BAKER HUGHES a GE (BHI) 10-Q 6 Aug 09 2009 Q2 Quarterly report Financial data

Document and Company Informatio

Document and Company Information (USD $)
In Millions, except Share data	6 Months Ended Jun. 30, 2009	Jul. 31, 2009	Jun. 30, 2008
Document and Company Information [Abstract]
Entity Registrant Name	BAKER HUGHES INCORPORATED
Entity Central Index Key	0000808362
Document Type	10-Q
Document Period End Date	2009-06-30
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$26,994
Entity Common Stock, Shares Outstanding		309,876,683

Consolidated Condensed Statemen

Consolidated Condensed Statements of Operations (USD $)
In Millions, except Per Share data	3 Months Ended Jun. 30, 2009	3 Months Ended Jun. 30, 2008	6 Months Ended Jun. 30, 2009	6 Months Ended Jun. 30, 2008
Revenues:
Sales	$1,156	$1,466	$2,467	$2,719
Services and rentals	1,180	1,532	2,537	2,949
Total revenues	2,336	2,998	5,004	5,668
Costs and expenses:
Cost of sales	926	1,055	1,953	1,920
Cost of services and rentals	871	942	1,804	1,846
Research and engineering	102	106	211	209
Marketing, general and administrative	284	270	565	520
Litigation settlement	0	62	0	62
Total costs and expenses	2,183	2,435	4,533	4,557
Operating income	153	563	471	1,111
Equity in income of affiliates	0	1	0	1
Gain on sale of product line	0	0	0	28
Interest expense	(34)	(17)	(69)	(32)
Interest and dividend income	3	4	4	12
Income before income taxes	122	551	406	1,120
Income taxes	(35)	(172)	(124)	(346)
Net income	$87	$379	$282	$774
Basic earnings per share	0.28	1.24	0.91	2.51
Diluted earnings per share	0.28	1.23	0.91	2.5
Cash dividends per share	0.15	0.13	0.3	0.26

Consolidated Condensed Balance

Consolidated Condensed Balance Sheets (USD $)
In Millions	Jun. 30, 2009	Dec. 31, 2008
Current Assets:
Cash and cash equivalents	$1,362	$1,955
Accounts receivable - less allowance for doubtful accounts (2009 - $ 133; 2008 - $ 74)	2,313	2,759
Inventories, net	2,024	2,021
Deferred income taxes	236	231
Other current assets	195	179
Total current assets	6,130	7,145
Property, plant and equipment, net	3,017	2,833
Goodwill	1,407	1,389
Intangible assets, net	193	198
Other assets	352	296
Total assets	11,099	11,861
Current Liabilities:
Accounts payable	737	888
Short-term borrowings and current portion of long-term debt	52	558
Accrued employee compensation	407	530
Income taxes payable	78	272
Other accrued liabilities	192	263
Total current liabilities	1,466	2,511
Long-term debt	1,777	1,775
Deferred income taxes and other tax liabilities	321	384
Liabilities for pensions and other postretirement benefits	355	317
Other liabilities	67	67
Stockholders' Equity:
Common stock	309	309
Capital in excess of par value	786	745
Retained earnings	6,465	6,276
Accumulated other comprehensive loss	(447)	(523)
Total stockholders' equity	7,113	6,807
Total liabilities and stockholders' equity	$11,099	$11,861

1_Consolidated Condensed Balanc

Consolidated Condensed Balance Sheets (Parenthetical) (USD $)
In Millions	Jun. 30, 2009	Dec. 31, 2008
Allowance for doubtful accounts	$133	$74

2_Consolidated Condensed Statem

Consolidated Condensed Statements of Cash Flows (USD $)
In Millions	6 Months Ended Jun. 30, 2009	6 Months Ended Jun. 30, 2008
Cash flows from operating activities:
Net income	$282	$774
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	355	302
Stock-based compensation costs	42	29
(Benefit)/provision for deferred income taxes	(87)	1
Gain on disposal of assets	(38)	(34)
Gain on sale of product line	0	(28)
Changes in operating assets and liabilities:
Accounts receivable	484	(283)
Inventories	33	(172)
Accounts payable	(162)	138
Accrued employee compensation and other accrued liabilities	(187)	(16)
Income taxes payable	(195)	(110)
Other	(21)	(44)
Net cash flows from operating activities	506	557
Cash flows from investing activities:
Expenditures for capital assets	(572)	(539)
Proceeds from disposal of assets	90	97
Proceeds from sale of product line	0	31
Acquisition of businesses, net of cash acquired	(35)	(72)
Net cash flows from investing activities	(517)	(483)
Cash flows from financing activities:
Net borrowings of commercial paper and other short-term debt	20	538
Repayment of long-term debt	(525)	0
Repurchases of common stock	0	(572)
Proceeds from issuance of common stock	1	51
Dividends	(92)	(81)
Excess tax benefits from stock-based compensation	0	1
Net cash flows from financing activities	(596)	(63)
Effect of foreign exchange rate changes on cash	14	6
(Decrease)/increase in cash and cash equivalents	(593)	17
Cash and cash equivalents, beginning of period	1,955	1,055
Cash and cash equivalents, end of period	1,362	1,072
Supplemental cash flows disclosures:
Income taxes paid (net of refunds)	405	433
Interest paid	90	41
Supplemental disclosure of noncash investing activities:
Capital expenditures included in accounts payable	$23	$17

General

General
	6 Months Ended Jun. 30, 2009 USD / shares
General [Abstract]
GENERAL	NOTE 1. GENERAL Nature of Operations Baker Hughes Incorporated (Company, we, our or us) is engaged in the oilfield services industry. We are a major supplier of wellbore-related products and technology services and systems and provide products and services for drilling, formation evaluation, completion and production, and reservoir technology and consulting to the worldwide oil and natural gas industry. Basis of Presentation Our unaudited consolidated condensed financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, certain information and disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) have been condensed or omitted. We believe that the presentations and disclosures herein are adequate to make the information not misleading. The unaudited consolidated condensed financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the interim periods. These unaudited consolidated condensed financial statements should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December31, 2008 (2008 Annual Report). 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 connection with the preparation of the consolidated condensed financial statements and in accordance with the recently issued Statement of Financial Accounting Standards No.165, Subsequent Events, we have evaluated all subsequent events through August6, 2009, the date the financial statements were issued. In the notes to the unaudited consolidated condensed financial statements, all dollar and share amounts in tabulations are in millions of dollars and shares, respectively, unless otherwise indicated. New Accounting Standards In September2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No.157, Fair Value Measurements (SFAS 157), which is intended to increase consistency and comparability in fair value measurements by defining fair value, establishing a framework for measuring fair value and expanding disclosures about fair value measurements. On January1, 2008, we adopted the provisions of SFAS 157 related to financial assets and liabilities and to nonfinancial assets and liabilities measured at fair value on a recurring basis and on January1, 2009, we adopted the provisions related to nonfinancial assets and liabilities that are not required or permitted to be measured at fair value on a recurring basis. There was no material impact to our consolidated condensed financial statements related to these adoptions. Additionally, in April2009, the FASB issued the following three FASB Staff Positions (FSP): (i)FSP FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transacti

Gain on Sale of Product Line

Gain on Sale of Product Line
	6 Months Ended Jun. 30, 2009 USD / shares
Gain on Sale of Product Line [Abstract]
GAIN ON SALE OF PRODUCT LINE	NOTE 2. GAIN ON SALE OF PRODUCT LINE In February2008, we sold the assets associated with the Completion and Production segments Surface Safety Systems (SSS) product line and received cash proceeds of $31million. The SSS assets sold included hydraulic and pneumatic actuators, bonnet assemblies and control systems. We recorded a pre-tax gain of $28million (approximately $18million after-tax) in the first quarter of 2008.

Stock Based Compensation

Stock Based Compensation
	6 Months Ended Jun. 30, 2009 USD / shares
Stock-Based Compensation [Abstract]
STOCK-BASED COMPENSATION	NOTE 3. STOCK-BASED COMPENSATION We grant various forms of equity based awards to directors, officers and other key employees. These equity based awards consist primarily of stock options, restricted stock awards and restricted stock units. The fair value of each stock option granted is estimated on the date of grant using a Black-Scholes option pricing model. The fair value of restricted stock awards and units is based on the market price of our common stock on the date of grant. We also have an Employee Stock Purchase Plan (ESPP) available for eligible employees to purchase shares of our common stock. Our ESPP allows eligible employees to elect to contribute on an after-tax basis between 1% and 10% of their annual pay to purchase our common stock; provided, however, an employee may not contribute more than $25,000 annually to the plan pursuant to Internal Revenue Service restrictions. Shares are purchased at a 15% discount of the fair market value of our common stock on January 1st or December31st, whichever is lower. The following summarizes stock-based compensation expense recognized in our consolidated condensed statements of operations: Three Months Ended Six Months Ended June 30, June 30, 2009 2008 2009 2008 Stock Options $ 2 $ 2 $ 9 $ 8 Restricted Stock Awards and Units 10 9 20 15 ESPP 7 3 13 6 Total $ 19 $ 14 $ 42 $ 29

Earnings Per Share

Earnings Per Share
	6 Months Ended Jun. 30, 2009 USD / shares
Earnings Per Share Disclosure [Abstract]
EARNINGS PER SHARE	NOTE 4. EARNINGS PER SHARE On January1, 2009, we adopted FSP EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities. This FSP clarifies that all unvested share-based payments that contain rights to non-forfeitable dividends are participating securities and shall be included in the computation of both basic and diluted earnings per share. FSP EITF 03-6-1 has not been applied to prior year quarters as the impact is immaterial. A reconciliation of the number of shares used for the basic and diluted EPS calculation is as follows: Three Months Ended Six Months Ended June 30, June 30, 2009 2008 2009 2008 Weighted average common shares outstanding for basic EPS 310 307 310 308 Effect of dilutive securities stock plans 1 2 Adjusted weighted average common shares outstanding for diluted EPS 310 308 310 310 Future potentially dilutive shares excluded from diluted EPS: Options with an exercise price greater than the average market price for the period 3 3 1

Inventories

Inventories
	6 Months Ended Jun. 30, 2009 USD / shares
Inventories [Abstract]
INVENTORIES	NOTE 5. INVENTORIES Inventories, net of reserves, are comprised of the following: June 30, December 31, 2009 2008 Finished goods $ 1,711 $ 1,693 Work in process 168 175 Raw materials 145 153 Total $ 2,024 $ 2,021

Property, Plant and Equipment

Property, Plant and Equipment
	6 Months Ended Jun. 30, 2009 USD / shares
Property Plant And Equipment Disclosure [Abstract]
PROPERTY, PLANT AND EQUIPMENT	NOTE 6. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are comprised of the following: June 30, December 31, 2009 2008 Land $ 87 $ 85 Buildings and improvements 976 878 Machinery and equipment 3,266 3,082 Rental tools and equipment 2,146 1,991 Subtotal 6,475 6,036 Accumulated depreciation (3,458 ) (3,203 ) Total $ 3,017 $ 2,833

Goodwill and Intangible Assets

Goodwill and Intangible Assets
	6 Months Ended Jun. 30, 2009 USD / shares
Goodwill and Intangible Assets [Abstract]
GOODWILL AND INTANGIBLE ASSETS	NOTE 7. GOODWILL AND INTANGIBLE ASSETS The changes in the carrying amount of goodwill are detailed below by segment: Drilling Completion and and Evaluation Production Total Balance as of December31, 2008 $ 951 $ 438 $ 1,389 Goodwill acquired during the period 9 9 Purchase price and other adjustments 2 2 Impact of foreign currency translation adjustments 6 1 7 Balance as of June30, 2009 $ 968 $ 439 $ 1,407 Intangible assets are comprised of the following: June 30, 2009 December 31, 2008 Gross Gross Carrying Accumulated Carrying Accumulated Amount Amortization Net Amount Amortization Net Technology-based $ 263 $ (132 ) $ 131 $ 256 $ (122 ) $ 134 Contract-based 13 (8 ) 5 12 (7 ) 5 Marketing-related 36 (13 ) 23 33 (6 ) 27 Customer-based 41 (7 ) 34 37 (5 ) 32 Other 1 (1 ) Total $ 353 $ (160 ) $ 193 $ 339 $ (141 ) $ 198 Intangible assets with finite useful lives are amortized either on a straight-line basis with estimated useful lives ranging from 1 to 20years, or on a basis that reflects the pattern in which the economic benefits of the intangible assets are expected to be realized, which range from 15 to 30years. Amortization expense for intangible assets included in net income for the three months and six months ended June30, 2009 was $12million and $19million, respectively, and is estimated to be $31million for 2009. Estimated amortization expense for each of the subsequent five fiscal years is expected to be as follows: 2010 $23million; 2011 $20million; 2012 $18million; 2013 - $15million; and 2014 $14million.

Fair Value of Certain Financial

Fair Value of Certain Financial Assets and Liabilities
	6 Months Ended Jun. 30, 2009 USD / shares
Fair Value of Certain Financial Assets and Liabilities [Abstract]
FAIR VALUE OF CERTAIN FINANCIAL ASSETS AND LIABILITIES	NOTE 8. FAIR VALUE OF CERTAIN FINANCIAL ASSETS AND LIABILITIES Financial assets and liabilities measured at fair value are based on a hierarchy that prioritizes the inputs to valuation techniques into three broad levels, which are described below: Level 1 inputs are quoted market prices in active markets for identical assets or liabilities (these are observable market inputs). Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability (includes quoted market prices for similar assets or identical or similar assets in markets in which there are few transactions, prices that are not current or vary substantially). Level 3 inputs are unobservable inputs that reflect the entitys own assumptions in pricing the asset or liability (used when little or no market data is available). The table below details the financial assets and liabilities included in our financial statements and measured at fair value as of June30, 2009 classified based on the valuation technique level. June 30, 2009 Description Total Level 1 Level 2 Level 3 Assets: Auction rate securities $ 15 $ $ $ 15 Non-qualified defined contribution plan assets 122 122 Total assets at fair value $ 137 $ $ 122 $ 15 Liabilities: Non-qualified defined contribution plan liabilities $ 122 $ $ 122 $ The following is a reconciliation of activity for the three and six months ended June30, 2009 for assets measured at fair value based on Level 3 inputs. Level 3 Fair Value Measurements Auction Rate Securities Three Months Ended June 30, 2009 Balance as of March31, 2009 $ 11 Total gains or (losses)realized: Included in earnings (or changes to net assets) Included in other comprehensive income 4 Balance as of June30, 2009 $ 15 Six Months Ended June 30, 2009 Balance as of December31, 2008 $ 11 Total gains or (losses)realized: Included in earnings (or changes to net assets) Included in other comprehensive income 4 Balance as of June30, 2009 $ 15 Auction Rate Securities The Company owns auction rate securities (ARS) that were purchased in 2007 at an original cost of $36million and have a fair value of $15million at June30, 2009. These ARS represent interests in three variable rate debt securities, which are credit linked notes that generally combine low risk assets and credit default swaps (CDS) to create a security that pays interest from the assets coupon payments and the periodic sale proceeds of the CDS. As of June30, 2009, the three notes carried split ratings, ranging from B to BBB-, as provided by Standard Poors and Fitch rating agencies. We estimate the fair value of our ARS investments using Level 3 inputs, incorporating the most recent market data available as of the valuation date. These inputs are based on the underlying structure of

Financial Instruments

Financial Instruments
	6 Months Ended Jun. 30, 2009 USD / shares
Financial Instruments [Abstract]
FINANCIAL INSTRUMENTS	NOTE 9. FINANCIAL INSTRUMENTS Fair Value of Financial Instruments During the second quarter of 2009, we adopted FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments. This FSP requires fair value disclosure of financial instruments for interim and annual reporting periods. Our financial instruments include cash and short-term investments, noncurrent investments in auction rate securities, accounts receivable, accounts payable, accrued payroll taxes, debt, foreign currency forward contracts and interest rate swaps. Except as described below, the estimated fair value of such financial instruments at June30, 2009 approximates their carrying value as reflected in our consolidated condensed balance sheet. The estimated fair value of total debt at June30, 2009 was $2,037million, which differs from the carrying amounts of $1,777million included in our consolidated condensed balance sheet. The fair value of our debt has been estimated based on quoted market prices as of June30, 2009. Foreign Currency Forward Contracts We conduct our business in over 90 countries around the world, and we are exposed to market risks resulting from fluctuations in foreign currency exchange rates. A number of our significant foreign subsidiaries have designated the local currency as their functional currency. We transact in various foreign currencies and have established a program that primarily utilizes foreign currency forward contracts to reduce the risks associated with the effects of certain foreign currency exposures. Under this program, our strategy is to have gains or losses on the foreign currency forward contracts mitigate the foreign currency transaction gains or losses to the extent practical. These foreign currency exposures typically arise from changes in the value of assets and liabilities which are denominated in currencies other than the functional currency. Our foreign currency forward contracts generally settle within 90days. We do not use these forward contracts for trading or speculative purposes. We designate these forward contracts as fair value hedging instruments pursuant to SFAS 133. The hedging objective is to mitigate exposure to fluctuations in the non functional currency exchange rate. Accordingly, we record the fair value of these contracts as of the end of our reporting period to our consolidated condensed balance sheet with changes in fair value recorded in our consolidated condensed statement of operations along with the change in fair value of the hedged item. At June30, 2009, we had outstanding foreign currency forward contracts with notional amounts aggregating $130million to hedge exposure to currency fluctuations in various foreign currencies. These contracts expire on various dates prior to September30, 2009. These contracts are designated and qualify as fair value hedging instruments. The fair value was determined using a model with Level 2 inputs including quoted market prices for contracts with similar terms and maturity dates. Interest Rate Swaps We are subject to interest rate risk on our debt and investment of cash and cash equivalents arising in the norma

Indebtedness

Indebtedness
	6 Months Ended Jun. 30, 2009 USD / shares
Indebtedness [Abstract]
INDEBTEDNESS	NOTE 10. INDEBTEDNESS During the first quarter of 2009, we repaid $325million principal amount of our 6.25% notes, which matured on January15, 2009, and $200million principal amount of our 6.00% notes, which matured on February15, 2009. On March30, 2009, we entered into a credit agreement (the 2009 Credit Agreement) for a committed $500million revolving credit facility that expires in March2010. At June30, 2009, we had $1.5billion of credit facilities with commercial banks, of which $1.0billion are committed revolving credit facilities, which includes the 2009 Credit Agreement. The committed facilities expire on July7, 2012 ($500million), unless extended, and on March29, 2010 ($500million). The $500million facility that expires on July7, 2012 provides for a one year extension, subject to the approval and acceptance by the lenders, among other conditions. In addition, this facility contains a provision to allow for an increase in the facility amount of an additional $500million, subject to the approval and acceptance by the lenders, among other conditions. Both facilities contain certain covenants which, among other things, require the maintenance of a funded indebtedness to total capitalization ratio (a defined formula per each agreement), 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 facilities may be accelerated. Such events of default include payment defaults to lenders under the facilities, covenant defaults and other customary defaults. At June30, 2009, we were in compliance with all of the covenants of both committed credit facilities. There were no direct borrowings under the committed credit facilities during the quarter ended June30, 2009. We also have an outstanding commercial paper program under which we may issue from time to time up to $1.0billion in commercial paper with maturity of no more than 270days. To the extent we have outstanding commercial paper, our ability to borrow under the facilities is reduced. At June30, 2009, we had no outstanding commercial paper.

Segment and Related Information

Segment and Related Information
	6 Months Ended Jun. 30, 2009 USD / shares
Segment and Related Information [Abstract]
SEGMENT AND RELATED INFORMATION	NOTE 11. SEGMENT AND RELATED INFORMATION We are a major supplier of wellbore-related products and technology services and systems and provide products and services for drilling, formation evaluation, completion and production, and reservoir technology and consulting to the worldwide oil and natural gas industry. In May2009, we reorganized the Company by product lines and geography; however, at this time we continue to review product line financial information as well as geographic information in deciding how to allocate resources and in assessing performance. Accordingly, we report results for our product lines under two segments: the Drilling and Evaluation segment and the Completion and Production segment. We have aggregated the product lines within each segment because they have similar economic characteristics and because the long-term financial performance of these product lines is affected by similar economic conditions. They also operate in the same markets, which includes all of the major oil and natural gas producing regions of the world. The Drilling and Evaluation segment consists of the following product lines: drilling fluids, oilfield drill bits, drilling, measurement-while-drilling and logging-while-drilling, wireline formation evaluation, wireline completion services and reservoir technology and consulting. The Drilling and Evaluation segment provides products and services used to drill and evaluate oil and natural gas wells as well as consulting services used in the analysis of oil and gas reservoirs. The Completion and Production segment consists of the following product lines: workover, fishing and completion equipment, oilfield specialty chemicals, electrical submersible pumps, progressing cavity pumps, production optimization, permanent monitoring, integrated operations and project management. The Completion and Production segment provides equipment and services used from the completion phase through the productive life of oil and natural gas wells. The performance of our segments is evaluated based on segment profit (loss), which is defined as income before income taxes, interest expense, interest and dividend income, and certain gains and losses not allocated to the segments. Summarized financial information is shown in the following table. Drilling Completion and and Total Corporate Evaluation Production Oilfield and Other Total Revenues Three months ended June30, 2009 $ 1,116 $ 1,220 $ 2,336 $ $ 2,336 Three months ended June30, 2008 1,528 1,470 2,998 2,998 Six months ended June30, 2009 $ 2,419 $ 2,585 $ 5,004 $ $ 5,004 Six months ended June30, 2008 2,919 2,749 5,668 5,668 Segment profit (loss) Three months ended June30, 2009 $ 73 $ 166 $ 239 $ (117 ) $ 122 Three months ended June30, 2008 367 322 689 (138 ) 551

Employee Benefit Plans

Employee Benefit Plans
	6 Months Ended Jun. 30, 2009 USD / shares
Employee Benefit Plans [Abstract]
EMPLOYEE BENEFIT PLANS	NOTE 12. EMPLOYEE BENEFIT PLANS We have noncontributory defined benefit pension plans (Pension Benefits) covering employees primarily in the U.S., the U.K. and Germany. We also provide certain postretirement health care benefits (other postretirement benefits), through an unfunded plan, to substantially all U.S. employees who retire and have met certain age and service requirements. The components of net periodic benefit cost are as follows for the three months ended June30: Other Postretirement U.S. Pension Benefits Non-U.S. Pension Benefits Benefits 2009 2008 2009 2008 2009 2008 Service cost $ 7 $ 8 $ 1 $ 1 $ 2 $ 2 Interest cost 5 5 4 5 3 3 Expected return on plan assets (6 ) (10 ) (4 ) (6 ) Amortization of net loss 3 Curtailment loss 1 Net periodic benefit cost $ 10 $ 3 $ 1 $ $ 5 $ 5 The components of net periodic benefit cost are as follows for the six months ended June30: Other Postretirement U.S. Pension Benefits Non-U.S. Pension Benefits Benefits 2009 2008 2009 2008 2009 2008 Service cost $ 14 $ 15 $ 1 $ 1 $ 4 $ 4 Interest cost 10 9 7 9 5 5 Expected return on plan assets (12 ) (19 ) (7 ) (11 ) Amortization of prior service cost 1 Amortization of net loss 6 1 1 Curtailment loss 1 Net periodic benefit cost $ 19 $ 5 $ 2 $ $ 10 $ 9 During the first six months of 2009, there was a reduction in our work force resulting in a significant reduction in the expected years of future service of our employees in certain pension plans and other post retirement benefit plans. In connection with this, in the second quarter of 2009, we recorded a one-time curtailment loss of $1million. As a result of this curtailment, the impacted plans have been remeasured as of June30, 2009 using a discount rate of 6.2% as compared to 6.4% at December31, 2008. The curtailment and remeasurement resulted in a net increase in our liabilities for pensions and other postretirement benefits and accumulated other comprehensive loss of $14million.

Commitments and Contingencies

Commitments and Contingencies
	6 Months Ended Jun. 30, 2009 USD / shares
Commitments and Contingencies [Abstract]
COMMITMENTS AND CONTINGENCIES	NOTE 13. COMMITMENTS AND CONTINGENCIES Litigation We are involved in litigation or proceedings that have arisen in our ordinary business activities. We insure against these risks 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 and future legal proceedings. Many of these 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. We record accruals for the uninsured portion of losses. The accruals for losses are calculated by estimating losses for claims using historical claim data, specific loss development factors and other information as necessary. On April26, 2007, the United States District Court, Southern District of Texas, Houston Division (the Court) unsealed a three-count criminal information (the Information) that had been filed against us as part of the execution of a Deferred Prosecution Agreement (the DPA) between us and the Department of Justice (DOJ). The three counts arose out of payments made to an agent in connection with a project in Kazakhstan and included conspiracy to violate the Foreign Corrupt Practices Act (FCPA), a substantive violation of the antibribery provisions of the FCPA, and a violation of the FCPAs books-and-records provisions. All three counts related to our operations in Kazakhstan during the period from 2000 to 2003. The DPA relates to our March29, 2002 announcement that the SEC and the DOJ were conducting investigations into allegations of violations of law relating to Nigeria and other related matters. In connection therewith, the SEC had issued a formal order of investigation into possible violations of provisions under the FCPA and issued subpoenas regarding our operations in Nigeria, Angola and Kazakhstan. On April26, 2009, the DPA expired and pursuant to a motion filed by the DOJ, the Court issued an order on April28, 2009, dismissing the Information on the basis that the Company had fully complied with its obligations under the DPA. The DPA also required us to retain an independent monitor (the Monitor) for a term of three years to assess and make recommendations about our compliance policies and procedures and our implementation of those procedures. In addition, the Monitor was required to perform two follow up reviews and to certify whether the anti-bribery compliance program of Baker Hughes, including its policies and procedures, is appropriately designed and implemented to ensure compliance with the FCPA, U.S. commercial bribery laws and foreign bribery laws. On April8, 2009, the Monitor issued his report for the first of such follow up reviews, and the Monitor issued his certification that our compliance program is appropriately designed and implemented to ensure su

Comprehensive Income

Comprehensive Income (Loss)
	6 Months Ended Jun. 30, 2009 USD / shares
Comprehensive Income (Loss) [Abstract]
COMPREHENSIVE INCOME (LOSS)	NOTE 14. COMPREHENSIVE INCOME (LOSS) Comprehensive income (loss)includes all changes in equity during a period except those resulting from investments by and distributions to owners. The components of our comprehensive income (loss), net of related tax, are as follows: Three Months Ended Six Months Ended June 30, June 30, 2009 2008 2009 2008 Net income $ 87 $ 379 $ 282 $ 774 Other comprehensive income (loss): Foreign currency translation adjustments during the period 98 (8 ) 82 20 Pension and other postretirement benefits (12 ) 3 (10 ) (2 ) Unrealized gain/(loss) on available-for-sale securities 4 (7 ) 4 (7 ) Total comprehensive income $ 177 $ 367 $ 358 $ 785 Total accumulated other comprehensive loss consisted of the following: June 30, December 31, 2009 2008 Foreign currency translation adjustments $ (260 ) $ (342 ) Pension and other postretirement benefits (191 ) (181 ) Unrealized gain on available-for-sale securities 4 Total accumulated other comprehensive loss $ (447 ) $ (523 )