Baker Hughes 2013 Annual Report Download - page 66

Download and view the complete annual report

Please find page 66 of the 2013 Baker Hughes 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 121

  • 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
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121

2013 Annual Report 36
36
Operating Activities
Cash flows from operating activities provided $3.16 billion and $1.84 billion for the years 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 (defined as the average number of days our net trade receivables are outstanding
based on quarterly revenue).
• 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.
Cash flows from operating activities provided $1.84 billion and $1.51 billion for the year ended December 31,
2012 and 2011, respectively. This increase in cash flows of $328 million is primarily due to the change in net
operating assets and liabilities, which used less cash in 2012 compared to 2011.
The main underlying drivers in 2012 compared to 2011 of the changes in operating assets and liabilities are as
follows:
• The change in accounts receivable provided cash of $16 million and used cash of $1.02 billion in 2012 and
2011, respectively. The slight change in accounts receivable in 2012 was primarily due to improved
collections over the prior year partially offset by an increase in activity. The change in accounts receivable
in 2011 was primarily due to an increase in activity as well as an increase in days sales outstanding due to
temporary invoicing delays resulting from the implementation of our enterprise wide software system for BJ
Services in North America.
• An increase in inventory used cash of $547 million and $641 million in 2012 and 2011, respectively, driven
by an increase in activity.
• Accrued employee compensation and other accrued liabilities used cash of $90 million and provided cash
of $58 million in 2012 and 2011, respectively. The net change of $148 million was primarily due to an
increase in payments related to employee bonuses earned in 2011 but paid in 2012 coupled with lower
employee compensation accruals in 2012.
•Income taxes payable used cash of $56 million and $121 million in 2012 and 2011, respectively. The
change of $65 million was primarily due to a decrease in income taxes paid in 2012 compared to 2011.
•Other operating items used cash of $213 million and $19 million in 2012 and 2011, respectively. The net
change of $194 million was primarily due to an increase in payments for prepaid assets in line with
increased activity and an increase in contributions to our pension plans.
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 $2.09 billion, $2.91 billion and $2.46 billion for 2013, 2012 and 2011,
respectively. While the majority of these expenditures were for machinery and equipment, we have continued our
spending on new facilities, expansions of existing facilities and other infrastructure projects.