Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Aug. 03, 2015 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | NOV | |
Entity Registrant Name | NATIONAL OILWELL VARCO INC | |
Entity Central Index Key | 1,021,860 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 383,808,711 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 2,544 | $ 3,536 |
Receivables, net | 3,476 | 4,416 |
Inventories, net | 5,394 | 5,281 |
Costs in excess of billings | 1,810 | 1,878 |
Deferred income taxes | 381 | 447 |
Prepaid and other current assets | 562 | 604 |
Total current assets | 14,167 | 16,162 |
Property, plant and equipment, net | 3,250 | 3,362 |
Deferred income taxes | 535 | 503 |
Goodwill | 8,507 | 8,539 |
Intangibles, net | 4,257 | 4,444 |
Investment in unconsolidated affiliates | 327 | 362 |
Other assets | 182 | 190 |
Total assets | 31,225 | 33,562 |
Current liabilities: | ||
Accounts payable | 847 | 1,189 |
Accrued liabilities | 3,028 | 3,518 |
Billings in excess of costs | 1,269 | 1,775 |
Current portion of long-term debt and short-term borrowings | 151 | 152 |
Accrued income taxes | 24 | 431 |
Deferred income taxes | 353 | 309 |
Total current liabilities | 5,672 | 7,374 |
Long-term debt | 4,154 | 3,014 |
Deferred income taxes | 1,976 | 1,972 |
Other liabilities | 418 | 430 |
Total liabilities | $ 12,220 | $ 12,790 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock - par value $.01; 1 billion shares authorized; 386,542,334 and 418,977,608 shares issued and outstanding at June 30, 2015 and December 31, 2014 | $ 4 | $ 4 |
Additional paid-in capital | 6,625 | 8,341 |
Accumulated other comprehensive loss | (1,119) | (834) |
Retained earnings | 13,417 | 13,181 |
Total Company stockholders' equity | 18,927 | 20,692 |
Noncontrolling interests | 78 | 80 |
Total stockholders' equity | 19,005 | 20,772 |
Total liabilities and stockholders' equity | $ 31,225 | $ 33,562 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 386,542,334 | 418,977,608 |
Common stock, shares outstanding | 386,542,334 | 418,977,608 |
Consolidated Statements of Inco
Consolidated Statements of Income (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Income Statement [Abstract] | ||||
Revenue | $ 3,909 | $ 5,255 | $ 8,729 | $ 10,144 |
Cost of revenue | 3,054 | 3,800 | 6,697 | 7,404 |
Gross profit | 855 | 1,455 | 2,032 | 2,740 |
Selling, general and administrative | 417 | 542 | 1,024 | 1,028 |
Operating profit | 438 | 913 | 1,008 | 1,712 |
Interest and financial costs | (26) | (27) | (52) | (53) |
Interest income | 2 | 5 | 7 | 9 |
Equity income in unconsolidated affiliates | 7 | 23 | 16 | 33 |
Other income (expense), net | (30) | (21) | (86) | (21) |
Income from continuing operations before income taxes | 391 | 893 | 893 | 1,680 |
Provision for income taxes | 105 | 284 | 294 | 523 |
Income from continuing operations | 286 | 609 | 599 | 1,157 |
Income from discontinued operations | 11 | 52 | ||
Net income | 286 | 620 | 599 | 1,209 |
Net income (loss) attributable to noncontrolling interests | (3) | 1 | 1 | |
Net income attributable to Company | $ 289 | $ 619 | $ 599 | $ 1,208 |
Basic: | ||||
Income from continuing operations | $ 0.75 | $ 1.42 | $ 1.51 | $ 2.70 |
Income from discontinued operations | 0.03 | 0.12 | ||
Net income attributable to Company | 0.75 | 1.45 | 1.51 | 2.82 |
Diluted: | ||||
Income from continuing operations | 0.74 | 1.42 | 1.51 | 2.69 |
Income from discontinued operations | 0.02 | 0.12 | ||
Net income attributable to Company | 0.74 | 1.44 | 1.51 | 2.81 |
Cash dividends per share | $ 0.46 | $ 0.46 | $ 0.92 | $ 0.72 |
Weighted average shares outstanding: | ||||
Basic | 387 | 428 | 397 | 428 |
Diluted | 388 | 430 | 398 | 430 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 286 | $ 620 | $ 599 | $ 1,209 |
Currency translation adjustments | 107 | 114 | (311) | 63 |
Changes in derivative financial instruments, net of tax | 92 | (25) | 26 | (11) |
Comprehensive income | 485 | 709 | 314 | 1,261 |
Comprehensive income (loss) attributable to noncontrolling interest | (3) | 1 | 1 | |
Comprehensive income attributable to Company | $ 488 | $ 708 | $ 314 | $ 1,260 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Cash flows from operating activities: | ||
Income from continuing operations | $ 599 | $ 1,157 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 380 | 381 |
Deferred income taxes | 26 | (57) |
Equity income in unconsolidated affiliates | (16) | (33) |
Dividend from unconsolidated affiliate | 34 | 73 |
Other, net | 162 | 127 |
Change in operating assets and liabilities, net of acquisitions: | ||
Receivables | 907 | (123) |
Inventories | (192) | (516) |
Costs in excess of billings | 68 | (28) |
Prepaid and other current assets | 41 | (48) |
Accounts payable | (343) | 101 |
Billings in excess of costs | (507) | 405 |
Income taxes payable | (406) | (295) |
Other assets/liabilities, net | (445) | 126 |
Net cash provided by continuing operating activities | 308 | 1,270 |
Discontinued operations | 89 | |
Net cash provided by operating activities | 308 | 1,359 |
Cash flows from investing activities: | ||
Purchases of property, plant and equipment | (234) | (300) |
Business acquisitions, net of cash acquired | (44) | (102) |
Cash distributed in spin-off | (253) | |
Other | 6 | 13 |
Net cash used in continuing investing activities | (272) | (642) |
Discontinued operations | (12) | |
Net cash used in investing activities | (272) | (654) |
Cash flows from financing activities: | ||
Borrowings against lines of credit and other debt | 4,751 | 151 |
Repayments on debt | (3,612) | (151) |
Cash dividends paid | (363) | (309) |
Share repurchases | (1,777) | |
Proceeds from stock options exercised | 5 | 34 |
Other | (1) | 12 |
Net cash used in continuing financing activities | (997) | (263) |
Discontinued operations | 0 | 0 |
Net cash used in financing activities | (997) | (263) |
Effect of exchange rates on cash | (31) | 7 |
Increase (decrease) in cash and cash equivalents | (992) | 449 |
Cash and cash equivalents, beginning of period | 3,536 | 3,436 |
Cash and cash equivalents, end of period | 2,544 | 3,885 |
Cash payments during the period for: | ||
Interest | 50 | 53 |
Income taxes | $ 660 | $ 886 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | 1. Basis of Presentation The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) 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 the reporting period. Actual results could differ from those estimates. The accompanying unaudited consolidated financial statements of National Oilwell Varco, Inc. (“NOV” or the “Company”) present information in accordance with GAAP in the United States for interim financial information and the instructions to Form 10-Q and applicable rules of Regulation S-X. They do not include all information or footnotes required by GAAP in the United States for complete consolidated financial statements and should be read in conjunction with our 2014 Annual Report on Form 10-K. In our opinion, the consolidated financial statements include all adjustments, which are of a normal recurring nature, unless otherwise disclosed, necessary for a fair presentation of the results for the interim periods. The results of operations for the three and six months ended June 30, 2015 are not necessarily indicative of the results to be expected for the full year. Effective April 1, 2014, the Company reorganized its reporting segments. All prior periods are presented on this basis. Results of operations related to the spin-off of the Company’s distribution business (“spin-off”) have been classified as discontinued operations in all prior periods presented on Form 10-Q. See Note 7 for discussion on the Company’s reporting segments and Note 2 for discussion on the spin-off of the Company’s distribution business. Fair Value of Financial Instruments The carrying amounts of 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. See Note 8 for the fair value of long-term debt and Note 11 for the fair value of derivative financial instruments. |
Spin-off of Distribution Busine
Spin-off of Distribution Business | 6 Months Ended |
Jun. 30, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Spin-off of Distribution Business | 2. Spin-off of Distribution Business On May 30, 2014, the Company completed the previously announced spin-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 share of NOW Inc. common stock for every four shares of NOV common stock held on the Record Date. No fractional shares of NOW Inc. common stock were distributed. Instead, the transfer agent aggregated any fractional shares into whole shares, sold those whole shares in the open market at prevailing rates and distributed the net cash proceeds, after deducting any taxes required to be withheld and any amount equal to all brokerage charges and commissions, pro rata to each holder who would otherwise have been entitled to receive fractional shares in the distribution. The following table presents selected financial information regarding the results of operations of our distribution business, which is reported as discontinued operations (in millions): Three Months Six Months Revenue from discontinued operations $ 624 $ 1,701 Income from discontinued operations before income taxes 21 83 Income tax expense 10 31 Income from discontinued operations $ 11 $ 52 Prior to the spin-off, sales to NOW were $91 million and $231 million for the three and six months ended June 30, 2014, respectively and purchases from NOW were $32 million and $82 million for the three and six months ended June 30, 2014, respectively. Prior to May 30, 2014, the spin-off date, revenue and related cost of revenue were eliminated in consolidation between NOV and NOW. Beginning May 31, 2014, this revenue and cost of revenue represent third-party transactions with NOW. |
Inventories, net
Inventories, net | 6 Months Ended |
Jun. 30, 2015 | |
Inventory Disclosure [Abstract] | |
Inventories, net | 3. Inventories, net Inventories consist of (in millions): June 30, December 31, Raw materials and supplies $ 1,227 $ 1,255 Work in process 982 1,027 Finished goods and purchased products 3,185 2,999 Total $ 5,394 $ 5,281 |
Accrued Liabilities
Accrued Liabilities | 6 Months Ended |
Jun. 30, 2015 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities | 4. Accrued Liabilities Accrued liabilities consist of (in millions): June 30, December 31, Accrued vendor costs $ 880 $ 815 Customer prepayments and billings 566 703 Compensation 331 662 Fair value of derivative financial instruments 290 297 Warranty 261 272 Taxes (non-income) 158 211 Insurance 115 126 Accrued commissions 87 97 Interest 11 11 Other 329 324 Total $ 3,028 $ 3,518 Service and Product Warranties The Company provides service and warranty policies on certain of its products. The Company accrues liabilities under service and warranty policies based upon specific claims and a review of historical warranty and service claim experience in accordance with Accounting Standards Codification (“ASC”) Topic 450 “Contingencies”. Adjustments are made to accruals as claim data and historical experience change. In addition, the Company incurs discretionary costs to service its products in connection with product performance issues and accrues for them when they are encountered. The changes in the carrying amount of service and product warranties are as follows (in millions): Balance at December 31, 2014 $ 272 Net provisions for warranties issued during the year 39 Amounts incurred (48 ) Currency translation adjustments and other (2 ) Balance at June 30, 2015 $ 261 |
Costs and Estimated Earnings on
Costs and Estimated Earnings on Uncompleted Contracts | 6 Months Ended |
Jun. 30, 2015 | |
Text Block [Abstract] | |
Costs and Estimated Earnings on Uncompleted Contracts | 5. Costs and Estimated Earnings on Uncompleted Contracts Costs and estimated earnings on uncompleted contracts consist of (in millions): June 30, December 31, Costs incurred on uncompleted contracts $ 10,991 $ 10,442 Estimated earnings 4,910 4,699 15,901 15,141 Less: Billings to date 15,360 15,038 $ 541 $ 103 Costs and estimated earnings in excess of billings on uncompleted contracts $ 1,810 $ 1,878 Billings in excess of costs and estimated earnings on uncompleted contracts (1,269 ) (1,775 ) $ 541 $ 103 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 6 Months Ended |
Jun. 30, 2015 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | 6. Accumulated Other Comprehensive Income (Loss) The components of accumulated other comprehensive income (loss) are as follows (in millions): Currency Derivative Defined Total Balance at December 31, 2014 $ (515 ) $ (228 ) $ (91 ) $ (834 ) Accumulated other comprehensive income (loss) before reclassifications (311 ) (81 ) — (392 ) Amounts reclassified from accumulated other comprehensive income (loss) — 107 — 107 Balance at June 30, 2015 $ (826 ) $ (202 ) $ (91 ) $ (1,119 ) The components of amounts reclassified from accumulated other comprehensive income (loss) are as follows (in millions): Three Months Ended June 30, 2015 2014 Currency Derivative Defined Total Currency Derivative Defined Total Revenue $ — $ (66 ) $ — $ (66 ) $ — $ (8 ) $ — $ (8 ) Cost of revenue — 153 — 153 — (4 ) — (4 ) Tax effect — (26 ) — (26 ) — 2 — 2 $ — $ 61 $ — $ 61 $ — $ (10 ) $ — $ (10 ) Six Months Ended June 30, 2015 2014 Currency Derivative Defined Total Currency Derivative Defined Total Revenue $ — $ (1 ) $ — $ (1 ) $ — $ (21 ) $ — $ (21 ) Cost of revenue — 152 — 152 — (1 ) — (1 ) Tax effect — (44 ) — (44 ) — 5 — 5 $ — $ 107 $ — $ 107 $ — $ (17 ) $ — $ (17 ) The Company’s reporting currency is the U.S. dollar. A majority of the Company’s international entities in which there is a substantial investment have the local currency as their functional currency. As a result, currency translation adjustments 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 three months ended June 30, 2015, a majority of these local currencies strengthened against the U.S. dollar resulting in net Other Comprehensive Income of $107 million, upon the translation from local currencies to the U.S. dollar. For the six months ended June 30, 2015, a majority of these local currencies weakened against the U.S. dollar resulting in net Other Comprehensive Loss of $311 million, upon the translation from local currencies to the U.S. dollar. For the three and six months ended June 30, 2014, a majority of these local currencies strengthened against the U.S. dollar resulting in net Other Comprehensive Income of $114 million and $63 million, respectively, upon the translation from local currencies to the U.S. dollar. The effect of changes in the fair values of derivatives designated as cash flow hedges are accumulated in Other Comprehensive Income or Loss, net of tax, until the underlying transactions to which they are designed to hedge are realized. The movement in Other Comprehensive Income or Loss from period to period will be the result of the combination of changes in fair value for open derivatives and the outflow of Other Comprehensive Income or Loss related to cumulative changes in the fair value of derivatives that have settled in the current or prior periods. The accumulated effect was Other Comprehensive Income of $92 million (net of tax of $34 million) and $26 million (net of tax of $13 million) for the three and six months ended June 30, 2015, respectively. The accumulated effect was Other Comprehensive Loss of $25 million (net of tax of $10 million) and $11 million (net of tax of $4 million) for the three and six months ended June 30, 2014, respectively. |
Business Segments
Business Segments | 6 Months Ended |
Jun. 30, 2015 | |
Segment Reporting [Abstract] | |
Business Segments | 7. Business Segments Operating results by segment are as follows (in millions): Three Months Ended Six Months Ended 2015 2014 2015 2014 Revenue: Rig Systems $ 1,930 $ 2,372 $ 4,453 $ 4,628 Rig Aftermarket 657 785 1,376 1,535 Wellbore Technologies 956 1,446 2,127 2,724 Completion & Production Solutions 873 1,127 1,821 2,129 Eliminations (507 ) (475 ) (1,048 ) (872 ) Total Revenue $ 3,909 $ 5,255 $ 8,729 $ 10,144 Operating Profit: Rig Systems $ 392 $ 501 $ 840 $ 952 Rig Aftermarket 143 217 334 408 Wellbore Technologies 38 263 117 484 Completion & Production Solutions 78 157 157 294 Unallocated expenses and eliminations (213 ) (225 ) (440 ) (426 ) Total Operating Profit $ 438 $ 913 $ 1,008 $ 1,712 Operating Profit %: Rig Systems 20.3 % 21.1 % 18.9 % 20.6 % Rig Aftermarket 21.8 % 27.6 % 24.3 % 26.6 % Wellbore Technologies 4.0 % 18.2 % 5.5 % 17.8 % Completion & Production Solutions 8.9 % 13.9 % 8.6 % 13.8 % Total Operating Profit % 11.2 % 17.4 % 11.5 % 16.9 % Sales from one segment to another generally are priced at estimated equivalent commercial selling prices; however, segments originating an external sale are credited with the full profit to the Company. Eliminations include intercompany transactions conducted between the four reporting segments that are eliminated in consolidation. Intercompany transactions within each reporting segment are eliminated within each reporting segment. Included in operating profit are other items related to costs associated with a Voluntary Early Retirement Plan established by the Company during the first quarter of 2015; costs related to severance and facility closures; items related to acquisitions, such as transaction costs, the amortization of backlog and inventory that was stepped up to fair value during purchase accounting; the costs of the spin-off of the Company’s distribution business and certain legal costs. Other items by segment are as follows (in millions): Three Months Ended Six Months Ended 2015 2014 2015 2014 Other items: Rig Systems $ 3 $ — $ 43 $ — Rig Aftermarket 2 — 10 — Wellbore Technologies 9 6 54 9 Completion & Production Solutions 3 1 32 7 Unallocated expenses and eliminations — 25 — 34 Total other items $ 17 $ 32 $ 139 $ 50 |
Debt
Debt | 6 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Debt | 8. Debt Debt consists of (in millions): June 30, December 31, Senior Notes, interest at 6.125% payable semiannually, principal due on August 15, 2015 $ 151 $ 151 Senior Notes, interest at 1.35% payable semiannually, principal due on December 1, 2017 500 500 Senior Notes, interest at 2.6% payable semiannually, principal due on December 1, 2022 1,396 1,396 Senior Notes, interest at 3.95% payable semiannually, principal due on December 1, 2042 1,096 1,096 Commercial paper 1,140 — Other 22 23 Total debt 4,305 3,166 Less current portion 151 152 Long-term debt $ 4,154 $ 3,014 During the second quarter of 2015, the Company exercised its accordion option to increase aggregate borrowing capacity under its five-year unsecured revolving credit facility by an additional $1.0 billion, bringing the aggregate borrowing capacity to $4.5 billion. The facility expires September 28, 2018. The Company also has a commercial paper program. Borrowings under the commercial paper program are classified as long-term as the program is supported by the $4.5 billion, five-year revolving credit facility. At June 30, 2015, there were $1,140 million in commercial paper borrowings, and there were $201 million in outstanding letters of credit issued under the credit facility, resulting in $3,159 million of funds available under this revolving credit facility. Interest under this multicurrency facility is based upon LIBOR, NIBOR or EURIBOR plus 0.875% subject to a ratings-based grid, or the U.S. prime rate. The credit facility contains a financial covenant regarding maximum debt to capitalization and the Company was in compliance at June 30, 2015. The Company also had $3,092 million of additional outstanding letters of credit at June 30, 2015 that are under various bilateral letter of credit facilities. Other letters of credit are issued as bid bonds, advanced payment bonds and performance bonds. The fair value of the Company’s debt is estimated using Level 2 inputs in the fair value hierarchy and is based on quoted prices for those or similar instruments. At June 30, 2015 and December 31, 2014, the fair value of the Company’s unsecured Senior Notes approximated $2,939 million and $2,974 million, respectively. At both June 30, 2015 and December 31, 2014, the carrying value of the Company’s unsecured Senior Notes approximated $3,143 million. The carrying value of the Company’s variable rate borrowings approximates fair value. |
Tax
Tax | 6 Months Ended |
Jun. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Tax | 9. Tax The effective tax rate for the three and six months ended June 30, 2015 was 26.9% and 32.9%, respectively, compared to 31.8% and 31.1% for the same periods in 2014. Compared to the U.S. statutory rate, the effective tax rate was positively impacted in the periods by the effect of lower tax rates on income earned in foreign jurisdictions, and foreign exchange losses for tax reporting in Norway. There is no deduction in the U.S. for manufacturing activities due to the decrease in U.S. sourced income for the three months ended June 30, 2015. The effective tax rate was negatively impacted by foreign dividends net of foreign tax credits, nondeductible expenses and a foreign audit settlement during the six months ended June 30, 2015. Excluding discrete items, the effective tax rate for the three and six months ended June 30, 2015 was 29.9% and 29.4%, respectively. The difference between the effective tax rate reflected in the provision for income taxes and the U.S. federal statutory rate of 35% was as follows (in millions): Three Months Ended Six Months Ended 2015 2014 2015 2014 Federal income tax at U.S. federal statutory rate $ 137 $ 312 $ 313 $ 588 Foreign income tax rate differential (41 ) (51 ) (87 ) (98 ) State income tax, net of federal benefit — 9 3 15 Nondeductible expenses 12 8 17 19 Tax benefit of manufacturing deduction — (10 ) (10 ) (17 ) Foreign dividends, net of foreign tax credits 8 12 15 21 Tax impact of foreign exchange (19 ) 6 (18 ) (2 ) Change in tax reserves — — 69 — Other 8 (2 ) (8 ) (3 ) Provision for income taxes $ 105 $ 284 $ 294 $ 523 The balance of unrecognized tax benefits at June 30, 2015 was $125 million, $52 million of which if ultimately realized, would be recorded as an income tax benefit. During the first quarter the company reserved $69 million related to an uncertain tax position identified in a foreign jurisdiction, of which the Company has settled and paid $60 million as of June 30, 2015. The company anticipates the remaining $9 million will be paid within 12 months of this reporting date, at which time the remainder of the reserve will be released. The Company is subject to taxation in the U.S., various states and foreign jurisdictions. The Company has significant operations in the United States, Canada, the United Kingdom, the Netherlands and Norway. Tax years that remain subject to examination by major tax jurisdiction vary by legal entity, but are generally open in the U.S. for tax years after 2009 and outside the U.S. for tax years after 2007. To the extent penalties and interest would be assessed on any underpayment of income tax, such accrued amounts have been classified as a component of income tax expense in the financial statements. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | 10. Stock-Based Compensation The Company has a stock-based compensation plan known as the National Oilwell Varco, Inc. Long-Term Incentive Plan (the “Plan”). The Plan provides for the granting of stock options, performance-based share awards, restricted stock, phantom shares, stock payments and stock appreciation rights. The number of shares authorized under the Plan is 39.5 million. At June 30, 2015, 5,688,421 shares remain available for future grants under the Plan, all of which are available for grants of stock options, performance-based share awards, restricted stock awards, phantom shares, stock payments and stock appreciation rights. On February 25, 2015, the Company granted 5,746,153 stock options with a fair value of $15.41 per share and an exercise price of $54.74 per share; 653,750 shares of restricted stock and restricted stock units with a fair value of $54.74 per share; and performance share awards to senior management employees with potential payouts varying from zero to 396,666 shares. The stock options vest over a three-year period from the grant date while the restricted stock and restricted stock units vest on the third anniversary of the date of grant. The performance share awards can be earned based on performance against established goals over a three-year performance period. The performance share awards are divided into two equal, independent parts that are subject to two separate performance metrics: 50% with a TSR (total shareholder return) goal (the “TSR Award”) and 50% with an internal ROC (return on capital) goal (the “ROC Award”). Performance against the TSR goal is determined by comparing the performance of the Company’s TSR with the TSR performance of the members of the OSX index for the three year performance period. Performance against the ROC goal is determined by comparing the performance of the Company’s actual ROC performance average for each of the three years of the performance period against the ROC goal set by the Company’s Compensation Committee. On May 13, 2015, the Company granted 26,992 restricted stock awards with a fair value of $51.88 per share. The awards were granted to non-employee members of the board of directors and vest on the first anniversary of the grant date. Total stock-based compensation for all stock-based compensation arrangements under the Plan was $22 million and $62 million for the three and six months ended June 30, 2015 and $27 million and $51 million for the three and six months ended June 30, 2014, respectively. Included in stock-based compensation for the six months ended June 30, 2015 is $18 million related to the Voluntary Early Retirement Plan established by the Company in the first quarter of 2015. The total income tax benefit recognized in the Consolidated Statements of Income for all stock-based compensation arrangements under the Plan was $6 million and $13 million for the three and six months ended June 30, 2015, respectively and $9 million and $16 million for the three and six months ended June 30, 2014, respectively. |
Derivative Financial Instrument
Derivative Financial Instruments | 6 Months Ended |
Jun. 30, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | 11. Derivative Financial Instruments ASC Topic 815, “Derivatives and Hedging” requires a company to recognize all of its derivative instruments as either assets or liabilities in the Consolidated Balance Sheet at fair value. The accounting for 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 risk managed by using derivative instruments is foreign currency exchange rate risk. Forward contracts against various foreign currencies are entered into to manage the foreign currency exchange rate risk on forecasted revenues and expenses denominated in currencies other than the functional currency of the operating unit (cash flow 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). The Company records all derivative financial instruments at their fair value in its Consolidated Balance Sheet. Except for certain non-designated hedges discussed below, all derivative financial instruments that the Company holds are designated as cash flow hedges and are highly effective in offsetting movements in the underlying risks. Such arrangements typically have terms between 2 and 24 months, but may have longer terms depending on the underlying cash flows being hedged, typically related to the projects in our backlog. The Company may also use interest rate contracts to mitigate its exposure to changes in interest rates on anticipated long-term debt issuances. At June 30, 2015, the Company has determined that the fair value of its derivative financial instruments representing assets of $54 million and liabilities of $341 million (primarily currency related derivatives) are determined using level 2 inputs (inputs other than quoted prices in active markets for identical assets and liabilities that are observable 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 June 30, 2015, the net fair value of the Company’s foreign currency forward contracts totaled a net liability of $287 million. At June 30, 2015, the Company did not have any interest rate swaps and its financial instruments do not contain any credit-risk-related or other contingent features that could cause accelerated payments when the Company’s financial instruments are in net liability positions. We do not use derivative financial instruments for trading or speculative purposes. Cash Flow Hedging Strategy To protect against the volatility of forecasted foreign currency cash flows resulting from forecasted revenues and expenses, the Company has instituted a cash flow hedging program. The Company hedges portions of its forecasted revenues and expenses denominated in nonfunctional currencies with forward contracts. When the U.S. dollar strengthens or weakens against the foreign currencies, the change in present value of future foreign currency revenues and expenses is offset by changes in the fair value of the forward contracts designated as hedges. For derivative instruments that are designated and qualify as a cash flow hedge (i.e., hedging the exposure to variability in expected future cash flows that is subject to a particular currency risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of Other Comprehensive Income and reclassified into earnings in the same line item associated with the forecasted transaction and in the same period or periods during which the hedged transaction affects earnings (e.g., in “revenues” when the hedged transactions are cash flows associated with forecasted revenues). The remaining gain or loss on the derivative instrument in excess of the cumulative change in the present value of future cash flows of the hedged item, if any (i.e., the ineffective portion), or hedge components excluded from the assessment of effectiveness, is recognized in the Consolidated Statements of Income during the current period. For the three months ended June 30, 2015, the Company recognized losses of $20 million as a result of the discontinuance of certain cash flow hedges when it became probable that the original forecasted transactions would not occur by the end of the originally specified time period. At June 30, 2015, there were $276 million in pre-tax losses recorded in accumulated other comprehensive income. Significant changes in forecasted operating levels or delays in large capital construction projects, whereby certain hedged transactions associated with these projects are no longer probable of occurring by the end of the originally specified time period, could result in additional losses due to the de-designation of existing hedge contracts. The Company had the following outstanding foreign currency forward contracts that were entered into to hedge nonfunctional currency cash flows from forecasted revenues and expenses (in millions): Currency Denomination Foreign Currency June 30, 2015 December 31, Norwegian Krone NOK 11,732 NOK 10,781 Euro € 242 € 462 U.S. Dollar $ 177 $ 231 Danish Krone DKK 105 DKK 227 British Pound Sterling £ 37 £ 80 Singapore Dollar SGD 24 SGD 44 Canadian Dollar CAD 8 CAD 14 Non-designated Hedging Strategy The Company enters into forward exchange contracts to hedge certain nonfunctional currency monetary accounts. The purpose of the Company’s foreign currency hedging activities is to protect the Company from risk that the eventual U.S. dollar equivalent cash flows from the nonfunctional currency monetary accounts will be adversely affected by changes in the exchange rates. For derivative instruments that are non-designated, the gain or loss on the derivative instrument subject to the hedged risk (i.e., nonfunctional currency monetary accounts) is recognized in other 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 Foreign Currency June 30, 2015 December 31, Norwegian Krone NOK 3,015 NOK 4,052 Russian Ruble RUB 1,695 RUB — U.S. Dollar $ 1,440 $ 1,092 Euro € 434 € 401 Danish Krone DKK 218 DKK 322 British Pound Sterling £ 13 £ 19 Canadian Dollar CAD 7 CAD 4 Singapore Dollar SGD 2 SGD 4 Swedish Krone SEK 1 SEK 3 Mexican Peso MXN — MXN 118 Brazilian Real BRL — BRL 57 The Company has the following gross fair values of its derivative instruments and their balance sheet classifications: Asset Derivatives Liability Derivatives Fair Value Fair Value Balance Sheet Location June 30, December 31, Balance Sheet June 30, December 31, Derivatives designated as hedging instruments under ASC Topic 815 Foreign exchange contracts Prepaid and other current assets $ 23 $ 18 Accrued liabilities $ 193 $ 204 Foreign exchange contracts Other Assets 8 8 Other Liabilities 50 102 Total derivatives designated as hedging instruments under ASC Topic 815 $ 31 $ 26 $ 243 $ 306 Derivatives not designated as hedging instruments under ASC Topic 815 Foreign exchange contracts Prepaid and other current assets $ 23 $ 27 Accrued liabilities $ 97 $ 93 Foreign exchange contracts Other Assets — — Other Liabilities 1 — Total derivatives not designated as hedging instruments under ASC Topic 815 $ 23 $ 27 $ 98 $ 93 Total derivatives $ 54 $ 53 $ 341 $ 399 The Effect of Derivative Instruments on the Consolidated Statements of Income ($ in millions) Derivatives in ASC Topic 815 Cash Flow Amount of Gain Recognized in OCI Location of Gain Amount of Gain Accumulated OCI Location of Gain (Loss) Portion and Amount Excluded from Effectiveness Testing) Amount of Gain Six Months Ended June 30, Six Months Ended Six Months Ended 2015 2014 2015 2014 2015 2014 Revenue 1 21 Cost of revenue (22 ) 1 Foreign exchange contracts (105 ) 13 Cost of revenue (138 ) 1 Other income (expense), net (1 ) 19 Total (105 ) 13 (137 ) 22 (23 ) 20 Derivatives Not Designated as Hedging Instruments under Location of Gain (Loss) Amount of Gain (Loss) Six Months Ended June 30, 2015 2014 Foreign exchange contracts Other income (expense), net (55 ) 4 Total (55 ) 4 (a) The Company expects that $(230) million of the Accumulated Other Comprehensive Income (Loss) will be reclassified into earnings within the next twelve months with an offset by gains from the underlying transactions resulting in no impact to earnings or cash flow. (b) The amount of gain (loss) recognized in income represents $(22) million and $1 million related to the ineffective portion of the hedging relationships for each of the six months ended June 30, 2015 and 2014, respectively, and $(1) million and $19 million related to the amount excluded from the assessment of the hedge effectiveness for the six months ended June 30, 2015 and 2014, respectively. |
Net Income Attributable to Comp
Net Income Attributable to Company Per Share | 6 Months Ended |
Jun. 30, 2015 | |
Earnings Per Share [Abstract] | |
Net Income Attributable to Company Per Share | 12. Net Income Attributable to Company Per Share The following table sets forth the computation of weighted average basic and diluted shares outstanding (in millions, except per share data): Three Months Ended Six Months Ended 2015 2014 2015 2014 Numerator: Income from continuing operations $ 289 $ 608 $ 599 $ 1,156 Income from discontinued operations $ — $ 11 $ — $ 52 Net income attributable to Company $ 289 $ 619 $ 599 $ 1,208 Denominator: Basic—weighted average common shares outstanding 387 428 397 428 Dilutive effect of employee stock options and other unvested stock awards 1 2 1 2 Diluted outstanding shares 388 430 398 430 Per share data: Basic: Income from continuing operations $ 0.75 $ 1.42 $ 1.51 $ 2.70 Income from discontinued operations $ — $ 0.03 $ — $ 0.12 Net income attributable to Company $ 0.75 $ 1.45 $ 1.51 $ 2.82 Diluted: Income from continuing operations $ 0.74 $ 1.42 $ 1.51 $ 2.69 Income from discontinued operations $ — $ 0.02 $ — $ 0.12 Net income attributable to Company $ 0.74 $ 1.44 $ 1.51 $ 2.81 Cash dividends per share $ 0.46 $ 0.46 $ 0.92 $ 0.72 ASC Topic 260, “Earnings Per Share” requires companies with unvested participating securities to utilize a two-class method for the computation of Net income attributable to Company per share. The two-class method requires a portion of Net income attributable to Company to be allocated to participating securities, which are unvested awards of share-based payments with non-forfeitable rights to receive dividends or dividend equivalents, if declared. Net income attributable to Company allocated to these participating securities was immaterial for three and six months ended June 30, 2015 and therefore not excluded from Net income attributable to Company per share calculation. In addition, the Company had stock options outstanding that were anti-dilutive totaling 14 million shares for each of the three and six months ended June 30, 2015, and 9 million shares for each of the three and six months ended June 30, 2014. |
Cash Dividends
Cash Dividends | 6 Months Ended |
Jun. 30, 2015 | |
Text Block [Abstract] | |
Cash Dividends | 13. Cash Dividends On May 13, 2015, the Company’s Board of Directors approved a cash dividend of $0.46 per share. The cash dividend was paid on June 26, 2015, to each stockholder of record on June 12, 2015. Cash dividends aggregated $178 million and $363 million for the three and six months ended June 30, 2015, and $198 million and $309 million for the three and six months ended June 30, 2014, 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 and other factors deemed relevant by the Company’s Board of Directors. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 14. Commitments and Contingencies We have received U.S. federal grand jury subpoenas and subsequent inquiries from U.S. governmental agencies requesting records related to our compliance with U.S. export trade laws and regulations. We have cooperated fully with agents from the U.S. Department of Justice, the Department of Commerce Bureau of Industry and Security, the United States Department of Treasury, Office of Foreign Assets Control, and U.S. Immigration and Customs Enforcement in responding to the inquiries. We have also cooperated with an informal inquiry from the Securities and Exchange Commission in connection with the inquiries previously made by the aforementioned federal agencies. 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, we cannot predict the timing or effect that any resulting government actions may have on our financial position or results of operations. In addition, we are involved in various other claims, internal investigations, regulatory agency audits and pending or threatened legal actions involving a variety of matters. As of June 30, 2015, the Company recorded an immaterial amount for contingent liabilities representing all contingencies believed to be probable. The Company has also assessed the potential for additional losses above the amounts accrued as well as potential losses for matters that are not probable but are reasonably possible. The total potential loss on these matters cannot be determined; however, in our opinion, any ultimate liability, to the extent not otherwise provided for and except for the specific cases referred to above, will not materially affect our financial position, cash flow or results of operations. As it relates to the specific cases referred to above 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, cash flow or results of operations. These estimated liabilities are based on the Company’s assessment of the nature of these matters, their progress toward resolution, the advice of legal counsel and outside experts as well as management’s intention and experience. 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. Further, in some instances, direct or indirect consumers of our products and services, entities providing financing for purchases of our products and services or members of the supply chain for our products and services may become involved in governmental investigations, internal investigations, political or other enforcement matters. In such circumstances, such investigations may adversely impact the ability of consumers of our products, entities providing financial support to such consumers or entities in the supply chain to timely perform their business plans or to timely perform under agreements with us. For example, the on-going, publicly disclosed investigations in Brazil may adversely impact our shipyard customers, their customers, entities providing financing for our shipyard customers and/or entities in the supply chain. The investigation in Brazil has led to, and is expected to continue to lead to, delays in deliveries to our shipyard customers in Brazil, along with temporary suspension of performance under our supply contracts, and could result in attempted cancellation or other breaches of our contracts by our shipyard customers. Further, customers in other markets may seek delay or suspension of deliveries, extending delivery into future periods, or may attempt cancellations. While we manage deliveries and collection of payment to achieve percentage of completion payments that mitigate our financial risk, such delays, suspensions, attempted cancellations, breaches of contract or other similar circumstances, could adversely affect our operating results and financial condition and could reduce our backlog. |
Share Repurchase Program
Share Repurchase Program | 6 Months Ended |
Jun. 30, 2015 | |
Equity [Abstract] | |
Share Repurchase Program | 15. Share Repurchase Program The Company established a share repurchase program to purchase up to $3 billion of the Company’s outstanding common stock. The Company may repurchase its shares on the open market at prevailing market prices. The timing and actual number of shares repurchased will depend on a variety of factors including market conditions and regulatory considerations. The duration of the share repurchase program is 36 months, although it may be increased, extended, suspended or discontinued without prior notice. The Company intends to fund the repurchases using its available U.S. cash balances, which may involve the repatriation of foreign earnings not indefinitely reinvested. However, depending on U.S. cash balances, the Company may choose to borrow against its revolving credit facility or its commercial paper program or issue new debt to finance the repurchases. As shares are repurchased, they are constructively retired and returned to an unissued state. During the three months ended June 30, 2015, the Company repurchased 8.6 million shares under the program for an average price of $51.73 per share for an aggregate amount of $447 million. During the six months ended June 30, 2015, the Company repurchased 33.1 million shares under the program for an average price of $53.66 per share for an aggregate amount of $1,777 million. |
Recently Issued Accounting Stan
Recently Issued Accounting Standards | 6 Months Ended |
Jun. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Recently Issued Accounting Standards | 16. Recently Issued Accounting Standards In May 2014, the FASB issued Accounting Standard Update No. 2014-09 “Revenue from Contracts with Customers” (ASU No. 2014-09), which supersedes the revenue recognition requirements in Accounting Standard Codification Topic No. 605 “Revenue Recognition” and most industry-specific guidance. This update requires that entities recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. ASU No. 2014-09 is effective for fiscal years beginning after December 15, 2017, 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. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of 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. See Note 8 for the fair value of long-term debt and Note 11 for the fair value of derivative financial instruments. |
Service and Product Warranties | Service and Product Warranties The Company provides service and warranty policies on certain of its products. The Company accrues liabilities under service and warranty policies based upon specific claims and a review of historical warranty and service claim experience in accordance with Accounting Standards Codification (“ASC”) Topic 450 “Contingencies”. Adjustments are made to accruals as claim data and historical experience change. In addition, the Company incurs discretionary costs to service its products in connection with product performance issues and accrues for them when they are encountered. The changes in the carrying amount of service and product warranties are as follows (in millions): Balance at December 31, 2014 $ 272 Net provisions for warranties issued during the year 39 Amounts incurred (48 ) Currency translation adjustments and other (2 ) Balance at June 30, 2015 $ 261 |
Derivatives and Hedging | ASC Topic 815, “Derivatives and Hedging” requires a company to recognize all of its derivative instruments as either assets or liabilities in the Consolidated Balance Sheet at fair value. The accounting for 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 risk managed by using derivative instruments is foreign currency exchange rate risk. Forward contracts against various foreign currencies are entered into to manage the foreign currency exchange rate risk on forecasted revenues and expenses denominated in currencies other than the functional currency of the operating unit (cash flow 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). The Company records all derivative financial instruments at their fair value in its Consolidated Balance Sheet. Except for certain non-designated hedges discussed below, all derivative financial instruments that the Company holds are designated as cash flow hedges and are highly effective in offsetting movements in the underlying risks. Such arrangements typically have terms between 2 and 24 months, but may have longer terms depending on the underlying cash flows being hedged, typically related to the projects in our backlog. The Company may also use interest rate contracts to mitigate its exposure to changes in interest rates on anticipated long-term debt issuances. At June 30, 2015, the Company has determined that the fair value of its derivative financial instruments representing assets of $54 million and liabilities of $341 million (primarily currency related derivatives) are determined using level 2 inputs (inputs other than quoted prices in active markets for identical assets and liabilities that are observable 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 June 30, 2015, the net fair value of the Company’s foreign currency forward contracts totaled a net liability of $287 million. At June 30, 2015, the Company did not have any interest rate swaps and its financial instruments do not contain any credit-risk-related or other contingent features that could cause accelerated payments when the Company’s financial instruments are in net liability positions. We do not use derivative financial instruments for trading or speculative purposes. Cash Flow Hedging Strategy To protect against the volatility of forecasted foreign currency cash flows resulting from forecasted revenues and expenses, the Company has instituted a cash flow hedging program. The Company hedges portions of its forecasted revenues and expenses denominated in nonfunctional currencies with forward contracts. When the U.S. dollar strengthens or weakens against the foreign currencies, the change in present value of future foreign currency revenues and expenses is offset by changes in the fair value of the forward contracts designated as hedges. For derivative instruments that are designated and qualify as a cash flow hedge (i.e., hedging the exposure to variability in expected future cash flows that is subject to a particular currency risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of Other Comprehensive Income and reclassified into earnings in the same line item associated with the forecasted transaction and in the same period or periods during which the hedged transaction affects earnings (e.g., in “revenues” when the hedged transactions are cash flows associated with forecasted revenues). The remaining gain or loss on the derivative instrument in excess of the cumulative change in the present value of future cash flows of the hedged item, if any (i.e., the ineffective portion), or hedge components excluded from the assessment of effectiveness, is recognized in the Consolidated Statements of Income during the current period. For the three months ended June 30, 2015, the Company recognized losses of $20 million as a result of the discontinuance of certain cash flow hedges when it became probable that the original forecasted transactions would not occur by the end of the originally specified time period. At June 30, 2015, there were $276 million in pre-tax losses recorded in accumulated other comprehensive income. Significant changes in forecasted operating levels or delays in large capital construction projects, whereby certain hedged transactions associated with these projects are no longer probable of occurring by the end of the originally specified time period, could result in additional losses due to the de-designation of existing hedge contracts. |
Net Income Attributable to Company Per Share | ASC Topic 260, “Earnings Per Share” requires companies with unvested participating securities to utilize a two-class method for the computation of Net income attributable to Company per share. The two-class method requires a portion of Net income attributable to Company to be allocated to participating securities, which are unvested awards of share-based payments with non-forfeitable rights to receive dividends or dividend equivalents, if declared. Net income attributable to Company allocated to these participating securities was immaterial for three and six months ended June 30, 2015 and therefore not excluded from Net income attributable to Company per share calculation. |
Recently Issued Accounting Standards | In May 2014, the FASB issued Accounting Standard Update No. 2014-09 “Revenue from Contracts with Customers” (ASU No. 2014-09), which supersedes the revenue recognition requirements in Accounting Standard Codification Topic No. 605 “Revenue Recognition” and most industry-specific guidance. This update requires that entities recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. ASU No. 2014-09 is effective for fiscal years beginning after December 15, 2017, 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. |
Spin-off of Distribution Busi24
Spin-off of Distribution Business (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Selected Financial Information Reported as Discontinued Operations | The following table presents selected financial information regarding the results of operations of our distribution business, which is reported as discontinued operations (in millions): Three Months Six Months Revenue from discontinued operations $ 624 $ 1,701 Income from discontinued operations before income taxes 21 83 Income tax expense 10 31 Income from discontinued operations $ 11 $ 52 |
Inventories, net (Tables)
Inventories, net (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories consist of (in millions): June 30, December 31, Raw materials and supplies $ 1,227 $ 1,255 Work in process 982 1,027 Finished goods and purchased products 3,185 2,999 Total $ 5,394 $ 5,281 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities | Accrued liabilities consist of (in millions): June 30, December 31, Accrued vendor costs $ 880 $ 815 Customer prepayments and billings 566 703 Compensation 331 662 Fair value of derivative financial instruments 290 297 Warranty 261 272 Taxes (non-income) 158 211 Insurance 115 126 Accrued commissions 87 97 Interest 11 11 Other 329 324 Total $ 3,028 $ 3,518 |
Changes in Carrying Amount of Service and Product Warranties | The changes in the carrying amount of service and product warranties are as follows (in millions): Balance at December 31, 2014 $ 272 Net provisions for warranties issued during the year 39 Amounts incurred (48 ) Currency translation adjustments and other (2 ) Balance at June 30, 2015 $ 261 |
Costs and Estimated Earnings 27
Costs and Estimated Earnings on Uncompleted Contracts (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Text Block [Abstract] | |
Costs and Estimated Earnings on Uncompleted Contracts | Costs and estimated earnings on uncompleted contracts consist of (in millions): June 30, December 31, Costs incurred on uncompleted contracts $ 10,991 $ 10,442 Estimated earnings 4,910 4,699 15,901 15,141 Less: Billings to date 15,360 15,038 $ 541 $ 103 Costs and estimated earnings in excess of billings on uncompleted contracts $ 1,810 $ 1,878 Billings in excess of costs and estimated earnings on uncompleted contracts (1,269 ) (1,775 ) $ 541 $ 103 |
Accumulated Other Comprehensi28
Accumulated Other Comprehensive Income (Loss) (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Equity [Abstract] | |
Components of Accumulated Other Comprehensive Income (Loss) | The components of accumulated other comprehensive income (loss) are as follows (in millions): Currency Derivative Defined Total Balance at December 31, 2014 $ (515 ) $ (228 ) $ (91 ) $ (834 ) Accumulated other comprehensive income (loss) before reclassifications (311 ) (81 ) — (392 ) Amounts reclassified from accumulated other comprehensive income (loss) — 107 — 107 Balance at June 30, 2015 $ (826 ) $ (202 ) $ (91 ) $ (1,119 ) |
Components of Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) | The components of amounts reclassified from accumulated other comprehensive income (loss) are as follows (in millions): Three Months Ended June 30, 2015 2014 Currency Derivative Defined Total Currency Derivative Defined Total Revenue $ — $ (66 ) $ — $ (66 ) $ — $ (8 ) $ — $ (8 ) Cost of revenue — 153 — 153 — (4 ) — (4 ) Tax effect — (26 ) — (26 ) — 2 — 2 $ — $ 61 $ — $ 61 $ — $ (10 ) $ — $ (10 ) Six Months Ended June 30, 2015 2014 Currency Derivative Defined Total Currency Derivative Defined Total Revenue $ — $ (1 ) $ — $ (1 ) $ — $ (21 ) $ — $ (21 ) Cost of revenue — 152 — 152 — (1 ) — (1 ) Tax effect — (44 ) — (44 ) — 5 — 5 $ — $ 107 $ — $ 107 $ — $ (17 ) $ — $ (17 ) |
Business Segments (Tables)
Business Segments (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Segment Reporting [Abstract] | |
Business Segments | Operating results by segment are as follows (in millions): Three Months Ended Six Months Ended 2015 2014 2015 2014 Revenue: Rig Systems $ 1,930 $ 2,372 $ 4,453 $ 4,628 Rig Aftermarket 657 785 1,376 1,535 Wellbore Technologies 956 1,446 2,127 2,724 Completion & Production Solutions 873 1,127 1,821 2,129 Eliminations (507 ) (475 ) (1,048 ) (872 ) Total Revenue $ 3,909 $ 5,255 $ 8,729 $ 10,144 Operating Profit: Rig Systems $ 392 $ 501 $ 840 $ 952 Rig Aftermarket 143 217 334 408 Wellbore Technologies 38 263 117 484 Completion & Production Solutions 78 157 157 294 Unallocated expenses and eliminations (213 ) (225 ) (440 ) (426 ) Total Operating Profit $ 438 $ 913 $ 1,008 $ 1,712 Operating Profit %: Rig Systems 20.3 % 21.1 % 18.9 % 20.6 % Rig Aftermarket 21.8 % 27.6 % 24.3 % 26.6 % Wellbore Technologies 4.0 % 18.2 % 5.5 % 17.8 % Completion & Production Solutions 8.9 % 13.9 % 8.6 % 13.8 % Total Operating Profit % 11.2 % 17.4 % 11.5 % 16.9 % |
Other Items by Segment | Other items by segment are as follows (in millions): Three Months Ended Six Months Ended 2015 2014 2015 2014 Other items: Rig Systems $ 3 $ — $ 43 $ — Rig Aftermarket 2 — 10 — Wellbore Technologies 9 6 54 9 Completion & Production Solutions 3 1 32 7 Unallocated expenses and eliminations — 25 — 34 Total other items $ 17 $ 32 $ 139 $ 50 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Debt | Debt consists of (in millions): June 30, December 31, Senior Notes, interest at 6.125% payable semiannually, principal due on August 15, 2015 $ 151 $ 151 Senior Notes, interest at 1.35% payable semiannually, principal due on December 1, 2017 500 500 Senior Notes, interest at 2.6% payable semiannually, principal due on December 1, 2022 1,396 1,396 Senior Notes, interest at 3.95% payable semiannually, principal due on December 1, 2042 1,096 1,096 Commercial paper 1,140 — Other 22 23 Total debt 4,305 3,166 Less current portion 151 152 Long-term debt $ 4,154 $ 3,014 |
Tax (Tables)
Tax (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Difference Between Effective Tax Rate | The difference between the effective tax rate reflected in the provision for income taxes and the U.S. federal statutory rate of 35% was as follows (in millions): Three Months Ended Six Months Ended 2015 2014 2015 2014 Federal income tax at U.S. federal statutory rate $ 137 $ 312 $ 313 $ 588 Foreign income tax rate differential (41 ) (51 ) (87 ) (98 ) State income tax, net of federal benefit — 9 3 15 Nondeductible expenses 12 8 17 19 Tax benefit of manufacturing deduction — (10 ) (10 ) (17 ) Foreign dividends, net of foreign tax credits 8 12 15 21 Tax impact of foreign exchange (19 ) 6 (18 ) (2 ) Change in tax reserves — — 69 — Other 8 (2 ) (8 ) (3 ) Provision for income taxes $ 105 $ 284 $ 294 $ 523 |
Derivative Financial Instrume32
Derivative Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Outstanding Foreign Currency Forward Contracts | The Company had the following outstanding foreign currency forward contracts that were entered into to hedge nonfunctional currency cash flows from forecasted revenues and expenses (in millions): Currency Denomination Foreign Currency June 30, 2015 December 31, Norwegian Krone NOK 11,732 NOK 10,781 Euro € 242 € 462 U.S. Dollar $ 177 $ 231 Danish Krone DKK 105 DKK 227 British Pound Sterling £ 37 £ 80 Singapore Dollar SGD 24 SGD 44 Canadian Dollar CAD 8 CAD 14 The Company had the following outstanding foreign currency forward contracts that hedge the fair value of nonfunctional currency monetary accounts (in millions): Currency Denomination Foreign Currency June 30, 2015 December 31, Norwegian Krone NOK 3,015 NOK 4,052 Russian Ruble RUB 1,695 RUB — U.S. Dollar $ 1,440 $ 1,092 Euro € 434 € 401 Danish Krone DKK 218 DKK 322 British Pound Sterling £ 13 £ 19 Canadian Dollar CAD 7 CAD 4 Singapore Dollar SGD 2 SGD 4 Swedish Krone SEK 1 SEK 3 Mexican Peso MXN — MXN 118 Brazilian Real BRL — BRL 57 |
Derivative Instruments and their Balance Sheet Classifications | The Company has the following gross fair values of its derivative instruments and their balance sheet classifications: Asset Derivatives Liability Derivatives Fair Value Fair Value Balance Sheet Location June 30, December 31, Balance Sheet June 30, December 31, Derivatives designated as hedging instruments under ASC Topic 815 Foreign exchange contracts Prepaid and other current assets $ 23 $ 18 Accrued liabilities $ 193 $ 204 Foreign exchange contracts Other Assets 8 8 Other Liabilities 50 102 Total derivatives designated as hedging instruments under ASC Topic 815 $ 31 $ 26 $ 243 $ 306 Derivatives not designated as hedging instruments under ASC Topic 815 Foreign exchange contracts Prepaid and other current assets $ 23 $ 27 Accrued liabilities $ 97 $ 93 Foreign exchange contracts Other Assets — — Other Liabilities 1 — Total derivatives not designated as hedging instruments under ASC Topic 815 $ 23 $ 27 $ 98 $ 93 Total derivatives $ 54 $ 53 $ 341 $ 399 |
Effect of Derivative Instruments on Consolidated Statements of Income | The Effect of Derivative Instruments on the Consolidated Statements of Income ($ in millions) Derivatives in ASC Topic 815 Cash Flow Amount of Gain Recognized in OCI Location of Gain Amount of Gain Accumulated OCI Location of Gain (Loss) Portion and Amount Excluded from Effectiveness Testing) Amount of Gain Six Months Ended June 30, Six Months Ended Six Months Ended 2015 2014 2015 2014 2015 2014 Revenue 1 21 Cost of revenue (22 ) 1 Foreign exchange contracts (105 ) 13 Cost of revenue (138 ) 1 Other income (expense), net (1 ) 19 Total (105 ) 13 (137 ) 22 (23 ) 20 Derivatives Not Designated as Hedging Instruments under Location of Gain (Loss) Amount of Gain (Loss) Six Months Ended June 30, 2015 2014 Foreign exchange contracts Other income (expense), net (55 ) 4 Total (55 ) 4 (a) The Company expects that $(230) million of the Accumulated Other Comprehensive Income (Loss) will be reclassified into earnings within the next twelve months with an offset by gains from the underlying transactions resulting in no impact to earnings or cash flow. (b) The amount of gain (loss) recognized in income represents $(22) million and $1 million related to the ineffective portion of the hedging relationships for each of the six months ended June 30, 2015 and 2014, respectively, and $(1) million and $19 million related to the amount excluded from the assessment of the hedge effectiveness for the six months ended June 30, 2015 and 2014, respectively. |
Net Income Attributable to Co33
Net Income Attributable to Company Per Share (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Earnings Per Share [Abstract] | |
Computation of Weighted Average Basic and Diluted Shares Outstanding | The following table sets forth the computation of weighted average basic and diluted shares outstanding (in millions, except per share data): Three Months Ended Six Months Ended 2015 2014 2015 2014 Numerator: Income from continuing operations $ 289 $ 608 $ 599 $ 1,156 Income from discontinued operations $ — $ 11 $ — $ 52 Net income attributable to Company $ 289 $ 619 $ 599 $ 1,208 Denominator: Basic—weighted average common shares outstanding 387 428 397 428 Dilutive effect of employee stock options and other unvested stock awards 1 2 1 2 Diluted outstanding shares 388 430 398 430 Per share data: Basic: Income from continuing operations $ 0.75 $ 1.42 $ 1.51 $ 2.70 Income from discontinued operations $ — $ 0.03 $ — $ 0.12 Net income attributable to Company $ 0.75 $ 1.45 $ 1.51 $ 2.82 Diluted: Income from continuing operations $ 0.74 $ 1.42 $ 1.51 $ 2.69 Income from discontinued operations $ — $ 0.02 $ — $ 0.12 Net income attributable to Company $ 0.74 $ 1.44 $ 1.51 $ 2.81 Cash dividends per share $ 0.46 $ 0.46 $ 0.92 $ 0.72 |
Spin-off of Distribution Busi34
Spin-off of Distribution Business - Additional Information (Detail) - Now Inc [Member] $ in Millions | May. 22, 2014 | Jun. 30, 2014USD ($) | Jun. 30, 2014USD ($) |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Ratio of common stock sharing | 4 | ||
Sales prior to the spin-off | $ 91 | $ 231 | |
Purchases prior to the spin-off | $ 32 | $ 82 |
Spin-off of Distribution Busi35
Spin-off of Distribution Business - Schedule of Selected Financial Information Reported as Discontinued Operations (Detail) - Jun. 30, 2014 - USD ($) $ in Millions | Total | Total |
Reorganizations [Abstract] | ||
Revenue from discontinued operations | $ 624 | $ 1,701 |
Income from discontinued operations before income taxes | 21 | 83 |
Income tax expense | 10 | 31 |
Income from discontinued operations | $ 11 | $ 52 |
Inventories, net - Inventories
Inventories, net - Inventories (Detail) - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 |
Inventory Disclosure [Abstract] | ||
Raw materials and supplies | $ 1,227 | $ 1,255 |
Work in process | 982 | 1,027 |
Finished goods and purchased products | 3,185 | 2,999 |
Total | $ 5,394 | $ 5,281 |
Accrued Liabilities - Accrued L
Accrued Liabilities - Accrued Liabilities (Detail) - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 |
Payables and Accruals [Abstract] | ||
Accrued vendor costs | $ 880 | $ 815 |
Customer prepayments and billings | 566 | 703 |
Compensation | 331 | 662 |
Fair value of derivative financial instruments | 290 | 297 |
Warranty | 261 | 272 |
Taxes (non-income) | 158 | 211 |
Insurance | 115 | 126 |
Accrued commissions | 87 | 97 |
Interest | 11 | 11 |
Other | 329 | 324 |
Total | $ 3,028 | $ 3,518 |
Accrued Liabilities - Changes i
Accrued Liabilities - Changes in Carrying Amount of Service and Product Warranties (Detail) $ in Millions | 6 Months Ended |
Jun. 30, 2015USD ($) | |
Product Warranties Disclosures [Abstract] | |
Beginning Balance | $ 272 |
Net provisions for warranties issued during the year | 39 |
Amounts incurred | (48) |
Currency translation adjustments and other | (2) |
Ending Balance | $ 261 |
Costs and Estimated Earnings 39
Costs and Estimated Earnings on Uncompleted Contracts - Costs and Estimated Earnings on Uncompleted Contracts (Detail) - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 |
Contractors [Abstract] | ||
Costs incurred on uncompleted contracts | $ 10,991 | $ 10,442 |
Estimated earnings | 4,910 | 4,699 |
Costs and estimated earnings on uncompleted contracts, Gross | 15,901 | 15,141 |
Less: Billings to date | 15,360 | 15,038 |
Total net estimate billing on uncompleted contracts | 541 | 103 |
Costs and estimated earnings in excess of billings on uncompleted contracts | 1,810 | 1,878 |
Billings in excess of costs and estimated earnings on uncompleted contracts | (1,269) | (1,775) |
Total net estimate billing on uncompleted contracts | $ 541 | $ 103 |
Accumulated Other Comprehensi40
Accumulated Other Comprehensive Income (Loss) - Components of Accumulated Other Comprehensive Income (Loss) (Detail) $ in Millions | 6 Months Ended |
Jun. 30, 2015USD ($) | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Accumulated other comprehensive income (loss), Beginning balance | $ (834) |
Accumulated other comprehensive income (loss) before reclassifications | (392) |
Amounts reclassified from accumulated other comprehensive income (loss) | 107 |
Accumulated other comprehensive income (loss), Ending balance | (1,119) |
Currency Translation Adjustments [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Accumulated other comprehensive income (loss), Beginning balance | (515) |
Accumulated other comprehensive income (loss) before reclassifications | (311) |
Accumulated other comprehensive income (loss), Ending balance | (826) |
Derivative Financial Instruments, Net of Tax [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Accumulated other comprehensive income (loss), Beginning balance | (228) |
Accumulated other comprehensive income (loss) before reclassifications | (81) |
Amounts reclassified from accumulated other comprehensive income (loss) | 107 |
Accumulated other comprehensive income (loss), Ending balance | (202) |
Defined Benefit Plans, Net of Tax [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Accumulated other comprehensive income (loss), Beginning balance | (91) |
Accumulated other comprehensive income (loss) before reclassifications | 0 |
Amounts reclassified from accumulated other comprehensive income (loss) | 0 |
Accumulated other comprehensive income (loss), Ending balance | $ (91) |
Accumulated Other Comprehensi41
Accumulated Other Comprehensive Income (Loss) - Components of Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Currency Translation Adjustments | $ 0 | $ 0 | $ 0 | $ 0 |
Derivative Financial Instruments | 61 | (10) | 107 | (17) |
Defined Benefit Plans | 0 | 0 | 0 | 0 |
Total | 61 | (10) | 107 | (17) |
Tax Effect [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Currency Translation Adjustments | 0 | 0 | 0 | 0 |
Derivative Financial Instruments | (26) | 2 | (44) | 5 |
Defined Benefit Plans | 0 | 0 | 0 | 0 |
Total | (26) | 2 | (44) | 5 |
Revenue [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Currency Translation Adjustments | 0 | 0 | 0 | 0 |
Derivative Financial Instruments | (66) | (8) | (1) | (21) |
Defined Benefit Plans | 0 | 0 | 0 | 0 |
Total | (66) | (8) | (1) | (21) |
Cost of Revenue [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Currency Translation Adjustments | 0 | 0 | 0 | 0 |
Derivative Financial Instruments | 153 | (4) | 152 | (1) |
Defined Benefit Plans | 0 | 0 | 0 | 0 |
Total | $ 153 | $ (4) | $ 152 | $ (1) |
Accumulated Other Comprehensi42
Accumulated Other Comprehensive Income (Loss) - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Statement of Comprehensive Income [Abstract] | ||||
Net increase to other comprehensive income or loss upon the translation | $ 107 | $ 114 | $ (311) | $ 63 |
Changes in derivative financial instruments, net of tax | 92 | (25) | 26 | (11) |
Changes in derivative financial instruments, tax | $ 34 | $ 10 | $ 13 | $ 4 |
Business Segments - Business Se
Business Segments - Business Segments (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Segment Reporting Information [Line Items] | ||||
Total Revenue | $ 3,909 | $ 5,255 | $ 8,729 | $ 10,144 |
Total Operating Profit | $ 438 | $ 913 | $ 1,008 | $ 1,712 |
Percentage as of operating profit to revenue | 11.20% | 17.40% | 11.50% | 16.90% |
Operating Segments [Member] | Rig Systems [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total Revenue | $ 1,930 | $ 2,372 | $ 4,453 | $ 4,628 |
Total Operating Profit | $ 392 | $ 501 | $ 840 | $ 952 |
Percentage as of operating profit to revenue | 20.30% | 21.10% | 18.90% | 20.60% |
Operating Segments [Member] | Rig Aftermarket [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total Revenue | $ 657 | $ 785 | $ 1,376 | $ 1,535 |
Total Operating Profit | $ 143 | $ 217 | $ 334 | $ 408 |
Percentage as of operating profit to revenue | 21.80% | 27.60% | 24.30% | 26.60% |
Operating Segments [Member] | Wellbore Technologies [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total Revenue | $ 956 | $ 1,446 | $ 2,127 | $ 2,724 |
Total Operating Profit | $ 38 | $ 263 | $ 117 | $ 484 |
Percentage as of operating profit to revenue | 4.00% | 18.20% | 5.50% | 17.80% |
Operating Segments [Member] | Completion & Production Solutions [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total Revenue | $ 873 | $ 1,127 | $ 1,821 | $ 2,129 |
Total Operating Profit | $ 78 | $ 157 | $ 157 | $ 294 |
Percentage as of operating profit to revenue | 8.90% | 13.90% | 8.60% | 13.80% |
Unallocated Expenses and Eliminations [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total Revenue | $ (507) | $ (475) | $ (1,048) | $ (872) |
Total Operating Profit | $ (213) | $ (225) | $ (440) | $ (426) |
Business Segments - Other Items
Business Segments - Other Items by Segment (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Segment Reporting Information [Line Items] | ||||
Total other items | $ 17 | $ 32 | $ 139 | $ 50 |
Operating Segments [Member] | Rig Systems [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total other items | 3 | 43 | ||
Operating Segments [Member] | Rig Aftermarket [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total other items | 2 | 10 | ||
Operating Segments [Member] | Wellbore Technologies [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total other items | 9 | 6 | 54 | 9 |
Operating Segments [Member] | Completion & Production Solutions [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total other items | $ 3 | 1 | $ 32 | 7 |
Unallocated Expenses and Eliminations [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total other items | $ 25 | $ 34 |
Debt - Debt (Detail)
Debt - Debt (Detail) - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 |
Debt Instrument [Line Items] | ||
Commercial paper | $ 1,140 | |
Other | 22 | $ 23 |
Total debt | 4,305 | 3,166 |
Less current portion | 151 | 152 |
Long-term debt | 4,154 | 3,014 |
Senior Notes, Interest at 6.125% Payable Semiannually, Principal Due on August 15, 2015 [Member] | ||
Debt Instrument [Line Items] | ||
Senior Notes | 151 | 151 |
Senior Notes, Interest at 1.35% Payable Semiannually, Principal Due on December 1, 2017 [Member] | ||
Debt Instrument [Line Items] | ||
Senior Notes | 500 | 500 |
Senior Notes, Interest at 2.6% Payable Semiannually, Principal Due on December 1, 2022 [Member] | ||
Debt Instrument [Line Items] | ||
Senior Notes | 1,396 | 1,396 |
Senior Notes, Interest at 3.95% Payable Semiannually, Principal Due on December 1, 2042 [Member] | ||
Debt Instrument [Line Items] | ||
Senior Notes | $ 1,096 | $ 1,096 |
Debt - Debt (Parenthetical) (De
Debt - Debt (Parenthetical) (Detail) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Senior Notes, Interest at 6.125% Payable Semiannually, Principal Due on August 15, 2015 [Member] | ||
Debt Instrument [Line Items] | ||
Senior notes interest rate | 6.125% | 6.125% |
Senior note due date | Aug. 15, 2015 | Aug. 15, 2015 |
Senior Notes, Interest at 1.35% Payable Semiannually, Principal Due on December 1, 2017 [Member] | ||
Debt Instrument [Line Items] | ||
Senior notes interest rate | 1.35% | 1.35% |
Senior note due date | Dec. 1, 2017 | Dec. 1, 2017 |
Senior Notes, Interest at 2.6% Payable Semiannually, Principal Due on December 1, 2022 [Member] | ||
Debt Instrument [Line Items] | ||
Senior notes interest rate | 2.60% | 2.60% |
Senior note due date | Dec. 1, 2022 | Dec. 1, 2022 |
Senior Notes, Interest at 3.95% Payable Semiannually, Principal Due on December 1, 2042 [Member] | ||
Debt Instrument [Line Items] | ||
Senior notes interest rate | 3.95% | 3.95% |
Senior note due date | Dec. 1, 2042 | Dec. 1, 2042 |
Debt - Additional Information (
Debt - Additional Information (Detail) - USD ($) | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2015 | Dec. 31, 2014 | |
Debt Instrument [Line Items] | |||
Borrowings under commercial paper | $ 1,140,000,000 | $ 1,140,000,000 | |
Letter of credit issued under credit facility | 201,000,000 | 201,000,000 | |
Funds available under revolving credit facility | 3,159,000,000 | $ 3,159,000,000 | |
Interest rate under multi currency facility | LIBOR, NIBOR or EURIBOR plus 0.875% | ||
Outstanding letters of credit under various bilateral committed letter of credit facilities | 3,092,000,000 | $ 3,092,000,000 | |
Fair Value of Unsecured Senior Note | 2,939,000,000 | 2,939,000,000 | $ 2,974,000,000 |
Carrying Value of Unsecured Senior Notes | $ 4,305,000,000 | $ 4,305,000,000 | 3,166,000,000 |
Commercial Paper Program [Member] | |||
Debt Instrument [Line Items] | |||
Variable rate | 0.875% | ||
Variable rate basis | LIBOR, NIBOR or EURIBOR plus | ||
Five-year Unsecured Revolving Credit Facility [Member] | |||
Debt Instrument [Line Items] | |||
Unsecured revolving credit facility, borrowing capacity | $ 4,500,000,000 | $ 4,500,000,000 | |
Unsecured revolving credit facility, increased amount | 1,000,000,000 | ||
Borrowings under commercial paper | $ 1,140,000,000 | 1,140,000,000 | |
Unsecured Revolving Credit Facility [Member] | |||
Debt Instrument [Line Items] | |||
Revolving credit facility, Period | 5 years | ||
Unsecured Senior Notes [Member] | |||
Debt Instrument [Line Items] | |||
Carrying Value of Unsecured Senior Notes | $ 3,143,000,000 | $ 3,143,000,000 | $ 3,143,000,000 |
Tax - Additional Information (D
Tax - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Mar. 31, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Tax Credit Carryforward [Line Items] | |||||
Effective tax rate | 26.90% | 31.80% | 32.90% | 31.10% | |
Effective tax rate excluding discrete items | 29.90% | 29.40% | |||
U.S. federal statutory rate | 35.00% | ||||
Unrecognized tax benefit | $ 125 | $ 125 | |||
Reserve of uncertain tax position identified in foreign jurisdiction | $ 69 | ||||
Uncertain tax position settled | 60 | ||||
Uncertain tax position remaining amount | 9 | 9 | |||
Realized [Member] | |||||
Tax Credit Carryforward [Line Items] | |||||
Unrecognized tax benefit | $ 52 | $ 52 |
Tax - Difference Between Effect
Tax - Difference Between Effective Tax Rate (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Income Tax Disclosure [Abstract] | ||||
Federal income tax at U.S. federal statutory rate | $ 137 | $ 312 | $ 313 | $ 588 |
Foreign income tax rate differential | (41) | (51) | (87) | (98) |
State income tax, net of federal benefit | 9 | 3 | 15 | |
Nondeductible expenses | 12 | 8 | 17 | 19 |
Tax benefit of manufacturing deduction | (10) | (10) | (17) | |
Foreign dividends, net of foreign tax credits | 8 | 12 | 15 | 21 |
Tax impact of foreign exchange | (19) | 6 | (18) | (2) |
Change in tax reserves | 69 | |||
Other | 8 | (2) | (8) | (3) |
Provision for income taxes | $ 105 | $ 284 | $ 294 | $ 523 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions | May. 13, 2015 | Feb. 25, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Earlier authorized shares under stock based compensation | 39,500,000 | |||||
Remaining shares available for future grants under the Plan | 5,688,421 | 5,688,421 | ||||
Description of performance goal | Performance against the ROC goal is determined by comparing the performance of the Company's actual ROC performance average for each of the three years of the performance period against the ROC goal set by the Company's Compensation Committee. | |||||
Stock-based compensation expense | $ 22 | $ 27 | $ 62 | $ 51 | ||
Income tax benefit recognized | $ 6 | $ 9 | $ 13 | $ 16 | ||
Restricted Stock Awards [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Restricted stock granted | 26,992 | |||||
Restricted stock granted fair value | $ 51.88 | |||||
Period of option vested over grant date | The stock options vest over a three-year period from the grant date while the restricted stock and restricted stock units vest on the third anniversary of the date of grant. | |||||
Performance based restricted stock awards vested, number of years | 3 years | |||||
TSR Award [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Performance based restricted stock awards granted in percent | 50.00% | |||||
ROC Award [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Performance based restricted stock awards granted in percent | 50.00% | |||||
Restricted Stock and Restricted Stock Units [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Restricted stock granted | 653,750 | |||||
Restricted stock granted fair value | $ 54.74 | |||||
Stock Options [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock option granted | 5,746,153 | |||||
Stock option granted fair value | $ 15.41 | |||||
Stock Options [Member] | Restricted Stock Awards [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock option granted, exercise price | $ 54.74 | |||||
Performance-base restricted stock [Member] | Minimum [Member] | Senior Management Employees [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Restricted stock granted | 0 | |||||
Performance-base restricted stock [Member] | Maximum [Member] | Senior Management Employees [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Restricted stock granted | 396,666 | |||||
Voluntary Early Retirement Plan [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock-based compensation expense | $ 18 |
Derivative Financial Instrume51
Derivative Financial Instruments - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2015 | Dec. 31, 2014 | |
Derivatives, Fair Value [Line Items] | |||
Minimum derivative financial instrument's term (months) | 2 months | ||
Maximum derivative financial instrument's term (months) | 24 months | ||
Derivative Assets | $ 54 | $ 54 | $ 53 |
Derivative Liabilities | 341 | 341 | $ 399 |
Fair value of the Company's foreign currency forward contracts | 287 | 287 | |
Loss recognized on discontinuation of cash flow hedges | 20 | ||
Pre-tax losses recorded in accumulated other comprehensive income | 276 | ||
Fair Value, Inputs, Level 2 [Member] | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Assets | 54 | 54 | |
Derivative Liabilities | $ 341 | $ 341 |
Derivative Financial Instrume52
Derivative Financial Instruments - Outstanding Foreign Currency Forward Contracts (Detail) - Forward Contracts [Member] € in Millions, £ in Millions, SGD in Millions, SEK in Millions, RUB in Millions, NOK in Millions, MXN in Millions, DKK in Millions, CAD in Millions, BRL in Millions, $ in Millions | Jun. 30, 2015USD ($) | Jun. 30, 2015RUB | Jun. 30, 2015SEK | Jun. 30, 2015SGD | Jun. 30, 2015CAD | Jun. 30, 2015DKK | Jun. 30, 2015EUR (€) | Jun. 30, 2015GBP (£) | Jun. 30, 2015NOK | Dec. 31, 2014USD ($) | Dec. 31, 2014SEK | Dec. 31, 2014SGD | Dec. 31, 2014CAD | Dec. 31, 2014DKK | Dec. 31, 2014EUR (€) | Dec. 31, 2014GBP (£) | Dec. 31, 2014NOK | Dec. 31, 2014BRL | Dec. 31, 2014MXN |
Derivative [Line Items] | |||||||||||||||||||
Foreign currency, Cash flow hedging | $ 177 | SGD 24 | CAD 8 | DKK 105 | € 242 | £ 37 | NOK 11,732 | $ 231 | SGD 44 | CAD 14 | DKK 227 | € 462 | £ 80 | NOK 10,781 | |||||
Foreign currency, Non-designated hedging | $ 1,440 | RUB 1,695 | SEK 1 | SGD 2 | CAD 7 | DKK 218 | € 434 | £ 13 | NOK 3,015 | $ 1,092 | SEK 3 | SGD 4 | CAD 4 | DKK 322 | € 401 | £ 19 | NOK 4,052 | BRL 57 | MXN 118 |
Derivative Financial Instrume53
Derivative Financial Instruments - Derivative Instruments and their Balance Sheet Classifications (Detail) - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 |
Derivatives, Fair Value [Line Items] | ||
Derivative Assets | $ 54 | $ 53 |
Derivative Liabilities | 341 | 399 |
Designated as Hedging Instruments [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Assets | 31 | 26 |
Derivative Liabilities | 243 | 306 |
Not Designated as Hedging Instruments [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Assets | 23 | 27 |
Derivative Liabilities | 98 | 93 |
Foreign Exchange Contracts [Member] | Prepaid and Other Current Assets [Member] | Designated as Hedging Instruments [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Assets | 23 | 18 |
Foreign Exchange Contracts [Member] | Prepaid and Other Current Assets [Member] | Designated as Hedging Instruments [Member] | Accrued liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liabilities | 193 | 204 |
Foreign Exchange Contracts [Member] | Prepaid and Other Current Assets [Member] | Not Designated as Hedging Instruments [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Assets | 23 | 27 |
Foreign Exchange Contracts [Member] | Prepaid and Other Current Assets [Member] | Not Designated as Hedging Instruments [Member] | Accrued liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liabilities | 97 | 93 |
Foreign Exchange Contracts [Member] | Other Assets [Member] | Designated as Hedging Instruments [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Assets | 8 | 8 |
Foreign Exchange Contracts [Member] | Other Liabilities [Member] | Designated as Hedging Instruments [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liabilities | 50 | $ 102 |
Foreign Exchange Contracts [Member] | Other Liabilities [Member] | Not Designated as Hedging Instruments [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liabilities | $ 1 |
Derivative Financial Instrume54
Derivative Financial Instruments - Effect of Derivative Instruments on Consolidated Statements of Income (Detail) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing) | $ (1) | $ 19 |
Not Designated as Hedging Instruments [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Recognized in Income on Derivative | (55) | 4 |
Cash Flow Hedging [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion) | (105) | 13 |
Foreign Exchange Contracts [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | (137) | 22 |
Amount of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing) | (23) | 20 |
Foreign Exchange Contracts [Member] | Cash Flow Hedging [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion) | (105) | 13 |
Foreign Exchange Contracts [Member] | Other Income (Expense), Net [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing) | (1) | 19 |
Foreign Exchange Contracts [Member] | Other Income (Expense), Net [Member] | Not Designated as Hedging Instruments [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Recognized in Income on Derivative | (55) | 4 |
Foreign Exchange Contracts [Member] | Cost of Revenue [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | (138) | 1 |
Amount of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing) | (22) | 1 |
Foreign Exchange Contracts [Member] | Revenue [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | $ 1 | $ 21 |
Derivative Financial Instrume55
Derivative Financial Instruments - Effect of Derivative Instruments on Consolidated Statements of Income (Parenthetical) (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Accumulated other comprehensive income (loss), reclassified | $ (61) | $ 10 | $ (107) | $ 17 |
Amount of gain (loss) recognized in income on derivative (ineffective portion) | (22) | 1 | ||
Amount of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing) | (1) | $ 19 | ||
Scenario, Forecast [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Accumulated other comprehensive income (loss), reclassified | $ (230) |
Net Income Attributable to Co56
Net Income Attributable to Company Per Share - Computation of Weighted Average Basic and Diluted Shares Outstanding (Detail) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Numerator: | ||||
Income from continuing operations | $ 289 | $ 608 | $ 599 | $ 1,156 |
Income from discontinued operations | 11 | 52 | ||
Net income attributable to Company | $ 289 | $ 619 | $ 599 | $ 1,208 |
Denominator: | ||||
Basic-weighted average common shares outstanding | 387 | 428 | 397 | 428 |
Dilutive effect of employee stock options and other unvested stock awards | 1 | 2 | 1 | 2 |
Diluted outstanding shares | 388 | 430 | 398 | 430 |
Basic: | ||||
Income from continuing operations | $ 0.75 | $ 1.42 | $ 1.51 | $ 2.70 |
Income from discontinued operations | 0.03 | 0.12 | ||
Net income attributable to Company | 0.75 | 1.45 | 1.51 | 2.82 |
Diluted: | ||||
Income from continuing operations | 0.74 | 1.42 | 1.51 | 2.69 |
Income from discontinued operations | 0.02 | 0.12 | ||
Net income attributable to Company | 0.74 | 1.44 | 1.51 | 2.81 |
Cash dividends per share | $ 0.46 | $ 0.46 | $ 0.92 | $ 0.72 |
Net Income Attributable to Co57
Net Income Attributable to Company Per Share - Additional Information (Detail) - shares shares in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Earnings Per Share [Abstract] | ||||
Anti-dilutive stock options outstanding | 14 | 9 | 14 | 9 |
Cash Dividends - Additional Inf
Cash Dividends - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | May. 13, 2015 | |
Statement of Partners' Capital [Abstract] | |||||
Dividends payable, amount per share | $ 0.46 | ||||
Cash dividends paid | $ 178 | $ 198 | $ 363 | $ 309 |
Share Repurchase Program - Addi
Share Repurchase Program - Additional Information (Detail) - Jun. 30, 2015 - USD ($) $ / shares in Units, shares in Millions | Total | Total |
Equity [Abstract] | ||
Share repurchase program, authorized amount | $ 3,000,000,000 | $ 3,000,000,000 |
Share repurchase program, duration | 36 months | |
Common stock repurchased (Treasury stock) | 8.6 | 33.1 |
Common stock repurchased, average price per share | $ 51.73 | $ 53.66 |
Common stock repurchased, aggregate amount | $ 447,000,000 | $ 1,777,000,000 |