UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 10, 2014
NATIONAL OILWELL VARCO, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 1-12317 | 76-0475815 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 7909 Parkwood Circle Dr. Houston, Texas |
77036 | |||
| (Address of principal executive offices) | (Zip Code) | |||
Registrant’s telephone number, including area code: 713-346-7500
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition
On May 30, 2014, National Oilwell Varco, Inc. (“NOV” or the “Company”) completed the previously announced spin-off of its distribution business into an independent public company named NOW Inc. On June 5, 2014, the Company filed a Current Report on Form 8-K to disclose certain historical financial information on a pro forma basis, reflecting the spin-off of NOW Inc. The June 5, 2014 Form 8-K contained the unaudited pro forma consolidated balance sheet of National Oilwell Varco, Inc., as of March 31, 2014, and the unaudited pro forma consolidated income statements of National Oilwell Varco, Inc., for the three months ended March 31, 2014 and March 31, 2013, and for the years ended December 31, 2013, 2012 and 2011, and the related notes thereto.
In conjunction with the spin-off of NOW Inc. we reviewed our reporting and management structure, and effective April 1, 2014, reorganized our Rig Technology, Petroleum Services & Supplies and remaining operations of Distribution & Transmission reporting segments into four new reporting segments. The new reporting segments will be Rig Systems, Rig Aftermarket, Wellbore Technologies and Completion & Production Solutions.
Because prior results of operations of our new reporting segments, by quarter, will not be reported until we file our Form 10-Q for each of the comparable quarters, beginning with the second quarter of 2014, management desires to furnish more timely information to investors to improve the understanding of the Company’s operating performance for the new reporting segments. Management is separately furnishing information which reflects our operating revenue, operating profit and backlog for the new reporting segments for the quarterly and annual periods in 2013, 2012 and the first quarter of 2014 and annual periods in 2011, 2010 and 2009.
The information included in Items 2.02 and 9.01 within this Current Report are being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended or otherwise subject to the liabilities of that Section. The information included in Items 2.02 and 9.01 within this Current Report shall not be incorporated by reference into any registration statement of other document pursuant to the Securities Act of 1933, as amended.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
The following exhibit is provided as part of the information furnished under Items 2.02 and 9.01 of this Current Report on Form 8-K:
| 99.1 | Supplemental Financial Schedules |
As described in Item 2.02 above this Current Report, this exhibit is “furnished” and not “filed” with this Current Report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: June 10, 2014 | NATIONAL OILWELL VARCO, INC. | |||||||
| /s/ Brigitte Hunt |
||||||||
| Brigitte Hunt | ||||||||
| Vice President | ||||||||
Index to Exhibits
| 99.1 | Supplemental Financial Schedules |
Exhibit 99.1
NATIONAL OILWELL VARCO, INC.
RECAST NEW REPORTING SEGMENTS (Unaudited)
Effective April 1, 2014, the Company’s operations were reorganized into four reportable segments: Rig Systems, Rig Aftermarket, Wellbore Technologies and Completion & Production Solutions. Within the four reporting segments, the Company has aggregated two business units under Rig Systems, one business unit under Rig Aftermarket, six business units under Wellbore Technologies and six business units under Completion & Production Solutions for a total of 15 business units. The Company has aggregated each of its business units in one of the four reporting segments based on the guidelines of ASC Topic 280, “Segment Reporting” (“ASC Topic 280”).
Rig Systems
The Company’s Rig Systems segment makes and supports the capital equipment and integrated systems needed to drill oil and gas wells on land and offshore. The segment designs, manufactures, and sells land rigs, offshore drilling equipment packages, including installation and commissioning services, and drilling rig components that mechanize and automate the rig process and functionality.
Equipment and technologies in Rig Systems include: substructures, derricks, and masts; cranes; pipe lifting, racking, rotating, and assembly systems; fluid transfer technologies, such as mud pumps; pressure control equipment, including blowout preventers; power transmission systems, including drives and generators; and rig instrumentation and control systems.
The Rig Systems segment primarily supports land and offshore drillers. Demand for Rig Systems products primarily depends on drilling contractors’ and oil and gas companies’ capital spending plans, specifically capital expenditures on rig construction and refurbishment.
Rig Aftermarket
The Company’s Rig Aftermarket segment provides comprehensive aftermarket products and services to support land rigs and offshore rigs, and drilling rig components manufactured by the Rig Systems segment.
The segment provides spare parts, repair, and rentals as well as technical support, field service and first well support, field engineering, and customer training through a network of aftermarket service and repair facilities strategically located in major areas of drilling operations.
The Rig Aftermarket segment primarily supports land and offshore drillers. Demand for Rig Aftermarket products and services primarily depends on overall levels of oilfield drilling activity, which drives demand for spare parts, service, and repair for Rig System’s large installed base of equipment; and secondarily on drilling contractors’ and oil and gas companies’ capital spending plans, specifically capital expenditures on rig refurbishment and re-certification.
Wellbore Technologies
The Company’s Wellbore Technologies segment designs, manufactures, rents, and sells a variety of equipment and technologies used to perform drilling operations, and offers services that optimize their performance, including: solids control and waste management equipment and services, drilling fluids, premium drill pipe, wired pipe, tubular inspection and coating services, instrumentation, downhole tools, and drill bits.
The Wellbore Technologies segment focuses on oil and gas companies and supports drilling contractors, oilfield service companies, and oilfield rental companies. Demand for Wellbore Technologies products and services primarily depends on the level of oilfield drilling activity by oil and gas companies, drilling contractors, and oilfield service companies.
Completion & Production Solutions
The Company’s Completion & Production Solutions segment integrates technologies for well completions and oil and gas production. The segment designs, manufactures, and sells equipment and technologies needed for hydraulic fracture stimulation, including pressure pumping trucks and pumps, blenders, sanders, hydration units, injection units, flowline, manifolds and wellheads; well intervention, including coiled tubing units, coiled tubing, and wireline units and tools; onshore production, including composite pipe, surface transfer and progressive cavity pumps, and artificial lift systems; and offshore production, including floating production systems and subsea production technologies.
The Completion & Production Solutions segment primarily supports service companies and oil and gas companies. Demand for Completion & Production Solutions products depends on the level of oilfield completions and workover activity by oilfield service companies and drilling contractors and capital spending plans by oil and gas companies and oilfield service companies.
NATIONAL OILWELL VARCO, INC.
RECAST NEW REPORTING SEGMENTS (Unaudited)
(In millions)
| Three Months Ended |
Years Ended December 31, | |||||||||||||||||||||||
| March 31, 2014 | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||
| Revenue: |
||||||||||||||||||||||||
| Rig Systems |
$ | 2,256 | $ | 8,450 | $ | 7,077 | $ | 5,686 | $ | 5,570 | $ | 6,712 | ||||||||||||
| Rig Aftermarket |
750 | 2,692 | 2,138 | 1,876 | 1,546 | 1,518 | ||||||||||||||||||
| Wellbore Technologies |
1,278 | 5,211 | 5,184 | 4,455 | 3,389 | 3,081 | ||||||||||||||||||
| Completion & Production Solutions |
1,002 | 4,309 | 3,994 | 2,483 | 1,360 | 1,304 | ||||||||||||||||||
| Eliminations |
(397 | ) | (1,441 | ) | (1,199 | ) | (1,025 | ) | (764 | ) | (820 | ) | ||||||||||||
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|||||||||||||
| Total revenue |
$ | 4,889 | $ | 19,221 | $ | 17,194 | $ | 13,475 | $ | 11,101 | $ | 11,795 | ||||||||||||
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| Operating profit: |
||||||||||||||||||||||||
| Rig Systems |
$ | 451 | $ | 1,594 | $ | 1,685 | $ | 1,562 | $ | 1,629 | $ | 1,876 | ||||||||||||
| Rig Aftermarket |
191 | 729 | 594 | 528 | 435 | 413 | ||||||||||||||||||
| Wellbore Technologies |
221 | 915 | 983 | 726 | 377 | 155 | ||||||||||||||||||
| Completion & Production Solutions |
137 | 613 | 684 | 456 | 262 | 210 | ||||||||||||||||||
| Eliminations |
(201 | ) | (652 | ) | (557 | ) | (463 | ) | (340 | ) | (390 | ) | ||||||||||||
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|||||||||||||
| Total operating profit |
$ | 799 | $ | 3,199 | $ | 3,389 | $ | 2,809 | $ | 2,363 | $ | 2,264 | ||||||||||||
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| Operating profit %: |
||||||||||||||||||||||||
| Rig Systems |
20.0 | % | 18.9 | % | 23.8 | % | 27.5 | % | 29.2 | % | 27.9 | % | ||||||||||||
| Rig Aftermarket |
25.5 | % | 27.1 | % | 27.8 | % | 28.1 | % | 28.1 | % | 27.2 | % | ||||||||||||
| Wellbore Technologies |
17.3 | % | 17.6 | % | 19.0 | % | 16.3 | % | 11.1 | % | 5.0 | % | ||||||||||||
| Completion & Production Solutions |
13.7 | % | 14.2 | % | 17.1 | % | 18.4 | % | 19.3 | % | 16.1 | % | ||||||||||||
| Total operating profit % |
16.3 | % | 16.6 | % | 19.7 | % | 20.8 | % | 21.3 | % | 19.2 | % | ||||||||||||
NATIONAL OILWELL VARCO, INC.
NONRECURRING ITEMS (Unaudited)
(In millions)
| Three Months Ended |
Years Ended December 31, | |||||||||||||||||||||||
| March 31, 2014 | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||
| Revenue: |
||||||||||||||||||||||||
| Rig Systems |
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
| Rig Aftermarket |
— | — | — | — | — | — | ||||||||||||||||||
| Wellbore Technologies |
— | (102 | ) | — | — | — | — | |||||||||||||||||
| Completion & Production Solutions |
— | — | — | — | — | — | ||||||||||||||||||
| Eliminations |
— | — | — | — | — | — | ||||||||||||||||||
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|||||||||||||
| Total revenue |
$ | — | $ | (102 | ) | $ | — | $ | — | $ | — | $ | — | |||||||||||
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| Operating profit: |
||||||||||||||||||||||||
| Rig Systems |
$ | — | $ | 21 | $ | — | $ | 7 | $ | 7 | $ | — | ||||||||||||
| Rig Aftermarket |
— | — | — | — | — | — | ||||||||||||||||||
| Wellbore Technologies |
3 | (61 | ) | — | 10 | — | 148 | |||||||||||||||||
| Completion & Production Solutions |
6 | 82 | 90 | 24 | — | 8 | ||||||||||||||||||
| Eliminations |
9 | 2 | 41 | — | 11 | 78 | ||||||||||||||||||
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| Total operating profit |
$ | 18 | $ | 44 | $ | 131 | $ | 41 | $ | 18 | $ | 234 | ||||||||||||
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Nonrecurring items primarily include transaction costs and the amortization of backlog and inventory that was stepped up to fair value during purchase accounting, items which are included in operating profit. In addition, included in Wellbore Technologies revenue and operating profit for the year ended December 31, 2013, is a $102 million gain resulting from a legal settlement.
NATIONAL OILWELL VARCO, INC.
AS ADJUSTED SUPPLEMENTAL SCHEDULE (Unaudited)
(In millions)
| Three Months Ended |
Years Ended December 31, | |||||||||||||||||||||||
| March 31, 2014 | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||
| Revenue excluding nonrecurring items (Note 1): |
||||||||||||||||||||||||
| Rig Systems |
$ | 2,256 | $ | 8,450 | $ | 7,077 | $ | 5,686 | $ | 5,570 | $ | 6,712 | ||||||||||||
| Rig Aftermarket |
750 | 2,692 | 2,138 | 1,876 | 1,546 | 1,518 | ||||||||||||||||||
| Wellbore Technologies |
1,278 | 5,109 | 5,184 | 4,455 | 3,389 | 3,081 | ||||||||||||||||||
| Completion & Production Solutions |
1,002 | 4,309 | 3,994 | 2,483 | 1,360 | 1,304 | ||||||||||||||||||
| Eliminations |
(397 | ) | (1,441 | ) | (1,199 | ) | (1,025 | ) | (764 | ) | (820 | ) | ||||||||||||
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|||||||||||||
| Total revenue excluding nonrecurring items |
$ | 4,889 | $ | 19,119 | $ | 17,194 | $ | 13,475 | $ | 11,101 | $ | 11,795 | ||||||||||||
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|||||||||||||
| Operating profit excluding nonrecurring items |
||||||||||||||||||||||||
| Rig Systems |
$ | 451 | $ | 1,615 | $ | 1,685 | $ | 1,569 | $ | 1,636 | $ | 1,876 | ||||||||||||
| Rig Aftermarket |
191 | 729 | 594 | 528 | 435 | 413 | ||||||||||||||||||
| Wellbore Technologies |
224 | 854 | 983 | 736 | 377 | 303 | ||||||||||||||||||
| Completion & Production Solutions |
143 | 695 | 774 | 480 | 262 | 218 | ||||||||||||||||||
| Eliminations |
(192 | ) | (650 | ) | (516 | ) | (463 | ) | (329 | ) | (312 | ) | ||||||||||||
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|||||||||||||
| Total operating profit excluding nonrecurring items |
$ | 817 | $ | 3,243 | $ | 3,520 | $ | 2,850 | $ | 2,381 | $ | 2,498 | ||||||||||||
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| Operating profit % excluding nonrecurring items (Note 1): |
||||||||||||||||||||||||
| Rig Systems |
20.0 | % | 19.1 | % | 23.8 | % | 27.6 | % | 29.4 | % | 27.9 | % | ||||||||||||
| Rig Aftermarket |
25.5 | % | 27.1 | % | 27.8 | % | 28.1 | % | 28.1 | % | 27.2 | % | ||||||||||||
| Wellbore Technologies |
17.5 | % | 16.7 | % | 19.0 | % | 16.5 | % | 11.1 | % | 9.8 | % | ||||||||||||
| Completion & Production Solutions |
14.3 | % | 16.1 | % | 19.4 | % | 19.3 | % | 19.3 | % | 16.7 | % | ||||||||||||
| Total operating profit % excluding nonrecurring items |
16.7 | % | 17.0 | % | 20.5 | % | 21.2 | % | 21.4 | % | 21.2 | % | ||||||||||||
NATIONAL OILWELL VARCO, INC.
AS ADJUSTED BEFORE DEPRECIATION & AMORTIZATION SUPPLEMENTAL SCHEDULE (Unaudited)
(In millions)
| Three Months Ended |
Years Ended December 31, | |||||||||||||||||||||||
| March 31, 2014 | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||
| Operating profit excluding nonrecurring items (Note 1): |
||||||||||||||||||||||||
| Rig Systems |
$ | 451 | $ | 1,615 | $ | 1,685 | $ | 1,569 | $ | 1,636 | $ | 1,876 | ||||||||||||
| Rig Aftermarket |
191 | 729 | 594 | 528 | 435 | 413 | ||||||||||||||||||
| Wellbore Technologies |
224 | 854 | 983 | 736 | 377 | 303 | ||||||||||||||||||
| Completion & Production Solutions |
143 | 695 | 774 | 480 | 262 | 218 | ||||||||||||||||||
| Eliminations |
(192 | ) | (650 | ) | (516 | ) | (463 | ) | (329 | ) | (312 | ) | ||||||||||||
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| Total operating profit excluding nonrecurring items |
$ | 817 | $ | 3,243 | $ | 3,520 | $ | 2,850 | $ | 2,381 | $ | 2,498 | ||||||||||||
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| Depreciation & amortization: |
||||||||||||||||||||||||
| Rig Systems |
$ | 22 | $ | 82 | $ | 64 | $ | 61 | $ | 61 | $ | 50 | ||||||||||||
| Rig Aftermarket |
6 | 26 | 18 | 14 | 11 | 10 | ||||||||||||||||||
| Wellbore Technologies |
108 | 420 | 389 | 381 | 377 | 371 | ||||||||||||||||||
| Completion & Production Solutions |
55 | 210 | 145 | 93 | 54 | 53 | ||||||||||||||||||
| Eliminations |
— | — | — | — | — | — | ||||||||||||||||||
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| Total depreciation & amortization |
$ | 191 | $ | 738 | $ | 616 | $ | 549 | $ | 503 | $ | 484 | ||||||||||||
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| Operating profit as adjusted before depreciation & amortization (Note 1): |
||||||||||||||||||||||||
| Rig Systems |
$ | 473 | $ | 1,697 | $ | 1,749 | $ | 1,630 | $ | 1,697 | $ | 1,926 | ||||||||||||
| Rig Aftermarket |
197 | 755 | 612 | 542 | 446 | 423 | ||||||||||||||||||
| Wellbore Technologies |
332 | 1,274 | 1,372 | 1,117 | 754 | 674 | ||||||||||||||||||
| Completion & Production Solutions |
198 | 905 | 919 | 573 | 316 | 271 | ||||||||||||||||||
| Eliminations |
(192 | ) | (650 | ) | (516 | ) | (463 | ) | (329 | ) | (312 | ) | ||||||||||||
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| Total operating profit as adjusted before depreciation & amortization |
$ | 1,008 | $ | 3,981 | $ | 4,136 | $ | 3,399 | $ | 2,884 | $ | 2,982 | ||||||||||||
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| Operating profit % as adjusted before depreciation & amortization (Note 1): |
||||||||||||||||||||||||
| Rig Systems |
21.0 | % | 20.1 | % | 24.7 | % | 28.7 | % | 30.5 | % | 28.7 | % | ||||||||||||
| Rig Aftermarket |
26.3 | % | 28.0 | % | 28.6 | % | 28.9 | % | 28.8 | % | 27.9 | % | ||||||||||||
| Wellbore Technologies |
26.0 | % | 24.9 | % | 26.5 | % | 25.1 | % | 22.2 | % | 21.9 | % | ||||||||||||
| Completion & Production Solutions |
19.8 | % | 21.0 | % | 23.0 | % | 23.1 | % | 23.2 | % | 20.8 | % | ||||||||||||
| Total operating profit % as adjusted before depreciation & amortization |
20.6 | % | 20.8 | % | 24.1 | % | 25.2 | % | 26.0 | % | 25.3 | % | ||||||||||||
| Total operating profit as adjusted before depreciation & amortization: |
$ | 1,008 | $ | 3,981 | $ | 4,136 | $ | 3,399 | $ | 2,884 | $ | 2,982 | ||||||||||||
| Nonrecurring items |
(18 | ) | (44 | ) | (131 | ) | (41 | ) | (18 | ) | (234 | ) | ||||||||||||
| Interest income |
4 | 12 | 10 | 18 | 13 | 9 | ||||||||||||||||||
| Equity income in unconsolidated affiliates |
10 | 63 | 58 | 46 | 36 | 47 | ||||||||||||||||||
| Other income (expense), net |
— | (39 | ) | (68 | ) | (39 | ) | (48 | ) | (110 | ) | |||||||||||||
| Net income (loss) attributable to noncontrolling interest |
— | (1 | ) | 8 | 9 | 8 | (4 | ) | ||||||||||||||||
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| EBITDA (Note 1) |
$ | 1,004 | $ | 3,972 | $ | 4,013 | $ | 3,392 | $ | 2,875 | $ | 2,690 | ||||||||||||
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| Reconciliation of EBITDA (Note 1): |
||||||||||||||||||||||||
| GAAP net income attributable to Company |
$ | 548 | $ | 2,180 | $ | 2,383 | $ | 1,909 | $ | 1,617 | $ | 1,440 | ||||||||||||
| Provision for income taxes |
239 | 943 | 965 | 894 | 705 | 713 | ||||||||||||||||||
| Interest expense |
26 | 111 | 49 | 40 | 50 | 53 | ||||||||||||||||||
| Depreciation and amortization |
191 | 738 | 616 | 549 | 503 | 484 | ||||||||||||||||||
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|||||||||||||
| EBITDA |
1,004 | 3,972 | 4,013 | 3,392 | 2,875 | 2,690 | ||||||||||||||||||
| Nonrecurring items |
18 | 53 | 143 | 41 | 45 | 234 | ||||||||||||||||||
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| EBITDA excluding nonrecurring items (Note 1) |
$ | 1,022 | $ | 4,025 | $ | 4,156 | $ | 3,433 | $ | 2,920 | $ | 2,924 | ||||||||||||
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NATIONAL OILWELL VARCO, INC.
RECAST NEW REPORTING SEGMENTS (Unaudited)
(In millions)
| Year Ended December 31, 2013 | ||||||||||||||||
| First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
|||||||||||||
| Revenue: |
||||||||||||||||
| Rig Systems |
$ | 1,911 | $ | 2,081 | $ | 2,061 | $ | 2,397 | ||||||||
| Rig Aftermarket |
551 | 670 | 712 | 759 | ||||||||||||
| Wellbore Technologies |
1,223 | 1,222 | 1,395 | 1,371 | ||||||||||||
| Completion & Production Solutions |
1,002 | 1,057 | 1,095 | 1,155 | ||||||||||||
| Eliminations |
(311 | ) | (350 | ) | (400 | ) | (380 | ) | ||||||||
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|||||||||
| Total revenue |
$ | 4,376 | $ | 4,680 | $ | 4,863 | $ | 5,302 | ||||||||
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| Operating profit: |
||||||||||||||||
| Rig Systems |
$ | 370 | $ | 383 | $ | 388 | $ | 453 | ||||||||
| Rig Aftermarket |
142 | 189 | 202 | 196 | ||||||||||||
| Wellbore Technologies |
182 | 184 | 306 | 243 | ||||||||||||
| Completion & Production Solutions |
136 | 127 | 175 | 175 | ||||||||||||
| Eliminations |
(137 | ) | (170 | ) | (187 | ) | (158 | ) | ||||||||
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|||||||||
| Total operating profit |
$ | 693 | $ | 713 | $ | 884 | $ | 909 | ||||||||
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|||||||||
| Operating profit %: |
||||||||||||||||
| Rig Systems |
19.4 | % | 18.4 | % | 18.8 | % | 18.9 | % | ||||||||
| Rig Aftermarket |
25.8 | % | 28.2 | % | 28.4 | % | 25.8 | % | ||||||||
| Wellbore Technologies |
14.9 | % | 15.1 | % | 21.9 | % | 17.7 | % | ||||||||
| Completion & Production Solutions |
13.6 | % | 12.0 | % | 16.0 | % | 15.2 | % | ||||||||
| Total operating profit % |
15.8 | % | 15.2 | % | 18.2 | % | 17.1 | % | ||||||||
NATIONAL OILWELL VARCO, INC.
NONRECURRING ITEMS (Unaudited)
(In millions)
| Year Ended December 31, 2013 | ||||||||||||||||
| First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
|||||||||||||
| Revenue: |
||||||||||||||||
| Rig Systems |
$ | — | $ | — | $ | — | $ | — | ||||||||
| Rig Aftermarket |
— | — | — | — | ||||||||||||
| Wellbore Technologies |
— | — | (102 | ) | — | |||||||||||
| Completion & Production Solutions |
— | — | — | — | ||||||||||||
| Eliminations |
— | — | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total revenue |
$ | — | $ | — | $ | (102 | ) | $ | — | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating profit: |
||||||||||||||||
| Rig Systems |
$ | 2 | $ | 10 | $ | 4 | $ | 5 | ||||||||
| Rig Aftermarket |
— | — | — | — | ||||||||||||
| Wellbore Technologies |
26 | 11 | (100 | ) | 2 | |||||||||||
| Completion & Production Solutions |
36 | 36 | 1 | 9 | ||||||||||||
| Eliminations |
— | — | 2 | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total operating profit |
$ | 64 | $ | 57 | $ | (93 | ) | $ | 16 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
Nonrecurring items primarily include transaction costs and the amortization of backlog and inventory that was stepped up to fair value during purchase accounting, items which are included in operating profit. In addition, included in Wellbore Technologies revenue and operating profit for the three months ended September 30, 2013, is a $102 million gain resulting from a legal settlement.
NATIONAL OILWELL VARCO, INC.
AS ADJUSTED SUPPLEMENTAL SCHEDULE (Unaudited)
(In millions)
| Year Ended December 31, 2013 | ||||||||||||||||
| First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
|||||||||||||
| Revenue excluding nonrecurring items (Note 1): |
||||||||||||||||
| Rig Systems |
$ | 1,911 | $ | 2,081 | $ | 2,061 | $ | 2,397 | ||||||||
| Rig Aftermarket |
551 | 670 | 712 | 759 | ||||||||||||
| Wellbore Technologies |
1,223 | 1,222 | 1,293 | 1,371 | ||||||||||||
| Completion & Production Solutions |
1,002 | 1,057 | 1,095 | 1,155 | ||||||||||||
| Eliminations |
(311 | ) | (350 | ) | (400 | ) | (380 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total revenue excluding nonrecurring items |
$ | 4,376 | $ | 4,680 | $ | 4,761 | $ | 5,302 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating profit excluding nonrecurring items (Note 1): |
||||||||||||||||
| Rig Systems |
$ | 372 | $ | 393 | $ | 392 | $ | 458 | ||||||||
| Rig Aftermarket |
142 | 189 | 202 | 196 | ||||||||||||
| Wellbore Technologies |
208 | 195 | 206 | 245 | ||||||||||||
| Completion & Production Solutions |
172 | 163 | 176 | 184 | ||||||||||||
| Eliminations |
(137 | ) | (170 | ) | (185 | ) | (158 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total operating profit excluding nonrecurring items |
$ | 757 | $ | 770 | $ | 791 | $ | 925 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating profit % excluding nonrecurring items (Note 1): |
||||||||||||||||
| Rig Systems |
19.5 | % | 18.9 | % | 19.0 | % | 19.1 | % | ||||||||
| Rig Aftermarket |
25.8 | % | 28.2 | % | 28.4 | % | 25.8 | % | ||||||||
| Wellbore Technologies |
17.0 | % | 16.0 | % | 15.9 | % | 17.9 | % | ||||||||
| Completion & Production Solutions |
17.2 | % | 15.4 | % | 16.1 | % | 15.9 | % | ||||||||
| Total operating profit % excluding nonrecurring items |
17.3 | % | 16.5 | % | 16.6 | % | 17.4 | % | ||||||||
NATIONAL OILWELL VARCO, INC.
AS ADJUSTED BEFORE DEPRECIATION & AMORTIZATION SUPPLEMENTAL SCHEDULE (Unaudited)
(In millions)
| Year Ended December 31, 2013 | ||||||||||||||||
| First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
|||||||||||||
| Operating profit excluding nonrecurring items (Note 1): |
||||||||||||||||
| Rig Systems |
$ | 372 | $ | 393 | $ | 392 | $ | 458 | ||||||||
| Rig Aftermarket |
142 | 189 | 202 | 196 | ||||||||||||
| Wellbore Technologies |
208 | 195 | 206 | 245 | ||||||||||||
| Completion & Production Solutions |
172 | 163 | 176 | 184 | ||||||||||||
| Eliminations |
(137 | ) | (170 | ) | (185 | ) | (158 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total operating profit excluding nonrecurring items |
$ | 757 | $ | 770 | $ | 791 | $ | 925 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Depreciation & amortization: |
||||||||||||||||
| Rig Systems |
$ | 16 | $ | 22 | $ | 19 | $ | 25 | ||||||||
| Rig Aftermarket |
6 | 6 | 6 | 8 | ||||||||||||
| Wellbore Technologies |
101 | 101 | 111 | 108 | ||||||||||||
| Completion & Production Solutions |
47 | 57 | 51 | 54 | ||||||||||||
| Eliminations |
— | — | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total depreciation & amortization |
$ | 170 | $ | 186 | $ | 187 | $ | 195 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating profit as adjusted before depreciation & amortization (Note 1): |
||||||||||||||||
| Rig Systems |
$ | 388 | $ | 415 | $ | 411 | $ | 483 | ||||||||
| Rig Aftermarket |
148 | 195 | 208 | 204 | ||||||||||||
| Wellbore Technologies |
309 | 296 | 317 | 353 | ||||||||||||
| Completion & Production Solutions |
219 | 220 | 227 | 238 | ||||||||||||
| Eliminations |
(137 | ) | (170 | ) | (185 | ) | (158 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total operating profit as adjusted before depreciation & amortization |
$ | 927 | $ | 956 | $ | 978 | $ | 1,120 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating profit % as adjusted before depreciation & amortization (Note 1): |
||||||||||||||||
| Rig Systems |
20.3 | % | 19.9 | % | 19.9 | % | 20.2 | % | ||||||||
| Rig Aftermarket |
26.9 | % | 29.1 | % | 29.2 | % | 26.9 | % | ||||||||
| Wellbore Technologies |
25.3 | % | 24.2 | % | 24.5 | % | 25.7 | % | ||||||||
| Completion & Production Solutions |
21.9 | % | 20.8 | % | 20.7 | % | 20.6 | % | ||||||||
| Total operating profit % as adjusted before depreciation & amortization |
21.2 | % | 20.4 | % | 20.5 | % | 21.1 | % | ||||||||
| Total operating profit as adjusted before depreciation & amortization: |
$ | 927 | $ | 956 | $ | 978 | $ | 1,120 | ||||||||
| Nonrecurring items |
(64 | ) | (57 | ) | 93 | (16 | ) | |||||||||
| Interest income |
3 | 3 | 2 | 4 | ||||||||||||
| Equity income in unconsolidated affiliates |
19 | 15 | 13 | 16 | ||||||||||||
| Other income (expense), net |
(23 | ) | 11 | (12 | ) | (15 | ) | |||||||||
| Net income (loss) attributable to noncontrolling interest |
2 | — | — | (3 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| EBITDA (Note 1) |
$ | 864 | $ | 928 | $ | 1,074 | $ | 1,106 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Reconciliation of EBITDA (Note 1): |
||||||||||||||||
| GAAP net income attributable to Company |
$ | 461 | $ | 494 | $ | 598 | $ | 627 | ||||||||
| Provision for income taxes |
205 | 218 | 263 | 257 | ||||||||||||
| Interest expense |
28 | 30 | 26 | 27 | ||||||||||||
| Depreciation and amortization |
170 | 186 | 187 | 195 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| EBITDA |
864 | 928 | 1,074 | 1,106 | ||||||||||||
| Nonrecurring items |
72 | 57 | (92 | ) | 16 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| EBITDA excluding nonrecurring items (Note 1) |
$ | 936 | $ | 985 | $ | 982 | $ | 1,122 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
NATIONAL OILWELL VARCO, INC.
RECAST NEW REPORTING SEGMENTS (Unaudited)
(In millions)
| Year Ended December 31, 2012 | ||||||||||||||||
| First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
|||||||||||||
| Revenue: |
||||||||||||||||
| Rig Systems |
$ | 1,633 | $ | 1,611 | $ | 1,741 | $ | 2,092 | ||||||||
| Rig Aftermarket |
393 | 660 | 533 | 552 | ||||||||||||
| Wellbore Technologies |
1,279 | 1,326 | 1,273 | 1,306 | ||||||||||||
| Completion & Production Solutions |
728 | 948 | 963 | 1,355 | ||||||||||||
| Eliminations |
(65 | ) | (339 | ) | (203 | ) | (592 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total revenue |
$ | 3,968 | $ | 4,206 | $ | 4,307 | $ | 4,713 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating profit: |
||||||||||||||||
| Rig Systems |
$ | 376 | $ | 376 | $ | 404 | $ | 529 | ||||||||
| Rig Aftermarket |
112 | 194 | 159 | 129 | ||||||||||||
| Wellbore Technologies |
256 | 257 | 229 | 241 | ||||||||||||
| Completion & Production Solutions |
137 | 155 | 140 | 252 | ||||||||||||
| Eliminations |
(41 | ) | (143 | ) | (79 | ) | (294 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total operating profit |
$ | 840 | $ | 839 | $ | 853 | $ | 857 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating profit %: |
||||||||||||||||
| Rig Systems |
23.0 | % | 23.3 | % | 23.2 | % | 25.3 | % | ||||||||
| Rig Aftermarket |
28.5 | % | 29.4 | % | 29.8 | % | 23.4 | % | ||||||||
| Wellbore Technologies |
20.0 | % | 19.4 | % | 18.0 | % | 18.5 | % | ||||||||
| Completion & Production Solutions |
18.8 | % | 16.4 | % | 14.5 | % | 18.6 | % | ||||||||
| Total operating profit % |
21.2 | % | 19.9 | % | 19.8 | % | 18.2 | % | ||||||||
NATIONAL OILWELL VARCO, INC.
NONRECURRING ITEMS (Unaudited)
(In millions)
| Year Ended December 31, 2012 | ||||||||||||||||
| First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
|||||||||||||
| Revenue: |
||||||||||||||||
| Rig Systems |
$ | — | $ | — | $ | — | $ | — | ||||||||
| Rig Aftermarket |
— | — | — | — | ||||||||||||
| Wellbore Technologies |
— | — | — | — | ||||||||||||
| Completion & Production Solutions |
— | — | — | — | ||||||||||||
| Eliminations |
— | — | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total revenue |
$ | — | $ | — | $ | — | $ | — | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating profit: |
||||||||||||||||
| Rig Systems |
$ | — | $ | — | $ | — | $ | — | ||||||||
| Rig Aftermarket |
— | — | — | — | ||||||||||||
| Wellbore Technologies |
— | — | — | — | ||||||||||||
| Completion & Production Solutions |
4 | 21 | 22 | 43 | ||||||||||||
| Eliminations |
— | 7 | 26 | 8 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total operating profit |
$ | 4 | $ | 28 | $ | 48 | $ | 51 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
Nonrecurring items primarily include transaction costs and the amortization of backlog and inventory that was stepped up to fair value during purchase accounting, items which are included in operating profit.
NATIONAL OILWELL VARCO, INC.
AS ADJUSTED SUPPLEMENTAL SCHEDULE (Unaudited)
(In millions)
| Year Ended December 31, 2012 | ||||||||||||||||
| First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
|||||||||||||
| Revenue excluding nonrecurring items (Note 1): |
||||||||||||||||
| Rig Systems |
$ | 1,633 | $ | 1,611 | $ | 1,741 | $ | 2,092 | ||||||||
| Rig Aftermarket |
393 | 660 | 533 | 552 | ||||||||||||
| Wellbore Technologies |
1,279 | 1,326 | 1,273 | 1,306 | ||||||||||||
| Completion & Production Solutions |
728 | 948 | 963 | 1,355 | ||||||||||||
| Eliminations |
(65 | ) | (339 | ) | (203 | ) | (592 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total revenue excluding nonrecurring items |
$ | 3,968 | $ | 4,206 | $ | 4,307 | $ | 4,713 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating profit excluding nonrecurring items (Note 1): |
||||||||||||||||
| Rig Systems |
$ | 376 | $ | 376 | $ | 404 | $ | 529 | ||||||||
| Rig Aftermarket |
112 | 194 | 159 | 129 | ||||||||||||
| Wellbore Technologies |
256 | 257 | 229 | 241 | ||||||||||||
| Completion & Production Solutions |
141 | 176 | 162 | 295 | ||||||||||||
| Eliminations |
(41 | ) | (136 | ) | (53 | ) | (286 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total operating profit excluding nonrecurring items |
$ | 844 | $ | 867 | $ | 901 | $ | 908 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating profit % excluding nonrecurring items (Note 1): |
||||||||||||||||
| Rig Systems |
23.0 | % | 23.3 | % | 23.2 | % | 25.3 | % | ||||||||
| Rig Aftermarket |
28.5 | % | 29.4 | % | 29.8 | % | 23.4 | % | ||||||||
| Wellbore Technologies |
20.0 | % | 19.4 | % | 18.0 | % | 18.5 | % | ||||||||
| Completion & Production Solutions |
19.4 | % | 18.6 | % | 16.8 | % | 21.8 | % | ||||||||
| Total operating profit % excluding nonrecurring items |
21.3 | % | 20.6 | % | 20.9 | % | 19.3 | % | ||||||||
NATIONAL OILWELL VARCO, INC.
AS ADJUSTED BEFORE DEPRECIATION & AMORTIZATION SUPPLEMENTAL SCHEDULE (Unaudited)
(In millions)
| Year Ended December 31, 2012 | ||||||||||||||||
| First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
|||||||||||||
| Operating profit excluding nonrecurring items (Note 1): |
||||||||||||||||
| Rig Systems |
$ | 376 | $ | 376 | $ | 404 | $ | 529 | ||||||||
| Rig Aftermarket |
112 | 194 | 159 | 129 | ||||||||||||
| Wellbore Technologies |
256 | 257 | 229 | 241 | ||||||||||||
| Completion & Production Solutions |
141 | 176 | 162 | 295 | ||||||||||||
| Eliminations |
(41 | ) | (136 | ) | (53 | ) | (286 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total operating profit excluding nonrecurring items |
$ | 844 | $ | 867 | $ | 901 | $ | 908 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Depreciation & amortization: |
||||||||||||||||
| Rig Systems |
$ | 15 | $ | 16 | $ | 15 | $ | 18 | ||||||||
| Rig Aftermarket |
4 | 4 | 5 | 5 | ||||||||||||
| Wellbore Technologies |
94 | 98 | 98 | 99 | ||||||||||||
| Completion & Production Solutions |
32 | 37 | 35 | 41 | ||||||||||||
| Eliminations |
— | — | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total depreciation & amortization |
$ | 145 | $ | 155 | $ | 153 | $ | 163 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating profit as adjusted before depreciation & amortization (Note 1): |
||||||||||||||||
| Rig Systems |
$ | 391 | $ | 392 | $ | 419 | $ | 547 | ||||||||
| Rig Aftermarket |
116 | 198 | 164 | 134 | ||||||||||||
| Wellbore Technologies |
350 | 355 | 327 | 340 | ||||||||||||
| Completion & Production Solutions |
173 | 213 | 197 | 336 | ||||||||||||
| Eliminations |
(41 | ) | (136 | ) | (53 | ) | (286 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total operating profit as adjusted before depreciation & amortization |
$ | 989 | $ | 1,022 | $ | 1,054 | $ | 1,071 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating profit % as adjusted before depreciation & amortization (Note 1): |
||||||||||||||||
| Rig Systems |
23.9 | % | 24.3 | % | 24.1 | % | 26.1 | % | ||||||||
| Rig Aftermarket |
29.5 | % | 30.0 | % | 30.8 | % | 24.3 | % | ||||||||
| Wellbore Technologies |
27.4 | % | 26.8 | % | 25.7 | % | 26.0 | % | ||||||||
| Completion & Production Solutions |
23.8 | % | 22.5 | % | 20.5 | % | 24.8 | % | ||||||||
| Total operating profit % as adjusted before depreciation & amortization |
24.9 | % | 24.3 | % | 24.5 | % | 22.7 | % | ||||||||
| Total operating profit as adjusted before depreciation & amortization: |
$ | 989 | $ | 1,022 | $ | 1,054 | $ | 1,071 | ||||||||
| Nonrecurring items |
(4 | ) | (28 | ) | (48 | ) | (51 | ) | ||||||||
| Interest income |
3 | 3 | 2 | 2 | ||||||||||||
| Equity income in unconsolidated affiliates |
17 | 19 | 7 | 15 | ||||||||||||
| Other income (expense), net |
(14 | ) | (5 | ) | (20 | ) | (29 | ) | ||||||||
| Net income (loss) attributable to noncontrolling interest |
2 | 3 | 3 | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| EBITDA (Note 1) |
$ | 993 | $ | 1,014 | $ | 998 | $ | 1,008 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Reconciliation of EBITDA (Note 1): |
||||||||||||||||
| GAAP net income attributable to Company |
$ | 583 | $ | 579 | $ | 584 | $ | 637 | ||||||||
| Provision for income taxes |
257 | 271 | 250 | 187 | ||||||||||||
| Interest expense |
8 | 9 | 11 | 21 | ||||||||||||
| Depreciation and amortization |
145 | 155 | 153 | 163 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| EBITDA |
993 | 1,014 | 998 | 1,008 | ||||||||||||
| Nonrecurring items |
7 | 28 | 57 | 51 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| EBITDA excluding nonrecurring items (Note 1) |
$ | 1,000 | $ | 1,042 | $ | 1,055 | $ | 1,059 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
NATIONAL OILWELL VARCO, INC.
BACKLOG (Unaudited)
(In millions)
| Beginning Backlog |
Backlog Orders |
Revenue out of Backlog |
Ending Backlog |
|||||||||||||
| Rig Systems |
||||||||||||||||
| Years Ended: |
||||||||||||||||
| 2009 |
$ | 10,834 | $ | 1,499 | $ | 6,089 | $ | 6,244 | ||||||||
| 2010 |
6,244 | 3,106 | 4,928 | 4,422 | ||||||||||||
| 2011 |
4,422 | 9,670 | 4,869 | 9,223 | ||||||||||||
| 2012 |
9,223 | 7,829 | 6,176 | 10,876 | ||||||||||||
| 2013 |
10,876 | 11,537 | 7,385 | 15,028 | ||||||||||||
| Quarters Ended: |
||||||||||||||||
| March 31, 2013 |
$ | 10,876 | $ | 2,759 | $ | 1,666 | $ | 11,969 | ||||||||
| June 30, 2013 |
11,969 | 2,705 | 1,819 | 12,855 | ||||||||||||
| September 30, 2013 |
12,855 | 2,978 | 1,772 | 14,061 | ||||||||||||
| December 31, 2013 |
14,061 | 3,095 | 2,128 | 15,028 | ||||||||||||
| March 31, 2014 |
15,028 | 2,116 | 1,964 | 15,180 | ||||||||||||
| Completion & Production Solutions |
||||||||||||||||
| Years Ended: |
||||||||||||||||
| 2009 |
$ | 415 | $ | 456 | $ | 632 | $ | 239 | ||||||||
| 2010 |
239 | 1,216 | 629 | 826 | ||||||||||||
| 2011 |
826 | 1,775 | 1,283 | 1,318 | ||||||||||||
| 2012 |
1,318 | 2,214 | 2,188 | 1,344 | ||||||||||||
| 2013 |
1,344 | 2,673 | 2,383 | 1,634 | ||||||||||||
| Quarters Ended: |
||||||||||||||||
| March 31, 2013 |
$ | 1,344 | $ | 600 | $ | 593 | $ | 1,351 | ||||||||
| June 30, 2013 |
1,351 | 738 | 597 | 1,492 | ||||||||||||
| September 30, 2013 |
1,492 | 557 | 552 | 1,497 | ||||||||||||
| December 31, 2013 |
1,497 | 778 | 641 | 1,634 | ||||||||||||
| March 31, 2014 |
1,634 | 485 | 492 | 1,627 | ||||||||||||
The Company monitors its backlog of orders within its Rig Systems and Completion & Production Solutions segments to guide its planning. Backlog includes orders which typically require more than three months to manufacture and deliver.
Backlog measurements are made on the basis of written orders which are firm, but may be defaulted upon by the customer in some instances. Most require reimbursement to the Company for costs incurred in such an event. There can be no assurance that the backlog amounts will ultimately be realized as revenue, or that the Company will earn a profit on backlog work.
NATIONAL OILWELL VARCO, INC.
NOTES TO FORM 8-K (Unaudited)
Note 1: In an effort to provide investors with additional information regarding our results as determined by GAAP, we disclose various non-GAAP financial measures in our quarterly earnings press releases and other public disclosures. The primary non-GAAP financial measures we focus on are: (i) revenue excluding nonrecurring items, (ii) operating profit excluding nonrecurring items, (iii) operating profit percentage excluding nonrecurring items, (iv) operating profit excluding nonrecurring items before depreciation & amortization, (v) operating profit percentage excluding nonrecurring items before depreciation & amortization and (vi) EBITDA. Each of these financial measures excludes the impact of certain other costs and therefore has not been calculated in accordance with GAAP. A reconciliation of each of these non-GAAP financial measures to its most comparable GAAP financial measure is included here within.
We use these non-GAAP financial measures internally to evaluate and manage the Company’s operations because we believe it provides useful supplemental information regarding the Company’s on-going economic performance. We have chosen to provide this information to investors to enable them to perform more meaningful comparisons of operating results and as a means to emphasize the results of on-going operations.