Baker Hughes 2004 Annual Report Download - page 81

facility฀during฀the฀year฀ended฀December฀31,฀2004;฀however,฀to฀
the฀extent฀we฀have฀outstanding฀commercial฀paper,฀our฀ability฀
to฀borrow฀under฀the฀facility฀is฀reduced.฀At฀December฀31,฀
2004,฀we฀had฀no฀outstanding฀commercial฀paper฀or฀money฀
market฀borrowings.
If฀market฀conditions฀were฀to฀change฀and฀revenues฀were฀
to฀be฀significantly฀reduced฀or฀operating฀costs฀were฀to฀increase,฀
our฀cash฀flows฀and฀liquidity฀could฀be฀reduced.฀Additionally,฀it฀
could฀cause฀the฀rating฀agencies฀to฀lower฀our฀credit฀rating.฀
We฀do฀not฀have฀any฀ratings฀triggers฀in฀the฀facility฀that฀would฀
accelerate฀the฀maturity฀of฀any฀borrowings฀under฀the฀facility.฀
However,฀a฀downgrade฀in฀our฀credit฀ratings฀could฀increase฀the฀
cost฀of฀borrowings฀under฀the฀facility.฀Also,฀a฀downgrade฀in฀our฀
credit฀ratings฀could฀limit฀or฀preclude฀our฀ability฀to฀issue฀com-
mercial฀paper.฀Should฀this฀occur,฀we฀would฀seek฀alternative฀
sources฀of฀funding,฀including฀borrowing฀under฀the฀facility.
Cash฀Requirements
In฀2005,฀we฀believe฀operating฀cash฀flows฀will฀provide฀us฀
with฀sufficient฀capital฀resources฀and฀liquidity฀to฀manage฀our฀
working฀capital฀needs,฀meet฀contractual฀obligations,฀fund฀cap-
ital฀expenditures,฀pay฀dividends,฀repurchase฀common฀stock฀
and฀support฀the฀development฀of฀our฀short-term฀and฀long-term฀
operating฀strategies.
We฀currently฀expect฀that฀2005฀capital฀expenditures฀will฀be฀
between฀$440.0฀million฀and฀$460.0฀million,฀excluding฀acquisi-
tions.฀The฀expenditures฀are฀expected฀to฀be฀used฀primarily฀for฀
normal,฀recurring฀items฀necessary฀to฀support฀the฀growth฀of฀
our฀business฀and฀operations.
In฀2005,฀we฀expect฀to฀make฀interest฀payments฀of฀approxi-
mately฀$80.0฀million฀to฀$90.0฀million.฀This฀is฀based฀on฀our฀฀
current฀expectations฀of฀debt฀levels฀during฀2005.
We฀have฀authorization฀remaining฀to฀repurchase฀up฀to฀
$44.5฀million฀in฀common฀stock.฀We฀may฀continue฀to฀repurchase฀
our฀common฀stock฀in฀2005฀depending฀on฀the฀price฀of฀our฀
common฀stock,฀our฀liquidity฀and฀other฀considerations.฀In฀2005,฀
we฀anticipate฀paying฀dividends฀of฀$0.46฀per฀share฀of฀common฀
stock.฀However,฀our฀Board฀of฀Directors฀is฀free฀to฀change฀the฀
dividend฀policy฀at฀any฀time.
During฀2005,฀we฀estimate฀that฀we฀will฀contribute฀approxi-
mately฀$12.0฀million฀to฀$19.0฀million฀to฀our฀pension฀plans฀and฀
make฀benefit฀payments฀related฀to฀postretirement฀welfare฀plans฀
of฀approximately฀$16.3฀million.฀We฀also฀estimate฀that฀we฀will฀
contribute฀approximately฀$70.0฀million฀to฀$80.0฀million฀to฀our฀
defined฀contribution฀plans.
We฀anticipate฀making฀income฀tax฀payments฀of฀approxi-
mately฀$230.0฀million฀to฀$260.0฀million฀in฀2005.
We฀do฀not฀believe฀that฀there฀are฀any฀other฀material฀trends,฀
demands,฀commitments,฀events฀or฀uncertainties฀that฀would฀
have,฀or฀are฀reasonably฀likely฀to฀have,฀a฀material฀impact฀on฀
our฀financial฀condition฀and฀liquidity.฀Other฀than฀previously฀dis-
cussed,฀we฀currently฀have฀no฀information฀that฀would฀create฀a฀
reasonable฀likelihood฀that฀the฀reported฀levels฀of฀revenues฀and฀
cash฀flows฀from฀operations฀in฀2004฀are฀not฀indicative฀of฀what฀
we฀can฀expect฀in฀the฀future.
Contractual฀Obligations
In฀the฀table฀below,฀we฀set฀forth฀our฀enforceable฀and฀
legally฀binding฀obligations฀as฀of฀December฀31,฀2004.฀Some฀of฀
the฀figures฀we฀include฀in฀this฀table฀are฀based฀on฀our฀estimates฀
and฀assumptions฀about฀these฀obligations,฀including฀their฀dura-
tion,฀anticipated฀actions฀by฀third฀parties฀and฀other฀factors.฀The฀
enforceable฀and฀legally฀binding฀obligations฀we฀will฀actually฀pay฀
in฀future฀periods฀may฀vary฀from฀those฀reflected฀in฀the฀table฀
because฀the฀estimates฀and฀assumptions฀are฀subjective.
฀ Payments฀Due฀by฀Period฀
฀ ฀ Less฀Than฀ 1฀–฀3฀ ฀4฀–฀5฀ ฀After฀
(In฀millions)฀ Total฀ 1฀year฀฀ Years฀ Years฀ 5฀Years
Total฀debt(1)฀ $฀ 1,151.1฀ $฀ 76.0฀ $฀ 0.1฀ $฀525.0฀ $฀ 550.0฀
Estimated฀interest฀payments(2)฀ ฀ 1,069.1฀ ฀ 72.6฀ ฀ 145.2฀ ฀ 129.1฀ ฀ 722.2฀
Operating฀leases(3)฀ ฀ 327.7฀ ฀ 74.0฀ ฀ 85.2฀ ฀ 42.2฀ ฀ 126.3฀
Purchase฀obligations(4)฀ ฀ 114.7฀ ฀ 99.4฀ ฀ 13.9฀ ฀ 1.4฀ ฀ –฀
Other฀long-term฀liabilities(5)฀ ฀ 20.5฀ ฀ 4.4฀ ฀ 8.9฀ ฀ 4.6฀ ฀ 2.6
Total฀ $฀ 2,683.1฀ $฀ 326.4฀ $฀ 253.3฀ $฀702.3฀ $฀ 1,401.1
(1)฀ Amounts฀represent฀the฀expected฀cash฀payments฀for฀our฀total฀debt฀and฀do฀not฀include฀any฀unamortized฀discounts,฀deferred฀issuance฀costs,฀fair฀market฀valuation฀of฀our฀
current฀interest฀rate฀swap฀agreement฀or฀deferred฀gains฀on฀terminated฀interest฀rate฀swap฀agreements.
(2)฀ Amounts฀represent฀the฀expected฀cash฀payments฀for฀interest฀on฀our฀fixed฀rate฀long-term฀debt.
(3)฀ We฀enter฀into฀operating฀leases฀in฀the฀normal฀course฀of฀business.฀Some฀lease฀agreements฀provide฀us฀with฀the฀option฀to฀renew฀the฀lease.฀Our฀future฀operating฀lease฀
payments฀would฀change฀if฀we฀exercised฀these฀renewal฀options฀and฀if฀we฀entered฀into฀additional฀operating฀lease฀agreements.
(4)฀ Purchase฀obligations฀include฀agreements฀to฀purchase฀goods฀or฀services฀that฀are฀enforceable฀and฀legally฀binding฀and฀that฀specify฀all฀significant฀terms,฀including:฀fixed฀or฀
minimum฀quantities฀to฀be฀purchased;฀fixed,฀minimum฀or฀variable฀price฀provisions;฀and฀the฀approximate฀timing฀of฀the฀transaction.฀Purchase฀obligations฀exclude฀agree-
ments฀that฀are฀cancelable฀at฀anytime฀without฀penalty.
(5)฀ Amounts฀represent฀other฀long-term฀liabilities,฀including฀the฀current฀portion,฀reflected฀in฀the฀consolidated฀balance฀sheet฀where฀both฀the฀timing฀and฀amount฀of฀
payment฀streams฀are฀known.฀Amounts฀include:฀payments฀for฀certain฀environmental฀remediation฀liabilities,฀payments฀for฀deferred฀compensation,฀payouts฀under฀
acquisition฀agreements฀and฀payments฀for฀certain฀asset฀retirement฀obligations.฀Amounts฀do฀not฀include:฀payments฀for฀pension฀contributions,฀payments฀for฀various฀
postretirement฀welfare฀benefit฀plans฀and฀postemployment฀benefit฀plans฀and฀payments฀for฀deferred฀taxes฀and฀other฀tax฀liabilities,฀as฀such฀amounts฀have฀not฀been฀
determined฀beyond฀2005.
2004฀Form฀10-K฀฀฀฀฀31