Halliburton 2015 Annual Report Download - page 40

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LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 2015, we had $10.1 billion of cash and equivalents, compared to $2.3 billion at December 31,
2014. Additionally, at December 31, 2015, we held $96 million of investments in fixed income securities held offshore
compared to $103 million at December 31, 2014. These securities are reflected in "Other current assets" and "Other assets" in
our consolidated balance sheets. As of December 31, 2015, approximately $1.5 billion of the $10.1 billion of cash and
equivalents was held by our foreign subsidiaries, of which $861 million 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
We had the following significant sources and uses of cash during the year ended December 31, 2015:
- Cash flows from operating activities were $2.9 billion in 2015.
- In November 2015, we received $7.4 billion in net proceeds from the issuance of debt. We intend to use the net
proceeds of this offering for general corporate purposes, including to finance a portion of the cash consideration
component of our pending Baker Hughes acquisition and to pay related fees and expenses. See Note 8 to the
consolidated financial statements for further information.
- Capital expenditures were $2.2 billion in 2015. The capital expenditures in 2015 were predominantly made in our
Production Enhancement, Cementing, Sperry Drilling, Production Solutions, and Wireline and Perforating product
service lines.
- Our primary components of net working capital (receivables, inventories, and accounts payable) decreased during
the year by a net $1.0 billion, primarily due to decreased business activity driven by current market conditions.
- We paid $614 million of dividends to our shareholders in 2015.
- During the third quarter of 2015, we made the second installment payment of $333 million related to the settlement
we reached during 2014 for the Macondo well incident. See Note 9 to the consolidated financial statements for
further information.
- We sold $168 million of property, plant, and equipment during 2015.
Future sources and uses of cash
We issued $7.5 billion aggregate principal amount of senior notes in November 2015 for general corporate purposes,
including to finance a portion of the cash consideration component of our pending acquisition of Baker Hughes. We may
finance the remainder of the cash portion of the consideration for the acquisition with cash on hand, additional debt financing,
or a combination thereof. We have $1.1 billion remaining under the senior unsecured bridge facility commitment we obtained
for the acquisition, although we may obtain other debt financing in lieu of utilizing all or a portion of the bridge facility. We
have not drawn any amounts under this facility as of December 31, 2015. See Note 8 to the consolidated financial statements
for further information. Additionally, we expect to receive cash proceeds from the sale of the businesses we are currently
marketing for sale as part of the regulatory review of the pending Baker Hughes acquisition. If the acquisition is not completed,
we could be required to pay Baker Hughes a termination fee of $3.5 billion in certain circumstances where the termination of
the merger agreement is related to failures to obtain regulatory clearances. See Note 2 to the consolidated financial statements
for further information about the pending acquisition and related divestitures.
We manufacture our own equipment, which allows us flexibility to increase or decrease our capital expenditures based
on market conditions. Capital spending for 2016 is currently expected to be approximately $1.6 billion, a reduction of
approximately $600 million, or 27%, from 2015 primarily due to the current market environment. The capital expenditures plan
for 2016 is primarily directed towards our Production Enhancement, Production Solutions, Wireline and Perforating, and
Cementing product service lines.
During 2014, we reached an agreement, subject to court approval, to settle a substantial portion of the plaintiffs' claims
asserted against us relating to the Macondo well incident. We have $472 million of Macondo-related liabilities as of
December 31, 2015, of which $400 million is expected to be paid in 2016. See Note 9 to the consolidated financial statements
for further information.
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. Currently, our quarterly dividend rate is $0.18 per share, or approximately $154 million per quarter.
Our Board of Directors has authorized a program to repurchase our common stock from time to time. Approximately
$5.7 billion remains authorized for repurchases as of December 31, 2015, and may be used for open market and other share
purchases. There were no repurchases made under the program during the year ended December 31, 2015.
We had $322 million of gross unrecognized tax benefits at December 31, 2015, of which we estimate $152 million
may require a cash payment. We estimate that $148 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 this amount will ultimately be settled and paid.