Name: National Oilwell Varco Inc. (NYSE:NOV) | Cash Flow Statement
Creator: Stock Analysis on Net

Cash Flow Statement

The cash flow statement provides information about a company cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company balance sheet.

The cash flow statement consists of three parts: cash flows provided by (used in) operating activities, cash flows provided by (used in) investing activities, and cash flows provided by (used in) financing activities.

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National Oilwell Varco Inc., consolidated cash flow statement

US$ in millions

12 months ended:	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013	Dec 31, 2012	Dec 31, 2011
Income (loss) from continuing operations	(767)	2,455)	2,328)	2,483)	1,985)
Depreciation and amortization	747)	778)	755)	628)	555)
Deferred income taxes	(258)	(300)	(333)	(97)	(352)
Stock-based compensation	109)	101)	92)	80)	73)
Excess tax benefit from stock-based compensation	1)	(15)	(20)	(25)	(22)
Equity income in unconsolidated affiliates	(13)	(58)	(63)	(58)	(46)
Dividend from unconsolidated affiliate	34)	73)	66)	61)	45)
Goodwill and intangible asset impairment	1,689)	104)	—)	—)	—)
Other	256)	181)	84)	84)	69)
Receivables	1,091)	(153)	(493)	(517)	(696)
Inventories	410)	(710)	396)	(1,061)	(591)
Costs in excess of billings	548)	(262)	(314)	(632)	222)
Prepaid and other current assets	112)	(60)	30)	(224)	(44)
Accounts payable	(570)	95)	9)	(19)	205)
Accrued liabilities	(1,137)	879)	—)	—)	—)
Billings in excess of costs	(686)	(59)	582)	324)	354)
Income taxes payable	(167)	(124)	211)	(409)	283)
Other assets/liabilities, net	(67)	(400)	67)	2)	103)
Change in operating assets and liabilities, net of acquisitions	(466)	(794)	488)	(2,536)	(164)
Adjustments to reconcile net income (loss) to net cash provided by operating activities	2,099)	70)	1,069)	(1,863)	158)
Net cash provided by operating activities	1,332)	2,525)	3,397)	620)	2,143)
Purchases of property, plant and equipment	(453)	(699)	(669)	(583)	(483)
Business acquisitions, net of cash acquired	(86)	(291)	(2,397)	(2,880)	(1,038)
Cash distributed in spin-off	—)	(253)	—)	—)	—)
Dividend from unconsolidated affiliate	—)	—)	—)	—)	13)
Other, net	25)	151)	102)	35)	50)
Net cash used in investing activities	(514)	(1,092)	(2,964)	(3,428)	(1,458)
Borrowings against lines of credit and other debt	11,377)	173)	2,609)	5,575)	—)
Payments against lines of credit and other debt	(10,615)	(155)	(2,610)	(2,938)	(391)
Cash dividends paid	(710)	(703)	(389)	(209)	(191)
Share repurchases	(2,221)	(779)	—)	—)	—)
Proceeds from stock options exercised	7)	108)	58)	113)	96)
Excess tax benefit from stock-based compensation	(1)	15)	20)	25)	22)
Other	—)	(2)	7)	17)	—)
Net cash provided by (used in) financing activities	(2,163)	(1,343)	(305)	2,583)	(464)
Net cash provided by discontinued operating activities	—)	89)	—)	—)	—)
Net cash used in discontinued investing activities	—)	(12)	—)	—)	—)
Discontinued operations	—)	77)	—)	—)	—)
Effect of exchange rates on cash	(111)	(67)	(11)	9)	(19)
Increase (decrease) in cash and cash equivalents	(1,456)	100)	117)	(216)	202)
Cash and cash equivalents, beginning of period	3,536)	3,436)	3,319)	3,535)	3,333)
Cash and cash equivalents, end of period	2,080)	3,536)	3,436)	3,319)	3,535)

Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).

Between 2011 and 2015, the cash flow profile shifted from a period of aggressive expansion and high profitability to one of significant impairment and capital preservation. Operating cash flow remained positive throughout the period but exhibited high volatility, peaking in 2013 before declining sharply by 2015.

Operating Performance and Quality of Earnings: Income from continuing operations remained robust between 2011 and 2014, averaging approximately 2.3 billion US$. However, 2015 marked a critical inflection point, with a transition to a net loss of 767 million US$. This deterioration was compounded by a substantial increase in non-cash charges, specifically goodwill and intangible asset impairments, which surged from 104 million US$ in 2014 to 1.689 billion US$ in 2015. This suggests a significant write-down of assets following the aggressive acquisition phase of previous years.
Working Capital Dynamics: Working capital management showed extreme fluctuations. A notable liquidity drain occurred in 2012, where the change in operating assets and liabilities resulted in a negative 2.536 billion US$. Conversely, 2015 saw a pivot toward liquidity recovery through the liquidation of working capital; receivables and inventories provided a combined positive cash inflow of approximately 1.5 billion US$, offsetting the operating loss.
Investment Strategy and Capital Expenditure: The investment phase was characterized by two distinct periods. From 2012 to 2013, the organization pursued an aggressive inorganic growth strategy, spending 5.277 billion US$ on business acquisitions. Following 2013, this strategy was abandoned, with acquisition spending dropping to 86 million US$ by 2015. Capital expenditures on property, plant, and equipment remained relatively steady, peaking at 699 million US$ in 2014 before moderating to 453 million US$ in 2015.
Financing and Shareholder Distributions: Financing activities shifted toward aggressive shareholder returns despite declining profitability. Cash dividends paid increased more than threefold, rising from 191 million US$ in 2011 to 710 million US$ in 2015. Furthermore, share repurchases, which were non-existent in the early part of the period, spiked to 2.221 billion US$ in 2015. To support these distributions and operating losses, the organization utilized heavy debt cycling, as evidenced by 11.377 billion US$ in borrowings in 2015, largely offset by 10.615 billion US$ in repayments.

The cumulative effect of these trends resulted in a contraction of the cash position. After maintaining a stable cash balance between 3.3 billion and 3.5 billion US$ from 2011 to 2014, the cash and cash equivalents end-of-period balance fell to 2.080 billion US$ by December 31, 2015, driven primarily by the surge in share repurchases and the onset of operational losses.

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