Baker Hughes 2015 Annual Report Download - page 89

Baker Hughes Incorporated
Notes to Consolidated Financial Statements
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Federal Court on related Canadian patent 2,412,072. These patents relate primarily to certain specific downhole
completions equipment. The case is set for a jury trial on September 25, 2017, in Tyler, Texas. Plaintiff has
requested a permanent injunction against further alleged infringement, damages in an unspecified amount,
supplemental and enhanced damages, and additional relief such as attorney’s fees and costs. At this time, we are
not able to predict the outcome of these claims or whether either will have a material impact on our financial
position, results of operations or cash flows.
On May 30, 2013, we received a Civil Investigative Demand ("CID") from the U.S. Department of Justice
("DOJ") pursuant to the Antitrust Civil Process Act. The CID seeks documents and information from us for the
period from May 29, 2011 through the date of the CID in connection with a DOJ investigation related to pressure
pumping services in the U.S. We are working with the DOJ to provide the requested documents and information.
We are not able to predict what action, if any, might be taken in the future by the DOJ or other governmental
authorities as a result of the investigation.
ENVIRONMENTAL MATTERS
Our past and present operations include activities that are subject to extensive domestic (including U.S. federal,
state and local) and international environmental regulations with regard to air, land and water quality and other
environmental matters. Our environmental procedures, policies and practices are designed to ensure compliance
with existing laws and regulations and to minimize the possibility of significant environmental damage.
We are involved in voluntary remediation projects at certain of our facilities. On rare occasions, remediation
activities are conducted as specified by a government agency-issued consent decree or agreed order. Remediation
costs are accrued based on estimates of probable exposure using currently available facts, existing environmental
permits, technology and presently enacted laws and regulations. Remediation cost estimates include direct costs
related to the environmental investigation, external consulting activities, governmental oversight fees, treatment
equipment and costs associated with long-term operation, maintenance and monitoring of a remediation project.
We have also been identified as a potentially responsible party (“PRP”) in remedial activities related to various
Superfund sites. In these instances, we participate in the process set out in the Joint Participation and Defense
Agreement to negotiate with government agencies, identify other PRPs, and determine each PRP’s allocation and
estimate remediation costs. We have accrued what we believe to be our pro-rata share of the total estimated cost
of remediation and associated management of these Superfund sites. This share is based upon the ratio that the
estimated volume of waste we contributed to the site to the total estimated volume of waste disposed at the site.
Applicable U.S. federal law imposes joint and several liability on each PRP for the cleanup of these sites leaving us
with the uncertainty that we may be responsible for the remediation cost attributable to other PRPs who are unable
to pay their share. No accrual has been made under the joint and several liability concept for those Superfund sites
where our participation is de minimis since we believe that the probability that we will have to pay material costs
above our volumetric share is remote. We believe there are other PRPs who have greater involvement on a
volumetric calculation basis, who have substantial assets and who may be reasonably expected to pay their share
of the cost of remediation. For those Superfund sites where we are a significant PRP, remediation costs are
estimated to include recalcitrant parties. In some cases, we have insurance coverage or contractual indemnities
from third parties to cover a portion of the ultimate liability.
Our total accrual for environmental remediation is $35 million and $35 million, which includes accruals of $2
million and $3 million for the various Superfund sites, at December 31, 2015 and 2014, respectively. The
determination of the required accruals for remediation costs is subject to uncertainty, including the evolving nature
of environmental regulations and the difficulty in estimating the extent and type of remediation activity that is
necessary.
OTHER
In the normal course of business with customers, vendors and others, we have entered into off-balance sheet
arrangements, such as surety bonds for performance, letters of credit and other bank issued guarantees, which
totaled approximately $1.2 billion at December 31, 2015. It is not practicable to estimate the fair value of these
financial instruments. None of the off-balance sheet arrangements either has, or is likely to have, a material effect