Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Oct. 19, 2016 | |
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 | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 422,794,027 |
Consolidated Condensed Statemen
Consolidated Condensed Statements of Income - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Revenue: | ||||
Sales | $ 933 | $ 1,363 | $ 2,900 | $ 4,322 |
Services | 1,420 | 2,423 | 4,531 | 8,026 |
Total revenue | 2,353 | 3,786 | 7,431 | 12,348 |
Costs and expenses: | ||||
Cost of sales | 794 | 1,138 | 2,920 | 3,703 |
Cost of services | 1,265 | 2,237 | 4,909 | 7,598 |
Research and engineering | 91 | 110 | 292 | 366 |
Marketing, general and administrative | 203 | 211 | 632 | 749 |
Impairment and restructuring charges | 304 | 98 | 1,590 | 747 |
Goodwill impairment | 17 | 0 | 1,858 | 0 |
Merger and related costs | 0 | 93 | 180 | 204 |
Merger termination fee | 0 | 0 | (3,500) | 0 |
Total costs and expenses | 2,674 | 3,887 | 8,881 | 13,367 |
Operating loss | (321) | (101) | (1,450) | (1,019) |
Loss on early extinguishment of debt | 0 | 0 | (142) | 0 |
Interest expense, net | (39) | (55) | (142) | (162) |
Loss before income taxes | (360) | (156) | (1,734) | (1,181) |
Income taxes | (70) | 0 | (589) | 242 |
Net loss | (430) | (156) | (2,323) | (939) |
Net (income) loss attributable to noncontrolling interests | 1 | (3) | 2 | 3 |
Net loss attributable to Baker Hughes | $ (429) | $ (159) | $ (2,321) | $ (936) |
Basic and diluted loss per share attributable to Baker Hughes | $ (1) | $ (0.36) | $ (5.31) | $ (2.13) |
Cash dividends per share | $ 0.17 | $ 0.17 | $ 0.51 | $ 0.51 |
Consolidated Condensed Stateme3
Consolidated Condensed Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (430) | $ (156) | $ (2,323) | $ (939) |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustments during the period | 7 | (91) | 47 | (182) |
Pension and other postretirement benefits, net of tax | 5 | 5 | 19 | 6 |
Other comprehensive income (loss) | 12 | (86) | 66 | (176) |
Comprehensive loss | (418) | (242) | (2,257) | (1,115) |
Comprehensive (income) loss attributable to noncontrolling interests | 1 | (3) | 2 | 3 |
Comprehensive loss attributable to Baker Hughes | $ (417) | $ (245) | $ (2,255) | $ (1,112) |
Consolidated Condensed Balance
Consolidated Condensed Balance Sheets - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 3,736 | $ 2,324 |
Accounts receivable - less allowance for doubtful accounts (2016 - $558; 2015 - $383) | 2,207 | 3,217 |
Inventories, net | 1,966 | 2,917 |
Deferred income taxes | 159 | 301 |
Other current assets | 934 | 509 |
Total current assets | 9,002 | 9,268 |
Property, plant and equipment - less accumulated depreciation (2016 - $6,759; 2015 - $7,378) | 4,874 | 6,693 |
Goodwill | 4,216 | 6,070 |
Intangible assets, net | 407 | 583 |
Other assets | 992 | 1,466 |
Total assets | 19,491 | 24,080 |
Current liabilities: | ||
Accounts payable | 951 | 1,409 |
Short-term debt and current portion of long-term debt | 127 | 151 |
Accrued employee compensation | 466 | 690 |
Income taxes payable | 131 | 55 |
Other accrued liabilities | 549 | 470 |
Total current liabilities | 2,224 | 2,775 |
Long-term debt | 2,895 | 3,890 |
Deferred income taxes and other tax liabilities | 382 | 252 |
Liabilities for pensions and other postretirement benefits | 631 | 646 |
Other liabilities | 122 | 135 |
Commitments and contingencies | ||
Equity: | ||
Common stock, one dollar par value (shares authorized - 750; issued and outstanding: 2016 - 423; 2015 - 437) | 423 | 437 |
Capital in excess of par value | 6,625 | 7,261 |
Retained earnings | 7,072 | 9,614 |
Accumulated other comprehensive loss | (939) | (1,005) |
Treasury stock | (22) | (9) |
Baker Hughes stockholders’ equity | 13,159 | 16,298 |
Noncontrolling interests | 78 | 84 |
Total equity | 13,237 | 16,382 |
Total liabilities and equity | $ 19,491 | $ 24,080 |
Consolidated Condensed Balance5
Consolidated Condensed Balance Sheets (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 558 | $ 383 |
Accumulated depreciation | $ 6,759 | $ 7,378 |
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 | Non-controlling Interests |
Balance at Dec. 31, 2014 | $ 18,730 | $ 434 | $ 7,062 | $ 11,878 | $ (749) | $ 0 | $ 105 |
Comprehensive loss: | |||||||
Net loss | (939) | (936) | (3) | ||||
Other comprehensive income | (176) | (176) | |||||
Activity related to stock plans | 55 | 2 | 62 | (9) | |||
Stock-based compensation | 92 | 92 | |||||
Cash dividends | (222) | (222) | |||||
Net activity related to noncontrolling interests | (35) | (24) | (11) | ||||
Balance at Sep. 30, 2015 | 17,505 | 436 | 7,192 | 10,720 | (925) | (9) | 91 |
Balance at Dec. 31, 2015 | 16,382 | 437 | 7,261 | 9,614 | (1,005) | (9) | 84 |
Comprehensive loss: | |||||||
Net loss | (2,323) | (2,321) | (2) | ||||
Other comprehensive income | 66 | 66 | |||||
Activity related to stock plans | 7 | 2 | 18 | (13) | |||
Repurchase and retirement of common stock | (763) | (16) | (747) | ||||
Stock-based compensation | 93 | 93 | |||||
Cash dividends | (221) | (221) | |||||
Net activity related to noncontrolling interests | (4) | (4) | |||||
Balance at Sep. 30, 2016 | $ 13,237 | $ 423 | $ 6,625 | $ 7,072 | $ (939) | $ (22) | $ 78 |
Consolidated Condensed Stateme7
Consolidated Condensed Statements of Changes in Equity (Parenthetical) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Statement of Stockholders' Equity [Abstract] | ||||
Cash dividends per share | $ 0.17 | $ 0.17 | $ 0.51 | $ 0.51 |
Consolidated Condensed Stateme8
Consolidated Condensed Statements of Cash Flows - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash flows from operating activities: | ||
Net loss | $ (2,323) | $ (939) |
Adjustments to reconcile net loss to net cash flows from operating activities: | ||
Depreciation and amortization | 921 | 1,326 |
Impairment of assets | 1,241 | 265 |
Goodwill impairment | 1,858 | 0 |
Inventory write-down | 556 | 194 |
Loss on early extinguishment of debt | 142 | 0 |
Provision (benefit) for deferred income taxes | 292 | (359) |
Provision for doubtful accounts | 209 | 160 |
Other noncash items | (15) | (3) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 802 | 1,692 |
Inventories | 408 | 570 |
Accounts payable | (457) | (1,289) |
Other operating items, net | (37) | (352) |
Net cash flows provided by operating activities | 3,597 | 1,265 |
Cash flows from investing activities: | ||
Expenditures for capital assets | (226) | (751) |
Proceeds from disposal of assets | 199 | 269 |
Proceeds from maturities of investment securities | 307 | 0 |
Purchases of investment securities | (308) | (217) |
Other investing items, net | 0 | (14) |
Net cash flows used in investing activities | (28) | (713) |
Cash flows from financing activities: | ||
Net repayments of short-term debt and other borrowings | (57) | (38) |
Repayment of long-term debt | (1,135) | 0 |
Repurchase of common stock | (763) | 0 |
Dividends paid | (221) | (222) |
Other financing items, net | 17 | 21 |
Net cash flows used in financing activities | (2,159) | (239) |
Effect of foreign exchange rate changes on cash and cash equivalents | 2 | (10) |
Increase in cash and cash equivalents | 1,412 | 303 |
Cash and cash equivalents, beginning of period | 2,324 | 1,740 |
Cash and cash equivalents, end of period | 3,736 | 2,043 |
Supplemental cash flows disclosures: | ||
Income taxes paid, net of refunds | 239 | 395 |
Interest paid | 183 | 192 |
Supplemental disclosure of noncash investing activities: | ||
Capital expenditures included in accounts payable | $ 25 | $ 52 |
Halliburton Merger Agreement (N
Halliburton Merger Agreement (Notes) | 9 Months Ended |
Sep. 30, 2016 | |
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 would acquire all of the outstanding shares of Baker Hughes through a merger of Baker Hughes with and into Merger Sub (the "Merger"). In accordance with the provisions of Section 9.1 of the Merger Agreement, Baker Hughes and Halliburton agreed to terminate the Merger Agreement on April 30, 2016, as a result of the failure of the Merger to occur on or before April 30, 2016 due to the inability to obtain certain specified antitrust related approvals. Halliburton paid 3.5 billion to Baker Hughes on May 4, 2016, representing the termination fee required to be paid pursuant to the Merger Agreement. Baker Hughes incurred costs related to the Merger of $180 million and $204 million for the nine months ended September 30, 2016 and 2015, respectively, including costs under our retention programs and obligations for minimum incentive compensation costs which, based on meeting eligibility criteria, have been treated as merger and related expenses. No costs related to the Merger were incurred during the three months ended September 30, 2016, compared to $93 million for the three months ended September 30, 2015. |
Summary of Significant Accounti
Summary of Significant Accounting Policies - (Notes) | 9 Months Ended |
Sep. 30, 2016 | |
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/A for the year ended December 31, 2015 . 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. Beginning in 2016, all merger and related costs are presented as a separate line item in the consolidated condensed statements of income (loss). Prior year merger and related costs were reclassified to conform to the current year presentation. New Accounting Standards Adopted In July 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-11, Simplifying the Measurement of Inventory , which requires inventory measured using average cost methods, which we utilize, to be subsequently measured at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. We adopted this guidance as of January 1, 2016 because we believe this approach will reduce the complexity in the subsequent measurement of our inventory. The guidance stipulates that the amendments in ASU No. 2015-11 shall be adopted on a prospective basis, therefore, our adoption had no impact on prior reporting periods. New Accounting Standards To Be Adopted In May 2014, the FASB issued 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 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, and is to be applied retrospectively. Early adoption is permitted. We have not completed an evaluation of the impact the pronouncement will have on our consolidated financial statements and related disclosures. In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes , which amends existing guidance on income taxes to require the classification of all deferred tax assets and liabilities as noncurrent on the balance sheet. The pronouncement is effective for annual reporting periods beginning after December 15, 2016, and may be applied either prospectively or retrospectively. Based on our current evaluation, the reclassification of deferred tax assets from current to noncurrent could be significant. We do not expect a significant reclassification for deferred tax liabilities. In February 2016, the FASB issued ASU No. 2016-02, Leases , a new standard on accounting for leases. The ASU introduces a lessee model that brings most leases on the balance sheet. The new standard also aligns many of the underlying principles of the new lessor model with those in the current accounting guidance as well as the FASB's new revenue recognition standard. However, the ASU eliminates the use of bright-line tests in determining lease classification as required in the current guidance. The ASU also requires additional qualitative disclosures along with specific quantitative disclosures to better enable users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The pronouncement is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, using a modified retrospective approach. Early adoption is permitted. We have not completed an evaluation of the impact the pronouncement will have on our consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting . The standard provides a new requirement to record all of the tax effects related to share-based payments at settlement (or expiration) through the income statement. This pronouncement is effective for annual reporting periods beginning after December 15, 2016. We have completed an evaluation of the pronouncement and determined that its impact upon adoption will not be material to our consolidated financial statements and related disclosures. In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments . The standard addresses the classification and presentation of eight specific cash flow issues that currently result in diverse practices. This pronouncement is effective for annual reporting periods beginning after December 15, 2017. The amendments in this ASU should be applied using a retrospective approach. We have not completed an evaluation of the impact the pronouncement will have on our consolidated financial statements and related disclosures, but the impact is not expected to be material. |
Impairment and Restructuring Ch
Impairment and Restructuring Charges - (Notes) | 9 Months Ended |
Sep. 30, 2016 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Other Charges | IMPAIRMENT AND RESTRUCTURING CHARGES IMPAIRMENT CHARGES We conduct impairment tests on long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable based on estimated future cash flows. Although oil prices have risen since the lows reached in February 2016 and rig counts have begun to stabilize, customer spending and activity continue to remain at low levels, thus continuing lower demand for our products and services. We consider our customers' constrained capital spending budgets for 2016 and the current outlook for low activity levels to be impairment indicators and accordingly continue to evaluate our long-lived assets for impairment. As a result of our impairment testing during the first three quarters of 2016, we have recorded impairment charges of $578 million , of which $462 million pertains to certain machinery and equipment and $116 million pertains to certain intangible assets that were written down to their estimated fair value. These assets remain in use. Specific to the third quarter of 2016, certain machinery and equipment, with an initial total carrying value of $380 million , was written down to its estimated fair value, resulting in an impairment charge of $116 million . Additionally, certain intangible assets, with an initial total carrying value of $40 million , were written down to their estimated fair values, resulting in an impairment charge of $15 million . Total impairment charges for the three months ended September 30, 2016 were $131 million . The majority of the machinery and equipment and intangible assets impaired in the third quarter of 2016 were related to our pressure pumping business in North America and Latin America. The estimated fair values for these assets were determined using discounted future cash flows. The significant Level 3 unobservable inputs used in the determination of the fair value of these assets were the estimated future cash flows and the weighted average cost of capital of 10.0% for North America and 16.0% for Latin America. RESTRUCTURING CHARGES We recognize restructuring charges for costs associated with workforce reductions, contract terminations, facility closures and impairments related to the permanent removal from service and disposal of excess machinery and equipment. As a result of the downturn in the industry in 2015 and its impact on our business outlook, we took actions to restructure and adjust our operations and cost structure to reflect current and expected activity levels to the extent allowable under the Merger Agreement with Halliburton. Following the termination of the Merger Agreement in the second quarter of 2016, to address ongoing industry challenges, we took additional actions to reduce costs, simplify our organization, refine and rationalize our operating strategy and adjust our capacity to meet expected levels of future demand. These actions necessitated workforce reductions, contract terminations, facility closures and the permanent removal from service and disposal of excess machinery and equipment. 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 nine months ended September 30, 2016 and 2015 , we recorded restructuring charges as summarized below: Three Months Ended Nine Months Ended Restructuring Charges September 30, 2016 September 30, 2015 September 30, 2016 September 30, 2015 Workforce reductions $ 58 $ 108 $ 203 $ 416 Contract terminations 55 — 146 83 Impairment of buildings and improvements 91 — 196 82 Impairment of machinery and equipment (31 ) (10 ) 467 166 Total restructuring charges $ 173 $ 98 $ 1,012 $ 747 Workforce reduction costs : During the first nine months of 2016 , we initiated workforce reductions that will result in the elimination of approximately 6,400 additional positions worldwide, of which 1,400 workforce reductions were initiated during the third quarter of 2016 . As a result, we recorded a charge for severance expense of $203 million for the nine months ended September 30, 2016 , and made payments totaling $236 million during the same period. As of September 30, 2016, we had $42 million of accrued severance. We expect that substantially all of the accrued severance will be paid by the end of 2016. Contract termination costs: During the first nine months of 2016 , we canceled supply contracts and certain facility and equipment leases and recorded a charge of $146 million . During the same period, we made payments totaling $97 million relating to contract termination costs. As of September 30, 2016, we had accrued contract termination costs of $75 million . We expect that substantially all of the accrued contract termination costs will be paid within the next twelve months. Impairment of buildings and improvements: During the first nine months of 2016 , we consolidated and closed certain facilities and recorded related impairment charges of $196 million . The total impairment of buildings and improvements for the first nine months of 2016 reduced our segment assets as follows: North America - $130 million ; Latin America - $18 million ; Europe/Africa/Russia Caspian - $41 million ; and Middle East/Asia Pacific - $7 million . These facilities have been taken out of service and will be disposed. Impairment of machinery and equipment: Following the termination of the Merger Agreement with Halliburton in the second quarter of 2016 , we evaluated our capacity and made adjustments to align our capacity to expected future operational levels and strategy. These actions impacted all product lines and as a result, we recognized an impairment loss of $467 million for the nine months ended September 30, 2016 relating to the cost to impair excess machinery and equipment to its net realizable value. The total machinery and equipment impairments reduced our segment assets as follows: North America - $200 million ; Latin America - $82 million ; Europe/Africa/Russia Caspian - $81 million ; Middle East/Asia Pacific - $71 million ; and Industrial Services - $33 million . We have been disposing of all excess machinery and equipment and expect to be substantially complete by the end of 2016. OTHER CHARGES During the nine months ended September 30, 2016 , in connection with the evaluation of our current inventory levels and expected future demand and to align with our future strategy, we recorded charges of $587 million , including $31 million of disposal costs, of which $194 million is reported in cost of sales and $393 million is reported in cost of services, to write off the carrying value of inventory deemed excess. These actions impacted all product lines. The amount of the inventory write-off recorded by segment is as follows: North America - $200 million ; Latin America - $84 million ; Europe/Africa/Russia Caspian - $143 million ; Middle East/Asia Pacific - $117 million ; and Industrial Services - $43 million . We have been disposing of the excess inventory, and were substantially completed by the end of the third quarter of 2016. During the first nine months of 2015 , we 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 product lines impacted were primarily pressure pumping and drilling and completion fluids. The second quarter of 2016 was benefited by a reversal of a loss on a firm purchase commitment of $51 million that was recorded in cost of service in the first quarter of 2016 as the contract was settled in the second quarter of 2016. |
Segment Information - (Notes)
Segment Information - (Notes) | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
Segment Information | SEGMENT INFORMATION We are a supplier of oilfield services, products, technology and systems used in 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 services, referred to as Industrial Services. The performance of our operating segments is evaluated based on operating profit (loss) before tax, which is defined as income (loss) before income taxes and before the following: net interest expense, corporate expenses, impairment and restructuring charges, goodwill impairment charges, the merger termination fee, and certain gains and losses not allocated to the operating segments. Beginning in 2016, we excluded merger and related costs from our operating segments. These costs are now presented as a separate line item in the consolidated condensed statement of income (loss). Prior year merger and related costs have been reclassified to conform to the current year presentation. Summarized financial information is shown in the following tables: Three Months Ended Three Months Ended September 30, 2016 September 30, 2015 Segments Revenue Operating Profit (Loss) Before Tax Revenue Operating Profit (Loss) Before Tax North America $ 674 $ (65 ) $ 1,368 $ (153 ) Latin America 243 20 439 51 Europe/Africa/Russia Caspian 519 22 791 98 Middle East/Asia Pacific 649 71 849 76 Industrial Services 268 30 339 44 Total Operations 2,353 78 3,786 116 Corporate — (78 ) — (26 ) Interest expense, net — (39 ) — (55 ) Impairment and restructuring charges — (304 ) — (98 ) Goodwill impairment — (17 ) — — Merger and related costs — — — (93 ) Total $ 2,353 $ (360 ) $ 3,786 $ (156 ) Nine Months Ended Nine Months Ended September 30, 2016 September 30, 2015 Segments Revenue Operating Profit (Loss) Before Tax Revenue Operating Profit (Loss) Before Tax North America $ 2,161 $ (601 ) $ 4,872 $ (512 ) Latin America 755 (289 ) 1,371 129 Europe/Africa/Russia Caspian 1,711 (254 ) 2,555 135 Middle East/Asia Pacific 2,018 (22 ) 2,621 198 Industrial Services 786 (17 ) 929 86 Total Operations 7,431 (1,183 ) 12,348 36 Corporate — (139 ) — (104 ) Loss on early extinguishment of debt — (142 ) — — Interest expense, net — (142 ) — (162 ) Impairment and restructuring charges — (1,590 ) — (747 ) Goodwill impairment — (1,858 ) — — Merger and related costs — (180 ) — (204 ) Merger termination fee — 3,500 — — Total $ 7,431 $ (1,734 ) $ 12,348 $ (1,181 ) The following table presents total assets by segment at September 30, 2016 and December 31, 2015: September 30, 2016 December 31, 2015 Segments Assets Assets North America $ 3,541 $ 6,599 Latin America 1,595 2,323 Europe/Africa/Russia Caspian 2,488 3,077 Middle East/Asia Pacific 2,867 3,441 Industrial Services 678 1,106 Shared assets 5,314 5,613 Total Operations 16,483 22,159 Corporate 3,008 1,921 Total $ 19,491 $ 24,080 Shared assets consist primarily of the assets carried at the enterprise level and include assets related to our supply chain, product line technology and information technology organizations. These assets are used to support our operating segments and consist primarily of manufacturing inventory, property, plant and equipment used in manufacturing and information technology, intangible assets related to technology, and certain deferred tax assets. All costs and expenses from these organizations, including depreciation and amortization, are allocated to our operating segments as these enterprise organizations support our global operations. Corporate assets include cash, certain facilities, and certain other noncurrent assets related to certain employee retirement plans. |
Income Taxes - (Notes)
Income Taxes - (Notes) | 9 Months Ended |
Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES For the three months ended September 30, 2016 , total income tax expense was $70 million on a loss before income taxes of $360 million , resulting in a negative effective tax rate of 19.4% . The negative effective tax rate is due primarily to the geographical mix of earnings and losses such that taxes in certain jurisdictions, including withholding and deemed profit taxes, exceed the tax benefit from the losses in other jurisdictions due to valuation allowances provided in most loss jurisdictions. In the third quarter of 2016, we filed a carryback claim for the 2015 U.S. Net Operating Loss ("NOL") to prior tax years. As a result, a $370 million current income tax receivable is reflected in other current assets in the balance sheet as of September 30, 2016. |
Earnings Per Share - (Notes)
Earnings Per Share - (Notes) | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | EARNINGS PER SHARE A reconciliation of the number of shares used for the basic and diluted loss per share computations is as follows: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Weighted average common shares outstanding for basic and diluted loss per share 430 439 437 438 Anti-dilutive shares excluded from diluted loss per share (1) 1 1 1 2 Future potentially dilutive shares excluded from diluted loss per share (2) 3 3 5 3 (1) The calculation of diluted loss per share for both the three and nine months ended September 30, 2016 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) | 9 Months Ended |
Sep. 30, 2016 | |
Inventory, Net [Abstract] | |
Inventories | INVENTORIES Inventories, net of reserves of $128 million at September 30, 2016 and $278 million at December 31, 2015 , are comprised of the following: September 30, December 31, Finished goods $ 1,744 $ 2,649 Work in process 117 132 Raw materials 105 136 Total inventories $ 1,966 $ 2,917 In the first nine months of 2016, we wrote off the carrying value of certain excess inventory resulting in a charge of $556 million , net of existing reserves of $260 million . In addition, we accrued $31 million of related disposal costs. See Note 3. "Impairment and Restructuring Charges" for further discussion. We have been disposing of the excess inventory, and were substantially completed by the end of the third quarter of 2016. |
Property, Plant and Equipment (
Property, Plant and Equipment (Notes) | 9 Months Ended |
Sep. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment Disclosure | PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are comprised of the following at September 30, 2016 and December 31, 2015: Useful Life September 30, 2016 December 31, 2015 Land $ 241 $ 263 Buildings and improvements 5 - 30 years 2,440 2,624 Machinery, equipment and other 1 - 20 years 8,952 11,184 Subtotal 11,633 14,071 Less: Accumulated depreciation 6,759 7,378 Total property, plant and equipment $ 4,874 $ 6,693 During the first nine months of 2016, we recorded impairment charges relating to property, plant and equipment totaling approximately $1,125 million . See Note 3. "Impairment and Restructuring Charges" for further discussion. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets - (Notes) | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | INTANGIBLE ASSETS The changes in the carrying amount of goodwill are detailed below by segment. North America Latin America Europe/ Africa/ Russia Caspian Middle East/ Asia Pacific Industrial Services Total Goodwill Balance at December 31, 2015 $ 3,097 $ 584 $ 1,068 $ 819 $ 502 $ 6,070 Impairments (1,549 ) — — — (309 ) (1,858 ) Currency translation adjustments 3 3 (1 ) — (1 ) 4 Balance at September 30, 2016 $ 1,551 $ 587 $ 1,067 $ 819 $ 192 $ 4,216 We perform an annual impairment test of goodwill on a qualitative or quantitative basis for each of our reporting units as of October 1 of each year, or more frequently when circumstances indicate an impairment may exist at the reporting unit level. During the second quarter of 2016, as a result of the termination of the Merger Agreement with Halliburton, we concluded it was necessary to conduct a quantitative goodwill impairment review. Our reporting units are the same as our five reportable segments. Goodwill is tested for impairment using a two-step approach. In the first step, the fair value of each reporting unit is determined and compared to the reporting unit's carrying value, including goodwill. If the fair value of a reporting unit is less than its carrying value, the second step of the goodwill impairment test is performed to measure the amount of impairment, if any. In the second step, the fair value of the reporting unit is allocated to the assets and liabilities of the reporting unit as if it had been acquired in a business combination and the purchase price was equivalent to the fair value of the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to its assets and liabilities is referred to as the implied fair value of goodwill. The implied fair value of the reporting unit's goodwill is then compared to the actual carrying value of goodwill. If the implied fair value of goodwill is less than the carrying value of goodwill, an impairment loss is recognized for the difference. We determined the fair value of our reporting units using a combination of techniques including discounted cash flows derived from our long-term plans and a market approach that provides value indications through a comparison with guideline public companies. The inputs used to determine the fair values were classified as Level 3 in the fair value hierarchy. Based on the results of our impairment test during the second quarter of 2016, we determined that goodwill of two of our reporting units was impaired, and we commenced the second step of the goodwill impairment test. We substantially completed all actions necessary in the determination of the implied fair value of goodwill in the second quarter of 2016; however, some of the estimated fair values and allocations were subject to adjustment once the valuations and other computations were completed. Accordingly, in the second quarter of 2016, we recorded an estimate of the goodwill impairment loss of $1,841 million , which consisted of $1,530 million for the North America segment and $311 million for the Industrial Services segment. During the third quarter of 2016, we finalized all valuations and computations, which resulted in an immaterial adjustment. The total impairment is reflected in the table above. The volatility that currently exists in the oil and natural gas industry and further declines in future commodity prices and customer spending could negatively impact our forecasted profitability and operating cash flows, necessitating a future goodwill impairment review. Depending on the changes in our business outlook and other assumptions underlying the fair value measurements of our reporting units, we may be required to recognize additional goodwill impairments. Intangible assets are comprised of the following: September 30, 2016 December 31, 2015 Gross Carrying Amount Less: Accumulated Amortization Net Gross Carrying Amount Less: Accumulated Amortization Net Technology $ 792 $ 439 $ 353 $ 866 $ 452 $ 414 Customer relationships 67 28 39 251 106 145 Trade names 90 78 12 108 89 19 Other 16 13 3 18 13 5 Total intangible assets $ 965 $ 558 $ 407 $ 1,243 $ 660 $ 583 During the first nine months of 2016, we recorded impairments relating to various intangible assets totaling $116 million . See Note 3. "Impairment and Restructuring Charges" for further discussion. Intangible assets are generally amortized on a straight-line basis with estimated useful lives ranging from 3 to 30 years. Amortization expense for the three and nine months ended September 30, 2016 was $17 million and $59 million , respectively, as compared to $26 million and $77 million reported in 2015 for the same periods. Amortization expense of these intangibles over the remainder of 2016 and for each of the subsequent five fiscal years is expected to be as follows: Year Estimated Amortization Expense Remainder of 2016 $ 17 2017 65 2018 60 2019 57 2020 48 2021 43 |
Indebtedness - (Notes)
Indebtedness - (Notes) | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Indebtedness | INDEBTEDNESS Total debt consisted of the following at September 30, 2016 , net of unamortized discount and debt issuance cost: September 30, 2016 December 31, 2015 6.0% Notes due June 2018 $ 200 $ 255 7.5% Senior Notes due November 2018 524 747 3.2% Senior Notes due August 2021 511 746 8.55% Debentures due June 2024 112 149 6.875% Notes due January 2029 301 394 5.125% Notes due September 2040 1,132 1,482 Other debt 242 268 Total debt 3,022 4,041 Less: short-term debt and current portion of long-term debt 127 151 Total long-term debt $ 2,895 $ 3,890 The estimated fair value of total debt at September 30, 2016 and December 31, 2015 was $3,404 million and $4,321 million , respectively, which differs from the carrying amounts of $3,022 million and $4,041 million , respectively, included in our unaudited consolidated condensed balance sheets. The fair value was determined using quoted period end market prices. In June 2016, we purchased $1.0 billion of the aggregate outstanding principal amount associated with our long-term outstanding notes and debentures, which included portions of each tranche of notes and debentures. Pursuant to a cash tender offer, the purchases resulted in the payment of an early-tender premium, including various fees, of $135 million and a pre-tax loss on the early extinguishment of debt of $142 million , which includes the premium and the write-off of a portion of the remaining original debt issue costs and debt discounts or premiums. On July 13, 2016 , we entered into a new five-year $2.5 billion committed revolving credit facility (the "2016 Credit Agreement") with commercial banks maturing in July 2021, which replaced our existing credit facility of $2.5 billion , but maintained the existing commercial paper program. The previous credit facility had a maturity date in September of 2016. The maximum combined borrowing at any time under both the 2016 Credit Agreement and the commercial paper program is $2.5 billion . The 2016 Credit Agreement contains certain covenants, which, among other things, require the maintenance of a total debt-to-total capitalization ratio, 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 2016 Credit Agreement may be accelerated. Such events of default include payment defaults to lenders under the 2016 Credit Agreement, covenant defaults and other customary defaults. To the extent we have outstanding commercial paper, the aggregate ability to borrow under the 2016 Credit Agreement is reduced. During the first nine months of 2016 , there were no direct borrowings under either the previous credit facility or the 2016 Credit Agreement, and we were in compliance with all of the covenants under both credit facilities. Under the commercial paper program, we may issue from time to time up to $2.5 billion in commercial paper with maturities of no more than 270 days. The amount available to borrow under the credit facility would be reduced by the amount of any commercial paper outstanding. At September 30, 2016 , we had no borrowings outstanding under the commercial paper program. |
Financial Instruments - (Notes)
Financial Instruments - (Notes) | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Financial Instruments | FINANCIAL INSTRUMENTS Our financial instruments include cash and cash equivalents, accounts receivable, investments, accounts payable, short and long-term debt and derivative financial instruments. Except for long-term debt, the estimated fair value of our financial instruments at September 30, 2016 and December 31, 2015 approximates their carrying value as reflected in our unaudited consolidated condensed balance sheets. For further information on the fair value of our debt, see Note 10. "Indebtedness." |
Employee Benefit Plans - (Notes
Employee Benefit Plans - (Notes) | 9 Months Ended |
Sep. 30, 2016 | |
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 September 30 : U.S. Pension Benefits Non-U.S. Pension Benefits Other Postretirement Benefits 2016 2015 2016 2015 2016 2015 Service cost $ 13 $ 15 $ 4 $ 4 $ 1 $ 1 Interest cost 7 6 7 7 1 1 Expected return on plan assets (10 ) (12 ) (9 ) (12 ) — — Amortization of prior service credit — — — — (2 ) (2 ) Amortization of net actuarial loss 3 3 1 2 — — Curtailment gain — — — — — (2 ) Other 3 8 — — — — Net periodic cost (benefit) $ 16 $ 20 $ 3 $ 1 $ — $ (2 ) The components of net periodic cost (benefit) are as follows for the nine months ended September 30 : U.S. Pension Benefits Non-U.S. Pension Benefits Other Postretirement Benefits 2016 2015 2016 2015 2016 2015 Service cost $ 39 $ 49 $ 11 $ 12 $ 3 $ 3 Interest cost 21 20 21 23 3 3 Expected return on plan assets (30 ) (37 ) (27 ) (36 ) — — Amortization of prior service credit — — — — (6 ) (8 ) Amortization of net actuarial loss 8 7 4 4 — 2 Curtailment gain — — — — — (11 ) Other 3 8 — — — — Net periodic cost (benefit) $ 41 $ 47 $ 9 $ 3 $ — $ (11 ) For all pension plans, we make annual contributions to the plans in amounts equal to or greater than amounts necessary to meet minimum governmental funding requirements. During the nine months ended September 30, 2016 , we contributed approximately $77 million to our defined benefit and other postretirement plans. We expect to contribute between $4 million and $5 million to our funded and unfunded pension plans and to make payments of between $3 million and $4 million related to other postretirement benefits in the fourth quarter of 2016. We contributed approximately $76 million to our defined contribution plans during the nine months ended September 30, 2016 . Effective April 2016, employer contributions to certain plans were suspended indefinitely. We estimate we will contribute between $11 million and $12 million to other defined contribution plans in the fourth quarter of 2016. |
Commitments and Contingencies -
Commitments and Contingencies - (Notes) | 9 Months Ended |
Sep. 30, 2016 | |
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 were filed in Delaware in connection with our Merger with Halliburton. Subsequent to the filing of the lawsuits, on April 30, 2016, the Merger Agreement with Halliburton was terminated as described in Note 2. "Halliburton Merger Agreement." • 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 Annette 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 was made subject to certain conditions, including consummation of the Merger, final documentation, and court approval. With the termination of the Merger Agreement with Halliburton, the March 18, 2015 settlement agreement is rendered null and void. On May 31, 2016, the Consolidated Case and the claims asserted therein were dismissed, save and except for plaintiffs counsel's Fee and Expense Application to the Delaware Chancery Court. On October 13, 2016, the Delaware Chancery Court ruled on plaintiffs counsel's Fee and Expense Application. The amount awarded does not have a material impact on our financial position, results of operations or cash flows. On October 9, 2014, one of our subsidiaries 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. On November 6, 2014, the customer filed its Response and Counterclaim, denying liability and counterclaiming damages for breach of contract of approximately $182 million . On March 31, 2016, the parties agreed to a settlement principally involving the purchase by the customer of certain inventory held by our subsidiary, with all other claims and counterclaims being released and discharged by each party, and the arbitral proceedings being discontinued. On April 18, 2016, all claims and counterclaims filed in the London Court of International Arbitration were released and discontinued. The settlement did not have a material impact on our financial position, results of operations or cash flows. 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). On August 3, 2016, the customer amended its claims and now alleges damages of approximately $224 million plus interest at an annual rate of prime + 5% . The hearing before the arbitration panel is scheduled to commence on January 16, 2017. In addition, on September 21, 2015, TRIUVA Kapitalverwaltungsgesellschaft mbH filed a lawsuit in the United States District Court for the Southern District of Texas, Houston Division against the Company and Baker Hughes Oilfield Operations, Inc. alleging that the plaintiff is the owner of gas storage caverns in Etzel, Germany in which the Company provided certain equipment in connection with the development of the gas storage caverns. The plaintiff further alleges that the Company supplied equipment that was either defectively designed or failed to warn of risks that the equipment posed, and that these alleged defects caused damage to the plaintiff’s property. The plaintiff seeks recovery of alleged compensatory and punitive damages of an unspecified amount, in addition to reasonable attorneys’ fees, court costs and pre-judgment and post-judgment interest. The allegations in this lawsuit are related to the claims made in the June 19, 2015 German arbitration referenced above. At this time, we are not able to predict the outcome of these claims or whether either will have any material impact on our financial position, results of operations or cash flows. On August 31, 2015, a customer of one of the Company’s subsidiaries issued a Letter of Claim pursuant to a Construction and Engineering Contract. The customer had claimed $369 million plus loss of production resulting from a breach of contract related to five electric submersible pumps installed by the subsidiary in Europe. On January 29, 2016, the Customer served its Statement of Claim, Case No. CL-2015-00584, in the Commercial Court Queen's Bench Division of the High Court of Justice. On September 20, 2016, the parties entered a settlement agreement by which all claims were released and discharged by each party. On October 6, 2016, the Commercial Court entered a Consent Order dismissing all claims in the litigation. The settlement did not have a material impact on our financial position, results of operations or cash flows. On October 30, 2015, Chieftain Sand and Proppant Barron, LLC initiated arbitration against our subsidiary, Baker Hughes Oilfield Operations, Inc., in the American Arbitration Association. The Claimant alleged that the Company failed to purchase the required sand tonnage for the contract year 2014-2015 and further alleged that the Company repudiated its yearly purchase obligations over the remaining contract term. The Claimant alleged damages of approximately $110 million plus interest, attorneys’ fees and costs. On June 2, 2016, the parties agreed to a settlement of all claims and counterclaims asserted in the Arbitration. The settlement did not have a material impact on our financial position, results of operations or cash flows. 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 Fair Labor Standards Act 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. On February 8, 2016, the Court conditionally certified certain subclasses of employees for collective action treatment. 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 July 31, 2015, Rapid Completions LLC filed a lawsuit in federal court in the Eastern District of Texas against Baker Hughes Incorporated, Baker Hughes Oilfield Operations, Inc., and others claiming infringement of U.S. Patent Nos. 6,907,936; 7,134,505; 7,543,634; 7,861,774; and 8,657,009. On August 6, 2015, Rapid Completions amended its complaint to allege infringement of U.S. Patent No. 9,074,451. On September 17, 2015, Rapid Completions and Packers Plus Energy Services Inc., sued Baker Hughes Canada Company in the Canada Federal Court on related Canadian patent 2,412,072. On April 1, 2016, Rapid Completions removed U.S. Patent No. 6,907,936 from its claims in the lawsuit. On April 5, 2016, Rapid Completions filed a second lawsuit in federal court in the Eastern District of Texas against Baker Hughes Incorporated, Baker Hughes Oilfield Operations, Inc. and others claiming infringement of U.S. Patent No. 9,303,501. These patents relate primarily to certain specific downhole completions equipment. The plaintiff has requested a permanent injunction against further alleged infringement, damages in an unspecified amount, supplemental and enhanced damages, and additional relief such as attorney’s fees and costs. During August and September 2016, the United States Patent and Trademark office agreed to institute an inter-partes review of U.S. Patent Nos 7,861,774; 7,134,505; 7,534,634; 6,907,936; 8,657,009; and 9,074,451. At this time, we are not able to predict the outcome of these claims or whether they will have a material impact on our financial position, results of operations or cash flows. On April 6, 2016, a civil Complaint against Baker Hughes Incorporated and Halliburton Company was filed by the United States of America seeking a permanent injunction restraining Baker Hughes and Halliburton from carrying out the planned acquisition of Baker Hughes by Halliburton or any other transaction that would combine the two companies. The lawsuit is styled United States of America v. Halliburton Co. and Baker Hughes Inc. , in the U.S. District Court for the District of Delaware, Case No. 1:16-cv-00233-UNA. The Complaint alleges that the proposed transaction between Halliburton and Baker Hughes would violate Section 7 of the Clayton Act. Subsequent to the filing of the Complaint, on April 30, 2016, the Merger Agreement with Halliburton was terminated as described in Note 2. "Halliburton Merger Agreement." On May 4, 2016, the United States filed a Notice of Voluntary Dismissal of the Complaint. 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 sought 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. On May 18, 2016, we received notice from the DOJ that they have closed the investigation with no further action requested of the Company. 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 $1.0 billion at September 30, 2016 . 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) | 9 Months Ended |
Sep. 30, 2016 | |
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, 2015 $ (261 ) $ (744 ) $ (1,005 ) Other comprehensive income before reclassifications 14 47 61 Amounts reclassified from accumulated other comprehensive loss 6 — 6 Deferred taxes (1 ) — (1 ) Balance at September 30, 2016 $ (242 ) $ (697 ) $ (939 ) 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 9 (182 ) (173 ) Amounts reclassified from accumulated other comprehensive loss (6 ) — (6 ) Deferred taxes 3 — 3 Balance at September 30, 2015 $ (240 ) $ (685 ) $ (925 ) The amounts reclassified from accumulated other comprehensive loss during the nine months ended September 30, 2016 and 2015 represent the amortization of prior service credit, net actuarial loss, curtailment gain and certain other items which are included in the computation of net periodic cost (benefit). See Note 12. "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 Accoun23
Summary of Significant Accounting Policies - (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
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/A for the year ended December 31, 2015 . 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. Beginning in 2016, all merger and related costs are presented as a separate line item in the consolidated condensed statements of income (loss). Prior year merger and related costs were reclassified to conform to the current year presentation. |
New Accounting Standards Updates | New Accounting Standards Adopted In July 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-11, Simplifying the Measurement of Inventory , which requires inventory measured using average cost methods, which we utilize, to be subsequently measured at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. We adopted this guidance as of January 1, 2016 because we believe this approach will reduce the complexity in the subsequent measurement of our inventory. The guidance stipulates that the amendments in ASU No. 2015-11 shall be adopted on a prospective basis, therefore, our adoption had no impact on prior reporting periods. New Accounting Standards To Be Adopted In May 2014, the FASB issued 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 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, and is to be applied retrospectively. Early adoption is permitted. We have not completed an evaluation of the impact the pronouncement will have on our consolidated financial statements and related disclosures. In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes , which amends existing guidance on income taxes to require the classification of all deferred tax assets and liabilities as noncurrent on the balance sheet. The pronouncement is effective for annual reporting periods beginning after December 15, 2016, and may be applied either prospectively or retrospectively. Based on our current evaluation, the reclassification of deferred tax assets from current to noncurrent could be significant. We do not expect a significant reclassification for deferred tax liabilities. In February 2016, the FASB issued ASU No. 2016-02, Leases , a new standard on accounting for leases. The ASU introduces a lessee model that brings most leases on the balance sheet. The new standard also aligns many of the underlying principles of the new lessor model with those in the current accounting guidance as well as the FASB's new revenue recognition standard. However, the ASU eliminates the use of bright-line tests in determining lease classification as required in the current guidance. The ASU also requires additional qualitative disclosures along with specific quantitative disclosures to better enable users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The pronouncement is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, using a modified retrospective approach. Early adoption is permitted. We have not completed an evaluation of the impact the pronouncement will have on our consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting . The standard provides a new requirement to record all of the tax effects related to share-based payments at settlement (or expiration) through the income statement. This pronouncement is effective for annual reporting periods beginning after December 15, 2016. We have completed an evaluation of the pronouncement and determined that its impact upon adoption will not be material to our consolidated financial statements and related disclosures. In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments . The standard addresses the classification and presentation of eight specific cash flow issues that currently result in diverse practices. This pronouncement is effective for annual reporting periods beginning after December 15, 2017. The amendments in this ASU should be applied using a retrospective approach. We have not completed an evaluation of the impact the pronouncement will have on our consolidated financial statements and related disclosures, but the impact is not expected to be material. |
Impairment and Restructuring 24
Impairment and Restructuring Charges - (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Related Costs | During the three and nine months ended September 30, 2016 and 2015 , we recorded restructuring charges as summarized below: Three Months Ended Nine Months Ended Restructuring Charges September 30, 2016 September 30, 2015 September 30, 2016 September 30, 2015 Workforce reductions $ 58 $ 108 $ 203 $ 416 Contract terminations 55 — 146 83 Impairment of buildings and improvements 91 — 196 82 Impairment of machinery and equipment (31 ) (10 ) 467 166 Total restructuring charges $ 173 $ 98 $ 1,012 $ 747 |
Segment Information - (Tables)
Segment Information - (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting Information [Line Items] | |
Summarized financial information | Summarized financial information is shown in the following tables: Three Months Ended Three Months Ended September 30, 2016 September 30, 2015 Segments Revenue Operating Profit (Loss) Before Tax Revenue Operating Profit (Loss) Before Tax North America $ 674 $ (65 ) $ 1,368 $ (153 ) Latin America 243 20 439 51 Europe/Africa/Russia Caspian 519 22 791 98 Middle East/Asia Pacific 649 71 849 76 Industrial Services 268 30 339 44 Total Operations 2,353 78 3,786 116 Corporate — (78 ) — (26 ) Interest expense, net — (39 ) — (55 ) Impairment and restructuring charges — (304 ) — (98 ) Goodwill impairment — (17 ) — — Merger and related costs — — — (93 ) Total $ 2,353 $ (360 ) $ 3,786 $ (156 ) Nine Months Ended Nine Months Ended September 30, 2016 September 30, 2015 Segments Revenue Operating Profit (Loss) Before Tax Revenue Operating Profit (Loss) Before Tax North America $ 2,161 $ (601 ) $ 4,872 $ (512 ) Latin America 755 (289 ) 1,371 129 Europe/Africa/Russia Caspian 1,711 (254 ) 2,555 135 Middle East/Asia Pacific 2,018 (22 ) 2,621 198 Industrial Services 786 (17 ) 929 86 Total Operations 7,431 (1,183 ) 12,348 36 Corporate — (139 ) — (104 ) Loss on early extinguishment of debt — (142 ) — — Interest expense, net — (142 ) — (162 ) Impairment and restructuring charges — (1,590 ) — (747 ) Goodwill impairment — (1,858 ) — — Merger and related costs — (180 ) — (204 ) Merger termination fee — 3,500 — — Total $ 7,431 $ (1,734 ) $ 12,348 $ (1,181 ) |
Reconciliation of Assets from Segment to Consolidated | The following table presents total assets by segment at September 30, 2016 and December 31, 2015: September 30, 2016 December 31, 2015 Segments Assets Assets North America $ 3,541 $ 6,599 Latin America 1,595 2,323 Europe/Africa/Russia Caspian 2,488 3,077 Middle East/Asia Pacific 2,867 3,441 Industrial Services 678 1,106 Shared assets 5,314 5,613 Total Operations 16,483 22,159 Corporate 3,008 1,921 Total $ 19,491 $ 24,080 |
Earnings Per Share - (Tables)
Earnings Per Share - (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
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 per share computations is as follows: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Weighted average common shares outstanding for basic and diluted loss per share 430 439 437 438 Anti-dilutive shares excluded from diluted loss per share (1) 1 1 1 2 Future potentially dilutive shares excluded from diluted loss per share (2) 3 3 5 3 (1) The calculation of diluted loss per share for both the three and nine months ended September 30, 2016 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) | 9 Months Ended |
Sep. 30, 2016 | |
Inventory, Net [Abstract] | |
Inventories, net of reserves | Inventories, net of reserves of $128 million at September 30, 2016 and $278 million at December 31, 2015 , are comprised of the following: September 30, December 31, Finished goods $ 1,744 $ 2,649 Work in process 117 132 Raw materials 105 136 Total inventories $ 1,966 $ 2,917 |
Property, Plant and Equipment28
Property, Plant and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Property, plant and equipment are comprised of the following at September 30, 2016 and December 31, 2015: Useful Life September 30, 2016 December 31, 2015 Land $ 241 $ 263 Buildings and improvements 5 - 30 years 2,440 2,624 Machinery, equipment and other 1 - 20 years 8,952 11,184 Subtotal 11,633 14,071 Less: Accumulated depreciation 6,759 7,378 Total property, plant and equipment $ 4,874 $ 6,693 |
Goodwill and Intangible Asset29
Goodwill and Intangible Assets - (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The changes in the carrying amount of goodwill are detailed below by segment. North America Latin America Europe/ Africa/ Russia Caspian Middle East/ Asia Pacific Industrial Services Total Goodwill Balance at December 31, 2015 $ 3,097 $ 584 $ 1,068 $ 819 $ 502 $ 6,070 Impairments (1,549 ) — — — (309 ) (1,858 ) Currency translation adjustments 3 3 (1 ) — (1 ) 4 Balance at September 30, 2016 $ 1,551 $ 587 $ 1,067 $ 819 $ 192 $ 4,216 |
Schedule of Finite-Lived Intangible Assets | Intangible assets are comprised of the following: September 30, 2016 December 31, 2015 Gross Carrying Amount Less: Accumulated Amortization Net Gross Carrying Amount Less: Accumulated Amortization Net Technology $ 792 $ 439 $ 353 $ 866 $ 452 $ 414 Customer relationships 67 28 39 251 106 145 Trade names 90 78 12 108 89 19 Other 16 13 3 18 13 5 Total intangible assets $ 965 $ 558 $ 407 $ 1,243 $ 660 $ 583 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Amortization expense of these intangibles over the remainder of 2016 and for each of the subsequent five fiscal years is expected to be as follows: Year Estimated Amortization Expense Remainder of 2016 $ 17 2017 65 2018 60 2019 57 2020 48 2021 43 |
Indebtedness - (Tables)
Indebtedness - (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Debt - Net of Unamortized Discount and Debt Issuance Cost | Total debt consisted of the following at September 30, 2016 , net of unamortized discount and debt issuance cost: September 30, 2016 December 31, 2015 6.0% Notes due June 2018 $ 200 $ 255 7.5% Senior Notes due November 2018 524 747 3.2% Senior Notes due August 2021 511 746 8.55% Debentures due June 2024 112 149 6.875% Notes due January 2029 301 394 5.125% Notes due September 2040 1,132 1,482 Other debt 242 268 Total debt 3,022 4,041 Less: short-term debt and current portion of long-term debt 127 151 Total long-term debt $ 2,895 $ 3,890 |
Employee Benefit Plans - (Table
Employee Benefit Plans - (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
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 September 30 : U.S. Pension Benefits Non-U.S. Pension Benefits Other Postretirement Benefits 2016 2015 2016 2015 2016 2015 Service cost $ 13 $ 15 $ 4 $ 4 $ 1 $ 1 Interest cost 7 6 7 7 1 1 Expected return on plan assets (10 ) (12 ) (9 ) (12 ) — — Amortization of prior service credit — — — — (2 ) (2 ) Amortization of net actuarial loss 3 3 1 2 — — Curtailment gain — — — — — (2 ) Other 3 8 — — — — Net periodic cost (benefit) $ 16 $ 20 $ 3 $ 1 $ — $ (2 ) The components of net periodic cost (benefit) are as follows for the nine months ended September 30 : U.S. Pension Benefits Non-U.S. Pension Benefits Other Postretirement Benefits 2016 2015 2016 2015 2016 2015 Service cost $ 39 $ 49 $ 11 $ 12 $ 3 $ 3 Interest cost 21 20 21 23 3 3 Expected return on plan assets (30 ) (37 ) (27 ) (36 ) — — Amortization of prior service credit — — — — (6 ) (8 ) Amortization of net actuarial loss 8 7 4 4 — 2 Curtailment gain — — — — — (11 ) Other 3 8 — — — — Net periodic cost (benefit) $ 41 $ 47 $ 9 $ 3 $ — $ (11 ) |
Accumulated Other Comprehensi32
Accumulated Other Comprehensive Loss - (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
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, 2015 $ (261 ) $ (744 ) $ (1,005 ) Other comprehensive income before reclassifications 14 47 61 Amounts reclassified from accumulated other comprehensive loss 6 — 6 Deferred taxes (1 ) — (1 ) Balance at September 30, 2016 $ (242 ) $ (697 ) $ (939 ) 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 9 (182 ) (173 ) Amounts reclassified from accumulated other comprehensive loss (6 ) — (6 ) Deferred taxes 3 — 3 Balance at September 30, 2015 $ (240 ) $ (685 ) $ (925 ) |
Halliburton Merger Agreement (D
Halliburton Merger Agreement (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Business Combinations [Abstract] | ||||
Merger termination fee | $ 0 | $ 0 | $ (3,500) | $ 0 |
Merger and related costs | $ 0 | $ 93 | $ 180 | $ 204 |
Impairment and Restructuring 34
Impairment and Restructuring Charges - (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016USD ($)Employee | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)Employee | Sep. 30, 2015USD ($) | |
Restructuring Cost and Reserve [Line Items] | ||||
Combined Long-Lived and Intangible Asset Impairment Charges | $ 131 | $ 578 | ||
Restructuring Costs | 173 | $ 98 | 1,012 | $ 747 |
Restructuring Reserve, Severance | 42 | 42 | ||
Restructuring reserve, contract termination | 75 | 75 | ||
Inventory Write-down and Disposal Cost Charge | 587 | |||
Inventory disposal costs | 31 | |||
Inventory Write Down-Cost of Sales | 194 | 37 | ||
Inventory Write Down-Cost of Services | 393 | 157 | ||
Inventory write-down | 556 | 194 | ||
Loss on firm purchase commitment | 51 | |||
Workforce reductions | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Severance Costs | $ 58 | 108 | $ 203 | 416 |
Restructuring and Related Cost, Expected Number of Positions Eliminated | Employee | 1,400 | 6,400 | ||
Payments for Restructuring | $ 236 | |||
Contract terminations | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Other Restructuring Costs | $ 55 | 0 | 146 | 83 |
Payments for Restructuring | 97 | |||
Impairment of buildings and improvements | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Impairment of Long-Lived Assets Held-for-use | 91 | 0 | 196 | 82 |
Impairment of machinery and equipment | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Impairment of Long-Lived Assets Held-for-use | (31) | $ (10) | 467 | $ 166 |
Machinery and Equipment | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Carrying Amount of Impaired Long-Lived Assets, Held-for-use | 380 | 380 | ||
Impairment of Long-Lived Assets Held-for-use | 116 | 462 | ||
Customer Relationships and Trade Names [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Carrying Amount of Intangible Assets, Finite-Lived | 40 | 40 | ||
Impairment of Intangible Assets, Finite-lived | $ 15 | 116 | ||
Latin America | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Fair Value Assumptions, Weighted Average Cost of Capital | 16.00% | |||
North America | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Fair Value Assumptions, Weighted Average Cost of Capital | 10.00% | |||
Latin America | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Inventory Write-down and Disposal Cost Charge | 84 | |||
Latin America | Impairment of buildings and improvements | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Impairment of Long-Lived Assets Held-for-use | 18 | |||
Latin America | Impairment of machinery and equipment | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Impairment of Long-Lived Assets Held-for-use | 82 | |||
North America | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Inventory Write-down and Disposal Cost Charge | 200 | |||
North America | Impairment of buildings and improvements | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Impairment of Long-Lived Assets Held-for-use | 130 | |||
North America | Impairment of machinery and equipment | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Impairment of Long-Lived Assets Held-for-use | 200 | |||
Europe/Africa/Russia Caspian | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Inventory Write-down and Disposal Cost Charge | 143 | |||
Europe/Africa/Russia Caspian | Impairment of buildings and improvements | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Impairment of Long-Lived Assets Held-for-use | 41 | |||
Europe/Africa/Russia Caspian | Impairment of machinery and equipment | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Impairment of Long-Lived Assets Held-for-use | 81 | |||
Middle East/Asia Pacific | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Inventory Write-down and Disposal Cost Charge | 117 | |||
Middle East/Asia Pacific | Impairment of buildings and improvements | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Impairment of Long-Lived Assets Held-for-use | 7 | |||
Middle East/Asia Pacific | Impairment of machinery and equipment | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Impairment of Long-Lived Assets Held-for-use | 71 | |||
Industrial Services | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Inventory Write-down and Disposal Cost Charge | 43 | |||
Industrial Services | Impairment of machinery and equipment | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Impairment of Long-Lived Assets Held-for-use | $ 33 |
Segment Information - (Details)
Segment Information - (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Segment Reporting Information [Line Items] | |||||
Assets | $ 19,491 | $ 19,491 | $ 24,080 | ||
Summarized financial information [Abstract] | |||||
Revenue | 2,353 | $ 3,786 | 7,431 | $ 12,348 | |
Operating Profit (Loss) Before Tax | (360) | (156) | (1,734) | (1,181) | |
Corporate | |||||
Segment Reporting Information [Line Items] | |||||
Assets | 3,008 | 3,008 | 1,921 | ||
Summarized financial information [Abstract] | |||||
Revenue | 0 | 0 | 0 | 0 | |
Operating Profit (Loss) Before Tax | (78) | (26) | (139) | (104) | |
Loss on early extinguishment of debt | |||||
Summarized financial information [Abstract] | |||||
Revenue | 0 | 0 | |||
Operating Profit (Loss) Before Tax | (142) | 0 | |||
Interest expense, net | |||||
Summarized financial information [Abstract] | |||||
Revenue | 0 | 0 | 0 | 0 | |
Operating Profit (Loss) Before Tax | (39) | (55) | (142) | (162) | |
Impairment and restructuring charges | |||||
Summarized financial information [Abstract] | |||||
Revenue | 0 | 0 | 0 | 0 | |
Operating Profit (Loss) Before Tax | (304) | (98) | (1,590) | (747) | |
Goodwill impairment | |||||
Summarized financial information [Abstract] | |||||
Revenue | 0 | 0 | 0 | 0 | |
Operating Profit (Loss) Before Tax | (17) | 0 | (1,858) | 0 | |
Merger and related costs | |||||
Summarized financial information [Abstract] | |||||
Revenue | 0 | 0 | 0 | 0 | |
Operating Profit (Loss) Before Tax | 0 | (93) | (180) | (204) | |
Merger termination fee | |||||
Summarized financial information [Abstract] | |||||
Revenue | 0 | 0 | |||
Operating Profit (Loss) Before Tax | 3,500 | 0 | |||
North America | |||||
Segment Reporting Information [Line Items] | |||||
Assets | 3,541 | 3,541 | 6,599 | ||
Summarized financial information [Abstract] | |||||
Revenue | 674 | 1,368 | 2,161 | 4,872 | |
Operating Profit (Loss) Before Tax | (65) | (153) | (601) | (512) | |
Latin America | |||||
Segment Reporting Information [Line Items] | |||||
Assets | 1,595 | 1,595 | 2,323 | ||
Summarized financial information [Abstract] | |||||
Revenue | 243 | 439 | 755 | 1,371 | |
Operating Profit (Loss) Before Tax | 20 | 51 | (289) | 129 | |
Middle East/Asia Pacific | |||||
Segment Reporting Information [Line Items] | |||||
Assets | 2,867 | 2,867 | 3,441 | ||
Summarized financial information [Abstract] | |||||
Revenue | 649 | 849 | 2,018 | 2,621 | |
Operating Profit (Loss) Before Tax | 71 | 76 | (22) | 198 | |
Industrial Services | |||||
Segment Reporting Information [Line Items] | |||||
Assets | 678 | 678 | 1,106 | ||
Summarized financial information [Abstract] | |||||
Revenue | 268 | 339 | 786 | 929 | |
Operating Profit (Loss) Before Tax | 30 | 44 | (17) | 86 | |
Total Operations | |||||
Summarized financial information [Abstract] | |||||
Revenue | 2,353 | 3,786 | 7,431 | 12,348 | |
Operating Profit (Loss) Before Tax | 78 | 116 | (1,183) | 36 | |
Europe/Africa/Russia Caspian | |||||
Segment Reporting Information [Line Items] | |||||
Assets | 2,488 | 2,488 | 3,077 | ||
Summarized financial information [Abstract] | |||||
Revenue | 519 | 791 | 1,711 | 2,555 | |
Operating Profit (Loss) Before Tax | 22 | $ 98 | (254) | $ 135 | |
Shared assets | |||||
Segment Reporting Information [Line Items] | |||||
Assets | 5,314 | 5,314 | 5,613 | ||
Continuing Operations | |||||
Segment Reporting Information [Line Items] | |||||
Assets | $ 16,483 | $ 16,483 | $ 22,159 |
Income Taxes - (Details)
Income Taxes - (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | ||||
Income taxes (benefit) | $ (70) | $ 0 | $ (589) | $ 242 |
Income (Loss) from Continuing Operations before Income Taxes, Extraordinary Items, Noncontrolling Interest | $ (360) | $ (156) | (1,734) | $ (1,181) |
Effective Income Tax Rate Reconciliation, Percent | 19.40% | |||
Current Income Taxes Receivable | $ 370 | $ 370 |
Earnings Per Share - (Details)
Earnings Per Share - (Details) - shares shares in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Weighted average common shares outstanding for basic and diluted loss per share | 430 | 439 | 437 | 438 | |
Anti-dilutive shares excluded from diluted loss per share (1) | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Anti-dilutive shares excluded from diluted loss per share (1) | [1] | 1 | 1 | 1 | 2 |
Future potentially dilutive shares excluded from diluted loss per share (2) | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Earnings Per Share, Potentially Dilutive Securities | [2] | 3 | 3 | 5 | 3 |
[1] | The calculation of diluted loss per share for both the three and nine months ended September 30, 2016 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 | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Inventory, Net [Abstract] | |||
Inventory write-down | $ 556 | $ 194 | |
Inventory Valuation Reserves | 128 | $ 278 | |
Finished goods | 1,744 | 2,649 | |
Work in process | 117 | 132 | |
Raw materials | 105 | 136 | |
Total inventories | 1,966 | $ 2,917 | |
Existing reserves on inventory write off | 260 | ||
Inventory disposal costs | $ 31 |
Property, Plant and Equipment39
Property, Plant and Equipment (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment [Line Items] | ||
Impairment of Plant, Property and Equipment | $ 1,125 | |
Land | 241 | $ 263 |
Buildings and Improvements, Gross | 2,440 | 2,624 |
Machinery and Equipment, Gross | 8,952 | 11,184 |
Property, Plant and Equipment, Gross | 11,633 | 14,071 |
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | 6,759 | 7,378 |
Property, Plant and Equipment, Net | $ 4,874 | $ 6,693 |
Building and Building Improvements | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Useful Life | 5 years | |
Building and Building Improvements | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Useful Life | 30 years | |
Machinery and Equipment | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Useful Life | 1 year | |
Machinery and Equipment | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Useful Life | 20 years |
Goodwill and Intangible Asset40
Goodwill and Intangible Assets Schedule of Carrying Amount of Goodwill by Segment (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Jun. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Goodwill [Line Items] | |||||
Goodwill at December 31, 2015 | $ 6,070 | ||||
Goodwill impairment | $ (17) | $ 0 | (1,858) | $ 0 | |
Goodwill at September 30, 2016 | 4,216 | 4,216 | |||
North America | |||||
Goodwill [Line Items] | |||||
Goodwill at December 31, 2015 | 3,097 | ||||
Goodwill impairment | $ (1,530) | (1,549) | |||
Goodwill, Translation Adjustments | 3 | ||||
Goodwill at September 30, 2016 | 1,551 | 1,551 | |||
Latin America | |||||
Goodwill [Line Items] | |||||
Goodwill at December 31, 2015 | 584 | ||||
Goodwill impairment | 0 | ||||
Goodwill, Translation Adjustments | 3 | ||||
Goodwill at September 30, 2016 | 587 | 587 | |||
Europe/Africa/Russia Caspian | |||||
Goodwill [Line Items] | |||||
Goodwill at December 31, 2015 | 1,068 | ||||
Goodwill impairment | 0 | ||||
Goodwill, Translation Adjustments | (1) | ||||
Goodwill at September 30, 2016 | 1,067 | 1,067 | |||
Middle East/Asia Pacific | |||||
Goodwill [Line Items] | |||||
Goodwill at December 31, 2015 | 819 | ||||
Goodwill impairment | 0 | ||||
Goodwill, Translation Adjustments | 0 | ||||
Goodwill at September 30, 2016 | 819 | 819 | |||
Industrial Services | |||||
Goodwill [Line Items] | |||||
Goodwill at December 31, 2015 | 502 | ||||
Goodwill impairment | (311) | (309) | |||
Goodwill, Translation Adjustments | (1) | ||||
Goodwill at September 30, 2016 | 192 | 192 | |||
Total | |||||
Goodwill [Line Items] | |||||
Goodwill at December 31, 2015 | 6,070 | ||||
Goodwill impairment | $ (1,841) | (1,858) | |||
Goodwill, Translation Adjustments | 4 | ||||
Goodwill at September 30, 2016 | $ 4,216 | $ 4,216 |
Goodwill and Intangible Asset41
Goodwill and Intangible Assets - Schedule of Intangible Assets by Type (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 | |
Schedule of Finite-Lived and Indefinite-Lived Intangible Assets by Major Class [Line Items] | |||
Finite-Lived Intangible Assets, Gross | $ 965 | $ 1,243 | |
Finite-Lived Intangible Assets, Accumulated Amortization | 558 | 660 | |
Finite-Lived Intangible Assets, Net | 407 | 583 | |
Technology-Based Intangible Assets | |||
Schedule of Finite-Lived and Indefinite-Lived Intangible Assets by Major Class [Line Items] | |||
Finite-Lived Intangible Assets, Gross | 792 | 866 | |
Finite-Lived Intangible Assets, Accumulated Amortization | 439 | 452 | |
Finite-Lived Intangible Assets, Net | 353 | 414 | |
Customer Relationships | |||
Schedule of Finite-Lived and Indefinite-Lived Intangible Assets by Major Class [Line Items] | |||
Finite-Lived Intangible Assets, Gross | 67 | [1] | 251 |
Finite-Lived Intangible Assets, Accumulated Amortization | 28 | [1] | 106 |
Finite-Lived Intangible Assets, Net | 39 | [1] | 145 |
Trade Names | |||
Schedule of Finite-Lived and Indefinite-Lived Intangible Assets by Major Class [Line Items] | |||
Finite-Lived Intangible Assets, Gross | 90 | 108 | |
Finite-Lived Intangible Assets, Accumulated Amortization | 78 | 89 | |
Finite-Lived Intangible Assets, Net | 12 | 19 | |
Other Intangible Assets | |||
Schedule of Finite-Lived and Indefinite-Lived Intangible Assets by Major Class [Line Items] | |||
Finite-Lived Intangible Assets, Gross | 16 | 18 | |
Finite-Lived Intangible Assets, Accumulated Amortization | 13 | 13 | |
Finite-Lived Intangible Assets, Net | $ 3 | $ 5 | |
[1] | During the first nine months of 2016, we recorded impairments relating to various intangible assets totaling $116 million. See Note 3. "Impairment and Restructuring Charges" for further discussion. |
Goodwill and Intangible Asset42
Goodwill and Intangible Assets - Schedule of Future Estimated Amortization Expense (Details) $ in Millions | Sep. 30, 2016USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Remainder of 2016 | $ 17 |
2,017 | 65 |
2,018 | 60 |
2,019 | 57 |
2,020 | 48 |
2,021 | $ 43 |
Goodwill and Intangible Asset43
Goodwill and Intangible Assets - Textual Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Jun. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Finite-Lived Intangible Assets [Line Items] | |||||
Goodwill impairment | $ 17 | $ 0 | $ 1,858 | $ 0 | |
Amortization expense for intangible assets included in net income | $ 17 | $ 26 | 59 | $ 77 | |
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 | ||||
Customer Relationships and Technology [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Impairment of Intangible Assets, Finite-lived | $ 15 | 116 | |||
North America | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Goodwill impairment | $ 1,530 | 1,549 | |||
Industrial Services | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Goodwill impairment | $ 311 | $ 309 |
Indebtedness - Schedule of Debt
Indebtedness - Schedule of Debt, Net of Unamortized Discount and Debt Issuance Cost (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Debt Instrument | ||
Total debt | $ 3,022 | $ 4,041 |
Less: short-term debt and current portion of long-term debt | 127 | 151 |
Total long-term debt | 2,895 | 3,890 |
6.0% Notes due June 2018 | ||
Debt Instrument | ||
Total debt | 200 | 255 |
7.5% Senior Notes due November 2018 | ||
Debt Instrument | ||
Total debt | 524 | 747 |
3.2% Senior Notes due August 2021 | ||
Debt Instrument | ||
Total debt | 511 | 746 |
8.55% Debentures due June 2024 | ||
Debt Instrument | ||
Total debt | 112 | 149 |
6.875% Notes due January 2029 | ||
Debt Instrument | ||
Total debt | 301 | 394 |
5.125% Notes due September 2040 | ||
Debt Instrument | ||
Total debt | 1,132 | 1,482 |
Other debt | ||
Debt Instrument | ||
Total debt | $ 242 | $ 268 |
Indebtedness - Textual Informat
Indebtedness - Textual Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2016 | Jun. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Jul. 13, 2016 | Dec. 31, 2015 | |
Debt Instrument | |||||||
Total debt, fair value | $ 3,404 | $ 3,404 | $ 4,321 | ||||
Total debt | 3,022 | 3,022 | $ 4,041 | ||||
Debt Instrument, Repurchased Face Amount | $ 1,000 | ||||||
Debt Instrument, Purchase Premium | 135 | ||||||
Loss on early extinguishment of debt | 0 | $ (142) | $ 0 | (142) | $ 0 | ||
Line of Credit Facility | |||||||
Line of Credit Facility, Maximum Borrowing Capacity | 2,500 | 2,500 | $ 2,500 | ||||
Combined Maximum Maturity of Commercial Paper and Line of Credit | 2,500 | $ 2,500 | |||||
Maximum maturity of commercial paper issued | 270 days | ||||||
Commercial Paper, Amount Outstanding | 0 | $ 0 | |||||
Line of Credit Facility, Amount Outstanding | $ 0 | $ 0 |
Employee Benefit Plans - (Detai
Employee Benefit Plans - (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Components of net periodic benefit cost [Abstract] | ||||
Defined Benefit Plan, Contributions by Employer | $ 77 | |||
Defined Contribution Plan, Cost Recognized | 76 | |||
U.S. Pension Benefits | ||||
Components of net periodic benefit cost [Abstract] | ||||
Service cost | $ 13 | $ 15 | 39 | $ 49 |
Interest cost | 7 | 6 | 21 | 20 |
Expected return on plan assets | (10) | (12) | (30) | (37) |
Amortization of prior service credit | 0 | 0 | 0 | 0 |
Amortization of net actuarial loss | 3 | 3 | 8 | 7 |
Curtailment gain | 0 | 0 | 0 | 0 |
Other | 3 | 8 | 3 | 8 |
Net periodic cost | 16 | 20 | 41 | 47 |
Non-U.S. Pension Benefits | ||||
Components of net periodic benefit cost [Abstract] | ||||
Service cost | 4 | 4 | 11 | 12 |
Interest cost | 7 | 7 | 21 | 23 |
Expected return on plan assets | (9) | (12) | (27) | (36) |
Amortization of prior service credit | 0 | 0 | 0 | 0 |
Amortization of net actuarial loss | 1 | 2 | 4 | 4 |
Curtailment gain | 0 | 0 | 0 | 0 |
Other | 0 | 0 | 0 | 0 |
Net periodic cost | 3 | 1 | 9 | 3 |
Other Postretirement Benefits | ||||
Components of net periodic benefit cost [Abstract] | ||||
Service cost | 1 | 1 | 3 | 3 |
Interest cost | 1 | 1 | 3 | 3 |
Expected return on plan assets | 0 | 0 | 0 | 0 |
Amortization of prior service credit | (2) | (2) | (6) | (8) |
Amortization of net actuarial loss | 0 | 0 | 0 | 2 |
Curtailment gain | 0 | (2) | 0 | (11) |
Other | 0 | 0 | 0 | 0 |
Net periodic cost | $ 0 | $ (2) | 0 | $ (11) |
Minimum | ||||
Components of net periodic benefit cost [Abstract] | ||||
Defined Contribution Plan, Estimated Future Employer Contributions in Current Fiscal Year | 11 | |||
Minimum | Pension Plan [Member] | ||||
Components of net periodic benefit cost [Abstract] | ||||
Defined Benefit Plans, Estimated Future Employer Contributions in Current Fiscal Year | 4 | |||
Minimum | Other Postretirement Benefits | ||||
Components of net periodic benefit cost [Abstract] | ||||
Defined Benefit Plans, Estimated Future Employer Contributions in Current Fiscal Year | 3 | |||
Maximum | ||||
Components of net periodic benefit cost [Abstract] | ||||
Defined Contribution Plan, Estimated Future Employer Contributions in Current Fiscal Year | 12 | |||
Maximum | Pension Plan [Member] | ||||
Components of net periodic benefit cost [Abstract] | ||||
Defined Benefit Plans, Estimated Future Employer Contributions in Current Fiscal Year | 5 | |||
Maximum | Other Postretirement Benefits | ||||
Components of net periodic benefit cost [Abstract] | ||||
Defined Benefit Plans, Estimated Future Employer Contributions in Current Fiscal Year | $ 4 |
Commitments and Contingencies47
Commitments and Contingencies - (Details) $ in Millions | 3 Months Ended |
Sep. 30, 2016USD ($) | |
Loss Contingencies [Line Items] | |
Claims amount for terminated contract | $ 67.9 |
Additional claim amount for terminated contract | 57 |
Breach of contract counter suit amount | 182 |
Fair Value Disclosure, Off-balance Sheet Risks, Face Amount, Liability | 1,000 |
Natural Gas Storage System in Northern Germany [Member] | |
Loss Contingencies [Line Items] | |
Loss Contingency, Damages Sought, Value | $ 224 |
Loss Contingency, Damages Sought, interest rate | 5.00% |
Construction and Engineering Contract in Europe [Member] | |
Loss Contingencies [Line Items] | |
Loss Contingency, Damages Sought, Value | $ 369 |
Chieftain Sand and Proppant Barron Arbitration [Member] | |
Loss Contingencies [Line Items] | |
Loss Contingency, Damages Sought, Value | $ 110 |
Accumulated Other Comprehensi48
Accumulated Other Comprehensive Loss - (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Accumulated Other Comprehensive Loss [Line Items] | ||
Beginning Balance | $ (1,005) | $ (749) |
Other comprehensive income before reclassifications | 61 | (173) |
Reclassification from Accumulated Other Comprehensive Income, Current Period, before Tax | 6 | (6) |
Deferred taxes | (1) | 3 |
Ending Balance | (939) | |
Pensions and Other Postretirement Benefits | ||
Accumulated Other Comprehensive Loss [Line Items] | ||
Beginning Balance | (261) | (246) |
Other comprehensive income before reclassifications | 14 | 9 |
Reclassification from Accumulated Other Comprehensive Income, Current Period, before Tax | 6 | (6) |
Deferred taxes | (1) | 3 |
Foreign Currency Translation Adjustments | ||
Accumulated Other Comprehensive Loss [Line Items] | ||
Beginning Balance | (744) | (503) |
Other comprehensive income before reclassifications | 47 | (182) |
Reclassification from Accumulated Other Comprehensive Income, Current Period, before Tax | 0 | 0 |
Deferred taxes | $ 0 | $ 0 |