Baker Hughes 2009 Annual Report Download - page 134

60 Baker Hughes Incorporated
The following table presents a rollforward for the fair value of the assets using Level 3 unobservable inputs.
Non-U.S. Non-U.S.
U.S. Property Fund Property Fund Insurance Contracts Total
Beginning balance at January 1, 2009 $ 19 $ 18 $ 7 $ 44
Unrealized gains (losses) (6) 1 1 (4)
Net purchases (sales) – – (1) (1)
Ending balance at December 31, 2009 $ 13 $ 19 $ 7 $ 39
Expected Cash Flows
For all pension plans, we make annual contributions to the
plans in amounts equal to or greater than amounts necessary
to meet minimum governmental funding requirements.
Although we previously expected to forgo contributions for a
period of five to eight years, due to recent downturns in
investment markets and the decline in the value of the pen-
sion plan assets, we may be required to make contributions to
the U.S. qualified pension plan within the next one to two
years. In 2010, we expect to contribute between $20 million
and $25 million to our U.S. pension plans and between $15
million and $20 million to the non-U.S. pension plans. In
2010, we also expect to make benefit payments related to
postretirement welfare plans of between $18 million and $20
million.
The following table presents the expected benefit pay-
ments over the next ten years. The U.S. and non-U.S. pension
benefit payments are made by the respective pension trust
funds. The other postretirement benefits are net of expected
Medicare subsidies of approximately $2 million per year and
are payments that are expected to be made by us.
U.S. Non-U.S. Other
Pension Pension Postretirement
Year Benefits Benefits Benefits
2010 $ 20 $ 11 $ 19
2011 23 10 16
2012 26 10 16
2013 29 12 16
2014 32 13 17
2015–2019 207 66 95
Defined Contribution Plans
During the periods reported, generally all of our U.S.
employees were eligible to participate in our sponsored Thrift
Plan, which is a 401(k) plan under the Internal Revenue Code
of 1986, as amended (“the Code”). The Thrift Plan allows eli-
gible employees to elect to contribute from 1% to 50% of
their salaries to an investment trust. Employee contributions
are matched by the Company in cash at the rate of $1.00 per
$1.00 employee contribution for the first 5% of the employ-
ee’s salary and such contributions vest immediately. In addi-
tion, we make cash contributions for all eligible employees
between 2% and 5% of their salary depending on the
employee’s age. Such contributions are fully vested to the
employee after three years of employment. The Thrift Plan
provides for ten different investment options, for which the
employee has sole discretion in determining how both the
employer and employee contributions are invested. The Thrift
Plan does not offer Baker Hughes company stock as an invest-
ment option. Our contributions to the Thrift Plan and several
other non-U.S. defined contribution plans amounted to
$129 million, $137 million and $131 million in 2009,
2008 and 2007, respectively.
For certain non-U.S. employees who are not eligible
to participate in the Thrift Plan, we provide a non-qualified
defined contribution plan that provides basically the same ben-
efits as the Thrift Plan. In addition, we provide a non-qualified
supplemental retirement plan (“SRP”) for certain officers and
employees whose benefits under the Thrift Plan and/or the
U.S. defined benefit pension plan are limited by federal tax
law. The SRP also allows the eligible employees to defer a por-
tion 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 sheet. Our contributions to these non-qualified plans
were $11 million, $9 million and $11 million for 2009, 2008
and 2007, respectively.
In 2010, we estimate we will contribute between $142 mil-
lion and $154 million to our defined contribution plans.
Postemployment Benefits
We provide certain postemployment disability income,
medical and other benefits to substantially all qualifying for-
mer 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, 2009 and 2008 was
$13 million and $12 million, respectively, and is included in
other liabilities in our consolidated balance sheet.
NOTE 15. COMMITMENTS AND CONTINGENCIES
Leases
At December 31, 2009, 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, 2014 are $126 million, $87 million, $63 million,
$40 million and $27 million, respectively, and $102 million in
the aggregate thereafter. Rent expense, which generally
includes transportation equipment and warehouse facilities,