Halliburton 2015 Annual Report Download - page 41

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Contractual obligations
The following table summarizes our significant contractual obligations and other long-term liabilities as of
December 31, 2015:
Payments Due
Millions of dollars 2016 2017 2018 2019 2020 Thereafter Total
Long-term debt (a) $ 659 $ 79 $ 823 $ 1,013 $ 1,261 $ 11,643 $ 15,478
Interest on debt (b) 711 696 692 659 596 9,446 12,800
Operating leases 257 171 132 96 60 228 944
Purchase obligations (c) 873 391 152 28 29 50 1,523
Other long-term liabilities (d) 37 10 10 10 9 32 108
Total $ 2,537 $ 1,347 $ 1,809 $ 1,806 $ 1,955 $ 21,399 $ 30,853
(a) Represents principal amounts of long-term debt, including current maturities, which excludes any unamortized debt
issuance costs and discounts. See Note 8 to the consolidated financial statements.
(b) Interest on debt includes 81 years of interest on $300 million of debentures at 7.6% interest that become due in 2096.
(c) Amount in 2016 primarily represents certain purchase orders for goods and services utilized in the ordinary course of
our business.
(d) Includes capital lease obligations and pension funding obligations. Amounts for pension funding obligations, which
include international plans and are based on assumptions that are subject to change, are only included for 2016 as we
are currently not able to reasonably estimate our contributions for years after 2016.
Other factors affecting liquidity
Financial position in current market. As of December 31, 2015, we had $10.1 billion of cash and equivalents, $96
million in fixed income investments, and a total of $3.0 billion of available committed bank credit under our revolving credit
facility. In July 2015, we executed a new five-year revolving credit agreement with an initial capacity of $3.0 billion, increasing
to $4.5 billion upon closing of the pending Baker Hughes acquisition. Furthermore, we have no financial covenants or material
adverse change provisions in our bank agreements, and our debt maturities extend over a long period of time. Although a
portion of earnings from our foreign subsidiaries is reinvested outside the United States indefinitely, we do not consider this to
have a significant impact on our liquidity. We currently believe that cash on hand, cash flows generated from operations and our
available credit facility will provide sufficient liquidity to manage our global cash needs in 2016, including capital
expenditures, working capital investments, dividends, if any, and contingent liabilities.
Guarantee agreements. In the normal course of business, we have agreements with financial institutions under which
approximately $2.0 billion of letters of credit, bank guarantees, or surety bonds were outstanding as of December 31, 2015.
Some of the outstanding letters of credit have triggering events that would entitle a bank to require cash collateralization.
Credit ratings. Credit ratings for our long-term debt remain A2 with Moody’s Investors Service (Moody's) and A with
Standard & Poor’s. The credit ratings on our short-term debt remain P-1 with Moody’s and A-1 with Standard & Poor’s. While
these credit ratings remained unchanged during 2015, after the 2014 announcement of the pending Baker Hughes acquisition,
Standard & Poor’s placed all of our ratings on negative watch, and in October 2015 Moody's placed all of our ratings on review
for downgrade.
Customer receivables. In line with industry practice, we bill our customers for our services in arrears and are,
therefore, subject to our customers delaying or failing to pay our invoices. In weak economic environments, we may experience
increased delays and failures to pay our invoices due to, among other reasons, a reduction in our customers’ cash flow from
operations and their access to the credit markets as well as unsettled political conditions. If our customers delay paying or fail
to pay us a significant amount of our outstanding receivables, it could have a material adverse effect on our liquidity,
consolidated results of operations, and consolidated financial condition. See “Business Environment and Results of Operations
– International operations – Venezuela” for further discussion related to receivables from our primary customer in Venezuela.