<SEC-DOCUMENT>0000950123-10-056504.txt : 20110401
<SEC-HEADER>0000950123-10-056504.hdr.sgml : 20110401
<ACCEPTANCE-DATETIME>20100608104101
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0000950123-10-056504
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		2
FILED AS OF DATE:		20100608

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			NATIONAL OILWELL VARCO INC
		CENTRAL INDEX KEY:			0001021860
		STANDARD INDUSTRIAL CLASSIFICATION:	OIL & GAS FILED MACHINERY & EQUIPMENT [3533]
		IRS NUMBER:				760475815
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		7909 PARKWOOD CIRCLE DR
		CITY:			HOUSTON
		STATE:			TX
		ZIP:			77036
		BUSINESS PHONE:		713-375-3700

	MAIL ADDRESS:	
		STREET 1:		7909 PARKWOOD CIRCLE DR
		CITY:			HOUSTON
		STATE:			TX
		ZIP:			77036

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	NATIONAL OILWELL INC
		DATE OF NAME CHANGE:	19960829
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
<TEXT>
<HTML>
<HEAD>
<TITLE>corresp</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="65%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><IMG src="h73704h7370401.gif" alt="(NATIONAL OILWELL VARCO LOGO)">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">National Oilwell Varco, Inc.<BR>
7909 Parkwood Circle Drive<BR>
Houston, TX 77036<BR>
PHONE 713-346-7500</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">June&nbsp;8, 2010
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">U.S. Securities and Exchange Commission<BR>
Division of Corporation Finance<BR>
100 F. Street, N.E.<BR>
Washington, D.C. 20549<BR>
Attn: Mr.&nbsp;Douglas Brown

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">RE:&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>National Oilwell Varco, Inc. (the &#147;Company&#148;)</B><BR><B>
Form&nbsp;10-K for Fiscal Year Ended December&nbsp;31, 2009</B><BR><B>
Filed February&nbsp;26, 2010 (&#147;2009 Form&nbsp;10-K&#148;)</B><BR><B>
Proxy Statement on Schedule&nbsp;14A</B><BR><B>
Filed April&nbsp;1, 2010 (&#147;2010 Proxy Statement&#148;)</B><BR><B>
File No.&nbsp;1-12317</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Ladies and Gentlemen:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">This letter responds to the comments that the Company received from the Staff of the Division of
Corporation Finance (the &#147;Staff&#148;) of the U.S. Securities and Exchange Commission (the &#147;Commission&#148;
or the &#147;SEC&#148;) by letter dated May&nbsp;25, 2010. For your convenience, the Company&#146;s responses are
prefaced by the Commission&#146;s comment in bold text. All capitalized terms used herein and not
defined herein shall have the meanings given to them in our 2009 Form 10-K or our 2010 Proxy
Statement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Form&nbsp;10-K for the Fiscal Year Ended December&nbsp;31, 2009</B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>General</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>1.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>We direct your attention to Item&nbsp;</B><B>601(b)(10)</B><B> of Regulation&nbsp;S-K. Please confirm that all
material contracts have been filed. We note, in particular, that it does not appear that
you have filed the agreements with your customer from whom you derive 10&nbsp;percent or more of
your total revenue. If you do not believe that such contracts fall within the purview of
Item&nbsp;</B><B>601(b)(10)</B><B>, please explain why.</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Response: The Company believes it has filed all of its material contracts as required under Item
601(b)(10) of Regulation&nbsp;S-K. As stated in the Company&#146;s 2009 Form 10-K, one of the Company&#146;s
customers accounted for 16.6% of the Company&#146;s total revenues for the year ended December&nbsp;31, 2009.
This customer is a shipyard serving as the general contractor for the construction of drillships
for numerous, unaffiliated drillship owners and drilling contractors, who have required the
shipyard to contract directly with the Company for the provision of the
</DIV>




<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">U. S. Securities and Exchange Commission<BR>
June&nbsp;8, 2010<BR>
Page 2 of 6

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Company&#146;s drilling equipment. Company revenues attributed to the shipyard are evidenced by
numerous contracts, each of which is ordinary course in nature and relates to the provision of
drilling equipment for a separate drillship to be delivered to individual owners or drilling
contractors. None of these contracts, on an individual basis, are material to the Company.
Because these contracts are made in the ordinary course of the Company&#146;s business and the Company&#146;s
business is not substantially dependent upon any of these contracts, they do not fall within the
purview of Item&nbsp;601(b)(10) of Regulation&nbsp;S-K.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>2.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>We note you had one customer in 2009 from which you derived more than 10% of your total
revenue. Please expand your disclosure to provide the name of this major customer, or tell
us why you believe this disclosure is not required. See Item&nbsp;</B><B>101(c)(1)(vii)</B><B> of Regulation
S-K.</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Response: We have not disclosed the name of the shipyard referenced in response to Comment No.&nbsp;1
above because of the unique nature of this relationship. Under our contracts with the shipyard,
the true purchasers of our drilling equipment are the drillship owners and drilling contractors.
Instead of contracting with the Company directly, the drillship owners and drilling contractors
have required the shipyard, as their general contractor, to contract with us. As previously noted,
none of these contracts, on an individual basis, are material to the Company. As a result, if the
drillship owners and drilling contractors had elected to contract with us directly, the Company
would not be required to provide their names under Item&nbsp;101 of Regulation&nbsp;S-K. Therefore, we do
not believe disclosure of the name of the shipyard is required under Item&nbsp;101 of Regulation&nbsp;S-K,
nor would such information be meaningful or useful to investors.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>3.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>In light of recent events in the Gulf of Mexico, please review your disclosure to
ensure that you have disclosed all material information regarding your potential liability
in the event that your employees or any of your products are involved in an event that
leads to property damage, personal injury, death or the discharge of hazardous materials
into the environment. For example, and without limitation, please address the following:</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Disclose your insurance coverage with respect to any liability related to any such
event. Such disclosure should address the types of claims covered, and the applicable
policy limits and deductibles. For example, and without limitation, you should expand
your disclosure regarding your insurance coverage for potential environmental
liabilities.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Disclose the material terms of your related indemnification obligations and those of
your customers, if applicable. For example, we note your statement at page 22
regarding your contractual agreement to indemnify your customers in the normal course
of business.</B></TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%"><B>Such disclosure should be set forth in the &#147;Business&#148; section of your annual report and in
the &#147;Risk Factors&#148; section, as applicable. Please provide a sample of your</B>
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">U. S. Securities and Exchange Commission<BR>
June&nbsp;8, 2010<BR>
Page 3 of 6

</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%"><B>proposed disclosure for our review. In responding to this comment, please consider all your
products and services, not just those involved in offshore operations.</B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Response: We have reviewed our disclosure and believe that we have disclosed all material
information regarding our potential liability in the event our employees or any of our drilling
equipment or other products are involved in an event that leads to property damage, personal
injury, death or the discharge of hazardous material into the environment. As part of this review,
we have considered the requirements and related interpretations of Item&nbsp;101 of Regulation&nbsp;S-K,
<I>Description of Business</I>; Item&nbsp;103 of Regulation&nbsp;S-K, <I>Legal Proceedings</I>; Item&nbsp;303 of Regulation&nbsp;S-K,
<I>Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations</I>; and Item
503(c) of Regulation&nbsp;S-K, <I>Risk Factors</I>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We disclose in Part&nbsp;I, Item&nbsp;1A of our 2009 Form 10-K that our businesses expose us to the risk that
harmful substances may escape into the environment, which could result in personal injury, loss of
life, and property damage. We also disclose that, as a result of our current and past activities,
we could face significant environmental and regulatory liabilities, including the costs of cleaning
up contaminated properties, and that these liabilities could arise through our normal
indemnification obligations with our customers, and which may vary from customer to customer. We
maintain liability insurance for these potential liabilities, but disclose that this insurance is
subject to various coverage limitations, including, in some cases, exclusions for environmental
contamination. We also disclose the risk that the dollar amount of any such liabilities could
exceed our policy limits and that our insurance carriers may not be able to meet their obligations
under the policies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We believe that these existing disclosures adequately describe the material risks facing the
Company in connection with an event similar to that currently occurring in the Gulf of Mexico or an
onshore environmental event of similar magnitude. The Company is continuing to monitor the events
in the Gulf of Mexico, including the efforts of each of the parties involved to stop the spill and
contain its effects, and their respective costs and liabilities associated therewith. To the
extent these events result in (i)&nbsp;material changes to our costs to comply with existing or future
federal, state or local environmental or other regulations; (ii)&nbsp;material changes in the
availability, cost, or coverage of liability insurance; (iii)&nbsp;material changes in the scope or
dollar amount of any contractual indemnification obligations required by our customers; or (iv)&nbsp;any
other trends or uncertainties that we believe will materially affect our financial condition or
results of operations, the Company will revise its disclosures to fully address such matters.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Definitive Proxy Statement on Schedule&nbsp;14A filed on April&nbsp;1, 2010</B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>Board Role in Risk Oversight, page 20</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>4.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>We note your disclosure that the responsibilities of the compensation committee allow
the committee to work with you to make sure that compensation does not pose undue risks to
you. Please describe the process you undertook to reach the conclusion that disclosure
under </B><B>Item 402(s)</B><B> of Regulation&nbsp;S-K is not necessary.</B></TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">U. S. Securities and Exchange Commission<BR>
June&nbsp;8, 2010<BR>
Page 4 of 6

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Response: The Compensation Committee generally reviews the Company&#146;s compensation programs on at
least an annual basis. The Compensation Committee, with the assistance of its independent
compensation consultant, reviews each component of the Company&#146;s compensation programs to ensure
that they are reasonably consistent with the Company&#146;s peers and industry practice, but also to
ensure that each such component, whether it be base salary, bonus, or long-term equity incentives,
will not encourage excessive risk-taking. The variable forms of compensation, namely the bonus
program and long-term equity incentives, have structural limitations and other mitigating controls,
which are designed to prevent the Company from being exposed to unexpected or unbudgeted materially
adverse events. For example, bonus payments to an employee under our bonus program are capped at a
certain percentage of the employee&#146;s base salary (highest percentage currently being 2.2 times base
salary), and the number of shares of restricted stock and stock options granted under our Long-Term
Equity Incentive Plan are fixed amounts of shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Following its review, the Compensation Committee concluded that the Company&#146;s compensation programs
foster cooperation, discourage excessive risk-taking behaviors, and focus our employees on award
opportunities that are aligned with the Company&#146;s overall business strategy and the interests of
the Company&#146;s stockholders. As a result, the Company determined that no disclosure under Item
402(s) of Regulation&nbsp;S-K was necessary.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U><B>Competitive Positioning, page 28</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>5.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>We note your disclosure that your compensation committee&#146;s February&nbsp;2009 review of its
compensation program for its senior executives was &#147;consistent with its practice in prior
years.&#148; Please revise your disclosure to provide all material information regarding the
February&nbsp;2009 review. For example, and without limitation, please disclose the material
differences in such review from the January&nbsp;2008 review that you describe in your filing.
For example, and without limitation, it would appear that Grant Prideco, Inc. would no
longer be part of your designated peer group in February&nbsp;2009.</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Response: Except for a few minor differences, noted in the draft disclosure below, the review
conducted in 2009 was consistent with the review conducted in 2008. The Company chose to disclose
the competitive positioning review starting in 2008 to provide its shareholders with an
understanding of how the Compensation Committee has historically conducted such reviews. The
Company did not disclose all the same detail from the 2008 review in the 2009 review disclosure as
much of it would be repetitive in nature. Additionally, detailed discussion of the Compensation
Committee&#146;s review of executive compensation, by type of compensation (i.e., base salary, bonus,
long-term incentive), is provided in the CD&#038;A section entitled &#147;Components of Compensation.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In future proxy statements, the Company will fully disclose any year-to-year differences in the
Compensation Committee&#146;s review process, which disclosure will be modeled on the following draft
disclosure provided for your reference: &#147;In February&nbsp;2009, the Committee reviewed the
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">U. S. Securities and Exchange Commission<BR>
June&nbsp;8, 2010<BR>
Page 5 of 6

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Company&#146;s compensation program for its senior executives, consistent with its practice in prior
years. The Company used the same peer group used in the January&nbsp;2008 review against which to
compare executive pay, excluding Grant Prideco, Inc. since it no longer existed as an independent
company at the end of 2008. This peer group was used to benchmark executive compensation levels
against companies that have executive positions with responsibilities similar in breadth and scope
to those of the Company and have businesses that compete with the Company for executive talent.
The Company analyzed and compared each position&#146;s responsibilities and job title to develop
competitive market data from proxy statements. The Company&#146;s proxy analysis focused on the top
five executives. Based on the compiled data and the comparisons prepared by the Company, the
Committee, in consultation with Frederic Cook, determined that total direct compensation for the
Company&#146;s named executive officers was in the median range of the Company&#146;s designated peer group.&#148;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U><B>Annual Incentive Award, page 30</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>6.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Please clarify how the capital employed modifier affected bonus payments made for 2009
performance.</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Response: The predetermined capital employed modifier for 2009 was not exceeded by the actual
capital employed number calculated for 2009. As a result of the capital employed modifier
adjustment, bonus payouts were increased by 6.7%. The level/percentage of increase was determined
based on the interpolated, or sliding scale, difference between the actual capital employed
modifier for 2009 and the predetermined capital employed modifier. The capital employed modifier
applied to bonus payouts can only increase or decrease the payout by up to 25%; provided that in no
event may the 200% maximum target incentive amount be exceeded. The Company will include
supplemental disclosure consistent with the foregoing in its future proxy statements.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>7.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>We note that you have not disclosed the operating profit and capital employed targets
applicable to the awards made under your annual incentive plan for 2009 performance. We
also note your statements regarding the difficulty of achieving each of the relevant
thresholds with respect to your target operating profit. Please provide similar disclosure
regarding your capital employed target, and revise your disclosure to provide support for
the level of difficulty that you assert with respect to each target, such as a discussion
of the correlation between historical and future achievement of the relevant performance
metric.</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Response: The predetermined capital employed modifier is set at the level provided under the
Company&#146;s annual financial plan approved by the Board. For the Company&#146;s actual capital employed
modifier not to exceed the predetermined capital employed modifier, and thus result in an increased
bonus payment, the Company must efficiently and properly utilize and deploy the
Company&#146;s assets. If the Company does not properly and efficiently deploy its assets, the actual
capital employed modifier will exceed the predetermined capital employed modifier, and thus result
in a reduced bonus payment. Results falling above or below the stated predetermined
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">U. S. Securities and Exchange Commission<BR>
June&nbsp;8, 2010<BR>
Page 6 of 6

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">capital employed modifier will result in an interpolated, or sliding scale, percentage reduction or
increase in the bonus payout.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Historically, the actual operating profit for the Company has fallen above and below the &#147;target&#148;
objective, and the actual capital employed modifier has increased and decreased bonus payments. In
years where market conditions were very favorable and the Company efficiently executed its
operational plan, the Company&#146;s actual operating profit exceeded the &#147;target&#148; objective and the
capital employed modifier increased bonus payments. In years where market conditions were not as
favorable and the Company was not able to efficiently execute its operational plan, the Company&#146;s
actual operating profit fell below the &#147;target&#148; objective (and in certain instances, the capital
employed modifier reduced bonus payments). In the past eight years under the Company&#146;s bonus
program, actual operating profit has exceeded the &#147;target&#148; objective four times, while actual
operating profit has been below the &#147;target&#148; objective four times. During that same period, the
capital employed modifier has resulted in a positive bonus payment adjustment three times, a
negative bonus adjustment two times, and no adjustment three times.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In future proxy statements, the Company will provide disclosure regarding the difficulty of
achieving the predetermined capital employed target, similar to the Company&#146;s prior disclosure
regarding achievement of target operating profit.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In providing this response letter to the Staff, the Company acknowledges that (i)&nbsp;the Company is
responsible for the adequacy and accuracy of the disclosure in the above-referenced filings, (ii)
Staff comments or changes to disclosure in response to comments do not foreclose the Commission
from taking any action with respect to the above-referenced filings, and (iii)&nbsp;the Company may not
assert Staff comments as a defense in any proceeding initiated by the Commission or any person
under the federal securities laws of the United States.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">If you or any member of the Staff has any questions regarding the responses set forth herein,
please contact the undersigned at (713)&nbsp;346-7550.
</DIV>


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Sincerely,<BR>
<BR>
/s/ Dwight W.
Rettig<div style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</div>Dwight W. Rettig<BR>
Senior Vice President, General Counsel<BR>
and Secretary<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>



</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>GRAPHIC
<SEQUENCE>2
<FILENAME>h73704h7370401.gif
<DESCRIPTION>GRAPHIC
<TEXT>
begin 644 h73704h7370401.gif
M1TE&.#EA40$A`/?_`-<,`/&[L]PR'-@5`/+!N^ZJHO79U.!,.-<:`/KP[NJ*
M?=33T>.YM-@0`.^SJMPZ(^1S8]]',\/"O?3S\O"LH_GEXM@3`.%=2N;EX^N8
MC.R5BMC*PO;6TM/1S^F!<NSKZN1I6_GBW?SZ^>5Z;?KN[-Y!*[.PJ/KHYMD=
M!/KLZ_?@W/"EF^V2A/GR\.-:1_72S;&NINN.@-@8`.70RN>#=+2QJKJZL]D:
M`/OY]O3.R?G<V>)40>R@D^V0@MS0RMH=`N)1.^ZHGOS]_/GKZ=H<`-C6T?GW
M]=LI$?CX^-@<`/KT\MT\*/&UKMHN%>=Z:OG5S\S.R;2PJL7$P.-I6;6RJ_&P
MJ/O__]W?W/SV]=LO&<3(P^B)>O"^M\K+Q=@=`MH:`/W__=DB"/KZ^O/)PNR>
MD>J1AO71R]]$+MDF#>VAF+R]M.-E5^A^<;:TKN1V:/S[^N-G6.'AX-D@!NZD
MF/K\^N1I5M'/RNF$=^>&>>5Q8/;EX.ZDG?++Q/"XKMHD"^Z?E_GZ^OO\_=@M
M$KFWL-PV'^=X9MO9UO?IY?W]__;=V.)@3>5E5?/%O^B5B///Q^5A4-TN%?3+
MQM\Z(^9L6N5N7-<>`[Z]N.IT8^FGF_7-Q_"PI>N<DMLC#.-B4KBUK[W`N_;;
MUM]0.<C&P?"TJNZGH,"^N;>WL/3+P]H>`N#?V_KZ^-PF#-HJ%+2QJ/75SNJB
ME]H>".J9D-D7`+:RK/OX^>R;C[NYLMDJ#_G__]@:`]PA">:>E<_2T>)O6N1E
M4^5J7?___?O]_^J0@O'1S>1N8>ZCG-<D"N-K7+Z[M?'`M^NDF]LG$?OR[^-M
M7NZ;E?*XL?_\_.N4AOSKZ*^MIMP?!^AM7=LK$MD9`/W___S___O__?_]_[J]
MMOOT\]@<!MLE"_G]_?//R^>KH?/4T-H=`?CLZ.-D5>%G5-_JZ?/'P.^>D^)/
M/N+KZ]?;V/;X^>9_;K.TKML9`O;V];N[L]PD#N+?X/GY^/SW]]/=U]]50-LH
M$-D;`]H>`[:SK/_______R'Y!`$``/\`+`````!1`2$```C_`/T)'$BPH,&#
M"!,J7,BPH<.'$"-*G$BQHL6+&#,N_*>1(;:.($.*'$FRI,F3$CD*%`.HI<N6
M;PH&>DD3D!@D2'`-%"'"BL!L[I#8K-E23$R";X@"0H*RJ=.G4*.:5"E&E(2K
M6+%^((@AJU<)I;3@F^%@2QT7+AZQ"3+L"I127[,6(2C/ZM=2'1!)W<NWKU^^
M*NV9,D&X,&$8HH[ZBV/8,`P36C:\6X)B0`,+%BXC$'",`11XCQN;@`&%X(+0
MC6M@^,NZM>O7%`/;H-*OMNW:-:X,C$/[=C\JIA:\DF1!UHT?_)+S^T%$AH5E
M-'Q\JN&[7PT[`S]XZGW;1(=ML,.+_Q__6C9WWU2031#(V_>L?D7PH)"%7+G]
MY"BN#7@TXU,4W]<)](8H_Z&G'GD()J@@2N959YL)V"UVGG4=;''-#?=EJ!PY
M`[@PPVRWU3"7/ZE,V,\LN2VHXHHL5M2@@[_-LE5[MM6@11#48*CACASF4<1Y
M(OHCSSS4^1:%*$*TJ.223!;T(HRM2`$-C2>:XD,),NRH)3]$4"..%$5:-U<'
M)E1'A2=;-:GFF@L^"2,5J6#`G8W"R++EEC*LXT.(16AG8BL+L"GHH.&YZ6`-
MEA1Q&SP;`''-G3ON(X<UXEC2VW6BA%FC)?(0ZNFG@`ED#X@PVD:%+6W41L4@
M#%A#!*09HO^0Q`&ZN*%%F+8X2$4-]8#JZZ\,BDIJJ:J::LDN/]0':W*5R)#/
M#GG:$285)IJ`)+#89MN1H<2JJ@4-=B[+K`P1X('&-83XD&JIJZ;)%S`=?:1M
M1?`F*"](W'9;0Q>%#"#N<A8<4,`2LA`!B;K$FC"B1_<2A$TV%67C4T+R9M,P
M-@T+9(5>`V&,4,,3"Y3Q0AB7[##$!&6#<D$>BPSQQ1QW/++##H/A<,,6*W1Q
MQP;%3+,_+1LT\\E"?[0R0?D2NZ\3_BZ+P``7$+`#?41D@3",)I3"5$'2:,#"
MURST,(<1"?#00P\9D#"0&<*`C78%_C"31@]@U_UU#Q2`XO77+P#_[4\"FMPQ
M21V%;&*`O"?44G<//&!QCS-G9W""O!PLK@'<`E60P=T$,`0&Q@8X4T@=D]Q1
M10(#O=#VUP8DD`'=,00P4#8!Q!"V)DF20`;=/1"@#1@J>-U#&D'0;7?858A0
M!>]_*%%0Y5\+T[="M=_=]T<&E/%U#)%@$\PSMM\]AP@B$V"\W4%P(!!X_H"1
M#@MYU$$)'E5@\5$"5=`P>"'J&."W0$DKU;YHD"5($<$"QMA"#B[0M&N<P0?P
M>%,_5F.0)Q"A`0/(8`/"8``5"*`!#3`&*`0"C6,`8`"8P<PF_!$"0F`P@S"$
M(0`.P(1]I%`=_L@&%R(@`Q1>9@"LN$,+__SQ`C2\T#)A,(,2E@%"/YAA('D`
M0`HSHP&4C2$,&&R`$SQB!#RP8HH6D,$9F""0-%S&`@.@0`CD@$$`5&-V"I!B
M`\X@#7\0``5H!(`+C)`-,V;F`#OX(0IEN(-N[."$#1#`$`I""A1:``!I6(@R
MS@@`8@SD#F<<0.=24(),-@`%.1C(.UX(1B#B01YZ"8<BPN#(S$BB`K0[@W-2
M:$KG`5!8)L+-FSY1AFLH2T-)R&`^")"."`R@/K)8!"\T=9LH="%)%?P&$9+%
MG&M0H`(/N$82!*$#@:B`$+[4Y@]D<($W8',`U[@&.:A)A'0.``A]H,<-B$"$
M%?@C&=:P0!*"F?_!<5K`#:IP11:^0,T?7$,9W1#`%[[0A"?ZHQP".,Z%?B"+
M4.!`()$XPC2OX0&&O($-`Y`!.621P21XP0+?Z(,_BG$->J*@"B'0QW$&<`F"
M$,`;^[A!%ORG@98:E!`JR`8;9$`$67@`#O3Y`0(`P%2F'@`++J#/-9:P2()0
M``7TE$$Q%G("<!KT`23`1@L.((,?#.``M/!'`+`Z3B*,5`$#H8$ZF?.T`>S#
M"S*0016P,88/WJ`22V6J)%*0C&58@`@W0*,L\#J`$:`L7YY`!C-QHP4NP.(+
M&6*.<Q!PACT<X@_6&$`EDH.*:\3B5KJRA;L*\H15O"I9_!A`(?3P@"__;+.;
MV`C"#U!P@R7<@APWL`8'3A"!,*#A&_:AQC>^(0<7Q',?R5K!/0[@KQ^$`0]!
M.$,2^.$-;P0`%%EX[:L0D(<$"(">#16(`Y*`"G(\H`GT1$,H_1$)5_$#`1U=
M"!?"@*$OE$`96S`&<@9P!B60`@&PA:E&8UO3@9Q``$GX@1RXD(TU))4<82``
M-"Y0UA\XH`YVJAH>%$#B.U``JEGZ`E4+0H'E&'2K"X&`G2I1B61D(P=^>-4`
MHH$Q-_A+#B4(0R6N$8$A^H,&-T#%#020ABI,83FH,&H"#F"!Y,B`$!#8`@1Z
MH0+J\@/#"EC!&>*!"F_`XAZW],>H3'2J>@S"_T2F^``6\B"#,V+F,DD0@").
MEPD&%C`Y1!#`#`8!HR@8(B&MG>8MZ/&#))S!%4NP+3?]\09?R``57ZC%([(D
MBS($X@5\R`0^7R6#'8PA$J<P0`#H`=T?%&`,7^:'+!0AD+4..`\<""\_=`$)
M<C@0%(1`[Q/I\(L.9^`<"$"%#+:`4?OB=R%"\#$J4."-*N20$EGZ@3>200$$
M(T?!.FZP@%R0)02DK02/\@(_9%`&$J`["=90@2_LA(`2*`$;8,AW-D1`;GZH
MN*H#:7&RK@%CA?0A#.18MP<0T0A_$:$)ZAO"`W)!CBQ0X`%)(((?DB$0)&/Z
M#-#P1R)<A8H!Q*"&K_^Z0034)R`N_"#A"#B'0/JPG-@ZE%NKFL`"RA0B"=@C
M;D'(@PN`$`H75$,!?=`#'5[@!C\<UCY19D,'"@0@"1@!T:XE0@D.\`4OL*(*
M);C!;44>WB4?@@P(6/<!5"$O'.@ZF?+"!A<XT6I-S*&`G19("")ZWP.<XKQ>
MR,(%6GJ$``3[X4],!"'B4;4*%"/"US@`ZNH[WOPF1`E3XY(U<%N+:?+C&F0H
M@+?Y`6X&%^0.=I+M*;YQ`TE$(`DR6(,96$$$!*S#"/->SC?.$('>GZ$6;^CW
MOUGL8H(SY!#H_OP!2-!O&2B"?)J`!0IDX`(Z'$,&TW]'QY/<^@`08`1R^('_
M!01@``4D&SD4.%HM[*34#.B=]NLN0)K7;"93R&,":M`4%6RPGMFUSV+94`$4
M<`%A8`%I=Q^RL`0SP`ULU@84A!")IG)W0`1>``ML<`9B-VFO<&D(<`%#P`6W
ML`\8Q@<#D0!9@"&R\`CD(Q!S5W<:T#0RX'[^<`B1=E\/P`CG102$$`U>L$X*
M<'CI%01>8%`[,`2,H`_TQ`G)@`V4=U^6AQ`D<`"/D@1-T$W^0`&H@!P(H``'
MEF`AL&`T51`.\&77``3"<`,R,`71D`0((`D\$'ZR\`[9T`GA<D$@U```\`[0
M('PK9E7%5W`)D0WOD"4WT`2;<%ZHX`5!X`^!,`FR_X`"6]@"/35.);!('I<<
MN@`+LD`.S34,_N`!:4<$MY`)*1,#[/<#]C2#P?9YKS!_PV(J\]`IJ1`%[V$J
M$E`/'_`&*F`&8Q``Q<`&+I`%*/0%HW4?,D`-F@`%D]4/)@`%(8=UB!4!3.!:
M^W``DD`$MP4&'+8<67`&)?`-*'!?=Y`S)HB"*C@0+9@L%,`#X2(#C2`07859
M*M=7]"0`!`!?U[`#.=@$+R`$%K8<D'`&9Z`+R"$#;.`/F>!L=[`0+0`$=D*%
M*@`T*[!.]Z4!HN>%8"AN`F$`X?5PH7`-YG8*?I`$:!`*E4`.1)!^=)@<U(`&
MRX`&:*`+"A!\*;8$J..'`_]'"@U!`&$PA+#P`'+@;P^@!RST`,=1"0\0`9*`
M"C6G4I?X`TR5=G*@""J`#5N0=NC7,`VW'#=`!@)Q"+IV#8OH#SBG!IWR!E)`
M=;41!37@"5#0!P_@!<V"0D2U([*@"YNP`,M8`[;0?]#(6:!P!@A&#VC`#Q!I
M`-:P71P"0H_R>1$05G]S@K)VCBQ(=R]'`<G@5K)&"0(1#GZ0<`,`!^/0D5D0
M`NN`?;=`D`_G"B'0!!AB5HQI927`#`GY*DG@!"F0F[FY@@,A!(ZX'+K`!1WG
M2^20!'W0;1CY*K)0#22@FRDP!$"0)5Z``AC&!4J`<<G!'!`WAP^Y!*!0`>`9
M`BW_P&\I]@"@T)RY20L"]P,W$`L)H)LD\(P%T0T\Q`^PX$NRE@>?(X3(D5B7
MH2,#D`?9X'$_X`=Y``%-L`^H8`'K@`.CX`W(<0VA0)0:PP2>)P,0(!".$`8#
ME@ZNR&9F*1`?T`83LBO>@0F0T`#'P93`-`!9$`3M``^Y9`*'MA`16`(GX`99
MXGG;%`*U,'I-D`59H`_(001A$``V4XZ3R9OI^`-!D``/8"=><`M!P`>=\"@4
M50`<24]9P`R#R"5%V@0&H`STP0]R$*1-<`O(\0/[P`4O8%^H8`U+,*=S>@H&
M00&Y\"I?L`.,H`FK>&4DT(7?]H6O=01T.J<$P`;7@`I9_YAGAY`-BU!=RI<`
MVK"2-_``FO`,3+"IC-`-_?8#G/``=$H(?\`$-5<)64"GDN`"*7`0V*``39,<
MW26<@?`(=H(*?B"D6>`'_2D`)X`'248$UN`_%H(*KW(*S&!,LGD'M>`![V``
M4<I=K!`$8W`!F$4.,F!D9=DI0$,FNE(#4,``.Z`?,C!/R8*-LG!8+L`%O$"B
MAR(%JL`0-RH-!9`+RD*%+S!XG[<#XV``H%``"!=E3@`Q2IJ"3&J9J.@/RK`/
MLE`)28`":(!]^]``+L`,N49/D-`-FA!K@)8%X7`!=G(-^?`"!F``5?`-H.D&
M9F!?ACD`LD!2U\!Q!=$"BJ"BI?_E!W*`8+*0"W_@#WLP>J7')3U$4C+P#`6P
M#\I!?8'@#QH@"RR*H=H@!"O)#Y60"_L$>P=0#MO(#_/QLK(``"=7<_?ELNFZ
M!">`$)GP#<6X;B60`-@0`I#P*AQ5L@9P!^Q%#MZ@">;''-9@IZ,`9=?0LP%P
M!$^70;+0``\@#1OXB+E0"9P@`Y5P`PUP`0,1&*:`&H4!`S;`K?XP`9:`N88Q
M#=Q@![O@`A!&4B[K!7HF#D7P"=,`NH71!JN5$"\0#WA(""=@`,8``'<(`,;`
M`[``0@"@`?)B!`_`NP#0!"'@#R3`"<CK`KP9``/`NPV`0^"P"<)XAYGA#;X`
M-V;@O`#_$`;,D`BK0+UXN`RU(`?(6P8#@041@+Q90`JZ<(?TBT'":1"'<`[B
MEQD@9`&0$`MZ\0?FJT9)8+[URP0<``O4"P#,Y@_I4&?"FP;8(`0N8+Y-Q50E
M4`Y`8,"]JP!54+^]B[NNV@T;W+O,A@W1@+P(X*$:JKYXZ`)N0+THX*%CD`3"
M2PEZD0P\A!DH!`"2<`)"$`O"R+^9`0MP@#ED*1"!4`0+T,1.W,2&``A<T0%/
M7,6\L`#H,`&@,`JO$P.UT`<Z(`_LL`!47,5.W`%7X#,?$P+$``)PX`$DH`1;
M``<@4,=3X`:8,`53``*_P'(Y]`?F``)34`?CX`\MX`9[;`X9_R#%`O$"S;#'
M($``'O,""M`)!Q`!+C`"HW!1_J`"B`P';J`$;S#'=>S&(_`*QU#'Q^")`Z$,
M=#P%Q%``B%S*I3P%O>#'`P$>.-`'(^`"$7``G:``K@`TV4``=`P"Q\`'AP`!
MD$S+=1P.1C`"QPP"=@H,Y3`">SP%>>`_@=`(:^#,=;P&"M`"T?#-X-P)3.`(
MJ0S.<$`#-\DRV>``T]P,PQS$WPP';%`.-B-6=T#'^!P+D`P!H)`->H#-(+`&
MPG`40Z`,>;`#$;`.:[`)W2`0XQ`#G1`*F.P$S\";26P2#V,%1Z,1B%`R#R,$
M0F`Q)9,-N&`%#X,-(8,-(YW222($)+^=#=#4/BQ=,ASS$6*5`!R-TQ]M-"3]
M,+B`TBI3+SF$TMB@#3D]U-A0U`MA#RW0`C;3,?N,,58@!"OMU#S=U#S=/L%@
MU"#M#T+@U4Y]TER-,3:=UBH=TBFCU"Y-UEYM!57MTB1M!3F=#>!`!V&-U;AP
MTP]S#PG0#2Y=UT#3`@E`"VZM$O/2V$TR-$N2,4C-$(SMV)9]V8+R#YJ]V9S=
DV9[]V:`=VJ(]VJ1=VJ9]VJB=VJJ]VJS=VJ[]VK`=VZ4=$``[
`
end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
