Baker Hughes 2015 Annual Report Download - page 4

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in every phase of our business. The most difficult
decisions have been the significant workforce reductions
that were required to adjust our cost structure to be
in line with revenue opportunities and profitability
objectives. Yet, I am pleased that our workforce has
remained engaged, focused on customers, committed
to achieving our business and financial objectives, and
steadfast in its dedication to compliance and safety.
One of the ways in which I can see this collective
engagement and dedication is through our Health,
Safety and Environment (HSE) performance. In this
area, 2015 was a record year for Baker Hughes
with 146 “Perfect HSE Days” in which we had no
injuries, environmental releases or vehicle accidents.
Considering the many potential distractions our
employees face, I am heartened by this performance
and we are focused on continuing this trend in 2016.
While we are working diligently to improve profitability,
to comply with the merger agreement with Halliburton
and in preparation for the combined Baker Hughes/
Halliburton entity we have retained certain costs,
which in the fourth quarter of 2015 exceeded 300 basis
points, or in excess of ($0.16) earnings-per-share impact.
This is the right approach to ensure that the proposed
combination has the best foundation for success.
In addition to reducing costs, one of our biggest
priorities in 2015 was to continue to strengthen our
balance sheet–in particular, our cash performance–and
we made significant progress in this area. We generated
$1.2 billion of free cash flow* during the year, and that
total would have been $1.7 billion when you consider the
approximately $450 million in restructuring payments
we made during the year. This compares to $1.6 billion
of free cash flow in 2014.
The LEAP adaptive production system
*Free cash flow is defined as net cash flows provided by operating activities less disbursements for capital expenditures plus proceeds from disposal of assets.