Document and Entity Information - USD ($) $ in Billions	12 Months Ended
Document and Entity Information - USD ($) $ in Billions	Dec. 31, 2016	Feb. 10, 2017	Jun. 30, 2016
Document And Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	FY
Trading Symbol	NOV
Entity Registrant Name	NATIONAL OILWELL VARCO INC
Entity Central Index Key	0001021860
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		378,727,274
Entity Public Float			$ 12.7

Consolidated Balance Sheets - USD ($) $ in Millions	Dec. 31, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 1,408	$ 2,080
Receivables, net	2,083	2,926
Inventories, net	3,325	4,678
Costs in excess of billings	665	1,250
Prepaid and other current assets	395	491
Total current assets	7,876	11,425
Property, plant and equipment, net	3,150	3,124
Deferred income taxes	86	130
Goodwill	6,067	6,980
Intangibles, net	3,530	3,849
Investment in unconsolidated affiliates	307	327
Other assets	124	135
Total assets	21,140	25,970
Current liabilities:
Accounts payable	414	623
Accrued liabilities	1,568	2,284
Billings in excess of costs	440	785
Current portion of long-term debt and short-term borrowings	506	2
Accrued income taxes	119	264
Total current liabilities	3,047	3,958
Long-term debt	2,708	3,907
Deferred income taxes	1,064	1,362
Other liabilities	318	283
Total liabilities	7,137	9,510
Commitments and contingencies
Stockholders' equity:
Common stock - par value $.01; 1 billion shares authorized; 378,637,403 and 375,764,794 shares issued and outstanding at December 31, 2016 and December 31, 2015	4	4
Additional paid-in capital	8,103	8,005
Accumulated other comprehensive loss	(1,452)	(1,553)
Retained earnings	7,285	9,927
Total Company stockholders' equity	13,940	16,383
Noncontrolling interests	63	77
Total stockholders' equity	14,003	16,460
Total liabilities and stockholders' equity	$ 21,140	$ 25,970

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2016	Dec. 31, 2015
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	378,637,403	375,764,794
Common stock, shares outstanding	378,637,403	375,764,794

Consolidated Statements of Income (Loss) - USD ($) shares in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Revenue
Sales	$ 5,351	$ 11,707	$ 17,173
Services	1,900	3,050	4,267
Total	7,251	14,757	21,440
Cost of revenue
Cost of sales	5,671	9,362	12,407
Cost of services	1,681	2,332	3,224
Total	7,352	11,694	15,631
Gross profit (loss)	(101)	3,063	5,809
Selling, general and administrative	1,338	1,764	2,092
Goodwill and intangible asset impairment	972	1,689	104
Operating profit (loss)	(2,411)	(390)	3,613
Interest and financial costs	(105)	(103)	(105)
Interest income	15	14	18
Equity income (loss) in unconsolidated affiliates	(21)	13	58
Other income (expense), net	(101)	(123)	(90)
Income (loss) from continuing operations before income taxes	(2,623)	(589)	3,494
Provision for income taxes	(207)	178	1,039
Income (loss) from continuing operations	(2,416)	(767)	2,455
Income from discontinued operations			52
Net income (loss)	(2,416)	(767)	2,507
Net income (loss) attributable to noncontrolling interests	(4)	2	5
Net income (loss) attributable to Company	$ (2,412)	$ (769)	$ 2,502
Basic:
Income (loss) from continuing operations	$ (6.41)	$ (1.99)	$ 5.73
Income from discontinued operations			0.12
Net income (loss) attributable to Company	(6.41)	(1.99)	5.85
Diluted:
Income (loss) from continuing operations	(6.41)	(1.99)	5.70
Income from discontinued operations			0.12
Net income (loss) attributable to Company	(6.41)	(1.99)	5.82
Cash dividends per share	$ 0.61	$ 1.84	$ 1.64
Weighted average shares outstanding:
Basic	376	387	428
Diluted	376	387	430

Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ (2,416)	$ (767)	$ 2,507
Other comprehensive income (loss):
Currency translation adjustments	(97)	(764)	(532)
Derivative financial instruments, net of tax	166	23	(233)
Change in defined benefit plans, net of tax	32	22	(65)
Comprehensive income (loss)	(2,315)	(1,486)	1,677
Net income (loss) attributable to noncontrolling interests	(4)	2	5
Comprehensive income (loss) attributable to Company	$ (2,311)	$ (1,488)	$ 1,672

Consolidated Statements of Cash Flows - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Cash flows from operating activities:
Income (loss) from continuing operations	$ (2,416)	$ (767)	$ 2,455
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	703	747	778
Deferred income taxes	(198)	(258)	(300)
Stock-based compensation	107	109	101
Excess tax benefit from stock-based compensation	7	1	(15)
Equity (income) loss in unconsolidated affiliates	21	(13)	(58)
Dividend from unconsolidated affiliate	6	34	73
Goodwill and intangible asset impairment	972	1,689	104
Provision for inventory losses	606	186	128
Other, net	108	70	53
Change in operating assets and liabilities, net of acquisitions:
Receivables	845	1,091	(153)
Inventories	782	410	(710)
Costs in excess of billings	646	548	(262)
Prepaid and other current assets	102	112	(60)
Accounts payable	(243)	(570)	95
Accrued liabilities	(773)	(1,137)	879
Billings in excess of costs	(366)	(686)	(59)
Income taxes payable	(146)	(167)	(124)
Other assets/liabilities, net	197	(67)	(400)
Net cash provided by continuing operating activities	960	1,332	2,525
Discontinued operations			89
Net cash provided by operating activities	960	1,332	2,614
Cash flows from investing activities:
Purchases of property, plant and equipment	(284)	(453)	(699)
Business acquisitions, net of cash acquired	(230)	(86)	(291)
Cash distributed in spin-off			(253)
Other, net	26	25	151
Net cash used in continuing investing activities	(488)	(514)	(1,092)
Discontinued operations			(12)
Net cash used in investing activities	(488)	(514)	(1,104)
Cash flows from financing activities:
Borrowings against lines of credit and other debt	3,972	11,377	173
Payments against lines of credit and other debt	(4,872)	(10,615)	(155)
Cash dividends paid	(230)	(710)	(703)
Share repurchases		(2,221)	(779)
Proceeds from stock options exercised	4	7	108
Excess tax benefit from stock-based compensation	(7)	(1)	15
Other	(8)		(2)
Net cash used in continuing financing activities	(1,141)	(2,163)	(1,343)
Discontinued operations	0	0	0
Net cash used in financing activities	(1,141)	(2,163)	(1,343)
Effect of exchange rates on cash	(3)	(111)	(67)
Increase (decrease) in cash and cash equivalents	(672)	(1,456)	100
Cash and cash equivalents, beginning of period	2,080	3,536	3,436
Cash and cash equivalents, end of period	1,408	2,080	3,536
Cash payments during the period for:
Interest	101	103	102
Income taxes	$ 181	$ 782	$ 1,380

Consolidated Statements of Stockholders' Equity - USD ($) shares in Millions, $ in Millions	Total	Common Stock [Member]	Additional Paid in Capital [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Retained Earnings (Loss) [Member]	Total Company Stockholders' Equity [Member]	Noncontrolling Interests [Member]
Beginning Balance at Dec. 31, 2013	$ 22,330	$ 4	$ 8,907	$ (4)	$ 13,323	$ 22,230	$ 100
Beginning Balance, shares at Dec. 31, 2013		428
Net income (loss)	2,507				2,502	2,502	5
Other comprehensive income (loss), net	(830)			(830)		(830)
Cash dividends, per common share	(703)				(703)	(703)
Dividends to noncontrolling interests	(20)						(20)
Noncontrolling interest contribution	16						16
Disposal of noncontrolling interest, net	(21)						(21)
Spin-off of distribution business	(1,941)				(1,941)	(1,941)
Stock-based compensation	101		101			101
Common stock issued	108		108			108
Common stock issued, shares		3
Withholding taxes	(11)		(11)			(11)
Share repurchases, value	(779)		(779)			(779)
Share repurchases, shares		(12)
Excess tax benefit from stock-based compensation	15		15			15
Ending Balance at Dec. 31, 2014	20,772	$ 4	8,341	(834)	13,181	20,692	80
Ending Balance, shares at Dec. 31, 2014		419
Net income (loss)	(767)				(769)	(769)	2
Other comprehensive income (loss), net	(719)			(719)		(719)
Cash dividends, per common share	(710)				(710)	(710)
Dividends to noncontrolling interests	(8)						(8)
Noncontrolling interest contribution	3						3
Stock-based compensation	109		109			109
Common stock issued	7		7			7
Common stock issued, shares		1
Withholding taxes	(5)		(5)			(5)
Share repurchases, value	(2,221)		(446)		(1,775)	(2,221)
Share repurchases, shares		(44)
Excess tax benefit from stock-based compensation	(1)		(1)			(1)
Ending Balance at Dec. 31, 2015	16,460	$ 4	8,005	(1,553)	9,927	16,383	77
Ending Balance, shares at Dec. 31, 2015		376
Net income (loss)	(2,416)				(2,412)	(2,412)	(4)
Other comprehensive income (loss), net	101			101		101
Cash dividends, per common share	(230)				(230)	(230)
Dividends to noncontrolling interests	(11)						(11)
Noncontrolling interest contribution	3						3
Disposal of noncontrolling interest, net	(2)						(2)
Stock-based compensation	87		87			87
Common stock issued	4		4			4
Common stock issued, shares		2
Stock issued in acquisition	18		18			18
Stock issued in acquisition, shares		1
Withholding taxes	(4)		(4)			(4)
Excess tax benefit from stock-based compensation	(7)		(7)			(7)
Ending Balance at Dec. 31, 2016	$ 14,003	$ 4	$ 8,103	$ (1,452)	$ 7,285	$ 13,940	$ 63
Ending Balance, shares at Dec. 31, 2016		379

Organization and Basis of Presentation	12 Months Ended
Organization and Basis of Presentation	Dec. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and Basis of Presentation	1. Organization and Basis of Presentation Nature of Business We design, construct, manufacture and sell comprehensive systems, components, and products used in oil and gas drilling and production, provide oilfield services and supplies, and distribute products and provide supply chain integration services to the upstream oil and gas industry. Our revenues and operating results are directly related to the level of worldwide oil and gas drilling and production activities and the profitability and cash flow of oil and gas companies, drilling contractors and oilfield service companies, which in turn are affected by current and anticipated prices of oil and gas. Oil and gas prices have been, and are likely to continue to be, volatile. Basis of Consolidation The accompanying Consolidated Financial Statements include the accounts of National Oilwell Varco, Inc. and its consolidated subsidiaries. Certain reclassifications have been made to the prior year financial statements in order for them to conform with the 2016 presentation. All significant intercompany transactions and balances have been eliminated in consolidation. Investments that are not wholly-owned, but where we exercise control, are fully consolidated with the equity held by minority owners and their portion of net income (loss) reflected as noncontrolling interests in the accompanying consolidated financial statements. Investments in unconsolidated affiliates, over which we exercise significant influence, but not control, are accounted for by the equity method. On May 30, 2014, the Company completed the spin-off of its distribution business into an independent public company named NOW Inc. In conjunction with the spin-off of NOW Inc. the Company reviewed its reporting and management structure, and effective April 1, 2014, reorganized the Rig Technology, Petroleum Services & Supplies and remaining operations of Distribution & Transmission reporting segments into four new reporting segments. The new reporting segments are Rig Systems, Rig Aftermarket, Wellbore Technologies and Completion & Production Solutions. As a result of the reorganization, all prior periods are presented on this basis. Results of operations related to NOW Inc. have been classified as discontinued operations in all periods presented on Form 10-K.

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2016

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Fair Value of Financial Instruments

The carrying amounts of financial instruments including 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.

Derivative Financial Instruments

Accounting Standards Codification (“ASC”) Topic 815, “Derivatives and Hedging” (“ASC Topic 815”) requires companies to recognize all 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 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 two and 24 months, but may have longer terms depending on the underlying cash flows being hedged, typically related to the projects in our backlog.

Inventories

Inventories consist of raw materials, work-in-process and oilfield and industrial finished products, manufactured equipment and spare parts. Inventories are stated at the lower of cost or market using the first-in, first-out or average cost methods. The Company determines reserves for inventory based on historical usage of inventory on-hand, assumptions about future demand and market conditions, and estimates about potential alternative uses, which are limited. The Company’s inventory consists of spare parts, work in process, and raw materials to support ongoing manufacturing operations and the Company’s large installed base of highly specialized oilfield equipment. The Company’s estimated carrying value of inventory depends upon demand largely driven by levels of oil and gas well drilling and remediation activity, which depends in turn upon oil and gas prices, the general outlook for economic growth worldwide, available financing for the Company’s customers, political stability and governmental regulation in major oil and gas producing areas, and the potential obsolescence of various types of equipment we sell, among other factors.

The Company evaluates inventory quarterly using the best information available at the time to inform our assumptions and estimates about future demand and resulting sales volumes, and recognizes reserves as necessary to properly state inventory. The historically severe oil-industry downturn that started in mid-2014 began to stabilize during the second half of 2016, and showed early signs of improvement in many areas in the fourth quarter. These signs of improvement, including conversations with customers about their plans for 2017 as well as inquiries and orders for products, provided the Company information with which to assess and adjust assumptions about future demand and market conditions. We saw clear evidence that a market recovery will favor newer technology and the most efficient equipment, and that certain products across our portfolio, for both land and offshore environments, were less likely to be successful going forward as our customers find footing in their newly competitive landscape.

Based on an update of our assumptions related to estimates of future demand, during the fourth quarter we recorded a charge for additions to inventory reserves of $582 million, consisting primarily of obsolete and surplus inventories. At December 31, 2016 and 2015, inventory reserves totaled $1,017 million and $500 million, or 23.4% and 9.7% of gross inventory, respectively.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Expenditures for major improvements that extend the lives of property and equipment are capitalized while minor replacements, maintenance and repairs are charged to operations as incurred. Disposals are removed at cost less accumulated depreciation with any resulting gain or loss reflected in operations. Depreciation is provided using the straight-line method over the estimated useful lives of individual items. Depreciation expense, which includes the amortization of assets recorded under capital leases, was $370 million, $391 million and $413 million for the years ended December 31, 2016, 2015 and 2014, respectively. Accumulated depreciation of $2,298 million as of December 31, 2016 included accumulated depreciation of $6 million for capital leases. The estimated useful lives of the major classes of property, plant and equipment are included in Note 6 to the consolidated financial statements.

We record impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets are impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amount of those assets. The carrying value of assets used in operations that are not recoverable is reduced to fair value if lower than carrying value. In determining the fair market value of the assets, we consider market trends and recent transactions involving sales of similar assets, or when not available, discounted cash flow analysis. There have been $54 million in impairments of long-lived assets for the year ended December 31, 2016, and nil for the each of the years ended December 31, 2015 and 2014.

Intangible Assets

The Company has approximately $6.1 billion of goodwill and $3.5 billion of identified intangible assets at December 31, 2016.

Goodwill is identified by segment as follows (in millions):


	Rig Systems			Rig Aftermarket		Wellbore Technologies			Completion & Production Solutions			Total
Balance at December 31, 2014	$	1,236		$	877	$	4,357		$	2,069		$	8,539

Goodwill acquired and adjusted during period		—			—		8			(8	)		—
Impairment (1)		—			—		(1,485	)		—			(1,485	)
Currency translation adjustments and other		(4	)		—		(6	)		(64	)		(74	)

Balance at December 31, 2015	$	1,232		$	877	$	2,874		$	1,997		$	6,980

Goodwill acquired and adjusted during period		—			—		24			126			150
Impairment (1)		(972	)		—		—			—			(972	)
Currency translation adjustments and other		(2	)		—		(24	)		(65	)		(91	)

Balance at December 31, 2016	$	258		$	877	$	2,874		$	2,058		$	6,067

(1)	Accumulated goodwill impairment was $2,457 million as of December 31, 2016.

Identified intangible assets with determinable lives consist primarily of customer relationships, trademarks, trade names, patents, and technical drawings acquired in acquisitions, and are being amortized on a straight-line basis over the estimated useful lives of 2-30 years. Amortization expense of identified intangibles is expected to be approximately $320 million in each of the next five years. Included in intangible assets are $384 million of indefinite-lived trade names.

The net book values of identified intangible assets are identified by segment as follows (in millions):


	Rig Systems			Rig Aftermarket			Wellbore Technologies			Completion & Production Solutions			Total
Balance at December 31, 2014	$	208		$	133		$	2,666		$	1,437		$	4,444

Additions to intangible assets		—			—			2			57			59
Asset impairment		(7	)		—			(173	)		(24	)		(204	)
Amortization		(22	)		(6	)		(214	)		(114	)		(356	)
Currency translation adjustments and other		(3	)		(4	)		(27	)		(60	)		(94	)

Balance at December 31, 2015	$	176		$	123		$	2,254		$	1,296		$	3,849

Additions to intangible assets		—			—			15			9			24
Amortization		(15	)		(7	)		(205	)		(106	)		(333	)
Currency translation adjustments and other		(1	)		(1	)		—			(8	)		(10	)

Balance at December 31, 2016	$	160		$	115		$	2,064		$	1,191		$	3,530

Identified intangible assets by major classification consist of the following (in millions):


	Gross		Accumulated Amortization			Net Book Value
December 31, 2015:

Customer relationships	$	4,016	$	(1,630	)	$	2,386
Trademarks		880		(265	)		615
Indefinite-lived trade names		384		—			384
Other		1,040		(576	)		464

Total identified intangibles	$	6,320	$	(2,471	)	$	3,849

December 31, 2016:

Customer relationships	$	4,024	$	(1,874	)	$	2,150
Trademarks		878		(290	)		588
Indefinite-lived trade names		384		—			384
Other		1,048		(640	)		408

Total identified intangibles	$	6,334	$	(2,804	)	$	3,530

Asset Impairment

The steep worldwide oil and gas industry downturn that started in 2014 stabilized somewhat during the third quarter of 2016, though at very low levels of activity. Operators have improved their cost structures and achieved operational efficiencies, reducing the industry’s marginal cost of supply, primarily in the North American land market. While some improvements in offshore operations have been made, many deepwater projects will not be able to achieve an economically competitive cost structure under the current commodity pricing outlook. As a result, the market shift from offshore drilling to land drilling in North America intensified. Announced cancellations of major offshore projects during the third quarter, releases of contracted offshore rigs, the number of idle offshore rigs and the number of current newbuilds still to be completed and enter the market all indicate a large over-supply of offshore equipment that may take years to absorb, even as offshore drilling activity recovers. During the third quarter of 2016, these factors indicated a more prolonged downturn associated with newbuild offshore drilling rigs, and we reduced our forecast accordingly, which indicated a goodwill impairment in the Rig Offshore reporting unit was possible.

Generally Accepted Accounting Principles require the company test goodwill and other indefinite-lived intangible assets for impairment at least annually or more frequently whenever events or circumstances occur indicating that those assets might be impaired.

The first step of the impairment analysis is to compare the reporting unit’s carrying value to the respective fair value. Fair value of the reporting unit is determined in accordance with ASC Topic 820 “Fair Value Measurements and Disclosures” using significant unobservable inputs, or level 3 in the fair value hierarchy. These inputs are based on internal management estimates, forecasts and judgments, using discounted cash flow.

The discounted cash flow is based on management’s forecast of operating performance for the reporting unit. The two main assumptions used in measuring goodwill impairment, which bear the risk of change and could impact the Company’s goodwill impairment analysis, include the cash flow from operations from each reporting unit and its weighted average cost of capital. The starting point for each of the reporting unit’s cash flow from operations is the detailed annual plan or updated forecast. Cash flows beyond the updated forecasted operating plans were estimated using a terminal value calculation, which incorporated historical and forecasted financial cyclical trends for each reporting unit and considered long-term earnings growth rates. The financial and credit market volatility directly impacts our fair value measurement through our weighted average cost of capital that we use to determine our discount rate. During times of volatility, significant judgment must be applied to determine whether credit changes are a short-term or long-term trend.

Based on the Company’s step one impairment analysis, as of July 1, 2016, completed as a result of the indicators identified in the third quarter, the Rig Offshore reporting unit had a calculated fair value below its carrying value, and required a step two analysis, which compares the implied fair value of goodwill of a reporting unit to the carrying value of goodwill for the reporting unit. The implied fair value of goodwill is determined by deducting the fair value of a reporting unit’s identifiable assets and liabilities from the fair value of that reporting unit as a whole. Consistent with the step one analysis, fair value of the assets and liabilities was determined in accordance with ASC Topic 820. Based on the step two analysis performed for the Rig Offshore reporting unit, the Company recorded a $972 million write-down of goodwill during the third quarter.

Also, to achieve higher efficiencies and reduce costs, the Company combined the operations of the Rig Offshore and Rig Land reporting units during the third quarter of 2016. Generally accepted accounting principles require the Company to test the value of goodwill assets for impairment before and after combining reporting units. As a result we also tested Rig Land before the combination as well as the combined reporting unit, Rig Systems, as of July 1, 2016 for goodwill impairment, in accordance with ASC Topic 350.

Based on the Company’s step one impairment analysis, the calculated fair value of the Rig Land reporting unit was substantially in excess of its carrying value. Additionally, the goodwill impairment analysis performed subsequent to the combination of the two reporting units into the Rig Systems reporting unit, concluded that the calculated fair value of the Rig Systems reporting unit was substantially in excess of its carrying value. We also considered whether impairment indicators existed that would suggest the goodwill of our other reporting units was more likely than not impaired and concluded there were none. While the outlook for offshore new-builds has declined sharply, higher activity levels in land drilling will benefit our other businesses.

During the fourth quarter of 2016, the Company performed its annual impairment test, as described in ASC Topic 350, as of October 1, 2016. Based on the Company’s annual impairment test, the calculated fair values for all of the Company’s reporting units were substantially in excess of the respective reporting unit’s carrying value. Additionally, the fair value for all of the Company’s intangible assets with indefinite lives were substantially in excess of the respective asset carrying values.

Foreign Currency

The functional currency for most of our foreign operations is the local currency. The cumulative effects of translating the balance sheet accounts from the functional currency into the U.S. dollar at current exchange rates are included in accumulated other comprehensive income (loss). Revenues and expenses are translated at average exchange rates in effect during the period. Certain other foreign operations, including our operations in Norway, use the U.S. dollar as the functional currency. Accordingly, financial statements of these foreign subsidiaries are remeasured to U.S. dollars for consolidation purposes using current rates of exchange for monetary assets and liabilities and historical rates of exchange for nonmonetary assets and related elements of expense. Revenue and expense elements are remeasured at rates that approximate the rates in effect on the transaction dates. For all operations, gains or losses from remeasuring foreign currency transactions into the functional currency are included in income. Net foreign currency transaction gains (losses) were $(10) million, $(47) million and $20 million for the years ending December 31, 2016, 2015 and 2014, respectively, and are included in other income (expense) in the accompanying statement of income.

Historically, the Venezuelan government has devalued the country’s currency. During the first quarter of 2015, the Venezuelan government officially devalued the Venezuelan bolivar against the U.S. dollar. As a result, the Company incurred approximately $9 million in devaluation charges in the first quarter of 2015. The reporting currency of all of the Company’s Venezuelan entities is the U.S. dollar. The Company’s net remaining investment in Venezuela, which is largely U.S. dollar, was nil at December 31, 2016.

During the fourth quarter of 2015, the Argentinian government officially devalued the Argentine peso against the U.S. dollar. As a result, the Company incurred approximately $7 million devaluation charges in the fourth quarter of 2015. The reporting currency of all of the Company’s Argentinian entities is the Argentine peso.

Revenue Recognition

The Company’s products and services are sold based upon purchase orders or contracts with the customer that include fixed or determinable prices and that do not generally include right of return or other similar provisions or other significant post delivery obligations. Except for certain construction contracts and drill pipe sales described below, the Company records revenue at the time its manufacturing process is complete, the customer has been provided with all proper inspection and other required documentation, title and risk of loss has passed to the customer, collectability is reasonably assured and the product has been delivered. Customer advances or deposits are deferred and recognized as revenue when the Company has completed all of its performance obligations related to the sale. The Company also recognizes revenue as services are performed. The amounts billed for shipping and handling costs are included in revenue and related costs are included in cost of sales.

Revenue Recognition under Long-term Construction Contracts

The Company uses the percentage-of-completion method to account for certain long-term construction contracts in the Rig Systems and Completion & Production Solutions segments. These long-term construction contracts include the following characteristics:

•

the contracts include custom designs for customer specific applications;

•

the structural design is unique and requires significant engineering efforts; and

•

construction projects often have progress payments.

This method requires the Company to make estimates regarding the total costs of the project, progress against the project schedule and the estimated completion date, all of which impact the amount of revenue and gross margin the Company recognizes in each reporting period. The Company prepares detailed cost estimates at the beginning of each project. Significant projects and their related costs and profit margins are updated and reviewed at least quarterly by senior management. Factors that may affect future project costs and margins include shipyard access, weather, production efficiencies, availability and costs of labor, materials and subcomponents and other factors. These factors can impact the accuracy of the Company’s estimates and materially impact the Company’s current and future reported earnings.

The asset, “Costs in excess of billings,” represents revenues recognized in excess of amounts billed. The liability, “Billings in excess of costs,” represents billings in excess of revenues recognized.

Drill Pipe Sales

For drill pipe sales, if requested in writing by the customer, delivery may be satisfied through delivery to the Company’s customer storage location or to a third-party storage facility. For sales transactions where title and risk of loss have transferred to the customer but the supporting documentation does not meet the criteria for revenue recognition prior to the products being in the physical possession of the customer, the recognition of the revenues and related inventory costs from these transactions are deferred until the customer takes physical possession.

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 ASC Topic 450 “Contingencies” (“ASC Topic 450”). 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 Company monitors the actual cost of performing these discretionary services and adjusts the accrual based on the most current information available.

The changes in the carrying amount of service and product warranties are as follows (in millions):


Balance at December 31, 2014	$	272

Net provisions for warranties issued during the year		92
Amounts incurred		(117	)
Currency translation adjustments and other		(3	)

Balance at December 31, 2015	$	244

Net provisions for warranties issued during the year		50
Amounts incurred		(127	)
Currency translation adjustments and other		5

Balance at December 31, 2016	$	172

Income Taxes

The liability method is used to account for income taxes. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates that will be in effect when the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to amounts which are more likely than not to be realized.

Concentration of Credit Risk

We grant credit to our customers, which operate primarily in the oil and gas industry. Concentrations of credit risk are limited because we have a large number of geographically diverse customers, thus spreading trade credit risk. We control credit risk through credit evaluations, credit limits and monitoring procedures. We perform periodic credit evaluations of our customers’ financial condition and generally do not require collateral, but may require letters of credit for certain international sales. Credit losses are provided for in the financial statements. Allowances for doubtful accounts are determined based on a continuous process of assessing the Company’s portfolio on an individual customer basis taking into account current market conditions and trends. This process consists of a thorough review of historical collection experience, current aging status of the customer accounts, and financial condition of the Company’s customers. Based on a review of these factors, the Company will establish or adjust allowances for specific customers. Accounts receivable are net of allowances for doubtful accounts of approximately $209 million and $159 million at December 31, 2016 and 2015.

Stock-Based Compensation

Compensation expense for the Company’s stock-based compensation plans is measured using the fair value method required by ASC Topic 718 “Compensation – Stock Compensation” (“ASC Topic 718”). Under this guidance the fair value of stock option grants and restricted stock is amortized to expense using the straight-line method over the shorter of the vesting period or the remaining employee service period.

The Company provides compensation benefits to employees and non-employee directors under share-based payment arrangements, including various employee stock option plans.

Environmental Liabilities

When environmental assessments or remediations are probable and the costs can be reasonably estimated, remediation liabilities are recorded on an undiscounted basis and are adjusted as further information develops or circumstances change.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted 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. Such estimates include but are not limited to, estimated losses on accounts receivable, estimated costs and related margins of projects accounted for under percentage-of-completion, estimated realizable value on excess and obsolete inventory, contingencies, estimated liabilities for litigation exposures and liquidated damages, estimated warranty costs, estimates related to pension accounting, estimates related to the fair value of reporting units for purposes of assessing goodwill and other indefinite-lived intangible assets for impairment and estimates related to deferred tax assets and liabilities, including valuation allowances on deferred tax assets. Actual results could differ from those estimates.

Contingencies

The Company accrues for costs relating to litigation claims and other contingent matters, including liquidated damage liabilities, when such liabilities become probable and reasonably estimable. In circumstances where the most likely outcome of a contingency can be reasonably estimated, we accrue a liability for that amount. Where the most likely outcome cannot be estimated, a range of potential losses is established and if no one amount in that range is more likely than others, the low end of the range is accrued. Such estimates may be based on advice from third parties or on management’s judgment, as appropriate. Revisions to contingent liabilities are reflected in income in the period in which different facts or information become known or circumstances change that affect the Company’s previous judgments with respect to the likelihood or amount of loss. Amounts paid upon the ultimate resolution of contingent liabilities may be materially different from previous estimates and could require adjustments to the estimated reserves to be recognized in the period such new information becomes known.

Net Income (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):


	Years Ended December 31,
	2016			2015			2014
Numerator:
Income (loss) from continuing operations	$	(2,412	)	$	(769	)	$	2,450

Income from discontinued operations	$	—		$	—		$	52

Net income (loss) attributable to Company	$	(2,412	)	$	(769	)	$	2,502

Denominator:
Basic—weighted average common shares outstanding		376			387			428
Dilutive effect of employee stock options and other unvested stock awards		—			—			2

Diluted outstanding shares		376			387			430

Per share data:
Basic:
Income (loss) from continuing operations	$	(6.41	)	$	(1.99	)	$	5.73

Income from discontinued operations	$	—		$	—		$	0.12

Net income (loss) attributable to Company	$	(6.41	)	$	(1.99	)	$	5.85

Diluted:
Income (loss) from continuing operations	$	(6.41	)	$	(1.99	)	$	5.70

Income from discontinued operations	$	—		$	—		$	0.12

Net income (loss) attributable to Company	$	(6.41	)	$	(1.99	)	$	5.82

Cash dividends per share	$	0.61		$	1.84		$	1.64

ASC Topic 260, “Earnings Per Share” (“ASC Topic 260”) requires companies with unvested participating securities to utilize a two-class method for the computation of net income attributable to Company per share. The two-class method requires a portion of net income attributable to Company to be allocated to participating securities, which are unvested awards of share-based payments with non-forfeitable rights to receive dividends or dividend equivalents, if declared. Net income attributable to Company allocated to these participating securities was immaterial for the years ended December 31, 2016, 2015 and 2014 and therefore not excluded from net income attributable to Company per share calculation. The Company had stock options outstanding that were anti-dilutive totaling 14 million, 13 million, and 8 million at December 31, 2016, 2015 and 2014, respectively.

Recently Adopted Accounting Standards

In November 2015, the FASB issued Accounting Standard Update No. 2015-17 “Balance Sheet Classification of Deferred Taxes” (ASU 2015-17). This update requires companies to classify all deferred tax assets and liabilities as non-current on its consolidated financial position. The Company has early adopted ASU 2015-17 on a retrospective basis, resulting in a reclassification of current deferred tax assets and liabilities to non-current deferred tax assets and liabilities. The Company adopted this update on January 1, 2016, and prior periods have been retrospectively adjusted. See Note 8 for further information on the presentation of deferred taxes.

In April 2015, the FASB issued Accounting Standard Update No. 2015-03 “Simplifying the Presentation of Debt Issuance Costs” (ASU 2015-03) to simplify the presentation of debt issuance costs. This update requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts, as opposed to historical presentation as an asset on the balance sheet. ASU No. 2015-03 is effective for fiscal years beginning after December 15, 2015, and for interim periods within those fiscal years. The Company adopted this update on January 1, 2016, and has applied the change retrospectively to prior periods for unamortized debt issuance costs. See Note 7 for further information on the presentation of debt issuance costs.

In August 2014, the FASB issued Accounting Standard Update No. 2014-15 “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (ASU No. 2014-15), which amends FASB Accounting Standards Codification 205 “Presentation of Financial Statements.” This update requires management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. ASU No. 2014-15 is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company adopted ASU No. 2014-15 as of December 31, 2016.

Recently Issued Accounting Standards

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 financial position and results of operations.

In March 2016, the FASB issued Accounting Standard Update No. 2016-09 “Improvements to Employee Share-Based Payment Accounting” (ASU 2016-09). This update requires that entities record all of the tax effects related to share-based payments at settlement (or expiration) through the income statement. ASU No. 2016-09 is effective for fiscal years beginning after December 15, 2016, and for interim periods within those fiscal years. The Company will adopt ASU No. 2016-09 on January 1, 2017.

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 our existing 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 outlines a single comprehensive model for entities to use in accounting for revenue. This ASU supersedes the revenue recognition requirements in FASB ASC Topic 605, “Revenue Recognition,” and most industry-specific guidance. This ASU sets forth a five-step model for determining when and how revenue is recognized. Under the model, an entity will be required to 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.

In 2015, the FASB issued guidance to defer the effective date to fiscal years beginning after December 15, 2017 with optional early adoption for fiscal periods beginning after December 15, 2016. The Company does not plan to early adopt ASU 2014-09.

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. The Company currently anticipates following the modified retrospective adoption, but will not make a final decision on the adoption method until later in 2017.

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. During 2017, we will quantify the potential impacts as well as design and implement required process, system, control and data requirements to address the impacts identified in the assessments.

The Company has not quantified and is not currently able to reasonably estimate the effect of the potential timing or other impacts to revenue recognition caused by the new standard, nor the amount of contract assets and liabilities which will be added to our balance sheet.

Derivative Financial Instruments

12 Months Ended

Dec. 31, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

3. Derivative Financial Instruments

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). Other forward exchange contracts against various foreign currencies are entered into to manage the foreign currency exchange rate risk associated with certain firm commitments denominated in currencies other than the functional currency of the operating unit (fair value 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).

At December 31, 2016, the Company has determined that the fair value of its derivative financial instruments representing assets of $62 million and liabilities of $77 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 December 31, 2016, the net fair value of the Company’s foreign currency forward contracts totaled a net liability of $15 million.

At December 31, 2016, the Company’s 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 against the foreign currencies, the decrease in present value of future foreign currency revenues and expenses is offset by gains in the fair value of the forward contracts designated as hedges. Conversely, when the U.S. dollar weakens, the increase in the present value of future foreign currency cash flows is offset by losses in the fair value of the forward contracts.

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 Income (Loss) during the current period.

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

December 31,
2016

December 31,
2015

Norwegian Krone

NOK

5,621

NOK

9,655

Japanese Yen

JPY

1,462

JPY

—

U.S. Dollar

USD

321

USD

321

Euro

EUR

279

EUR

Danish Krone

DKK

Singapore Dollar

SGD

British Pound Sterling

GBP

Canadian Dollar

CAD

—

CAD

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 the Consolidated Statement of Income (Loss).

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

December 31,
2016

December 31,
2015

Russian Ruble

RUB

1,893

RUB

2,164

Norwegian Krone

NOK

538

NOK

2,265

U.S. Dollar

USD

457

USD

515

Euro

EUR

272

EUR

371

South African Rand

ZAR

150

ZAR

—

Danish Krone

DKK

153

Singapore Dollar

SGD

British Pound Sterling

GBP

Canadian Dollar

CAD

The Company has the following fair values of its derivative instruments and their balance sheet classifications (in millions):

Fair Values of Derivative Instruments

(In millions)


	Asset Derivatives						Liability Derivatives
	Balance Sheet		Fair Value December 31,				Balance Sheet		Fair Value December 31,
	Location		2016		2015		Location		2016		2015
Derivatives designated as hedging instruments under ASC Topic 815
Foreign exchange contracts		Prepaid and other current assets	$	24	$	5		Accrued liabilities	$	37	$	212
Foreign exchange contracts		Other Assets		6		—		Other Liabilities		11		25

Total derivatives designated as hedging instruments under ASC Topic 815			$	30	$	5			$	48	$	237

Derivatives not designated as hedging instruments under ASC Topic 815
Foreign exchange contracts		Prepaid and other current assets	$	32	$	21		Accrued liabilities	$	29	$	49

Total derivatives not designated as hedging instruments under ASC Topic 815			$	32	$	21			$	29	$	49

Total derivatives			$	62	$	26			$	77	$	286

The Effect of Derivative Instruments on the Consolidated Statements of Income (Loss)

($ in millions)


Derivatives Designated as Hedging Instruments under ASC Topic 815	Amount of Gain (Loss) Recognized in OCI on Derivatives (Effective Portion) (a)					Location of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)						Location of Gain (Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain (Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing) (b)
	Years Ended December 31,						Years Ended December 31,							Years Ended December 31,
	2016		2015				2016			2015				2016			2015
						Revenue		5			19		Cost of revenue		(21	)		(33	)
Foreign exchange contracts		45		(243	)	Cost of revenue		(170	)		(262	)	Other income (expense), net		8			4

Total		45		(243	)			(165	)		(243	)			(13	)		(29	)


Derivatives Not Designated as Hedging Instruments under ASC Topic 815	Location of Gain (Loss) Recognized in Income on Derivatives		Amount of Gain (Loss) Recognized in Income on Derivatives
			Years Ended December 31,
			2016			2015
Foreign exchange contracts		Other income (expense), net		(33	)		(97	)

Total				(33	)		(97	)

(a)	The Company expects that $20 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 $(21) million and $(33) million related to the ineffective portion of the hedging relationships for the years ended December 31, 2016 and 2015, respectively, and $8 million and $4 million related to the amount excluded from the assessment of the hedge effectiveness for the years ended December 31, 2016 and 2015, respectively.

- Definition

The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-Section 45
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6441202&loc=d3e80720-113993

Reference 2: http://www.xbrl.org/2003/role/presentationRef
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Reference 3: http://www.xbrl.org/2003/role/presentationRef
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Reference 4: http://www.xbrl.org/2003/role/presentationRef
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Reference 5: http://www.xbrl.org/2003/role/presentationRef
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Reference 6: http://www.xbrl.org/2003/role/presentationRef
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Reference 7: http://www.xbrl.org/2003/role/presentationRef
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Reference 9: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-Publisher FASB
-Name Accounting Standards Codification
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Reference 16: http://www.xbrl.org/2003/role/presentationRef
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-Subparagraph (SX 210.4-08.(n))
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+ Details

Acquisitions and Investments

12 Months Ended

Dec. 31, 2016

Business Combinations [Abstract]

Acquisitions and Investments

4. Acquisitions and Investments

2016

In the year ended December 31, 2016, the Company completed a total of 10 acquisitions and other investments for an aggregate cash investment of $230 million, net of cash acquired and $18 million of NOV stock. The Company has preliminarily allocated $24 million to identifiable intangible assets and $152 million to goodwill. The amount allocated to goodwill represents the excess of the purchase price over the fair value of the net assets acquired. Goodwill specifically includes the expected synergies and other benefits that the Company believes will result from combining its operations with those of businesses acquired and other intangible assets that do not qualify for separate recognition, such as assembled workforce in place at the date of acquisition. Goodwill resulting from the acquisitions is not deductible for tax purposes.

2015

In the year ended December 31, 2015, the Company completed seven acquisitions and other investments for an aggregate purchase price of $86 million, net of cash acquired. The Company has allocated $13 million to identifiable intangible assets and $51 million to goodwill. The amount allocated to goodwill represents the excess of the purchase price over the fair value of the net assets acquired. Goodwill specifically includes the expected synergies and other benefits that the Company believes will result from combining its operations with those of businesses acquired and other intangible assets that do not qualify for separate recognition, such as assembled workforce in place at the date of acquisition. Goodwill resulting from the acquisitions is not deductible for tax purposes.

2014

In the year ended December 31, 2014, the Company completed 10 acquisitions for an aggregate purchase price of $291 million, net of cash acquired. The Company has allocated $59 million to identifiable intangible assets and $167 million to goodwill. The amount allocated to goodwill represents the excess of the purchase price over the fair value of the net assets acquired. Goodwill specifically includes the expected synergies and other benefits that the Company believes will result from combining its operations with those of businesses acquired and other intangible assets that do not qualify for separate recognition, such as assembled workforce in place at the date of acquisition. Goodwill resulting from the acquisitions is not deductible for tax purposes.

Each of the acquisitions was accounted for using the purchase method of accounting and, accordingly, the results of operations of each business are included in the Consolidated Statements of Income (Loss) from the date of acquisition. A summary of the acquisitions follows (in millions):


	Years Ended December 31,
	2016			2015			2014
Fair value of assets acquired, net of cash acquired	$	357		$	116		$	406
Cash paid, net of cash acquired		(230	)		(86	)		(291	)

Liabilities assumed, debt issued and noncontrolling interest	$	127		$	30		$	115

Excess purchase price over fair value of net assets acquired	$	152		$	51		$	167

- Definition

The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1497-128463

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1490-128463

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1392-128463

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 30
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e7008-128479

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1486-128463

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 30
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e6927-128479

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 20
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=73530397&loc=d3e4845-128472

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1524-128463

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 30
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e7000-128479

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 20
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=73530397&loc=d3e4922-128472

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 20
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=73530397&loc=d3e4934-128472

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 20
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=73530397&loc=d3e4926-128472

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 20
-Section 50
-Paragraph 4A
-URI http://asc.fasb.org/extlink&oid=73530397&loc=SL65897772-128472

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1383-128463

Reference 15: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 30
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e6996-128479

+ Details

Inventories, net

12 Months Ended

Dec. 31, 2016

Inventory Disclosure [Abstract]

Inventories, net

5. Inventories, net

Inventories consist of (in millions):


	December 31,
	2016		2015
Raw materials and supplies	$	961	$	1,069
Work in process		561		632
Finished goods and purchased products		1,803		2,977

Total	$	3,325	$	4,678

Property, Plant and Equipment

12 Months Ended

Dec. 31, 2016

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

6. Property, Plant and Equipment

Property, plant and equipment consist of (in millions):


	Estimated		December 31,
	Useful Lives		2016			2015
Land and buildings		5-35 Years	$	1,570		$	1,565
Operating equipment		3-15 Years		3,102			3,055
Rental equipment		3-12 Years		557			639
Capital leases		20-24 Years		219			17

				5,448			5,276
Less: Accumulated Depreciation				(2,298	)		(2,152	)

			$	3,150		$	3,124

Accrued Liabilities

12 Months Ended

Dec. 31, 2016

Payables and Accruals [Abstract]

Accrued Liabilities

7. Accrued Liabilities

Accrued liabilities consist of (in millions):


	December 31,
	2016		2015
Vendor costs	$	235	$	449
Customer prepayments and billings		222		426
Compensation		181		241
Taxes (non income)		176		175
Warranty		172		244
Insurance		103		113
Fair value of derivatives		66		261
Commissions		57		73
Interest		8		8
Other		348		294

Total	$	1,568	$	2,284

Costs and Estimated Earnings on Uncompleted Contracts

12 Months Ended

Dec. 31, 2016

Text Block [Abstract]

Costs and Estimated Earnings on Uncompleted Contracts

8. Costs and Estimated Earnings on Uncompleted Contracts

Costs and estimated earnings on uncompleted contracts consist of (in millions):


	December 31,
	2016			2015
Costs incurred on uncompleted contracts	$	8,132		$	9,082
Estimated earnings		3,869			4,080

		12,001			13,162
Less: Billings to date on uncompleted contracts		11,776			12,697

	$	225		$	465

Costs and estimated earnings in excess of billings on uncompleted contracts	$	665		$	1,250
Billings in excess of costs and estimated earnings on uncompleted contracts		(440	)		(785	)

	$	225		$	465

Debt

12 Months Ended

Dec. 31, 2016

Debt Disclosure [Abstract]

Debt

9. Debt

Debt consists of (in millions):


	December 31,
	2016		2015
$500 million in Senior Notes, interest at 1.35% payable semiannually, principal due on December 1, 2017		499		498
$1.4 billion in Senior Notes, interest at 2.60% payable semiannually, principal due on December 1, 2022		1,391		1,389
$1.1 billion in Senior Notes, interest at 3.95% payable semiannually, principal due on December 1, 2042		1,087		1,087
Commercial paper		—		890
Capital Leases and other debt		237		45

Total debt		3,214		3,909
Less current portion		506		2

Long-term debt	$	2,708	$	3,907

Principal payments of debt and capital leases for years subsequent to 2016 are as follows (in millions):


2017	$	506
2018		3
2019		4
2020		5
2021		5
Thereafter		2,691

	$	3,214

See Note 12 for additional details on future lease payments specific to capital leases.

On January 1, 2016, the Company adopted Accounting Standards Update No. 2015-03 “Simplifying the Presentation of Debt Issuance Costs.” This update requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. We have applied the change retrospectively for prior period balances of unamortized debt issuance costs, resulting in a $21 million reduction in other assets and long-term debt on our consolidated balance sheet as of December 31, 2015. The table above now presents our debt liability net of the related debt discount and debt issuance costs.

The Company has a $4.5 billion, five-year credit facility which expires September 28, 2018. The Company also has a commercial paper program under which borrowings are classified as long-term since the program is supported by the $4.5 billion, five-year unsecured revolving credit facility. At December 31, 2016, there were no commercial paper borrowings, and there were no outstanding letters of credit issued under the credit facility, resulting in $4,500 million of funds available under this revolving credit facility. Interest under this multicurrency facility is based upon LIBOR, NIBOR or EURIBOR plus 1.125% subject to a ratings-based grid, or the U.S. prime rate. The credit facility contains a financial covenant regarding maximum debt-to-capitalization ratio of 60%. As of December 31, 2016, the Company was in compliance with a debt-to-capitalization ratio of 18.7%.

The Company had $1,196 million of outstanding letters of credit at December 31, 2016, primarily in the U.S. and Norway, that are under various bilateral committed letter of credit facilities. Letters of credit are issued as bid bonds, advanced payment bonds and performance bonds.

At December 31, 2016 and 2015, the fair value of the Company’s unsecured Senior Notes approximated $2,669 million and $2,551 million, respectively. 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 December 31, 2016 and 2015, the carrying value of the Company’s unsecured Senior Notes approximated $2,977 million and $2,974 million, respectively.

Employee Benefit Plans

12 Months Ended

Dec. 31, 2016

Compensation and Retirement Disclosure [Abstract]

Employee Benefit Plans

10. Employee Benefit Plans

We have benefit plans covering substantially all of our employees. Defined-contribution benefit plans cover most of the U.S. and Canadian employees, and benefits are based on years of service, a percentage of current earnings and matching of employee contributions. We also have defined contribution plans in Norway and the United Kingdom. For the years ended December 31, 2016, 2015 and 2014, expenses for defined-contribution plans were $66 million, $95 million, and $115 million, respectively, and all funding is current.

Certain retired or terminated employees of predecessor or acquired companies participate in a defined benefit plan in the United States. Approximately 75 employees represented by certain collective bargaining agreements continue to accrue benefits under the plan. In addition, approximately 1,900 U.S. retirees and spouses participate in defined benefit health care plans of predecessor or acquired companies that provide postretirement medical and life insurance benefits. Except for two locations represented by certain collective bargaining agreements, active employees are ineligible to participate in any of these U.S. defined benefit plans. Active employees based in the United Kingdom are ineligible to participate in any defined benefit plans.

During 2014, the Company sold certain industrial assets of which the impact on the defined benefit plans is reflected in the table below.

During 2016, the Company settled its Norway defined benefit plan and transferred all participants to the defined-contribution plan. The impact on the defined benefit plans is reflected in the table below.

Net periodic benefit cost for our defined benefit plans aggregated $5 million, $5 million and $7 million for the years ended December 31, 2016, 2015 and 2014, respectively.

The change in benefit obligation, plan assets and the funded status of the defined benefit pension plans in the United States, United Kingdom, Norway, Germany and the Netherlands and defined postretirement plans in the United States, using a measurement date of December 31, 2016 and 2015, is as follows (in millions):


	Pension benefits						Postretirement benefits
At year end	2016			2015			2016			2015
Benefit obligation at beginning of year	$	703		$	792		$	90		$	53
Service cost		5			6			—			—
Interest cost		25			26			3			3
Actuarial loss (gain)		42			(38	)		(29	)		(7	)
Benefits paid		(30	)		(34	)		(16	)		(5	)
Participants contributions		—			—			2			1
Exchange rate loss (gain)		(37	)		(33	)		—			—
Acquisitions (disposals)		2			—			—			—
Curtailments		(71	)		—			—			—
Settlements		(17	)		(16	)		—			—
Other		—			—			42			45

Benefit obligation at end of year	$	622		$	703		$	92		$	90

Fair value of plan assets at beginning of year	$	601		$	660		$	—		$	—
Actual return		60			3			—			—
Benefits paid		(30	)		(34	)		(16	)		(5	)
Company contributions		16			12			14			4
Participants contributions		—			—			2			1
Exchange rate gain (loss)		(34	)		(23	)		—			—
Curtailments		(71	)		—			—			—
Acquisitions (disposals)		1			(17	)		—			—

Fair value of plan assets at end of year	$	543		$	601		$	—		$	—

Funded status	$	(79	)	$	(102	)	$	(92	)	$	(90	)

Accumulated benefit obligation at end of year	$	617		$	685

Liabilities associated with the funded status of the defined benefit pension plans are included in the balances of accrued liabilities and other liabilities in the Consolidated Balance Sheet.

Defined Benefit Pension Plans

Assumed long-term rates of return on plan assets, discount rates and rates of compensation increases vary for the different plans according to the local economic conditions. The assumption rates used for benefit obligations are as follows:


	Years Ended December 31,
	2016			2015
Discount rate:
United States plan		3.10% - 4.00	%		3.40% - 3.90	%
International plans		1.80% - 2.80	%		2.10% - 3.60	%
Salary increase:
United States plan		N/A			N/A
International plans		1.80% - 3.50	%		2.00% - 4.20	%

The assumption rates used for net periodic benefit costs are as follows:


	Years Ended December 31,
	2016			2015			2014
Discount rate:
United States plan		3.20% - 4.20	%		3.70% - 4.20	%		3.99% - 4.67	%
International plans		2.20% - 3.70	%		2.20% - 3.70	%		3.50% - 4.40	%
Salary increase:
United States plan		N/A			N/A			N/A
International plans		2.00% - 4.20	%		2.00% - 4.20	%		2.00% - 4.40	%
Expected return on assets:
United States plan		5.60	%		5.50	%		6.50	%
International plans		1.80% - 3.00	%		2.30% - 5.12	%		3.50% - 5.53	%

In determining the overall expected long-term rate of return for plan assets, the Company takes into consideration the historical experience as well as future expectations of the asset mix involved. As different investments yield different returns, each asset category is reviewed individually and then weighted for significance in relation to the total portfolio.

The majority of our plans have projected benefit obligations in excess of plan assets.

The Company expects to pay future benefit amounts on its defined benefit plans of approximately $35 million for each of the next five years and aggregate payments of $338 million over the next five years thereafter.

Plan Assets

The Company and its investment advisers collaboratively reviewed market opportunities using historic and statistical data, as well as the actuarial valuation reports for the plans, to ensure that the levels of acceptable return and risk are well-defined and monitored. Currently, the Company’s management believes that there are no significant concentrations of risk associated with plan assets. Our pension investment strategy worldwide prohibits a direct investment in our own stock.

The following table sets forth by level, within the fair value hierarchy, the Plan’s assets carried at fair value (in millions):


	Fair Value Measurements
	Total		Level 1		Level 2		Level 3
December 31, 2015:
Equity securities	$	186	$	—	$	186	$	—
Bonds		259		—		259		—
Other (insurance contracts)		156		—		57		99

Total Fair Value Measurements	$	601	$	—	$	502	$	99

December 31, 2016:
Equity securities	$	181	$	—	$	181	$	—
Bonds		262		—		262		—
Other (insurance contracts)		100		—		47		53

Total Fair Value Measurements	$	543	$	—	$	490	$	53

Level 3 inputs are unobservable (i.e., supported by little or no market activity). Level 3 inputs include management’s own judgement about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk). The following table sets forth a summary of changes in the fair value of the Plan’s Level 3 assets (in millions):


	Level 3 Plan Assets
Balance at December 31, 2014	$	108

Actual return on plan assets still held at reporting date		3
Purchases, sales and settlements		2
Currency translation adjustments		(14	)

Balance at December 31, 2015	$	99

Actual return on plan assets still held at reporting date		5
Purchases, sales and settlements		(50	)
Currency translation adjustments		(1	)

Balance at December 31, 2016	$	53

Accumulated Other Comprehensive Income (Loss)

12 Months Ended

Dec. 31, 2016

Equity [Abstract]

Accumulated Other Comprehensive Income (Loss)

11. Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss) are as follows (in millions):


	Currency Translation Adjustments			Derivative Financial Instruments, Net of Tax			Defined Benefit Plans, Net of Tax			Total
Balance at December 31, 2013	$	17		$	5		$	(26	)	$	(4	)

Accumulated other comprehensive income (loss) before reclassifications		(543	)		(245	)		(59	)		(847	)
Amounts reclassified from accumulated other comprehensive income (loss)		11			12			(6	)		17

Balance at December 31, 2014	$	(515	)	$	(228	)	$	(91	)	$	(834	)

Accumulated other comprehensive income (loss) before reclassifications		(764	)		(176	)		26			(914	)
Amounts reclassified from accumulated other comprehensive income (loss)		—			199			(4	)		195

Balance at December 31, 2015	$	(1,279	)	$	(205	)	$	(69	)	$	(1,553	)

Accumulated other comprehensive income (loss) before reclassifications		(97	)		32			35			(30	)
Amounts reclassified from accumulated other comprehensive income (loss)		—			134			(3	)		131

Balance at December 31, 2016	$	(1,376	)	$	(39	)	$	(37	)	$	(1,452	)

The components of amounts reclassified from accumulated other comprehensive income (loss) are as follows (in millions):

Years Ended December 31,

2016

2015

2014

Currency

Derivative

Defined

Currency

Derivative

Defined

Currency

Derivative

Defined

Translation

Financial

Benefit

Translation

Financial

Benefit

Translation

Financial

Benefit

Adjustments

Instruments

Plans

Total