Baker Hughes 2014 Annual Report Download - page 62

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37
Cash Flows
Cash flows provided by (used in) each type of activity were as follows for the years ended December 31:
(In millions) 2014 2013 2012
Operating activities $ 2,953 $ 3,161 $ 1,835
Investing activities (1,659) (1,663) (2,521)
Financing activities (939) (1,103) 646
Operating Activities
Cash flows from operating activities provided $2.95 billion and $3.16 billion for the years ended December 31,
2014 and 2013, respectively. Cash flows from operating activities decreased $208 million in 2014 primarily due to
the change in net operating assets and liabilities, which used more cash in 2014 compared to 2013, partially offset
by the increase in net income.
The main underlying drivers in 2014 compared to 2013 of the changes in operating assets and liabilities are as
follows:
• An increase in accounts receivable used cash of $524 million and $453 million in 2014 and 2013,
respectively. The increase in accounts receivable in 2014 was primarily due to an increase in activity and
the corresponding revenue growth partially offset by improved collections as evidenced by a decrease in
days sales outstanding (defined as the average number of days our net trade receivables are outstanding
based on quarterly revenue).
• An increase in inventory used cash of $259 million and $120 million in 2014 and 2013, respectively, driven
by an increase in activity levels.
• An increase in accounts payable provided cash of $291 million and $845 million in 2014 and 2013,
respectively. The increase in accounts payable in 2014 was primarily due to an increase in activity and the
continuation of our vendor management initiatives.
• Accrued employee compensation and other accrued liabilities provided cash of $115 million and $231
million in 2014 and 2013, respectively. The decrease in cash provided in 2014 from 2013 was primarily due
to higher payments for employee bonuses in 2014 compared to 2013.
Cash flows from operating activities provided $3.16 billion and $1.84 billion for the year ended December 31,
2013 and 2012, respectively. Cash flows from operating activities increased $1.33 billion in 2013 primarily due to
the change in net operating assets and liabilities, which used less cash in 2013 compared to 2012.
The main underlying drivers in 2013 compared to 2012 of the changes in operating assets and liabilities are as
follows:
• An increase in accounts receivable used cash of $453 million and provided cash of $16 million in 2013 and
2012, respectively. The increase in accounts receivable in 2013 was primarily due to an increase in activity
and the corresponding revenue growth partially offset by improved collections as evidenced by a decrease
in days sales outstanding.
• An increase in inventory used cash of $120 million and $547 million in 2013 and 2012, respectively, driven
by an increase in activity levels partially offset by improved inventory utilization.
• An increase in accounts payable provided $845 million in cash in 2013 and used cash of $94 million in
2012. This increase in accounts payable was primarily due to increased activity and an improvement in our
days payable outstanding resulting from vendor management initiatives.
• Accrued employee compensation and other accrued liabilities provided cash of $231 million and used cash
of $90 million in 2013 and 2012, respectively. The increase in cash provided in 2013 was primarily due to
the change in accrued employee compensation driven by an increase in employee bonus accruals for 2013
compared to 2012 coupled with lower payments for employee bonuses in 2013 compared to 2012.
Additionally, the cash improvement for other accrued liabilities resulted from advanced customer payments.