Baker Hughes 2015 Annual Report Download - page 86

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Baker Hughes Incorporated
Notes to Consolidated Financial Statements
77
the employee’s age. Such contributions are fully vested to the employee after three years of employment. The
Thrift Plan provides several investment options, for which the employee has sole investment discretion. The Thrift
Plan does not offer the Company's common stock as an investment option. Our contributions to the Thrift Plan and
several other non-U.S. defined contribution plans amounted to $202 million, $263 million and $240 million in 2015,
2014 and 2013, respectively.
For certain non-U.S. employees who are not eligible to participate in the Thrift Plan, we provide a non-qualified
defined contribution international retirement plan that provides basically the same benefits as those provided in the
Thrift Plan. In addition, we provide a non-qualified supplemental retirement plan (“SRP”) for certain officers and
employees whose benefits under the Thrift Plans and/or the U.S. qualified pension plan are limited by federal tax
law. The SRP also allows eligible employees to defer a portion of their eligible compensation and provides for
employer matching and base contributions pursuant to limitations. Both non-qualified plans are invested through
trusts, and the assets and corresponding liabilities are included in our consolidated balance sheets. Our
contributions to these non-qualified plans amounted to $15 million, $17 million and $15 million in 2015, 2014 and
2013, respectively. In 2016, we estimate we will contribute between $165 million and $180 million to all of our
defined contribution plans.
POSTEMPLOYMENT BENEFITS
We provide certain postemployment disability income, medical and other benefits to substantially all qualifying
former or inactive U.S. employees. Income benefits for long-term disability are provided through a fully-insured
plan. The continuation of medical and other benefits while on disability (“Continuation Benefits”) are provided
through a qualified self-insured plan. The accrued postemployment liability for Continuation Benefits at
December 31, 2015 and 2014 was $34 million and $30 million, respectively, and is included in other liabilities in our
consolidated balance sheets.
NOTE 14. COMMITMENTS AND CONTINGENCIES
LEASES
At December 31, 2015, we had long-term non-cancelable operating leases covering certain facilities and
equipment. The minimum annual rental commitments, net of amounts due under subleases, for each of the five
years in the period ending December 31, 2020 are $183 million, $119 million, $65 million, $51 million and $21
million, respectively, and $151 million in the aggregate thereafter. Rent expense was $514 million, $747 million and
$702 million for the years ended December 31, 2015, 2014 and 2013, respectively. We did not enter into any
significant capital leases during the three years ended December 31, 2015.
LITIGATION
We are subject to a number of lawsuits and claims arising out of the conduct of our business. The ability to
predict the ultimate outcome of such matters involves judgments, estimates and inherent uncertainties. We record
a liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably
estimated, including accruals for self-insured losses which are calculated based on historical claim data, specific
loss development factors and other information. A range of total possible losses for all litigation matters cannot be
reasonably estimated. Based on a consideration of all relevant facts and circumstances, we do not expect the
ultimate outcome of any currently pending lawsuits or claims against us will have a material adverse effect on our
financial position, results of operations or cash flows; however, there can be no assurance as to the ultimate
outcome of these matters.
We insure against risks arising from our business to the extent deemed prudent by our management and to the
extent insurance is available, but no assurance can be given that the nature and amount of that insurance will be
sufficient to fully indemnify us against liabilities arising out of pending or future legal proceedings or other claims.
Most of our insurance policies contain deductibles or self-insured retentions in amounts we deem prudent and for
which we are responsible for payment. In determining the amount of self-insurance, it is our policy to self-insure
those losses that are predictable, measurable and recurring in nature, such as claims for automobile liability,
general liability and workers compensation.