Baker Hughes 2015 Annual Report Download - page 65

Baker Hughes Incorporated
Notes to Consolidated Financial Statements
56
beginning after December 15, 2015. Adoption of this pronouncement is not expected to have a material impact on
our consolidated financial statements or related disclosures.
In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory, which requires
inventory measured using the FIFO or average cost methods to be subsequently measured at the lower of cost or
net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less
reasonably predictable costs of completion, disposal, and transportation. Currently, inventory measured using these
methods is required to be subsequently measured at the lower of cost or market with market defined as
replacement cost, net realizable value or net realizable value less a normal profit margin. This pronouncement is
effective for annual reporting periods beginning after December 15, 2016 on a prospective basis. Early adoption is
permitted. We have not completed an evaluation of the impact the pronouncement will have on our consolidated
financial statements and related disclosures.
In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes, which
amends existing guidance on income taxes to require the classification of all deferred tax assets and liabilities as
noncurrent on the balance sheet. The pronouncement is effective for annual reporting periods beginning after
December 15, 2016, and may be applied either prospectively or retrospectively. We have not completed an
evaluation of the impact the pronouncement will have on our consolidated financial statements and related
disclosures.
NOTE 2. HALLIBURTON MERGER AGREEMENT
On November 16, 2014, Baker Hughes, Halliburton Company (“Halliburton”) and a wholly owned subsidiary of
Halliburton (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), under which
Halliburton will acquire all of the outstanding shares of Baker Hughes through a merger of Baker Hughes with and
into Merger Sub (the "Merger"). Subject to certain specified exceptions, at the effective time of the Merger, each
share of Baker Hughes common stock will be converted into the right to receive (i) 1.12 shares of Halliburton
common stock and (ii) $19.00 in cash.
On March 27, 2015, Halliburton's stockholders approved the proposal to issue shares of Halliburton common
stock as contemplated by the Merger Agreement. In addition, Baker Hughes’ stockholders adopted the Merger
Agreement and thereby approved the proposed combination of the two companies. The obligation of the parties to
consummate the Merger is still subject to additional customary closing conditions, including: (i) applicable regulatory
approvals; (ii) the absence of legal restraints and prohibitions; and (iii) other customary closing conditions.
Halliburton is required to take all actions necessary to obtain regulatory approvals (including agreeing to
divestitures) unless the assets, businesses or product lines subject to such actions would account for more than
$7.5 billion of 2013 revenue.
Under the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act") and the
rules promulgated thereunder by the Federal Trade Commission (the “FTC”), the Merger cannot be completed until
each of Halliburton and Baker Hughes has filed a notification and report form with the FTC and the Antitrust Division
of the Department of Justice (the “DOJ”) under the HSR Act and the applicable waiting period has expired or been
terminated. Each of Halliburton and Baker Hughes filed an initial notification and report form on December 8, 2014.
Halliburton withdrew its filing on January 7, 2015 and refiled on January 9, 2015 in order to provide the FTC and the
DOJ with an additional 30-day period to review the filings. On February 9, 2015, the DOJ issued a request for
additional information under the HSR Act (the “Second Request”). On July 10, 2015, Halliburton and Baker Hughes
entered into a timing agreement with the DOJ, and on September 28, 2015, Halliburton and Baker Hughes
announced an amendment to the timing agreement which extended the period for the DOJ's review of the Merger to
the later of December 15, 2015 or 30 days following the date on which both companies have certified final,
substantial compliance with the Second Request.
On December 16, 2015, Baker Hughes' and Halliburton's timing agreement with the DOJ expired without
reaching a settlement or the DOJ initiating litigation to block the pending Merger. The companies intend to continue
their discussions with the DOJ and other competition agencies that have expressed an interest in the transaction,
and remain focused on completing the Merger as early as possible in 2016. In that regard, Baker Hughes and
Halliburton have agreed to extend the period for the parties to obtain required competition approvals to April 30,