Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Oct. 20, 2017 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
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 | 380,032,211 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 1,722 | $ 1,408 |
Receivables, net | 2,060 | 2,083 |
Inventories, net | 3,219 | 3,325 |
Costs in excess of billings | 518 | 665 |
Prepaid and other current assets | 306 | 395 |
Total current assets | 7,825 | 7,876 |
Property, plant and equipment, net | 3,031 | 3,150 |
Deferred income taxes | 71 | 86 |
Goodwill | 6,165 | 6,067 |
Intangibles, net | 3,377 | 3,530 |
Investment in unconsolidated affiliates | 309 | 307 |
Other assets | 156 | 124 |
Total assets | 20,934 | 21,140 |
Current liabilities: | ||
Accounts payable | 447 | 414 |
Accrued liabilities | 1,544 | 1,568 |
Billings in excess of costs | 288 | 440 |
Current portion of long-term debt and short-term borrowings | 506 | 506 |
Accrued income taxes | 57 | 119 |
Total current liabilities | 2,842 | 3,047 |
Long-term debt | 2,707 | 2,708 |
Deferred income taxes | 925 | 1,064 |
Other liabilities | 309 | 318 |
Total liabilities | 6,783 | 7,137 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock-par value $.01; 1 billion shares authorized; 380,053,721 and 378,637,403 shares issued and outstanding at September 30, 2017 and December 31, 2016 | 4 | 4 |
Additional paid-in capital | 8,190 | 8,103 |
Accumulated other comprehensive loss | (1,109) | (1,452) |
Retained earnings | 6,999 | 7,285 |
Total Company stockholders' equity | 14,084 | 13,940 |
Noncontrolling interests | 67 | 63 |
Total stockholders' equity | 14,151 | 14,003 |
Total liabilities and stockholders' equity | $ 20,934 | $ 21,140 |
Consolidated Balance Sheets (U3
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
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 | 380,053,721 | 378,637,403 |
Common stock, shares outstanding | 380,053,721 | 378,637,403 |
Consolidated Statements of Loss
Consolidated Statements of Loss (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Statement [Abstract] | ||||
Revenue | $ 1,835 | $ 1,646 | $ 5,335 | $ 5,559 |
Cost of revenue | 1,550 | 1,567 | 4,610 | 5,201 |
Gross profit | 285 | 79 | 725 | 358 |
Selling, general and administrative | 292 | 293 | 891 | 1,031 |
Goodwill impairment | 972 | 972 | ||
Operating loss | (7) | (1,186) | (166) | (1,645) |
Interest and financial costs | (26) | (25) | (77) | (80) |
Interest income | 11 | 3 | 19 | 11 |
Equity loss in unconsolidated affiliates | (2) | (6) | (4) | (19) |
Other income (expense), net | (6) | (30) | (19) | (85) |
Loss before income taxes | (30) | (1,244) | (247) | (1,818) |
Provision for income taxes | (3) | 120 | (26) | (119) |
Net loss | (27) | (1,364) | (221) | (1,699) |
Net income (loss) attributable to noncontrolling interests | (1) | (2) | 2 | (1) |
Net loss attributable to Company | $ (26) | $ (1,362) | $ (223) | $ (1,698) |
Net loss attributable to Company per share: | ||||
Basic | $ (0.07) | $ (3.62) | $ (0.59) | $ (4.53) |
Diluted | (0.07) | (3.62) | (0.59) | (4.53) |
Cash dividends per share | $ 0.05 | $ 0.05 | $ 0.15 | $ 0.56 |
Weighted average shares outstanding: | ||||
Basic | 377 | 376 | 377 | 375 |
Diluted | 377 | 376 | 377 | 375 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (27) | $ (1,364) | $ (221) | $ (1,699) |
Currency translation adjustments | 124 | (18) | 290 | 79 |
Changes in derivative financial instruments, net of tax | 25 | 60 | 53 | 191 |
Comprehensive income (loss) | 122 | (1,322) | 122 | (1,429) |
Comprehensive income (loss) attributable to noncontrolling interest | (1) | (2) | 2 | (1) |
Comprehensive income (loss) attributable to Company | $ 123 | $ (1,320) | $ 120 | $ (1,428) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities: | ||
Net loss | $ (221) | $ (1,699) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 523 | 529 |
Deferred income taxes | 16 | (216) |
Equity loss in unconsolidated affiliates | 4 | 19 |
Goodwill impairment | 972 | |
Other, net | 141 | 287 |
Change in operating assets and liabilities, net of acquisitions: | ||
Receivables | 13 | 1,089 |
Inventories | 103 | 430 |
Costs in excess of billings | 147 | 485 |
Prepaid and other current assets | 95 | 31 |
Accounts payable | 36 | (230) |
Accrued liabilities | (50) | (664) |
Billings in excess of costs | (152) | (235) |
Income taxes payable | (72) | (229) |
Other assets/liabilities, net | (72) | 238 |
Net cash provided by operating activities | 511 | 807 |
Cash flows from investing activities: | ||
Purchases of property, plant and equipment | (127) | (221) |
Business acquisitions, net of cash acquired | (85) | (60) |
Other | 28 | 4 |
Net cash used in investing activities | (184) | (277) |
Cash flows from financing activities: | ||
Borrowings against lines of credit and other debt | 3,972 | |
Payments against lines of credit and other debt | (4) | (4,869) |
Cash dividends paid | (57) | (211) |
Activity under stock incentive plans | 11 | 2 |
Other | (2) | (10) |
Net cash used in financing activities | (52) | (1,116) |
Effect of exchange rates on cash | 39 | 16 |
Increase (decrease) in cash and cash equivalents | 314 | (570) |
Cash and cash equivalents, beginning of period | 1,408 | 2,080 |
Cash and cash equivalents, end of period | 1,722 | 1,510 |
Cash payments during the period for: | ||
Interest | 51 | 56 |
Income taxes | $ 130 | $ 173 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2017 | |
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 2016 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 nine months ended September 30, 2017 are not necessarily indicative of the results to be expected for the full year. 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 7 for the fair value of long-term debt and Note 10 for the fair value of derivative financial instruments. |
Inventories, net
Inventories, net | 9 Months Ended |
Sep. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Inventories, net | 2. Inventories, net Inventories consist of (in millions): September 30, December 31, Raw materials and supplies $ 719 $ 961 Work in process 499 561 Finished goods and purchased products 2,001 1,803 Total $ 3,219 $ 3,325 |
Accrued Liabilities
Accrued Liabilities | 9 Months Ended |
Sep. 30, 2017 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities | 3. Accrued Liabilities Accrued liabilities consist of (in millions): September 30, December 31, Compensation $ 314 $ 181 Customer prepayments and billings 262 222 Vendor costs 202 235 Warranty 147 172 Taxes (non-income) 133 176 Insurance 77 103 Commissions 55 57 Fair value of derivative financial instruments 7 66 Interest 29 8 Other 318 348 Total $ 1,544 $ 1,568 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, 2016 $ 172 Net provisions for warranties issued during the year 27 Amounts incurred (60 ) Currency translation adjustments and other 8 Balance at September 30, 2017 $ 147 |
Costs and Estimated Earnings on
Costs and Estimated Earnings on Uncompleted Contracts | 9 Months Ended |
Sep. 30, 2017 | |
Text Block [Abstract] | |
Costs and Estimated Earnings on Uncompleted Contracts | 4. Costs and Estimated Earnings on Uncompleted Contracts Costs and estimated earnings on uncompleted contracts consist of (in millions): September 30, December 31, Costs incurred on uncompleted contracts $ 6,807 $ 8,132 Estimated earnings 3,242 3,869 10,049 12,001 Less: Billings to date 9,819 11,776 $ 230 $ 225 Costs and estimated earnings in excess of billings on uncompleted contracts $ 518 $ 665 Billings in excess of costs and estimated earnings on uncompleted contracts (288 ) (440 ) $ 230 $ 225 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | 5. 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, 2016 $ (1,376 ) $ (39 ) $ (37 ) $ (1,452 ) Accumulated other comprehensive income (loss) before reclassifications 290 50 — 340 Amounts reclassified from accumulated other comprehensive income (loss) — 3 — 3 Balance at September 30, 2017 $ (1,086 ) $ 14 $ (37 ) $ (1,109 ) The components of amounts reclassified from accumulated other comprehensive income (loss) are as follows (in millions): Three Months Ended September 30, 2017 2016 Currency Derivative Defined Total Currency Derivative Defined Total Revenue $ — $ (2 ) $ — $ (2 ) $ — $ — $ — $ — Cost of revenue — 4 — 4 — 48 — 48 Tax effect — (1 ) — (1 ) — (12 ) — (12 ) $ — $ 1 $ — $ 1 $ — $ 36 $ — $ 36 Nine Months Ended September 30, 2017 2016 Currency Derivative Defined Total Currency Derivative Defined Total Revenue $ — $ (6 ) $ — $ (6 ) $ — $ (3 ) $ — $ (3 ) Cost of revenue — 8 — 8 — 170 — 170 Tax effect — 1 — 1 — (47 ) — (47 ) $ — $ 3 $ — $ 3 $ — $ 120 $ — $ 120 The Company’s reporting currency is the U.S. dollar. For a majority of the Company’s international entities in which there is a substantial investment, the local currency is 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 September 30, 2017, a majority of these local currencies strengthened against the U.S. dollar resulting in net other comprehensive income of $124 million, upon the translation from local currencies to the U.S. dollar. For the nine months ended September 30, 2017, a majority of these local currencies strengthened against the U.S. dollar resulting in net other comprehensive income of $290 million, upon the translation from local currencies to the U.S. dollar. For the three months ended September 30, 2016, a majority of these local currencies weakened against the U.S. dollar resulting in net other comprehensive loss of $18 million upon the translation from local currencies to the U.S. dollar. For the nine months ended September 30, 2016, a majority of these local currencies strengthened against the U.S. dollar resulting in net other comprehensive income of $79 million, 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 $25 million (net of tax of $8 million) and $53 million (net of tax of $15 million) for the three and nine months ended September 30, 2017, respectively. The accumulated effect was other comprehensive income of $60 million (net of tax of $20 million) and $191 million (net of tax of $72 million) for the three and nine months ended September 30, 2016, respectively. |
Business Segments
Business Segments | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Business Segments | 6. Business Segments Operating results by segment are as follows (in millions): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Revenue: Rig Systems $ 330 $ 470 $ 1,069 $ 1,960 Rig Aftermarket 311 322 973 1,077 Wellbore Technologies 693 526 1,862 1,668 Completion & Production Solutions 682 543 1,982 1,639 Eliminations (181 ) (215 ) (551 ) (785 ) Total revenue $ 1,835 $ 1,646 $ 5,335 $ 5,559 Operating profit (loss): Rig Systems $ 11 $ (962 ) $ 13 $ (888 ) Rig Aftermarket 64 72 201 203 Wellbore Technologies — (94 ) (81 ) (331 ) Completion & Production Solutions 44 (61 ) 79 (132 ) Eliminations and corporate costs (126 ) (141 ) (378 ) (497 ) Total operating profit (loss) $ (7 ) $ (1,186 ) $ (166 ) $ (1,645 ) Operating profit (loss)%: Rig Systems 3.3 % (204.7 %) 1.2 % (45.3 %) Rig Aftermarket 20.6 % 22.4 % 20.7 % 18.8 % Wellbore Technologies 0.0 % (17.9 %) (4.4 %) (19.8 %) Completion & Production Solutions 6.5 % (11.2 %) 4.0 % (8.1 %) Total operating profit (loss) % (0.4 %) (72.1 %) (3.1 %) (29.6 %) 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. On July 1, 2017, the Company’s Wellbore Technologies segment reorganized three of its reporting units, moving various operations between them. The goodwill impairment analyses performed prior to and subsequent to the restructuring of the three reporting units, concluded that the calculated fair values of these reporting units were substantially in excess of their carrying value. The restructuring had no effect on Wellbore Technologies consolidated financial position and results of operations. Included in operating profit (loss) are other items primarily related to costs associated with severance, facility closures, goodwill impairment, and a Voluntary Early Retirement Plan (“VERP”) established by the Company during the first quarter of 2016. As of September 30, 2017, the Company had approximately $44 million accrued for the VERP postretirement medical benefits. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt | 7. Debt Debt consists of (in millions): September 30, December 31, $500 million in Senior Notes, interest at 1.35% payable semiannually, principal due on December 1, 2017 $ 500 $ 499 $1.4 billion in Senior Notes, interest at 2.60% payable semiannually, principal due on December 1, 2022 1,392 1,391 $1.1 billion in Senior Notes, interest at 3.95% payable semiannually, principal due on December 1, 2042 1,087 1,087 Other 234 237 Total debt 3,213 3,214 Less current portion 506 506 Long-term debt $ 2,707 $ 2,708 On June 27, 2017, the Company entered into a new $3.0 billion credit agreement evidencing a five-year unsecured revolving credit facility, which expires on June 27, 2022, with a syndicate of financial institutions. This new credit facility replaced the Company’s previous $4.5 billion revolving credit facility. The Company has the right to increase the aggregate commitments under this new agreement to an aggregate amount of up to $4.0 billion upon the consent of only those lenders holding any such increase. Interest under the new multicurrency facility is based upon LIBOR, NIBOR or CDOR plus 1.125% subject to a ratings-based grid or the U.S. prime rate. The new credit facility contains a financial covenant regarding maximum debt-to-capitalization ratio of 60%. As of September 30, 2017, the Company was in compliance with a debt-to-capitalization ratio of 18.5%. The Company has a commercial paper program under which borrowings are classified as long-term since the program is supported by the $3.0 billion, five-year credit facility. At September 30, 2017, there were no commercial paper borrowings, and there were no outstanding letters of credit issued under the credit facility, resulting in $3.0 billion of funds available under this credit facility. The Company had $731 million of outstanding letters of credit at September 30, 2017 that are under various bilateral letter of credit facilities. 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 September 30, 2017 and December 31, 2016, the fair value of the Company’s unsecured Senior Notes approximated $2,817 million and $2,669 million, respectively. At September 30, 2017 and December 31, 2016, the carrying value of the Company’s unsecured Senior Notes approximated $2,979 million and $2,977 million, respectively. |
Tax
Tax | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Tax | 8. Tax The effective tax rates for the three and nine months ended September 30, 2017 were 10.0% and 10.5%, respectively, compared to (9.6)% and 6.5% for the same periods in 2016. Market conditions continued to negatively impact our business in the third quarter of 2017. As a result of these conditions, we continue to establish valuation allowances on deferred tax assets for losses and tax credits generated in the current year, which, when applied to losses resulted in a lower effective tax rate than the U.S. statutory rate. For the three and nine months ended September 30, 2016, impairment of goodwill not deductible for tax purposes, lower tax rates on losses incurred in foreign jurisdictions, and the establishment of valuation allowances, when applied to losses resulted in a lower effective tax rate than the U.S. statutory rate. For the three and nine months ended September 30, 2016, the Company utilized the discrete-period method to compute its interim tax provision due to significant variations in the relationship between income tax expense and pre-tax accounting income or loss; consequently, the actual effective rate for the interim period was reported. For the three and nine months ended September 30, 2017, the Company returned to estimating and recording a full year effective tax rate. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | 9. 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 (“SARs”). The number of shares authorized under the Plan is 69.4 million. The Plan is subject to a fungible ratio concept, such that the issuance of stock options and SARs reduces the number of available shares under the Plan on a 1-for-1 basis, and the issuance of other awards reduces the number of available shares under the Plan on a 3-for-1 basis. At September 30, 2017, 21,026,617 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 SARs. On February 22, 2017, the Company granted 3,362,460 stock options with a fair value of $10.98 per share and an exercise price of $38.86 per share; 1,504,450 shares of restricted stock and restricted stock units with a fair value of $38.86 per share; and performance share awards to senior management employees with potential payouts varying from zero to 388,380 shares. The stock options vest over a three-year period from the grant date. The restricted stock and restricted stock units vest on the third anniversary of the grant date or in three equal annual installments commencing on the first anniversary of the grant date. The performance share awards can be earned based on performance against established goals over a three-year performance period. The performance share awards are based entirely on a TSR (total shareholder return) goal. 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. On May 17, 2017, the Company granted 36,701 restricted stock awards with a fair value of $33.38 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 $33 million and $85 million for the three and nine months ended September 30, 2017, respectively, and $28 million and $78 million for the three and nine months ended September 30, 2016, respectively. Included in stock-based compensation for the nine months ended September 30, 2016 is $5 million related to the Voluntary Early Retirement Plan established by the Company in the first quarter of 2016. The total income tax benefit recognized in the Consolidated Statements of Loss for all stock-based compensation arrangements under the Plan was $9 million and $18 million for the three and nine months ended September 30, 2017, respectively, and $5 million and $17 million for the three and nine months ended September 30, 2016, respectively. |
Derivative Financial Instrument
Derivative Financial Instruments | 9 Months Ended |
Sep. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | 10. 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 September 30, 2017, the Company has determined that the fair value of its derivative financial instruments representing assets of $42 million and liabilities of $10 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 September 30, 2017, the net fair value of the Company’s foreign currency forward contracts totaled a net asset of $32 million. At September 30, 2017, 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 (loss) 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 Loss during the current period. For the three and nine months ended September 30, 2017, the Company recognized a loss of $3 million and a gain of $10 million, respectively, 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 September 30, 2017, there were $19 million in pre-tax gains recorded in accumulated other comprehensive income (loss). 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 gains or 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 September 30, December 31, Norwegian Krone NOK 3,692 NOK 5,621 Japanese Yen JPY 1,071 JPY 1,462 U.S. Dollar USD 229 USD 321 Euro EUR 74 EUR 279 Danish Krone DKK 29 DKK 29 British Pound Sterling GBP 7 GBP 1 Singapore Dollar SGD 1 SGD 2 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 September 30, December 31, Russian Ruble RUB 2,645 RUB 1,893 Norwegian Krone NOK 1,766 NOK 538 U.S. Dollar USD 461 USD 457 South African Rand ZAR 150 ZAR 150 Euro EUR 101 EUR 272 Danish Krone DKK 38 DKK 49 Singapore Dollar SGD 2 SGD 7 British Pound Sterling GBP 2 GBP 3 Canadian Dollar CAD 1 CAD 1 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 September 30, December 31, Balance Sheet September 30, December 31, Derivatives designated as hedging instruments under ASC Topic 815 Foreign exchange contracts Prepaid and other $ 20 $ 24 Accrued liabilities $ 2 $ 37 Foreign exchange contracts Other Assets 14 6 Other liabilities 3 11 Total derivatives designated as hedging instruments under ASC Topic 815 $ 34 $ 30 $ 5 $ 48 Derivatives not designated as hedging instruments under ASC Topic 815 Foreign exchange contracts Prepaid and other $ 6 $ 32 Accrued liabilities $ 5 $ 29 Foreign exchange contracts Other Assets 2 — Other Liabilities — — Total derivatives not designated as hedging instruments under ASC Topic 815 $ 8 $ 32 $ 5 $ 29 Total derivatives $ 42 $ 62 $ 10 $ 77 The Effect of Derivative Instruments on the Consolidated Statements of Income ($ in millions) Derivatives in ASC Topic 815 Cash Flow Hedging Relationships Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion) (a) Location of Gain (Loss) (Effective Portion) Amount of Gain (Loss) Location of Gain (Loss) Testing) Amount of Gain (Loss) Nine Months Ended September 30, Nine Months Ended Nine Months Ended 2017 2016 2017 2016 2017 2016 Revenue 6 3 Cost of revenue 10 (19 ) Foreign exchange contracts 67 96 Cost of revenue (18 ) (151 ) Other income (expense), net 4 3 Total 67 96 (12 ) (148 ) 14 (16 ) Derivatives Not Designated as Location of Gain (Loss) Recognized Amount of Gain (Loss) Nine Months Ended September 30, 2017 2016 Foreign exchange contracts Other income (expense), net 65 — Total 65 — (a) The Company expects that $11 million of the accumulated other comprehensive income (loss) will be reclassified into earnings within the next twelve months with an offset by losses from the underlying transactions resulting in no impact to earnings or cash flow. (b) The amount of gain (loss) recognized in income represents $10 million and $(19) million related to the ineffective portion of the hedging relationships for the nine months ended September 30, 2017 and 2016, respectively, and $4 million and $3 million related to the amount excluded from the assessment of the hedge effectiveness for the nine months ended September 30, 2017 and 2016, respectively. |
Net Loss Attributable to Compan
Net Loss Attributable to Company Per Share | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Net Loss Attributable to Company Per Share | 11. Net Loss 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 Nine Months Ended 2017 2016 2017 2016 Numerator: Net loss attributable to Company $ (26 ) $ (1,362 ) $ (223 ) $ (1,698 ) Denominator: Basic—weighted average common shares outstanding 377 376 377 375 Dilutive effect of employee stock options and other unvested stock awards — — — — Diluted outstanding shares 377 376 377 375 Net loss attributable to Company per share: Basic $ (0.07 ) $ (3.62 ) $ (0.59 ) $ (4.53 ) Diluted $ (0.07 ) $ (3.62 ) $ (0.59 ) $ (4.53 ) Cash dividends per share $ 0.05 $ 0.05 $ 0.15 $ 0.56 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 loss attributable to Company allocated to these participating securities was immaterial for the three and nine months ended September 30, 2017 and therefore not excluded from the net income attributable to Company per share calculation. The Company had stock options outstanding that were anti-dilutive totaling 17 million shares and 13 million shares for the three and nine months ended September 30, 2017, respectively, and 14 million shares for each of the three and nine months ended September 30, 2016. |
Cash Dividends
Cash Dividends | 9 Months Ended |
Sep. 30, 2017 | |
Text Block [Abstract] | |
Cash Dividends | 12. Cash Dividends On August 17, 2017, the Company’s Board of Directors approved a cash dividend of $0.05 per share. The cash dividend was paid on September 29, 2017, to each stockholder of record on September 15, 2017. Cash dividends were $19 million and $57 million for the three and nine months ended September 30, 2017, respectively, and $19 million and $211 million for the three and nine months ended September 30, 2016, 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 | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 13. Commitments and Contingencies We are involved in various claims, internal investigations, regulatory agency audits and pending or threatened legal actions involving a variety of matters. Predicting the ultimate outcome of such matters involves subjective judgment, estimates and inherent uncertainties. As of September 30, 2017, the Company recorded an 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, will not materially affect 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 trade, 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 trade regulations, trade sanctions, 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 have adversely impacted our shipyard customers, their customers, entities providing financing for our shipyard customers and/or entities in the supply chain. The investigations in Brazil have led to, and are 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 have resulted in cancellations and could result in further attempted cancellation or other breaches of our contracts by our shipyard customers. In other jurisdictions, our shipyard customers’ customers in some instances have sought, and may in the future seek, suspension, delay or cancellation of the contracts or payment due between our shipyard customers and their customers. To the extent our shipyard customers and their customers become engaged in disputes or litigation related to any such suspensions, delays or cancellations, we may also become involved, either directly or indirectly, in such disputes or litigation, as we enforce the terms of our contracts with our shipyard customers. As the result of such disputes, payments to us may be delayed or jeopardized. Further, customers in other markets may seek delay or suspension of deliveries, the extension of delivery into future periods, or may attempt cancellations. While we manage deliveries and collection of payment to achieve milestone payments that mitigate our financial risk, such delays, suspensions, attempted cancellations, breaches of contract or other similar circumstances, could adversely affect our operating results, collections of accounts receivable and financial condition and could reduce our backlog. |
New Accounting Pronouncements
New Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Changes and Error Corrections [Abstract] | |
New Accounting Pronouncements | 14. New Accounting Pronouncements Recently Adopted Accounting Standards In July 2015, the FASB issued Accounting Standard Update No. 2015-11 “Simplifying the Measurement of Inventory” (ASU 2015-11). This update requires inventory measured using the first in, first out (FIFO) or average cost methods to be subsequently measured at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable cost of completion, disposal and transportation. ASU 2015-11 is effective for fiscal years beginning after December 15, 2016, and for interim periods within those fiscal years. The Company adopted this update on January 1, 2017 with no material impact. In March 2016, the FASB issued Accounting Standard Update No. 2016-09 “Improvements to Employee Share-Based Payment Accounting” (ASU 2016-09). This update simplifies several aspects of accounting for share-based payment transactions, including the income tax consequences, forfeitures, and the classification on the statement of cash flows. ASU 2016-09 is effective for fiscal periods beginning after December 15, 2016, and for interim periods within those fiscal years. The Company adopted this update on January 1, 2017. The cumulative impact of the adoption of this standard was $1 million to retained earnings, and the classification on the statement of cash flows was applied on a prospective basis. The Company also recorded a $4 million increase to tax expense in the first quarter of 2017 due to the impact of the adoption of this standard. In October 2016, the FASB issued Accounting Standard Update No. 2016-16 “Intra-Entity Transfers of Assets Other Than Inventory” (ASU 2016-16). This update requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. ASU 2016-16 is effective for fiscal years beginning after December 15, 2017, and for interim reporting periods within those fiscal years. The Company has early adopted this update on January 1, 2017 and recorded a $5 million reduction to retained earnings and receivables. The effect of the change on net income is not significant. In January 2017, the FASB issued Accounting Standard Update No. 2017-04 “Simplifying the Test for Goodwill Impairment” (ASU 2017-04). This update eliminates the requirement to compute the implied fair value of goodwill under Step 2 of the goodwill impairment test. ASU 2017-04 is effective for fiscal periods beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company has early adopted this update on July 1, 2017 with no material impact. Recently Issued Accounting Standards In August 2017, the FASB issued Accounting Standard Update No. 2017-12 “Derivatives and Hedging – Targeted Improvements to Accounting for Hedging Activities” (ASU 2017-12). This update improves the financial reporting of hedging relationships and simplifies the application of the hedge accounting guidance. ASU 2017-12 is effective for fiscal periods beginning after December 15, 2018, and for interim periods within those fiscal years. Early adoption is permitted in any interim period after issuance of ASU 2017-12. The Company is currently assessing the impact of the adoption of ASU No. 2017-12 on its consolidated financial position and results of operations. In March 2017, the FASB issued Accounting Standard Update No. 2017-07 “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” (ASU 2017-07). This update requires that an employer report the service cost component in the same line item as other compensation costs and separately from other components of net benefit cost. ASU 2017-04 is effective for fiscal periods 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. 2017-04 on its consolidated financial position and results of operations. In August 2016, the FASB issued Accounting Standard Update No. 2016-15 “Classification of Certain Cash Receipts and Cash Payments” (ASU 2016-15). This update amends Accounting Standard Codification Topic No. 230 “Statement of Cash Flows” and provides guidance and clarification on presentation of certain cash flow issues. ASU No. 2016-15 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. 2016-15 on its consolidated statement of cash flows. In March 2016, the FASB issued ASC Topic 842, “Leases” (ASC Topic 842), which supersedes the lease requirements in ASC Topic No. 840 “Leases” and most industry-specific guidance. This update increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASC Topic 842 is effective for fiscal years beginning after December 15, 2018, and for interim periods within those fiscal years. In preparing for the adoption of this new standard, the Company has established an internal team to centralize the implementation process as well as engaged external resources to assist in our approach. We are currently utilizing a software program to consolidate and accumulate leases with documentation as required by the new standard. We have assessed the changes to the Company’s current accounting practices and are currently investigating the related tax impact and process changes. We are also in process of quantifying the impact of the new standard on our balance sheet. In May 2014, the FASB issued Accounting Standard Update No. 2014-09, “Revenue from Contracts with Customers” (ASU 2014-09), which supersedes the revenue recognition requirements in FASB ASC Topic 605, “Revenue Recognition,” and most industry-specific guidance. This ASU proscribes a five-step model for determining when and how revenue is recognized. Under the model, an entity will recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. The standard permits either a full retrospective adoption, in which the standard is applied to all the periods presented, or a modified retrospective adoption, in which the standard is applied only to the current period with a cumulative-effect adjustment reflected in retained earnings. ASU 2014-09 is effective for fiscal periods beginning after December 15, 2017. The Company currently anticipates following the modified retrospective adoption. In 2015, the Company assembled an internal team to study the provisions of ASU 2014-09, began assessing the potential impacts on the Company and educating the organization. In 2016, the Company engaged external resources to complete the assessment of potential changes to current accounting practices related to material revenue streams. Potential impacts were identified based on required changes to current processes to accommodate provisions in the new standard. We are currently designing and implementing required process, system, control and data requirement chanages to address the impacts identified in our assessments. Based on an analysis of revenue streams, customer contracts and transactions, the Company does not expect a material change in the timing or other impacts to revenue recognition across most of our businesses. We are still evaluating certain revenue streams, which will change from point-in-time to over-time revenue recognition, and we are reviewing the impact of the new disclosure requirements. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Changes and Error Corrections [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 7 for the fair value of long-term debt and Note 10 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, 2016 $ 172 Net provisions for warranties issued during the year 27 Amounts incurred (60 ) Currency translation adjustments and other 8 Balance at September 30, 2017 $ 147 |
Net Loss 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 loss attributable to Company allocated to these participating securities was immaterial for the three and nine months ended September 30, 2017 and therefore not excluded from the net income attributable to Company per share calculation. |
Recently Adopted and Issued Accounting Standards | Recently Adopted Accounting Standards In July 2015, the FASB issued Accounting Standard Update No. 2015-11 “Simplifying the Measurement of Inventory” (ASU 2015-11). This update requires inventory measured using the first in, first out (FIFO) or average cost methods to be subsequently measured at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable cost of completion, disposal and transportation. ASU 2015-11 is effective for fiscal years beginning after December 15, 2016, and for interim periods within those fiscal years. The Company adopted this update on January 1, 2017 with no material impact. In March 2016, the FASB issued Accounting Standard Update No. 2016-09 “Improvements to Employee Share-Based Payment Accounting” (ASU 2016-09). This update simplifies several aspects of accounting for share-based payment transactions, including the income tax consequences, forfeitures, and the classification on the statement of cash flows. ASU 2016-09 is effective for fiscal periods beginning after December 15, 2016, and for interim periods within those fiscal years. The Company adopted this update on January 1, 2017. The cumulative impact of the adoption of this standard was $1 million to retained earnings, and the classification on the statement of cash flows was applied on a prospective basis. The Company also recorded a $4 million increase to tax expense in the first quarter of 2017 due to the impact of the adoption of this standard. In October 2016, the FASB issued Accounting Standard Update No. 2016-16 “Intra-Entity Transfers of Assets Other Than Inventory” (ASU 2016-16). This update requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. ASU 2016-16 is effective for fiscal years beginning after December 15, 2017, and for interim reporting periods within those fiscal years. The Company has early adopted this update on January 1, 2017 and recorded a $5 million reduction to retained earnings and receivables. The effect of the change on net income is not significant. In January 2017, the FASB issued Accounting Standard Update No. 2017-04 “Simplifying the Test for Goodwill Impairment” (ASU 2017-04). This update eliminates the requirement to compute the implied fair value of goodwill under Step 2 of the goodwill impairment test. ASU 2017-04 is effective for fiscal periods beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company has early adopted this update on July 1, 2017 with no material impact. Recently Issued Accounting Standards In August 2017, the FASB issued Accounting Standard Update No. 2017-12 “Derivatives and Hedging – Targeted Improvements to Accounting for Hedging Activities” (ASU 2017-12). This update improves the financial reporting of hedging relationships and simplifies the application of the hedge accounting guidance. ASU 2017-12 is effective for fiscal periods beginning after December 15, 2018, and for interim periods within those fiscal years. Early adoption is permitted in any interim period after issuance of ASU 2017-12. The Company is currently assessing the impact of the adoption of ASU No. 2017-12 on its consolidated financial position and results of operations. In March 2017, the FASB issued Accounting Standard Update No. 2017-07 “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” (ASU 2017-07). This update requires that an employer report the service cost component in the same line item as other compensation costs and separately from other components of net benefit cost. ASU 2017-04 is effective for fiscal periods 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. 2017-04 on its consolidated financial position and results of operations. In August 2016, the FASB issued Accounting Standard Update No. 2016-15 “Classification of Certain Cash Receipts and Cash Payments” (ASU 2016-15). This update amends Accounting Standard Codification Topic No. 230 “Statement of Cash Flows” and provides guidance and clarification on presentation of certain cash flow issues. ASU No. 2016-15 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. 2016-15 on its consolidated statement of cash flows. In March 2016, the FASB issued ASC Topic 842, “Leases” (ASC Topic 842), which supersedes the lease requirements in ASC Topic No. 840 “Leases” and most industry-specific guidance. This update increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASC Topic 842 is effective for fiscal years beginning after December 15, 2018, and for interim periods within those fiscal years. In preparing for the adoption of this new standard, the Company has established an internal team to centralize the implementation process as well as engaged external resources to assist in our approach. We are currently utilizing a software program to consolidate and accumulate leases with documentation as required by the new standard. We have assessed the changes to the Company’s current accounting practices and are currently investigating the related tax impact and process changes. We are also in process of quantifying the impact of the new standard on our balance sheet. In May 2014, the FASB issued Accounting Standard Update No. 2014-09, “Revenue from Contracts with Customers” (ASU 2014-09), which supersedes the revenue recognition requirements in FASB ASC Topic 605, “Revenue Recognition,” and most industry-specific guidance. This ASU proscribes a five-step model for determining when and how revenue is recognized. Under the model, an entity will recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. The standard permits either a full retrospective adoption, in which the standard is applied to all the periods presented, or a modified retrospective adoption, in which the standard is applied only to the current period with a cumulative-effect adjustment reflected in retained earnings. ASU 2014-09 is effective for fiscal periods beginning after December 15, 2017. The Company currently anticipates following the modified retrospective adoption. In 2015, the Company assembled an internal team to study the provisions of ASU 2014-09, began assessing the potential impacts on the Company and educating the organization. In 2016, the Company engaged external resources to complete the assessment of potential changes to current accounting practices related to material revenue streams. Potential impacts were identified based on required changes to current processes to accommodate provisions in the new standard. We are currently designing and implementing required process, system, control and data requirement chanages to address the impacts identified in our assessments. Based on an analysis of revenue streams, customer contracts and transactions, the Company does not expect a material change in the timing or other impacts to revenue recognition across most of our businesses. We are still evaluating certain revenue streams, which will change from point-in-time to over-time revenue recognition, and we are reviewing the impact of the new disclosure requirements. |
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 September 30, 2017, the Company has determined that the fair value of its derivative financial instruments representing assets of $42 million and liabilities of $10 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 September 30, 2017, the net fair value of the Company’s foreign currency forward contracts totaled a net asset of $32 million. At September 30, 2017, 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 (loss) 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 Loss during the current period. For the three and nine months ended September 30, 2017, the Company recognized a loss of $3 million and a gain of $10 million, respectively, 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 September 30, 2017, there were $19 million in pre-tax gains recorded in accumulated other comprehensive income (loss). 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 gains or losses due to the de-designation of existing hedge contracts. |
Inventories, net (Tables)
Inventories, net (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories consist of (in millions): September 30, December 31, Raw materials and supplies $ 719 $ 961 Work in process 499 561 Finished goods and purchased products 2,001 1,803 Total $ 3,219 $ 3,325 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities | Accrued liabilities consist of (in millions): September 30, December 31, Compensation $ 314 $ 181 Customer prepayments and billings 262 222 Vendor costs 202 235 Warranty 147 172 Taxes (non-income) 133 176 Insurance 77 103 Commissions 55 57 Fair value of derivative financial instruments 7 66 Interest 29 8 Other 318 348 Total $ 1,544 $ 1,568 |
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, 2016 $ 172 Net provisions for warranties issued during the year 27 Amounts incurred (60 ) Currency translation adjustments and other 8 Balance at September 30, 2017 $ 147 |
Costs and Estimated Earnings 24
Costs and Estimated Earnings on Uncompleted Contracts (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Text Block [Abstract] | |
Costs and Estimated Earnings on Uncompleted Contracts | Costs and estimated earnings on uncompleted contracts consist of (in millions): September 30, December 31, Costs incurred on uncompleted contracts $ 6,807 $ 8,132 Estimated earnings 3,242 3,869 10,049 12,001 Less: Billings to date 9,819 11,776 $ 230 $ 225 Costs and estimated earnings in excess of billings on uncompleted contracts $ 518 $ 665 Billings in excess of costs and estimated earnings on uncompleted contracts (288 ) (440 ) $ 230 $ 225 |
Accumulated Other Comprehensi25
Accumulated Other Comprehensive Income (Loss) (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
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, 2016 $ (1,376 ) $ (39 ) $ (37 ) $ (1,452 ) Accumulated other comprehensive income (loss) before reclassifications 290 50 — 340 Amounts reclassified from accumulated other comprehensive income (loss) — 3 — 3 Balance at September 30, 2017 $ (1,086 ) $ 14 $ (37 ) $ (1,109 ) |
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 September 30, 2017 2016 Currency Derivative Defined Total Currency Derivative Defined Total Revenue $ — $ (2 ) $ — $ (2 ) $ — $ — $ — $ — Cost of revenue — 4 — 4 — 48 — 48 Tax effect — (1 ) — (1 ) — (12 ) — (12 ) $ — $ 1 $ — $ 1 $ — $ 36 $ — $ 36 Nine Months Ended September 30, 2017 2016 Currency Derivative Defined Total Currency Derivative Defined Total Revenue $ — $ (6 ) $ — $ (6 ) $ — $ (3 ) $ — $ (3 ) Cost of revenue — 8 — 8 — 170 — 170 Tax effect — 1 — 1 — (47 ) — (47 ) $ — $ 3 $ — $ 3 $ — $ 120 $ — $ 120 |
Business Segments (Tables)
Business Segments (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Business Segments | Operating results by segment are as follows (in millions): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Revenue: Rig Systems $ 330 $ 470 $ 1,069 $ 1,960 Rig Aftermarket 311 322 973 1,077 Wellbore Technologies 693 526 1,862 1,668 Completion & Production Solutions 682 543 1,982 1,639 Eliminations (181 ) (215 ) (551 ) (785 ) Total revenue $ 1,835 $ 1,646 $ 5,335 $ 5,559 Operating profit (loss): Rig Systems $ 11 $ (962 ) $ 13 $ (888 ) Rig Aftermarket 64 72 201 203 Wellbore Technologies — (94 ) (81 ) (331 ) Completion & Production Solutions 44 (61 ) 79 (132 ) Eliminations and corporate costs (126 ) (141 ) (378 ) (497 ) Total operating profit (loss) $ (7 ) $ (1,186 ) $ (166 ) $ (1,645 ) Operating profit (loss)%: Rig Systems 3.3 % (204.7 %) 1.2 % (45.3 %) Rig Aftermarket 20.6 % 22.4 % 20.7 % 18.8 % Wellbore Technologies 0.0 % (17.9 %) (4.4 %) (19.8 %) Completion & Production Solutions 6.5 % (11.2 %) 4.0 % (8.1 %) Total operating profit (loss) % (0.4 %) (72.1 %) (3.1 %) (29.6 %) |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt | Debt consists of (in millions): September 30, December 31, $500 million in Senior Notes, interest at 1.35% payable semiannually, principal due on December 1, 2017 $ 500 $ 499 $1.4 billion in Senior Notes, interest at 2.60% payable semiannually, principal due on December 1, 2022 1,392 1,391 $1.1 billion in Senior Notes, interest at 3.95% payable semiannually, principal due on December 1, 2042 1,087 1,087 Other 234 237 Total debt 3,213 3,214 Less current portion 506 506 Long-term debt $ 2,707 $ 2,708 |
Derivative Financial Instrume28
Derivative Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
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 September 30, December 31, Norwegian Krone NOK 3,692 NOK 5,621 Japanese Yen JPY 1,071 JPY 1,462 U.S. Dollar USD 229 USD 321 Euro EUR 74 EUR 279 Danish Krone DKK 29 DKK 29 British Pound Sterling GBP 7 GBP 1 Singapore Dollar SGD 1 SGD 2 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 September 30, December 31, Russian Ruble RUB 2,645 RUB 1,893 Norwegian Krone NOK 1,766 NOK 538 U.S. Dollar USD 461 USD 457 South African Rand ZAR 150 ZAR 150 Euro EUR 101 EUR 272 Danish Krone DKK 38 DKK 49 Singapore Dollar SGD 2 SGD 7 British Pound Sterling GBP 2 GBP 3 Canadian Dollar CAD 1 CAD 1 |
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 September 30, December 31, Balance Sheet September 30, December 31, Derivatives designated as hedging instruments under ASC Topic 815 Foreign exchange contracts Prepaid and other $ 20 $ 24 Accrued liabilities $ 2 $ 37 Foreign exchange contracts Other Assets 14 6 Other liabilities 3 11 Total derivatives designated as hedging instruments under ASC Topic 815 $ 34 $ 30 $ 5 $ 48 Derivatives not designated as hedging instruments under ASC Topic 815 Foreign exchange contracts Prepaid and other $ 6 $ 32 Accrued liabilities $ 5 $ 29 Foreign exchange contracts Other Assets 2 — Other Liabilities — — Total derivatives not designated as hedging instruments under ASC Topic 815 $ 8 $ 32 $ 5 $ 29 Total derivatives $ 42 $ 62 $ 10 $ 77 |
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 Hedging Relationships Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion) (a) Location of Gain (Loss) (Effective Portion) Amount of Gain (Loss) Location of Gain (Loss) Testing) Amount of Gain (Loss) Nine Months Ended September 30, Nine Months Ended Nine Months Ended 2017 2016 2017 2016 2017 2016 Revenue 6 3 Cost of revenue 10 (19 ) Foreign exchange contracts 67 96 Cost of revenue (18 ) (151 ) Other income (expense), net 4 3 Total 67 96 (12 ) (148 ) 14 (16 ) Derivatives Not Designated as Location of Gain (Loss) Recognized Amount of Gain (Loss) Nine Months Ended September 30, 2017 2016 Foreign exchange contracts Other income (expense), net 65 — Total 65 — (a) The Company expects that $11 million of the accumulated other comprehensive income (loss) will be reclassified into earnings within the next twelve months with an offset by losses from the underlying transactions resulting in no impact to earnings or cash flow. (b) The amount of gain (loss) recognized in income represents $10 million and $(19) million related to the ineffective portion of the hedging relationships for the nine months ended September 30, 2017 and 2016, respectively, and $4 million and $3 million related to the amount excluded from the assessment of the hedge effectiveness for the nine months ended September 30, 2017 and 2016, respectively. |
Net Loss Attributable to Comp29
Net Loss Attributable to Company Per Share (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
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 Nine Months Ended 2017 2016 2017 2016 Numerator: Net loss attributable to Company $ (26 ) $ (1,362 ) $ (223 ) $ (1,698 ) Denominator: Basic—weighted average common shares outstanding 377 376 377 375 Dilutive effect of employee stock options and other unvested stock awards — — — — Diluted outstanding shares 377 376 377 375 Net loss attributable to Company per share: Basic $ (0.07 ) $ (3.62 ) $ (0.59 ) $ (4.53 ) Diluted $ (0.07 ) $ (3.62 ) $ (0.59 ) $ (4.53 ) Cash dividends per share $ 0.05 $ 0.05 $ 0.15 $ 0.56 |
Basis of Presentation - Additio
Basis of Presentation - Additional Information (Detail) | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Maturity period of investments description | Three months or less |
Inventories, net - Inventories
Inventories, net - Inventories (Detail) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Raw materials and supplies | $ 719 | $ 961 |
Work in process | 499 | 561 |
Finished goods and purchased products | 2,001 | 1,803 |
Total | $ 3,219 | $ 3,325 |
Accrued Liabilities - Accrued L
Accrued Liabilities - Accrued Liabilities (Detail) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Payables and Accruals [Abstract] | ||
Compensation | $ 314 | $ 181 |
Customer prepayments and billings | 262 | 222 |
Vendor costs | 202 | 235 |
Warranty | 147 | 172 |
Taxes (non-income) | 133 | 176 |
Insurance | 77 | 103 |
Commissions | 55 | 57 |
Fair value of derivative financial instruments | 7 | 66 |
Interest | 29 | 8 |
Other | 318 | 348 |
Total | $ 1,544 | $ 1,568 |
Accrued Liabilities - Changes i
Accrued Liabilities - Changes in Carrying Amount of Service and Product Warranties (Detail) $ in Millions | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Product Warranties Disclosures [Abstract] | |
Beginning Balance | $ 172 |
Net provisions for warranties issued during the year | 27 |
Amounts incurred | (60) |
Currency translation adjustments and other | 8 |
Ending Balance | $ 147 |
Costs and Estimated Earnings 34
Costs and Estimated Earnings on Uncompleted Contracts - Costs and Estimated Earnings on Uncompleted Contracts (Detail) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Contractors [Abstract] | ||
Costs incurred on uncompleted contracts | $ 6,807 | $ 8,132 |
Estimated earnings | 3,242 | 3,869 |
Costs and estimated earnings on uncompleted contracts, Gross | 10,049 | 12,001 |
Less: Billings to date | 9,819 | 11,776 |
Total net estimate billing on uncompleted contracts | 230 | 225 |
Costs and estimated earnings in excess of billings on uncompleted contracts | 518 | 665 |
Billings in excess of costs and estimated earnings on uncompleted contracts | (288) | (440) |
Total net estimate billing on uncompleted contracts | $ 230 | $ 225 |
Accumulated Other Comprehensi35
Accumulated Other Comprehensive Income (Loss) - Components of Accumulated Other Comprehensive Income (Loss) (Detail) $ in Millions | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Accumulated other comprehensive income (loss), Beginning balance | $ (1,452) |
Accumulated other comprehensive income (loss) before reclassifications | 340 |
Amounts reclassified from accumulated other comprehensive income (loss) | 3 |
Accumulated other comprehensive income (loss), Ending balance | (1,109) |
Currency Translation Adjustments [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Accumulated other comprehensive income (loss), Beginning balance | (1,376) |
Accumulated other comprehensive income (loss) before reclassifications | 290 |
Accumulated other comprehensive income (loss), Ending balance | (1,086) |
Derivative Financial Instruments, Net of Tax [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Accumulated other comprehensive income (loss), Beginning balance | (39) |
Accumulated other comprehensive income (loss) before reclassifications | 50 |
Amounts reclassified from accumulated other comprehensive income (loss) | 3 |
Accumulated other comprehensive income (loss), Ending balance | 14 |
Defined Benefit Plans, Net of Tax [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Accumulated other comprehensive income (loss), Beginning balance | (37) |
Accumulated other comprehensive income (loss), Ending balance | $ (37) |
Accumulated Other Comprehensi36
Accumulated Other Comprehensive Income (Loss) - Components of Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Currency Translation Adjustments | $ 0 | $ 0 | $ 0 | $ 0 |
Derivative Financial Instruments | 1 | 36 | 3 | 120 |
Defined Benefit Plans | 0 | 0 | 0 | 0 |
Total | 1 | 36 | 3 | 120 |
Revenue [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Currency Translation Adjustments | 0 | 0 | 0 | 0 |
Derivative Financial Instruments | (2) | (6) | (3) | |
Defined Benefit Plans | 0 | 0 | 0 | 0 |
Total | (2) | (6) | (3) | |
Cost of Revenue [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Currency Translation Adjustments | 0 | 0 | 0 | 0 |
Derivative Financial Instruments | 4 | 48 | 8 | 170 |
Defined Benefit Plans | 0 | 0 | 0 | 0 |
Total | 4 | 48 | 8 | 170 |
Tax Effect [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Currency Translation Adjustments | 0 | 0 | 0 | 0 |
Derivative Financial Instruments | (1) | (12) | 1 | (47) |
Defined Benefit Plans | 0 | 0 | 0 | 0 |
Total | $ (1) | $ (12) | $ 1 | $ (47) |
Accumulated Other Comprehensi37
Accumulated Other Comprehensive Income (Loss) - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Net increase to other comprehensive income or loss upon the translation | $ 124 | $ (18) | $ 290 | $ 79 |
Changes in derivative financial instruments, net of tax | 25 | 60 | 53 | 191 |
Changes in derivative financial instruments, tax | $ 8 | $ 20 | $ 15 | $ 72 |
Business Segments - Business Se
Business Segments - Business Segments (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Segment Reporting Information [Line Items] | ||||
Total revenue | $ 1,835 | $ 1,646 | $ 5,335 | $ 5,559 |
Total operating profit (loss) | $ (7) | $ (1,186) | $ (166) | $ (1,645) |
Percentage as of operating profit (loss) to revenue | (0.40%) | (72.10%) | (3.10%) | (29.60%) |
Operating Segments [Member] | Rig Systems [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | $ 330 | $ 470 | $ 1,069 | $ 1,960 |
Total operating profit (loss) | $ 11 | $ (962) | $ 13 | $ (888) |
Percentage as of operating profit (loss) to revenue | 3.30% | (204.70%) | 1.20% | (45.30%) |
Operating Segments [Member] | Rig Aftermarket [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | $ 311 | $ 322 | $ 973 | $ 1,077 |
Total operating profit (loss) | $ 64 | $ 72 | $ 201 | $ 203 |
Percentage as of operating profit (loss) to revenue | 20.60% | 22.40% | 20.70% | 18.80% |
Operating Segments [Member] | Wellbore Technologies [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | $ 693 | $ 526 | $ 1,862 | $ 1,668 |
Total operating profit (loss) | $ (94) | $ (81) | $ (331) | |
Percentage as of operating profit (loss) to revenue | 0.00% | (17.90%) | (4.40%) | (19.80%) |
Operating Segments [Member] | Completion & Production Solutions [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | $ 682 | $ 543 | $ 1,982 | $ 1,639 |
Total operating profit (loss) | $ 44 | $ (61) | $ 79 | $ (132) |
Percentage as of operating profit (loss) to revenue | 6.50% | (11.20%) | 4.00% | (8.10%) |
Eliminations and Corporate Costs [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | $ (181) | $ (215) | $ (551) | $ (785) |
Total operating profit (loss) | $ (126) | $ (141) | $ (378) | $ (497) |
Business Segments - Additional
Business Segments - Additional Information (Detail) $ in Millions | Jul. 01, 2017Unit | Sep. 30, 2017USD ($)Segment |
Segment Reporting Information [Line Items] | ||
Number of reportable segments | Segment | 4 | |
Wellbore Technologies [Member] | ||
Segment Reporting Information [Line Items] | ||
Number of reporting units reorganized | Unit | 3 | |
Voluntary Early Retirement Plan [Member] | ||
Segment Reporting Information [Line Items] | ||
Accrued postretirement medical benefits | $ | $ 44 |
Debt - Debt (Detail)
Debt - Debt (Detail) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||
Other | $ 234 | $ 237 |
Total debt | 3,213 | 3,214 |
Total debt | 3,213 | 3,214 |
Less current portion | 506 | 506 |
Long-term debt | 2,707 | 2,708 |
Senior Notes, Interest at 1.35% Payable Semiannually, Principal Due on December 1, 2017 [Member] | ||
Debt Instrument [Line Items] | ||
Senior Notes | 500 | 499 |
Senior Notes, Interest at 2.60% Payable Semiannually, Principal Due on December 1, 2022 [Member] | ||
Debt Instrument [Line Items] | ||
Senior Notes | 1,392 | 1,391 |
Senior Notes, Interest at 3.95% Payable Semiannually, Principal Due on December 1, 2042 [Member] | ||
Debt Instrument [Line Items] | ||
Senior Notes | $ 1,087 | $ 1,087 |
Debt - Debt (Parenthetical) (De
Debt - Debt (Parenthetical) (Detail) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Senior Notes, Interest at 1.35% Payable Semiannually, Principal Due on December 1, 2017 [Member] | ||
Debt Instrument [Line Items] | ||
Senior note face amount | $ 500,000,000 | $ 500,000,000 |
Senior notes interest rate | 1.35% | 1.35% |
Senior note due date | Dec. 1, 2017 | Dec. 1, 2017 |
Senior Notes, Interest at 2.60% Payable Semiannually, Principal Due on December 1, 2022 [Member] | ||
Debt Instrument [Line Items] | ||
Senior note face amount | $ 1,400,000,000 | $ 1,400,000,000 |
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 note face amount | $ 1,100,000,000 | $ 1,100,000,000 |
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 ($) | Jun. 27, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | |||
Interest rate under multi currency facility | LIBOR, NIBOR or CDOR plus 1.125% | ||
Capitalization ratio, Maximum | 60.00% | ||
Capitalization ratio, Actual | 18.50% | ||
Funds available under revolving credit facility | $ 3,000,000,000 | ||
Outstanding letters of credit under various bilateral letter of credit facilities | 731,000,000 | ||
Fair value of Unsecured Senior Notes | 2,817,000,000 | $ 2,669,000,000 | |
Carrying value of Unsecured Senior Notes | 3,213,000,000 | 3,214,000,000 | |
Canadian Dollar Offered Rate (CDOR) [Member] | |||
Debt Instrument [Line Items] | |||
Variable rate | 1.125% | ||
Five-year Credit Facility [Member] | |||
Debt Instrument [Line Items] | |||
Credit facility, borrowing capacity | $ 3,000,000,000 | $ 3,000,000,000 | |
Credit facility, Period | 5 years | ||
Credit facility, maturity date | Jun. 27, 2022 | ||
Credit facility, extendable borrowing capacity | $ 4,000,000,000 | ||
Variable rate basis | LIBOR, NIBOR or CDOR plus | ||
Borrowings under commercial paper | $ 0 | ||
Unsecured Credit Facility [Member] | |||
Debt Instrument [Line Items] | |||
Credit facility, Period | 5 years | ||
Previous Five Year Credit Facility [Member] | |||
Debt Instrument [Line Items] | |||
Credit facility, borrowing capacity | $ 4,500,000,000 | ||
Unsecured Senior Notes [Member] | |||
Debt Instrument [Line Items] | |||
Carrying value of Unsecured Senior Notes | $ 2,979,000,000 | $ 2,977,000,000 |
Tax - Additional Information (D
Tax - Additional Information (Detail) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate | 10.00% | (9.60%) | 10.50% | 6.50% |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Detail) $ / shares in Units, $ in Millions | May 17, 2017$ / sharesshares | Feb. 22, 2017$ / sharesshares | Sep. 30, 2017USD ($)shares | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)shares | Sep. 30, 2016USD ($) |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Earlier authorized shares under stock based compensation | 69,400,000 | |||||
Remaining shares available for future grants under the Plan | 21,026,617 | 21,026,617 | ||||
Stock-based compensation expense | $ | $ 33 | $ 28 | $ 85 | $ 78 | ||
Income tax benefit recognized | $ | $ 9 | $ 5 | $ 18 | 17 | ||
Restricted Stock Awards [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares granted | 36,701 | |||||
Restricted stock granted fair value | $ / shares | $ 33.38 | |||||
Period of option vested over grant date | The stock options vest over a three-year period from the grant date. The restricted stock and restricted stock units vest on the third anniversary of the date of grant or in three equal annual installments commencing on the first anniversary of the date of grant. | |||||
Restricted Stock and Restricted Stock Units [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares granted | 1,504,450 | |||||
Restricted stock granted fair value | $ / shares | $ 38.86 | |||||
Stock Options and Stock Appreciation Rights (SARs) [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Fungible shares issuance ratio | 1 | |||||
Other Awards [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Fungible shares issuance ratio | 3 | |||||
Stock Options [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock option granted | 3,362,460 | |||||
Stock option granted fair value | $ / shares | $ 10.98 | |||||
Stock Options [Member] | Restricted Stock Awards [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock option granted, exercise price | $ / shares | $ 38.86 | |||||
Performance-base restricted stock [Member] | Minimum [Member] | Senior Management Employees [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares granted | 0 | |||||
Performance-base restricted stock [Member] | Maximum [Member] | Senior Management Employees [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares granted | 388,380 | |||||
Voluntary Early Retirement Plan [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock-based compensation expense | $ | $ 5 |
Derivative Financial Instrume45
Derivative Financial Instruments - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2017 | Dec. 31, 2016 | |
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 | $ 42 | $ 42 | $ 62 |
Derivative Liabilities | 10 | 10 | $ 77 |
Fair value of the Company's foreign currency forward contracts | 32 | 32 | |
Loss recognized on discontinuation of cash flow hedges | 3 | ||
Pre-tax losses recorded in accumulated other comprehensive income (loss) | 19 | ||
Gains recognized on discontinuation of cash flow hedges | 10 | ||
Fair Value, Inputs, Level 2 [Member] | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Assets | 42 | 42 | |
Derivative Liabilities | $ 10 | $ 10 |
Derivative Financial Instrume46
Derivative Financial Instruments - Outstanding Foreign Currency Forward Contracts (Detail) - Forward Contracts [Member] € in Millions, ¥ in Millions, £ in Millions, ZAR in Millions, SGD in Millions, RUB in Millions, NOK in Millions, DKK in Millions, CAD in Millions, $ in Millions | Sep. 30, 2017USD ($) | Sep. 30, 2017DKK | Sep. 30, 2017EUR (€) | Sep. 30, 2017GBP (£) | Sep. 30, 2017JPY (¥) | Sep. 30, 2017NOK | Sep. 30, 2017SGD | Sep. 30, 2017ZAR | Sep. 30, 2017RUB | Sep. 30, 2017CAD | Dec. 31, 2016USD ($) | Dec. 31, 2016DKK | Dec. 31, 2016EUR (€) | Dec. 31, 2016GBP (£) | Dec. 31, 2016JPY (¥) | Dec. 31, 2016NOK | Dec. 31, 2016SGD | Dec. 31, 2016ZAR | Dec. 31, 2016RUB | Dec. 31, 2016CAD |
Derivative [Line Items] | ||||||||||||||||||||
Foreign currency, Cash flow hedging | $ 229 | DKK 29 | € 74 | £ 7 | ¥ 1,071 | NOK 3,692 | SGD 1 | $ 321 | DKK 29 | € 279 | £ 1 | ¥ 1,462 | NOK 5,621 | SGD 2 | ||||||
Foreign currency, Non-designated hedging | $ 461 | DKK 38 | € 101 | £ 2 | NOK 1,766 | SGD 2 | ZAR 150 | RUB 2,645 | CAD 1 | $ 457 | DKK 49 | € 272 | £ 3 | NOK 538 | SGD 7 | ZAR 150 | RUB 1,893 | CAD 1 |
Derivative Financial Instrume47
Derivative Financial Instruments - Derivative Instruments and their Balance Sheet Classifications (Detail) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Derivatives, Fair Value [Line Items] | ||
Derivative Assets | $ 42 | $ 62 |
Derivative Liabilities | 10 | 77 |
Designated as Hedging Instruments [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Assets | 34 | 30 |
Derivative Liabilities | 5 | 48 |
Not Designated as Hedging Instruments [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Assets | 8 | 32 |
Derivative Liabilities | 5 | 29 |
Foreign Exchange Contracts [Member] | Prepaid and Other Current Assets [Member] | Designated as Hedging Instruments [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Assets | 20 | 24 |
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 | 2 | 37 |
Foreign Exchange Contracts [Member] | Prepaid and Other Current Assets [Member] | Not Designated as Hedging Instruments [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Assets | 6 | 32 |
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 | 5 | 29 |
Foreign Exchange Contracts [Member] | Other Liabilities [Member] | Designated as Hedging Instruments [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liabilities | 3 | 11 |
Foreign Exchange Contracts [Member] | Other Assets [Member] | Designated as Hedging Instruments [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Assets | 14 | $ 6 |
Foreign Exchange Contracts [Member] | Other Assets [Member] | Not Designated as Hedging Instruments [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Assets | $ 2 |
Derivative Financial Instrume48
Derivative Financial Instruments - Effect of Derivative Instruments on Consolidated Statements of Income (Detail) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing) | $ 4 | $ 3 |
Not Designated as Hedging Instruments [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Recognized in Income on Derivatives | 65 | |
Cash Flow Hedging [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Recognized in OCI on Derivatives (Effective Portion) | 67 | 96 |
Foreign Exchange Contracts [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | (12) | (148) |
Amount of Gain (Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing) | 14 | (16) |
Foreign Exchange Contracts [Member] | Cash Flow Hedging [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Recognized in OCI on Derivatives (Effective Portion) | 67 | 96 |
Foreign Exchange Contracts [Member] | Other Income (Expense), Net [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing) | 4 | 3 |
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 Derivatives | 65 | |
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) | (18) | (151) |
Amount of Gain (Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing) | 10 | (19) |
Foreign Exchange Contracts [Member] | Revenue [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | $ 6 | $ 3 |
Derivative Financial Instrume49
Derivative Financial Instruments - Effect of Derivative Instruments on Consolidated Statements of Income (Parenthetical) (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2017 | |
Derivative Instruments, Gain (Loss) [Line Items] | |||||
Accumulated other comprehensive income (loss), reclassified | $ (1) | $ (36) | $ (3) | $ (120) | |
Amount of gain (loss) recognized in income on derivative (ineffective portion) | 10 | (19) | |||
Amount of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing) | $ 4 | $ 3 | |||
Scenario, Forecast [Member] | |||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
Accumulated other comprehensive income (loss), reclassified | $ 11 |
Net Loss Attributable to Comp50
Net Loss 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 | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Numerator: | ||||
Net loss attributable to Company | $ (26) | $ (1,362) | $ (223) | $ (1,698) |
Denominator: | ||||
Basic-weighted average common shares outstanding | 377 | 376 | 377 | 375 |
Dilutive effect of employee stock options and other unvested stock awards | 0 | 0 | 0 | 0 |
Diluted outstanding shares | 377 | 376 | 377 | 375 |
Basic | $ (0.07) | $ (3.62) | $ (0.59) | $ (4.53) |
Diluted | (0.07) | (3.62) | (0.59) | (4.53) |
Cash dividends per share | $ 0.05 | $ 0.05 | $ 0.15 | $ 0.56 |
Net Loss Attributable to Comp51
Net Loss Attributable to Company Per Share - Additional Information (Detail) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Earnings Per Share [Abstract] | ||||
Anti-dilutive stock options outstanding | 17 | 14 | 13 | 14 |
Cash Dividends - Additional Inf
Cash Dividends - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Aug. 17, 2017 | |
Dividends [Abstract] | |||||
Dividends payable, amount per share | $ 0.05 | ||||
Cash dividends paid | $ 19 | $ 19 | $ 57 | $ 211 |
New Accounting Pronouncements -
New Accounting Pronouncements - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Sep. 30, 2017 | |
ASU 2016-09 [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Increase in tax expense | $ 4 | |
ASU 2016-09 [Member] | Retained Earnings (Loss) [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative impact on retained earnings | $ 1 | |
ASU 2016-16 [Member] | New Accounting Pronouncement, Early Adoption, Effect [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Reduction in retained earnings and receivables | $ 5 |