Halliburton 2013 Annual Report Download - page 38

Download and view the complete annual report

Please find page 38 of the 2013 Halliburton annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 102

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102

22
LIQUIDITY AND CAPITAL RESOURCES
We ended 2013 with cash and equivalents of $2.4 billion compared to $2.5 billion at December 31, 2012. Additionally,
at December 31, 2013, we held $373 million of investments in fixed income securities compared to $398 million at
December 31, 2012, These securities are reflected in "Other current assets" and "Other assets" in our consolidated balance
sheets. As of December 31, 2013, approximately $306 million of the $2.4 billion of cash and equivalents was held by our
foreign subsidiaries, and would be subject to United States tax if repatriated. However, our intent is to permanently reinvest
these funds outside of the United States and our current plans do not suggest a need to repatriate them to fund our United States
operations.
Significant sources and uses of cash
Cash flows from operating activities were $4.4 billion in 2013.
In the third quarter of 2013, we issued $3.0 billion aggregate principal amount of senior notes and used the net
proceeds, along with cash on hand, to fund the repurchase of approximately 68 million shares of our common stock at an
aggregate cost of $3.3 billion pursuant to a modified Dutch auction cash tender offer. During 2013, we repurchased
approximately 93 million shares of our common stock under our share repurchase program at a total cost of approximately $4.4
billion.
Capital expenditures were $2.9 billion in 2013. The capital expenditures in 2013 were predominantly made in our
Production Enhancement, Sperry Drilling, Boots and Coots, Wireline and Perforating, and Cementing product service lines. We
have also invested additional working capital to support the growth of our business.
We paid $465 million of dividends to our shareholders in 2013. We increased our quarterly dividend rate by $0.035 per
share in the first quarter of 2013 and an additional $0.025 per share in the fourth quarter of 2013. Our current quarterly dividend
rate is $0.15 per share, or approximately $129 million per quarter, which represents a 67% increase over the quarterly dividend
rate during 2012.
During 2013, we sold $241 million of property, plant, and equipment.
Our primary components of net working capital (receivables, inventories and accounts payable) increased during the
year by a net $229 million, primarily due to increased business activity.
In the first quarter of 2013, we made a $219 million payment under a guarantee we issued for the Barracuda-Caratinga
project.
In the second quarter of 2013, we made a $172 million earn-out payment related to a prior year acquisition due to
significantly better than expected operating performance.
Future sources and uses of cash
Capital spending for 2014 is currently expected to be approximately $3.0 billion. The capital expenditures plan for
2014 is primarily directed towards our Production Enhancement, Sperry Drilling, Cementing, Boots & Coots, and Wireline and
Perforating product service lines, with an increasing amount dedicated to our international operations.
Subject to Board of Directors approval, our intention is to pay dividends representing at least 15% to 20% of our net
income on an annual basis. We have approximately $1.7 billion remaining available under our share repurchase authorization,
which may be used for open market and other share repurchases.
During 2013, the Congressional Joint Committee on Taxation approved a $135 million income tax refund, excluding
interest, to us for agreed upon tax items for the tax years 2003 through 2009. We expect to receive the refund in 2014.
In the third quarter of 2013, we were awarded $105 million by an arbitrator regarding amounts owed by KBR, Inc.
(KBR) related to our Tax Sharing Agreement with KBR. KBR is contesting the award and, although the arbitrator recently
issued a supplemental report that reaffirmed the original award, there is uncertainty as to the ultimate timing and amount of any
payment. See Note 7 to the consolidated financial statements for further information.
We are continuing to explore opportunities for acquisitions that will enhance or augment our current portfolio of
services and products, including those with unique technologies or distribution networks in areas where we do not already have
significant operations.
We had $209 million of gross unrecognized tax benefits at December 31, 2013, of which we estimate $146 million
may require a cash payment. We estimate that $141 million of the cash payment will not be settled within the next 12 months.
We are not able to reasonably estimate in which future periods any amounts will ultimately be settled and paid.