2.2.0.7 false Commitments and Contingencies 0214 - Disclosure - Commitments and Contingencies true false false false 1 USD false false USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 Pure Standard http://www.xbrl.org/2003/instance pure xbrli 0 Shares Standard http://www.xbrl.org/2003/instance shares xbrli 0 USDEPS Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares xbrli 0 $ 2 Commitments and Contingencies [Abstract] 0 bhi_CommitmentsAndContingenciesAbstract bhi false na duration Commitments and Contingencies. false false false false false true false false false false false false 1 false false false false 0 0 false false false xbrli:stringItemType string Commitments and Contingencies. false 3 COMMITMENTS AND CONTINGENCIES 1 us-gaap_CommitmentsAndContingenciesDisclosureTextBlock us-gaap true na duration No definition available. false false false false false false false false false false false verboselabel false 1 false false false false 0 0   <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE 14. COMMITMENTS AND CONTINGENCIES</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b>LITIGATION</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     We are involved in litigation or proceedings that have arisen in our ordinary business activities as well as litigation or proceedings assumed in connection with the acquisition of BJ Services. 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. The accruals for losses are calculated by estimating losses for claims using historical claim data, specific loss development factors and other information as necessary. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>BJ Services Merger Related Stockholder Lawsuits</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b><i>Delaware Cases</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     On September 1, 2009, three purported stockholder class action lawsuits styled Laborers Local 235 Benefit Fund v. Stewart, et al., The Booth Family Trust v. Huff, et al., and Dugdale v. Huff, et al., were filed in the Court of Chancery of the State of Delaware (the “Delaware Chancery Court”) on behalf of the public stockholders of BJ Services, with respect to the Merger Agreement, dated as of August 30, 2009, among Baker Hughes, its wholly owned subsidiary, BSA Acquisition LLC (now named BJ Services Company LLC), a Delaware limited liability company (“Merger Sub”), and BJ Services, providing for BJ Services to merge with and into Merger Sub (the “Merger”), with Merger Sub continuing as the surviving entity after the Merger. Each action names BJ Services, the then members of the BJ Services Board of Directors (the “BJ Services Board”) and the Company as defendants (collectively the “Defendants”). </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In these Delaware actions, and the follow-on actions discussed below, the plaintiffs allege, among other things, that the members of the BJ Services Board breached their fiduciary duties by failing to properly value BJ Services, failing to take steps to maximize the value of BJ Services to its public stockholders, and avoiding a competitive bidding process. The actions each allege that the Company aided and abetted the purported breaches by the BJ Services Board. The plaintiffs in each lawsuit seek, among other things, injunctive relief with respect to the Merger. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Six additional purported class action lawsuits were filed in the Delaware Chancery Court on behalf of the public stockholders of BJ Services against the Company, BJ Services and the BJ Services Board, including: Myers, v. BJ Services, et al., which was filed on September 4, 2009, Garden City Employees’ Retirement System v. BJ Services, et al., which was filed on September 8, 2009, Saratoga Advantage Trust-Energy & Basic Materials Portfolio v. Huff, et al., which was filed on September 8, 2009, Stationary Engineers Local 39 Pension Trust Fund v. Stewart, et al., which was filed on September 11, 2009, Jacobs v. Stewart, et al., which was filed on September 23, 2009, and Lyle v. BJ Services Company, et al., which was filed on October 1, 2009. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     On September 25, 2009, the Delaware Chancery Court entered an order consolidating the lawsuits filed in the Delaware Chancery Court. On October 6, 2009, the Delaware Chancery Court entered an order implementing a bench ruling of October 5, 2009, resolving competing motions for appointment of lead counsel in the Delaware Chancery Court and designating the law firm of Faruqi & Faruqi, LLP of New York, New York as lead counsel and Rosenthal, Monhait & Goddess, P.A. of Wilmington, Delaware as liaison counsel. On October 14, 2009, the Delaware Chancery Court entered a supplemental consolidation order adding the October 1, 2009 Lyle complaint to the consolidated action. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     On October 16, 2009, lead counsel for plaintiffs in the consolidated class action, In re: BJ Services Company Shareholders Litigation, C.A. No. 4851-VCN, served a Verified Consolidated Amended Class Action Complaint (the “Amended Complaint”) in the Delaware Court of Chancery. The Amended Complaint, among other things, added an officer of BJ Services (Jeffrey E. Smith, the then Executive Vice President-Finance and CFO of BJ Services) as a defendant, contained new factual allegations about the negotiations between BJ Services and the Company, and alleged the Form S-4 Registration Statement and preliminary joint proxy statement/prospectus, filed with the SEC on October 14, 2009, omitted and misrepresents material information. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Texas Cases</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     On September 4, 2009, a purported stockholder class action lawsuit styled Garden City Employees’ Retirement System v. BJ Services Company, et al., was filed in the 80th Judicial District Court of Harris County, Texas, on behalf of the public stockholders of BJ Services with respect to the Merger Agreement naming BJ Services, the then members of the BJ Services Board, the Company and Merger Sub as defendants. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Three additional actions were filed against the Company, BJ Services and the BJ Services Board in District Courts in Harris County, Texas. They are: (1) Johnson v. Stewart, et al., filed on September 11, 2009, (2) Saratoga Advantage Trust — Energy & Basic Materials Portfolio v. Huff, et al., filed on September 11, 2009, and (3) Matt v. Huff, et al., filed on September 21, 2009. The lead plaintiff and plaintiff’s counsel in the Garden City and Saratoga Advantage Trust cases filed in Texas also filed the cases of the same name in Delaware that are listed above. The Texas actions make substantially the same allegations as were initially asserted in the Delaware actions, and seek the same relief. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     On October 9, 2009, the Harris County Court consolidated the Texas actions and restyled the action as Garden City Employees’ Retirement System, et al. v. BJ services Company, et al., Cause No. 2009-57320, 80<sup style="font-size: 85%; vertical-align: text-top">th</sup> Judicial District of Harris County, Texas. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     On October 20, 2009, the Court of Appeals for the First District of Texas at Houston granted the Defendants’ emergency motion to stay the Texas cases pending its decision on the Defendants’ mandamus petition seeking a stay of the Texas litigation pending adjudication of the first-filed cases in Delaware. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Settlement of Delaware and Texas Cases</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The Company believes that the Delaware and Texas actions were without merit, and that it has valid defenses to all claims. Nevertheless, in an effort to minimize further cost, expense, burden and distraction of any litigation relating to such lawsuits, on February 9, 2010, the parties to the Delaware and Texas actions entered into a Memorandum of Understanding regarding the terms of settlement of such lawsuits. The Memorandum of Understanding resolves the allegations by the plaintiffs against the defendants in connection with the merger and provides a release and settlement by the purported class of the BJ Services stockholders of all claims against BJ Services, its directors and an officer and Baker Hughes, and their affiliates and agents, in connection with the merger. In exchange for such release and settlement, the parties agreed, after discussions on an arms’ length basis, that Baker Hughes and BJ Services provide additional supplemental disclosures in the joint proxy statement/prospectus included in a registration statement on Form S-4 filed by Baker Hughes on February 9, 2010 with the SEC. The proposed settlement included an agreement that neither BJ Services nor Baker Hughes will oppose plaintiff’s counsel’s application for BJ Services to pay attorneys’ fees and costs in an amount to be determined by the court up to $700,000. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     On July 15, 2010, the Delaware Chancery Court certified the Class of BJ Services stockholders, approved the settlement terms, awarded $500,000 in attorneys fees and $36,000 in costs to the Class counsel, and entered a Final Judgment dismissing all of the Class claims with prejudice, In re: BJ Services Company Shareholders Litigation, C.A. No. 4851-VCN. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     On July 23, 2010, The Harris County District Court entered a Final Judgment dismissing the plaintiffs claims with prejudice in the consolidated actions styled as Garden City Employees’ Retirement System, et al. v. BJ Services Company, et al., Cause No. 2009-57320, 80<sup style="font-size: 85%; vertical-align: text-top">th</sup> Judicial District of Harris County, Texas. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Customer Claim</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     On November 19, 2009, BJ Services received correspondence from a customer operating in the North Sea, claiming that BJ Services’ decision to move a stimulation vessel out of the North Sea market constituted a breach of contract. The customer alleges that it was forced to purchase well stimulation services from other providers at a higher cost than in the original agreement between the customer and BJ Services. The customer further alleges that it has incurred actual and estimated future damages of $40 million plus an undisclosed amount for production loss and/or production deferral. The customer has initiated a request for arbitration and we are responding accordingly. We believe that this claim is without merit, and we intend to vigorously defend ourselves in this matter based on the information available to us at this time. We do not expect the outcome of this matter to have a material adverse effect on our consolidated condensed financial statements; however, there can be no assurance as to the ultimate outcome of this matter. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>ENVIRONMENTAL</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     BJ Services operations included activities which are subject to domestic (including U.S. federal, state and local) and international environmental regulations with regard to air, land and water quality and other environmental matters. BJ Services has conducted environmental investigations and remedial actions at current and former locations of BJ Services and, along with other companies, are currently named as a potentially responsible party at five waste disposal sites owned by third parties. As a result of the acquisition of BJ Services, we have recorded approximately $9 million as a preliminary estimate for environmental remediation. As of June 30, 2010, our total accrual for environmental remediation on a combined company basis is $27 million. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>OTHER</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In the normal course of business with customers, vendors and others, we have entered into off-balance sheet arrangements, such as surety bonds for performance, letters of credit and other bank issued guarantees, which totaled approximately $1,009 million at June 30, 2010. None of the off-balance sheet arrangements either has, or is likely to have, a material effect on our consolidated condensed financial statements. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> </div>  <!-- Begin Block Tagged Note false false false us-types:textBlockItemType textblock Includes disclosure of commitments and contingencies. This element may be used as a single block of text to encapsulate the entire disclosure including data and tables. Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name FASB Interpretation (FIN) -Number 14 -Paragraph 3 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 5 -Paragraph 9, 10, 11, 12 false 1 2 false UnKnown UnKnown UnKnown false true