National Oilwell Reports Record Revenues and Backlog



National-Oilwell, Inc. (NYSE: NOI) reported fourth quarter revenues of $669.5 million and net income of $50.0 million, or $0.58 per diluted share. Full year 2004 revenues were $2.3 billion, and net income was $110.2 million, or $1.27 per share.

Backlog of capital equipment orders increased to $605 million at December 31, 2004,compared to $575 million at September 30, 2004, and $339 at December 31, 2003.

Products and Technology Group
Fourth quarter revenues for this group increased to $465.9 million, up 11% sequentially and 34% over the fourth quarter 2003. Of the $48 million revenue increase compared to the third quarter, $13 million resulted from an increase in capital equipment from backlog revenues. Operating income for the quarter was $54.0 million, a 20% sequential increase.

Distribution Services Group
Continuing their growth over the last eight quarters, Distribution revenues for the fourth quarter were $235.3 million. Fourth quarter operating profit of $9.0 million represented another sequential improvement as a percentage of revenues.

Pete Miller, President and CEO of National Oilwell, stated "Our revenues and operating results showed continuing improvement and strength throughout 2004, and have set the stage for an even stronger performance in 2005. Our non capital businesses were responsible for much of our improvement this past year, and while we expect continued improvements from these, we believe 2005 will be heavily influenced by capital equipment orders. Our year end backlog of orders, especially from international markets, grew steadily last year, exceeding $600 million at year end. New order additions in 2004 were $961 million, and we believe 2005 will see new orders of capital equipment of at least $1.0 – 1.2 billion. Already in the first two months of 2005 we have received over $200 million in capital orders, also primarily from international customers."

Merger with Varco
Stockholder meetings have been scheduled for March 11, 2005 by National Oilwell and Varco for their respective stockholders to vote on the proposed merger of the two companies. A joint proxy/prospectus regarding this proposed merger was mailed to stockholders on or about February 9, 2005. Closing of this transaction will occur immediately after receipt of stockholder approval and required regulatory approvals.

The Company has scheduled a conference call today at 10:00 a.m. Central Time to discuss fourth quarter results. The call will be broadcast through the Investor Relations link on National Oilwell's web site at www.natoil.com, and a replay will be available on the site for thirty days following the conference. Participants may also join the conference call by dialing 303-262-2131 five to ten minutes prior to the scheduled start time.

The following table sets forth comparative data (in millions, except per share data):


                    Quarter Ended    Quarter Ended   Full Year Ended
                    December 31,     September 30,    December 31,
                 ------------------- ------------- -------------------
                   2004      2003        2004        2004      2003
                 --------- --------- ------------- --------- ---------

Revenues
  Products and
   Technology
   Group           $465.9    $349.0        $418.4  $1,537.0  $1,314.7
  Distribution
   Services Group  $235.3     211.4        $233.3    $905.1    $791.9
  Eliminations     $(31.7)    (30.1)       $(32.8)  $(124.0)  $(101.7)
                 --------- --------- ------------- --------- ---------
    Total          $669.5    $530.3        $618.9  $2,318.1  $2,004.9

Operating Income
  Products and
   Technology
   Group            $54.0     $44.9         $45.0    $157.4    $165.1
  Distribution
   Services Group    $9.0     $(3.7)         $8.4     $29.6      $6.5
  Corporate         $(7.6)    $(3.2)        $(4.3)   $(18.4)   $(12.6)
                 --------- --------- ------------- --------- ---------
    Total           $55.4     $38.0         $49.1    $168.6    $159.0

Net Income          $50.0     $19.5         $27.8    $110.2     $76.8

Average diluted
 shares
 outstanding         86.9      85.3          86.7      86.5      85.0

Net income per
 diluted share      $0.58     $0.23         $0.32     $1.27     $0.90

Backlog for
 capital
 equipment at
 quarter end       $605.0    $339.0        $575.0    $605.0    $339.0


Condensed Balance
 Sheet Data:

Cash and cash
 equivalents       $142.7     $74.2         $73.4
Other current
 assets          $1,386.2   1,172.2       1,242.1
                 --------- --------- -------------
  Total current
   assets        $1,528.9   1,246.4       1,315.5
Net property,
 plant and
 equipment         $252.4     252.3         242.6
Other assets       $782.0     744.0         789.8
                 --------- --------- -------------
  Total assets   $2,563.3  $2,242.7      $2,347.9

Current
 liabilities       $777.0    $452.2        $650.9
Long-term debt     $350.0     594.0         350.0
Other long-term
 liabilities       $124.0      90.4         148.9
                 --------- --------- -------------
  Total
   liabilities   $1,251.0  $1,136.6      $1,149.8

Minority interest   $17.8     $15.7         $16.9

Shareholders'
 equity          $1,294.5  $1,090.4      $1,181.2
                 --------- --------- -------------
  Total
   liabilities
   and equity    $2,563.3  $2,242.7      $2,347.9


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