Baker Hughes 2013 Annual Report Download - page 67

Baker Hughes Incorporated37
Proceeds from the disposal of assets were $455 million, $389 million and $311 million for 2013, 2012 and 2011,
respectively. These disposals related to equipment that was lost-in-hole and property, machinery, and equipment no
longer used in operations that was sold throughout the year.
During 2011, we had U.S. Treasury Bills mature resulting in the receipt of proceeds of $250 million.
We routinely evaluate potential acquisitions of businesses that may enhance our current operations or expand
our operations into new markets or product lines. We may also from time to time sell business operations that are
not considered part of our core business. During 2013, 2012 and 2011, we did not have any significant business
acquisitions or dispositions.
Financing Activities
We had net repayments of commercial paper and other short-term debt of $571 million in 2013, and net
borrowing of commercial paper and other short-term debt of $847 million and $125 million in 2012 and 2011,
respectively. In 2011, we completed a private placement of $750 million 3.2% senior notes that will mature in
August 2021, resulting in net proceeds of approximately $742 million after deducting the underwriting discounts and
expenses of the offering and used $563 million of the net proceeds to redeem our 6.5% notes in full. The remaining
net proceeds from the senior notes were used for general corporate purposes. In addition in 2011, we repaid $250
million of our 5.75% notes that matured.
Total debt outstanding at December 31, 2013 was $4.38 billion, a decrease of $535 million compared to
December 31, 2012. The total debt-to-capital (defined as total debt plus equity) ratio was 0.20 at December 31,
2013 and 0.22 at December 31, 2012. We received proceeds of $101 million, $81 million and $183 million in 2013,
2012 and 2011, respectively, from the issuance of common stock through the exercise of stock options and the
employee stock purchase plan.
Our Board of Directors has authorized a program to repurchase our common stock from time to time. During
2013, our Board of Directors increased the authorization to purchase our common stock under our share
repurchase program by $800 million, for a total remaining authorized amount of $2.0 billion. During the fourth
quarter of 2013, we repurchased 6.3 million shares of our common stock at an average price of $55.59 per share,
for a total of $350 million. We had authorization remaining to repurchase approximately $1.65 billion in common
stock at the end of 2013. During 2012 and 2011, we did not repurchase any shares of common stock.
From January 1, 2014 through February 7, 2014, we repurchased 1.4 million shares of our common stock at an
average price of $56.79 per share for a total of $78 million. As of February 7, 2014, we had authorization remaining
to purchase approximately $1.57 billion in common stock.
We paid dividends of $267 million, $263 million and $261 million in 2013, 2012 and 2011, respectively.
Available Credit Facility
At December 31, 2013, we had a $2.50 billion committed revolving credit facility with commercial banks that
matures in September 2016. This facility contains certain covenants which, among other things, restrict certain
merger transactions or the sale of all or substantially all of our assets or a significant subsidiary and limit the amount
of subsidiary indebtedness. Upon the occurrence of certain events of default, our obligations under the facility may
be accelerated. Such events of default include payment defaults to lenders under the facility, covenant defaults and
other customary defaults. At December 31, 2013, we were in compliance with all of the facility’s covenants. There
were no direct borrowings under the committed credit facility in 2013. We also have a commercial paper program
under which we may issue from time to time up to $2.50 billion in commercial paper with maturity of no more than
270 days. The maximum combined borrowing at any point in time under both the commercial paper program and
the credit facility is $2.50 billion. At December 31, 2013, we had $254 million of commercial paper outstanding;
therefore, the amount available for borrowing under the facility as of December 31, 2013 was $2.246 billion.
If market conditions were to change and our revenue was reduced significantly or operating costs were to
increase, our cash flows and liquidity could be reduced. Additionally, it could cause the rating agencies to lower our
credit rating. There are no ratings triggers that would accelerate the maturity of any borrowings under our