107057698 107053031 30.85 3599654 1034055 31.94 120000000 1904000000 -17000000 1921000000 107057698 107057698 330000000 0 0.01 20000000 0.01 0 1958000000 63000000 0 508000000 4000000 1000000 1000000 401000000 10000000 5000000 18000000 1946000000 103000000 1958000000 2000000 38000000 2473000000 515000000 25000000 22000000 236000000 20000000 333000000 118000000 773000000 35000000 181000000 2473000000 8000000 882000000 67000000 1000000 1946000000 1000000 1000000 30.85 3594987 1034055 31.94 17000000 23000000 68000000 55000000 58000000 1000000 10000000 107058000 1946000000 1000000 107053031 138000000 107057698 107057698 330000000 0 0.01 20000000 0.01 0 1802000000 61000000 0 363000000 264000000 16000000 18000000 99000000 1802000000 2000000 32000000 2183000000 381000000 24000000 25000000 101000000 21000000 333000000 102000000 661000000 29000000 163000000 2183000000 15000000 850000000 68000000 3000000 1662000000 1802000000 62000000 44000000 57000000 1802000000 0.69 415837 128000000 107468868 0.69 0.353 107053031 6000000 44000000 4000000 7000000 -41000000 115000000 111000000 56000000 -1000000 2142000000 36000000 74000000 -7000000 3000000 -1000000 7000000 -3000000 1000000 79000000 -3000000 -18000000 -2000000 40000000 41000000 18000000 -108000000 1748000000 -108000000 4000000 2000000 -35000000 7000000 -108000000 6000000 3000000 -34000000 204000000 0.052 74000000 22000000 387000000 0.057 74000000 1454000000 0.051 15000000 301000000 0.050 <div> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 18pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> <b>Basis of Presentation</b></p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> All financial information presented before the Spin-Off represents the combined results of operations, financial position and cash flows for the Company and all financial information presented after the Spin-Off represents the consolidated results of operations, financial position and cash flows for the Company.</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 6pt 'Times New Roman'; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; WORD-SPACING: 0px; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td width="5%">&#xA0;</td> <td valign="top" width="2%" align="left">&#x2022;</td> <td valign="top" width="1%">&#xA0;</td> <td valign="top" align="left">The Company&#x2019;s consolidated statement of income for the three months ended June&#xA0;30, 2014 consist of the consolidated results of NOW for the period from May&#xA0;31 through June&#xA0;30 and the combined results of NOW for the period from April&#xA0;1, 2014 through May&#xA0;30, 2014.</td> </tr> </table> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 6pt 'Times New Roman'; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; WORD-SPACING: 0px; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td width="5%">&#xA0;</td> <td valign="top" width="2%" align="left">&#x2022;</td> <td valign="top" width="1%">&#xA0;</td> <td valign="top" align="left">The Company&#x2019;s consolidated statement of income for the six months ended June&#xA0;30, 2014 consist of the consolidated results of NOW for the period from May&#xA0;31 through June&#xA0;30 and the combined results of NOW for the period from January&#xA0;1, 2014 through May&#xA0;30, 2014.</td> </tr> </table> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 6pt 'Times New Roman'; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; WORD-SPACING: 0px; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td width="5%">&#xA0;</td> <td valign="top" width="2%" align="left">&#x2022;</td> <td valign="top" width="1%">&#xA0;</td> <td valign="top" align="left">The Company&#x2019;s consolidated balance sheet as at June&#xA0;30, 2014 is presented on a consolidated basis, whereas the Company&#x2019;s consolidated balance sheet as at December&#xA0;31, 2013 was prepared on a combined basis.</td> </tr> </table> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 6pt 'Times New Roman'; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; WORD-SPACING: 0px; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td width="5%">&#xA0;</td> <td valign="top" width="2%" align="left">&#x2022;</td> <td valign="top" width="1%">&#xA0;</td> <td valign="top" align="left">The Company&#x2019;s consolidated statement of cash flows for the six months ended June&#xA0;30, 2014 consist of the consolidated results of NOW for the period from May&#xA0;31 through June&#xA0;30 and the combined results of NOW for the period from January&#xA0;1, 2014 through May&#xA0;30, 2014.</td> </tr> </table> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> The Company&#x2019;s historical financial statements prior to May&#xA0;31, 2014 were derived from the consolidated financial statements and accounting records of NOV and include assets, liabilities, revenues and expenses directly attributable to the Company&#x2019;s operations. The assets and liabilities in the consolidated financial statements have been reflected on a historical cost basis, as immediately prior to the separation all of the assets and liabilities presented were wholly owned by NOV and were transferred within NOV. For the periods prior to the Separation, the consolidated financial statements include expense allocations for certain functions provided by NOV as well as other NOV employees not solely dedicated to NOW, including, but not limited to, general corporate expenses related to finance, legal, information technology, human resources, communications, ethics and compliance, shared services, employee benefits and incentives, and stock-based compensation. These expenses were allocated to NOW on the basis of direct usage when identifiable, with the remainder allocated on the basis of operating profit, headcount or other measures.</p> <p style="MARGIN-BOTTOM: 0px; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 1px 'Times New Roman'; MARGIN-TOP: 12px; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> &#xA0;</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> Actual costs that would have been incurred if we had been a stand-alone public company would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including information technology and infrastructure. The Company&#x2019;s historical financial statements prior to May&#xA0;31, 2014 do not reflect the debt or interest costs it might have incurred if it had been a stand-alone entity. In addition, the Company expects to incur other costs, not reflected in its historical financial statements prior to May&#xA0;31, 2014, as a result of being a separate publicly traded company. As a result, the Company&#x2019;s historical financial statements prior to May&#xA0;31, 2014 do not necessarily reflect what its financial position or results of operations would have been if it had been operated as a stand-alone public entity during the periods covered prior to May&#xA0;31, 2014, and may not be indicative of the Company&#x2019;s future results of operations and financial position.</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> The consolidated financial statements include certain assets and liabilities that have historically been held by NOV but which are specifically identifiable or otherwise allocable to the Company. The cash and cash equivalents held by NOV are not specifically identifiable to NOW and therefore were not allocated to it for any of the periods presented prior to the Separation. Cash and equivalents in the Company&#x2019;s consolidated balance sheets primarily represent cash held locally by entities included in its consolidated financial statements. Transfers of cash prior to the Separation to and from NOV&#x2019;s cash management system are reflected as a component of NOV invested equity on the consolidated balance sheets.</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> Prior to the Separation, all significant intercompany transactions between NOW and NOV were considered to be effectively settled for cash at the time the transaction was recorded. The total net effect of the settlement of these intercompany transactions is reflected in the consolidated statements of cash flow as a financing activity and in the consolidated balance sheet as NOV invested equity.</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> The unaudited consolidated financial information included in this report has been prepared in accordance with accounting principles generally accepted in the United States (&#x201C;GAAP&#x201D;) for interim financial information and Article 10 of SEC Regulation S-X. The principles for interim financial information do not require the inclusion of all the information and footnotes required by generally accepted accounting principles for complete financial statements. Therefore, these financial statements should be read in conjunction with the financial statements included in the Company&#x2019;s most recent Registration Statement on Form 10, as amended. In our opinion, the consolidated financial statements include all adjustments, all of which are of a normal recurring nature, necessary for a fair presentation of the results for the interim periods. The results of operations for the three and six months ended June&#xA0;30, 2014, are not necessarily indicative of the results to be expected for the full year.</p> </div> <div> <p style="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"> <b>10. Commitments and Contingencies</b></p> <p style="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"> We are involved in various claims, regulatory agency audits and pending or threatened legal actions involving a variety of matters. We record accruals for estimated losses from these matters when available information indicates that a loss is probable and the loss can be reasonably estimated. We also assess the potential for additional losses above the amounts accrued as well as potential losses for matters that are not probable but are reasonably possible. The total potential loss on these pending matters cannot be determined; however, in our opinion, any ultimate liability, to the extent not otherwise recorded or accrued for, will not materially affect our financial position, cash flow or results of operations. These estimated liabilities are based on the Company&#x2019;s assessment of the nature of these matters, their progress toward resolution, the advice of legal counsel and outside experts as well as management&#x2019;s intention and experience.</p> <p style="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"> Our business is affected both directly and indirectly by governmental laws and regulations relating to the oilfield service industry in general, as well as by environmental and safety regulations that specifically apply to our business. Although we have not incurred material costs in connection with our compliance with such laws, there can be no assurance that other developments, such as new environmental laws, regulations and enforcement policies hereunder may not result in additional, presently unquantifiable, costs or liabilities to the Company.</p> <p style="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"> The Company has entered into various agreements with NOV as a result of the Spin-Off, including the Separation and Distribution Agreement, Tax Matters Agreement and Employee Matters Agreement, which govern various terms of the separation of the Company&#x2019;s business from NOV&#x2019;s other businesses.&#xA0;The Tax Matters Agreement sets forth the Company and NOV&#x2019;s rights and obligations related to the allocation of federal, state, local and foreign taxes for periods before and after the Spin-Off, as well as taxes attributable to the Spin-Off, and related matters such as the filing of tax returns and the conduct of IRS and other audits.</p> </div> <div> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt"> <b>4. Debt</b></p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt"> <b>Credit Facility</b></p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt"> On April&#xA0;18, 2014, we entered into a five-year senior unsecured revolving credit facility with a syndicate of lenders, including Wells Fargo Bank, National Association, as administrative agent. The credit facility became available to the Company on June&#xA0;2, 2014 as a result of the satisfaction of customary conditions, including the consummation of the Separation. The credit facility is for an aggregate principal amount of up to $750 million with sub-facilities for standby letters of credit and swingline loans, each with a sublimit of $150 million and $50 million, respectively. We have the right, subject to certain conditions, to increase the aggregate principal amount of commitments under the credit facility by $250 million. At June&#xA0;30, 2014, the Company had no borrowings against its revolving credit facility and no letters of credit issued under the facility. The credit facility is unsecured and guaranteed by our domestic subsidiaries.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"> The credit agreement contains usual and customary affirmative and negative covenants for credit facilities of this type including financial covenants consisting of (a)&#xA0;a maximum capitalization ratio (as defined in the credit agreement) of 50% and (b)&#xA0;a minimum interest coverage ratio (as defined in the credit agreement) of no less than 3:1. Borrowings under the credit facility will bear interest at a base rate (as defined in the credit agreement) plus an applicable interest margin based on our capitalization ratio. The base rate is calculated as the highest of (a)&#xA0;the Federal Funds Rate, as published by the Federal Reserve Bank of New York, plus 1/2 of 1%, (b)&#xA0;the prime commercial lending rate of the administrative agent, as established from time to time at its principal U.S. office, and (c)&#xA0;the Daily One-Month LIBOR (as defined in the credit agreement) plus 1%. We also have the option for our borrowings under the credit facility to bear interest based on LIBOR (as defined in the credit agreement). The credit agreement also provides for customary fees, including administrative agent fees, commitment fees, fees in respect of letters of credit and other fees. The line of credit expires in April 2019, unless extended. As of June&#xA0;30, 2014, we are in compliance with all covenants.</p> </div> 0.63 <div> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> <b>9. Earnings Per Share</b></p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> In conjunction with the Separation, NOV distributed to its stockholders all 107,053,031 shares of common stock of NOW Inc. after the market closed on May&#xA0;30, 2014. Each NOV stockholder received one share of NOW common stock for every four shares of NOV common stock held at the close of business on the record date of May&#xA0;22, 2014 and not sold prior to close of business May&#xA0;30, 2014. On June&#xA0;2, 2014, NOW Inc. stock began trading the &#x201C;regular-way&#x201D; on the New York Stock Exchange under the symbol &#x201C;DNOW&#x201D;. Subsequent to the Separation through June&#xA0;30, 2014, the Company has not granted any stock options, PSAs, RSAs or RSUs.</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> Basic earnings per share is based on net income attributable to the Company&#x2019;s earnings and is calculated based upon the daily weighted-average number of common shares outstanding during the periods presented. Also, this calculation includes fully vested stock and unit awards that have not yet been issued as common stock. Diluted EPS includes the above, plus unvested stock, unit or option awards granted and vested unexercised stock options, but only to the extent these instruments dilute earnings per share.</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> For comparative purposes, and to provide a more meaningful calculation of weighted-average shares outstanding, the Company has assumed the 107,053,031 shares of common stock of NOW Inc. that was distributed on May&#xA0;30, 2014 to be outstanding as of the beginning of each period prior to the separation presented in the calculation of weighted-average shares. In addition, the Company has assumed the dilutive securities outstanding at May&#xA0;30,&#xA0;2014, were also outstanding for each of the periods prior to the Separation presented.</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> For the three and six months ended June&#xA0;30, 2014, 1,992,899&#xA0;stock options, RSAs and RSUs were excluded from the computation of diluted earnings per share due to their antidilutive effect.</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 12pt 'Times New Roman'; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; WORD-SPACING: 0px; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="48%"></td> <td valign="bottom" width="10%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="10%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="10%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="10%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'"> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="6" align="center"><b>Three Months Ended June&#xA0;30</b></td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="6" align="center"><b>Six Months Ended June&#xA0;30</b></td> <td valign="bottom">&#xA0;</td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'"> <td valign="bottom" nowrap="nowrap"> <p style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'; BORDER-BOTTOM: rgb(0,0,0) 1pt solid; WIDTH: 100pt"> <i>(In millions, except share data)</i></p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>2014</b></td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>2013</b></td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>2014</b></td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>2013</b></td> <td valign="bottom">&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Numerator for basic and diluted net income per share attributable to the Company&#x2019;s stockholders:</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Net income attributable to the Company</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">27</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">33</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">68</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">74</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Denominator for basic net income per share attributable to the Company&#x2019;s stockholders:</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Weighted average common shares outstanding</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">107,053,082</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">107,053,031</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">107,053,058</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">107,053,031</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Effect of dilutive securities:</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 5em; TEXT-INDENT: -1em"> Dilutive effect of stock based compensation</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">497,263</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">415,837</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">456,550</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">415,837</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Denominator for diluted net income per share attributable to the Company&#x2019;s stockholders:</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">107,550,345</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">107,468,868</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">107,509,608</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">107,468,868</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Net income per share attributable to the Company&#x2019;s stockholders:</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Basic</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.25</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.31</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.64</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.69</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Diluted</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.25</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.31</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.63</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.69</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> </tr> </table> </div> 2014-04-18 <div> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> The difference between the effective tax rate reflected in the provision for income taxes and the U.S. federal statutory rate of 35% was as follows&#xA0;<i>(in millions):</i></p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 12pt 'Times New Roman'; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; WORD-SPACING: 0px; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="80%"></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'"> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="6" align="center"><b>Three Months<br /> Ended June&#xA0;30</b></td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="6" align="center"><b>Six Months<br /> Ended June&#xA0;30</b></td> <td valign="bottom">&#xA0;</td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'"> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>2014</b></td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>2013</b></td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>2014</b></td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>2013</b></td> <td valign="bottom">&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Federal income tax at the U.S. federal statutory rate</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">15</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">19</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">37</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">40</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Foreign income tax rate differential</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">(1</td> <td valign="bottom" nowrap="nowrap">)&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;</td> <td valign="bottom" nowrap="nowrap" align="right"> &#x2014;&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">(3</td> <td valign="bottom" nowrap="nowrap">)&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">(2</td> <td valign="bottom" nowrap="nowrap">)&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> State income tax, net of federal benefit</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">1</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;</td> <td valign="bottom" nowrap="nowrap" align="right"> &#x2014;&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">1</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;</td> <td valign="bottom" nowrap="nowrap" align="right"> &#x2014;&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Nondeductible expenses</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">1</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;</td> <td valign="bottom" nowrap="nowrap" align="right"> &#x2014;&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">3</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">2</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Foreign tax credit</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">(1</td> <td valign="bottom" nowrap="nowrap">)&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;</td> <td valign="bottom" nowrap="nowrap" align="right"> &#x2014;&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">(2</td> <td valign="bottom" nowrap="nowrap">)&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;</td> <td valign="bottom" nowrap="nowrap" align="right"> &#x2014;&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Other</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">1</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">3</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">1</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">1</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Provision for income taxes</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">16</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">22</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">37</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">41</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> </tr> </table> <br class="Apple-interchange-newline" /> </div> 10-Q NOW INC. DNOW <div> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> <b>6. Business Segments</b></p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> Operating results by segment are as follows&#xA0;<i>(in millions):</i></p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 12pt 'Times New Roman'; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; WORD-SPACING: 0px; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="73%"></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'"> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="6" align="center"><b>Three&#xA0;Months&#xA0;Ended<br /> June&#xA0;30</b></td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="6" align="center"><b>Six&#xA0;Months&#xA0;Ended<br /> June&#xA0;30</b></td> <td valign="bottom">&#xA0;</td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'"> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>2014</b></td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>2013</b></td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>2014</b></td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>2013</b></td> <td valign="bottom">&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Revenue:</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> United States</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">662</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">742</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,366</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,454</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Canada</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">125</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">172</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">316</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">387</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> International</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">165</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">156</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">347</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">301</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Total Revenue</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">952</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,070</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">2,029</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">2,142</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Operating Profit:</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> United States</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">28</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">41</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">58</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">74</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Canada</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">2</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">5</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">18</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">22</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> International</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">13</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">7</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">29</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">15</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Total Operating Profit</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">43</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">53</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">105</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">111</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Operating Profit %:</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> United States</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">4.2%</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">5.5%</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">4.2%</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">5.1%</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Canada</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">1.6%</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">2.9%</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">5.7%</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">5.7%</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> International</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">7.9%</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">4.5%</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">8.4%</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">5.0%</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Total Operating Profit %</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">4.5%</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">5.0%</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">5.2%</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">5.2%</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> </table> </div> Non-accelerated Filer <div> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> Awards granted under the Plan as a result of the adjustment and substitution of the NOV Plan awards in connection with the Separation and a summary of stock option, RSU and RSA activity for the period from May&#xA0;30, 2014, to June&#xA0;30, 2014, are presented in the following table:</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 12pt 'Times New Roman'; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; WORD-SPACING: 0px; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="57%"></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'"> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="6" align="center">Stock Options</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="6" align="center">RSUs / RSAs</td> <td valign="bottom">&#xA0;</td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'"> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center">Options</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center">Weighted-<br /> average<br /> Exercise&#xA0;Price</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center">Awards /<br /> RSUs</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center">Weighted-<br /> average<br /> Exercise&#xA0;Price</td> <td valign="bottom">&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Outstanding as of May&#xA0;30, 2014</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">3,599,654</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">30.85</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">1,034,055</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">31.94</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Granted post-Separation</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;</td> <td valign="bottom" nowrap="nowrap" align="right"> &#x2014;&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;</td> <td valign="bottom" nowrap="nowrap" align="right"> &#x2014;&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;</td> <td valign="bottom" nowrap="nowrap" align="right"> &#x2014;&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;</td> <td valign="bottom" nowrap="nowrap" align="right"> &#x2014;&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Exercised or settled</p> </td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom"> &#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" align="right">(4,667</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" nowrap="nowrap">)&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" align="right">32.57</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom"> &#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" nowrap="nowrap">&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" nowrap="nowrap" align="right">&#x2014;&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom"> &#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" nowrap="nowrap">&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" nowrap="nowrap" align="right">&#x2014;&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td style="BORDER-BOTTOM: rgb(0,0,0) 2pt solid" valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Outstanding as of June&#xA0;30, 2014</p> </td> <td style="BORDER-BOTTOM: rgb(0,0,0) 2pt solid" valign="bottom"> &#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 2pt solid" valign="bottom"> &#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 2pt solid" valign="bottom" align="right">3,594,987</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 2pt solid" valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 2pt solid" valign="bottom"> &#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 2pt solid" valign="bottom"> $</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 2pt solid" valign="bottom" align="right">30.85</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 2pt solid" valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 2pt solid" valign="bottom"> &#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 2pt solid" valign="bottom"> &#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 2pt solid" valign="bottom" align="right">1,034,055</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 2pt solid" valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 2pt solid" valign="bottom"> &#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 2pt solid" valign="bottom"> $</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 2pt solid" valign="bottom" align="right">31.94</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 2pt solid" valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> </table> </div> 456550 70000000 <div> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> <b>11. Related Party Transactions</b></p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> <b>Related Party Transactions</b></p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> In connection with the Separation, the Company and NOV entered into a Separation and Distribution Agreement, Tax Matters Agreement, Employee Matters Agreement, and Transition Service Agreement each dated May&#xA0;29, 2014.</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> The Separation and Distribution Agreement contains the key provisions related to the separation from NOV and the distribution of our common stock to NOV shareholders. The Separation and Distribution Agreement separated the assets related to the Company&#x2019;s business from NOV, along with liabilities related to such assets, which now reside with the Company. In general, the Company agrees to indemnify NOV from liabilities arising from the Company&#x2019;s business and assets, and NOV agrees to indemnify the Company from liabilities arising from NOV&#x2019;s business and assets (that remained with NOV), except as otherwise provided in such agreement.</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> The Tax Matters Agreement governs the respective rights, responsibilities and obligations of each party with respect to taxes and tax benefits, the filing of tax returns, the control of audits, restrictions to preserve the tax-free status of the Spin-Off and other tax matters.</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> The Employee Matters Agreement governs the Company and NOV&#x2019;s compensation and employee benefit obligations with respect to current and former employees of each company, and generally allocates liabilities and responsibilities relating to employee compensation and benefit plans and programs. Such agreement also provides the adjustment mechanisms to be applied as a result of the Spin-Off to convert outstanding NOV equity awards held by Company employees to Company awards.</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> The Transition Service Agreement provides for transitional services in the areas of information technology, tax, accounting, finance and employee benefits and are initially short-term in nature. The charges under these transition service agreements will be at cost-based rates. For the period from May&#xA0;31 through June&#xA0;30, 2014, the net amount of less than $1 million incurred by the Company under this agreement was recognized in selling, general and administrative in the consolidated statements of income. No amounts were reflected in the consolidated statements of income prior to May&#xA0;31, 2014, as the Transition Service Agreement was not effective prior to the Separation.</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> Additionally, the Company and NOV entered into a Master Distribution Agreement and a Master Supply Agreement, effective as of May&#xA0;29, 2014. Under the Master Distributor Agreement, we will act as a distributor of certain NOV products. Under the Master Supply Agreement, we will supply products and provide solutions, including supply chain management solutions, to NOV.</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 18pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> <b>Allocation of General Corporate Expenses</b></p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> For the periods prior to the Separation, the consolidated financial statements include expense allocations for certain functions provided by NOV as well as other NOV employees not solely dedicated to NOW, including, but not limited to, general corporate expenses related to finance, legal, information technology, human resources, communications, ethics and compliance, shared services, employee benefits and incentives, and stock-based compensation. These expenses were allocated to NOW on the basis of direct usage when identifiable, with the remainder allocated on the basis of operating profit, headcount or other measures. During the three months ended June&#xA0;30, 2014 and 2013, NOW was allocated $3 million and $2 million, respectively, which is included within selling, general and administrative in the accompanying consolidated statements of income. During the six months ended June&#xA0;30, 2014 and 2013, NOW was allocated $6 million and $4 million, respectively, of expenses incurred by NOV which is included within selling, general and administrative expenses in the accompanying consolidated statements of income.</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> The expense allocations were determined on a basis that was considered to be a reasonable reflection of the utilization of services provided or the benefit received by the Company during the periods presented. The allocations may not reflect the expense the Company would have incurred as an independent, publicly traded company for the periods presented. Actual costs that may have been incurred if the Company had been a stand-alone public company would depend on a number of factors, including the chosen organizational structure, what functions were outsourced or performed by employees and strategic decisions made in areas such as information technology and infrastructure.</p> <p style="MARGIN-BOTTOM: 0px; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 1px 'Times New Roman'; MARGIN-TOP: 18px; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> &#xA0;</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> <b>NOV Net Investment</b></p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> Prior to the Separation, net contributions from (distributions to) NOV invested equity were included within NOV net investment on the Consolidated Balance Sheets and Statements of Cash Flows. The components of the change in NOV net investment for the six months ended June&#xA0;30, 2014 and 2013 are as follows&#xA0;<i>(in millions):</i></p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 12pt 'Times New Roman'; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; WORD-SPACING: 0px; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="76%" align="center" border="0"> <tr> <td width="81%"></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'"> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="6" align="center"> Six&#xA0;Months&#xA0;Ended&#xA0;June&#xA0;30</td> <td valign="bottom">&#xA0;</td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'"> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center">2014</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center">2013</td> <td valign="bottom">&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Net contributions from (distributions to) NOV per the consolidated statements of changes in equity</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">143</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">(34</td> <td valign="bottom" nowrap="nowrap">)&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Non-cash adjustments:</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">&#xA0;</td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Stock-based compensation</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">(3</td> <td valign="bottom" nowrap="nowrap">)&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;</td> <td valign="bottom" nowrap="nowrap" align="right"> &#x2014;&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Net transfer of assets and liabilities from NOV</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">(8</td> <td valign="bottom" nowrap="nowrap">)&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;</td> <td valign="bottom" nowrap="nowrap" align="right"> &#x2014;&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Less: Net income attributable to NOV net investment prior to the Separation</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">(58</td> <td valign="bottom" nowrap="nowrap">)&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">(74</td> <td valign="bottom" nowrap="nowrap">)&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Net contributions from (distributions to) NOV per the consolidated statements of cash flows</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">74</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">(108</td> <td valign="bottom" nowrap="nowrap">)&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> </tr> </table> </div> <div> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 18pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> <b>3. Accrued Liabilities</b></p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> Accrued liabilities consist of&#xA0;<i>(in millions):</i></p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 12pt 'Times New Roman'; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; WORD-SPACING: 0px; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="76%" align="center" border="0"> <tr style="COLOR: white; LINE-HEIGHT: 0pt; VISIBILITY: hidden"> <td width="76%"></td> <td valign="bottom" width="10%"></td> <td></td> <td nowrap="nowrap"></td> <td></td> <td valign="bottom" width="10%"></td> <td></td> <td nowrap="nowrap"></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'"> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>June&#xA0;30,<br /> 2014</b></td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>December&#xA0;31,<br /> 2013</b></td> <td valign="bottom">&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Compensation and other related expenses</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">25</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">24</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Customer prepayments</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">18</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">18</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Taxes (non income)</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">22</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">25</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Other</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">38</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">32</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Total</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">103</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">99</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> </tr> </table> </div> <div> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> Accrued liabilities consist of&#xA0;<i>(in millions):</i></p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 12pt 'Times New Roman'; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; WORD-SPACING: 0px; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="76%" align="center" border="0"> <tr style="COLOR: white; LINE-HEIGHT: 0pt; VISIBILITY: hidden"> <td width="76%"></td> <td valign="bottom" width="10%"></td> <td></td> <td nowrap="nowrap"></td> <td></td> <td valign="bottom" width="10%"></td> <td></td> <td nowrap="nowrap"></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'"> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>June&#xA0;30,<br /> 2014</b></td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>December&#xA0;31,<br /> 2013</b></td> <td valign="bottom">&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Compensation and other related expenses</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">25</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">24</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Customer prepayments</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">18</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">18</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Taxes (non income)</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">22</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">25</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Other</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">38</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">32</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Total</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">103</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">99</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> </tr> </table> </div> <div> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> The components of the change in NOV net investment for the six months ended June&#xA0;30, 2014 and 2013 are as follows&#xA0;<i>(in millions):</i></p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 12pt 'Times New Roman'; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; WORD-SPACING: 0px; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="76%" align="center" border="0"> <tr> <td width="81%"></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'"> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="6" align="center"> Six&#xA0;Months&#xA0;Ended&#xA0;June&#xA0;30</td> <td valign="bottom">&#xA0;</td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'"> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center">2014</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center">2013</td> <td valign="bottom">&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Net contributions from (distributions to) NOV per the consolidated statements of changes in equity</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">143</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">(34</td> <td valign="bottom" nowrap="nowrap">)&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Non-cash adjustments:</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">&#xA0;</td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Stock-based compensation</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">(3</td> <td valign="bottom" nowrap="nowrap">)&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;</td> <td valign="bottom" nowrap="nowrap" align="right"> &#x2014;&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Net transfer of assets and liabilities from NOV</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">(8</td> <td valign="bottom" nowrap="nowrap">)&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;</td> <td valign="bottom" nowrap="nowrap" align="right"> &#x2014;&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Less: Net income attributable to NOV net investment prior to the Separation</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">(58</td> <td valign="bottom" nowrap="nowrap">)&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">(74</td> <td valign="bottom" nowrap="nowrap">)&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Net contributions from (distributions to) NOV per the consolidated statements of cash flows</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">74</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">(108</td> <td valign="bottom" nowrap="nowrap">)&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> </tr> </table> </div> <div> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> Operating results by segment are as follows&#xA0;<i>(in millions):</i></p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 12pt 'Times New Roman'; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; WORD-SPACING: 0px; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="73%"></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'"> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="6" align="center"><b>Three&#xA0;Months&#xA0;Ended<br /> June&#xA0;30</b></td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="6" align="center"><b>Six&#xA0;Months&#xA0;Ended<br /> June&#xA0;30</b></td> <td valign="bottom">&#xA0;</td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'"> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>2014</b></td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>2013</b></td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>2014</b></td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>2013</b></td> <td valign="bottom">&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Revenue:</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> United States</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">662</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">742</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,366</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,454</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Canada</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">125</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">172</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">316</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">387</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> International</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">165</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">156</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">347</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">301</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Total Revenue</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">952</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,070</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">2,029</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">2,142</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Operating Profit:</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> United States</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">28</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">41</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">58</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">74</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Canada</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">2</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">5</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">18</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">22</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> International</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">13</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">7</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">29</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">15</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Total Operating Profit</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">43</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">53</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">105</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">111</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Operating Profit %:</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> United States</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">4.2%</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">5.5%</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">4.2%</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">5.1%</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Canada</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">1.6%</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">2.9%</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">5.7%</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">5.7%</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> International</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">7.9%</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">4.5%</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">8.4%</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">5.0%</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Total Operating Profit %</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">4.5%</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">5.0%</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">5.2%</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">5.2%</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> </table> </div> <div> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt"> <b>Use of Estimates</b></p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt"> The preparation of financial statements in conformity with GAAP 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. Actual results could differ from those estimates.</p> </div> 2014-06-30 <div> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 18pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> <b>12. Derivative Financial Instruments</b></p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> 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 foreign currencies may be entered into to manage (i)&#xA0;foreign currency exchange rate risk on forecasted revenues and expenses denominated in currencies other than the functional currency of the operating unit, (ii)&#xA0;foreign currency exchange rate risk on recognized nonfunctional currency monetary accounts, or (iii)&#xA0;foreign-currency exchange rate risk on unrecognized firm commitments.</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> The Company records all derivative financial instruments at their fair value in its Consolidated Balance Sheets. None of the derivative financial instruments that the Company holds are designated as either a fair value hedge or cash flow hedge. For derivative instruments that are non-designated, the gain or loss on the derivative instrument subject to the economically-hedged risk (i.e. unrecognized firm commitments) is recognized in other income in current earnings.</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> The Company has entered into forward exchange contracts which have terms of less than a year to economically hedge foreign-currency exchange rate risk on unrecognized firm commitments. The purpose of the Company&#x2019;s foreign currency economic hedging activities is to economically-hedge the Company&#x2019;s risk from changes in the fair value of a non-functional currency denominated unrecognized firm commitment attributable to changes in the rates between the non-functional currency and the functional currency. At June&#xA0;30, 2014, the Company had outstanding foreign currency forward contracts that economically-hedged the fair value of unrecognized firm commitments denominated in U.S. Dollars.</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> At June&#xA0;30, 2014, the Company has determined that the fair value of its derivative financial instruments representing liabilities of less than $1 million (all 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 rates at each financial reporting date. At June&#xA0;30, 2014, the net fair value of the Company&#x2019;s foreign currency forward contracts totaled a net liability of less than $1 million and is included in accrued liabilities in the accompanying Consolidated Balance Sheets.</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> At June&#xA0;30, 2014, the Company&#x2019;s financial instruments do not contain any credit-risk-related or other contingent features that could cause accelerated payments when the Company&#x2019;s financial instruments are in net liability positions. The Company does not use derivative financial instruments for trading or speculative purposes.</p> </div> <div> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt"> The components of accumulated other comprehensive income (loss)&#xA0;are as follows <i>(in millions):</i></p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="68%" align="center" border="0"> <tr> <td width="85%"></td> <td valign="bottom" width="12%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom" colspan="2" align="center"><b>Currency</b></td> <td valign="bottom">&#xA0;</td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom" colspan="2" align="center"> <b>Translation</b></td> <td valign="bottom">&#xA0;</td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Adjustments</b></td> <td valign="bottom">&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Balance at December&#xA0;31, 2013</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">$</td> <td valign="bottom" nowrap="nowrap" align="right"> &#x2014;&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Accumulated other comprehensive income (loss) before reclassifications</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">1</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Amounts reclassified from accumulated other comprehensive income (loss)</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;</td> <td valign="bottom" nowrap="nowrap" align="right"> &#x2014;&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: #000000 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: #000000 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Balance at June&#xA0;30, 2014</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">1</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: #000000 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: #000000 3px double">&#xA0;</p> </td> <td>&#xA0;</td> </tr> </table> </div> false --12-31 2014 107509608 0.64 0.356 <div> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> <b>7. Income Tax</b></p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> In connection with the Separation, the Company and NOV entered into a Tax Matters Agreement, dated as of May&#xA0;29, 2014 (the &#x201C;Tax Matters Agreement&#x201D;), which governs the Company&#x2019;s and NOV&#x2019;s respective rights, responsibilities and obligations. Pursuant to the Tax Matters Agreement, NOV will prepare and file the consolidated federal income tax return, and any other tax returns that include both NOV and the Company for all taxable periods ending on or prior to May&#xA0;30, 2014. NOV will indemnify and hold harmless the Company for any income tax liability for periods before the Separation date. The Company will prepare and file all tax returns that include solely the Company for all taxable periods ending after that date. Settlements of tax payments between NOV and the Company were generally treated as contributions from or distributions to NOV in periods prior to the Separation date.</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> The effective tax rate for the Company was 37.4% and 35.6% for the three and six months ended June&#xA0;30, 2014, respectively, and 39.6% and 35.3% for the same periods of the prior year, respectively. Compared to the U.S. statutory rate, the effective tax rate is increased in the periods by the effect of state income taxes and certain non-deductible expenses that is partially offset by the effect of lower tax rates on income earned in foreign jurisdictions which are permanently reinvested. The provision for income taxes for periods prior to the Separation has been computed as if we were a stand-alone company.</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> The difference between the effective tax rate reflected in the provision for income taxes and the U.S. federal statutory rate of 35% was as follows&#xA0;<i>(in millions):</i></p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 12pt 'Times New Roman'; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; WORD-SPACING: 0px; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="80%"></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'"> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="6" align="center"><b>Three Months<br /> Ended June&#xA0;30</b></td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="6" align="center"><b>Six Months<br /> Ended June&#xA0;30</b></td> <td valign="bottom">&#xA0;</td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'"> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>2014</b></td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>2013</b></td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>2014</b></td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>2013</b></td> <td valign="bottom">&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Federal income tax at the U.S. federal statutory rate</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">15</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">19</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">37</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">40</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Foreign income tax rate differential</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">(1</td> <td valign="bottom" nowrap="nowrap">)&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;</td> <td valign="bottom" nowrap="nowrap" align="right"> &#x2014;&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">(3</td> <td valign="bottom" nowrap="nowrap">)&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">(2</td> <td valign="bottom" nowrap="nowrap">)&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> State income tax, net of federal benefit</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">1</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;</td> <td valign="bottom" nowrap="nowrap" align="right"> &#x2014;&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">1</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;</td> <td valign="bottom" nowrap="nowrap" align="right"> &#x2014;&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Nondeductible expenses</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">1</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;</td> <td valign="bottom" nowrap="nowrap" align="right"> &#x2014;&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">3</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">2</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Foreign tax credit</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">(1</td> <td valign="bottom" nowrap="nowrap">)&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;</td> <td valign="bottom" nowrap="nowrap" align="right"> &#x2014;&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">(2</td> <td valign="bottom" nowrap="nowrap">)&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;</td> <td valign="bottom" nowrap="nowrap" align="right"> &#x2014;&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Other</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">1</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">3</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">1</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">1</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Provision for income taxes</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">16</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">22</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">37</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">41</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> </tr> </table> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> The Company is subject to taxation in the United States, various states and foreign jurisdictions. The Company has significant operations in the United States and Canada and to a lesser extent in various other international jurisdictions including the United Kingdom, Indonesia and Norway. Tax years that remain subject to examination by major tax jurisdictions vary by legal entity, but are generally open in the U.S. for the tax years ending after 2007 and outside the U.S. for the tax years ending after 2006. The Company is indemnified for any income tax expense exposures related to periods prior to the Separation.</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> To the extent penalties and interest would be assessed on any underpayment of income tax, such accrued amounts will continue to be classified as a component of income tax expense in the financial statements.</p> </div> <div> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> <b>1. Organization and Basis of Presentation</b></p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> <b>The Separation</b></p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> On May&#xA0;1, 2014, the National Oilwell Varco, Inc. (&#x201C;NOV&#x201D;) Board of Directors approved the spin-off (the &#x201C;Spin-Off&#x201D; or &#x201C;Separation&#x201D;) of its distribution business into an independent, publicly traded company named NOW Inc. (&#x201C;NOW&#x201D; or the &#x201C;Company&#x201D;). In accordance with a separation and distribution agreement, the two companies were separated by NOV distributing to its stockholders all 107,053,031 shares of common stock of the Company after the market closed on May&#xA0;30, 2014. Each NOV stockholder received one share of NOW common stock for every four shares of NOV common stock held at the close of business on the record date of May&#xA0;22, 2014 and not sold prior to close of business May&#xA0;30, 2014. Fractional shares of NOW common stock were not distributed and any fractional shares of NOW common stock otherwise issuable to a NOV stockholder were sold in the open market on such stockholder&#x2019;s behalf, and such stockholder received a cash payment with respect to that fractional share. In conjunction with the separation, NOV received an opinion from its legal counsel to the effect that, based on certain facts, assumptions, representations and undertakings, for U.S. federal income tax purposes, the distribution of NOW common stock and certain related transactions generally was not taxable to NOV or U.S. holders of NOV common stock, except in respect to cash received in lieu of fractional shares, which generally will be taxable to such holders as a capital gain. Following the separation, NOW is an independent, publicly traded company, and NOV has no ownership interest in NOW. Each company now has separate public ownership, boards of directors and management. A Registration Statement on Form 10, as amended, relating to the Spin-Off was filed by the Company with the U.S. Securities and Exchange Commission (&#x201C;SEC&#x201D;) and was declared effective on May&#xA0;13, 2014. On June&#xA0;2, 2014, NOW stock began trading the &#x201C;regular-way&#x201D; on the New York Stock Exchange under the symbol &#x201C;DNOW&#x201D;.</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 18pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> <b>Basis of Presentation</b></p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> All financial information presented before the Spin-Off represents the combined results of operations, financial position and cash flows for the Company and all financial information presented after the Spin-Off represents the consolidated results of operations, financial position and cash flows for the Company.</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 6pt 'Times New Roman'; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; WORD-SPACING: 0px; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td width="5%">&#xA0;</td> <td valign="top" width="2%" align="left">&#x2022;</td> <td valign="top" width="1%">&#xA0;</td> <td valign="top" align="left">The Company&#x2019;s consolidated statement of income for the three months ended June&#xA0;30, 2014 consist of the consolidated results of NOW for the period from May&#xA0;31 through June&#xA0;30 and the combined results of NOW for the period from April&#xA0;1, 2014 through May&#xA0;30, 2014.</td> </tr> </table> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 6pt 'Times New Roman'; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; WORD-SPACING: 0px; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td width="5%">&#xA0;</td> <td valign="top" width="2%" align="left">&#x2022;</td> <td valign="top" width="1%">&#xA0;</td> <td valign="top" align="left">The Company&#x2019;s consolidated statement of income for the six months ended June&#xA0;30, 2014 consist of the consolidated results of NOW for the period from May&#xA0;31 through June&#xA0;30 and the combined results of NOW for the period from January&#xA0;1, 2014 through May&#xA0;30, 2014.</td> </tr> </table> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 6pt 'Times New Roman'; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; WORD-SPACING: 0px; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td width="5%">&#xA0;</td> <td valign="top" width="2%" align="left">&#x2022;</td> <td valign="top" width="1%">&#xA0;</td> <td valign="top" align="left">The Company&#x2019;s consolidated balance sheet as at June&#xA0;30, 2014 is presented on a consolidated basis, whereas the Company&#x2019;s consolidated balance sheet as at December&#xA0;31, 2013 was prepared on a combined basis.</td> </tr> </table> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 6pt 'Times New Roman'; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; WORD-SPACING: 0px; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td width="5%">&#xA0;</td> <td valign="top" width="2%" align="left">&#x2022;</td> <td valign="top" width="1%">&#xA0;</td> <td valign="top" align="left">The Company&#x2019;s consolidated statement of cash flows for the six months ended June&#xA0;30, 2014 consist of the consolidated results of NOW for the period from May&#xA0;31 through June&#xA0;30 and the combined results of NOW for the period from January&#xA0;1, 2014 through May&#xA0;30, 2014.</td> </tr> </table> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> The Company&#x2019;s historical financial statements prior to May&#xA0;31, 2014 were derived from the consolidated financial statements and accounting records of NOV and include assets, liabilities, revenues and expenses directly attributable to the Company&#x2019;s operations. The assets and liabilities in the consolidated financial statements have been reflected on a historical cost basis, as immediately prior to the separation all of the assets and liabilities presented were wholly owned by NOV and were transferred within NOV. For the periods prior to the Separation, the consolidated financial statements include expense allocations for certain functions provided by NOV as well as other NOV employees not solely dedicated to NOW, including, but not limited to, general corporate expenses related to finance, legal, information technology, human resources, communications, ethics and compliance, shared services, employee benefits and incentives, and stock-based compensation. These expenses were allocated to NOW on the basis of direct usage when identifiable, with the remainder allocated on the basis of operating profit, headcount or other measures.</p> <p style="MARGIN-BOTTOM: 0px; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 1px 'Times New Roman'; MARGIN-TOP: 12px; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> &#xA0;</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> Actual costs that would have been incurred if we had been a stand-alone public company would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including information technology and infrastructure. The Company&#x2019;s historical financial statements prior to May&#xA0;31, 2014 do not reflect the debt or interest costs it might have incurred if it had been a stand-alone entity. In addition, the Company expects to incur other costs, not reflected in its historical financial statements prior to May&#xA0;31, 2014, as a result of being a separate publicly traded company. As a result, the Company&#x2019;s historical financial statements prior to May&#xA0;31, 2014 do not necessarily reflect what its financial position or results of operations would have been if it had been operated as a stand-alone public entity during the periods covered prior to May&#xA0;31, 2014, and may not be indicative of the Company&#x2019;s future results of operations and financial position.</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> The consolidated financial statements include certain assets and liabilities that have historically been held by NOV but which are specifically identifiable or otherwise allocable to the Company. The cash and cash equivalents held by NOV are not specifically identifiable to NOW and therefore were not allocated to it for any of the periods presented prior to the Separation. Cash and equivalents in the Company&#x2019;s consolidated balance sheets primarily represent cash held locally by entities included in its consolidated financial statements. Transfers of cash prior to the Separation to and from NOV&#x2019;s cash management system are reflected as a component of NOV invested equity on the consolidated balance sheets.</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> Prior to the Separation, all significant intercompany transactions between NOW and NOV were considered to be effectively settled for cash at the time the transaction was recorded. The total net effect of the settlement of these intercompany transactions is reflected in the consolidated statements of cash flow as a financing activity and in the consolidated balance sheet as NOV invested equity.</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> The unaudited consolidated financial information included in this report has been prepared in accordance with accounting principles generally accepted in the United States (&#x201C;GAAP&#x201D;) for interim financial information and Article 10 of SEC Regulation S-X. The principles for interim financial information do not require the inclusion of all the information and footnotes required by generally accepted accounting principles for complete financial statements. Therefore, these financial statements should be read in conjunction with the financial statements included in the Company&#x2019;s most recent Registration Statement on Form 10, as amended. In our opinion, the consolidated financial statements include all adjustments, all of which are of a normal recurring nature, necessary for a fair presentation of the results for the interim periods. The results of operations for the three and six months ended June&#xA0;30, 2014, are not necessarily indicative of the results to be expected for the full year.</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> <b>Use of Estimates</b></p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> The preparation of financial statements in conformity with GAAP 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. Actual results could differ from those estimates.</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> <b>Fair Value of Financial Instruments</b></p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> The carrying amounts of 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. See Note 12 for the fair value of derivative financial instruments.</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> <b>Recently Issued Accounting Standards</b></p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> In April 2014, the Financial Accounting Standards Board (&#x201C;FASB&#x201D;) issued Accounting Standard Update (&#x201C;ASU&#x201D;) No.&#xA0;2014-08&#xA0;<i>Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity</i>, which is an update for Accounting Standards Codification Topic No.&#xA0;205 &#x201C;Presentation of Financial Statements&#x201D; and Topic No.&#xA0;360 &#x201C;Property, Plant and Equipment&#x2019;. This update changes the requirements of reporting discontinued operations. Under the amended guidance, a disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity&#x2019;s operations and financial results. The amendments in this update are effective for all disposals (or classifications as held for sale) of components of an entity that occur within annual periods beginning on or after December&#xA0;15, 2014, and interim periods within those years, with early adoption permitted. The adoption of this update concerns presentation and disclosure only as it relates to the Company&#x2019;s consolidated financial statements. The Company is currently assessing the impact of ASU No.&#xA0;2014-08 on its financial position and results of operations. No material changes are expected upon adoption of this ASU.</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 12pt 'Times New Roman'; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> &#xA0;</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> In May 2014, the FASB issued ASU No.&#xA0;2014-09,&#xA0;<i>Revenue from Contracts with Customers: Topic 606.&#xA0;</i>ASU 2014-09 affects any entity using GAAP that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). This ASU will supersede the revenue recognition requirements in Topic 605,&#xA0;<i>Revenue Recognition,</i>&#xA0;and most industry-specific guidance. In addition, the existing requirements for the recognition of a gain or loss on the transfer of nonfinancial assets that are not in a contract with a customer (e.g., assets within the scope of Topic 360,&#xA0;<i>Property, Plant, and Equipment,</i>&#xA0;and intangible assets within the scope of Topic 350,&#xA0;<i>Intangibles&#x2014;Goodwill and Other)</i>&#xA0;are amended to be consistent with the guidance on recognition and measurement (including the constraint on revenue) in this ASU. The amendments in this ASU are effective for annual reporting periods beginning after December&#xA0;15, 2016, including interim periods within that reporting period. Early application is not permitted. The ASU provides two transition methods: (i)&#xA0;retrospectively to each prior reporting period presented (ii)&#xA0;retrospectively with the cumulative effect of initially applying this ASU recognized at the date of initial application. The Company is currently assessing the impact of ASU No.&#xA0;2014-09 on its financial position and results of operations.</p> </div> <div> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> For the three and six months ended June&#xA0;30, 2014, 1,992,899&#xA0;stock options, RSAs and RSUs were excluded from the computation of diluted earnings per share due to their antidilutive effect.</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 12pt 'Times New Roman'; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; WORD-SPACING: 0px; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="48%"></td> <td valign="bottom" width="10%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="10%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="10%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="10%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'"> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="6" align="center"><b>Three Months Ended June&#xA0;30</b></td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="6" align="center"><b>Six Months Ended June&#xA0;30</b></td> <td valign="bottom">&#xA0;</td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'"> <td valign="bottom" nowrap="nowrap"> <p style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'; BORDER-BOTTOM: rgb(0,0,0) 1pt solid; WIDTH: 100pt"> <i>(In millions, except share data)</i></p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>2014</b></td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>2013</b></td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>2014</b></td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>2013</b></td> <td valign="bottom">&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Numerator for basic and diluted net income per share attributable to the Company&#x2019;s stockholders:</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Net income attributable to the Company</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">27</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">33</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">68</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">74</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Denominator for basic net income per share attributable to the Company&#x2019;s stockholders:</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Weighted average common shares outstanding</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">107,053,082</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">107,053,031</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">107,053,058</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">107,053,031</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Effect of dilutive securities:</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 5em; TEXT-INDENT: -1em"> Dilutive effect of stock based compensation</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">497,263</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">415,837</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">456,550</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">415,837</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Denominator for diluted net income per share attributable to the Company&#x2019;s stockholders:</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">107,550,345</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">107,468,868</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">107,509,608</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">107,468,868</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Net income per share attributable to the Company&#x2019;s stockholders:</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Basic</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.25</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.31</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.64</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.69</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Diluted</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.25</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.31</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.63</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.69</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> </tr> </table> </div> 0001599617 <div> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> <b>8. Stock-based Compensation and Outstanding Awards</b></p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> Prior to the Separation, the Company participated in NOV&#x2019;s stock-based compensation plan known as the National Oilwell Varco, Inc. Long-Term Incentive Plan (the &#x201C;NOV Plan&#x201D;) and the Company&#x2019;s employees were issued NOV equity awards. Under the NOV Plan, our employees were granted stock options, restricted stock units (RSUs), performance share awards (PSAs) and/or restricted stock awards (RSAs).</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> In connection with the Separation, the Company established the NOW Inc. Long-Term Incentive Plan (the &#x201C;Plan&#x201D;). The Plan was adopted by the Company&#x2019;s board of directors and approved by NOV, as the Company&#x2019;s sole stockholder, on May&#xA0;1, 2014. In connection with the Separation, stock-based compensation awards granted under the NOV Plan and held by Company employees as of May&#xA0;30, 2014, were adjusted or substituted as follows. These adjustments were intended to preserve the intrinsic value of the awards on May 30, 2014.</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 6pt 'Times New Roman'; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; WORD-SPACING: 0px; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td width="5%">&#xA0;</td> <td valign="top" width="2%" align="left">&#x2022;</td> <td valign="top" width="1%">&#xA0;</td> <td valign="top" align="left">Stock option awards held by Company employees were replaced with substitute awards to purchase NOW common stock.</td> </tr> </table> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 6pt 'Times New Roman'; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; WORD-SPACING: 0px; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td width="5%">&#xA0;</td> <td valign="top" width="2%" align="left">&#x2022;</td> <td valign="top" width="1%">&#xA0;</td> <td valign="top" align="left">Unvested RSAs and RSUs under the NOV plan were replaced with adjusted, substitute awards for NOW RSAs or RSUs, as applicable.</td> </tr> </table> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 6pt 'Times New Roman'; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; WORD-SPACING: 0px; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td width="5%">&#xA0;</td> <td valign="top" width="2%" align="left">&#x2022;</td> <td valign="top" width="1%">&#xA0;</td> <td valign="top" align="left">PSAs received were replaced entirely with substitute NOW RSAs.</td> </tr> </table> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> Stock based compensation expense recognized in the three month periods ended June&#xA0;30, 2014 and 2013 totaled $3 million and $2&#xA0;million, respectively. Stock based compensation expense recognized in the six month periods ended June&#xA0;30, 2014 and 2013 totaled $5 million and $3 million, respectively. Adjustment and substitution of the awards did not result in additional compensation expense.</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> Awards granted under the Plan as a result of the adjustment and substitution of the NOV Plan awards in connection with the Separation and a summary of stock option, RSU and RSA activity for the period from May&#xA0;30, 2014, to June&#xA0;30, 2014, are presented in the following table:</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 12pt 'Times New Roman'; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; WORD-SPACING: 0px; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="57%"></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'"> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="6" align="center">Stock Options</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="6" align="center">RSUs / RSAs</td> <td valign="bottom">&#xA0;</td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'"> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center">Options</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center">Weighted-<br /> average<br /> Exercise&#xA0;Price</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center">Awards /<br /> RSUs</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center">Weighted-<br /> average<br /> Exercise&#xA0;Price</td> <td valign="bottom">&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Outstanding as of May&#xA0;30, 2014</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">3,599,654</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">30.85</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">1,034,055</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">31.94</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Granted post-Separation</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;</td> <td valign="bottom" nowrap="nowrap" align="right"> &#x2014;&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;</td> <td valign="bottom" nowrap="nowrap" align="right"> &#x2014;&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;</td> <td valign="bottom" nowrap="nowrap" align="right"> &#x2014;&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;</td> <td valign="bottom" nowrap="nowrap" align="right"> &#x2014;&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Exercised or settled</p> </td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom"> &#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" align="right">(4,667</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" nowrap="nowrap">)&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom"> &#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" align="right">32.57</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom"> &#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" nowrap="nowrap">&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" nowrap="nowrap" align="right">&#x2014;&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom"> &#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" nowrap="nowrap">&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" nowrap="nowrap" align="right">&#x2014;&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td style="BORDER-BOTTOM: rgb(0,0,0) 2pt solid" valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Outstanding as of June&#xA0;30, 2014</p> </td> <td style="BORDER-BOTTOM: rgb(0,0,0) 2pt solid" valign="bottom"> &#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 2pt solid" valign="bottom"> &#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 2pt solid" valign="bottom" align="right">3,594,987</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 2pt solid" valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 2pt solid" valign="bottom"> &#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 2pt solid" valign="bottom"> $</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 2pt solid" valign="bottom" align="right">30.85</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 2pt solid" valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 2pt solid" valign="bottom"> &#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 2pt solid" valign="bottom"> &#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 2pt solid" valign="bottom" align="right">1,034,055</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 2pt solid" valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 2pt solid" valign="bottom"> &#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 2pt solid" valign="bottom"> $</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 2pt solid" valign="bottom" align="right">31.94</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 2pt solid" valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> </table> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-LEFT: 62px; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> <i>All Stock Options, RSUs, and RSAs presented in this table are for NOW stock only.</i></p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> Awards granted in connection with the adjustment and substitution of awards originally issued under the NOV Plan were deducted from the number of NOW shares of common stock available for grant under the Plan. As of June&#xA0;30, 2014, unrecognized compensation cost related to stock option awards was $17 million, which is expected to be recognized over a weighted average period of 2.1 years. Unrecognized compensation cost related to RSU and RSA awards was $23 million, which is expected to be recognized over a weighted average period of 2.8 years. The calculations of unamortized expense and weighted-average periods include awards that were based on both NOW and NOV stock held by NOW employees.</p> </div> 0.35 <div> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 18pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> <b>2. Property, Plant and Equipment, net</b></p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> Property, plant and equipment consist of&#xA0;<i>(in millions):</i></p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 12pt 'Times New Roman'; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; WORD-SPACING: 0px; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="76%" align="center" border="0"> <tr style="COLOR: white; LINE-HEIGHT: 0pt; VISIBILITY: hidden"> <td width="76%"></td> <td valign="bottom" width="10%"></td> <td></td> <td nowrap="nowrap"></td> <td></td> <td valign="bottom" width="10%"></td> <td></td> <td nowrap="nowrap"></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'"> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>June&#xA0;30,<br /> 2014</b></td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>December&#xA0;31,<br /> 2013</b></td> <td valign="bottom">&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Information technology equipment</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">55</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">44</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Operating equipment</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">58</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">57</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Land and buildings</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">68</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">62</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"></td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">181</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">163</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Less: accumulated depreciation</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">(63</td> <td valign="bottom" nowrap="nowrap">)&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">(61</td> <td valign="bottom" nowrap="nowrap">)&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Total</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">118</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">102</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> </tr> </table> </div> Q2 <div> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 18pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> <b>5. Accumulated Other Comprehensive Income</b></p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> The components of accumulated other comprehensive income (loss)&#xA0;are as follows&#xA0;<i>(in millions):</i></p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 12pt 'Times New Roman'; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; WORD-SPACING: 0px; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="68%" align="center" border="0"> <tr> <td width="85%"></td> <td valign="bottom" width="12%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'"> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom" colspan="2" align="center"><b>Currency</b></td> <td valign="bottom">&#xA0;</td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'"> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom" colspan="2" align="center"> <b>Translation</b></td> <td valign="bottom">&#xA0;</td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'"> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Adjustments</b></td> <td valign="bottom">&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Balance at December&#xA0;31, 2013</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">$</td> <td valign="bottom" nowrap="nowrap" align="right"> &#x2014;&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Accumulated other comprehensive income (loss) before reclassifications</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">1</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Amounts reclassified from accumulated other comprehensive income (loss)</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;</td> <td valign="bottom" nowrap="nowrap" align="right"> &#x2014;&#xA0;&#xA0;</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Balance at June&#xA0;30, 2014</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">1</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> </tr> </table> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> The Company&#x2019;s reporting currency is the U.S. dollar. A majority of the Company&#x2019;s international entities in which there is a substantial investment have the local currency as their functional currency. As a result, currency translation adjustments resulting from the process of translating the entities&#x2019; financial statements into the reporting currency are reported in Other Comprehensive Income or Loss in accordance with ASC Topic 830 &#x201C;Foreign Currency Matters&#x201D; (&#x201C;ASC Topic 830&#x201D;). For the six months ended June&#xA0;30, 2014 the majority of these local currencies returned closer to year-end 2013 rates against the U.S. dollar resulting in net Other Comprehensive Gain of $1 million upon the translation from local currencies to the U.S. dollar.</p> </div> P5Y <div> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt"> <b>Fair Value of Financial Instruments</b></p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt"> The carrying amounts of 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. See Note 12 for the fair value of derivative financial instruments.</p> </div> <div> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> Property, plant and equipment consist of&#xA0;<i>(in millions):</i></p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 12pt 'Times New Roman'; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; WORD-SPACING: 0px; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="76%" align="center" border="0"> <tr style="COLOR: white; LINE-HEIGHT: 0pt; VISIBILITY: hidden"> <td width="76%"></td> <td valign="bottom" width="10%"></td> <td></td> <td nowrap="nowrap"></td> <td></td> <td valign="bottom" width="10%"></td> <td></td> <td nowrap="nowrap"></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'"> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>June&#xA0;30,<br /> 2014</b></td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>December&#xA0;31,<br /> 2013</b></td> <td valign="bottom">&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Information technology equipment</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">55</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">44</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Operating equipment</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">58</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">57</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Land and buildings</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">68</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">62</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"></td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">181</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">163</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Less: accumulated depreciation</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">(63</td> <td valign="bottom" nowrap="nowrap">)&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;</font></td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">(61</td> <td valign="bottom" nowrap="nowrap">)&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 1px solid">&#xA0;</p> </td> <td>&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Total</p> </td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">118</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> <td valign="bottom"><font style="FONT-SIZE: 8pt">&#xA0;</font></td> <td valign="bottom">$</td> <td valign="bottom" align="right">102</td> <td valign="bottom" nowrap="nowrap">&#xA0;&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> </tr> </table> </div> 107053058 3000000 33000000 1000000 6000000 39000000 105000000 105000000 69000000 2000000 -8000000 1000000 2029000000 18000000 68000000 111000000 250000000 5000000 1000000 10000000 1000000 1000000 89000000 4000000 135000000 -3000000 37000000 37000000 -1000000 74000000 4000000 1628000000 750000000 74000000 6000000 3000000 -10000000 3000000 1000000 74000000 141000000 5000000 143000000 50000000 0.50 <div> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt"> <b>Recently Issued Accounting Standards</b></p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt"> In April 2014, the Financial Accounting Standards Board (&#x201C;FASB&#x201D;) issued Accounting Standard Update (&#x201C;ASU&#x201D;) No.&#xA0;2014-08 <i>Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity</i>, which is an update for Accounting Standards Codification Topic No.&#xA0;205 &#x201C;Presentation of Financial Statements&#x201D; and Topic No.&#xA0;360 &#x201C;Property, Plant and Equipment&#x2019;. This update changes the requirements of reporting discontinued operations. Under the amended guidance, a disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity&#x2019;s operations and financial results. The amendments in this update are effective for all disposals (or classifications as held for sale) of components of an entity that occur within annual periods beginning on or after December&#xA0;15, 2014, and interim periods within those years, with early adoption permitted. The adoption of this update concerns presentation and disclosure only as it relates to the Company&#x2019;s consolidated financial statements. The Company is currently assessing the impact of ASU No.&#xA0;2014-08 on its financial position and results of operations. No material changes are expected upon adoption of this ASU.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt"> &#xA0;</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt"> In May 2014, the FASB issued ASU No.&#xA0;2014-09, <i>Revenue from Contracts with Customers: Topic 606.</i> ASU 2014-09 affects any entity using GAAP that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). This ASU will supersede the revenue recognition requirements in Topic 605, <i>Revenue Recognition,</i> and most industry-specific guidance. In addition, the existing requirements for the recognition of a gain or loss on the transfer of nonfinancial assets that are not in a contract with a customer (e.g., assets within the scope of Topic 360, <i>Property, Plant, and Equipment,</i> and intangible assets within the scope of Topic 350, <i>Intangibles&#x2014;Goodwill and Other)</i> are amended to be consistent with the guidance on recognition and measurement (including the constraint on revenue) in this ASU. The amendments in this ASU are effective for annual reporting periods beginning after December&#xA0;15, 2016, including interim periods within that reporting period. Early application is not permitted. The ASU provides two transition methods: (i)&#xA0;retrospectively to each prior reporting period presented (ii)&#xA0;retrospectively with the cumulative effect of initially applying this ASU recognized at the date of initial application. The Company is currently assessing the impact of ASU No.&#xA0;2014-09 on its financial position and results of operations.</p> </div> 0.03 150000000 207000000 2014-05-29 0.052 -8000000 <div> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> <b>The Separation</b></p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> On May&#xA0;1, 2014, the National Oilwell Varco, Inc. (&#x201C;NOV&#x201D;) Board of Directors approved the spin-off (the &#x201C;Spin-Off&#x201D; or &#x201C;Separation&#x201D;) of its distribution business into an independent, publicly traded company named NOW Inc. (&#x201C;NOW&#x201D; or the &#x201C;Company&#x201D;). In accordance with a separation and distribution agreement, the two companies were separated by NOV distributing to its stockholders all 107,053,031 shares of common stock of the Company after the market closed on May&#xA0;30, 2014. Each NOV stockholder received one share of NOW common stock for every four shares of NOV common stock held at the close of business on the record date of May&#xA0;22, 2014 and not sold prior to close of business May&#xA0;30, 2014. Fractional shares of NOW common stock were not distributed and any fractional shares of NOW common stock otherwise issuable to a NOV stockholder were sold in the open market on such stockholder&#x2019;s behalf, and such stockholder received a cash payment with respect to that fractional share. In conjunction with the separation, NOV received an opinion from its legal counsel to the effect that, based on certain facts, assumptions, representations and undertakings, for U.S. federal income tax purposes, the distribution of NOW common stock and certain related transactions generally was not taxable to NOV or U.S. holders of NOV common stock, except in respect to cash received in lieu of fractional shares, which generally will be taxable to such holders as a capital gain. Following the separation, NOW is an independent, publicly traded company, and NOV has no ownership interest in NOW. Each company now has separate public ownership, boards of directors and management. A Registration Statement on Form 10, as amended, relating to the Spin-Off was filed by the Company with the U.S. Securities and Exchange Commission (&#x201C;SEC&#x201D;) and was declared effective on May&#xA0;13, 2014. On June&#xA0;2, 2014, NOW stock began trading the &#x201C;regular-way&#x201D; on the New York Stock Exchange under the symbol &#x201C;DNOW&#x201D;.</p> </div> <div> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"> The Company&#x2019;s reporting currency is the U.S. dollar. A majority of the Company&#x2019;s international entities in which there is a substantial investment have the local currency as their functional currency. As a result, currency translation adjustments resulting from the process of translating the entities&#x2019; financial statements into the reporting currency are reported in Other Comprehensive Income or Loss in accordance with ASC Topic 830 &#x201C;Foreign Currency Matters&#x201D; (&#x201C;ASC Topic 830&#x201D;).</p> </div> 58000000 1992899 1992899 P2Y1M6D 18000000 316000000 0.057 58000000 1366000000 0.042 29000000 347000000 0.084 P2Y9M18D In accordance with a separation and distribution agreement, the two companies were separated by NOV distributing to its stockholders all 107,053,031 shares of common stock of the Company after the market closed on May 30, 2014. Each NOV stockholder received one share of NOW common stock for every four shares of NOV common stock held at the close of business on the record date of May 22, 2014. 4 0.01 0.005 1000000 32.57 4667 -17000000 41000000 78000000 -17000000 41000000 78000000 0.31 415837 107468868 0.31 0.396 107053031 2000000 55000000 53000000 33000000 1070000000 33000000 2000000 3000000 40000000 19000000 22000000 874000000 2000000 103000000 0.050 5000000 172000000 0.029 41000000 742000000 0.055 7000000 156000000 0.045 0.25 497263 107550345 0.25 0.374 107053082 18000000 43000000 43000000 45000000 1000000 952000000 27000000 3000000 1000000 45000000 -1000000 15000000 16000000 -18000000 759000000 3000000 1000000 1000000 -3000000 17000000 105000000 0.045 10000000 6000000 1992899 1992899 2000000 125000000 0.016 28000000 662000000 0.042 13000000 165000000 0.079 18000000 10000000 5000 -2000000 -1000000 107053000 1000000 -1945000000 -1000000 17000000 1945000000 6000000 0001599617 us-gaap:EquityMember 2014-04-01 2014-06-30 0001599617 us-gaap:CommonStockMember 2014-04-01 2014-06-30 0001599617 us-gaap:RetainedEarningsMember 2014-04-01 2014-06-30 0001599617 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2014-04-01 2014-06-30 0001599617 dnow:InternationalMember 2014-04-01 2014-06-30 0001599617 country:US 2014-04-01 2014-06-30 0001599617 country:CA 2014-04-01 2014-06-30 0001599617 dnow:RestrictedStockAwardsMember 2014-04-01 2014-06-30 0001599617 us-gaap:RestrictedStockUnitsRSUMember 2014-04-01 2014-06-30 0001599617 2014-04-01 2014-06-30 0001599617 dnow:InternationalMember 2013-04-01 2013-06-30 0001599617 country:US 2013-04-01 2013-06-30 0001599617 country:CA 2013-04-01 2013-06-30 0001599617 2013-04-01 2013-06-30 0001599617 us-gaap:EquityMember 2014-01-01 2014-03-31 0001599617 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2014-01-01 2014-03-31 0001599617 2014-01-01 2014-03-31 0001599617 dnow:RestrictedStockAndRestrictedStockUnitsMember 2014-05-31 2014-06-30 0001599617 us-gaap:EmployeeStockOptionMember 2014-05-31 2014-06-30 0001599617 us-gaap:MaximumMember 2014-05-31 2014-06-30 0001599617 dnow:FederalFundsRateMember 2014-01-01 2014-06-30 0001599617 us-gaap:LondonInterbankOfferedRateLIBORMember 2014-01-01 2014-06-30 0001599617 us-gaap:SpinoffMember 2014-01-01 2014-06-30 0001599617 dnow:RestrictedStockAndRestrictedStockUnitsMember 2014-01-01 2014-06-30 0001599617 dnow:InternationalMember 2014-01-01 2014-06-30 0001599617 country:US 2014-01-01 2014-06-30 0001599617 country:CA 2014-01-01 2014-06-30 0001599617 us-gaap:EmployeeStockOptionMember 2014-01-01 2014-06-30 0001599617 dnow:RestrictedStockAwardsMember 2014-01-01 2014-06-30 0001599617 us-gaap:RestrictedStockUnitsRSUMember 2014-01-01 2014-06-30 0001599617 2014-01-01 2014-06-30 0001599617 dnow:InternationalMember 2013-01-01 2013-06-30 0001599617 country:US 2013-01-01 2013-06-30 0001599617 country:CA 2013-01-01 2013-06-30 0001599617 2013-01-01 2013-06-30 0001599617 us-gaap:EquityMember 2013-12-31 0001599617 us-gaap:EquipmentMember 2013-12-31 0001599617 us-gaap:TechnologyEquipmentMember 2013-12-31 0001599617 us-gaap:LandAndBuildingMember 2013-12-31 0001599617 2013-12-31 0001599617 2012-12-31 0001599617 us-gaap:SpinoffMember 2014-06-30 0001599617 us-gaap:CommonStockMember 2014-06-30 0001599617 us-gaap:RetainedEarningsMember 2014-06-30 0001599617 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2014-06-30 0001599617 us-gaap:EquipmentMember 2014-06-30 0001599617 us-gaap:TechnologyEquipmentMember 2014-06-30 0001599617 us-gaap:LandAndBuildingMember 2014-06-30 0001599617 dnow:RestrictedStockAndRestrictedStockUnitsMember 2014-06-30 0001599617 us-gaap:EmployeeStockOptionMember 2014-06-30 0001599617 dnow:RestrictedStockAndRestrictedStockUnitsMember 2014-06-30 0001599617 us-gaap:EmployeeStockOptionMember 2014-06-30 0001599617 us-gaap:ForwardContractsMemberus-gaap:MaximumMember 2014-06-30 0001599617 us-gaap:FairValueInputsLevel2Memberus-gaap:MaximumMember 2014-06-30 0001599617 2014-06-30 0001599617 us-gaap:EquityMember 2014-03-31 0001599617 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2014-03-31 0001599617 2014-03-31 0001599617 2013-06-30 0001599617 dnow:RestrictedStockAndRestrictedStockUnitsMember 2014-05-30 0001599617 us-gaap:EmployeeStockOptionMember 2014-05-30 0001599617 2014-05-30 0001599617 2014-08-01 shares iso4217:USD shares iso4217:USD pure