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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998

OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934

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COMMISSION FILE NUMBER 1-9397

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BAKER HUGHES INCORPORATED
(Exact Name of Registrant as Specified in its Charter)

DELAWARE 76-0207995
(State or Other Jurisdiction (I.R.S. Employer Identification No.)
of Incorporation or Organization)

3900 ESSEX LANE, HOUSTON, TEXAS 77027-5177
(Address of Principal Executive Offices) (Zip Code)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713)439-8600

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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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Common Stock, $1 Par Value New York Stock Exchange
Pacific Exchange
Swiss Exchange

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

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At March 3, 1999, the registrant had outstanding 327,204,472 shares of
Common Stock, $1 par value. The aggregate market value of the Common Stock on
such date (based on the closing price on the New York Stock Exchange) held by
nonaffiliates was approximately $5,917,274,025.

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DOCUMENTS INCORPORATED BY REFERENCE

Portions of Registrant's Annual Report to Stockholders for 1998 are
incorporated by reference into Parts I and II.

Portions of Registrant's 1998 Proxy Statement for the Annual Meeting of
Stockholders to be held April 28, 1999 are incorporated by reference into Part
III.

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2
PART I

ITEM 1. BUSINESS

The Company is engaged in the oilfield and process industry segments.
In addition, the Company manufactures and sells other products and provides
services to industries that are not related to the oilfield or continuous
process industries. The Company conducts certain of its operations through joint
ventures, partnerships or alliances.

The Company is a Delaware corporation that was formed in connection
with the combination of Baker International Corporation ("Baker") and Hughes
Tool Company ("Hughes") consummated on April 3, 1987 (the "Combination"). The
Company acquired Western Atlas Inc. ("Western Atlas") in a merger completed on
August 10, 1998. As used herein, the "Company" refers to Baker Hughes
Incorporated and its subsidiaries, unless the context clearly indicates
otherwise.

For additional industry segment information for the year ended December
31, 1998, the three month period ended December 31, 1997 and for each of the two
years in the period ended September 30, 1997, see Note 13 of Notes to
Consolidated Financial Statements which Notes are incorporated herein by
Reference in Part II, Item 8 ("Notes to Consolidated Financial Statements").

OILFIELD

The Company is a leading supplier of reservoir-centered products,
services and systems to the worldwide oil and gas industry. Through its eight
oilfield service companies, the Company provides products and services for oil
and gas exploration, drilling, completion and production.

The Company provides seismic data acquisition and processing services
to assist oil and gas companies in evaluating the producing potential of
sedimentary basins and in locating productive zones. The Company conducts
seismic surveys on land, in deep waters and across shallow-water transition
zones worldwide. Seismic information can reduce field development and production
costs by reducing turnaround time, lowering drilling risks and minimizing the
number of wells necessary to explore and develop reservoirs. The Company's major
competitors in providing these services are Geco-Prakla, a division of
Schlumberger, Ltd. ("Schlumberger"), Compagnie Generale de Geophysique and
Petroleum Geo-Services ASA.

The Company manufactures and markets a broad range of roller cutter
bits and fixed cutter diamond bits, ranging upward from 3-3/4 inches in
diameter, which are designed for drilling in specific types of rock formations,
and slimhole bits for the worldwide oil, gas and geothermal industries. The
Company believes that it is a leading worldwide manufacturer of bits and that
its principal competitors in this area are Smith International, Inc. ("Smith"),
the Security DBS operating unit of Halliburton Company ("Halliburton") and Reed
Tool Company and Hycalog, each operating units of Schlumberger.

The Company also produces and markets drilling fluids (muds) for oil
and gas well drilling,

as well as chemical additives and specialty chemicals, and provides technical
services in connection with their respective formulation and use. Drilling
fluids, that are usually comprised of barite and bentonite combined with other
chemicals in a water, chemical or oil base, are used to clean the bottom of a
hole by removing cuttings and transporting them to the surface, to cool the bit
and drill string, to control formation pressures and to seal porous well
formations. The Company also furnishes on-site, around-the-clock laboratory
analysis and examination of circulated and recovered drilling fluids and
recovered drill cuttings to detect the presence of hydrocarbons and identify the
formations penetrated by the drill bit. The Company's principal competitors with
regard to these products and services are M-I Drilling Fluids, an operating unit
of Smith, and Baroid Corporation, a subsidiary of Halliburton.

The Company believes that it is a leading supplier of directional and
horizontal drilling services, downhole motors, drilling fluid systems, coring
services, subsurface surveying and measurement-while-drilling services to the
oil and gas industry. The Company's specialized positive displacement downhole
motors help operators to steer wells into subsurface geologic strata where oil
and gas may be found (often referred to as pay zones) for conventional
directional drilling and short, medium and long-radius horizontal drilling. A
full range of measurement-while-drilling systems that the Company provides use
mud-pulse telemetry to deliver real-time downhole information on the drilling
process and the reservoir. The systems are available for every application, from
directional-only service through real-time logging-while-drilling. With regard
to these products and services, the Company competes principally with
Halliburton Energy Services, an operating unit of Halliburton, Sperry-Sun
Drilling Services, a subsidiary of Halliburton, and Anadrill, a subsidiary of
Schlumberger.

The Company provides a broad range of well logging and data analysis
services for various phases of drilling and production. These services are
designed to measure rock and fluid properties of subsurface geologic formations.
New-generation high-resolution logging instruments, together with faster data
transmission techniques, have often provided for the transfer of larger amounts
of data from the borehole to the surface in less time than older techniques.
These new-generation tools, used in combination with other logging instruments
and sensors to obtain simultaneous multiple measurements, have often resulted in
more accurate reservoir evaluation while reducing logging turnaround time than
the older techniques, and consequently can lower drilling costs and risks. The
Company's largest competitors in this market include Schlumberger and
Halliburton.

After oil and gas wells are drilled, the operator must complete and
equip the well using production tools, serviced to achieve safety and long-term
productivity, protect the well against pressure and corrosion damage and
stimulate or repair the well during its productive life. The Company provides a
broad range of production tools and oilfield services to meet many of these
needs.

Packers are a major product of the Company. The Company's customers
use packers to seal the space between the production tubing and the casing to
protect the casing from reservoir pressures and corrosive formation fluids and
also to maintain the separation of productive zones. The Company believes that
it is a leading worldwide producer of packers and that its principal

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competitors for sale of packers are Dresser Oil Tools and Halliburton Energy
Services, operating units of Halliburton, and Camco, an operating division of
Schlumberger.

The Company manufactures and sells liner hanger tools and equipment.
The Company's customers use these tools and equipment to suspend and set strings
of casing pipe in oil and gas wells. The Company believes that it is a leading
worldwide producer of liner hangers and its primary competitor in this area is
the Nodeco division of Weatherford International Inc. ("Weatherford").

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The Company provides fishing tool services using specialized tools to
locate, dislodge and retrieve twisted off, dropped or damaged pipe, tools or
other objects from the well bore. The Company's major fishing tool competitors
are Weatherford and Smith. The Company also provides inflatable and mechanical
packers that its customers use in testing the potential of a well during the
drilling phase prior to installation of casing, and under-reamers, which enlarge
the well bore at any point below the surface to form a production cavity.

The Company offers gravel packing, a specialized service that prevents
sand from entering the well bore and reducing productivity, as well as other
sand control services. It also provides tubing conveyed perforating services to
provide paths through the casing and cement sheath in wells so that oil and gas
can enter the well bore from the formation. Major gravel packing competitors
include Dowell, a division of Schlumberger, and Halliburton Energy Services.
Tubing conveyed perforating competitors include the Well Testing division of
Schlumberger and Halliburton Energy Services and Dresser Oil Tools, both
operating units of Halliburton. The Company's gravel packing products and
services also compete with frac-pack services that pressure pumping companies,
such as BJ Services Company, Dowell and Halliburton Energy Services, provide.

The Company also provides other completion, remedial and production
products and services, including control systems for surface and subsurface
safety valves and surface flow lines and flow regulators and packers used in
secondary recovery waterflood projects. The Company's primary competitors for
these products and services are Halliburton Energy Services and Camco.

The Company is a leader in proprietary technology for oilfield electric
submersible pumping ("ESP") systems, which help raise oil to the surface. It
also provides variable speed motor controllers and specialty armored power
cables. Its major competition in ESPs is Reda, a division of Schlumberger.

The Company plays a leading role in project management and the
integration of products and services from the Company and other service
producers. The Company seeks clients and partners for oil and gas exploration
and production opportunities who value the subsurface information technologies
that the Company possesses to exploit the full potential of hydrocarbon-bearing
properties. The Company has multidisciplinary project teams of geophysicists,
geologists and reservoir engineers that offer a wide range of experience in
exploration and production techniques, including integrated geoscience
subsurface analysis, reservoir characterization economic and risk analysis,
drilling recommendations and project management and implementation. Halliburton
and Schlumberger are the principal competitors with this capability.

Recent new technology that the Company has offered its customers
includes downhole hydrocyclone oil/water separation systems, multi-lateral
drilling and completion systems, coiled tubing drilling systems, remote
actuated, downhole completion tools and rotary closed loop drilling systems.

The Company manufactures oilfield specialty chemicals and integrated
chemical technology solutions for petroleum production, transportation and
refining. These chemicals include specialty chemicals that production segments
of the petroleum industry use, as well as industrial chemicals that customers
use in refining, waste water treatment, mineral handling and cooling and boiler
water processes. The Company also provides chemical technology solutions to

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other industrial markets throughout the world including petrochemicals, fuel
additives, plastics, imaging, adhesives, steel and crop protection. The Company
believes it is a leader in worldwide specialty oilfield chemicals and that its
primary competitor is the Nalco-Exxon joint venture. The Company designs and
manufactures systems for the treatment of produced water and its reinjection.

PROCESS

The Company provides a broad range of solid/liquid separation equipment
and systems to concentrate its customers' product or separate and remove waste
material in the mineral, industrial, pulp and paper and municipal industries.
The Company's product lines include vacuum filters (drum, disc and horizontal
belt), filter presses, belt presses, granular media filters, thickeners,
clarifiers, flotation cells and aeration equipment. The Company's principal
competitors for sales for mineral and industrial applications are Krauss Maffei,
Outokumpu and Svedala; the Company's principal competitors for sales for
municipal applications are Envirex and General Filter, both business units of
United States Filter Corporation ("U.S. Filter"), and Walker Process; and the
Company's principal competitor for sales for pulp and paper applications is
Ahlstrom.

The Company designs and manufactures process solutions for the oilfield
and refinery markets. These solutions include equipment for the processing and
conditioning of seawater for injection, desalting oil streams and separating oil
from water in oil production streams, with products consisting of fine filters,
coarse filters, nutshell filters, flotation units, hydrocyclones, coalescers,
deaeration towers, electrochlorinators and electrostatic desalters. The primary
competitors in this area are Kvaerner, Serck Baker and U.S. Filter.

The Company manufactures a broad range of continuous and batch
centrifuges and specialty filters that are each widely used in the
environmental, chemical, minerals and pharmaceutical markets to dewater or
classify process and waste streams. The Company's principal competitors in its
continuous centrifuge product line are Alfa-Lavel/Sharples, Tomoe and Flottweg.
There are numerous small and large companies that compete in the batch
centrifuge and filter product lines.

The Company provides parts and service for all of its process equipment
product lines through a global network of personnel and facilities strategically
located to serve the customer community. The Company also offers facilities
operation services for processes that utilize many of the Company's process
equipment product and service lines.

MARKETING, COMPETITION AND ECONOMIC CONDITIONS

The Company markets the products of each of its principal industry
segments primarily through the Company's own sales organizations on a product
line basis, although certain of its products and services are marketed through
supply stores, independent distributors or sales representatives. The Company
ordinarily provides technical and advisory services to assist in its customer's
use of the Company's products and services. Stockpoints and service centers for
oilfield products and services are located in areas of drilling and production
activity throughout the world. The Company markets its oilfield products and
services in nearly all of the oil producing countries. Stockpoints and service
centers for process products and services are located near the Company's

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customers' operations, and the Company markets process products and services
throughout the world. In certain areas outside the United States where direct
product sales efforts are not practicable, the Company utilizes licensees, sales
representatives and distributors.

The products of each of the Company's principal industry segments are
sold in highly competitive markets, and its revenues and earnings can be
affected by changes in competitive prices, fluctuations in the level of activity
in major markets, general economic conditions and governmental regulation. The
Company competes effectively with the oil and gas industry's largest integrated
oilfield service providers. The Company believes that the principal competitive
factors in the industries that it serves are product and service quality and
availability, technical proficiency and price.

Further information concerning Marketing, Competition and Economic
Conditions is contained under the caption "Business Environment" in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the 1998 Annual Report to Stockholders and is incorporated herein
by reference.

INTERNATIONAL OPERATIONS

The Company's operations are subject to the risks inherent in doing
business in multiple countries with various legal and political policies. These
risks include war, boycotts, political changes, expropriation, currency
restrictions, taxes and changes in currency exchange rates. Although it is
impossible to predict the likelihood of such occurrences or their effect on the
Company, management believes these risks to be acceptable. However, there can be
no assurance that an occurrence of any one of these events would not have a
material adverse effect on its operations.

RESEARCH AND DEVELOPMENT; PATENTS

At December 31, 1998, the equivalent of approximately 800 full-time
employees were engaged in research and development activities directed primarily
toward improvement of existing products and services, design of specialized
products to meet specific customer needs and development of new products and
processes. For information regarding the amounts of research and development
expense for the year ended December 31, 1998, the three month period ended
December 31, 1997 and for each of the two years in the period ended September
30, 1997, see Note 17 of Notes to Consolidated Financial Statements.

The Company has followed a policy of seeking patent protection both
inside and outside the United States for products and methods that appear to
have commercial significance. The Company believes its patents and trademarks to
be adequate for the conduct of its business, and while it regards patent and
trademark protection important to its business and future prospects, it
considers its established reputation, the reliability of its products and the
technical skills of its personnel to be more important. The Company aggressively
pursues protection of its patents against patent infringement worldwide.

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BUSINESS DEVELOPMENTS

OILFIELD

Oilfield Operations consists of eight operating divisions: Baker Atlas,
Baker Hughes INTEQ, Baker Oil Tools, Baker Petrolite, Centrilift, E&P Solutions,
Hughes Christensen and Western Geophysical. Business developments during fiscal
1998 have positioned these divisions among the market leaders in providing
products, services and technologies in the drilling, completion and production
processes.

In August 1998, the Company completed its acquisition of Western Atlas,
which specializes in land, marine and transition-zone seismic data acquisitions
and processing services, well-logging and completion services and reservoir
characterization and project management services. With the combination of the
Company and Western Atlas, the Company has enhanced its strategic position in
providing integrated "life of field" and "reservoir management" related products
and services. These products and services span the planning, exploration,
development and production phases of an oil and gas reservoir, integrating the
Company's drilling, completion and production technologies with Western Atlas'
reservoir information technologies. This acquisition also gave the Company the
ability to provide integrated product and service offerings and project
management on an outsourced basis by combining the Company's drilling solutions
with Western Atlas' seismic and reservoir information technologies.

During the year ended December 31, 1998, the Company acquired and
disposed of several additional oilfield businesses, none of which had a material
effect on the Company's results of operations.

PROCESS

Baker Process provides separation technologies, continuous process
solutions and centrifuges and filters for the mineral, industrial, pulp and
paper, municipal and petroleum industries.

During the year ended December 31, 1998, the Company acquired several
additional process businesses, none of which had a material effect on the
Company's results of operations.

EMPLOYEES

At December 31, 1998, the Company had a total of approximately 32,300
employees, as compared to approximately 33,400 employees at December 31, 1997
and a 1998 peak of approximately 36,500 employees in May 1998. Approximately
3,000 employees at December 31, 1998 were represented under collective
bargaining agreements that terminate at various times through July 2002. The
Company believes that its relations with its employees are satisfactory.

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EXECUTIVE OFFICERS

The following table shows as of March 3, 1999, the name of each
executive officer of the Company, together with his age and all offices
presently held with the Company.

NAME OF INDIVIDUAL AGE
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Max L. Lukens 50 Chief Executive Officer of the Company since October 1996; President of the
Company since October 1998 and from October 1995 to August 1998; and Chairman
of the Board since January 1997. Employed 1981. Vice President and Chief
Financial Officer of Baker, 1984-1987; Senior Vice President and Chief
Financial Officer of the Company, 1987-1989; President, Baker Hughes Production
Tools, 1989-1993; Senior Vice President of the Company, 1987-1994; Executive
Vice President, 1994-1995; President, Baker Hughes Oilfield Operations,
1993-1995; and Chief Operating Officer of the Company, 1995-1996.

Thomas R. Bates, Jr. 49 Senior Vice President of the Company since June 1998. Employed 1998. President
and Chief Executive Officer of Weatherford Enterra 1997-1998; and President of
Anadrill Division of Schlumberger 1992-1997.

George S. Finley 47 Senior Vice President and Chief Administrative Officer of the Company since
1995. Employed 1982. Controller of the Company, 1987-1993; Vice President of
the Company, 1990-1995; and Chief Financial Officer of Baker Hughes Oilfield
Operations, 1993-1995.

James W. Harris 40 Controller of the Company since December 1998; and Vice President-Tax of the
Company since December 1997. Director of Tax from 1994-1997. Employed 1994.

Eric L. Mattson 47 Senior Vice President of the Company since 1994; and Chief Financial Officer of
the Company since 1993. Employed 1980. Treasurer of the Company, 1983-1994; and
Vice President of the Company, 1988 to 1994.

Lawrence O'Donnell, III 41 Vice President and General Counsel of the Company since 1995. Employed 1991.
Deputy General Counsel of the Company, 1991-1995; Vice President and General
Counsel, Baker Hughes Oilfield Operations, 1994-1995; and Corporate Secretary
of the Company, 1992-1996.

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Andrew J. Szescila 51 Senior Vice President of the Company since July 1997; Vice President of the
Company from 1995-1997; and President of Hughes Christensen Company from
1989-1997. Employed 1973. President, BJ Services International, 1987-1988; and
President, Baker Service Tools, 1988-1989.

There are no family relationships among the executive officers of the
Company.

The Company follows the practice of electing its officers annually in
October.

ENVIRONMENTAL MATTERS

The Company is subject to U.S. federal, state and local regulations
with regard to air and water quality and other environmental matters. The
Company believes that it is in substantial compliance with these regulations.
Regulation in this area is in the process of development, and changes in
standards of enforcement of existing regulations as well as the enactment and
enforcement of new legislation may require the Company, as well as its
customers, to modify, supplement or replace equipment or facilities or to change
or discontinue present methods of operation.

While making projections of future costs in the environmental area can
be difficult and uncertain, based upon current information, the Company
estimates that during the fiscal year ending December 31, 1999, the Company will
spend approximately $24,683,000 to enable the Company to comply with U.S.
federal, state and local provisions that have been enacted or adopted regulating
the discharge of materials into the environment or otherwise relating to the
protection of the environment (collectively, "Environmental Regulations"). Based
upon current information, the Company believes that its compliance with
Environmental Regulations will not have a material adverse effect upon the
capital expenditures, earnings and competitive position of the Company because
the Company has adequate reserves for such compliance expenditures or the cost
to the Company for such compliance will be small when compared to the Company's
overall net worth.

In addition to the amounts described in the preceding paragraph, based
upon current information, the Company estimates that it will incur capital
expenditures of approximately $6,500,000 for environmental control equipment
during the fiscal year ending December 31, 1999. Based upon current information,
the Company believes that capital expenditures for environmental control
equipment for the 1999 and 2000 fiscal years, as well as such future periods as
the Company deems relevant, will not have a material adverse effect upon the
financial condition of the Company because the aggregate amount of these
expenditures for those periods is or will be small when compared to the
Company's overall net worth.

The Company and certain of its subsidiaries and divisions have been
identified as a potentially responsible party ("PRP") as a result of substances
which may have been released in the

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past at various sites more fully discussed below. The United States
Environmental Protection Agency (the "EPA") and appropriate state agencies are
supervising investigative and clean-up activities at these sites.

(a) Baker Petrolite Corporation ("BPC"), a subsidiary of the
Company, Hughes Christensen Company ("HC"), Milpark Drilling Fluids
("Milpark") (now known as INTEQ), and Baker Oil Tools ("BOT"), a
division of Baker Hughes Oilfield Operations, Inc. ("BHOO"), have been
named as PRPs in the Sheridan Superfund Site, located in Hempstead,
Texas. The remedial work at this site is being overseen by the Texas
Natural Resource Conservation Commission ("TNRCC"). A trust (the
"Sheridan Site Trust") was formed to manage the site remediation and
administrative details of the project. The Company participates as a
member of the Sheridan Site Trust. Total remedial and administrative
costs are estimated by Sheridan Site Trust officials to total
approximately $30,000,000. Contribution of the Company's subsidiaries
and divisions (including Baker Hughes Tubular Services, Inc. ("BHTS"),
which was sold to ICO on September 30, 1992), is estimated to be 1.81%
of those costs.

(b) Spectrace Instruments, Inc. ("Spectrace"), the assets of
which were sold to Thermo-Electron Corporation on March 15, 1994, is a
named respondent to an EPA Administrative Order associated with the MEW
Study Area, an eight square mile soil and groundwater contamination
site located in Mountain View, California. A group of PRPs estimates
that the total cost of remediation will be approximately $80,000,000.
The Company's environmental consultants have conducted extensive
investigations of Spectrace's operating facility located within the MEW
Study Area and have concluded that Spectrace's activities could not
have been the source of any contamination in the soil or groundwater at
and around the MEW Study Area. The EPA has informed the Company that no
further work needs to be performed on Spectrace's site and indicated
that the EPA does not believe there is a contaminant source on the
property. However, the Company continues to be named in the EPA's
Administrative Order. The Company continues to believe the EPA's
Administrative Order for Remedial Design and Remedial Action is not
valid with respect to the Company's subsidiary and is seeking the
withdrawal of the Administrative Order with respect to the Company's
subsidiary.

(c) In June 1998, Magna Corporation (now known as BPC) was
named as a de minimis PRP at the Operating Industries Superfund Site
located in Monterrey Park, California. The EPA has alleged that the
company has transported, disposed, or arranged for disposal of, 12,600
gallons of waste material to the site and has demanded a contribution
of $43,200 to assist with the remedial response. The Company is
presently considering the demand.

(d) In May 1987, Baker Performance Chemicals Incorporated (now
known as BPC) entered into an Agreed Administrative Order with the then
Texas

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Water Commission, now known as the TNRCC, with respect to soil and
groundwater contamination at the Odessa - Hillmont site located in
Odessa, Texas. This site was previously used by BPC as a chemical
blending plant. The contaminated soil has been removed, and the site
continues in the groundwater recovery/treatment phase at an annual cost
to the Company of approximately $20,000.

(e) Oil Base, Inc. and Hughes Drilling Fluids (now known as
INTEQ) have been identified by the EPA as PRPs in the PAB Oil and
Chemical Superfund Site located in Abbeville, Louisiana. The
remediation of the site was completed in 1998. Operating and
maintenance costs of the environmental monitoring system at the site is
estimated to total $1,000,000. The Company's allocated share of this
cost, based on allocated volume (4.5%) is $45,000.

(f) PA Inc., a former subsidiary of the Company, was
identified as a PRP in the Sonics International Site, a former
hazardous waste disposal facility located near Ranger, Texas. This site
is currently being administered by the TNRCC under the Texas Superfund
Statute. The Company allegedly contributed 1.64% of the waste volume at
the site. It is not possible at this time to quantify the Company's
ultimate liability. The remediation proposed by the TNRCC is estimated
to cost $700,000.

(g) Milpark (now known as INTEQ) has been identified as a PRP
at the Toups Farm Superfund Site (eligible for cleanup under the Texas
State Cleanup Fund) located north of South Lake near Hallettsville,
Texas. The site consists of approximately 21 acres and was operated
over the years as a municipal landfill, fence post treating company and
a hog farm. Based on available information, the Company does not
believe that it has any liability for contamination at the site.

(h) Milpark (now known as INTEQ) and Baker Sand Control (now
known as BOT) have been named as PRPs at the DL Mud Superfund Site
located in Abbeville, Louisiana. This site was used for the disposal of
used drilling fluids and drilling muds. However, another named PRP is
responsible for a majority of the waste volume disposed at this site,
and such PRP is presently engaged in the remediation of the site. To
date neither the other PRP nor the EPA have produced any substantive
waste disposal or transportation documentation linking the Company or
its subsidiaries or divisions to the environmental conditions at the
site. The Company does not anticipate that it will have any liability
for this site.

(i) Milpark (now known as INTEQ) has been named as a PRP at
the Mar Services Superfund site located in Crankton, Louisiana. It has
been estimated that the contribution to this site by the Company's
subsidiary is approximately 0.08% of the total volume of solids at the
site (based upon a volumetric calculation). The site is now undergoing
investigative studies to determine the remedial action plan as well as
a total estimated cost for remediation.

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(j) Teleco Oilfield Services, Inc. ("Teleco") (now known as
INTEQ) has been named as a PRP at the Solvent Recycling Service of New
England Superfund Site located in Southington, Connecticut.
Approximately 1,000 companies have been named as PRPs at this site.
Calculations from the PRP group verified by the Company, indicate that
Teleco contributed 0.00006% of the volume at the site. The total cost
of cleanup at the site is currently estimated to be $3,500,000. A de
minimis buyout offer from either the EPA or the PRP group is
anticipated in the future.

(k) In January 1996, Petrolite Corporation (now known as BPC)
was named as a PRP by the TNRCC at the McBay Oil and Gas State
Superfund Site in Grapevine, Texas. The Company has disputed its
involvement in the site based on the fact that it has no knowledge of
transporting waste to the site. However, the Company has transacted
product sales to McBay Oil and Gas Company. Documentation of product
sales has been sent to the TNRCC. Based on available information, the
Company does not believe that it has any liability for contamination at
this site.

(l) In July 1997, Petrolite Corporation (now known as BPC),
was named by the EPA as a PRP at the Shore Refinery Site, Kilgore,
Gregg County, Texas. The Company has completed a thorough search of its
documents and records. The Company has concluded that it has not
arranged for the disposal, treatment, or transportation of hazardous
substances or used oil at the site. To date, the EPA has not produced
any substantive, hazardous substance treatment, disposal or
transportation documentation linking the Company or any of its
subsidiaries or divisions to the environmental conditions at the site.
The Company does not believe that it has any liability for
contamination at the site.

While PRPs in Superfund actions have joint and several liability for
all costs of remediation in many of the sites described above, it is not
possible at this time to quantify the Company's ultimate exposure because the
project is either in its early investigative or remediation stage. Based upon
current information, the Company does not believe that probable and reasonably
possible expenditures in connection with any of the sites described above are
likely to have a material adverse effect on the Company's financial condition
because: (i) the Company has established adequate reserves to cover what the
Company presently believes will be its ultimate liability with respect to the
matter, (ii) the Company and its subsidiaries have only limited involvement in
the sites based upon a volumetric calculation, as described above, (iii) there
are other PRPs that have greater involvement on a volumetric calculation basis
who have substantial assets and who may reasonably be expected to pay their
share of the cost of remediation, (iv) where discussed above, the Company has
insurance coverage or contractual indemnities from third parties to cover the
ultimate liability, and (v) the Company's ultimate liability, based upon current
information, is small compared to the Company's overall net worth.

-12-
14

The Company is subject to various other governmental proceedings
relating to environmental matters, but the Company does not believe that any of
these matters is likely to have a material adverse effect on its financial
condition.

ITEM 2. PROPERTIES

The Company operates 80 manufacturing plants, almost all of which are
owned, ranging in size from approximately 750 square feet to approximately
306,700 square feet of manufacturing space and totaling more than 3,860,000
square feet. Of such total, approximately 2,570,000 square feet (67%) are
located in the United States, 270,000 square feet (7%) are located in the
Western Hemisphere exclusive of the United States, 875,000 square feet (23%) are
located in Europe, and 145,000 square feet (3%) are located in the Eastern
Hemisphere exclusive of Europe. These manufacturing plants by industry segment
and geographic area appear in the table below. The Company also owns or leases
and operates various customer service centers and shops, and sales and
administrative offices throughout the geographic areas in which it operates.

Other Other
United Western Eastern
States Hemisphere Europe Hemisphere Total
------ ---------- ------ ---------- -----

Oilfield 39 8 10 10 67
Process 6 2 4 1 13

The Company believes that its manufacturing facilities are well
maintained. The Company also has a significant investment in service vehicles,
rental tools and equipment. During 1998 and 1997, the Company recognized
permanent impairments and wrote down to net realizable value

-13-
15

certain inventory, property, plant and equipment. For further information
regarding these write-downs, see Note 8 of Notes to Consolidated Financial
Statements. Property additions increased in 1998 as the Company added capacity
to meet the increased market demand.

ITEM 3. LEGAL PROCEEDINGS

The Company is sometimes named as a defendant in litigation relating to
the products and services it provides. The Company insures against these risks
to the extent deemed prudent by its management, but no assurance can be given
that the nature and amount of such insurance will in every case fully indemnify
the Company against liabilities arising out of pending and future legal
proceedings relating to its business activities.

See also "Item 1. Business - Environmental Matters."

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

-14-
16

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Common Stock, $1.00 par value per share (the "Common Stock"), of
the Company is principally traded on The New York Stock Exchange. The Common
Stock is also traded on the Pacific Exchange and the Swiss Exchange. At March 3,
1999, there were approximately 98,741 stockholders and 29,180 stockholders of
record.

For information regarding quarterly high and low sales prices on the
New York Stock Exchange for the Common Stock, during the two years ended
December 31, 1998 and information regarding dividends declared on the Common
Stock during the two years ended December 31, 1998, see Note 19 of Notes to
Consolidated Financial Statements.

ITEM 6. SELECTED FINANCIAL DATA

The information set forth under the caption "Selected Financial Data"
in the 1998 Annual Report to Stockholders is incorporated herein by reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The information set forth under the caption "Management's Discussion
and Analysis of Financial Condition and Results of Operations" in the 1998
Annual Report to Stockholders ("MD&A") is incorporated herein by reference.

ITEM 7.a QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information set forth under the sub-caption "Quantitative and
Qualitative Market Risk Disclosures" under MD&A is incorporated herein by
reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The following consolidated financial statements of the Company and the
independent auditors' report set forth in the 1998 Annual Report to Stockholders
are incorporated herein by reference:

-15-
17

Independent Auditors' Report.

Consolidated Statements of Operations for the year ended December 31,
1998, the three month period ended December 31, 1997 and for each of
the two years in the period ended September 30, 1997.

Consolidated Statements of Financial Position as of December 31, 1998
and 1997.

Consolidated Statements of Stockholders' Equity for the year ended
December 31, 1998, the three month period ended December 31, 1997 and
for each of the two years in the period ended September 30, 1997.

Consolidated Statements of Cash Flows for the year ended December 31,
1998, the three month period ended December 31, 1997 and for each of
the two years in the period ended September 30, 1997.

Notes to Consolidated Financial Statements.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

-16-
18

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information concerning the directors of the Company is set forth in the
section entitled "Election of Directors" in the Proxy Statement of the Company
for the Annual Meeting of Stockholders to be held April 28, 1999, which section
is incorporated herein by reference. For information regarding executive
officers of the Company, see "Item 1. Business -- Executive Officers."
Additional information regarding compliance by directors and executive officers
with Section 16(a) of the Securities Exchange Act of 1934, as amended, is set
forth under the section entitled "Compliance with Section 16(a) of the
Securities Exchange Act of 1934" in the Proxy Statement for the Annual Meeting
of Stockholders to be held on April 28, 1999, which section is incorporated
herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

Information for this item is set forth in the section entitled
"Executive Compensation" in the Proxy Statement of the Company for the Annual
Meeting of Stockholders to be held April 28, 1999, which section is incorporated
herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information concerning security ownership of certain beneficial owners
and management is set forth in the sections entitled "Voting Securities" and
"Security Ownership of Management" in the Proxy Statement of the Company for the
Annual Meeting of Stockholders to be held April 28, 1999, which sections are
incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None.

-17-
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PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) LIST OF DOCUMENTS FILED AS PART OF THIS REPORT

(1) Financial Statements

All financial statements of the Registrant as set forth under
Item 8 of this Annual Report on Form 10-K.

(2) Financial Statement Schedules:

Financial statement schedules are omitted because of the
absence of conditions under which they are required or because
all material information required to be reported is included
in the consolidated financial statements and notes thereto.

(3) Exhibits:

3.1 Restated Certificate of Incorporation.

3.2 By-Laws.

3.3 Certificate of Designation of Series L Preferred
Stock of Baker Hughes Incorporated (filed as Exhibit
3.3 to Annual Report of Baker Hughes Incorporated on
Form 10-K for the year ended September 30, 1996 and
incorporated herein by reference).

4.1 Rights of Holders of the Company's Long-Term Debt.
The Company has no long-term debt instrument with
regard to which the securities authorized thereunder
equal or exceed 10% of the total assets of the
Company and its subsidiaries on a consolidated basis.
The Company agrees to furnish a copy of its long-term
debt instruments to the SEC upon request.

4.2 Restated Certificate of Incorporation (filed as
Exhibit 3.1 hereto).

4.3 By-Laws (filed as Exhibit 3.2 hereto).

4.4 Certificate of Designation of Series L Preferred
Stock of Baker Hughes Incorporated (filed as Exhibit
4.4 to Annual Report of Baker Hughes Incorporated on
Form 10-K for the year ended September 30, 1996 and
incorporated herein by reference).

-18-
20

10.1 Employment Agreement between Baker Hughes
Incorporated and Max L. Lukens dated as of
January 1, 1998.

10.2 Severance Agreement between Baker Hughes Incorporated
and G. Stephen Finley dated as of July 23, 1997
(filed as Exhibit 10.6 to Annual Report of Baker
Hughes Incorporated on Form 10-K for the year ended
September 30, 1997 and incorporated herein by
reference).

10.3 Severance Agreement between Baker Hughes Incorporated
and Max L. Lukens dated as of July 23, 1997 (filed as
Exhibit 10.9 to Annual Report of Baker Hughes
Incorporated on Form 10-K for the year ended
September 30, 1997 and incorporated herein by
reference).

10.4 Severance Agreement between Baker Hughes Incorporated
and Eric L. Mattson dated as of July 23, 1997 (filed
as Exhibit 10.10 to Annual Report of Baker Hughes
Incorporated on Form 10-K for the year ended
September 30, 1997 and incorporated herein by
reference).

10.5 Severance Agreement between Baker Hughes Incorporated
and Lawrence O'Donnell, III dated as of July 23, 1997
(filed as Exhibit 10.11 to Annual Report of Baker
Hughes Incorporated on Form 10-K for the year ended
September 30, 1997 and incorporated herein by
reference).

10.6 Severance Agreement between Baker Hughes Incorporated
and Andrew J. Szescila dated as of July 23, 1997
(filed as Exhibit 10.13 to Annual Report of Baker
Hughes Incorporated on Form 10-K for the year ended
September 30, 1997 and incorporated herein by
reference).

10.7 Form of Amendment 1 to Severance Agreement between
Baker Hughes Incorporated and each of G. Stephen
Finley, Max L. Lukens, Eric L. Mattson, Lawrence
O'Donnell, III and Andrew J. Szescila effective
November 11, 1998.

10.8 Severance Agreement between Baker Hughes Incorporated
and Thomas R. Bates, Jr. dated as of January 27,
1999.

10.9 Amended and Restated 1991 Employee Stock Bonus Plan
of Baker Hughes Incorporated (filed as Exhibit 10.15
to Annual Report of Baker Hughes Incorporated on Form
10-K for the year ended September 30, 1997 and
incorporated herein by reference).

10.10 Amendment No. 1997-1 to the Amended and Restated 1991
Employee Stock Bonus Plan (filed as Exhibit 10.16 to
Annual Report of Baker Hughes

-19-
21

Incorporated on Form 10-K for the year ended
September 30, 1997 and incorporated herein by
reference).

10.11 Amendment No. 1999-1 to the Amended and Restated 1991
Employee Stock Bonus Plan.

10.12 Restated 1987 Stock Option Plan of Baker Hughes
Incorporated (amended as of October 24, 1990) (filed
as Exhibit 10.17 to Annual Report of Baker Hughes
Incorporated on Form 10-K for the year ended
September 30, 1997 and incorporated herein by
reference).

10.13 1987 Convertible Debenture Plan of Baker Hughes
Incorporated (amended as of October 24, 1990) (filed
as Exhibit 10.18 to Annual Report of Baker Hughes
Incorporated on Form 10-K for the year ended
September 30, 1997 and incorporated herein by
reference).

10.14 Baker Hughes Incorporated Supplemental Retirement
Plan.

10.15 Amendment No. 1997-1 to the Baker Hughes Incorporated
Supplemental Retirement Plan (filed as Exhibit 10.20
to Annual Report of Baker Hughes Incorporated on Form
10-K for the year ended September 30, 1997 and
incorporated herein by reference).

10.16 Amendment No. 1999-1 to the Baker Hughes Incorporated
Supplemental Retirement Plan.

10.17 Executive Severance Policy.

10.18 1993 Stock Option Plan.

10.19 Amendment No. 1997-1 to the 1993 Stock Option Plan
(filed as Exhibit 10.23 to Annual Report of Baker
Hughes Incorporated on Form 10-K for the year ended
September 30, 1997 and incorporated herein by
reference).

10.20 Amendment No. 1999-1 to the 1993 Stock Option Plan.

10.21 1993 Employee Stock Bonus Plan.

10.22 Amendment No. 1997-1 to the 1993 Employee Stock Bonus
Plan (filed as Exhibit 10.25 to Annual Report of
Baker Hughes Incorporated on Form 10-K for the year
ended September 30, 1997 and incorporated herein by
reference).

10.23 Amendment No. 1999-1 to the 1993 Employee Stock Bonus
Plan.

10.24 Amended and Restated Director Compensation Deferral
Plan.

10.25 1995 Employee Annual Incentive Compensation Plan
(filed as Exhibit 10.16 to Annual Report of Baker
Hughes Incorporated on Form 10-K for the year ended
September 30, 1994 and incorporated herein by
reference).

10.26 Amendment No. 1997-1 to the 1995 Employee Annual
Incentive Compensation Plan (filed as Exhibit 10.25
to Annual Report of Baker Hughes Incorporated on Form
10-K for the year ended September 30, 1997 and
incorporated herein by reference).

-20-
22

10.27 Amendment No. 1999-1 to the 1995 Employee Annual
Incentive Compensation Plan.

10.28 1995 Stock Award Plan (filed as Exhibit 10.17 to
Annual Report of Baker Hughes Incorporated on Form
10-K for the year ended September 30, 1994 and
incorporated herein by reference).

10.29 Amendment No. 1997-1 to the 1995 Stock Award Plan
(filed as Exhibit 10.27 to Annual Report of Baker
Hughes Incorporated on Form 10-K for the year ended
September 30, 1997 and incorporated herein by
reference).

10.30 Amendment No. 1999-1 to the 1995 Stock Award Plan.

10.31 Long Term Incentive Plan. (filed as Exhibit 10.31 to
Annual Report of Baker Hughes Incorporated on Form
10-K for the year ended September 30, 1997).

10.32 Amendment No. 1999-1 to Long Term Incentive Plan.

10.33 1998 Employee Stock Option Plan.

10.34 Amendment No. 1999-1 to 1998 Employee Stock Option
Plan.

10.35 Form of Credit Agreement, dated as of October 1,
1998, among Baker Hughes Incorporated and fourteen
banks for $750,000,000, in the aggregate for all
banks.

10.36 Form of Credit Agreement dated as of October 1, 1998
among Baker Hughes Incorporated and fourteen banks
for $250,000,000, in the aggregate for all banks.

10.37 Form of Nonqualified Stock Option Agreement for
executive officers effective October 1, 1998.

10.38 Form of Nonqualified Stock Option Agreement for
employees effective October 1, 1998.

10.39 Form of Nonqualified Stock Option Agreement for
executive officers effective October 1, 1998.

10.40 Form of Incentive Stock Option Agreement for
executive officers effective October 1, 1998.

10.41 Form of Nonqualified Stock Option Agreement for
directors effective October 25, 1995 (filed as
Exhibit 10.16 to Annual Report of Baker Hughes
Incorporated on Form 10-K for the year ended
September 30, 1996 and incorporated herein by
reference).

-21-
23

10.42 Form of Nonqualified Stock Option Agreement for
employees effective October 25, 1995 (filed as
Exhibit 10.16 to Annual Report of Baker Hughes
Incorporated on Form 10-K for the year ended
September 30, 1996 and incorporated herein by
reference).

10.43 Form of Incentive Stock Option Agreement for
employees effective October 25, 1995 (filed as
Exhibit 10.16 to Annual Report of Baker Hughes
Incorporated on Form 10-K for the year ended
September 30, 1996 and incorporated herein by
reference).

10.44 Agreement and Plan of Merger among Baker Hughes
Incorporated, Baker Hughes Missouri, Inc., Baker
Hughes Delaware, Inc., Petrolite Corporation and Wm.
S. Barnickel & Company, dated as of February 25, 1997
(filed as Exhibit 2.1 to Form 8-K dated March 5, 1997
and incorporated herein by reference).

10.45 Agreement and Plan of Merger among Baker Hughes
Incorporated, Baker Hughes Delaware I, Inc. and
Western Atlas Inc. dated as of May 10, 1998 (filed as
Exhibit 2.1 to Form 8-K dated May 20, 1998 and
incorporated herein by reference).

10.46 Distribution and Indemnity Agreement dated October
31, 1997, between Western Atlas Inc. and UNOVA, Inc.
(filed as Exhibit 10.18 to Western Atlas Inc.'s Form
10-Q for the quarter ended September 30, 1997 and
incorporated herein by reference).

10.47 Tax Sharing Agreement dated October 31, 1997, between
Western Atlas Inc. and UNOVA, Inc. (filed as Exhibit
10.19 to Western Atlas Inc.'s form 10-Q for the
quarter ended September 30, 1997 and incorporated
herein by reference).

10.48 Intellectual Property Agreement dated October 31,
1997, between Western Atlas Inc. and UNOVA, Inc.
(filed as Exhibit 10.20 to Western Atlas Inc.'s Form
10-Q for the quarter ended September 30, 1997 and
incorporated herein by reference).

10.49 Employee Benefits Agreement dated October 31, 1997,
between Western Atlas Inc. and UNOVA, Inc. (filed as
Exhibit 10.21 to Western Atlas Inc.'s Form 10-Q for
the quarter ended September 30, 1997 and incorporated
herein by reference).

10.50 Corporate Executive Loan Program.

-22-
24

13.1 Portions of 1998 Annual Report to Stockholders.

21.1 Subsidiaries of Registrant.

23.1 Consent of Deloitte & Touche LLP.

27.1 Financial Data Schedule (for SEC purposes only).

(b) REPORTS ON FORM 8-K:

A report on Form 8-K dated December 18, 1998 was filed with the
Commission on December 21, 1998 reporting that the Company has restated its
financial statements to account for using the pooling of interests method of
business combinations and reflecting the audited transition period related to
the Company's change in fiscal year.

-23-
25

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized on the
17th day of March, 1999.

BAKER HUGHES INCORPORATED

By /s/ MAX L. LUKENS
-----------------------------------------
(Max L. Lukens, Chief Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.

Signature Title Date
--------- ----- ----

/s/ MAX L. LUKENS
- ----------------------------------------- Chairman of the Board, President March 17, 1999
(Max L. Lukens) and Chief Executive Officer
(principal executive officer)
/s/ E.L. MATTSON
- ----------------------------------------- Senior Vice President and March 17, 1999
(E. L. Mattson) Chief Financial Officer
(principal financial officer)
/s/ JAMES W. HARRIS
- ----------------------------------------- Vice President and Controller March 17, 1999
(James W. Harris) (principal accounting officer)

/s/ LESTER M. ALBERTHAL, JR.
- ----------------------------------------- Director March 17, 1999
(Lester M. Alberthal, Jr.)

/s/ VICTOR G. BEGHINI
- ----------------------------------------- Director March 17, 1999
(Victor G. Beghini)

- ----------------------------------------- Director March , 1999
(Alton J. Brann)

-24-
26

/s/ JOSEPH T. CASEY
- ----------------------------------------- Director March 17, 1999
(Joseph T. Casey)

/s/ EUNICE M. FILTER
- ----------------------------------------- Director March 17, 1999
(Eunice M. Filter)

/s/ JOE B. FOSTER
- ----------------------------------------- Director March 17, 1999
(Joe B. Foster)

/s/ CLAIRE W. GARGALLI
- ----------------------------------------- Director March 17, 1999
(Claire W. Gargalli)

/s/ RICHARD D. KINDER
- ----------------------------------------- Director March 17, 1999
(Richard D. Kinder)

- ----------------------------------------- Director March , 1999
(John F. Maher)

/s/ JAMES F. McCALL
- ----------------------------------------- Director March 17, 1999
(James F. McCall)

/s/ H. JOHN RILEY, JR.
- ----------------------------------------- Director March 17, 1999
(H. John Riley, Jr.)

/s/ JOHN R. RUSSELL
- ----------------------------------------- Director March 17, 1999
(John R. Russell)

/s/ CHARLES L. WATSON
- ----------------------------------------- Director March 17, 1999
(Charles L. Watson)

/s/ MAX P. WATSON, JR.
- ----------------------------------------- Director March 17, 1999
(Max P. Watson, Jr.)

-25-
27

INDEX TO EXHIBITS

EXHIBIT
NUMBERS DESCRIPTION
- ------- -----------

3.1 Restated Certificate of Incorporation.

3.2 By-Laws.

3.3 Certificate of Designation of Series L Preferred Stock of Baker Hughes
Incorporated (filed as Exhibit 3.3 to Annual Report of Baker Hughes
Incorporated on Form 10-K for the year ended September 30, 1996 and
incorporated herein by reference).

4.1 Rights of Holders of the Company's Long-Term Debt. The Company has no
long-term debt instrument with regard to which the securities
authorized thereunder equal or exceed 10% of the total assets of the
Company and its subsidiaries on a consolidated basis. The Company
agrees to furnish a copy of its long-term debt instruments to the SEC
upon request.

4.2 Restated Certificate of Incorporation (filed as Exhibit 3.1 hereto).

4.3 By-Laws (filed as Exhibit 3.2 hereto).

4.4 Certificate of Designation of Series L Preferred Stock of Baker Hughes
Incorporated (filed as Exhibit 4.4 to Annual Report of Baker Hughes
Incorporated on Form 10-K for the year ended September 30, 1996 and
incorporated herein by reference).

10.1 Employment Agreement between Baker Hughes Incorporated and Max L.
Lukens dated as of January 1, 1998.

10.2 Severance Agreement between Baker Hughes Incorporated and G. Stephen
Finley dated as of July 23, 1997 (filed as Exhibit 10.6 to Annual
Report of Baker Hughes Incorporated on Form 10-K for the year ended
September 30, 1997 and incorporated herein by reference).

10.3 Severance Agreement between Baker Hughes Incorporated and Max L. Lukens
dated as of July 23, 1997 (filed as Exhibit 10.9 to Annual Report of
Baker Hughes Incorporated on Form 10-K for the year ended September 30,
1997 and incorporated herein by reference).

10.4 Severance Agreement between Baker Hughes Incorporated and Eric L.
Mattson dated as of July 23, 1997 (filed as Exhibit 10.10 to Annual
Report of Baker Hughes Incorporated on Form 10-K for the year ended
September 30, 1997 and incorporated herein by reference).

10.5 Severance Agreement between Baker Hughes Incorporated and Lawrence
O'Donnell, III dated as of July 23, 1997 (filed as Exhibit 10.11 to
Annual Report of Baker Hughes Incorporated on Form 10-K for the year
ended September 30, 1997 and incorporated herein by reference).

10.6 Severance Agreement between Baker Hughes Incorporated and Andrew J.
Szescila dated as of July 23, 1997 (filed as Exhibit 10.13 to Annual
Report of Baker Hughes Incorporated on Form 10-K for the year ended
September 30, 1997 and incorporated herein by reference).

10.7 Form of Amendment 1 to Severance Agreement between Baker Hughes
Incorporated and each of G. Stephen Finley, Max L. Lukens, Eric L.
Mattson, Lawrence O'Donnell, III and Andrew J. Szescila effective
November 11, 1998.

10.8 Severance Agreement between Baker Hughes Incorporated and Thomas R.
Bates, Jr. dated as of January 27, 1999.

10.9 Amended and Restated 1991 Employee Stock Bonus Plan of Baker Hughes
Incorporated (filed as Exhibit 10.15 to Annual Report of Baker Hughes
Incorporated on Form 10-K for the year ended September 30, 1997 and
incorporated herein by reference).

10.10 Amendment No. 1997-1 to the Amended and Restated 1991 Employee Stock
Bonus Plan (filed as Exhibit 10.16 to Annual Report of Baker Hughes

Incorporated on Form 10-K for the year ended September 30, 1997 and
incorporated herein by reference).

10.11 Amendment No. 1999-1 to the Amended and Restated 1991 Employee Stock
Bonus Plan.

10.12 Restated 1987 Stock Option Plan of Baker Hughes Incorporated (amended
as of October 24, 1990) (filed as Exhibit 10.17 to Annual Report of
Baker Hughes Incorporated on Form 10-K for the year ended September 30,
1997 and incorporated herein by reference).

10.13 1987 Convertible Debenture Plan of Baker Hughes Incorporated (amended
as of October 24, 1990) (filed as Exhibit 10.18 to Annual Report of
Baker Hughes Incorporated on Form 10-K for the year ended September 30,
1997 and incorporated herein by reference).

10.14 Baker Hughes Incorporated Supplemental Retirement Plan.

10.15 Amendment No. 1997-1 to the Baker Hughes Incorporated Supplemental
Retirement Plan (filed as Exhibit 10.20 to Annual Report of Baker
Hughes Incorporated on Form 10-K for the year ended September 30, 1997
and incorporated herein by reference).

10.16 Amendment No. 1999-1 to the Baker Hughes Incorporated Supplemental
Retirement Plan.

10.17 Executive Severance Policy.

10.18 1993 Stock Option Plan.

10.19 Amendment No. 1997-1 to the 1993 Stock Option Plan (filed as Exhibit
10.23 to Annual Report of Baker Hughes Incorporated on Form 10-K for
the year ended September 30, 1997 and incorporated herein by
reference).

10.20 Amendment No. 1999-1 to the 1993 Stock Option Plan.

10.21 1993 Employee Stock Bonus Plan.

10.22 Amendment No. 1997-1 to the 1993 Employee Stock Bonus Plan (filed as
Exhibit 10.25 to Annual Report of Baker Hughes Incorporated on Form
10-K for the year ended September 30, 1997 and incorporated herein by
reference).

10.23 Amendment No. 1999-1 to the 1993 Employee Stock Bonus Plan.

10.24 Amended and Restated Director Compensation Deferral Plan.

10.25 1995 Employee Annual Incentive Compensation Plan (filed as Exhibit
10.16 to Annual Report of Baker Hughes Incorporated on Form 10-K for
the year ended September 30, 1994 and incorporated herein by
reference).

10.26 Amendment No. 1997-1 to the 1995 Employee Annual Incentive Compensation
Plan (filed as Exhibit 10.25 to Annual Report of Baker Hughes
Incorporated on Form 10-K for the year ended September 30, 1997 and
incorporated herein by reference).

10.27 Amendment No. 1999-1 to the 1995 Employee Annual Incentive Compensation
Plan.

10.28 1995 Stock Award Plan (filed as Exhibit 10.17 to Annual Report of Baker
Hughes Incorporated on Form 10-K for the year ended September 30, 1994
and incorporated herein by reference).

10.29 Amendment No. 1997-1 to the 1995 Stock Award Plan (filed as Exhibit
10.27 to Annual Report of Baker Hughes Incorporated on Form 10-K for
the year ended September 30, 1997 and incorporated herein by
reference).

10.30 Amendment No. 1999-1 to the 1995 Stock Award Plan.

10.31 Long Term Incentive Plan. (filed as Exhibit 10.31 to Annual Report of
Baker Hughes Incorporated on Form 10-K for the year ended September 30,
1997).

10.32 Amendment No. 1999-1 to Long Term Incentive Plan.

10.33 1998 Employee Stock Option Plan.

10.34 Amendment No. 1999-1 to 1998 Employee Stock Option Plan.

10.35 Form of Credit Agreement, dated as of October 1, 1998, among Baker
Hughes Incorporated and fourteen banks for $750,000,000, in the
aggregate for all banks.

10.36 Form of Credit Agreement dated as of October 1, 1998 among Baker Hughes
Incorporated and fourteen banks for $250,000,000, in the aggregate for
all banks.

10.37 Form of Nonqualified Stock Option Agreement for executive officers
effective October 1, 1998.

10.38 Form of Nonqualified Stock Option Agreement for employees effective
October 1, 1998.

10.39 Form of Nonqualified Stock Option Agreement for executive officers
effective October 1, 1998.

10.40 Form of Incentive Stock Option Agreement for executive officers
effective October 1, 1998.

10.41 Form of Nonqualified Stock Option Agreement for directors effective
October 25, 1995 (filed as Exhibit 10.16 to Annual Report of Baker
Hughes Incorporated on Form 10-K for the year ended September 30, 1996
and incorporated herein by reference).

10.42 Form of Nonqualified Stock Option Agreement for employees effective
October 25, 1995 (filed as Exhibit 10.16 to Annual Report of Baker
Hughes Incorporated on Form 10-K for the year ended September 30, 1996
and incorporated herein by reference).

10.43 Form of Incentive Stock Option Agreement for employees effective
October 25, 1995 (filed as Exhibit 10.16 to Annual Report of Baker
Hughes Incorporated on Form 10-K for the year ended September 30, 1996
and incorporated herein by reference).

10.44 Agreement and Plan of Merger among Baker Hughes Incorporated, Baker
Hughes Missouri, Inc., Baker Hughes Delaware, Inc., Petrolite
Corporation and Wm. S. Barnickel & Company, dated as of February 25,
1997 (filed as Exhibit 2.1 to Form 8-K dated March 5, 1997 and
incorporated herein by reference).

10.45 Agreement and Plan of Merger among Baker Hughes Incorporated, Baker
Hughes Delaware I, Inc. and Western Atlas Inc. dated as of May 10, 1998
(filed as Exhibit 2.1 to Form 8-K dated May 20, 1998 and incorporated
herein by reference).

10.46 Distribution and Indemnity Agreement dated October 31, 1997, between
Western Atlas Inc. and UNOVA, Inc. (filed as Exhibit 10.18 to Western
Atlas Inc.'s Form 10-Q for the quarter ended September 30, 1997 and
incorporated herein by reference).

10.47 Tax Sharing Agreement dated October 31, 1997, between Western Atlas
Inc. and UNOVA, Inc. (filed as Exhibit 10.19 to Western Atlas Inc.'s
form 10-Q for the quarter ended September 30, 1997 and incorporated
herein by reference).

10.48 Intellectual Property Agreement dated October 31, 1997, between Western
Atlas Inc. and UNOVA, Inc. (filed as Exhibit 10.20 to Western Atlas
Inc.'s Form 10-Q for the quarter ended September 30, 1997 and
incorporated herein by reference).

10.49 Employee Benefits Agreement dated October 31, 1997, between Western
Atlas Inc. and UNOVA, Inc. (filed as Exhibit 10.21 to Western Atlas
Inc.'s Form 10-Q for the quarter ended September 30, 1997 and
incorporated herein by reference).

10.50 Corporate Executive Loan Program.

13.1 Portions of 1998 Annual Report to Stockholders.

21.1 Subsidiaries of Registrant.

23.1 Consent of Deloitte & Touche LLP.

27.1 Financial Data Schedule (for SEC purposes only).