amount $96million from the mezzanine section to equity in the December31, 2008 balance sheet. Investments in unconsolidated affiliates, over which we exercise significant influence, but not control, are accounted for by the equity method. The Company has evaluated subsequent events for potential recognition or disclosure in the Consolidated Financial Statements included through February25, 2010.

Summary of Significant Accounti

Summary of Significant Accounting Policies
	12 Months Ended Dec. 31, 2009 USD / shares
Summary of Significant Accounting Policies [Abstract]
Summary of Significant Accounting Policies	2. Summary of Significant Accounting Policies Fair Value of Financial Instruments The carrying amounts of financial instruments including cash and cash equivalents, receivables, and payables approximated fair value because of the relatively short maturity of these instruments. Cash equivalents include only those investments having a maturity date of three months or less at the time of purchase. The carrying values of other financial instruments approximate their respective fair values. Derivative Financial Instruments The Financial Accounting Standards Board (FASB) issued ASC Topic 815, Derivatives and Hedging. (ASC Topic 815) This Standard requires companies to recognize all of its derivative instruments as either assets or liabilities in the statement of financial position at fair value. The accounting changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, cash flow hedge, or a hedge of a net investment in a foreign operation. The Company is exposed to certain risks relating to its ongoing business operations. The primary risks managed by using derivative instruments are foreign currency exchange rate risk, and interest rate risk. Forward contracts against various foreign currencies are entered into to manage the foreign currency exchange rate risk on forecasted revenue and expenses denominated in currencies other than the functional currency of the operating unit (cash flow hedge). Other forward exchange contracts against various foreign currencies are entered into to manage the foreign currency exchange rate risk associated with certain firm commitments denominated in currencies other than the functional currency of the operating unit (fair value hedge). In addition the Company will enter into non-designated forward contracts against various foreign currencies to manage the foreign currency exchange rate risk on recognized nonfunctional currency monetary accounts (non-designated hedge). Interest rate swaps are entered into to manage interest rate risk associated with the Companys fixed and floating-rate borrowings. The Company records all derivative financial instruments at their fair value in our consolidated balance sheet. Except for certain non-designated hedges discussed below, all derivative financial instruments we hold are designated as either cash flow or fair value hedges and are highly effective in offsetting movements in the underlying risks. Such arrangements typically have terms between two and 24months, but may have longer terms depending on the underlying cash flows being hedged, typically related to the projects in our backlog. We may also use interest rate contracts to mitigate our exposure to changes in interest rates on anticipated long-term debt issuances. At December31, 2009, the Company has determined that its financial assets of $104mi

Grant Prideco Merger

Grant Prideco Merger
	12 Months Ended Dec. 31, 2009 USD / shares
Grant Prideco Merger [Abstract]
Grant Prideco Merger	3. Grant Prideco Merger Pursuant to the Agreement and Plan of Merger with Grant Prideco, Inc. (Grant Prideco) (the Merger), a Delaware Corporation, effective December16, 2007 (the Agreement Date), the Company issued .4498 shares of National Oilwell Varco, Inc. common stock and $23.20 in cash (the Exchange Ratio) for each Grant Prideco common share outstanding on April21, 2008 (the Merger Date) totaling approximately 57million shares and $2.9billion in cash. The Company has included the financial results of Grant Prideco in its Consolidated Financial Statements beginning on the Merger Date, the date Grant Prideco common shares were exchanged for National Oilwell Varco common shares and cash. The Grant Prideco operations are included in the Petroleum Services Supplies segment. Prior to its acquisition, Grant Prideco was a world leader in drill stem technology development and drill pipe manufacturing, sales and service and a global leader in drill bit and specialty tools, manufacturing, sales and service. The Company believes the Merger with Grant Prideco advanced its strategic goal of providing more products and services to its customers and that Grant Pridecos product range added new growth opportunities to the Company and benefited its customers needs worldwide. The Merger was accounted for as a purchase business combination. Assets acquired and liabilities assumed were recorded at their fair values as of April21, 2008. The fair value of shares issued was determined using an average price of $72.74, which represents the average closing price of the Companys common stock for a five-day period beginning two available trading days before the public announcement of the transaction. The total purchase price is $7,199million, including Grant Prideco stock options assumed and acquisition related transaction costs and is comprised of (in millions): Shares issued totaled approximately 57million shares at $72.74 per share $ 4,135 Cash paid at $23.20 per share 2,932 Grant Prideco stock options assumed 56 Merger related transaction costs 76 Total purchase price $ 7,199 For all Grant Prideco stock options and restricted stock granted prior to 2008, vesting was accelerated under the terms of the stock option and restricted stock agreements; therefore, there was no modification of the awards as defined under SFAS 123(R). For stock options and restricted stock granted by Grant Prideco in 2008, 320,500 Grant Prideco stock options and 388,000 shares of restricted stock were replaced with 250,402 National Oilwell Varco stock options and 303,212 shares of National Oilwell Varco restricted stock, respectively. For the 2008 Grant Prideco grants, vesting was not accelerated in connection with the Merger, under the terms of the stock option and restricted stock agreements, except for certain recipients of the 2008 Grant Prideco restricted stock grant. Merger related costs of $76million include severance and other external costs directly related to the Merger. Transaction costs of $11million for the year ending December31, 2008 were comprised of $6million for accelerated ves

Other Acquisitions and Investme

Other Acquisitions and Investments
	12 Months Ended Dec. 31, 2009 USD / shares
Other Acquisitions and Investments [Abstract]
Other Acquisitions and Investments	4. Other Acquisitions and Investments 2009 The Company completed nine acquisitions for an aggregate purchase price of $573million, net of cash acquired. These acquisitions included: The shares of ASEP Group Holding B.V., a Netherlands-based manufacturer of well service equipment. The shares of ANS (1001)Ltd. (Anson), a U.K.-based manufacturer of pumps and fluid expendibles. The business and assets of Spirit Drilling Fluids Ltd., a U.S.-based company that provides drilling fluids and related well-site services to exploration and production companies. The business and assets of Spirit Minerals L.P., a U.S.-based company that mines, processes and distributes barite to the oil and gas drilling fluid industry. The shares of South Seas Inspection (S)Pte. Ltd., a Singapore-based inspection, repair and maintenance provider to the oil and gas industry. The shares of Hochang Machinery Industries Co., Ltd., a South Korean-based manufacturing and fabrication business. The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed at the date of acquisition of the 2009 acquisitions (in millions): Current assets, net of cash acquired $ 404 Property, plant and equipment 149 Intangible assets 115 Goodwill 198 Other assets 5 Total assets acquired 871 Current liabilities 242 Long-term debt 48 Other liabilities 8 Total liabilities 298 Cash consideration, net of cash acquired $ 573 The Company allocated $115million to intangible assets (11year weighted-average life), comprised of: $60million of customer relationships (9year weighted-average life), $46million of trademarks (18year weighted-average life), and $9million of other intangible assets (7year weighted-average life). In September2009, the Company sold 45% of certain of its IntelliServ operations and created the IntelliServ Joint Venture (IntelliServ). IntelliServ provides drilling technology that enables downhole drilling conditions to be measured, evaluated and monitored. 2008 In addition to the Grant Prideco Merger, the Company completed nine acquisitions for an aggregate purchase price of $171million net of cash acquired. These acquisitions included: Welch Power Source, L.L.C., a Louisiana-based manufacturer of power generation equipment. CKS, a France-based solids control company. Mid-South Machine, Inc., a Louisiana-based machine shop. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition of the 2008 acquisitions (in millions): Current assets, net of cash acquired $ 33 Property, plant and equipment 61 Intangible assets 38 Goodwill 76 Total assets acquired 208 Current liabilities 11 Long-term debt 26 Total liabilities 37 Cash consideration, net of cash acquired $ 171

Inventories, net

Inventories, net
	12 Months Ended Dec. 31, 2009 USD / shares
Inventories, net [Abstract]
Inventories, net	5. Inventories, net Inventories consist of (in millions): December 31, 2009 2008 Raw materials and supplies $ 704 $ 739 Work in process 1,307 1,326 Finished goods and purchased products 1,479 1,741 Total $ 3,490 $ 3,806

Property, Plant and Equipment

Property, Plant and Equipment
	12 Months Ended Dec. 31, 2009 USD / shares
Property, Plant and Equipment [Abstract]
Property, Plant and Equipment	6. Property, Plant and Equipment Property, plant and equipment consist of the following (in millions): Estimated December 31, Useful Lives 2009 2008 Land and buildings 5-35 Years $ 678 $ 544 Operating equipment 3-15 Years 1,429 1,259 Rental equipment 3-12 Years 594 527 2,701 2,330 Less: Accumulated Depreciation (865 ) (653 ) $ 1,836 $ 1,677

Accrued Liabilities

Accrued Liabilities
	12 Months Ended Dec. 31, 2009 USD / shares
Accrued Liabilities [Abstract]
Accrued Liabilities	7. Accrued Liabilities Accrued liabilities consist of (in millions): December 31, 2009 2008 Compensation $ 272 $ 258 Customer prepayments and billings 500 912 Warranty 217 114 Interest 11 11 Taxes (non income) 95 76 Insurance 58 50 Accrued vendor costs 853 688 Fair value of derivatives 61 59 Other 200 208 Total $ 2,267 $ 2,376

Costs and Estimated Earnings on

Costs and Estimated Earnings on Uncompleted Contracts
	12 Months Ended Dec. 31, 2009 USD / shares
Costs and Estimated Earnings on Uncompleted Contracts [Abstract]
Costs and Estimated Earnings on Uncompleted Contracts	8. Costs and Estimated Earnings on Uncompleted Contracts Costs and estimated earnings on uncompleted contracts consist of (in millions): December 31, 2009 2008 Costs incurred on uncompleted contracts $ 6,276 $ 4,397 Estimated earnings 3,735 2,183 10,011 6,580 Less: Billings to date 10,361 8,123 $ (350 ) $ (1,543 ) Costs and estimated earnings in excess of billings on uncompleted contracts $ 740 $ 618 Billings in excess of costs and estimated earnings on uncompleted contracts (1,090 ) (2,161 ) $ (350 ) $ (1,543 )

Long-Term Debt

Long-Term Debt
	12 Months Ended Dec. 31, 2009 USD / shares
Long-Term Debt [Abstract]
Long-Term Debt	9. Long-Term Debt Debt consists of (in millions): December 31, 2009 2008 Senior Notes, interest at 6.5% payable semiannually, principal due on March15, 2011 $ 150 $ 150 Senior Notes, interest at 7.25% payable semiannually, principal due on May1, 2011 205 208 Senior Notes, interest at 5.65% payable semiannually, principal due on November15, 2012 200 200 Senior Notes, interest at 5.5% payable semiannually, principal due on November19, 2012 151 151 Senior Notes, interest at 6.125% payable semiannually, principal due on August15, 2015 151 151 Other 26 14 Total debt 883 874 Less current portion 7 4 Long-term debt $ 876 $ 870 Principal payments of debt for years subsequent to 2009 are as follows (in millions): 2010 $ 7 2011 362 2012 355 2013 5 2014 1 Thereafter 153 $ 883 Senior Notes In connection with the merger of Grant Prideco, the Company completed an exchange offer relative to the $175million of 6.125% Senior Notes due 2015 previously issued by Grant Prideco. On April21, 2008, $151million of Grant Prideco Senior Notes were exchanged for National Oilwell Varco Senior Notes. The National Oilwell Varco Senior Notes have the same interest rate, interest payment dates, redemption terms and maturity as the Grant Prideco Senior Notes. In November2008, the Company repurchased $23million of the unexchanged Grant Prideco Senior Notes. Revolving Credit Facilities On April21, 2008, the Company replaced its existing $500million unsecured revolving credit facility with an aggregate of $3billion of unsecured credit facilities and borrowed $2billion to finance the cash portion of the Grant Prideco acquisition. These facilities consisted of a $2 billion, five-year revolving credit facility and a $1billion, 364-day revolving credit facility which was terminated early in February2009. At December31, 2009, there were no borrowings against the remaining credit facility, and there were $588million in outstanding letters of credit issued under this facility, resulting in $1,412million of funds available under this revolving credit facility. Interest under this multicurrency facility is based upon LIBOR, NIBOR or EURIBOR plus 0.26% subject to a ratings-based grid, or the prime rate. The Company also had $2,073million of additional outstanding letters of credit at December31, 2009, primarily in Norway, that are essentially under various bilateral committed letter of credit facilities. Other letters of credit are issued as bid bonds and performance bonds. The Senior Notes contain reporting covenants and the credit facility contains a financial covenant regarding maximum debt to capitalization. The Company was in compliance with all covenants at December31, 2009. Other Other debt includes approximately $3million in promissory notes due to former owners of businesses acquired who remain employed by the Company

Employee Benefit Plans

Employee Benefit Plans
	12 Months Ended Dec. 31, 2009 USD / shares
Employee Benefit Plans [Abstract]
Employee Benefit Plans	10. 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 December31, 2009, 2008 and 2007, expenses for defined-contribution plans were $39million, $37million, and $31million, respectively, 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 777 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. Net periodic benefit cost for our defined benefit plans aggregated $12million, $7million and $8 million for the years ended December31, 2009, 2008 and 2007, respectively. The change in benefit obligation, plan assets and the funded status of the defined benefit pension plans in the United States, United Kingdom, and Norway and defined postretirement plans in the United States, using a measurement date of December31, 2009 and December31, 2008, is as follows (in millions): Pension benefits Postretirement benefits At year end 2009 2008 2009 2008 Benefit obligation at beginning of year $ 214 $ 246 $ 20 $ 14 Service cost 5 5 Interest cost 14 12 2 1 Actuarial loss (gain) 19 (6 ) 1 5 Benefits paid (10 ) (13 ) (2 ) (2 ) Participants contributions 1 1 Exchange rate loss (gain) 19 (50 ) 18 Acquisitions/divestitures, net 17 Other 2 2 Benefit obligation at end of year $ 262 $ 214 $ 39 $ 20 Accumulated benefit obligation at end of year 244 198 Fair value of plan assets at beginning of year 154 206 Actual return 21 (23 ) Benefits paid (11 ) (13 ) (2 ) (2 ) Company contributions 12 17 2 2 Participants contributions 1 1 Exchange rate (loss)gain 16 (50 ) Acquisitions/divestitures, net 16 Other (1 ) Fair value of plan assets at end of year $ 193 $ 153 $ $

Accumulated Other Comprehensive

Accumulated Other Comprehensive Income (Loss)
	12 Months Ended Dec. 31, 2009 USD / shares
Accumulated Other Comprehensive Income (Loss) [Abstract]
Accumulated Other Comprehensive Income (Loss)	11. Accumulated Other Comprehensive Income (Loss) The components of accumulated other comprehensive income (loss)are as follows (in millions): Cumulative Change in Currency Derivative Defined Translation Financial Benefit Plans Adjustment Instruments Total Balance at December31, 2006 $ (15 ) $ 60 $ 1 $ 46 Current period activity (8 ) 211 25 228 Tax effect 3 (75 ) (7 ) (79 ) Balance at December31, 2007 $ (20 ) $ 196 $ 19 $ 195 Current period activity (30 ) (265 ) (241 ) (536 ) Tax effect 10 89 81 180 Balance at December31, 2008 $ (40 ) $ 20 $ (141 ) $ (161 ) Current period activity (14 ) 150 223 359 Tax effect 5 (50 ) (63 ) (108 ) Balance at December31, 2009 $ (49 ) $ 120 $ 19 $ 90

Commitments and Contingencies

Commitments and Contingencies
	12 Months Ended Dec. 31, 2009 USD / shares
Commitments and Contingencies [Abstract]
Commitments and Contingencies	12. Commitments and Contingencies We are involved in various claims, regulatory agency audits and pending or threatened legal actions involving a variety of matters. The total liability on these matters at December31, 2009 cannot be determined; however, in our opinion, any ultimate liability, to the extent not otherwise provided for, will not materially affect our financial position, cash flow or results of operations. Our business is affected both directly and indirectly by governmental laws and regulations relating to the oilfield service industry in general, as well as by environmental and safety regulations that specifically apply to our business. Although we have not incurred material costs in connection with our compliance with such laws, there can be no assurance that other developments, such as new environmental laws, regulations and enforcement policies hereunder may not result in additional, presently unquantifiable, costs or liabilities to us. We have received federal grand jury subpoenas and subsequent inquiries from governmental agencies requesting records related to our compliance with export trade laws and regulations. We have cooperated fully with agents from the Department of Justice, the Bureau of Industry and Security, the Office of Foreign Assets Control, and U.S. Immigration and Customs Enforcement in responding to the inquiries, and we have conducted our own internal review of this matter. At the conclusion of our internal review in the fourth quarter of 2009, we identified possible areas of concern and discussed these areas of concern with the relevant agencies. We are currently negotiating a potential resolution with the agencies involved related to these matters. We currently anticipate that any administrative fine or penalty agreed to as part of a resolution would be within established accruals, and would not have a material effect on our financial position or results of operations. To the extent a resolution is not negotiated as anticipated, we cannot predict the timing or effect that any resulting government actions may have on our financial position or results of operations. As a result of our internal review and in an effort to prevent any future compliance issues of this nature, we have reviewed and are in the process of enhancing our compliance procedures and training. The Company leases certain facilities and equipment under operating leases that expire at various dates through 2066. These leases generally contain renewal options and require the lessee to pay maintenance, insurance, taxes and other operating expenses in addition to the minimum annual rentals. Rental expense related to operating leases approximated $199million, $184million, and $128million in 2009, 2008 and 2007, respectively. Future minimum lease commitments under noncancellable operating leases with initial or remaining terms of one year or more at December31, 2009 are payable as follows (in millions): 2010 $ 122 2011 88 2012 68 2013 52 2014 44 Thereafter 179 Total future lease commitments $ 553

Common Stock

Common Stock
	12 Months Ended Dec. 31, 2009 USD / shares
Common Stock [Abstract]
Common Stock	13. Common Stock National Oilwell Varco has authorized 500million shares of $.01 par value common stock. We also have authorized 10million shares of $.01 par value preferred stock, none of which is issued or outstanding. On November11, 2009 National Oilwell Varcos Board of Directors approved a special one-time cash dividend of $1.00 per share of common stock along with the commencement of a regular quarterly dividend of $0.10 per share. The special cash dividend and the first quarterly dividend was paid on December16, 2009 to each stockholder of record on December2, 2009. The declaration and payment of future dividends is at the discretion of the Companys Board of Directors and will be dependent upon the Companys results of operations, financial condition, capital requirements and other factors deemed relevant by the Board of Directors. On August22, 2007, the Companys Board of Directors approved a two-for-one stock split in the form of a stock dividend to the Companys stockholders of record on September7, 2007, with distribution of shares on September28, 2007. The total number of authorized common stock shares and associated par value were unchanged by this action. All per-share amounts in the financial statements reflect the stock split for all periods presented unless indicated otherwise. Stock Options Under the terms of National Oilwell Varcos Long-Term Incentive Plan, as amended, 25.5million shares of common stock are authorized for the grant of options to officers, key employees, non-employee directors and other persons. Options granted under our stock option plan generally vest over a three-year period starting one year from the date of grant and expire ten years from the date of grant. The purchase price of options granted may not be less than the closing market price of National Oilwell Varco common stock on the date of grant. At December31, 2009, approximately 12million shares were available for future grants. We also have inactive stock option plans that were acquired in connection with the acquisitions of Varco International, Inc. in 2005 and Grant Prideco in 2008. We converted the outstanding stock options under these plans to options to acquire our common stock and no further options are being issued under these plans. Stock option information summarized below includes amounts for the National Oilwell Varco Long-Term Incentive Plan and stock plans of acquired companies. Options outstanding at December31, 2009 under the stock option plans have exercise prices between $8.83 and $73.98 per share, and expire at various dates from January25, 2010 to May13, 2019. The following summarizes options activity: Years Ended December 31, 2009 2008 2007 Number Average Number Average Number Average of Exercise of Exercise of Exercise Shares Price Shares Price Shares Price Shares under option at beginning of year 7,547,822 $ 37.24 7,903,832 $ 29.12 10,559,862 $ 23.28 Granted 3,234,400 26.03 2,993,000 48.59 2,381,300 35

Income Taxes

Income Taxes
	12 Months Ended Dec. 31, 2009 USD / shares
Income Taxes [Abstract]
Income Taxes	14. Income Taxes The domestic and foreign components of income before income taxes were as follows (in millions): Years Ended December 31, 2009 2008 2007 Domestic $ 761 $ 1,577 $ 1,244 Foreign 1,447 1,384 785 $ 2,208 $ 2,961 $ 2,029 The components of the provision for income taxes consisted of (in millions): Years Ended December 31, 2009 2008 2007 Current: Federal $ 526 $ 691 $ 490 State 35 55 39 Foreign 348 280 136 Total current income tax provision 909 1,026 665 Deferred: Federal (249 ) (93 ) (66 ) State (5 ) (2 ) (3 ) Foreign 80 62 80 Total deferred income tax provision (174 ) (33 ) 11 Total income tax provision $ 735 $ 993 $ 676 The difference between the effective tax rate reflected in the provision for income taxes and the U.S. federal statutory rate was as follows (in millions): Years Ended December 31, 2009 2008 2007 Federal income tax at U.S. statutory rate $ 773 $ 1,037 $ 710 Foreign income tax rate differential (120 ) (125 ) (66 ) State income tax, net of federal benefit 18 34 23 Nondeductible expenses 30 12 10 Tax benefit of manufacturing deduction (17 ) (17 ) (11 ) Foreign dividends net of foreign tax credits 10 46 9 Change in deferred tax valuation allowance 3 Other 41 6 (2 ) Total income tax provision $ 735 $ 993 $ 676 Significant components of our deferred tax assets and liabilities were as follows (in millions): December 31, 2009 2008 2007 Deferred tax assets: Allowances and operating liabilities $ 343 $ 364 $ 152 Net operating loss carryforwards 7 6 8 Postretirement benefits 12 12 17 Capital loss carryforwards 3 7 Other 28 22 17 Total deferred tax assets 390 407 201 Valuation allowance for deferred tax assets (8 ) (10 ) (14 ) 382 397 187 Deferred tax liabilities: Tax over book depreciation 168 146 95 Intangible assets 1,413 1,542 218 Deferred income 363 215 166 Other 147 231 85 Total deferred tax liabilities 2,091 2,134 564 Net deferred tax liability $ 1,709 $ 1,737 $ 377 ASC Topic 740 Income Taxe

Business Segments and Geographi

Business Segments and Geographic Areas
	12 Months Ended Dec. 31, 2009 USD / shares
Business Segments and Geographic Areas [Abstract]
Business Segments and Geographic Areas	15. Business Segments and Geographic Areas The Companys operations consist of three reportable segments: Rig Technology, Petroleum Services Supplies and Distribution Services. Rig Technology: Our Rig Technology segment designs, manufactures, sells and services complete systems for the drilling, completion, and servicing of oil and gas wells. The segment offers a comprehensive line of highly-engineered equipment that automates complex well construction and management operations, such as offshore and onshore drilling rigs; derricks; pipe lifting, racking, rotating and assembly systems; rig instrumentation systems; coiled tubing equipment and pressure pumping units; well workover rigs; wireline winches; and cranes. Petroleum Services Supplies: Our Petroleum Services Supplies segment provides a variety of consumable goods and services used to drill, complete, remediate and workover oil and gas wells and service flowlines and other oilfield tubular goods. The segment manufactures, rents and sells a variety of products and equipment used to perform drilling operations, including drill pipe, transfer pumps, solids control systems, drilling motors, drill bits, reamers and other downhole tools, and mud pump consumables. Distribution Services: Our Distribution Services segment provides maintenance, repair and operating supplies and spare parts to drill site and production locations worldwide. In addition to its comprehensive network of field locations supporting land drilling operations throughout North America, the segment supports major offshore drilling contractors through locations in Mexico, the Middle East, Europe, Southeast Asia and South America. Distribution Services employs advanced information technologies to provide complete procurement, inventory management and logistics services to its customers around the globe. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies of the Company. The Company evaluates performance of each reportable segment based upon its operating income, excluding non-recurring items. During the second quarter of 2008, certain products previously reported in the Petroleum Services Supplies segment were transferred to the Companys other two segments, due to a realignment of management responsibilities. Prior periods have not been restated for this change as the impact of the change was not material to any of the Companys segments. The Company had revenues of 16.6% of total revenue from one of its customers for the year ended December31, 2009. This customer is a shipyard acting as a general contractor for its customers, who are drillship owners and drilling contractors. This shipyards customers have specified that the Companys drilling equipment be installed on their drillships and have required the shipyard to issue contracts to the Company. Geographic Areas: The following table presents consolidated revenues by country based on sales destination of the use of the products or services (in millions): Years Ended December 31, 2009 2008 2007 United States $ 3,444

Quarterly Financial Data

Quarterly Financial Data (Unaudited)
	12 Months Ended Dec. 31, 2009 USD / shares
Quarterly Financial Data (Unaudited) [Abstract]
Quarterly Financial Data (Unaudited)	16. Quarterly Financial Data (Unaudited) Summarized quarterly results, were as follows (in millions, except per share data). The 2008 results include Grant Prideco operations from the Merger Date: First Second Third Fourth Quarter Quarter Quarter Quarter Year ended December31, 2009 Revenues $ 3,481 $ 3,010 $ 3,087 $ 3,134 Gross profit 1,039 875 891 979 Net income attributable to Company 470 220 385 394 Net income attributable to Company per basic share 1.13 0.53 0.93 0.95 Net income attributable to Company per diluted share 1.13 0.53 0.92 0.94 Cash dividends per share 1.10 Year ended December31, 2008 Revenues $ 2,685 $ 3,325 $ 3,611 $ 3,810 Gross profit 797 981 1,100 1,194 Net income attributable to Company 398 421 548 585 Net income attributable to Company per basic share 1.12 1.05 1.32 1.41 Net income attributable to Company per diluted share 1.11 1.04 1.31 1.40 Cash dividends per share

Valuation and Qualifying Accoun

Valuation and Qualifying Accounts
	12 Months Ended Dec. 31, 2009 USD / shares
Valuation and Qualifying Accounts [Abstract]
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS	Schedule Of Valuation And Qualifying Accounts Disclosure SCHEDULE II NATIONAL OILWELL VARCO, INC. VALUATION AND QUALIFYING ACCOUNTS Years Ended December31, 2009, 2008 and 2007 (in millions) Additions (Deductions) Balance charged to Charge Balance beginning costs and offs and end of of year expenses other year Allowance for doubtful accounts: 2009 $ 73 $ 53 $ (31 ) $ 95 2008 45 25 3 73 2007 30 16 (1 ) 45 Allowance for excess and obsolete inventories: 2009 $ 123 $ 100 $ (17 ) $ 206 2008 99 27 (3 ) 123 2007 86 34 (21 ) 99 Valuation allowance for deferred tax assets: 2009 $ 10 $ $ (2 ) $ 8 2008 14 (4 ) 10 2007 7 3 4 14 Warranty reserve: 2009 $ 114 $ 144 $ (41 ) $ 217 2008 92 81 (59 ) 114 2007 57 78 (43 ) 92