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Derivative Financial Instruments (Tables)
 3 Months Ended
Mar. 31, 2013
Derivative Instruments And Hedging Activities Disclosure [Abstract]  
Outstanding Foreign Currency Forward Contracts

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

    March 31,
2013		      December 31,
2012		  

Norwegian Krone

    NOK     7,913       NOK     6,281   

Euro

    € 471       € 389   

U.S. Dollar

    $ 290       $ 331   

Danish Krone

    DKK 201       DKK 134   

British Pound Sterling

    £ 44       £ 6   

Singapore Dollar

    SGD 12       SGD 14   

 

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

    March 31,
2013		      December 31,
2012		  

Norwegian Krone

    NOK      2,873       NOK      1,684   

Russian Ruble

    RUB 1,224       RUB 1,467   

U.S. Dollar

    $ 1,032       $ 967   

Danish Krone

    DKK 275       DKK 177   

Euro

    € 241       € 225   

Mexican Peso

    MXN 224       MXN —     

Brazilian Real

    BRL 104       BRL 135   

Singapore Dollar

    SGD 37       SGD 24   

British Pound Sterling

    £ 16       £ 9   

Swedish Krone

    SEK 10       SEK 5   
Derivative Instruments and their Balance Sheet Classifications

The Company has the following gross fair values of its derivative instruments and their balance sheet classifications:

NATIONAL OILWELL VARCO, INC.

Fair Values of Derivative Instruments

(In millions)

 

   

Asset Derivatives

     Liability Derivatives  
        Fair Value         Fair Value  
    Balance Sheet   March 31,     December 31,     Balance Sheet   March 31,     December 31,  
   

Location

   2013     2012     Location   2013     2012  

Derivatives designated as hedging instruments under ASC Topic 815

            

Foreign exchange contracts

  

Prepaid and other current assets

   $ 22      $ 57      Accrued liabilities   $ 24      $ 5   

Foreign exchange contracts

  

Other Assets

     8        24      Other Liabilities     5        1   
   

 

 

    

 

 

      

 

 

    

 

 

  

Total derivatives designated as hedging instruments under ASC Topic 815

     $ 30      $ 81        $ 29      $ 6   
   

 

 

    

 

 

      

 

 

    

 

 

  

Derivatives not designated as hedging instruments under ASC Topic 815

            

Foreign exchange contracts

  

Prepaid and other current assets

   $ 15      $ 24      Accrued liabilities   $ 23      $ 13   
   

 

 

    

 

 

      

 

 

    

 

 

  

Total derivatives not designated as hedging instruments under ASC Topic 815

     $ 15      $ 24        $ 23      $ 13   
   

 

 

    

 

 

      

 

 

    

 

 

  

Total derivatives

     $ 45      $ 105        $ 52      $ 19   
   

 

 

    

 

 

      

 

 

    

 

 

  
Effect of Derivative Instruments on Consolidated Statements of Income

The Effect of Derivative Instruments on the Consolidated Statements of Income

($ in millions)

 

                                             
                                Location of Gain (Loss)   Amount of Gain (Loss)  
                                Recognized in Income on   Recognized in Income on  
                Location of Gain (Loss)   Amount of Gain (Loss)     Derivative (Ineffective   Derivative (Ineffective  
    Amount of Gain (Loss)     Reclassified from   Reclassified from     Portion and Amount   Portion and Amount  
Derivatives in ASC Topic 815   Recognized in OCI on     Accumulated OCI into   Accumulated OCI into     Excluded from   Excluded from  
Cash Flow Hedging   Derivative     Income   Income     Effectiveness   Effectiveness  

Relationships

   (Effective Portion) (a)    

(Effective Portion)

   (Effective Portion)    

Testing)

   Testing) (b)  
    Three Months Ended
March 31,		         Three Months Ended
March 31,		         Three Months Ended
March 31,		  
    2013     2012         2013     2012         2013     2012  
      Revenue     2        (4 )       

Foreign exchange contracts

     (61 )      78      Cost of revenue     3        (6 )   

Other income (expense), net

     3        (1 ) 
 

 

 

    

 

 

      

 

 

    

 

 

      

 

 

    

 

 

  

Total

     (61 )      78          5        (10 )        3        (1 ) 
 

 

 

    

 

 

      

 

 

    

 

 

      

 

 

    

 

 

  

 

Derivatives Not Designated as   Location of Gain (Loss)   Amount of Gain (Loss)  
Hedging Instruments under   Recognized in Income   Recognized in Income on  

ASC Topic 815

  

on Derivative

   Derivative  
        Three Months Ended
March 31,		  
        2013     2012  

Foreign exchange contracts

  

Other income (expense), net

     —          16   
   

 

 

    

 

 

  

Total

       —          16   
   

 

 

    

 

 

  

 

(a) The Company expects that $10 million of the Accumulated Other Comprehensive Income (Loss) will be reclassified into earnings within the next twelve months with an offset by gains from the underlying transactions resulting in no impact to earnings or cash flow.
(b) The amount of gain (loss) recognized in income represents nil and $(1) million related to the ineffective portion of the hedging relationships for the three months ended March 31, 2013 and 2012, respectively, and nil and $(1) million related to the amount excluded from the assessment of the hedge effectiveness for the three months ended March 31, 2013 and 2012, respectively.