Baker Hughes 2009 Annual Report Download - page 128

54 Baker Hughes Incorporated
During the first quarter of 2009, we repaid $325 million
principal amount of our 6.25% notes, which matured on
January 15, 2009, and $200 million principal amount of our
6.00% notes, which matured on February 15, 2009.
On March 30, 2009, we entered into a credit agreement
(the “2009 Credit Agreement”) for a committed $500 million
revolving credit facility that expires in March 2010. In addition
to the 2009 Credit Agreement, there is a $500 million com-
mitted revolving credit facility which expires on July 7, 2012.
Under a committed facility, the lender is obligated to advance
funds and/or provide credit to the borrower as per the terms
and conditions stipulated in the credit agreement. At Decem-
ber 31, 2009, we had $1.0 billion of committed revolving
credit facilities with commercial banks. 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 accel-
erated. Such events of default include payment defaults
to lenders under the facilities, covenant defaults and other
customary defaults.
At December 31, 2009, we were in compliance with all
of the covenants of both committed credit facilities. There
were no direct borrowings under the committed credit facili-
ties during 2009. We also have an outstanding commercial
paper program under which we may issue from time to time
up to $1.0 billion in commercial paper with maturity of no
more than 270 days. To the extent we have commercial
paper outstanding, our ability to borrow under the facilities
is reduced. At December 31, 2009, we had no outstanding
commercial paper.
Maturities of debt at December 31, 2009 are as follows:
2010 – $15 million; 2011 – $0 million; 2012 – $0 million; 2013 –
$504 million; 2014 – $0 million; and $1,281 million thereafter.
NOTE 13. 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 May 2009, we
reorganized the Company by geography and product lines;
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 perfor-
mance. 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 simi-
lar economic characteristics and because the long-term finan-
cial 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 accounting policies of our segments
are the same as those described in Note 1 of Notes to Consoli-
dated Financial Statements.
• The Drilling and Evaluation segment consists of the follow-
ing product lines: drilling fluids, drill bits, directional drilling,
drilling evaluation services, wireline formation evaluation,
wireline completion and production 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: wellbore construction and comple-
tion, specialty chemicals, artificial lift systems, permanent
monitoring systems, chemical injection systems, 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.