Baker Hughes 2013 Annual Report Download - page 72

2013 Annual Report 42
cash flows underlying the projected benefit obligation are matched against a yield curve constructed from a bond
portfolio of high-quality, fixed-income securities. Use of a lower discount rate would increase the present value of
benefit obligations and increase pension expense. We used a weighted average discount rate of 4.0% in 2013,
4.6% in 2012 and 5.2% in 2011 to determine pension expense. A 50 basis point reduction in the weighted average
discount rate would have increased pension expense and the projected benefit obligation of our principal pension
plans by approximately $8 million and $92 million, respectively, in 2013.
To determine the expected rate of return on plan assets, we consider the current and target asset allocations,
as well as historical and expected future returns on various categories of plan assets. A lower rate of return would
decrease plan assets which results in higher pension expense. We assumed a weighted average expected rate of
return on our plan assets of 6.9% in 2013, 7.0% in 2012 and 7.2% in 2011. A 50 basis point reduction in the
weighted average expected rate of return on assets of our principal pension plans would have increased pension
expense by approximately $6 million in 2013.
NEW ACCOUNTING STANDARDS UPDATES
In February 2013, the FASB issued ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated
Other Comprehensive Income. This ASU requires entities to present separately, among other items, the amount of
the change that is due to reclassifications, and the amount that is due to current period other comprehensive
income. We adopted the new presentation requirements in the notes to our financial statements in the first quarter
of 2013. See Note 12 of the Notes to Consolidated Financial Statements in Item 8 herein for additional information.
In July 2012, the Financial Accounting Standards Board ("FASB") issued an update to ASC 350, Intangibles -
Goodwill and Other. This ASU amends the guidance in ASC 350-30 on testing indefinite-lived intangible assets for
impairment. The revised guidance permits an entity first to assess qualitative factors to determine whether it is
more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is
necessary to perform the quantitative impairment test. The ASU is effective for impairment tests performed for fiscal
years beginning after September 15, 2012. We adopted this ASU for our 2013 impairment testing and it did not
have a material impact on our consolidated financial statements.
RELATED PARTY TRANSACTIONS
There were no significant related party transactions during the three years ended December 31, 2013.
FORWARD-LOOKING STATEMENTS
This Form 10-K, including MD&A and certain statements in the Notes to Consolidated Financial Statements,
includes forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act (each a “forward-looking statement”). The words “anticipate,” “believe,” “ensure,” “expect,” “if,”
“intend,” “estimate,” “probable,” “project,” “forecasts,” “predict,” “outlook,” “aim,” “will,” “could,” “should,” “would,”
“potential,” “may,” “likely” and similar expressions, and the negative thereof, are intended to identify forward-looking
statements. Our forward-looking statements are based on assumptions that we believe to be reasonable but that
may not prove to be accurate. The statements do not include the potential impact of future transactions, such as an
acquisition, disposition, merger, joint venture or other transaction that could occur. We undertake no obligation to
publicly update or revise any forward-looking statement. Our expectations regarding our business outlook,
including changes in revenue, pricing, capital spending, profitability, strategies for our operations, impact of any
common stock repurchases, oil and natural gas market conditions, the business plans of our customers, market
share and contract terms, costs and availability of resources, legal, economic and regulatory conditions, and
environmental matters are only our forecasts regarding these matters.
All of our forward-looking information is subject to risks and uncertainties that could cause actual results to differ
materially from the results expected. Although it is not possible to identify all factors, these risks and uncertainties
include the risk factors and the timing of any of those risk factors identified in Item 1A. Risk Factors and those set
forth from time to time in our filings with the SEC. These documents are available through our website or through
the SEC’s Electronic Data Gathering and Analysis Retrieval system (“EDGAR”) at http://www.sec.gov.