Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Jul. 16, 2015 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | BAKER HUGHES INC | |
Entity Central Index Key | 808,362 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 435,882,315 |
Consolidated Condensed Statemen
Consolidated Condensed Statements of Income - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Revenue: | ||||
Sales | $ 1,431 | $ 1,975 | $ 2,959 | $ 3,832 |
Services | 2,537 | 3,960 | 5,603 | 7,834 |
Total revenue | 3,968 | 5,935 | 8,562 | 11,666 |
Costs and expenses: | ||||
Cost of sales | 1,230 | 1,530 | 2,575 | 3,031 |
Cost of services | 2,385 | 3,215 | 5,382 | 6,434 |
Research and engineering | 124 | 159 | 262 | 302 |
Marketing, general and administrative | 310 | 338 | 625 | 654 |
Restructuring charges | 76 | 0 | 649 | 0 |
Litigation settlements | (13) | 62 | (13) | 62 |
Total costs and expenses | 4,112 | 5,304 | 9,480 | 10,483 |
Operating (loss) income | (144) | 631 | (918) | 1,183 |
Interest expense, net | (53) | (59) | (107) | (116) |
(Loss) income before income taxes | (197) | 572 | (1,025) | 1,067 |
Income taxes | 7 | (213) | 242 | (372) |
Net (loss) income | (190) | 359 | (783) | 695 |
Net loss (income) attributable to noncontrolling interests | 2 | (6) | 6 | (14) |
Net (loss) income attributable to Baker Hughes | $ (188) | $ 353 | $ (777) | $ 681 |
Basic (loss) earnings per share attributable to Baker Hughes | $ (0.43) | $ 0.81 | $ (1.77) | $ 1.56 |
Diluted (loss) earnings per share attributable to Baker Hughes | (0.43) | 0.80 | (1.77) | 1.55 |
Cash dividends per share | $ 0.17 | $ 0.15 | $ 0.34 | $ 0.30 |
Consolidated Condensed Stateme3
Consolidated Condensed Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Statement of Comprehensive Income [Abstract] | ||||
Net (loss) income | $ (190) | $ 359 | $ (783) | $ 695 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustments during the period | 81 | 29 | (91) | 3 |
Pension and other postretirement benefits, net of tax | (6) | (4) | 1 | (8) |
Other comprehensive income (loss) | 75 | 25 | (90) | (5) |
Comprehensive (loss) income | (115) | 384 | (873) | 690 |
Comprehensive loss (income) attributable to noncontrolling interests | 2 | (6) | 6 | (14) |
Comprehensive (loss) income attributable to Baker Hughes | $ (113) | $ 378 | $ (867) | $ 676 |
Consolidated Condensed Balance
Consolidated Condensed Balance Sheets - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 1,973 | $ 1,740 |
Accounts receivable - less allowance for doubtful accounts (2015 - $322; 2014 - $224) | 3,684 | 5,418 |
Inventories, net | 3,535 | 4,074 |
Deferred income taxes | 420 | 418 |
Other current assets | 326 | 395 |
Total current assets | 9,938 | 12,045 |
Property, plant and equipment - less accumulated depreciation (2015 - $8,629; 2014 - $8,215) | 8,366 | 9,063 |
Goodwill | 6,081 | 6,081 |
Intangible assets, net | 759 | 812 |
Other assets | 874 | 826 |
Total assets | 26,018 | 28,827 |
Current liabilities: | ||
Accounts payable | 1,785 | 2,807 |
Short-term debt and current portion of long-term debt | 139 | 220 |
Accrued employee compensation | 634 | 782 |
Income taxes payable | 71 | 265 |
Other accrued liabilities | 485 | 563 |
Total current liabilities | 3,114 | 4,637 |
Long-term debt | 3,904 | 3,913 |
Deferred income taxes and other tax liabilities | 410 | 740 |
Liabilities for pensions and other postretirement benefits | 631 | 629 |
Other liabilities | $ 162 | $ 178 |
Commitments and contingencies | ||
Equity: | ||
Common stock | $ 436 | $ 434 |
Capital in excess of par value | 7,155 | 7,062 |
Retained earnings | 10,953 | 11,878 |
Accumulated other comprehensive loss | (839) | (749) |
Treasury stock | (8) | 0 |
Baker Hughes stockholders’ equity | 17,697 | 18,625 |
Noncontrolling interests | 100 | 105 |
Total equity | 17,797 | 18,730 |
Total liabilities and equity | $ 26,018 | $ 28,827 |
Consolidated Condensed Balance5
Consolidated Condensed Balance Sheets (Parenthetical) - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 322 | $ 224 |
Accumulated depreciation | $ 8,629 | $ 8,215 |
Consolidated Condensed Stateme6
Consolidated Condensed Statements of Changes in Equity - USD ($) $ in Millions | Total | Common Stock | Capital in Excess of Par Value | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock [Member] | Non-controlling Interests |
Balance at Dec. 31, 2013 | $ 17,912 | $ 438 | $ 7,341 | $ 10,438 | $ (504) | $ 199 | |
Comprehensive loss: | |||||||
Net (loss) income | 695 | 681 | 14 | ||||
Other comprehensive loss | (5) | (5) | |||||
Activity related to stock plans | 116 | 3 | 113 | ||||
Repurchase and retirement of common stock | (400) | (6) | (394) | ||||
Stock-based compensation | 63 | 63 | |||||
Cash dividends | (131) | (131) | |||||
Net activity related to noncontrolling interests | 1 | 1 | |||||
Balance at Jun. 30, 2014 | 18,251 | 435 | 7,123 | 10,988 | (509) | 214 | |
Balance at Dec. 31, 2014 | 18,730 | 434 | 7,062 | 11,878 | (749) | $ 0 | 105 |
Comprehensive loss: | |||||||
Net (loss) income | (783) | (777) | (6) | ||||
Other comprehensive loss | (90) | (90) | |||||
Activity related to stock plans | 48 | 2 | 54 | (8) | |||
Stock-based compensation | 63 | 63 | |||||
Cash dividends | (148) | (148) | |||||
Net activity related to noncontrolling interests | (23) | (24) | 1 | ||||
Balance at Jun. 30, 2015 | $ 17,797 | $ 436 | $ 7,155 | $ 10,953 | $ (839) | $ (8) | $ 100 |
Consolidated Condensed Stateme7
Consolidated Condensed Statements of Changes in Equity (Parenthetical) - $ / shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Statement of Stockholders' Equity [Abstract] | ||||
Cash dividends per share | $ 0.17 | $ 0.15 | $ 0.34 | $ 0.30 |
Consolidated Condensed Stateme8
Consolidated Condensed Statements of Cash Flows - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Cash flows from operating activities: | ||
Net (loss) income | $ (783) | $ 695 |
Adjustments to reconcile net (loss) income to net cash flows from operating activities: | ||
Depreciation and amortization | 894 | 891 |
Impairment of assets | 265 | 0 |
Benefit for deferred income taxes | (366) | (32) |
Provision for doubtful accounts | 116 | 43 |
Other noncash items | (10) | (59) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 1,590 | (349) |
Inventories | 507 | (192) |
Accounts payable | (1,000) | (31) |
Other operating items, net | (376) | (270) |
Net cash flows provided by operating activities | 837 | 696 |
Cash flows from investing activities: | ||
Expenditures for capital assets | (573) | (863) |
Proceeds from disposal of assets | 171 | 203 |
Other investing items, net | (11) | (26) |
Net cash flows used in investing activities | (413) | (686) |
Cash flows from financing activities: | ||
Net (repayments) proceeds of commercial paper borrowings and other debt with original maturity of three months or less | (7) | 190 |
Repayments of short-term debt with original maturity greater than three months | (180) | (12) |
Proceeds from short-term debt with original maturity greater than three months | 123 | 0 |
Repurchase of common stock | 0 | (400) |
Dividends paid | (148) | (131) |
Other financing items, net | 25 | 108 |
Net cash flows used in financing activities | (187) | (245) |
Effect of foreign exchange rate changes on cash and cash equivalents | (4) | (1) |
Increase (decrease) in cash and cash equivalents | 233 | (236) |
Cash and cash equivalents, beginning of period | 1,740 | 1,399 |
Cash and cash equivalents, end of period | 1,973 | 1,163 |
Supplemental cash flows disclosures: | ||
Income taxes paid, net of refunds | 306 | 360 |
Interest paid | 122 | 124 |
Supplemental disclosure of noncash investing activities: | ||
Capital expenditures included in accounts payable | $ 100 | $ 119 |
Summary of Significant Accounti
Summary of Significant Accounting Policies - (Notes) | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations Baker Hughes Incorporated (“Baker Hughes,” “Company,” “we,” “our,” or “us,”) is a leading supplier of oilfield services, products, technology and systems used for drilling, formation evaluation, completion and production, pressure pumping, and reservoir development in the worldwide oil and natural gas industry. We also provide products and services for other businesses including downstream chemicals, and process and pipeline services. Basis of Presentation Our unaudited consolidated condensed financial statements included herein have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States of America (“U.S.”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, certain information and disclosures normally included in our annual financial statements have been condensed or omitted. These unaudited consolidated condensed financial statements should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2014 . We believe the unaudited consolidated condensed financial statements included herein reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the interim periods. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year. In the Notes to Unaudited Consolidated Condensed Financial Statements, all dollar and share amounts in tabulations are in millions of dollars and shares, respectively, unless otherwise indicated. New Accounting Standards Updates In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers . The ASU will supersede most of the existing revenue recognition requirements in U.S. GAAP and will require entities to recognize revenue at an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer. The new standard also requires significantly expanded disclosures regarding the qualitative and quantitative information of an entity's nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The pronouncement initially was effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period and is to be applied retrospectively, with early application initially not permitted. In July 2015, the FASB decided to defer for one year the effective date of the new revenue standard (ASU 2014-09) for public and non public entities reporting under U.S. GAAP. The FASB also decided to permit entities to early adopt the standard. We have not completed an evaluation of the impact the pronouncement will have on our consolidated financial statements and related disclosures. In April 2015, the FASB issued ASU No. 2015-3, Simplifying the Presentation of Debt Issuance Costs . The ASU requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The pronouncement is effective for annual reporting periods beginning after December 15, 2015. We currently report debt issuance costs consistent with the guidance of this ASU; therefore there will be no impact on our consolidated financial statements and related disclosures upon adoption. In April 2015, the FASB issued ASU No. 2015-5, Customer's Accounting for Fees Paid in a Cloud Computing Arrangement . The ASU provides guidance to customers about whether a cloud computing arrangement includes a software license and the related accounting treatment. The pronouncement is effective for annual reporting periods beginning after December 15, 2015. Adoption of this pronouncement is not expected to have a material impact upon our consolidated financial statements or notes thereto. |
Halliburton Merger Agreement (N
Halliburton Merger Agreement (Notes) | 6 Months Ended |
Jun. 30, 2015 | |
Business Combinations [Abstract] | |
Halliburton Merger Agreement | HALLIBURTON MERGER AGREEMENT On November 16, 2014, Baker Hughes, Halliburton Company (“Halliburton”) and a wholly owned subsidiary of Halliburton (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), under which Halliburton will acquire all of the outstanding shares of Baker Hughes through a merger of Baker Hughes with and into Merger Sub (the "Merger"). Subject to certain specified exceptions, at the effective time of the Merger, each share of Baker Hughes common stock will be converted into the right to receive (i) 1.12 shares of Halliburton common stock and (ii) $19.00 in cash. On March 27, 2015, Halliburton's stockholders approved the proposal to issue shares of Halliburton common stock as contemplated by the Merger Agreement. In addition, Baker Hughes’ stockholders adopted the Merger Agreement and thereby approved the proposed combination of the two companies. The obligation of the parties to consummate the Merger is still subject to additional customary closing conditions, including: (i) applicable regulatory approvals, including the termination or expiration of the applicable waiting period under the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”); (ii) the absence of legal restraints and prohibitions; and (iii) other customary closing conditions. Halliburton is required to take all actions necessary to obtain regulatory approvals (including agreeing to divestitures) unless the assets, businesses or product lines subject to such actions would account for more than $7.5 billion of 2013 revenue. As mentioned in the paragraph above, under the HSR Act and the rules promulgated thereunder by the Federal Trade Commission (the “FTC”), the Merger cannot be completed until each of Halliburton and Baker Hughes has filed a notification and report form with the FTC and the Antitrust Division of the Department of Justice (the “DOJ”) under the HSR Act and the applicable waiting period has expired or been terminated. Each of Halliburton and Baker Hughes filed an initial notification and report form on December 8, 2014. Halliburton withdrew its filing on January 7, 2015 and refiled on January 9, 2015 in order to provide the FTC and the DOJ with an additional 30-day period to review the filings. On February 9, 2015, the DOJ issued a request for additional information under the HSR Act (the “Second Request”). On July 10, 2015, Halliburton and Baker Hughes entered into a timing agreement with the DOJ pursuant to which both companies agreed to extend the period for the DOJ's review of the Merger to the later of November 25, 2015 or 90 days after both companies have certified substantial compliance with the Second Request. Baker Hughes certified substantial compliance with the Second Request on July 14, 2015, and Halliburton expects to certify substantial compliance with the Second Request by mid-summer of 2015. Halliburton and Baker Hughes are targeting closing the Merger late in 2015. However, the Merger Agreement provides that the closing can be extended into 2016, if necessary. Baker Hughes cannot predict with certainty when, or if, the Merger will be completed because completion of the Merger is subject to conditions beyond the control of Baker Hughes. Baker Hughes and Halliburton each made customary representations, warranties and covenants in the Merger Agreement, including, among others, covenants by each of Baker Hughes and Halliburton to, subject to certain exceptions, conduct its business in the ordinary course. In particular, among other restrictions and subject to certain exceptions, Baker Hughes agreed to generally refrain from acquiring new businesses, incurring new indebtedness, repurchasing shares, issuing new common stock or equity awards (other than equity awards granted to employees, officers and directors materially consistent with historical long-term incentive awards granted), or entering into new material contracts or commitments outside the normal course of business, without the consent of Halliburton, during the period between the execution of the Merger Agreement and the consummation of the Merger. With respect to equity awards granted after the Merger Agreement to officers and employees, such awards will not vest solely as a result of the Merger but will be converted to an equivalent Halliburton equity award. However, they will vest entirely if an officer or employee is terminated within one year following the closing of the Merger with Halliburton. Baker Hughes and Halliburton are each permitted to pay regular quarterly cash dividends during such period. In addition, under the terms of the Merger Agreement, Halliburton and Baker Hughes have agreed to coordinate the declaration and payment of dividends in respect of each party's common stock including record dates and payment dates relating thereto, which we expect to be in the third month of each quarter. Under the Merger Agreement, we have agreed not to increase the quarterly dividend while the Merger is pending. In the event the Merger Agreement is terminated by (i) either party as a result of the failure of the Merger to occur on or before the end date (as it may be extended) due to the failure to achieve certain specified antitrust-related approvals when all other closing conditions (other than receipt of antitrust and other specified regulatory approvals and conditions that by their nature cannot be satisfied until the closing but subject to such conditions being capable of being satisfied if the closing date were the date of termination) have been satisfied, (ii) either party as a result of any antitrust-related final, non-appealable order or injunction prohibiting the closing, or (iii) Baker Hughes as a result of Halliburton’s material breach of its obligations to obtain regulatory approval such that the antitrust-related condition to closing is incapable of being satisfied, then, in each case, Halliburton would be required to pay Baker Hughes a termination fee of $3.5 billion . Baker Hughes incurred costs related to the Merger of $83 million and $111 million for the three and six months ended June 30, 2015, respectively, including costs under our retention program and obligations for minimum incentive compensation costs which, based on meeting eligibility criteria in April, have been treated as merger related expenses. |
Restructuring Costs - (Notes)
Restructuring Costs - (Notes) | 6 Months Ended |
Jun. 30, 2015 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Other Charges | RESTRUCTURING AND OTHER CHARGES Beginning in the second half of 2014 and throughout 2015, the oil and natural gas market experienced a significant over supply of capacity leading to a substantial and rapid decline in oil prices resulting in significantly lower activity in 2015. Accordingly, to adjust to the lower level of activity, we assessed our overall operations and have taken actions to restructure and adjust our operations and cost structure to reflect current and expected near-term activity levels. Depending on future market conditions and activity levels, further actions may be necessary to adjust our operations which may result in additional charges. During the three and six months ended June 30, 2015 , we recorded restructuring charges as summarized below: Three Months Ended Six Months Ended Restructuring Charges June 30, 2015 June 30, 2015 Workforce reductions $ 61 $ 308 Contract terminations (3 ) 83 Impairment of buildings and improvements 5 82 Impairment of machinery and equipment 13 176 Total restructuring charges $ 76 $ 649 Workforce reduction costs : During the first six months of 2015 , we initiated workforce reductions that will result in the total elimination of approximately 13,000 positions worldwide. As of June 30, 2015 , we have eliminated approximately 11,000 positions. As a result of these workforce reductions, we recorded a charge for severance expense of $308 million , net of a related benefit plan curtailment gain of $9 million for the first six months of 2015 . As of June 30, 2015 , we have made payments totaling $230 million relating to workforce reductions. We expect that substantially all of the accrued severance remaining of $87 million will be paid in the second half of 2015. Contract termination costs: During the first six months of 2015 , we incurred costs of $83 million for various contracts being terminated, primarily in North America. This includes the accrual for costs to settle leases on closed facilities and certain equipment, and other estimated exit costs, and is net of expected sublease income. We also incurred costs to terminate a take-or-pay supply contract related to the purchase of materials used in our pressure pumping operations in North America, including the write-off of $14 million of prepayments made in 2014. As of June 30, 2015 , we have made payments totaling $52 million relating to contract termination costs. We expect that substantially all of the accrued contract termination costs remaining of $17 million will be paid in the second half of 2015. Impairment of buildings and improvements: We are consolidating facilities and shutting down certain operations and as a result are closing and abandoning or selling certain facilities, both owned and leased. During the first six months of 2015 , we recognized $82 million of impairment charges related to facilities primarily in North America and Latin America. For leased facilities, this charge includes the impairment of the leasehold improvements made to those facilities. Impairment of machinery and equipment: We are exiting or substantially downsizing our presence in select markets primarily in our pressure pumping product line in North America and Latin America. During the first six months of 2015 , we recognized $176 million of impairment losses to adjust the carrying value of certain machinery and equipment to its fair value, net of costs to dispose. We are currently in the process of disposing of this machinery and equipment through sale or scrap. Other Charges In addition to the matters described above, during the first six months of 2015 , we also recorded charges of $194 million , of which $37 million is reported in cost of sales and $157 million is reported in cost of services, to write-down the carrying value of certain inventory. The write-down, primarily in North America, includes lower of cost or market adjustments due to the significant decline in activity and related prices for our products coupled with declines in replacement costs. In addition, the adjustments include provisions for excess inventory levels based on estimates of current and future market demand. The product lines impacted are primarily pressure pumping and drilling and completion fluids. |
Venezuelan Currency Devaluation
Venezuelan Currency Devaluation - (Notes) | 6 Months Ended |
Jun. 30, 2015 | |
Foreign Currency [Abstract] | |
Venezuelan Currency Devaluation | VENEZUELA CURRENCY DEVALUATION In February of 2015, the Venezuelan government modified the currency exchange system by the creation of a new exchange mechanism, SIMADI, which allows for the trading of the Venezuelan Bolivars Fuertes ("BsF") at a floating rate. On March 31, 2015, we began using the SIMADI exchange rate of approximately 192 BsF per U.S. Dollar to remeasure our BsF denominated assets and liabilities, which resulted in a foreign currency loss of approximately $5 million . This loss was recorded in MG&A expenses in the first quarter of 2015. We believe any further devaluation of Venezuela's currency would not have a material impact on our financial position, results of operations or cash flows. |
Segment Information - (Notes)
Segment Information - (Notes) | 6 Months Ended |
Jun. 30, 2015 | |
Segment Reporting [Abstract] | |
Segment Information | SEGMENT INFORMATION We are a supplier of oilfield services, products, technology and systems to the worldwide oil and natural gas business, referred to as oilfield operations, which are managed through operating segments that are aligned with our geographic regions. We also provide services and products to the downstream chemicals, and process and pipeline industries, referred to as Industrial Services. The performance of our operating segments is evaluated based on profit (loss) before tax, which is defined as income (loss) before income taxes and before the following: net interest expense, corporate expenses and certain gains and losses, including restructuring charges, not allocated to the operating segments. Summarized financial information is shown in the following tables: Three Months Ended Three Months Ended June 30, 2015 June 30, 2014 Segments Revenue Profit (Loss) Before Taxes Revenue Profit (Loss) Before Taxes North America $ 1,498 $ (167 ) $ 2,843 $ 340 Latin America 439 41 544 46 Europe/Africa/Russia Caspian 869 47 1,111 183 Middle East/Asia Pacific 856 51 1,104 163 Industrial Services 306 29 333 34 Total Operations 3,968 1 5,935 766 Corporate and other — (82 ) — (73 ) Interest expense, net — (53 ) — (59 ) Restructuring charges — (76 ) — — Litigation settlements — 13 — (62 ) Total $ 3,968 $ (197 ) $ 5,935 $ 572 Six Months Ended Six Months Ended June 30, 2015 June 30, 2014 Segments Revenue Profit (Loss) Before Taxes Revenue Profit (Loss) Before Taxes North America $ 3,504 $ (376 ) $ 5,619 $ 598 Latin America 932 74 1,074 101 Europe/Africa/Russia Caspian 1,764 27 2,155 330 Middle East/Asia Pacific 1,772 113 2,164 293 Industrial Services 590 39 654 61 Total Operations 8,562 (123 ) 11,666 1,383 Corporate and other — (159 ) — (138 ) Interest expense, net — (107 ) — (116 ) Restructuring charges — (649 ) — — Litigation settlements — 13 — (62 ) Total $ 8,562 $ (1,025 ) $ 11,666 $ 1,067 |
Income Taxes - (Notes)
Income Taxes - (Notes) | 6 Months Ended |
Jun. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES We estimate our annual effective tax rate based on actual year-to-date operating results and our expectation of operating results for the remainder of the year, by jurisdiction, and apply this rate to the actual year-to-date operating results. If our actual operating results, by jurisdiction, differ from the expected operating results, our effective tax rate can change affecting the tax expense for both interim and annual periods. Total income tax benefit was $7 million and $242 million for the three and six months ended June 30, 2015 , respectively. Our effective tax rate on the loss before income taxes for the three and six months ended June 30, 2015 was 3.7% and 23.6% , respectively. The effective tax rate for the three months ended June 30, 2015 is lower than the U.S. statutory income tax rate of 35% primarily due to $99 million of restructuring charges and inventory write-downs with only partial or no tax-benefit in certain jurisdictions, adjustments to prior years' tax positions, loss of certain tax benefits, and a change in the geographical mix of earnings. The total tax benefit associated with the restructuring charges and inventory write-downs for the three and six months ended June 30, 2015 was $28 million and $235 million , respectively. |
Earnings Per Share - (Notes)
Earnings Per Share - (Notes) | 6 Months Ended |
Jun. 30, 2015 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | EARNINGS PER SHARE A reconciliation of the number of shares used for the basic and diluted (loss) earnings per share (“EPS”) computations is as follows: Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Weighted average common shares outstanding for basic EPS 438 437 438 438 Adjustment for effect of dilutive securities - stock plans — 3 — 2 Weighted average common shares outstanding for diluted EPS 438 440 438 440 Anti-dilutive shares excluded from diluted EPS (1) 2 — 2 — Future potentially dilutive shares excluded from diluted EPS (2) 2 2 2 2 (1) The calculation of diluted net loss per share for both the three and six months ended June 30, 2015, excludes shares potentially issuable under stock-based incentive compensation plans and the employee stock purchase plan, as their effect, if included, would have been anti-dilutive. (2) Options where the exercise price exceeds the average market price are excluded from the calculation of diluted net loss or earnings per share because their effect would be anti-dilutive. |
Inventories - (Notes)
Inventories - (Notes) | 6 Months Ended |
Jun. 30, 2015 | |
Inventory, Net [Abstract] | |
Inventories | INVENTORIES Inventories, net of reserves of $353 million at June 30, 2015 and $319 million at December 31, 2014 , are comprised of the following: June 30, December 31, Finished goods $ 3,173 $ 3,644 Work in process 199 227 Raw materials 163 203 Total inventories $ 3,535 $ 4,074 |
Intangible Assets - (Notes)
Intangible Assets - (Notes) | 6 Months Ended |
Jun. 30, 2015 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
Intangible Assets | INTANGIBLE ASSETS Intangible assets are comprised of the following: June 30, 2015 December 31, 2014 Gross Carrying Amount Less: Accumulated Amortization Net Gross Carrying Amount Less: Accumulated Amortization Net Technology $ 874 $ 422 $ 452 $ 870 $ 393 $ 477 Customer relationships 487 211 276 488 191 297 Trade names 120 94 26 120 92 28 Other 18 13 5 23 13 10 Total intangible assets $ 1,499 $ 740 $ 759 $ 1,501 $ 689 $ 812 Intangible assets are generally amortized on a straight-line basis with estimated useful lives ranging from 3 to 30 years. Amortization expense included in the net loss for the three and six months ended June 30, 2015 was $25 million and $51 million , respectively, as compared to $27 million and $53 million reported in 2014 for the same periods. Amortization expense of these intangibles over the remainder of 2015 and for each of the subsequent five fiscal years is expected to be as follows: Year Estimated Amortization Expense Remainder of 2015 $ 52 2016 102 2017 98 2018 92 2019 89 2020 78 |
Financial Instruments - (Notes)
Financial Instruments - (Notes) | 6 Months Ended |
Jun. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Financial Instruments | FINANCIAL INSTRUMENTS Our financial instruments include cash and cash equivalents, accounts receivable, accounts payable, debt and foreign currency forward contracts. Except as described below, the estimated fair value of such financial instruments at June 30, 2015 and December 31, 2014 approximates their carrying value as reflected in our unaudited consolidated condensed balance sheets. The estimated fair value of total debt at June 30, 2015 and December 31, 2014 was $4,495 million and $4,663 million , respectively, which differs from the carrying amounts of $4,043 million and $4,133 million , respectively, included in our unaudited consolidated condensed balance sheets. The fair value was determined using quoted period-end market prices. |
Employee Benefit Plans - (Notes
Employee Benefit Plans - (Notes) | 6 Months Ended |
Jun. 30, 2015 | |
Compensation and Retirement Disclosure [Abstract] | |
Employee Benefits Plans | EMPLOYEE BENEFIT PLANS We have both funded and unfunded noncontributory defined benefit pension plans ("Pension Benefits") covering certain employees primarily in the U.S., the United Kingdom, Germany and Canada. We also provide certain postretirement health care benefits (“Other Postretirement Benefits”), through an unfunded plan, to a closed group of U.S. employees who, when they retire, have met certain age and service requirements. The components of net periodic cost (benefit) are as follows for the three months ended June 30 : U.S. Pension Benefits Non-U.S. Pension Benefits Other Postretirement Benefits 2015 2014 2015 2014 2015 2014 Service cost $ 16 $ 18 $ 4 $ 4 $ 1 $ 2 Interest cost 7 7 8 9 1 1 Expected return on plan assets (12 ) (11 ) (12 ) (10 ) — — Amortization of prior service credit — — — — (3 ) (2 ) Amortization of net actuarial loss 2 2 1 1 1 — Other — — — — — 1 Net periodic cost (benefit) $ 13 $ 16 $ 1 $ 4 $ — $ 2 The components of net periodic cost (benefit) are as follows for the six months ended June 30 : U.S. Pension Benefits Non-U.S. Pension Benefits Other Postretirement Benefits 2015 2014 2015 2014 2015 2014 Service cost $ 34 $ 35 $ 8 $ 7 $ 2 $ 3 Interest cost 14 14 16 18 2 3 Expected return on plan assets (25 ) (22 ) (24 ) (20 ) — — Amortization of prior service credit — — — — (6 ) (3 ) Amortization of net actuarial loss 4 4 2 2 2 1 Curtailment gain — — — — (9 ) — Other — — — — — (3 ) Net periodic cost (benefit) $ 27 $ 31 $ 2 $ 7 $ (9 ) $ 1 |
Commitments and Contingencies -
Commitments and Contingencies - (Notes) | 6 Months Ended |
Jun. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES LITIGATION We are subject to a number of lawsuits and claims arising out of the conduct of our business. The ability to predict the ultimate outcome of such matters involves judgments, estimates and inherent uncertainties. We record a liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated, including accruals for self-insured losses which are calculated based on historical claim data, specific loss development factors and other information. A range of total possible losses for all litigation matters cannot be reasonably estimated. Based on a consideration of all relevant facts and circumstances, we do not expect the ultimate outcome of any currently pending lawsuits or claims against us will have a material adverse effect on our financial position, results of operations or cash flows; however, there can be no assurance as to the ultimate outcome of these matters. We insure against risks arising from our business to the extent deemed prudent by our management and to the extent insurance is available, but no assurance can be given that the nature and amount of that insurance will be sufficient to fully indemnify us against liabilities arising out of pending or future legal proceedings or other claims. Most of our insurance policies contain deductibles or self-insured retentions in amounts we deem prudent and for which we are responsible for payment. In determining the amount of self-insurance, it is our policy to self-insure those losses that are predictable, measurable and recurring in nature, such as claims for automobile liability, general liability and workers compensation. The following lawsuits have been filed in Delaware in connection with our pending merger with Halliburton: • On November 24, 2014, Gary Molenda, a purported shareholder of the Company, filed a class action lawsuit in the Court of Chancery of the State of Delaware ("Delaware Chancery Court") against Baker Hughes, the Company’s Board of Directors, Halliburton, and Red Tiger LLC, a wholly owned subsidiary of Halliburton (“Red Tiger” and together with all defendants, “Defendants”) styled Gary R. Molenda v. Baker Hughes, Inc., et al., Case No. 10390-CB. • On November 26, 2014, a second purported shareholder of the Company, Booth Family Trust, filed a substantially similar class action lawsuit in Delaware Chancery Court. • On December 1, 2014, New Jersey Building Laborers Annuity Fund and James Rice, two additional purported shareholders of the Company, filed substantially similar class action lawsuits in Delaware Chancery Court. • On December 10, 2014, a fifth purported shareholder of the Company, Iron Workers Mid-South Pension Fund, filed another substantially similar class action lawsuit in the Delaware Chancery Court. • On December 24, 2014, a sixth purported shareholder of the Company, Annette Shipp, filed another substantially similar class action lawsuit in the Delaware Chancery Court. All of the lawsuits make substantially similar claims. The plaintiffs generally allege that the members of the Company’s Board of Directors breached their fiduciary duties to our shareholders in connection with the merger negotiations by entering into the merger agreement and by approving the merger, and that the Company, Halliburton, and Red Tiger aided and abetted the purported breaches of fiduciary duties. More specifically, the lawsuits allege that the merger agreement provides inadequate consideration to our shareholders, that the process resulting in the merger agreement was flawed, that the Company’s directors engaged in self-dealing, and that certain provisions of the merger agreement improperly favor Halliburton and Red Tiger, precluding or impeding third parties from submitting potentially superior proposals, among other things. The lawsuit filed by Annettee Shipp also alleges that our Board of Directors failed to disclose material information concerning the proposed merger in the preliminary registration statement on Form S-4. On January 7, 2015, James Rice amended his complaint, adding similar allegations regarding the disclosures in the preliminary registration statement on Form S-4. The lawsuits seek unspecified damages, injunctive relief enjoining the merger, and rescission of the merger agreement, among other relief. On January 23, 2015, the Delaware lawsuits were consolidated under the caption In re Baker Hughes Inc. Stockholders Litigation, Consolidated C.A. No. 10390-CB (the "Consolidated Case"). Pursuant to the Court’s consolidation order, plaintiffs filed a consolidated complaint on February 4, 2015, which alleges substantially similar claims and seeks substantially similar relief to that raised in the six individual complaints, except that while Baker Hughes is named as a defendant, no claims are asserted against the Company. On March 18, 2015, the parties reached an agreement in principle to settle the Consolidated Case in exchange for the Company making certain additional disclosures. Those disclosures were contained in a Form 8-K filed with the SEC on March 18, 2015. The settlement remains subject to certain conditions, including consummation of the merger, final documentation, and court approval. On November 26, 2014, a seventh class action challenging the merger was filed by a purported Company shareholder in the United States District Court for the Southern District of Texas (Houston Division). The lawsuit, styled Marc Rovner v. Baker Hughes Inc., et al., Cause No. 4:14-cv-03416 ("the Rovner lawsuit"), asserts claims against the Company, most of our current Board of Directors, Halliburton, and Red Tiger. The lawsuit asserts substantially similar claims and seeks substantially similar relief as that sought in the Delaware lawsuits. On March 20, 2015, counsel for Mr. Rovner filed a notice of voluntary dismissal, and on March 23, 2015, the Court entered an order dismissing the Rovner lawsuit without prejudice. On October 9, 2014, our subsidiary filed a Request for Arbitration against a customer before the London Court of International Arbitration, pursuing claims for the non-payment of invoices for goods and services provided in an amount provisionally quantified to exceed $67.9 million . In our Request for Arbitration, we also noted that invoices in an amount exceeding $57 million had been issued to the customer, and would be added to the claim in the event that they became overdue. The due date for payment of all of these invoices has now passed. On November 6, 2014, the customer filed its Response and Counterclaim, denying liability and counterclaiming damages for breach of contract of approximately $182 million . We deny any liability to the customer and intend to pursue our claims against the customer and defend the claims made under the counterclaim. No timetable for the conduct of the arbitration has yet been established. During 2014, we received customer notifications related to a possible equipment failure in a natural gas storage system in Northern Germany, which includes certain of our products. We are currently investigating the cause of the possible failure and, if necessary, possible repair and replacement options for our products. Similar products were utilized in other natural gas storage systems for this and other customers. The customer initiated arbitral proceedings against us on June 19, 2015, under the rules of the German Institute of Arbitration e.V. (DIS). The customer alleges damages of approximately $170 million plus interest at an annual rate of prime + 5% . A procedural schedule for the arbitration has not yet been set and it is not possible to predict the likely outcome of the arbitration at this time. Additionally, at this time, we are not able to predict what products will need to be repaired or replaced and are not able to reasonably estimate the ultimate impact, if any, such repairs or replacements or other damages would have on our financial position, results of operations or cash flows. We are a defendant in various labor claims including the following matters. • On April 28, 2014, a collective action lawsuit alleging that we failed to pay a class of workers overtime in compliance with the Fair Labor Standards Act ("FLSA") was filed titled Michael Ciamillo, individually, etc., et al. vs. Baker Hughes Incorporated in the U.S. District Court for the District of Alaska (“Ciamillo”). During the fourth quarter of 2014, the parties agreed to settle the Ciamillo lawsuit, including certain state law claims, for $5 million . The court granted final approval of that settlement on June 19, 2015. • On December 10, 2013, a class and collective action lawsuit alleging that we failed to pay a nationwide class of workers overtime in compliance with the FLSA and certain state laws was filed titled Lea et al. v. Baker Hughes, Inc. in the U.S. District Court for the Southern District of Texas, Galveston Division ("Lea"). During the second quarter of 2014, the parties agreed to settle the Lea lawsuit, subject to final court approval, and we recorded a charge of $62 million , which included an estimate of the Lea settlement amount and associated costs and an amount for settlement of another wage and hour lawsuit. A portion of this settlement was to be paid on a claims made basis and during the second quarter of 2015, the date passed by which the class members could file a claim under this provision of the settlement agreement. The amount of claims made was less than estimated and accordingly, we reduced the accrual by approximately $13 million , which was recorded as an adjustment of litigation settlements during the second quarter of 2015. • On April 30, 2015, a class and collective action lawsuit alleging that we failed to pay a nationwide class of workers overtime in compliance with the FLSA and North Dakota law was filed titled Williams et al. v. Baker Hughes Oilfield Operations, Inc. in the U.S. District Court for the District of North Dakota. We are evaluating the background facts and at this time cannot predict the outcome of this lawsuit and are not able to reasonably estimate the potential impact, if any, such outcome would have on our financial position, results of operations or cash flows. On May 30, 2013, we received a Civil Investigative Demand ("CID") from the U.S. Department of Justice ("DOJ") pursuant to the Antitrust Civil Process Act. The CID seeks documents and information from us for the period from May 29, 2011 through the date of the CID in connection with a DOJ investigation related to pressure pumping services in the U.S. We are working with the DOJ to provide the requested documents and information. We are not able to predict what action, if any, might be taken in the future by the DOJ or other governmental authorities as a result of the investigation. OTHER In the normal course of business with customers, vendors and others, we have entered into off-balance sheet arrangements, such as surety bonds for performance, letters of credit and other bank issued guarantees, which totaled approximately $1.2 billion at June 30, 2015 . It is not practicable to estimate the fair value of these financial instruments. None of the off-balance sheet arrangements either has, or is likely to have, a material effect on our financial position, results of operations or cash flows. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss - (Notes) | 6 Months Ended |
Jun. 30, 2015 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Accumulated Other Comprehensive Loss | ACCUMULATED OTHER COMPREHENSIVE LOSS The following tables present the changes in accumulated other comprehensive loss, net of tax: Pensions and Other Postretirement Benefits Foreign Currency Translation Adjustments Accumulated Other Comprehensive Loss Balance at December 31, 2014 $ (246 ) $ (503 ) $ (749 ) Other comprehensive income (loss) before reclassifications 5 (91 ) (86 ) Amounts reclassified from accumulated other comprehensive loss (7 ) — (7 ) Deferred taxes 3 — 3 Balance at June 30, 2015 $ (245 ) $ (594 ) $ (839 ) Pensions and Other Postretirement Benefits Foreign Currency Translation Adjustments Accumulated Other Comprehensive Loss Balance at December 31, 2013 $ (217 ) $ (287 ) $ (504 ) Other comprehensive (loss) income before reclassifications (8 ) 3 (5 ) Amounts reclassified from accumulated other comprehensive loss 1 — 1 Deferred taxes (1 ) — (1 ) Balance at June 30, 2014 $ (225 ) $ (284 ) $ (509 ) The amounts reclassified from accumulated other comprehensive loss during the six months ended June 30, 2015 and 2014 represent the amortization of prior service credit, net actuarial loss, curtailment gain and other which are included in the computation of net periodic cost (benefit). See Note 11. Employee Benefit Plans for additional details. Net periodic cost (benefit) is recorded in cost of sales and services, research and engineering, and marketing, general and administrative expenses. |
Summary of Significant Accoun22
Summary of Significant Accounting Policies - (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Nature of Operations | Nature of Operations Baker Hughes Incorporated (“Baker Hughes,” “Company,” “we,” “our,” or “us,”) is a leading supplier of oilfield services, products, technology and systems used for drilling, formation evaluation, completion and production, pressure pumping, and reservoir development in the worldwide oil and natural gas industry. We also provide products and services for other businesses including downstream chemicals, and process and pipeline services. |
Basis of Presentation | Basis of Presentation Our unaudited consolidated condensed financial statements included herein have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States of America (“U.S.”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, certain information and disclosures normally included in our annual financial statements have been condensed or omitted. These unaudited consolidated condensed financial statements should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2014 . We believe the unaudited consolidated condensed financial statements included herein reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the interim periods. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year. In the Notes to Unaudited Consolidated Condensed Financial Statements, all dollar and share amounts in tabulations are in millions of dollars and shares, respectively, unless otherwise indicated. |
New Accounting Standards Updates | New Accounting Standards Updates In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers . The ASU will supersede most of the existing revenue recognition requirements in U.S. GAAP and will require entities to recognize revenue at an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer. The new standard also requires significantly expanded disclosures regarding the qualitative and quantitative information of an entity's nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The pronouncement initially was effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period and is to be applied retrospectively, with early application initially not permitted. In July 2015, the FASB decided to defer for one year the effective date of the new revenue standard (ASU 2014-09) for public and non public entities reporting under U.S. GAAP. The FASB also decided to permit entities to early adopt the standard. We have not completed an evaluation of the impact the pronouncement will have on our consolidated financial statements and related disclosures. In April 2015, the FASB issued ASU No. 2015-3, Simplifying the Presentation of Debt Issuance Costs . The ASU requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The pronouncement is effective for annual reporting periods beginning after December 15, 2015. We currently report debt issuance costs consistent with the guidance of this ASU; therefore there will be no impact on our consolidated financial statements and related disclosures upon adoption. In April 2015, the FASB issued ASU No. 2015-5, Customer's Accounting for Fees Paid in a Cloud Computing Arrangement . The ASU provides guidance to customers about whether a cloud computing arrangement includes a software license and the related accounting treatment. The pronouncement is effective for annual reporting periods beginning after December 15, 2015. Adoption of this pronouncement is not expected to have a material impact upon our consolidated financial statements or notes thereto. |
Restructuring Costs - (Tables)
Restructuring Costs - (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Related Costs | During the three and six months ended June 30, 2015 , we recorded restructuring charges as summarized below: Three Months Ended Six Months Ended Restructuring Charges June 30, 2015 June 30, 2015 Workforce reductions $ 61 $ 308 Contract terminations (3 ) 83 Impairment of buildings and improvements 5 82 Impairment of machinery and equipment 13 176 Total restructuring charges $ 76 $ 649 |
Segment Information - (Tables)
Segment Information - (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Segment Reporting Information [Line Items] | |
Summarized financial information | Summarized financial information is shown in the following tables: Three Months Ended Three Months Ended June 30, 2015 June 30, 2014 Segments Revenue Profit (Loss) Before Taxes Revenue Profit (Loss) Before Taxes North America $ 1,498 $ (167 ) $ 2,843 $ 340 Latin America 439 41 544 46 Europe/Africa/Russia Caspian 869 47 1,111 183 Middle East/Asia Pacific 856 51 1,104 163 Industrial Services 306 29 333 34 Total Operations 3,968 1 5,935 766 Corporate and other — (82 ) — (73 ) Interest expense, net — (53 ) — (59 ) Restructuring charges — (76 ) — — Litigation settlements — 13 — (62 ) Total $ 3,968 $ (197 ) $ 5,935 $ 572 Six Months Ended Six Months Ended June 30, 2015 June 30, 2014 Segments Revenue Profit (Loss) Before Taxes Revenue Profit (Loss) Before Taxes North America $ 3,504 $ (376 ) $ 5,619 $ 598 Latin America 932 74 1,074 101 Europe/Africa/Russia Caspian 1,764 27 2,155 330 Middle East/Asia Pacific 1,772 113 2,164 293 Industrial Services 590 39 654 61 Total Operations 8,562 (123 ) 11,666 1,383 Corporate and other — (159 ) — (138 ) Interest expense, net — (107 ) — (116 ) Restructuring charges — (649 ) — — Litigation settlements — 13 — (62 ) Total $ 8,562 $ (1,025 ) $ 11,666 $ 1,067 |
Earnings Per Share - (Tables)
Earnings Per Share - (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Earnings Per Share [Abstract] | |
Reconciliation of Weighted Average Number of Shares | A reconciliation of the number of shares used for the basic and diluted (loss) earnings per share (“EPS”) computations is as follows: Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Weighted average common shares outstanding for basic EPS 438 437 438 438 Adjustment for effect of dilutive securities - stock plans — 3 — 2 Weighted average common shares outstanding for diluted EPS 438 440 438 440 Anti-dilutive shares excluded from diluted EPS (1) 2 — 2 — Future potentially dilutive shares excluded from diluted EPS (2) 2 2 2 2 (1) The calculation of diluted net loss per share for both the three and six months ended June 30, 2015, excludes shares potentially issuable under stock-based incentive compensation plans and the employee stock purchase plan, as their effect, if included, would have been anti-dilutive. (2) Options where the exercise price exceeds the average market price are excluded from the calculation of diluted net loss or earnings per share because their effect would be anti-dilutive. |
Inventories - (Tables)
Inventories - (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Inventory, Net [Abstract] | |
Inventories, net of reserves | Inventories, net of reserves of $353 million at June 30, 2015 and $319 million at December 31, 2014 , are comprised of the following: June 30, December 31, Finished goods $ 3,173 $ 3,644 Work in process 199 227 Raw materials 163 203 Total inventories $ 3,535 $ 4,074 |
Intangible Assets - (Tables)
Intangible Assets - (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
Schedule of Finite-Lived Intangible Assets | Intangible assets are comprised of the following: June 30, 2015 December 31, 2014 Gross Carrying Amount Less: Accumulated Amortization Net Gross Carrying Amount Less: Accumulated Amortization Net Technology $ 874 $ 422 $ 452 $ 870 $ 393 $ 477 Customer relationships 487 211 276 488 191 297 Trade names 120 94 26 120 92 28 Other 18 13 5 23 13 10 Total intangible assets $ 1,499 $ 740 $ 759 $ 1,501 $ 689 $ 812 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Amortization expense of these intangibles over the remainder of 2015 and for each of the subsequent five fiscal years is expected to be as follows: Year Estimated Amortization Expense Remainder of 2015 $ 52 2016 102 2017 98 2018 92 2019 89 2020 78 |
Employee Benefit Plans - (Table
Employee Benefit Plans - (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
Schedule of Net Benefit Costs | The components of net periodic cost (benefit) are as follows for the three months ended June 30 : U.S. Pension Benefits Non-U.S. Pension Benefits Other Postretirement Benefits 2015 2014 2015 2014 2015 2014 Service cost $ 16 $ 18 $ 4 $ 4 $ 1 $ 2 Interest cost 7 7 8 9 1 1 Expected return on plan assets (12 ) (11 ) (12 ) (10 ) — — Amortization of prior service credit — — — — (3 ) (2 ) Amortization of net actuarial loss 2 2 1 1 1 — Other — — — — — 1 Net periodic cost (benefit) $ 13 $ 16 $ 1 $ 4 $ — $ 2 The components of net periodic cost (benefit) are as follows for the six months ended June 30 : U.S. Pension Benefits Non-U.S. Pension Benefits Other Postretirement Benefits 2015 2014 2015 2014 2015 2014 Service cost $ 34 $ 35 $ 8 $ 7 $ 2 $ 3 Interest cost 14 14 16 18 2 3 Expected return on plan assets (25 ) (22 ) (24 ) (20 ) — — Amortization of prior service credit — — — — (6 ) (3 ) Amortization of net actuarial loss 4 4 2 2 2 1 Curtailment gain — — — — (9 ) — Other — — — — — (3 ) Net periodic cost (benefit) $ 27 $ 31 $ 2 $ 7 $ (9 ) $ 1 |
Accumulated Other Comprehensi29
Accumulated Other Comprehensive Loss - (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Accumulated Other Comprehensive Loss | The following tables present the changes in accumulated other comprehensive loss, net of tax: Pensions and Other Postretirement Benefits Foreign Currency Translation Adjustments Accumulated Other Comprehensive Loss Balance at December 31, 2014 $ (246 ) $ (503 ) $ (749 ) Other comprehensive income (loss) before reclassifications 5 (91 ) (86 ) Amounts reclassified from accumulated other comprehensive loss (7 ) — (7 ) Deferred taxes 3 — 3 Balance at June 30, 2015 $ (245 ) $ (594 ) $ (839 ) Pensions and Other Postretirement Benefits Foreign Currency Translation Adjustments Accumulated Other Comprehensive Loss Balance at December 31, 2013 $ (217 ) $ (287 ) $ (504 ) Other comprehensive (loss) income before reclassifications (8 ) 3 (5 ) Amounts reclassified from accumulated other comprehensive loss 1 — 1 Deferred taxes (1 ) — (1 ) Balance at June 30, 2014 $ (225 ) $ (284 ) $ (509 ) |
Halliburton Merger Agreement (D
Halliburton Merger Agreement (Details) - Jun. 30, 2015 - USD ($) $ / shares in Units, $ in Millions | Total | Total |
Business Combinations [Abstract] | ||
Baker Hughes to Halliburton share exchange ratio | 1.12 | 1.12 |
Cash consideration per share from Halliburton | $ 19 | $ 19 |
Revenue divestiture threshold | $ 7,500 | $ 7,500 |
Days for DOJ review after certification by BHI & HAL | 90 days | |
Halliburton merger termination fee maximum | $ 3,500 | 3,500 |
Payments for Merger Related Costs | $ 83 | $ 111 |
Restructuring Costs - (Details)
Restructuring Costs - (Details) - Jun. 30, 2015 $ in Millions | USD ($)Employee | USD ($)Employee |
Restructuring Cost and Reserve [Line Items] | ||
Restructuring Costs | $ 76 | $ 649 |
Inventory Write-down | 194 | |
Inventory Write Down-Cost of Sales | 37 | |
Inventory Write Down-Cost of Services | 157 | |
Workforce reductions [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Severance Costs | $ 61 | $ 308 |
Restructuring and Related Cost, Number of Positions Eliminated | Employee | 13,000 | |
Restructuring and Related Cost, Number of Positions Eliminated, Inception to Date | Employee | 11,000 | 11,000 |
Curtailment gain | $ 9 | |
Payments for Restructuring | 230 | |
Restructuring Reserve, Severance | $ 87 | 87 |
Contract Termination [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Other Restructuring Costs | (3) | 83 |
Payments for Restructuring | 52 | |
Prepayments Write-Off | 14 | |
Restructuring reserve, contract termination | 17 | 17 |
Impairment of buildings and improvements | ||
Restructuring Cost and Reserve [Line Items] | ||
Impairment of Long-Lived Assets Held-for-use | 5 | 82 |
Impairment of machinery and equipment | ||
Restructuring Cost and Reserve [Line Items] | ||
Impairment of Long-Lived Assets Held-for-use | $ 13 | $ 176 |
Venezuelan Currency Devaluati32
Venezuelan Currency Devaluation - (Details) - 6 months ended Jun. 30, 2015 $ in Millions | USD ($) |
Foreign Currency [Abstract] | |
SIMADI Exchange Rate | 192 |
Foreign Currency Transaction Loss, before Tax | $ 5 |
Segment Information - (Details)
Segment Information - (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Summarized financial information [Abstract] | ||||
Revenue | $ 3,968 | $ 5,935 | $ 8,562 | $ 11,666 |
Profit (Loss) Before Taxes | (197) | 572 | (1,025) | 1,067 |
Corporate and other | ||||
Summarized financial information [Abstract] | ||||
Revenue | 0 | 0 | 0 | 0 |
Profit (Loss) Before Taxes | (82) | (73) | (159) | (138) |
Interest expense, net | ||||
Summarized financial information [Abstract] | ||||
Revenue | 0 | 0 | 0 | 0 |
Profit (Loss) Before Taxes | (53) | (59) | (107) | (116) |
Restructuring charges | ||||
Summarized financial information [Abstract] | ||||
Revenue | 0 | 0 | 0 | 0 |
Profit (Loss) Before Taxes | (76) | 0 | (649) | 0 |
Litigation settlements | ||||
Summarized financial information [Abstract] | ||||
Revenue | 0 | 0 | 0 | 0 |
Profit (Loss) Before Taxes | 13 | (62) | 13 | (62) |
North America | ||||
Summarized financial information [Abstract] | ||||
Revenue | 1,498 | 2,843 | 3,504 | 5,619 |
Profit (Loss) Before Taxes | (167) | 340 | (376) | 598 |
Latin America | ||||
Summarized financial information [Abstract] | ||||
Revenue | 439 | 544 | 932 | 1,074 |
Profit (Loss) Before Taxes | 41 | 46 | 74 | 101 |
Europe/Africa/Russia Caspian | ||||
Summarized financial information [Abstract] | ||||
Revenue | 869 | 1,111 | 1,764 | 2,155 |
Profit (Loss) Before Taxes | 47 | 183 | 27 | 330 |
Middle East/Asia Pacific | ||||
Summarized financial information [Abstract] | ||||
Revenue | 856 | 1,104 | 1,772 | 2,164 |
Profit (Loss) Before Taxes | 51 | 163 | 113 | 293 |
Industrial Services | ||||
Summarized financial information [Abstract] | ||||
Revenue | 306 | 333 | 590 | 654 |
Profit (Loss) Before Taxes | 29 | 34 | 39 | 61 |
Total Operations | ||||
Summarized financial information [Abstract] | ||||
Revenue | 3,968 | 5,935 | 8,562 | 11,666 |
Profit (Loss) Before Taxes | $ 1 | $ 766 | $ (123) | $ 1,383 |
Income Taxes - (Details)
Income Taxes - (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Income Tax Disclosure [Abstract] | ||||
Income taxes (benefit) | $ (7) | $ 213 | $ (242) | $ 372 |
Effective Income Tax Rate Reconciliation, Percent | 3.70% | 23.60% | ||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 35.00% | |||
Restructuring costs and inventory write-downs | $ 99 | |||
Income tax benefit, Amount related to Restructuring | $ 28 | $ 235 |
Earnings Per Share - (Details)
Earnings Per Share - (Details) - shares shares in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | ||
Earnings Per Share [Abstract] | |||||
Weighted average common shares outstanding for basic EPS | 438 | 437 | 438 | 438 | |
Adjustment for effect of dilutive securities - stock plans | 0 | 3 | 0 | 2 | |
Weighted average common shares outstanding for diluted EPS | 438 | 440 | 438 | 440 | |
Anti-dilutive shares excluded from diluted EPS (1) | [1] | 2 | 0 | 2 | 0 |
Future potentially dilutive shares excluded from diluted EPS (2) | [2] | 2 | 2 | 2 | 2 |
[1] | The calculation of diluted net loss per share for both the three and six months ended June 30, 2015, excludes shares potentially issuable under stock-based incentive compensation plans and the employee stock purchase plan, as their effect, if included, would have been anti-dilutive. | ||||
[2] | Options where the exercise price exceeds the average market price are excluded from the calculation of diluted net loss or earnings per share because their effect would be anti-dilutive. |
Inventories - (Details)
Inventories - (Details) - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 |
Inventory, Net [Abstract] | ||
Inventory Valuation Reserves | $ 353 | $ 319 |
Finished goods | 3,173 | 3,644 |
Work in process | 199 | 227 |
Raw materials | 163 | 203 |
Total inventories | $ 3,535 | $ 4,074 |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Intangible Assets by Type (Details) - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 |
Schedule of Finite-Lived and Indefinite-Lived Intangible Assets by Major Class [Line Items] | ||
Finite-Lived Intangible Assets, Gross | $ 1,499 | $ 1,501 |
Finite-Lived Intangible Assets, Accumulated Amortization | 740 | 689 |
Finite-Lived Intangible Assets, Net | 759 | 812 |
Technology-Based Intangible Assets | ||
Schedule of Finite-Lived and Indefinite-Lived Intangible Assets by Major Class [Line Items] | ||
Finite-Lived Intangible Assets, Gross | 874 | 870 |
Finite-Lived Intangible Assets, Accumulated Amortization | 422 | 393 |
Finite-Lived Intangible Assets, Net | 452 | 477 |
Customer Relationships | ||
Schedule of Finite-Lived and Indefinite-Lived Intangible Assets by Major Class [Line Items] | ||
Finite-Lived Intangible Assets, Gross | 487 | 488 |
Finite-Lived Intangible Assets, Accumulated Amortization | 211 | 191 |
Finite-Lived Intangible Assets, Net | 276 | 297 |
Trade Names | ||
Schedule of Finite-Lived and Indefinite-Lived Intangible Assets by Major Class [Line Items] | ||
Finite-Lived Intangible Assets, Gross | 120 | 120 |
Finite-Lived Intangible Assets, Accumulated Amortization | 94 | 92 |
Finite-Lived Intangible Assets, Net | 26 | 28 |
Other Intangible Assets | ||
Schedule of Finite-Lived and Indefinite-Lived Intangible Assets by Major Class [Line Items] | ||
Finite-Lived Intangible Assets, Gross | 18 | 23 |
Finite-Lived Intangible Assets, Accumulated Amortization | 13 | 13 |
Finite-Lived Intangible Assets, Net | $ 5 | $ 10 |
Intangible Assets - Schedule 38
Intangible Assets - Schedule of Future Estimated Amortization Expense (Details) $ in Millions | Jun. 30, 2015USD ($) |
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract] | |
Remainder of 2015 | $ 52 |
2,016 | 102 |
2,017 | 98 |
2,018 | 92 |
2,019 | 89 |
2,020 | $ 78 |
Intangible Assets - Textual Inf
Intangible Assets - Textual Information (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization expense for intangible assets included in net income | $ 25 | $ 27 | $ 51 | $ 53 |
Minimum | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-Lived Intangible Asset, Useful Life | 3 years | |||
Maximum | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-Lived Intangible Asset, Useful Life | 30 years |
Financial Instruments - (Detail
Financial Instruments - (Details) - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 |
Fair Value Disclosures [Abstract] | ||
Debt, fair value | $ 4,495 | $ 4,663 |
Debt, Long-term and Short-term, Combined Amount | $ 4,043 | $ 4,133 |
Employee Benefit Plans - (Detai
Employee Benefit Plans - (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
U.S. Pension Benefits | ||||
Components of net periodic benefit cost [Abstract] | ||||
Service cost | $ 16 | $ 18 | $ 34 | $ 35 |
Interest cost | 7 | 7 | 14 | 14 |
Expected return on plan assets | (12) | (11) | (25) | (22) |
Amortization of prior service credit | 0 | 0 | 0 | 0 |
Amortization of net actuarial loss | 2 | 2 | 4 | 4 |
Other | 0 | 0 | 0 | 0 |
Net periodic cost | 13 | 16 | 27 | 31 |
Non-U.S. Pension Benefits | ||||
Components of net periodic benefit cost [Abstract] | ||||
Service cost | 4 | 4 | 8 | 7 |
Interest cost | 8 | 9 | 16 | 18 |
Expected return on plan assets | (12) | (10) | (24) | (20) |
Amortization of prior service credit | 0 | 0 | 0 | 0 |
Amortization of net actuarial loss | 1 | 1 | 2 | 2 |
Other | 0 | 0 | 0 | 0 |
Net periodic cost | 1 | 4 | 2 | 7 |
Other Postretirement Benefits | ||||
Components of net periodic benefit cost [Abstract] | ||||
Service cost | 1 | 2 | 2 | 3 |
Interest cost | 1 | 1 | 2 | 3 |
Expected return on plan assets | 0 | 0 | 0 | 0 |
Amortization of prior service credit | (3) | (2) | (6) | (3) |
Amortization of net actuarial loss | 1 | 0 | 2 | 1 |
Curtailment gain | 9 | 0 | ||
Other | 0 | 1 | 0 | (3) |
Net periodic cost | $ 0 | $ 2 | $ (9) | $ 1 |
Commitments and Contingencies42
Commitments and Contingencies - (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2015 | Dec. 31, 2014 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ||||||
Claims amount for terminated contract | $ 67.9 | $ 67.9 | ||||
Additional claim amount for terminated contract | 57 | 57 | ||||
Breach of contract counter suit amount | 182 | 182 | ||||
Alleged damages by customer | $ 170 | $ 170 | ||||
Alleged damages by customer - interest rate | 5.00% | 5.00% | ||||
Litigation Settlement, Expense | $ (13) | $ 5 | $ 62 | $ (13) | $ 62 | $ 62 |
Reduction in estimated litigation settlement | 13 | |||||
Off-balance sheet arrangements related to letters of credit and other bank issued guarantees, total | $ 1,200 | $ 1,200 |
Accumulated Other Comprehensi43
Accumulated Other Comprehensive Loss - (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Accumulated Other Comprehensive Loss [Line Items] | ||
Beginning Balance | $ (749) | $ (504) |
Other comprehensive income (loss) before reclassifications | (86) | (5) |
Amounts reclassified from accumulated other comprehensive loss | (7) | 1 |
Deferred taxes | 3 | (1) |
Ending Balance | (839) | (509) |
Pensions and Other Postretirement Benefits | ||
Accumulated Other Comprehensive Loss [Line Items] | ||
Beginning Balance | (246) | (217) |
Other comprehensive income (loss) before reclassifications | 5 | (8) |
Amounts reclassified from accumulated other comprehensive loss | (7) | 1 |
Deferred taxes | 3 | (1) |
Ending Balance | (245) | (225) |
Foreign Currency Translation Adjustments | ||
Accumulated Other Comprehensive Loss [Line Items] | ||
Beginning Balance | (503) | (287) |
Other comprehensive income (loss) before reclassifications | (91) | 3 |
Amounts reclassified from accumulated other comprehensive loss | 0 | 0 |
Deferred taxes | 0 | 0 |
Ending Balance | $ (594) | $ (284) |