milestone 6mcanally

8/3/2019 Milestone 6mcanally

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Halliburton

As Reported Adjustment As If

Current Assets 8,886 0 8,886

Total Assets 18,297 580 18,877

Net Operating Assets (NOA) 10,727 580 11,307

Current Liabilities 2,757 120 2,877

Non-Current Liabilities 5,153 460 5,613Total Debt (Current + LT) 3,824 580 4,404

Total Liabilities 7,910 580 8,490

Equity 10,387 0 10,387

Before Tax Tax After Tax

Net Income as Reported 2,695 853 1,842

Add back operating lease payment 161 56 105

Deduct depericiation expense 67 24 44

Deduct interest at 7% 41 14 27

Net Income as if 2,748 871 1,876

Before Tax

(NOPBT) Tax

After Tax

(NOPAT)

Operating profit, as reported 3,009 957 2,035

Add back operating lease payment 161 56.35 104.65

Deduct depericiation expense 67 24 11

Operating profit, as if 3,103 990 2,129

As Reported As If

Current Ratio 3.2231 3.0882

Common Size Liabilities 0.4323 0.4498Total debt to Equity 0.3682 0.4240

ROE (annualized) 0.1924 0.1806

T e as reporte

uses average but

the as if does not.

RNOA (annualized) 0.1591 0.1883

Baker Hughes

As Reported Adjustment As If

Current Assets 8,707 0 8,707

Total Assets 22,986 1,140 24,126

Net Operating Assets (NOA) 17,921 1,140 19,061Current Liabilities 3,139 106 3,245

Non-Current Liabilities 5,561 1,034 6,595

Total Debt (Current + LT) 3,885 1,140 5,025

Total Liabilities 8,700 1,034 9,734

Equity 14,286 0 14,286

Before tax Tax After tax

Net income as reported 1,282 463 819


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Add back operating lease payment 186 65 121

Deduct depreciation expense 181 63 118

Deduct interest at 7% 80 28 52

Net income as if 1,207 437 770

Before tax (NOPBT) Tax After tax (NOPAT)

Operating profit, as reported 1,417 496 921Add back operating lease payment 186 65 121

Deduct depreciation expense 181 63 118

Operating profit, as if 1,422 498 924

As reported As if

Current ratio 2.7738 2.6832

Common size liabilities 0.3785 0.4035

Total debt/equity 0.2719 0.3517

ROE (annualized) 0.0573 0.0539

RNOA (annualized) 0.0670 0.0485

Changing the operating leases to capitalized leases will impact the financial ratios for the companies.

The current ratio drops for both companies indicating they might less liquid.

Additionally the common-size liabilties increases for both firms which means they are less solvent than reported.

Also the total debt to equity increased for both companies meaning they financing more of their operations with

ORIGINAL NOTES FROM FINANCIAL STATEMENTS

Excerpt from Halliburton

EXECUTIVE OVERVIEW

LIQUIDITY AND CAPITAL RESOURCES

We ended 2010 with cash and equivalents of $1.4 billion compared to $2.1 billion at December 31, 2009.We also held $653 million of short-ter

Significant sources of cash

Cash flows from operating activities contributed $2.2 billion to cash in 2010.

During 2010, we sold approximately $1.9 billion of short-term marketable securities.

Further available sources of cash. We have an unsecured $1.2 billion, five-year revolving credit facility to provide commercial paper support, g

Significant uses of cash

Capital expenditures were $2.1 billion in 2010 and were predominantly made in the production enhancement, drilling services, wireline and perfo

During 2010, we purchased approximately $1.3 billion in short-term marketable securities.

We paid $523 million to acquire various companies, including Boots & Coots, Inc. (Boots & Coots), during 2010 that should enhance or augment

In September 2010, we completed the acquisition of Boots & Coots in a stock and cash transaction valued at approximately $248 million, of whic

Subsequent to the acquisition, we retired approximately $40 million of Boots & Coots outstanding debt.Effective October 2010, Boots & Coots

In October 2010, we retired $750 million principal amount of our 5.5% senior notes with available cash and equivalents.

We paid $327 million in dividends to our shareholders in 2010.

We paid $177 million to United States and Nigerian authorities during 2010 related to KBR TSKJ matters.See Notes 7 and 8 to our consolidated

Future uses of cash. Capital spending for 2011 is expected to be approximately $3.0 billion.The capital expenditures plan for 2011 is primarily


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We are currently exploring opportunities for acquisitions that will enhance or augment our current portfolio of products and services, including th

Subject to Board of Directors approval, we expect to pay quarterly dividends of approximately $80 million during 2011.We also have approxim

The following table summarizes our significant contractual obligations and other long-term liabilities as of December 31, 2010:

(a) Interest on debt includes 86 years of interest on $300 million

(b) Primarily represents certain purchase orders for goods and ser

(c) Amount based on assumptions that are subject to change.Als

We are currently not able to reasonably estimate our contribut

We had $209 million of gross unrecognized tax benefits at December 31, 2010, of which we estimate $59 million may require a cash payment.

We are not able to reasonably estimate in which future periods this amount will ultimately be settled and paid.

Excerpt from Baker Hughes

ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

Contractual Obligations

In the table below, we set forth our contractual cash obligations as of December31, 2010. Certain amounts included in thi

The contractual cash obligations we will actually pay in future periods may vary from those reflected in the table because

(1) Amounts represent the expected cash payments for our total debt and do not include any una

(2) Amounts represent the expected cash payments for interest on our long-term debt.

(3) We enter into operating leases in the normal course of business. Some lease agreements prov

Our future operating lease payments as reflected in the table above would change if we exer

(4) Purchase obligations include agreements to purchase goods or services that are enforceable a

fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions;

(5) Amounts represent other long-term liabilities, including the current portion, reflected in the

payments for deferred compensation, payouts under acquisition agreements and payments fo

Payments DueMillions of dollars 2011 2012 2013 2014 2015Long-term debt $ $ $ $ $ $Interest on debt (a) 263 263 263 263 263Operating leases 161 122 87 50 41Purchase obligations (b) 1,714 91 64 13 6Pension funding obligations (c) 41 Other long-term liabilities 9 9 9

Total $ 2,188 $ 485 $ 423 $ 326 $ 310 $

Payments Due by Perio Less Than 2 - 3

(In millions) Total 1 year Years

Total debt (1) $ 3,880 $ 330 $ 500Estimated interest payments (2) 3,621 220 416Operating leases (3) 681 186 228Purchase obligations (4) 264 246 18Other long-term liabilities (5) 168 14 70Income tax liabilities for uncertain tax

positions (6) 438 279 76

Total $ 9,052 $ 1,275 $ 1,308


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(6) The estimated income tax liabilities for uncertain tax positions will be settled as a result of e

The timing of any particular settlement will depend on the length of the tax audit and related


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Score out of 10: 9

Discount Rate = 7%

Year Operating Lease Payment Discount Factor Present Value

2011 161 0.93 150

2012 122 0.87 107

2013 87 0.82 712014 50 0.76 38

2015 41 0.71 29

>2015 149 4.51 185 This is inc

Total 580

Remaining life = 149/41 3.63

Present Value Factor for the Annuity after 2015 6.32

Discount Factor = 0.71

Year Present Value Interest Interest Expense Principal

2011 580 0.07 41 120

2012 460 0.07 32 90

2013 370 0.07 26 61

2014 309 0.07 22 28

2015 281 0.07 20 21

>2015 259 0.07 18 18

Discount Rate = 7%

Year Operating Lease Payment Discount Factor Present Value

2011 186 0.93 1742012 228 0.87 199

2013 228 0.82 186

2014 116 0.76 88

2015 116 0.71 83

>2015 151 3.54 410 This is inc

Total 1140

1.30Remaining life = 151/116


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4.96

0.71

Year Present Value Interest Interest Expense Principal

2011 1140 0.07 80 106

2012 1034 0.07 72 156

2013 879 0.07 62 1662014 712 0.07 50 66

2015 646 0.07 45 71

>2015 575 0.07 40 40

debt.

, United States Treasury securities classified as marketable securities.

eneral working capital, and credit for other corporate purposes.The facility was undrawn as of December 31, 2010.

rating, and cementing product service lines.

our current portfolio of products and services.

h approximately $143 million was paid in cash and approximately 3.4 million shares of our common stock were issued to Boots & Coot

esults of operations were included in our Completion and Production segment.

financial statements for more information.

directed toward our production enhancement, drilling services, wireline and perforating, completion tools, and cementing product servi

Present Value Factor for the Annuity after 2015

Discount Factor =


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ose with unique technologies or distribution networks in areas where we do not already have large operations.

tely $1.7 billion remaining available under our share repurchase authorization, which may be used for open market share purchases.

f debentures at 7.6% interest that become due in 2096.

vices utilized in the ordinary course of our business.

o, we may choose to make additional discretionary contributions.

ions for years after 2011.See Note 13 to the consolidated financial statements for further information regarding pension contributions.

e estimate that the total $59 million will not be settled within the next 12 months.

PERATIONS

is table are based on our estimates and assumptions about these obligations, including their duration, anticipated acti

the estimates and assumptions are subjective.

ortized discounts, deferred issuance costs or net deferred gains on terminated interest rate swap agreements.

ide us with the option to renew the lease.

ised these renewal options or if we entered into additional operating lease agreements.

nd legally binding and that specify all significant terms, including:

nd the approximate timing of the transaction. Purchase obligations exclude agreements that are cancelable at anytime without penalty.

onsolidated balance sheet where both the timing and amount of payment streams are known. Amounts include: payments for certain env

r certain asset retirement obligations. Amounts do not include: payments for pension contributions and payments for various postretirem

Thereafter Total3,824 $ 3,8245,359 6,674

149 6105 1,893 41 27

9,337 $ 13,069

d4 - 5 More than

Years 5 Years

$ $ 3,050377 2,608116 151 26 58

34 49

$553 $ 5,916


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xpiring statutes, audit activity, competent authority proceedings related to transfer pricing, or final decisions in matters that are the subje

appeals process, if any, or an expiration of a statute. If a liability is settled due to a statute expiring or a favorable audit result, the settle


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These are correctly done. The numbers are wrong but that's because $580 is wrong

rrect. Please check the book for the method to calculate this.

rrect. Please check the book for the method to calculate this.


10/47

s stockholders.

e lines.


11/47

ons by third parties and other factors.

ironmental remediation liabilities,

ent welfare benefit plans and postemployment benefit plans.


12/47

ct of litigation in various taxing jurisdictions in which we operate.

ent of the tax liability would not result in a cash payment.


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Halliburton

2010 2009 2008

Common-size Analysis

Total liabilities / Total assets 0.4323 0.4705 0.4617

Current liabilities / Total assets 0.1507 0.1747 0.1933

Current portion of long-term debt / Total assets 0.0000 0.0454 0.0447

Current portion of long-term debt / Total long-term debt 0.0000 0.1640 0.1991

Turnover Analysis

Account payable turnover (COGS / Average AP) 15.3115 14.8119 16.8655

Net op'n working capital turnover (sales / NOWC) 3.2821 2.8292 3.6362

Liquidity Analysis

Current Ratio Current Assets / Curent Liab 3.2231 2.9900 2.6649

Quick Ratio (Cash + Sec+AR)/Curr Liab 2.1672 2.2008 1.8572

Cash from operation / Current liabilities 0.8023 0.8328 0.9615

Cash collection cycle (ART + INVT - APT) (8.2846) (8.4326) (9.3863)

Solvency Ratios

Total liabilities / Equity 0.7615 0.8885 0.8576

Total long-term debt / Equity 0.3682 0.5223 0.4170

Times interest earned - EBIT/Int Expense 9.9394 6.9018 31.0703

Average interest rate on debt 0.0777 0.0623 0.0396

Cash from operations / Cash interest paid 2.8000 77.6129 1.3057

Baker Hughes

2010 2009 2008Common-size Analysis

Total liabilities / Total assets 0.3785 0.3632 0.4261

Current liabilities / Total assets 0.1366 0.1410 0.2117

Current portion of long-term debt / Total assets 0.0144 0.0013 0.0470

Current portion of long-term debt / Total long-term debt 0.0852 0.0083 0.2392

Turnover Analysis

Account payable turnover (COGS / AP) 9.6539 8.6565 9.9925

Net op'n working capital turnover (sales / NOWC) 2.5516 2.0886 2.2851

Liquidity AnalysisCurrent Ratio - Current Assets / Current Liabilities 2.7738 3.8593 2.8455

Quick Ratio - Cash + Marketable Securities + AR / Current Liabi 1.7993 2.4340 1.8773

Cash from operation / Current liabilities 0.2727 0.7681 0.6428

Cash collection cycle (ART + INVT - APT) (2.6270) (2.2772) (2.5132)

Solvency Ratios

Total liabilities / Equity 0.6090 0.5704 0.7425

Total long-term debt / Equity 0.2719 0.2471 0.3427


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Times interest earned - EBIT/Int Expense 10.0496 5.8560 38.8065

Average interest rate on debt 0.0363 0.0694 0.0266

Cash from operations / Cash interest paid 5.5584 8.0455 18.7674


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Halliburton

ACCOUNTS RECEIVABLE RATIOS:

2010 2009 2008

Common size analysis

AR/Total Assets 0.2145 0.1792 0.2638Allowance for bad debts/Total assets 0.0050 0.0054 0.0042

Allowance for bad debts/Gross AR 0.0227 0.0295 0.0156

Turnover Analysis

Account receivable turnover (Sales/Average AR) 5.2186 4.3424 5.3075

Average collection period (365/(Sales/AR)) 69.9416 84.0557 68.7707

INVENTORY RATIOS:

2010 2009 2008


Gross profit margin (Gross profit/Sales) 0.1796 0.1496 0.2314

Inventory/Total Assets 0.1060 0.0966 0.1271

Allowance for inventory obsolescence/Total Assets 0.0048 0.0057 0.0056

Allowance for inventory obsolescence/Gross Inventory 0.0454 0.0588 0.0443

Turnover analysis

Inventory turnover (COGS/Average Inventory) 1.8082 2.0369 2.1718

Average turnover period (365/(COGS/Inventory)) 201.8529 179.1920 168.0655

FIXED ASSETS RATIOS:

2010 2009 2008Common size analysis

Depreciation expense/Sales 0.0623 0.0634 0.0404

PPE/Total assets 0.3739 0.3482 0.3324

Accumulated depreciation/Total assets 0.3314 0.3162 0.3174

Turnover Analysis

PPE Turnover (Sales/Average PPE) 0.7132 0.6961 1.0865

Long-term operating asset turnover (Sales/Average LT

net operating assets) 2.2238 2.1480 3.2068

Other ratios

Estimated average useful life (Depreciable PPE/

depreciation expense) 11.4397 11.7111 9.9785

Percent used up (Accumulated depreciation/

Depreciable PPE) 0.4737 0.4797 0.4915

Asset replacement ratio (CAPEX/Depreciation expense) 1.8490 2.0021 2.4715

SALES / EMPLOYEE 0.2996 0.2446 0.3047

OPERATING EXPENSES / EMPLOYEE 0.2494 0.2114 0.2378


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Baker Hughes

ACCOUNTS RECEIVABLE RATIOS:

2010 2009 2008


AR/Total Assets 0.1715 0.2038 0.2326Allowance for bad debts/Total assets 0.0070 0.0137 0.0062

Allowance for bad debts/Gross AR 0.0395 0.0631 0.0261

Turnover Analysis

Account receivable turnover (Sales/Average AR) 4.5956 3.7972 4.6145

Average collection period (365/(Sales/AR)) 79.4243 96.1222 79.0977

INVENTORY RATIOS:

2010 2009 2008


Gross profit margin (Gross profit/Sales) 0.2241 0.2346 0.3296

Inventory/Total assets 0.1129 0.1605 0.1704

Allowance for inventory obsolescence/Total Assets

Allowance for inventory obsolescence/Gross Invetory

Turnover analysis

Inventory turnover (COGS/Average Inventory) 1.9679 2.0005 2.1853

Average turnover period (365/(COGS/Inventory)) 185.4726 182.4527 167.0271

FIXED ASSETS RATIOS:

2010 2009 2008Common size analysis

Depreciation expense/Sales 0.0742 0.0736 0.0537

PPE/Total assets 0.2745 0.2763 0.2389

Accumulated depreciation/Total assets 0.1900 0.3207 0.2700

Turnover Analysis

PPE Turnover (Sales/Average PPE) 3.0438 3.2246 4.5825

Long-term operating asset turnover (Sales/Average LT

net operating assets) 1.1745 2.1683 3.0051

Other ratios

Estimated average useful life (Depreciable PPE/

depreciation expense) 9.8092 9.4909 9.3422

Percent used up (Accumulated depreciation/

Depreciable PPE) 0.4165 0.5436 0.5382

Asset replacement ratio (CAPEX/Depreciation expense) 1.3938 1.5331 2.0408

SALES / EMPLOYEES 0.2720 0.1823 0.2238

OPERATING EXPENSE / EMPLOYEES 0.2452 0.1685 0.1790


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Company name Halliburton As Stated

Year 2010 ROE

0.192 = 0.159 +

RNOA

ROE

0.192 = 0.113 1.405 +NOPM NOAT

Year 2009 ROE

0.140 = 0.121 +

RNOA

ROE

0.140 = 0.094 1.290 +

NOPM NOAT

Year 2008 ROE

0.301 = 0.269 +RNOA

ROE

0.301 = 0.151 1.783 +

NOPM NOAT

Company name Halliburton Pro Forma

Year 2010 ROE

0.191 = 0.157 +

RNOA

ROE

0.191 = 0.112 1.405 +

NOPM NOAT

Year 2009 ROE

0.139 = 0.118 +

RNOA

ROE

0.139 = 0.091 1.290 +

NOPM NOAT

Year 2008 ROE

0.339 = 0.262 +

RNOA

ROE

0.339 = 0.147 1.783 +

NOPM NOAT


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Company name Baker Hughes As Stated

Year 2010 ROE

0.0759 = 0.0670 +

RNOA

ROE0.0759 = 0.1640 0.4085 +

NOPM NOAT

Year 2009 ROE

0.0598 = 0.0547 +

RNOA

ROE

0.0598 = 0.1037 0.5278 +

NOPM NOAT

Year 2008 ROE0.2494 = 0.2009 +

RNOA

ROE

0.2494 = 0.2896 0.6938 +

NOPM NOAT

Company name Baker Hughes Pro Forma

Year 2010 ROE0.0895 = 0.0774 +

RNOA

ROE

0.0895 = 0.1896 0.4085 +

NOPM NOAT

Year 2009 ROE

0.0597 = 0.0552 +

RNOA

ROE0.0597 = 0.1047 0.5278 +

NOPM NOAT

Year 2008 ROE

0.2388 = 0.1994 +

RNOA

ROE

0.2388 = 0.2873 0.6938 +


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NOPM NOAT


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ROE

0.033

NORRNOA

1.000

0.336 0.099 FLEV Spread MISR NOPM

0.019 NOAT

NOR

1.000 NNEP

0.378 0.050

FLEV Spread MISR FLEV

0.033NOR Spread

1.000 FLEV*Spread

0.394 0.083

FLEV Spread MISR ROE Check

ROE

0.033

NORRNOA

1.000

0.336 0.099

FLEV Spread MISR NOPM

0.022 NOAT

NOR

1.000 NNEP

0.378 0.057

FLEV Spread MISR FLEV

0.077

NOR Spread

1.000 FLEV*Spread

0.394 0.196

FLEV Spread MISR ROE Check


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ROE

0.0089 RNOA

NOR

1.0000 NOPM0.2520 0.0355

FLEV Spread MISR NOAT

0.0051

NOR NNEP

1.0000

0.2933 0.0172 FLEV

FLEV Spread MISR

Spread0.0484

NOR FLEV*Spread

1.0000 ROE Check

0.2606 0.1858

FLEV Spread MISR

ROE

0.0120 RNOA

NOR

1.0000 NOPM

0.2520 0.0478

FLEV Spread MISR

NOAT

0.0045

NOR NNEP

1.00000.2933 0.0153 FLEV

FLEV Spread MISR

Spread

0.0394

NOR FLEV*Spread

1.0000 ROE Check

0.2606 0.1513


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FLEV Spread MISR


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2010 2009 2008

NI 0.1924 0.1400 0.3013

Avg Equity

NOPAT 0.1591 0.1210 0.2687

Avg NOA

NOPAT 0.1132 0.0938 0.1507

Sales

SALES 1.4054 1.2903 1.7832Avg NOA

NNE 0.0600 0.0709 0.1860

Avg NNO

Avg NNO 0.3360 0.3785 0.3942

Avg Equity

RNOA-NNEP 0.0991 0.0502 0.0827

0.0333 0.0190 0.0326

RNOA+FLEV*Spread 0.1924 0.1400 0.3013

2010 2009 2008

NI 0.1905 0.1393 0.3391

Avg Equity

NOPAT 0.157 0.118 0.262

Avg NOA

NOPAT 0.112 0.091 0.147

Sales

SALES 1.405 1.290 1.783Avg NOA

NNE 0.059 0.061 0.065

Avg NNO

Avg NNO 0.336 0.378 0.394

Avg Equity

RNOA-NNEP 0.099 0.057 0.196

0.033 0.022 0.077

RNOA+FLEV*Spread 0.191 0.139 0.339


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2010 2009 2008

NI 0.0759 0.0598 0.2494Avg Equity

NOPAT 0.067 0.0547 0.2009Avg NOA

NOPAT 0.164 0.1037 0.2896Sales

SALES 0.409 0.5278 0.6938

Avg NOA

NNE 0.032 0.0375 0.0151

Avg NNO

Avg NNO 0.252 0.2933 0.2606

Avg Equity

RNOA-NNEP 0.035 0.0172 0.1858

0.009 0.0051 0.0484

RNOA+FLEV*Spread 0.0759 0.0598 0.2494

2010 2009 2008

NI 0.0895 0.0597 0.2388

Avg Equity

NOPAT 0.0774 0.0552 0.1994Avg NOA

NOPAT 0.1896 0.1047 0.2873

Sales

SALES 0.4085 0.5278 0.6938

Avg NOA

NNE 0.0297 0.0400 0.0481

Avg NNO

Avg NNO 0.2520 0.2933 0.2606

Avg Equity

RNOA-NNEP 0.0478 0.0153 0.1513

0.0120 0.0045 0.0394

RNOA+FLEV*Spread 0.0895 0.0597 0.2388


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Halliburton Company

Consolidated Statements of Operations (USD

$)

In Millions, except Per Share data Dec. 31, 2010Dec. 31,

2009

Dec. 31,

2008

Dec.

20Revenue:Services 13,779 10,832 13,391

Product sales 4,194 3,843 4,888 Total revenue 17,973 14,675 18,279

Operating costs and expenses:Cost of services 11,237 9,224 10,079

Cost of sales 3,508 3,255 3,970

General and administrative 229 207 282

Gain on sale of assets, net (10) (5) (62) Non-Persistent

Total operating costs and expenses 14,964 12,681 14,269

O eratin income 3,009 1,994 4,010

Interest expense, net of interest income of $11,

12, and 39 (297) (285) (128)

Other, net

(57) (27) (33)

Income from continuing operations before income

taxes 2,655 1,682 3,849

Provision for income taxes (853) (518) (1,211)

Income from continuing operations 1,802 1,164 2,638

Income (loss) from discontinued operations, net of

income tax benefit of 75, 5, and 3 40 (9) (423) Non-Persistent

Net income 1,842 1,155 2,215

Noncontrolling interest in net income of

subsidiaries (7) (10) 9

Net income attributable to company 1,835 1,145 2,224

Amounts attributable to company

shareholders:Income from continuing operations 1,795 1,154 2,647

Income (loss) from discontinued operations, net 40 (9) (423)

Net income attributable to com an 1,835 1,145 2,224

Basic income per share attributable to

com an shareholders:Income from continuing operations (in dollars per

share 1.98 1.28 3

Income (loss) from discontinued operations, net (in

dollars er share 0.04 (0.01) (0.48)

Net income per share (in dollars per share) 2.02 1.27 2.52

Diluted income per share attributable to

com an shareholders:Income from continuing operations (in dollars per

share 1.97 1.28 2.91

Income (loss) from discontinued operations, net (in

dollars er share 0.04 (0.01) (0.46)Net income per share (in dollars per share) 2.01 1.27 2.45

Basic weighted average common shares

outstandin in shares 908 900 883

Diluted weighted average common shares

outstandin in shares 911 902 909

Statutory Tax Rate 0.35 0.35 0.35 Statutory Tax Rate

Tax On Operating Profit 957 618 1,256

NOPBT 3,009 1,994 4,010

NOPAT 2,035 1,376 2,754

NNE (NOPAT-Net Income) 193 221 539 NNE (NOPAT-Net Income)

12 Months Ended

NOPAT=NI+(NonOpExp*(1-

Tax Rate)


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Halliburton Company

Consolidated Balance

Sheets (USD $)

In Millions Dec. 31, 2010 Dec. 31, 2009 Dec. 31, 2008 Dec. 31, 2007

Current assets

Cash and equivalents 1398 2082 1,124 1,847

Receivables (less allowance3,924 2,964

3,795 3,093Inventories 1,940 1,598 1,828 1,459

Investments in marketable 653 1,312 246 388

Current deferred income 257 210 0 376

Other current assets 418 410

Total current assets, , 7,411 7,573

Property, plant, and

equipment (net of 6,842 5,759 4,782 3,630

Goodwill 1,315 1,100 1,072 790

Noncurrent deferred income 0 0 157 348

Other assets , , 963 794

Total assets 18,297 16,538 14,385 13,135

Current liabilities

Accounts payable 1,139 787 898 768

Current maturities of long- 0 750 643 575

Accrued employee 716 514 373 209

Deferred revenue 266 215 231 209

Department of Justice and

Securities and Exchange

Commission settlement and

indemnity, current 142 67 159Income tax payable 0 0 26 0

Other current liabilities 543 491

Total current liabilities, , 2,781 2,411

Long-term debt 3,824 3,824 2,586 2,627

Employee compensation 487 462 539 403

Other liabilities 735 734

Total liabilities , , 6,641 6,175

Shareholders' equityCommon shares, par value

$2.50 per share -

authorized 2,000 shares,

issued 1,069 shares and

1 067 shares2,674 2,669 2,666 2,657

Paid-in capital in excess of 339 411 1,114 1,741

Accumulated other (240) (213) (215) (104)

Retained earnings 12,371 10,863 9,411 8,202

Treasury stock, at cost - , , (5,251) (5,630)


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Company shareholders' 10,373 8,728 7,725 6,866

Noncontrolling interest in 19 94

Total shareholders' , , 7,744 6,960

Total liabilities and, , 14,385 13,135

Total Assets 18,297 16,538 14,385 13,135

Average Total Assets 17,418 15,462 13,760

Total Equity 10,387 8,757 7,744 6,960

Average Total Equity 9,572 8,251 7,352

Non-operating Liabilities 3,824 4,574 3,229 3,202

Non-operating Assets 653 1,312 246 388

NNO 3,171 3,262 2,983 2,814

Average NNO 3,217 3,123 2,899

Operating Assets 17,644 15,226 14,139 12,747

Operating Liabilities 4,086 3,207 3,412 2,973

NOA 13,558 12,019 10,727 9,774

Average NOA 12,789 11,373 10,251

CHECK TRUE TRUE TRUE TRUE

Avg '10-'09 Avg '09-08 Avg 08-07

9,572 8,251 7,352


28/47

As reported Adjustment As if

1,398 0 1,398

3,924 0 3,9241,940 0 1,940653 0 653257 0 257714 0 714

8,886 0 8,886

6,842 580 7,4221,315 0 1,315

0 0 01,254 0 1,254

18,297 580 18,877

1,139 0 1,1390 120 120

716 0 716266 0 266

0 0 00 0 0

636 0 636

2,757 120 2,877

3,824 460 4,284487 0 487842 0 842

7,910 580 8,490

2,674 0 2,674339 0 339

(240) 0 (240)12,371 0 12,371(4,771) 0 (4,771)


29/47

10,373 0 10,37314 0 14

10,387 0 10,387

18,297 0 18,877


30/47

Halliburton CompanyConsolidated Statements of

Shareholders' Equity (USD $)

Millions of dollars Common Shares Paid-in Capital in Excess of Par Value Treasury Stock

Balance at December 31, 2007 2657 1804 (5630)

Cash dividends paid

Stock plans 9 41 173

Common shares purchased (507)Tax benefit from exercise of options

and restricted stock 45

Distributions to noncontrolling interest

holders

Other transactions with shareholders

Total dividends and other transactions

with shareholders9 86 (334)

Adoption of new accounting standards

(693)

Portion of the convertible debt

premium settled in stock, at cost (713) 713

Comprehensive income (loss):

Net income

Other comprehensive income (loss):

Cumulative translation adjustment

postretirement

Actuarial net loss

Other

Tax effect on defined benefit and

postretirement plans

Defined benefit and other

postretirement

plans, net

Net unrealized losses on investments,

net of tax benefit of $4

Total comprehensive income


Cash dividends paid

Stock plans 3 (51) 266

Common shares purchased (17)

Tax loss from exercise of options andrestricted stock

(22)

Other


with shareholders3 (73) 249


Net income




31/47


postretirementplans, net

Net unrealized gains on investments,

net of tax provision of $3


Balance at December 31, 2009 2669 411 (5002)Cash dividends paid

Stock plans 5 (37) 252

Common shares purchased (141)Tax loss from exercise of options and

restricted stock (18)

Other


with shareholders5 (55) 111

Treasury shares issued for acquisition (17) 120


Net income




postretirement plans adjustments, net




32/47

Retained EarningsAccumulated Other

Comprehensive Income (Loss)

Noncontrolling Interest in

Consolidated SubsidiariesTotal

8146 (104) 93 6966

(319) (319)

223

(507)

45

(2) (2)

(63) (63)

(319) (65) (623)

(10)

(703)

2224 (9) 2215

1 1

(170) (170)

18 18

46

46

(106) (106)

(6) (6)

2224 (111) (9) 2104

10041 (215) 19 7744

(324) (324)

218

(17)

(22)

1 1

(323) (144)

1145 10 1155

(5) (5)


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2 2

5 5

1145 2 10 1157

10863 (213) 29 8757(327) (327)

220

(141)

(18)

(21) (21)

(327) (21) (287)

103

1835

7 1842

(1) (1)

(26) (1) (27)

1835 (27) 6 1814

12371 (240) 14 10387


34/47

Halliburton Company

Consolidated Statements of Cash Flows (USD $)

In Millions (USD $)Dec. 31,

2010

Dec. 31,

2009

Dec. 31,

2008

Cash flows from operating activities:

Net income 1,842 1,155 2,215

Adjustments to reconcile net income to net cash

from o erations:Depreciation, depletion, and amortization 1,119 931 738

Payments related to KBR TSKJ matters(177) (417)

-

Provision for deferred income taxes, continuing operations124 274 254

(Income) loss from discontinued operations (40) 9 423

Other changes:

Receivables (902) 869 (670)

Inventories (331) 232 (368)

Accounts payable 330 (118) 161

Other 247 (529) (79)

Total cash flows from operating activities 2,212 2,406 2,674

Cash flows from investing activities:

Capital expenditures (2,069) (1,864) (1,824)

Sales of marketable securities 1,925 300 388

Purchases of marketable securities (1,282) (1,620)

-

Acquisitions of business assets, net of cash acquired (523) (55) (652)

Other investing activities 194 154 232

Total cash flows from investing activities (1,755) (3,085) (1,856)

Cash flows from financing activities:

Proceeds from long-term borrowings, net of offering costs

- 1,975 1,187

Payments on long-term borrowings (790) (31) (2,048)

Dividends to shareholders (327) (324) (319)

Payments to reacquire common stock (141) (17) (507)Other financin activities 144 67 164

Total cash flows from financing activities (1,114) 1,670 (1,523)

Effect of exchange rate changes on cash (27) (33) (18)

Increase (decrease) in cash and equivalents (684) 958 (723)

Cash and equivalents at beginning of period 2,082 1,124 1,847

Cash and equivalents at end of period 1,398 2,082 1,124

Cash payments during the period for:

Interest from continuing operations 310 251 143

Income taxes from continuing operations 804 485 1,057

12 Months Ended


35/47

Baker Hughes, Inc. and Subsidiaries

Consolidated Statements of Operations (USD $)

In Millions, except Per Share dataDec. 31,

2010

Dec. 31,

2009

Dec. 31,

2008

Revenues:

Sales 5,516 4,809 5,734

Services8,898 4,855 6,130

Total revenues 14,414 9,664 11,864

Costs and expenses:

Cost of sales 4,359 3,858 4,081

Cost of services 6,825 3,539 3,873

Research and engineering 429 397 426

Marketing, general and administrative 1,250 1,120 1,046

Acquisition-related costs 134 18 0

Litigation settlement 0 0 62

Total costs and expenses12,997 8,932 9,488

Operating income 1,417 732 2,376

Equity in income of affiliates 0 0 2

Gain on sale of product line 0 0 28

Gain (loss) on investments 6 4 (25)

Interest expense, net (141) (125) (62)

Income before income taxes 1,282 611 2,319

Income taxes (463) (190) (684)

Net income 819 421 1,635

Net income attributable to noncontrolling interest (7) 0 0Net income attributable to Baker Hughes 812 421 1,635

Basic earnings per share attributable to Baker Hughes 2.06 1.36 5.32

Diluted earnings per share attributable to Baker Hughes2.06 1.36 5.30

Statutory Tax Rate 0.3648 0.3598 0.3582

Tax On Operating Profit (512) (234) (715)

Tax Rate On Operating Profit

NOPBT 1,417 732 2,376

NOPAT 905 498 1,661

NNE (NOPAT-Net Income) 86 77 26

12 Months Ended


36/47

Non operating item

Dec. 31, 2010 Dec. 31, 2009 Dec. 31, 2008

5,516 4,809 5,734

8,898 4,855 6,130

14,414 9,664 11,864

4,359 3,858 4,081

6,825 3,539 3,873

429 397 426

1,250 1,120 1,046

0 0 00 0 0

12,863 8,914 9,426

1,551 750 2,438

0 0 0

0 0 0

6 4 5

(133) (133) (133)

1,424 621 2,310

(459) (200) (745) 0.361154

965 421 1,565

(7) 0 0958 421 1,565

0.3648 0.3598 0.3582

(505) (247) (790)

1,551 750 2,438

1,046 503 1,648

81 83 82

Pro Forma


37/47

0.294955

0.218703


38/47


Consolidated Balance Sheets

In Millions (USD $) Dec. 31, 2010 Dec. 31, 2009

Current Assets

Cash and cash equivalents 1,456 1,595

Short-term investments 250 -Accounts receivable - less allowance for doubtful accounts (2010 -

$162; 2009 - $157; 2008 - $74; 2007 - $59) 3,942 2,331

Inventories, net 2,594 1,836

Deferred income taxes 234 268

Other current assets 231 195

Total current assets 8,707 6,225

Property, plant and equipment - less accumulated depreciation

(2010 - $4,367; 2009 - $3,668; 2008 - $3,203; 2007 - $2976) 6,310 3,161

Goodwill 5,869 1,418

Intangible assets, net 1,569 195

Other assets 531 440

Total assets 22,986 11,439

Current Liabilities

Accounts payable 1,496 821

Short-term borrowings and current portion of long-term debt 331 15

Accrued employee compensation 589 448

Income taxes payable 219 95

Other accrued liabilities 504 234

Total current liabilities 3,139 1,613

Long-term debt 3,554 1,785

Deferred income taxes and other tax liabilities 1,360 309

Liabilities for pensions and other postretirement benefits 483 379

Other liabilities 164 69

Commitments and contingencies - -

Total Non-Current Liability 5,561 2,542

Total Liabilities 8,700 4,155

Stockholders' EquityCommon stoc , one o ar par vaue s ares aut orize - 750;

issued and outstanding: 2010 - 432; 2009 - 312; 2008 - 309;

2007 - 316) 432 312

Capital in excess of par value 7,005 874

Retained earnings 7,083 6,512

Accumulated other comprehensive loss (420) (414)

12 Mont


39/47

Baker Hughes stockholders' equity 14,100 7,284

Noncontrolling interest 186 -

Total stockholders' equity 14,286 7,284

Total liabilities and stockholders' equity 22,986 11,439

Total Assets 22,986 11,439

Average Total Assets 17212.5 11650

Total Equity 14,286 7,284

Average Total Equity 10785 7045.5

Non-operating Liabilities 3,885 1,800

Non-operating Assets 250 -

NNO 3,635 1,800

Average NNO 2718 2067

Operating Assets 22,736 11,439

Operating Liabilities 4,815 2,355

NOA 17,921 9,084

Average NOA 13502.5 9112

CHECK TRUE TRUE


40/47

Dec. 31, 2008 Dec. 31, 2007 As reported Adjustment As if

1,955 1,054 1,456 - 1,456

- - 250 - 250

2,759 2,383 3,942 - 3,942

2,021 1,714 2,594 - 2,594

231 182 234 - 234

179 122 231 - 231

7,145 5,455 8,707 - 8,707

2,833 2,345 6,310 1140 7,450

1,389 1,354 5,869 - 5,869

198 177 1,569 - 1,569

296 526 531 - 531

11,861 9,857 22,986 1,140 24,126

888 704 1,496 - 1,496

558 15 331 106 437

530 457 589 - 589

272 191 219 - 219

263 251 504 - 504

2,511 1,618 3,139 106 3,245

1,775 1,069 3,554 1,034 4,588

384 416 1,360 - 1,360

317 332 483 - 483

67 116 164 - 164

- - - - -

2,543 1,933 5,561 1,034 6,595

5,054 3,551 8,700 1034 9,734

309 316 432 - 432

745 1,216 7,005 - 7,005

6,276 4,818 7,083 - 7,083

(523) (44) (420) - (420)

s Ended Fiscal 2010


41/47

6,807 6,306 14,100 - 14,100

- - 186 - 186

6,807 6,306 14,286 - 14,286

11,861 9,857 22,986 1,140 24,126

11,861 9,857

10859

6,807 6,306

6556.5

2,333 1,084

- -

2,333 1,084

1709

11,861 9,857

2,721 2,467

9,140 7,390

8265

TRUE TRUE


42/47


2008 Consolidated Statements of Stockholders'

Equity (USD $)

Common

Stock

Capital in

Excess of Par

Value

Retained

Earnings

In Millions

Balance, December 31, 2007 316 1,216 4,818Adoption of ASC 715, Compensation -

Retirement Benefits (4)

Adjusted beginning balance January 1, 2008 316 1,216 4,814

Comprehensive income:

Net income 1,635

Foreign currency translation adjustments

Defined benefit pension plans, net of tax $67, $2,and

$5 for the year 2008, 2009 and 2010, respectively


Issuance of common stock, pursuant to employee stock

lans2 76

Tax benefit on stock lans 11Stock-based compensation 60

Repurchase and retirement of common stock (9) (618)

Cash dividends ($0.56 per share), ($0.60 per share)

and ($0.60 per share) for the year 2008, 2009 and

2010 res ectvel

(173)

Ending Balance at Dec. 31, 2008 309 745 6,276


Equity (USD $)

Common

Stock

Capital in

Excess of Par

Value

Retained

Earnings

In Millions


Net income 421






lans3 43

Tax benefit on stock plans (2)

Stock-based compensation 88



2010 res ectvel

(185)

Ending Balance at Dec. 31, 2009 312 874 6,512


Equity (USD $)

Common

Stock

Capital in

Excess of Par

Value

Retained

Earnings

In Millions


43/47


Net income 812





Issuance of common stock, to acquire BJ Services118 5,986


lans2 60

Tax benefit on stock plans (2)

Stock-based compensation 87



2010 res ectvel

(241)

Acquisition of noncontrolling interest

Ending Balance at Dec. 31, 2010 432 7,005 7,083


44/47

Accumulated

Other

Comprehensive

Loss

Noncontrolling

InterestTotal

(44) 6,306

(4)

(44) 6,302

(354)

(125)

1,156

78

1160

(627)

(173)

(523) 0 6,807

Accumulated

Other

Comprehensive

Loss

Noncontrolling

InterestTotal

122

(13)

530

46

(2)

88

(185)

(414) 0 7,284

Accumulated

Other

Comprehensive

Loss

Noncontrolling

InterestTotal


45/47

7

(41)

35

813

6,104

62

(2)

87

(241)

179 179

(420) 186 14,286


46/47


Consolidated Statements of Cash Flows (USD $)

In MillionsDec. 31,

2010

Dec. 31,

2009

Dec. 31,

2008

Cash flows from operating activities:

Net income 819 421 1,635

Adjustments to reconcile net income to net cash

flows from o eratin activities:Depreciation and amortization 1,069 711 637

(Gain) loss on investments (6) (4) 25

Stock-based compensation 87 88 60

Benefit for deferred income taxes (188) (256) (21)

Gain on sale of product line (28)

Gain on disposal of assets (113) (64) (101)

Provision for doubtful accounts 39 94 31

Changes in operating assets and liabilities:

Accounts receivable (702) 399 (515)

Inventories (243) 240 (371)

Accounts payable 292 (89) 242

Accrued employee compensation and other accruedliabilities (182) (130) 90

Income taxes payable 23 (169) 76

Liabilities for pensions and other postretirement benefits

and other liabilities (16) 13 (38)

Other (23) (15) (108)

Net cash flows from operating activities 856 1,239 1,614

Cash flows from investing activities:

Expenditures for capital assets (1,491) (1,086) (1,303)

Proceeds from disposal of assets 208 163 222

Proceeds from sale of businesses, net of disposal costs,

and interests in affiliates 39 31

Ac uisition of businesses net of cash ac uired (888) (58) (120)

Proceeds from sale/settlement of investments 6 15

Purchase of short-term investments (250)

Net cash flows from investing activities (2,376) (966) (1,170)

Cash flows from financing activities:

Net proceeds (payments) of commercial paper and other

short-term debt 52 (16) 15

Net proceeds from issuance of long-term debt 1,479 1,235

Repayment of long-term debt

- (525)

Proceeds from issuance of common stock 74 51 87

Repurchase of common stock (627)

Dividends (241) (185) (173)

Excess tax benefits from stock-based compensation 2 4Net cash flows from financing activities 1,366 (675) 541

Effect of forei n exchan e rate chan es on cash 15 42 (84)

Decrease increase in cash and cash e uivalents (139) (360) 901

Cash and cash equivalents, beginning of year 1,595 1,955 1,054

Cash and cash equivalents, end of year 1,456 1,595 1,955

Supplemental cash flows disclosures:

Income taxes paid 637 604 621

Interest paid 154 154 86

12 Months Ended


47/47

Supplemental disclosure of noncash investing

activities:Capital expenditures included in accounts payable 64 29 43

milestone 6mcanally

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