Baker Hughes 2015 Annual Report Download - page 44

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35
• We have a centralized human resources function, including, among other things, consistent standards for
pre-hire screening of employees, the screening of existing employees prior to promoting them to positions
where they may be exposed to corruption-related risks, and a uniform policy for new hire training with a
compliance component.
LIQUIDITY AND CAPITAL RESOURCES
Our objective in financing our business is to maintain sufficient liquidity, adequate financial resources and
financial flexibility in order to fund the requirements of our business. At December 31, 2015, we had cash and cash
equivalents of $2.32 billion, of which approximately $2.01 billion was held by foreign subsidiaries. A substantial
portion of the cash held by foreign subsidiaries at December 31, 2015 was reinvested in our international operations
as our intent is to use this cash to, among other things, fund the operations of our foreign subsidiaries. If we decide
at a later date to repatriate those funds to the U.S., we may be required to provide taxes on certain of those funds
based on applicable U.S. tax rates net of foreign tax credits. We have a committed revolving credit facility (the
"credit facility") with commercial banks and a related commercial paper program under which the maximum
combined borrowing at any time under both the credit facility and the commercial paper program is $2.50 billion. At
December 31, 2015, we had no commercial paper outstanding; therefore, the amount available for borrowing under
the credit facility as of December 31, 2015 was $2.50 billion. We believe that cash on hand, cash flows generated
from operations and the available credit facility, including the issuance of commercial paper, will provide sufficient
liquidity to manage our global cash needs. In 2015, we used cash to pay for a variety of activities including working
capital needs, capital expenditures and payment of dividends.
Cash Flows
Cash flows provided by (used in) each type of activity were as follows for the years ended December 31:
(In millions) 2015 2014 2013
Operating activities $ 1,796 $ 2,953 $ 3,161
Investing activities (905) (1,659) (1,663)
Financing activities (282) (939) (1,103)
Operating Activities
Cash flows from operating activities provided $1.80 billion and $2.95 billion for the years ended December 31,
2015 and 2014, respectively. Cash flows from operating activities decreased $1.16 billion in 2015 primarily due to
the decrease in net income after noncash charges, partially offset by the reduction in working capital (receivables,
inventories and accounts payable), which provided more cash in 2015 compared to 2014 due to lower activity
levels. Additionally, the decrease in net income and market activity resulted in lower income taxes paid. Included in
our cash flows from operating activities for 2015 are payments of $446 million made for employee severance and
contract termination costs as a result of our restructuring activities initiated during the year.
Cash flows from operating activities provided $2.95 billion and $3.16 billion for the year ended December 31,
2014 and 2013, respectively. Cash flows from operating activities decreased $208 million in 2014 primarily due to
the increase in working capital, which used more cash in 2014 compared to 2013, partially offset by the increase in
net income. The main drivers of the increase in working capital were due to the increase in activity levels and the
continuation of vendor management initiatives, partially offset by improved collections. Additionally, the increase in
net income and market activity resulted in higher income taxes paid.
Investing Activities
Our principal recurring investing activity is the funding of capital expenditures to ensure that we have the
appropriate levels and types of machinery and equipment in place to generate revenue from operations.
Expenditures for capital assets totaled $965 million, $1.79 billion and $2.09 billion for 2015, 2014 and 2013,
respectively. The decline in capital expenditures in 2015 is a result of lower demand for our products and services.
While the majority of these expenditures were for machinery and equipment, it also includes expenditures for new
facilities, expansions of existing facilities and other infrastructure projects.