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2013 Annual Report 68
Baker Hughes Incorporated
Notes to Consolidated Financial Statements
NOTE 10. EMPLOYEE BENEFIT PLANS
DEFINED BENEFIT PLANS
We have both funded and unfunded noncontributory defined benefit pension plans (“Pension Benefits”)
covering certain employees primarily in the U.S., the U.K., Germany and Canada. Under the provisions of the U.S.
qualified pension plan (the “U.S. Plan”), a hypothetical cash balance account is established for each participant.
Such accounts receive quarterly credits based on a percentage according to the employee’s age on the last day of
the quarter applied to quarterly eligible compensation and interest credits based on the balance in the account on
the last day of the quarter. The plans are frozen for the majority of the participants in the U.K. and Canada pension
plans; therefore, we do not accrue benefits for those participants. The Germany pension plan is an unfunded plan
where benefits are based on creditable years of service, creditable pay and accrual rates. We also provide certain
postretirement health care benefits (“other postretirement benefits”), through an unfunded plan, to a closed group of
U.S. employees who retire and have met certain age and service requirements. This plan was amended during
2012 and as a result was closed to new participants as of December 31, 2012. This amendment resulted in a
reduction in the benefit obligation of $69 million, which was recorded as a prior service credit in accumulated other
comprehensive loss in 2012.
Funded Status
Below is the reconciliation of the beginning and ending balances of benefit obligations, fair value of plan assets
and the funded status of our plans.
U.S. Pension Benefits
Non-U.S.
Pension Benefits
Other Postretirement
Benefits
2013 2012 2013 2012 2013 2012
Change in benefit obligation:
Benefit obligation at beginning of year $ 589 $ 524 $ 740 $ 643 $ 148 $ 196
Service cost 65 63 12 8 6 13
Interest cost 21 21 31 32 5 7
Actuarial loss (gain) 2 20 36 76 (22) 16
Benefits paid (24) (34) (24) (22) (9) (15)
Plan amendments — — — 9 — (69)
Curtailment/settlements — — (3) (23) — —
Other (4) (5) — (8) — —
Foreign currency translation adjustments — — 7 25 — —
Benefit obligation at end of year 649 589 799 740 128 148
Change in plan assets:
Fair value of plan assets at beginning of year 524 433 592 526 — —
Actual return on plan assets 78 53 52 43 — —
Employer contributions 43 76 18 44 9 15
Benefits paid (24) (34) (24) (22) (9) (15)
Curtailment/settlements — — (2) (23) — —
Other (4
)(4)————
Foreign currency translation adjustments — — 9 24 — —
Fair value of plan assets at end of year 617 524 645 592 — —
Funded status - underfunded at end of year $ (32) $ (65) $ (154) $ (148) $ (128) $ (148)
Accumulated benefit obligation $ 599 $ 540 $ 767 $ 700 $ 128 $ 148