Halliburton Current Assets Total Assets Net Operating Assets (NOA) Current Liabilities Non-Current Liabilities Total Debt

(Current + LT) Total Liabilities Equity As Reported 8,886 18,297 10,727 2,757 5,153 3,824 7,910 10,387 Before Tax 2,695 161 67 41 2,748 Before Tax (NOPBT) Operating profit, as reported Add back operating lease payment Deduct depericiation expense Operating profit, as if 3,009 161 67 3,103 As Reported 3.2231 0.4323 0.3682 Adjustment 0 580 580 120 460 580 580 0 Tax 853 56 24 14 871 As If 8,886 18,877 11,307 2,877 5,613 4,404 8,490 10,387 After Tax 1,842 105 44 27 1,876 After Tax (NOPAT) 2,035 104.65 11 2,129

Net Income as Reported Add back operating lease payment Deduct depericiation expense Deduct interest at 7% Net Income as if

Tax 957 56.35 24 990 As If 3.0882 0.4498 0.4240

Current Ratio Common Size Liabilities Total debt to Equity

ROE (annualized) RNOA (annualized) Baker Hughes Current Assets Total Assets Net Operating Assets (NOA) Current Liabilities Non-Current Liabilities Total Debt (Current + LT) Total Liabilities Equity

0.1924 0.1591

0.1806 0.1883

The as reported uses average but the as if does not.

As Reported 8,707 22,986 17,921 3,139 5,561 3,885 8,700 14,286 Before tax 1,282

Adjustment 0 1,140 1,140 106 1,034 1,140 1,034 0 Tax 463

As If 8,707 24,126 19,061 3,245 6,595 5,025 9,734 14,286 After tax 819

Net income as reported

Add back operating lease payment Deduct depreciation expense Deduct interest at 7% Net income as if

186 181 80 1,207 Before tax (NOPBT) 1,417 186 181 1,422 As reported 2.7738 0.3785 0.2719 0.0573 0.0670

65 63 28 437 Tax 496 65 63 498 As if 2.6832 0.4035 0.3517 0.0539 0.0485

121 118 52 770 After tax (NOPAT) 921 121 118 924

Operating profit, as reported Add back operating lease payment Deduct depreciation expense Operating profit, as if

Current ratio Common size liabilities Total debt/equity ROE (annualized) RNOA (annualized)

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 debt.

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-term, United States Tr 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, general working cap Significant uses of cash During 2010, we purchased approximately $1.3 billion in short-term marketable securities.

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

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

In September 2010, we completed the acquisition of Boots & Coots in a stock and cash transaction valued at approximately $248 million, of which approximately $1

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

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

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

Subject to Board of Directors approval, we expect to pay quarterly dividends of approximately $80 million during 2011. We also have approximately $1.7 billion re

The following table summarizes our significant contractual obligations and other long-term liabilities as of December 31, 2010:
Payments Due 2012 2013 $ $ 263 263 122 87 91 64 9 9 $ 485 $ 423

Millions of dollars Long-term debt Interest on debt (a) Operating leases Purchase obligations (b) Pension funding obligations (c) Other long-term liabilities Total

2011 $ 263 161 1,714 41 9 2,188

2014 $ 263 50 13 326 $

2015 263 41 6 310 $

Thereafter 3,824 5,359 149 5 9,337

(a) (b) (c)

Interest on debt includes 86 years of interest on $300 million of debentures at 7.6

Primarily represents certain purchase orders for goods and services utilized in the

Amount based on assumptions that are subject to change. Also, we may choose t

We are currently not able to reasonably estimate our contributions for years after

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 estimate that the 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 OPERATIONS Contractual Obligations In the table below, we set forth our contractual cash obligations as of December 31, 2010. Certain amounts included in this table are based The contractual cash obligations we will actually pay in future periods may vary from those reflected in the table because the estimates an
(In millions) Total Less Than 1 year Payments Due by Period 2-3 Years

4-5 Years

Total debt (1) Estimated interest payments (2) Operating leases (3) Purchase obligations (4) Other long-term liabilities (5) Income tax liabilities for uncertain tax positions (6) Total

$ 3,880 3,621 681 264 168 438 $ 9,052

330 220 186 246 14 279

500 416 228 18 70 76

$ 377 116 26

34

$ 1,275

$ 1,308

$ 553

(1) Amounts represent the expected cash payments for our total debt and do not include any unamortized discounts (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 provide us with the opt

Our future operating lease payments as reflected in the table above would change if we exercised these renewal (4) Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding

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

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

payments for deferred compensation, payouts under acquisition agreements and payments for certain asset retire

(6) The estimated income tax liabilities for uncertain tax positions will be settled as a result of expiring statutes, au

The timing of any particular settlement will depend on the length of the tax audit and related appeals process, if

Score out of 10: 9 Discount Rate = 7% Year 2011 2012 2013 2014 2015 >2015 Total Operating Lease Payment Discount Factor 161 0.93 122 0.87 87 0.82 50 0.76 41 0.71 149 4.51 Present Value 150 107 71 38 29 185 580

This is incorrect. Please check the

Remaining life = 149/41 Present Value Factor for the Annuity after 2015 Discount Factor =

3.63 6.32 0.71

Year 2011 2012 2013 2014 2015 >2015

Present Value 580 460 370 309 281 259

Interest 0.07 0.07 0.07 0.07 0.07 0.07

Interest Expense Principal 41 120 32 90 26 61 22 20 18 28 21 18

Discount Rate = 7% Year 2011 2012 2013 2014 2015 >2015 Total Operating Lease Payment Discount Factor 186 0.93 228 0.87 228 0.82 116 0.76 116 0.71 151 3.54 Present Value 174 199 186 88 83 410 1140 1.30

This is incorrect. Please check the

Remaining life = 151/116

Present Value Factor for the Annuity after 2015 Discount Factor = Year 2011 2012 2013 2014 2015 >2015 Present Value 1140 1034 879 712 646 575 Interest 0.07 0.07 0.07 0.07 0.07 0.07

4.96 0.71 Interest Expense Principal 80 106 72 156 62 166 50 66 45 71 40 40

rations with debt.

ion of short-term, United States Treasury securities classified as marketable securities.

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

reline and perforating, and cementing product service lines.

nce or augment our current portfolio of products and services.

million, of which approximately $143 million was paid in cash and approximately 3.4 million shares of our common stock were issued to Boots & Coots stockholders.

Boots & Coots results of operations were included in our Completion and Production segment.

ur consolidated financial statements for more information.

011 is primarily directed toward our production enhancement, drilling services, wireline and perforating, completion tools, and cementing product service lines.

es, including those with unique technologies or distribution networks in areas where we do not already have large operations.

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

15 263 41 6 310 $

Thereafter 3,824 5,359 149 5 9,337

Total 3,824 6,674 610 1,893 41 27 13,069

n $300 million of debentures at 7.6% interest that become due in 2096.

r goods and services utilized in the ordinary course of our business. to change. Also, we may choose to make additional discretionary contributions.

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

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

SULTS OF OPERATIONS

ncluded in this table are based on our estimates and assumptions about these obligations, including their duration, anticipated actions by third parties and o able because the estimates and assumptions are subjective.
4-5 Years More than 5 Years

s Due by Period 2-3 Years

500 416 228 18 70 76

$ 377 116 26 34 $ 553

$ 3,050 2,608 151 58 49 $ 5,916

$ 1,308

nclude any unamortized discounts, deferred issuance costs or net deferred gains on terminated interest rate swap agreements.

greements provide us with the option to renew the lease.

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

re enforceable and legally binding and that specify all significant terms, including:

ice provisions; and the approximate timing of the transaction. Purchase obligations exclude agreements that are cancelable at anytime without penalty.

eflected in the consolidated balance sheet where both the timing and amount of payment streams are known. Amounts include: payments for certain environmental remediation liabi

nd payments for certain asset retirement obligations. Amounts do not include: payments for pension contributions and payments for various postretirement welfare benefit plans and

as a result of expiring statutes, audit activity, competent authority proceedings related to transfer pricing, or final decisions in matters that are the subject of litigation in various tax

udit and related 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 settlement of the tax liability woul

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

This is incorrect. Please check the book for the method to calculate this.

This is incorrect. Please check the book for the method to calculate this.

o Boots & Coots stockholders.

g product service lines.

ticipated actions by third parties and other factors.

s for certain environmental remediation liabilities,

ous postretirement welfare benefit plans and postemployment benefit plans.

hat are the subject of litigation in various taxing jurisdictions in which we operate.

esult, the settlement of the tax liability would not result in a cash payment.

Halliburton 2010 Common-size Analysis Total liabilities / Total assets Current liabilities / Total assets Current portion of long-term debt / Total assets Current portion of long-term debt / Total long-term debt Turnover Analysis Account payable turnover (COGS / Average AP) Net op'n working capital turnover (sales / NOWC) Liquidity Analysis Current Ratio Current Assets / Curent Liab Quick Ratio (Cash + Sec+AR)/Curr Liab Cash from operation / Current liabilities Cash collection cycle (ART + INVT - APT) Solvency Ratios Total liabilities / Equity Total long-term debt / Equity Times interest earned - EBIT/Int Expense Average interest rate on debt Cash from operations / Cash interest paid 0.4323 0.1507 0.0000 0.0000 2009 0.4705 0.1747 0.0454 0.1640 2008 0.4617 0.1933 0.0447 0.1991

15.3115 3.2821

14.8119 2.8292

16.8655 3.6362

3.2231 2.1672 0.8023 (8.2846)

2.9900 2.2008 0.8328 (8.4326)

2.6649 1.8572 0.9615 (9.3863)

0.7615 0.3682 9.9394 0.0777 2.8000

0.8885 0.5223 6.9018 0.0623 77.6129

0.8576 0.4170 31.0703 0.0396 1.3057

Baker Hughes 2010 Common-size Analysis Total liabilities / Total assets Current liabilities / Total assets Current portion of long-term debt / Total assets Current portion of long-term debt / Total long-term debt Turnover Analysis Account payable turnover (COGS / AP) Net op'n working capital turnover (sales / NOWC) 0.3785 0.1366 0.0144 0.0852 2009 0.3632 0.1410 0.0013 0.0083 2008 0.4261 0.2117 0.0470 0.2392

9.6539 2.5516

8.6565 2.0886

9.9925 2.2851

Liquidity Analysis Current Ratio - Current Assets / Current Liabilities 2.7738 Quick Ratio - Cash + Marketable Securities + AR / Current Liabilities 1.7993 Cash from operation / Current liabilities 0.2727 Cash collection cycle (ART + INVT - APT) (2.6270) Solvency Ratios Total liabilities / Equity Total long-term debt / Equity

3.8593 2.4340 0.7681 (2.2772)

2.8455 1.8773 0.6428 (2.5132)

0.6090 0.2719

0.5704 0.2471

0.7425 0.3427

Times interest earned - EBIT/Int Expense Average interest rate on debt Cash from operations / Cash interest paid

10.0496 0.0363 5.5584

5.8560 0.0694 8.0455

38.8065 0.0266 18.7674

Halliburton ACCOUNTS RECEIVABLE RATIOS: 2010 Common size analysis AR/Total Assets Allowance for bad debts/Total assets Allowance for bad debts/Gross AR Turnover Analysis Account receivable turnover (Sales/Average AR) Average collection period (365/(Sales/AR)) INVENTORY RATIOS: 2010 Common size analysis Gross profit margin (Gross profit/Sales) Inventory/Total Assets Allowance for inventory obsolescence/Total Assets Allowance for inventory obsolescence/Gross Inventory Turnover analysis Inventory turnover (COGS/Average Inventory) Average turnover period (365/(COGS/Inventory)) FIXED ASSETS RATIOS: 2010 Common size analysis Depreciation expense/Sales PPE/Total assets Accumulated depreciation/Total assets Turnover Analysis PPE Turnover (Sales/Average PPE) Long-term operating asset turnover (Sales/Average LT net operating assets) Other ratios Estimated average useful life (Depreciable PPE/ depreciation expense) Percent used up (Accumulated depreciation/ Depreciable PPE) Asset replacement ratio (CAPEX/Depreciation expense) SALES / EMPLOYEE OPERATING EXPENSES / EMPLOYEE 0.0623 0.3739 0.3314 0.7132 2.2238 2009 0.0634 0.3482 0.3162 0.6961 2.1480 2008 0.0404 0.3324 0.3174 1.0865 3.2068 0.1796 0.1060 0.0048 0.0454 1.8082 201.8529 2009 0.1496 0.0966 0.0057 0.0588 2.0369 179.1920 2008 0.2314 0.1271 0.0056 0.0443 2.1718 168.0655 0.2145 0.0050 0.0227 5.2186 69.9416 2009 0.1792 0.0054 0.0295 4.3424 84.0557 2008 0.2638 0.0042 0.0156 5.3075 68.7707

11.4397 0.4737 1.8490 0.2996 0.2494

11.7111 0.4797 2.0021 0.2446 0.2114

9.9785 0.4915 2.4715 0.3047 0.2378

Baker Hughes ACCOUNTS RECEIVABLE RATIOS: 2010 Common size analysis AR/Total Assets Allowance for bad debts/Total assets Allowance for bad debts/Gross AR Turnover Analysis Account receivable turnover (Sales/Average AR) Average collection period (365/(Sales/AR)) INVENTORY RATIOS: 2010 Common size analysis Gross profit margin (Gross profit/Sales) Inventory/Total assets Allowance for inventory obsolescence/Total Assets Allowance for inventory obsolescence/Gross Invetory Turnover analysis Inventory turnover (COGS/Average Inventory) Average turnover period (365/(COGS/Inventory)) FIXED ASSETS RATIOS: 2010 Common size analysis Depreciation expense/Sales PPE/Total assets Accumulated depreciation/Total assets Turnover Analysis PPE Turnover (Sales/Average PPE) Long-term operating asset turnover (Sales/Average LT net operating assets) Other ratios Estimated average useful life (Depreciable PPE/ depreciation expense) Percent used up (Accumulated depreciation/ Depreciable PPE) Asset replacement ratio (CAPEX/Depreciation expense) SALES / EMPLOYEES OPERATING EXPENSE / EMPLOYEES 0.0742 0.2745 0.1900 3.0438 1.1745 2009 0.0736 0.2763 0.3207 3.2246 2.1683 2008 0.0537 0.2389 0.2700 4.5825 3.0051 0.2241 0.1129 2009 0.2346 0.1605 2008 0.3296 0.1704 0.1715 0.0070 0.0395 4.5956 79.4243 2009 0.2038 0.0137 0.0631 3.7972 96.1222 2008 0.2326 0.0062 0.0261 4.6145 79.0977

1.9679 185.4726

2.0005 182.4527

2.1853 167.0271

9.8092 0.4165 1.3938 0.2720 0.2452

9.4909 0.5436 1.5331 0.1823 0.1685

9.3422 0.5382 2.0408 0.2238 0.1790

Company name Year 2010

Halliburton ROE 0.192

As Stated

0.159 RNOA

ROE 0.192

0.113 NOPM

1.405 NOAT

Year 2009

ROE 0.140

0.121 RNOA

ROE 0.140

0.094 NOPM

1.290 NOAT

Year 2008

ROE 0.301

0.269 RNOA

ROE 0.301

0.151 NOPM

1.783 NOAT Pro Forma

Company name Year 2010

Halliburton ROE 0.191

0.157 RNOA

ROE 0.191

0.112 NOPM

1.405 NOAT

Year 2009

ROE 0.139

0.118 RNOA

ROE 0.139

0.091 NOPM

1.290 NOAT

Year 2008

ROE 0.339

0.262 RNOA

ROE 0.339

0.147 NOPM

1.783 NOAT

Company name Year 2010

Baker Hughes ROE 0.0759

As Stated

0.0670 RNOA

ROE 0.0759

0.1640 NOPM

0.4085 NOAT

Year 2009

ROE 0.0598

0.0547 RNOA

ROE 0.0598

0.1037 NOPM

0.5278 NOAT

Year 2008

ROE 0.2494

0.2009 RNOA

ROE 0.2494

0.2896 NOPM

0.6938 NOAT

Company name Year 2010

Baker Hughes ROE 0.0895

Pro Forma

0.0774 RNOA

ROE 0.0895

0.1896 NOPM

0.4085 NOAT

Year 2009

ROE 0.0597

0.0552 RNOA

ROE 0.0597

0.1047 NOPM

0.5278 NOAT

Year 2008

ROE 0.2388

0.1994 RNOA

ROE 0.2388

0.2873

0.6938

NOPM

NOAT

ROE 0.033 NOR 1.000 MISR NOPM

RNOA

0.336 FLEV

0.099 Spread

0.019 NOR 1.000 MISR

NOAT

NNEP

0.378 FLEV

0.050 Spread

FLEV

0.033 NOR 1.000 MISR

Spread FLEV*Spread ROE Check

0.394 FLEV

0.083 Spread

ROE 0.033 NOR 1.000 MISR NOPM

RNOA

0.336 FLEV

0.099 Spread

0.022 NOR 1.000 MISR

NOAT

NNEP

0.378 FLEV

0.057 Spread

FLEV

0.077 NOR 1.000 MISR

Spread FLEV*Spread ROE Check

0.394 FLEV

0.196 Spread

ROE

0.0089 NOR 1.0000 MISR

RNOA

NOPM

0.2520 FLEV

0.0355 Spread

NOAT

0.0051 NOR 1.0000 MISR

NNEP

0.2933 FLEV

0.0172 Spread

FLEV

Spread 0.0484 NOR 1.0000 MISR FLEV*Spread ROE Check

0.2606 FLEV

0.1858 Spread

ROE

0.0120 NOR 1.0000 0.2520 FLEV 0.0478 Spread MISR

RNOA

NOPM

NOAT 0.0045 NOR 1.0000 0.2933 FLEV 0.0153 Spread MISR Spread 0.0394 NOR 1.0000 FLEV*Spread ROE Check FLEV

NNEP

0.2606

0.1513

FLEV

Spread

MISR

2010 NI Avg Equity NOPAT Avg NOA NOPAT Sales SALES Avg NOA NNE Avg NNO Avg NNO Avg Equity RNOA-NNEP 0.1924

2009 0.1400

2008 0.3013

0.1591

0.1210

0.2687

0.1132

0.0938

0.1507

1.4054

1.2903

1.7832

0.0600

0.0709

0.1860

0.3360

0.3785

0.3942

0.0991 0.0333

0.0502 0.0190 0.1400

0.0827 0.0326 0.3013

RNOA+FLEV*Spread

0.1924

2010 NI Avg Equity NOPAT Avg NOA NOPAT Sales SALES Avg NOA NNE Avg NNO Avg NNO Avg Equity RNOA-NNEP 0.1905

2009 0.1393

2008 0.3391

0.157

0.118

0.262

0.112

0.091

0.147

1.405

1.290

1.783

0.059

0.061

0.065

0.336

0.378

0.394

0.099 0.033

0.057 0.022 0.139

0.196 0.077 0.339

RNOA+FLEV*Spread

0.191

NI Avg Equity NOPAT Avg NOA NOPAT Sales SALES Avg NOA NNE Avg NNO Avg NNO Avg Equity RNOA-NNEP

2010 0.0759

2009 0.0598

2008 0.2494

0.067

0.0547

0.2009

0.164

0.1037

0.2896

0.409

0.5278

0.6938

0.032

0.0375

0.0151

0.252

0.2933

0.2606

0.035 0.009

0.0172 0.0051 0.0598

0.1858 0.0484 0.2494

RNOA+FLEV*Spread

0.0759

2010 NI Avg Equity NOPAT Avg NOA NOPAT Sales SALES Avg NOA NNE Avg NNO Avg NNO Avg Equity RNOA-NNEP

2009

2008

0.0895
0.0774

0.0597
0.0552

0.2388
0.1994

0.1896

0.1047

0.2873

0.4085

0.5278

0.6938

0.0297

0.0400

0.0481

0.2520
0.0478 0.0120

0.2933
0.0153 0.0045 0.0597

0.2606
0.1513 0.0394 0.2388

RNOA+FLEV*Spread

0.0895

Halliburton Company Consolidated Statements of Operations (USD $) In Millions, except Per Share data Revenue: Services Product sales Total revenue Operating costs and expenses: Cost of services Cost of sales General and administrative Gain on sale of assets, net Total operating costs and expenses Operating income Interest expense, net of interest income of $11, $12, and $39 Other, net 12 Months Ended Dec. 31, 2010 13,779 4,194 17,973 Dec. 31, 2009 10,832 3,843 14,675 Dec. 31, 2008 13,391 4,888 18,279 Dec. 31, 2010 13,779 4,194 17,973 Pro Forma Dec. 31, 2009 10,832 3,843 14,675 Dec. 31, 2008 13,391 4,888 18,279

11,237 3,508 229 (10) 14,964 3,009 (297)

9,224 3,255 207 (5) 12,681 1,994 (285)

10,079 3,970 282 (62) Non-Persistent 14,269 4,010 (128)

11,237 3,508 229 0 14,974 2,999 (291)

9,224 3,255 207 0 12,686 1,989 (291)

10,079 3,970 282 0 14,331 3,948 (291) Average (291)

(57) Income from continuing operations before income taxes Provision for income taxes Income from continuing operations Income (loss) from discontinued operations, net of income tax benefit of $75, $5, and $3 Net income Noncontrolling interest in net income of subsidiaries Net income attributable to company Amounts attributable to company shareholders: Income from continuing operations Income (loss) from discontinued operations, net Net income attributable to company Basic income per share attributable to company shareholders: Income from continuing operations (in dollars per share) Income (loss) from discontinued operations, net (in dollars per share) Net income per share (in dollars per share) Diluted income per share attributable to company shareholders: Income from continuing operations (in dollars per share) Income (loss) from discontinued operations, net (in dollars per share) Net income per share (in dollars per share) Basic weighted average common shares outstanding (in shares) Diluted weighted average common shares outstanding (in shares) Statutory Tax Rate 2,655 (853) 1,802 40 1,842

(27) 1,682 (518) 1,164 (9) 1,155

(33) 3,849 (1,211) 2,638 (423) Non-Persistent 2,215

(57) 2,651 (827) 1,824 0 1,824

(27) 1,671 (521) 1,150 0 1,150

(33) 3,624 (1,131) 2,493 0 2,493

(7) 1,835 1,795 40 1,835

(10) 1,145 1,154 (9) 1,145

9 2,224 2,647 (423) 2,224

(7) 1,835 1,795 40 1,835

(10) 1,145 1,154 (9) 1,145

9 2,224 2,647 (423) 2,224

1.98 0.04 2.02

1.28 (0.01) 1.27

3 (0.48) 2.52

1.98 0.04 2.02

1.28 (0.01) 1.27

3 (0.48) 2.52

1.97 0.04 2.01 908 911

1.28 (0.01) 1.27 900 902

2.91 (0.46) 2.45 883 909

1.97 0.04 2.01 908 911

1.28 (0.01) 1.27 900 902

2.91 (0.46) 2.45 883 909

Tax On Operating Profit NOPBT NOPAT

NNE (NOPAT-Net Income)

0.35 957 3,009

0.35 618 1,994 1,376 221

0.35 Statutory Tax Rate 1,256 4,010 2,754 NOPAT=NI+(NonOpExp*(1Tax Rate) 539 NNE (NOPAT-Net Income)

0.35

0.35

0.35

2,035
193

2,013 189

1,339 189

2,682 189

Halliburton Company Consolidated Balance Sheets (USD $) In Millions Current assets Cash and equivalents Receivables (less allowance Inventories Investments in marketable Current deferred income Other current assets Total current assets Property, plant, and equipment (net of accumulated depreciation Goodwill Noncurrent deferred income taxes Other assets Total assets Current liabilities Accounts payable Current maturities of longAccrued employee Deferred revenue Department of Justice and Securities and Exchange Commission settlement and indemnity, current Income tax payable Other current liabilities Total current liabilities Long-term debt Employee compensation Other liabilities Total liabilities Shareholders' equity Common shares, par value $2.50 per share authorized 2,000 shares, issued 1,069 shares and 1,067 shares Paid-in capital in excess of Accumulated other Retained earnings Treasury stock, at cost Dec. 31, 2010 Dec. 31, 2009 1398 3,924 1,940 653 257 714 8,886 2082 2,964 1,598 1,312 210 472 8,638 Dec. 31, 2008 1,124 3,795 1,828 246 0 418 7,411 Dec. 31, 2007 1,847 3,093 1,459 388 376 410 7,573

6,842 1,315 0 1,254 18,297

5,759 1,100 0 1,041 16,538

4,782 1,072 157 963 14,385

3,630 790 348 794 13,135

1,139 0 716 266

787 750 514 215

898 643 373 231

768 575 209 209

0 636 2,757 3,824 487 842 7,910

142 0 481 2,889 3,824 462 606 7,781

67 26 543 2,781 2,586 539 735 6,641

159 0 491 2,411 2,627 403 734 6,175

2,674 339 (240) 12,371 (4,771)

2,669 411 (213) 10,863 (5,002)

2,666 1,114 (215) 9,411 (5,251)

2,657 1,741 (104) 8,202 (5,630)

Company shareholders' Noncontrolling interest in Total shareholders' Total liabilities and Total Assets Average Total Assets Total Equity Average Total Equity Non-operating Liabilities Non-operating Assets NNO Average NNO Operating Assets Operating Liabilities NOA Average NOA CHECK

10,373 14 10,387 18,297 18,297 17,418 10,387 9,572 3,824 653 3,171 3,217 17,644 4,086 13,558 12,789 TRUE

8,728 29 8,757 16,538 16,538 15,462 8,757 8,251 4,574 1,312 3,262 3,123 15,226 3,207 12,019 11,373 TRUE

7,725 19 7,744 14,385 14,385 13,760 7,744 7,352 3,229 246 2,983 2,899 14,139 3,412 10,727 10,251 TRUE

6,866 94 6,960 13,135 13,135

6,960

3,202 388 2,814

12,747 2,973 9,774

TRUE

Avg '10-'09 Avg '09-08 Avg 08-07 9,572 8,251 7,352

As reported Adjustment 1,398 3,924 1,940 653 257 714 8,886 0 0 0 0 0 0 0

As if 1,398 3,924 1,940 653 257 714 8,886

6,842 1,315 0 1,254 18,297 1,139 0 716 266

580 0 0 0 580 0 120 0 0

7,422 1,315 0 1,254 18,877 1,139 120 716 266

0 0 636 2,757 3,824 487 842 7,910

0 0 0 120 460 0 0 580

0 0 636 2,877 4,284 487 842 8,490

2,674 339 (240) 12,371 (4,771)

0 0 0 0 0

2,674 339 (240) 12,371 (4,771)

10,373 14 10,387 18,297

0 0 0 0

10,373 14 10,387 18,877

Halliburton Company Consolidated Statements of Shareholders' Equity (USD $)

Millions of dollars
Balance at December 31, 2007 Cash dividends paid Stock plans Common shares purchased Tax benefit from exercise of options and restricted stock Distributions to noncontrolling interest holders Other transactions with shareholders Total dividends and other transactions with shareholders Adoption of new accounting standards Portion of the convertible debt premium settled in stock, at cost Comprehensive income (loss): Net income Other comprehensive income (loss): Cumulative translation adjustment Defined benefit and other postretirement plan adjustments: 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 Balance at December 31, 2008 Cash dividends paid Stock plans Common shares purchased Tax loss from exercise of options and restricted stock Other Total dividends and other transactions with shareholders Comprehensive income (loss): Net income Other comprehensive income (loss): Cumulative translation adjustment

Common Shares Paid-in Capital in Excess of Par Value Treasury Stock 2657 9 9 1804 41 45 86 (693) (713) (5630) 173 (507) (334) 713

2666 3 3

484 (51) (22) (73)

(5251) 266 (17) 249

Defined benefit and other postretirement plans, net Net unrealized gains on investments, net of tax provision of $3 Total comprehensive income Balance at December 31, 2009 Cash dividends paid Stock plans Common shares purchased Tax loss from exercise of options and restricted stock Other Total dividends and other transactions with shareholders Treasury shares issued for acquisition Comprehensive income (loss): Net income Other comprehensive income (loss): Cumulative translation adjustment Defined benefit and other postretirement plans adjustments, net Total comprehensive income Balance at December 31, 2010

2669 5 5 2674

411 (37) (18) (55) (17) 339

(5002) 252 (141) 111 120 (4771)

Retained Earnings 8146 (319) (319) (10) 2224

Accumulated Other Noncontrolling Interest in Comprehensive Income (Loss) Consolidated Subsidiaries (104) 1 93 (2) (63) (65) (9)

Total 6966 (319) 223 (507) 45 (2) (63) (623) (703) 2215 1

(170) 18 46 (106)

(170) 18 46 (106)

2224 10041 (324) 1 (323) 1145

(6) (111) (215) (5)

(9) 19 10

(6) 2104 7744 (324) 218 (17) (22) 1 (144) 1155 (5)

 1145 10863 (327) (327) 1835 1835 12371

2 5 2 (213) (1) (26) (27) (240)

10 29 (21) (21) 7 (1) 6 14

2 5 1157 8757 (327) 220 (141) (18) (21) (287) 103 1842 (1) (27) 1814 10387

Halliburton Company Consolidated Statements of Cash Flows (USD $) In Millions (USD $) Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash from operations: Depreciation, depletion, and amortization Payments related to KBR TSKJ matters Provision for deferred income taxes, continuing operations (Income) loss from discontinued operations Other changes: Receivables Inventories Accounts payable Other Total cash flows from operating activities Cash flows from investing activities: Capital expenditures Sales of marketable securities Purchases of marketable securities Acquisitions of business assets, net of cash acquired Other investing activities Total cash flows from investing activities Cash flows from financing activities: Proceeds from long-term borrowings, net of offering costs Payments on long-term borrowings Dividends to shareholders Payments to reacquire common stock Other financing activities Total cash flows from financing activities Effect of exchange rate changes on cash Increase (decrease) in cash and equivalents Cash and equivalents at beginning of period Cash and equivalents at end of period Cash payments during the period for: Interest from continuing operations Income taxes from continuing operations

12 Months Ended Dec. 31, Dec. 31, Dec. 31, 2010 2009 2008 1,842 1,119 (177) 124 (40) (902) (331) 330 247 2,212 (2,069) 1,925 (1,282) (523) 194 (1,755) (790) (327) (141) 144 (1,114) (27) (684) 2,082 1,398 310 804 1,155 931 (417) 274 9 869 232 (118) (529) 2,406 (1,864) 300 (1,620) (55) 154 (3,085) 1,975 (31) (324) (17) 67 1,670 (33) 958 1,124 2,082 251 485 254 423 (670) (368) 161 (79) 2,674 (1,824) 388 (652) 232 (1,856) 1,187 (2,048) (319) (507) 164 (1,523) (18) (723) 1,847 1,124 143 1,057 2,215 738

Baker Hughes, Inc. and Subsidiaries Consolidated Statements of Operations (USD $) In Millions, except Per Share data Revenues: Sales Services Total revenues Costs and expenses: Cost of sales Cost of services Research and engineering Marketing, general and administrative Acquisition-related costs Litigation settlement Total costs and expenses Operating income Equity in income of affiliates Gain on sale of product line Gain (loss) on investments Interest expense, net Income before income taxes Income taxes Net income Net income attributable to noncontrolling interest Net income attributable to Baker Hughes Basic earnings per share attributable to Baker Hughes Diluted earnings per share attributable to Baker Hughes Statutory Tax Rate Dec. 31, 2010 5,516 8,898 14,414 12 Months Ended Dec. 31, 2009 4,809 4,855 9,664 Dec. 31, 2008 5,734 6,130 11,864

4,359 6,825 429 1,250 134 0 12,997 1,417 0 0 6 (141) 1,282 (463) 819 (7) 812 2.06 2.06 0.3648 (512) 1,417 905 86

3,858 3,539 397 1,120 18 0 8,932 732 0 0 4 (125) 611 (190) 421 0 421 1.36 1.36 0.3598 (234) 732 498 77

4,081 3,873 426 1,046 0 62 9,488 2,376 2 28 (25) (62) 2,319 (684) 1,635 0 1,635 5.32 5.30 0.3582 (715) 2,376 1,661 26

Tax On Operating Profit Tax Rate On Operating Profit NOPBT NOPAT

NNE (NOPAT-Net Income)

Non operating item

Pro Forma Dec. 31, 2010 Dec. 31, 2009 5,516 8,898 14,414 4,809 4,855 9,664 Dec. 31, 2008 5,734 6,130 11,864

4,359 6,825 429 1,250 0 0 12,863 1,551 0 0 6 (133) 1,424 (459) 965 (7) 958

3,858 3,539 397 1,120 0 0 8,914 750 0 0 4 (133) 621 (200) 421 0 421

4,081 3,873 426 1,046 0 0 9,426 2,438 0 0 5 (133) 2,310 (745) 0.361154 1,565 0 1,565

0.3648 (505) 1,551 1,046 81

0.3598 (247) 750 503 83

0.3582 (790) 2,438 1,648 82

0.294955 0.218703

Baker Hughes, Inc. and Subsidiaries Consolidated Balance Sheets In Millions (USD $) Current Assets Cash and cash equivalents Short-term investments Accounts receivable - less allowance for doubtful accounts (2010 $162; 2009 - $157; 2008 - $74; 2007 - $59) Inventories, net Deferred income taxes Other current assets Total current assets

Dec. 31, 2010 1,456 250 3,942 2,594 234 231 8,707

12 Months Ended Dec. 31, 2009 1,595 2,331 1,836 268 195 6,225

Property, plant and equipment - less accumulated depreciation (2010 - $4,367; 2009 - $3,668; 2008 - $3,203; 2007 - $2976) Goodwill Intangible assets, net Other assets Total assets Current Liabilities Accounts payable Short-term borrowings and current portion of long-term debt Accrued employee compensation Income taxes payable Other accrued liabilities Total current liabilities Long-term debt Deferred income taxes and other tax liabilities Liabilities for pensions and other postretirement benefits Other liabilities Commitments and contingencies Total Non-Current Liability Total Liabilities Stockholders' Equity Common stock, one dollar par value (shares authorized - 750; issued and outstanding: 2010 - 432; 2009 - 312; 2008 - 309; 2007 - 316) Capital in excess of par value Retained earnings Accumulated other comprehensive loss

6,310 5,869 1,569 531 22,986

3,161 1,418 195 440 11,439

1,496 331 589 219 504 3,139 3,554 1,360 483 164 5,561 8,700

821 15 448 95 234 1,613 1,785 309 379 69 2,542 4,155

432 7,005 7,083 (420)

312 874 6,512 (414)

Baker Hughes stockholders' equity Noncontrolling interest Total stockholders' equity Total liabilities and stockholders' equity Total Assets Average Total Assets Total Equity Average Total Equity Non-operating Liabilities Non-operating Assets NNO Average NNO Operating Assets Operating Liabilities NOA Average NOA CHECK

14,100 186 14,286 22,986 22,986 17212.5 14,286 10785 3,885 250 3,635 2718 22,736 4,815 17,921 13502.5 TRUE

7,284 7,284 11,439 11,439 11650 7,284 7045.5 1,800 1,800 2067 11,439 2,355 9,084 9112 TRUE

12 Months Ended Dec. 31, 2008 1,955 2,759 2,021 231 179 7,145

Dec. 31, 2007 1,054 2,383 1,714 182 122 5,455

Fiscal 2010 As reported Adjustment

1,456 250 3,942 2,594 234 231 8,707 -

As if 1,456 250 3,942 2,594 234 231 8,707

2,833 1,389 198 296 11,861

2,345 1,354 177 526 9,857

6,310 5,869 1,569 531 22,986

1140
-

7,450 5,869 1,569 531 24,126

1,140

888 558 530 272 263 2,511 1,775 384 317 67 2,543 5,054

704 15 457 191 251 1,618 1,069 416 332 116 1,933 3,551

1,496 331 589 219 504 3,139 3,554 1,360 483 164 5,561

106 -

1,496 437 589 219 504 3,245 4,588 1,360 483 164 6,595

106
1,034 1,034

8,700

1034

9,734

309 745 6,276 (523)

316 1,216 4,818 (44)

432 7,005 7,083 (420)

432 7,005 7,083 (420)

6,807 6,807 11,861 11,861 10859 6,807 6556.5 2,333 2,333 1709 11,861 2,721 9,140 8265 TRUE TRUE

6,306 6,306 9,857 9,857

14,100 186 14,286 22,986

14,100 186 14,286 24,126

1,140

6,306

1,084 1,084

9,857 2,467 7,390

Baker Hughes, Inc. and Subsidiaries 2008 Consolidated Statements of Stockholders' Equity (USD $) In Millions Balance, December 31, 2007 Adoption of ASC 715, Compensation Retirement Benefits Adjusted beginning balance January 1, 2008 Comprehensive income: Net income Foreign currency translation adjustments Defined benefit pension plans, net of tax $67, $2,and $5 for the year 2008, 2009 and 2010, respectively Total comprehensive income Issuance of common stock, pursuant to employee stock plans Tax benefit on stock plans Stock-based compensation Repurchase and retirement of common stock Cash dividends ( $0.56 per share), ( $0.60 per share) and ( $0.60 per share) for the year 2008, 2009 and 2010, respectvely Ending Balance at Dec. 31, 2008 Common Stock 316 Capital in Excess of Par Value 1,216 Retained Earnings 4,818 (4) 316 1,216 4,814

1,635

76 11 60 (618) (173)

(9)

309

745 Capital in Excess of Par Value

6,276

2009 Consolidated Statements of Stockholders' Equity (USD $) In Millions Comprehensive income: Net income Foreign currency translation adjustments Defined benefit pension plans, net of tax $67, $2,and $5 for the year 2008, 2009 and 2010, respectively Total comprehensive income Issuance of common stock, pursuant to employee stock plans Tax benefit on stock plans Stock-based compensation Cash dividends ( $0.56 per share), ( $0.60 per share) and ( $0.60 per share) for the year 2008, 2009 and 2010, respectvely Ending Balance at Dec. 31, 2009

Common Stock

Retained Earnings

421

43 (2) 88 (185)

312

874 Capital in Excess of Par Value

6,512

2010 Consolidated Statements of Stockholders' Equity (USD $) In Millions

Common Stock

Retained Earnings

Comprehensive income: Net income Foreign currency translation adjustments Defined benefit pension plans, net of tax $67, $2,and $5 for the year 2008, 2009 and 2010, respectively Total comprehensive income Issuance of common stock, to acquire BJ Services Issuance of common stock, pursuant to employee stock plans Tax benefit on stock plans Stock-based compensation Cash dividends ( $0.56 per share), ( $0.60 per share) and ( $0.60 per share) for the year 2008, 2009 and 2010, respectvely Acquisition of noncontrolling interest Ending Balance at Dec. 31, 2010 118 2 5,986 60 (2) 87

812

(241)

432

7,005

7,083

Accumulated Noncontrolling Other Interest Comprehensive Loss (44)

Total

6,306 (4)

(44)

6,302

(354) (125) 1,156 78 11 60 (627) (173)

(523)

6,807

Accumulated Noncontrolling Other Interest Comprehensive Loss

Total

122 (13) 530 46 (2) 88 (185) (414) 0 7,284

Accumulated Noncontrolling Other Interest Comprehensive Loss

Total

7 (41) 35 813 6,104 62 (2) 87 (241) 179 (420) 186 179 14,286

Baker Hughes, Inc. and Subsidiaries Consolidated Statements of Cash Flows (USD $) In Millions Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization (Gain) loss on investments Stock-based compensation Benefit for deferred income taxes Gain on sale of product line Gain on disposal of assets Provision for doubtful accounts Changes in operating assets and liabilities: Accounts receivable Inventories Accounts payable Accrued employee compensation and other accrued liabilities Income taxes payable Liabilities for pensions and other postretirement benefits and other liabilities Other Net cash flows from operating activities Cash flows from investing activities: Expenditures for capital assets Proceeds from disposal of assets Proceeds from sale of businesses, net of disposal costs, and interests in affiliates Acquisition of businesses, net of cash acquired Proceeds from sale/settlement of investments Purchase of short-term investments Net cash flows from investing activities Cash flows from financing activities: Net proceeds (payments) of commercial paper and other short-term debt Net proceeds from issuance of long-term debt Repayment of long-term debt Proceeds from issuance of common stock Repurchase of common stock Dividends Excess tax benefits from stock-based compensation Net cash flows from financing activities Effect of foreign exchange rate changes on cash (Decrease) increase in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year Supplemental cash flows disclosures: Income taxes paid Interest paid Dec. 31, 2010 819 1,069 (6) 87 (188) (113) 39 (702) (243) 292 (182) 23 (16) (23) 856 (1,491) 208 39 (888) 6 (250) (2,376) 52 1,479 74 (241) 2 1,366 15 (139) 1,595 1,456 637 154 12 Months Ended Dec. 31, 2009 421 711 (4) 88 (256) (64) 94 399 240 (89) (130) (169) 13 (15) 1,239 (1,086) 163 (58) 15 (966) (16) (525) 51 (185) (675) 42 (360) 1,955 1,595 604 154 Dec. 31, 2008 1,635 637 25 60 (21) (28) (101) 31 (515) (371) 242 90 76 (38) (108) 1,614 (1,303) 222 31 (120) (1,170) 15 1,235 87 (627) (173) 4 541 (84) 901 1,054 1,955 621 86

Supplemental disclosure of noncash investing activities: Capital expenditures included in accounts payable

64

29

43