Baker Hughes 2007 Annual Report Download - page 92

2007 Form 10-K 9
John A. O’Donnell 59
Vice President of the Company since 1998 and President
of Baker Petrolite Corporation since 2005. President
of Baker Hughes Drilling Fluids from 2004 to 2005.
Vice President, Business Process Development of the
Company from 1998 to 2002; Vice President, Manufac-
turing, of Baker Oil Tools from 1990 to 1998 and Plant
Manager of Hughes Tool Company from 1988 to 1990.
Employed by the Company in 1975.
Gary G. Rich 49
Vice President of the Company and President of Hughes
Christensen since 2006. Vice President Marketing, Drill-
ing and Evaluation for INTEQ from 2005 to 2006. Region
Manager for INTEQ from 2001 to 2005; Director of
Marketing for Hughes Christensen from 1998 to 2001
and served in various marketing and finance positions
for the Company from 1987 to 1998. Employed by the
Company in 1987.
Richard L. Williams 52
Vice President of the Company and President of Baker
Hughes Drilling Fluids since 2005. Vice President, East-
ern Hemisphere Operations, Baker Oil Tools from March
2005 to May 2005. Worldwide Operations Vice Presi-
dent, INTEQ from 2004 to 2005; Vice President Eastern
Hemisphere, INTEQ from 2003 to 2004 and Vice Presi-
dent Western Hemisphere, INTEQ from 2001 to 2003.
Employed by the Company in 1975.
There are no family relationships among our executive officers.
ENVIRONMENTAL MATTERS
We are committed to the health and safety of people,
protection of the environment and compliance with laws, regula-
tions and our policies. Our past and present operations include
activities that are subject to domestic (including U.S. federal,
state and local) and international regulations with regard to air
and water quality and other environmental matters. We believe
we are in substantial compliance with these regulations. Regu-
lation in this area continues to evolve, and changes in standards
of enforcement of existing regulations, as well as the enactment
and enforcement of new legislation, may require us and our cus-
tomers to modify, supplement or replace equipment or facili-
ties or to change or discontinue present methods of operation.
We are involved in voluntary remediation projects at some
of our present and former manufacturing locations or other
facilities, the majority of which relate to properties obtained
in acquisitions or to sites no longer actively used in operations.
On rare occasions, remediation activities are conducted as
specified by a government agency-issued consent decree or
agreed order. Estimated remediation costs are accrued using
currently available facts, existing environmental permits, tech-
nology and presently enacted laws and regulations. For sites
where we are primarily responsible for the remediation, our
cost estimates are developed based on internal evaluations
and are not discounted. Such accruals are recorded when it is
probable that we will be obligated to pay amounts for environ-
mental site evaluation, remediation or related activities, and
such amounts can be reasonably estimated. If the obligation
can only be estimated within a range, we accrue the mini-
mum amount in the range. Such accruals are recorded even
if significant uncertainties exist over the ultimate cost of the
remediation. Ongoing environmental compliance costs, such
as obtaining environmental permits, installation of pollution
control equipment and waste disposal, are expensed as incurred.
During the year ended December 31, 2007, we spent
$35.2 million to comply with domestic and international stan-
dards regulating the discharge of materials into the environment
or otherwise relating to the protection of the environment
(collectively, “Environmental Regulations”). This cost includes
the total spent on remediation projects at current or former
sites, Superfund projects and environmental compliance activi-
ties, exclusive of capital expenditures. In 2008, we expect to
spend approximately $38 million to comply with Environmental
Regulations. During the year ended December 31, 2007, we
incurred $7.9 million in capital expenditures for environmen-
tal control equipment, and we estimate we will incur approxi-
mately $15 million during 2008. In addition, we estimate we
will incur approximately $19 million in capital expenditures for
the relocation of an existing plant in the U.K. to comply with
local environmental regulations. Depending on the resolution
of environmental permitting, up to $13 million may be spent
in 2008 and the remainder in 2009. Based upon current infor-
mation, we believe that our compliance with Environmental
Regulations will not have a material adverse effect upon our
capital expenditures, earnings or competitive position because
we have either established adequate reserves or our cost for
that compliance is not expected to be material to our consoli-
dated financial statements.
The Comprehensive Environmental Response, Compensa-
tion and Liability Act (known as “Superfund” or “CERCLA”)
imposes liability for the release of a “hazardous substance”
into the environment. Superfund liability is imposed without
regard to fault, even if the waste disposal was in compliance
with laws and regulations. We have been identified as a poten-
tially responsible party (“PRP”) in remedial activities related to
various Superfund sites, and we accrue our share of the esti-
mated remediation costs of the site based on the ratio of the
estimated volume of waste we contributed to the site to the
total volume of waste disposed at the site. With the joint
and several liability imposed under Superfund, a PRP may be
required to pay more than its proportional share of such costs.
We have been identified as a PRP at various Superfund sites
discussed below. The United States Environmental Protection
Agency (the “EPA”) and appropriate state agencies supervise
investigative and cleanup activities at these sites. For the year
ended December 31, 2007, we paid $0.1 million in Superfund
costs and have accrued an additional $5.3 million related to
these sites. Payments made in 2007 are in addition to amounts
previously paid in settlements, cash calls or other Superfund
costs, and these ongoing contributions reduce our financial
liability for the total site cleanup costs shown below. When
used in the descriptions of the sites that follow, the word de
minimis refers to the smallest PRPs, whose contribution rate
is usually less than 1%.