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.

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).

Income from continuing operations: There was a general upward trend from 2011 to 2014, peaking at 2,455 million US dollars in 2014, followed by a sharp decline to a loss of 767 million US dollars in 2015. This represents a significant downturn in profitability in the most recent year.
Depreciation and amortization: These expenses increased steadily from 555 million in 2011 to 778 million in 2014 and slightly decreased to 747 million in 2015, indicating ongoing investment in fixed assets but some moderation in amortization or asset base changes.
Deferred income taxes: Deferred tax liabilities decreased in absolute value over the period, moving from -352 million in 2011 to -258 million in 2015, suggesting some changes in tax timing differences or deferred tax assets utilization.
Stock-based compensation and excess tax benefits: Stock-based compensation costs increased progressively each year, reaching 109 million in 2015. Conversely, excess tax benefits related to this compensation diminished, moving from a negative benefit to slightly positive in 2015.
Equity income in unconsolidated affiliates and related dividends: Equity income was consistently negative, though it improved substantially in 2015 to -13 million from larger negative amounts previously. Dividends from these affiliates fluctuated, peaking at 73 million in 2014 then dropping to 34 million in 2015.
Goodwill and intangible asset impairment: There were no impairments reported until 2014, when 104 million was recognized, followed by a very large impairment of 1,689 million in 2015. This significant impairment likely contributed to the large loss recorded in 2015.
Working capital components: The data indicate volatility in working capital accounts. Receivables shifted from negative changes to a positive change of 1,091 million in 2015, signaling a large increase in accounts receivable. Inventories fluctuated widely without a clear trend. Accounts payable and accrued liabilities showed extreme swings, with accrued liabilities increasing markedly in 2014, then reversing sharply in 2015.
Net cash provided by operating activities: Operating cash flows were strong in 2013 and 2014, exceeding 2,500 million each year, but fell significantly to 1,332 million in 2015. Despite the loss, positive cash flow from operations was maintained, though it weakened relative to earlier years.
Investing activities: Capital expenditures decreased from 699 million in 2014 to 453 million in 2015, suggesting reduced investments in property and equipment. Business acquisitions dropped sharply after 2012, remaining low in 2015 at 86 million. Overall net cash used in investing activities declined substantially by 2015, indicating a more conservative investment stance.
Financing activities: There was significant borrowing activity, with borrowings against lines of credit and other debt reaching 11,377 million in 2015, a large increase compared to prior years. However, payments against these borrowings also increased, albeit net financing cash flows were negative at -2,163 million in 2015, indicating more cash outflow from financing overall. Share repurchases escalated markedly in 2015 to 2,221 million, suggesting aggressive return of capital to shareholders despite financial challenges.
Liquidity: Cash and cash equivalents grew modestly from 2011 through 2014, hovering around 3,300 to 3,500 million, but declined significantly to 2,080 million in 2015—a sizable reduction reflecting the company's weaker operational performance and cash use in finance activities.
Other observations: The effect of exchange rates on cash and cash equivalents had a negative impact in the last two years, particularly in 2015 (-111 million), which may have exacerbated cash declines. Adjustments reconciling net income to cash flows showed high volatility, with a large positive adjustment in 2015 (2,099 million), helping to offset operational cash shortfalls.

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National Oilwell Varco Inc. (NYSE:NOV)

Cash Flow Statement