Baker Hughes provides oilfield services and products. It has a history of acquisitions and offers various drilling, evaluation, completion, and production services. The company focuses on a high performance culture, best-in-class opportunities, financial flexibility, and mastering the market. Its strengths include innovative technology and focus on products/services, though it faces threats from industry cycles and geopolitics.
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Baker Hughes
Jeff Burkhardt
Syarifah Fakhry
Julio Idrovo
Sri Krishna
Dionne Moonah
Bernd Ruehlicke
University of Houston-Victoria
ACC6351
Fall 2005
December 5, 2005
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I. Introduction 3
II. Industry Economic Characteristics 12
III. Business Strategies and Performance 35
IV. Financial Reporting and Analysis 43
V. Forecasting Profitability and Risk 79
VI. Conclusion and Recommendations 94
References 100
Appendix 101
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• History 4
• Products and Services 5
• Core Values and Keys to Success 7
• Management Team and Leadership 8
• Business Performance 9
– Sales Growth and Profit
– Market Shares
– Stock Market Performance
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• In 1907, Reuben C. Baker developed a casing shoe
that revolutionized cable tool drilling. In 1909,
Howard R. Hughes, Sr. introduced the first roller
cutter bit, which dramatically improved the rotary
drilling process
• Over the next eight decades, Baker International and
Hughes Tool Company became worldwide leaders in
well completion, drilling tools, and related services.
The two companies merged in 1987 to form Baker
Hughes, Incorporated
• During its history, Baker Hughes has acquired and
assimilated numerous oilfield pioneers
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Baker Hughes delivers a broad range of products and
services that help the petroleum industry improve
efficiency and increase ultimate productivity for
the life of the reservoir.
• Drilling – Logging-While-Drilling
– Directional Drilling – Measurement-While-
– Drill Bits Drilling
– Drilling Fluids Systems – Reservoir and Petrophysical
Analysis
– Drilling Optimization
(OASIS) – Surface Logging Systems
– Waste Management
• Formation Evaluation Services
– Coring Services – Wireline Logging
– Integrated Formation
Evaluation
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• Completion Services • Production Management
– APEX Big Bore Solutions – Coiled Tubing
– Completion Systems – Electric Submersible Pumps
– Deepwater Upper (ESP)
Completions – Oil/Water Separation and
– Fishing Services Treatment Systems
– Flow Control – Pipeline Management
– High Pressure/High – Production Services
Temperature – Reentry
– Inflatable Systems – Reservoir Management
– Liner Hangers – Specialty Chemical
– Packers Programs
– Perforating Systems – Wellbore Instrumentation
– Safety Systems – Workover Services
– Sand Control • Seismic Acquisition &
– Service Tools Processing
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• Core Values
– Integrity
– Teamwork
– Performance
– Learning
• Keys to Success
– People contributing at their full potential. Everyone
can make a difference.
– Delivering unmatched value to our customers.
– Being cost efficient in everything we do.
– Employing our resources effectively.
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• Comprised of eight operating Management Organization Chart
divisions focused on technology
development, customer service,
field operations, and financial
performance
• Baker Hughes Business Shared
Services provides administrative
services supporting Baker
Hughes divisions including
information technology, finance
and accounting, and human
resources and benefits Baker Hughes executive management team.
(bakerhughes.com)
• Corporate offices provide legal,
tax, finance and investor
relations support, and executive
management
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Sales Growth and Profit
Revenues*
2004 $6.1 billion
2003 5.3 billion
2002 4.9 billion
Operating Income*
2004 $821.0 million
2003 560.3 million
2002 562.4 million
Net Income*
2004 $528.6 million
2003 128.9 million
2002 168.9 million
* Excludes the results of EIMCO Process Equipment, Bird
Machine, and oil producing operations in West Africa,
which are discontinued business.
Baker Hughes sales and profitability figures for Baker Hughes financial highlights as of
2002 through 2004. (bakerhughes.com) June 30, 2005. (finance.yahoo.com)
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Market Shares
Market Postion
Drilling and Evaluation
Baker Hughes
Drilling Fluids 3 Drilling Fluids 1 2
Hughes
Dill Bits 1 Christensen - 4
Drilling and Evaluation 2 INTEQ 1 3
Wireline 2 Baker Atlas 1 3
Completion and Production
Baker Oil
Completions 1 Tools 2 3
Electronic Submersible Pumps 1 Centrilift 2 -
Baker
Oilfield Chemicals 1 Petrolite - -
Seismic 1* Western Geco 1* -
* Joint venture between Baker Hughes and Schlumberger
Oil services industry market share by market position rank for Baker Hughes,
Schlumberger, and Haliburton. (One-on-One, 2005)(RBC Capital, 2005)
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Stock Market Performance
BHI: Baker Hughes Inc., GSPC: S&P 500, DJI: Dow Jones Index
The dramatic difference between the S&P 500 and Baker Hughes shows its strong correlation
to the price of oil. In June 2005, crude oil was $45 per Barrel, and peaked in September
at $70 per Barrel
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• Critical Success Factors 13
• Business Environment Analysis 18
(SWOT)
• Industry Competition Analysis 25
(Porter’s Five Forces)
• Customer Analysis 33
• Government and Regulatory Analysis 34
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The Strategic Framework
• High Performance Culture
• Best-in-Class Opportunities
• Financial Flexibility
• Master the Market
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High Performance Culture
• Core Values
• Keys to Success
• Leadership team
development
– Succession planning
• Recruit, train, and
retain a high
performance Illustrates the relationships within Baker
Hughes’ high performance culture.
nationalized (One-on-One, 2005)
workforce
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Best-in-Class Opportunities
• Geographic
opportunities
– Russia and Caspian
Sea
– Middle East
– Mature markets
• Customer
opportunities
– National oil companies
(One-on-One, 2005)
• Market opportunites
– Critical wells: risk
reduction
– Standard wells: cost
15 reduction
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Financial Flexibility
• Cost discipline
– Efficient cost base
• Financial discipline
– Quarterly performance
reviews
– Incentive
compensation plan
– Individual performance
contracts
• Financial Flexibility
– Retire debt
Effective debt-load of Baker
– Repurchase stock Hughes from 1999 to 2005.
(One-on-One, 2005)
16 – Grow the business
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Master the Market
• Cultivate superior
process and capabilites
in:
– Product development
and commercialization
– Manufacturing and
product quality
– Service quality
• Strengthen support
services
Illustrates Baker Hughes’ overlapping focus
on product development, manufacturing
and product quality, and service
quality. (One-on-One, 2005)
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Strengths
• Strong product line divisions that give a competitive
advantage.
• Develop technology innovations that cut cost, reduce risk,
and increase productivity.
• Focus on best-in-class products and services.
• Maintain capital discipline by reducing debt and carefully
evaluating investments.
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Weaknesses
• Compete with the oil and natural gas industry’s largest
diversified oilfield service providers
• Not to carry inventory of materials and component parts
used in manufacturing products that could be subject to
shortages and rising costs
• Limited number of buyers
• Cyclical demand, dependent upon customer’s forecasts of
future oil and natural gas prices and production, future
economic growth.
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Opportunities
• Worldwide oil demand estimated to increase 2-3% in 2005
which will affect the clients to increase their upstream
spending program by 9-12%
• Expand business in the areas that are growing rapidly, such
as Russia and Caspian regions
• Expecting higher levels of activity in the Gulf of Mexico
as deepwater development proceeds and in the North Sea
where independents are ramping up operations.
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Threats
• Operations are subject to the risk of war, boycott, and
change in foreign currency exchange rate
• Risk of disruption in oil supply due to terrorist attacks
targeting oil production from key producers, labor strikes,
and military activity
• Adverse weather conditions, such as hurricanes
• Risk of doing business in multiple countries with various
laws and differing political structures
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SWOT Summary
• Strengths: High
• Weaknesses: Low
• Opportunities: High
• Threats: Moderate
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SWOT Matrix
Strengths Weaknesses
S-O Strategies W-O Strategies
Low
Growing demand for Expand business in the
natural gas will support areas where are few
Opportunities strong drilling activities. competitors exist.
S-T Strategies W-T Strategies
Develop technology Not to carry inventory of
innovation that reduce materials and component
Threats
risk of weather and component parts to
conditions. avoid risk of political and
weather condition.
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Porter’s Five Forces
• Buyer Power
• Supplier Power
• Rivalry Among Existing Firms
• Threat of New Entrants
• Threat of Substitutes
• Porter’s Five Forces Summary
• Porter’s Generic Strategies
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Buyer Power
• Direct sales account for most of the revenues, not
retailers or distributors
• Products and services offered are quite unique in a
small industry of specialists
• Products provided are extremely essential for the
industry, but the number of buyers is quite limited
• Cost of production and services offered is a small
portion of the total capital investment of buyers
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Supplier Power
• Very specialized and high-tech suppliers for
components built and services offered
• Small number of suppliers, more bargaining
power
• The size of companies they are selling to however,
gives them some leverage when exercising control
over suppliers
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Rivalry Among Existing Firms
• Halliburton Co., Schlumberger Ltd., Smith
International, Inc. are 3 main competitors
• The relative size and broad range of products and
services offered makes the rivalry quite severe
• Number of buyers is quite limited
• Some competitor products are reasonably similar
but each is best suited for certain applications only
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Threat of New Entrants
• High capital investments, technology and
expertise and patents available with existing firms
are high barriers for new entrants
• Limited number of buyers
• Very cyclical industry. During bad times, business
is very bad
• Brand recognition for existing firms is quite high
• Reasonable good profitability
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Threat of Substitutes
• Number of competitors is very limited
• Limited number of buyers
• Buyers like to standardize products and services
for entire fleets
• After making a decision on one firm, it is very
expensive to make a switch to another firm’s
products
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Porter’s Five Forces Summary
• Buyer Power: Low
• Supplier Power: Moderate
• Rivalry Among Existing
Firms: High
• Threat of New Entrants: Low
• Threat of Substitutes: Low
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Porter’s Generic Strategies
Baker Hughes’ broad range of services and operational units
requires a varied strategic approach to each unit--not just a
common strategy for the entire firm.
Cost Leadership Focus Strategy Differentiation
Strategy • Concentration within a Strategy
• Acquisitions and narrow segment • Unique products
mergers • Risk of less bargaining • Strong R&D group
• Outsourcing power with suppliers, • Strong sales group
• Efficiencies in design so less of focus strategy
is applied • Example : AutoTrack
and production rotarty Closed Loop
• Vertical integration • Since the market Drilling System, Low
segment is narrow, a Dosage Hydrate
• Examples : Reservoir broad range of products
and Petrophysical Inhibitors, Specialty
and services is offered Chemicals
Analysis tools,
Wellbore • In a cyclical industry
Instrumentation, adoption of a firm-wide
OASIS business unit, focus strategy is very
VSFusion tools risky
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• Business based customers only
• Three major customers
– Super major and major integrated oil and
natural gas companies
– Independent oil and natural gas companies
– State-owned national oil companies (NCO’s)
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• Compliance with all U.S. federal, state and local laws.
– Comprehensive Environmental Response, Compensation and
Liability Act (Superfund or CERCLA)
– The United States Protection Agency (EPA)
– The Texas Commission on Environmental Quality (TECQ)
– Identify as Potential Responsible Parties (PRP)
• Occupational Safety and Health Administration (OSHA)
• International Regulations – with regards to air and water
quality
• Securities and Exchange Commission
• Financial Accounting and Standards Board
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• Product Life Cycle 36
• Business Segments 37
• BCG Matrix 38
• Integration with Value Chain 39
• Geographical Diversification 41
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• Negative Financing Consolidated Cash Flow
1000
activity 800
600
• Large positive 400 Operating activities
Investing activities
Operating activity 200
0
Financing activities
Cash
• Along with Investing -200
-400
activity patterns, we -600
2000 2001 2002 2003 2004
clearly identify a Break-down of cash flow by activity for Baker
Hughes for 2000 through 2004. (Baker Hughes,
company in its 2005)
Maturity phase
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• Baker Hughes is focused on providing drilling, formation evaluation
and production technology used within oil and gas wells. Six
divisions provide best-in-class products and services to the
worldwide petroleum industry.
– Baker Hughes Drilling Fluids: The market leader in providing
advanced reservoir drill-in fluids that help maximize production.
Drilling
– Hughes Christensen: The most innovative and technically advanced
drill bit manufacturer in the world.
Formation Eval
– INTEQ: Delivers advanced drilling technologies and services that
deliver efficiency and precise well placement.
– Baker Atlas: Advanced well logging and completion systems. Industry
Completion
leader in wireline and tubing-conveyed perforating services.
– Baker Oil Tools: Leads the world in completion, workover and fishing
solutions.
Production
– Centrilift: Provides a broad variety of pumping systems and related
components. The leader in proprietary technology for electrical
submersible pumps (ESPs), variable frequency drives, and cabling for
ESP systems.
– Baker Petrolite: World leader in providing chemical technology
solutions to the global hydrocarbon recovery and processing industries.
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• Baker Hughes’ core businesses have moved to
“Cash Cow” status, while others enjoy “Star”
status; some remain as “Question Marks”
• Baker Atlas introduced new technologies and
expanded into new markets; along with a solid 2nd
place market share, it has star status
• Hughes Christensen delivered record revenues
and profits; as the industry leader, has star value
• Centrilift delivered record revenues and profits; as
a narrow industry leader, has cash cow status with
star potential
• Baker Oil Tools revenues increased 16.4% in
2004; as industry leader, has cash cow status with
star potential
• Baker Petrolite was able to offset rising material Boston Consulting Group growth-share matrix
costs through improved efficiency and price for each of Baker Hughes’ business segments
increases; along with industry lead, gives it cash based on relative market share, revenue, and
cow status profitability. (quickmba.com) (One-on-One,
• INTEQ posted improvement in profitability, but 2005)(Baker Hughes, 2004)
with 2nd and sometimes 3rd place market share, a
question mark with star potential • Drilling Fluids (DF), Hughes Christensen
• Drilling Fluids disaggregated from INTEQ to (HC), INTEQ (I), Baker Atlas (BA),
renew focus; does not share top market position Baker Oil Tools (BOT), Centrilift (C),
• Baker Hughes will need to gain adoption of new Baker Petrolite (BP)
technologies to move “Question Marks” to
“Stars” and increase market share to return to and
maintain “Star” status in others
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Each step in the oilfield services covered by one or more divisions has their
individual value chain. We will focus on overall value chain. Looking at the
chain of oilfield services Baker Hughes is covering
Drilling Formation Evaluation Completion Production
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It is clear that the firm is pursuing a vertical integration strategy.
• Inbound Logistics: Transportation to onside production sites
worldwide
• Operations: Tool and material production or custom adjusting of
equipment
• Outbound Logistics: Applying/using equipment
• Marketing and Sales: SPE, Internet, tradeshows
• Service: Fishing, workover, chemical provider
• Support Activities: Increased research and development
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• Reason Global Operations
– Having construction
and production sites
at oilfield location
– Being close to the
customer
• Risk
– Security
Baker Hughes operates in 100 countries, with
– Terrorism manufacturing facilities in 60. They employ more
than 27,000 people around the world.
(One-onOne, 2005)
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• Strategy Forward Geographic Shift
– Switching from mature
areas like North Sea/North
America to Eastern
Hemisphere (Middle East,
Caspian, Russia)
– Russia and China will roll
in competitors
– Follow the super majors
– National oil companies
attain momentum (Middle Illustrates Baker Hughes’ shift from mature areas
to emerging areas. (Ward, 2005)
East, China, Russia)
holding large reserves
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• Accounting practices 44
– Accounting methods used
– Recent accounting changes and effects on financial
statements
– Audit opinion
• Financial reporting with SEC 52
– Compliance with SEC
– Recent changes in accounting and financial reporting
• Long-term trend analysis 55
– Financial position and health
– Operating performance
– Cash flow
• Financial ratio analysis 64
– Profitability Measures
– Activity Measures
– Liquidity Measures
43 – Solvency Measures
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Accounting Methods Used
• Financial statements are in conformity with U.S. GAAP
• Product Revenue Recognition
– Upon delivery, when title passes and when collectibility is
reasonably assured during ordinary operations.
– Products produce to customer specifications are produced using
standard manufacturing operations and sold using regular
marketing channel
• Service Revenue Recognition
– When rendered and collectability is reasonably assured during
ordinary business operations
– Usually priced on a per day, per meter or per man hour
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Accounting Methods Used
• Impairment of Long-Lived Assets
– Long lived assets includes property, goodwill and intangible assets
which carrying values are periodically reviewed for impairment Losses.
– Base on the business climate in which BHI operates no significant
impairment losses are anticipated for the foreseeable future
• Inventories
– Stated at the lower of cost or market value.
– Cost is determined by using the First-in, First-out ( FIFO) or the
Average Cost method
• Cash equivalents
– Highly liquid investments with an original maturity date of 3 months or
less
• Allowance for doubtful debts (Bad Debts)
– Recorded when it is evident that customers will not meet present or
future payments as required by contractual due dates.
– BAD Debts at December 2004 was $50.5 million or 3.6% of A/R.
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Accounting Methods Used
• Interest Expense
– Decreased by $16.0 million in 2004 due to repayment of $350 million
long term debt.
– Decreased by $8.0 Million in 2004 due to lower weighted average
interest rates on commercial papers and market borrowings.
– Decreased by $4.1 million in 2004 as a result of new interest rate swap
agreements entered into the second quarter of 2004
• Product Warranties
– Estimated warranty claims are based upon current and historical
product sales data
• Remediation Cost
– Accrue base on estimates of a probably environmental exposure, using
current data and recorded when likely obligated to pay.
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Accounting Methods Used
• Foreign Currency
– Gains/losses due to foreign currency translation are recorded as a
component of accumulated other comprehensive income
• Stock-Based Compensation
– Stocks issued to employee as part of their compensation are valued
using the intrinsic value method
• Income Taxes
– Liability method is used for determining income taxes.
– Current deferred tax liabilities and assets are recorded in accordance
with enacted domestic and foreign tax laws and rates.
– Earnings from foreign subsidiaries will be indefinitely reinvested
subsequently, no U.S. income taxes on these amounts will be paid.
– BHI effective tax rate differ from the U.S. statutory rate of 35%.
– BHI is confident that estimates and assumptions when providing for tax
valuation will be accurate
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Accounting Methods Used
Estimated
Depreciation Estimated
Asset Class Residual
Method Useful Life
Value
Plant, Straight-line
Property, and for financial
Machinery statements 20 - 25 years 3% - 12%
Capital Lease
Straight-line 5-15 years 1% - 3%
Intangible Review for
Assets Amortize 40 YEARS impairment
*For Income tax purposes Baker Hughes uses the accelerated method of depreciation.
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Recent Accounting Changes
• SFAS No. 142: Goodwill and Other Intangible
Assets
– Adopted January 1, 2002
– Cease amortizing goodwill and perform a transitional
impairment test from
– Valuations of the reporting units were performed by a
third party
– Goodwill in EIMCO and BIRD operation divisions
determined to be impaired
– Recognized transitional impairment losses of $42.5
million, net of tax of $20.4 million
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Recent Accounting Changes
• SFAS No. 143: Asset Retirement Obligations
– Adopted January 1, 2003
– Fair value of a liability associated with an asset
retirement obligation be recognized in the period in
which it is incurred if a reasonable estimation can be
made
– Resulted in a change of $5.6 million, net of tax of $2.8
million
– Recorded ARO liabilities of $11.4 million
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Audit Opinion
In our opinion, such consolidated financial statements present fairly, in all material respects, the
financial position of Baker Hughes Incorporated and subsidiaries at December 31, 2004 and
2003, and the results of their operations and their cash flows for each of the three years in the
period ended December 31, 2004, in conformity with accounting principles generally
accepted in the United States of America. Also, in our opinion, such financial statement
schedule, when considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set forth therein.
We have also audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the effectiveness of the Company’s internal control over
financial reporting as of December 31, 2004, based on the criteria established in Internal
Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission and our report dated February 24, 2005 expressed an unqualified
opinion on management’s assessment of the effectiveness of the Company’s internal control
over financial reporting and an unqualified opinion on the effectiveness of the Company’s
internal control over financial reporting.
Deloitte & Touche, LLP
Houston, Texas
February 24, 2005
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Compliance with SEC
• Section 16(a) of the Securities Exchange Act of 1934, as amended
(“Exchange Act”), requires executive officers and directors, and
persons who beneficially own more than 10% of the Common Stock,
to file initial reports of ownership and reports of changes in ownership
with the SEC and the NYSE.
• SEC regulations require executive officers, directors and greater than
10% beneficial owners to furnish the Company with copies of all
Section 16(a) forms they file.
• Based solely on a review of the copies of those forms furnished to the
Company and written representations from the executive officers and
directors, the Company believes, that during its fiscal year ended
December 31, 2003, the Company’s executive officers and directors
complied with all applicable Section 16(a) filing requirements.
52
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Recent Changes in Accounting and Financial Reporting
• Effective as of January 1, 2003, the Company adopted
Statement of Financial Accounting Standards No. 143,
which established new accounting and reporting standards
for asset retirement obligations
• Effective as of January 1, 2002, the Company adopted
Statement of Financial Accounting Standards No. 142,
which established new accounting and reporting standards
for the recording, amortization and impairment of goodwill
and other intangibles
• Effective as of January 1, 2001, the Company adopted
Statement of Financial Accounting Standards No. 133, as
amended, which established new accounting and reporting
standards for derivative instruments and hedging activities.
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Recent Changes in Accounting and Financial Reporting
Date Rule Number Description Consequence
Guarantor’s Accounting and Disclosure Did not have an impact on the
FASB issued
November Requirements for Guarantees, Including consolidated financial statements of the
Interpretation No. 45
2002 Indirect Guarantees of Indebtedness of Company
(“FIN 45”)
Others
Requires that the fair value of a liability Charge of $5.6 million, net of tax of
associated with an asset retirement $2.8 million, recorded as the cumulative
FASB issued SFAS obligation (“ARO”) be recognized in effect of accounting change in the
June 2005
No. 143 the period in which it is incurred if a consolidated statement of operations
reasonable estimate of fair value can be
made
January & FASB issued Consolidation of Variable Interest Does not expect the adoption to have a
December Interpretation No. 46 Entities material impact, if any, on the
2003 (“FIN 46”) consolidated financial statements
Amendment of Statement 133 on No impact on the consolidated financial
FASB issued SFAS
April 2003 Derivative Instruments and Hedging statements
No. 149
Activities
Accounting for Certain Financial No impact on the consolidated financial
FASB issued SFAS
May 2003 Instruments with Characteristics of both statements
No. 150
Liabilities and Equity
December FASB revised SFAS Employers’ Disclosures about Pensions Adopted the disclosure requirements
2003 No. 132 and Other Post retirement Benefits that were effective for 2003
Accounting and Disclosure Elected to defer accounting for the
FASB issued FASB
Requirements Related to the Medicare effects of the Act until 2004
January 2004 Staff Position No. FAS
Prescription Drug, Improvement and
106-1 (“FSP 106-1”)
Modernization Act of 2003
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• Financial Position and Health
– Balance Sheets
• Operating Performance
– Income Statements
• Cash Flow
– Statements of Cash Flow
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Financial Health and Position
Selected company information for 2004. (bakerhughes.com)
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Financial Health and Position
• Cash and cash equivalents increased in 2004
• Accounts receivable have increased somewhat in
2004, probably due in part to increased revenue
• Inventories, property, plant, and equipment, and
other assets have remained stable during the last 5
years.
Balance Sheet Baker Hughes
2004 2003 2002 2001 2000
Assets
Current assets:
Cash and cash equivalents 319 98.4 143.9 38.7 34.6
Accounts receivable 1356.1 1141.8 1110.6 1268.8 1310.4
Inventories 1035.2 1013.4 1032 1031.9 898.5
Total current assets 2966.6 2533 2555.5 2806.7 2486.6
Total Assets 6821.3 6416.5 6400.8 6676.2 6452.7
* Full financial statements are included in the Appendix
57
58. ilkdJqboj=qobka=^k^ivpfp
Financial Health and Position
• Long-term debt shows a decreasing trend for the
past 5 years
• Retained earnings have increased heavily in 2004,
maybe due to the increase in cash mentioned
above
Balance Sheet Baker Hughes
2004 2003 2002 2001 2000
Liabilities and Stockholders' Equity
Total current liabilities 1235.5 1324.4 1080.1 1218.6 987.8
Long-term debt 1086.3 1133 1424.3 1682.4 2049.6
Retained earnings 545.9 170.9 196.3 182.3 -101.3
Total stockholders' equity 3895.4 3350.4 3397.2 3327.8 3046.7
Total Liabilities and Stockholders' Equity 6821.3 6416.5 6400.8 6676.2 6452.7
* Full financial statements are included in the Appendix
58
59. ilkdJqboj=qobka=^k^ivpfp
Financial Health and Position
• Firm is financially healthy (cash showing a
positive trend, long term debt decreasing).
• Baker Hughes has enough cash to cover short
term debt and current portion of long term debt
commitments.
Note:
• Halliburton's consolidated balance sheet
numbers include both ESG (direct competitor of
Baker Hughes) and KBR (engineering &
construction) business units.
59
60. ilkdJqboj=qobka=^k^ivpfp
Operating Performance
• Baker Hughes shows lower COGS compared to its
main competitors
• Selling, general & administrative costs are stable, but
much higher than Halliburton and Schlumberger
• Baker Hughes’ net income in 2004 increased
considerably compared to previous years, and it is at
the top of its competitors
Income Statement Baker Hughes
2004 2003 2002 2001 2000
Revenues 6103.8 5252.4 5020.4 5139.6 5233.8
Operating expenses:
Cost of goods sold 4367.4 3820.9 3625.7 3655.9 4009.6
Selling, general, and administrative 915.4 827.0 840.6 781.7 759.6
Net Income 528.6 128.9 168.9 438.0 102.3
* Full financial statements are included in the Appendix
60
61. ilkdJqboj=qobka=^k^ivpfp
Operating Performance
• Baker Hughes’ overall operating performance is
improving as shown by the stable COGS (may
indicate good cost control) and the increase in
net income.
Note:
• Halliburton's consolidated income statement
numbers include both ESG (direct competitor of
Baker Hughes) and KBR (engineering &
construction) business units.
61
62. ilkdJqboj=qobka=^k^ivpfp
Cash Flow Baker Hughes
Consolidated Cash Flow 2004 2003 2002 2001 2000
Net cash flows from operating activities 783.7 656.1 706.4 720.8 563.5
Net cash flows from investing activities (196.8) (362.2) (283.1) (241.3) (313.5)
Net cash flows from financing activities (352.2) (335.8) (312.3) (465.0) (223.2)
Cash and cash equivalents, end of year 319.0 98.4 143.9 45.4 34.6
Baker Hughes
Percent Change Cash Flow 2004 2003 2002 2001 2000
Net cash flows from operating activities 19.45% -7.12% -2.00% 27.91% 3.74%
Net cash flows from investing activities -45.67% 27.94% 17.32% -23.03% -35.52%
Net cash flows from financing activities 4.88% 7.52% -32.84% 108.33% 280.89%
Cash and cash equivalents, end of year 224.19% -31.62% 216.96% 31.21% 121.79%
Consolidated Cash Flow Percent Change Cash Flow
1000 300.00%
800 250.00%
600 200.00%
400 Operating activities 150.00% Operating activities
Investing activities Investing activities
200 Financing activities 100.00% Financing activities
0 Cash 50.00% Cash
-200 0.00%
-400 -50.00%
-600 -100.00%
2000 2001 2002 2003 2004 2000 2001 2002 2003 2004
* Full financial statements are included in the Appendix
62
63. ilkdJqboj=qobka=^k^ivpfp
Cash Flow
• Operating cash flow show a steady increase in
excess of finance and investing activities
• No stock was repurchased in 2004 and close to
twice as much as in 2003 were issued in 2004
• This free cash gives Baker Hughes the
opportunity to repay borrowing
• Baker Hughes may consider increasing dividends
payments
63
64. cfk^k`f^i=o^qfl=^k^ivpfp
• Profitability Measures
– Return on Assets (ROA)
– Gross Profit Margin
– Asset Turnover
– Return on Common Shareholder’s Equity (ROCE)
– Earnings per Share (EPS)
• Activity Measures
– Inventory Turnover
– Accounts Receivable Turnover
– Accounts Payable Turnover
• Liquidity Measures
– Current Ratio
– Working Capital
• Solvency Measures
– Debt to Assets
– Debt to Equity
– Long-term Debt to Equity
• Summary
64
65. cfk^k`f^i=o^qfl=^k^ivpfp
Return on Assets (ROA)
Return on Assets • ROA based on income
10 . 0 %
9.0%
from continuing
8.0%
7.0%
operations
6.0%
5.0%
• Average ROA of 5.4%
4.0%
3.0%
2.0%
• Baker Hughes above
1. 0 %
0.0%
industry average
2000 2001 2002 2003 2004
Baker Hughes 3.2% 7.6% 4.5% 3.1% 8.8% • Last four year greater or
Schlumberger
Industry
5.4% 3.8%
6.6%
3.5%
3.7%
3.1%
3.2%
6.6%
equal to Schlumberger
Comparison of return on assets ratios for Baker • Increasing ROA
Hughes and Schlumberger between 2000 and 2004.
(Baker Hughes, 2004)(Schlumberger, 2004)(D&B
indicates a better
Key Business Ratios) operating performance
65
66. cfk^k`f^i=o^qfl=^k^ivpfp
Gross Profit Margin
Gross Profit Margin
• Above industry
29.0% average
27.0%
25.0%
23.0%
• Increasing margins
21.0% will improve Return
19.0%
17.0% on Sales
15.0%
Baker Hughes
2000
23.4%
2001
28.9%
2002
27.8%
• Similar trend to
2003
27.3%
2004
28.4%
Schlumberger
Industry (5-Yr. Avg.)
21.6% 21.6% 17.8%
Schlumberger, but
15.9%
26.2%
21.2%
Comparison of gross profit margin for Baker Hughes more stable
and Schlumberger between 2000 and 2004. (Baker
Hughes, 2004)(Schlumberger, 2004)
(investor.reuters.com)
66
67. cfk^k`f^i=o^qfl=^k^ivpfp
Total Asset Turnover
Total Asset Turnover • Steadily increasing asset
1.00 turnover
0.90
0.80 • Indicates resources are
0.70
0.60
well managed
0.50
0.40
• Average consistently
0.30
2000 2001 2002 2003 2004 above Schlumberger’s
Baker Hughes 0.77 0.78 0.77 0.82 0.92
Schlumberger 0.59 0.71 0.46 0.91 0.64 • Between two different
Industry (Med. Val.)
Industry (5-Yr. Avg.)
1.76 1.83 1.37
0.88 acquired industry
Comparison of total asset turnover for Baker Hughes
averages
and Schlumberger between 2000 and 2004. (Baker
Hughes, 2004)(Schlumberger, 2004) (D&B Key
• Adds to the increase of
Business Ratios)(investor.reuters.com) ROA
67
68. cfk^k`f^i=o^qfl=^k^ivpfp
Return on Common Shareholder’s Equity (ROCE)
Return on Common Shareholder's Equity • ROCE significantly higher
21.0%
since 2002, but still lower
19.0% than Schlumberger
17.0%
15.0%
• Higher ROCE can be
13.0% attributed to a combination
11.0%
of:
9.0%
7.0% - Higher profit margins
5.0%
2000 2001 2002 2003 2004 - Greater asset utilization
Baker Hughes 6.6% 8.5% 8.6% 11.2% 13.6%
Schlumberger 8.9% 9.7% 12.4% 15.5% 20.2% - Change in leverage
Industry (Comp. Val.) 9.8% 5.6% 6.5% 6.9%
- Emerging economies
Comparison of return on common shareholder’s
equity for Baker Hughes and Schlumberger between
2000 and 2004. (Baker Hughes, 2004)(Schlumberger,
2004) (D&B Key Business Ratios)
68
69. cfk^k`f^i=o^qfl=^k^ivpfp
Earnings Per Share
Earnings per Share (Basic) • Uses income from
$2.50 continuing operations
$2.00 before taxes due to
$1.50
extraordinary losses
$1.00
from discontinued
$0.50
operations sustained by
$0.00
Schlumberger in 2002
2000 2001 2002 2003 2004
Baker Hughes $0.71 $1.98 $1.13 $0.98 $2.33 • Earnings comparable to
Schlumberger $1.69 $1.96 $1.13 $0.78 $2.25
Schlumberger’s
Comparison of earnings per share for Baker Hughes
and Schlumberger between 2000 and 2004. (Baker • After a two-year retreat,
Hughes, 2004)(Schlumberger, 2004) earnings improving
again
• Little or no dilution
potential
69
70. cfk^k`f^i=o^qfl=^k^ivpfp
Inventory Turnover
Inventory Turnover • Baker Hughes’ COGS is
12.00 much lesser than
10.00 Schulmberger’s, hence the
8.00
smaller ratio
6.00
4.00
• Baker Hughes’s ratio over
2.00
the past 3 years has been
0.00
2000 2001 2002 2003 2004
steady
Baker Hughes
Schlumberger
4.56
6.54
3.79
9.51
3.51
7.06
3.74
8.43
4.23
9.71
• Schlumberger’s ratio has
however been changing
Comparison of inventory turnover for Baker Hughes
and Schlumberger between 2000 and 2004. (Baker • The increasing ratio
Hughes, 2004)(Schlumberger, 2004)
indicates a tendency for
Schlumberger to decrease
investment in inventory
70
71. cfk^k`f^i=o^qfl=^k^ivpfp
Accounts Receivable Turnover
Accounts Receivable Turnover • Baker Hughes’s ratio is
5.50 consistently higher than
5.00
Schlumberger’s
4.50
4.00 • For Baker Hughes, the
3.50
ratio has been reasonably
3.00
2.50
steady over the past 5
2.00
2000 2001 2002 2003 2004
years
Baker Hughes
Schlumberger
4.20
3.78
3.99
4.14
4.22
2.57
4.36
3.04
4.95
3.73
• Much lower value for
Schlumberger could signal
Comparison of accounts receivable turnover for
Baker Hughes and Schlumberger between 2000 and difficulty in collecting
2004. (Baker Hughes, 2004)(Schlumberger, 2004) accounts receivable,
especially in 2002
71
72. cfk^k`f^i=o^qfl=^k^ivpfp
Accounts Payable Turnover
Accounts Payable Turnover • Baker Hughes’s ratio is
11.00 consistently higher than
9.00 Schlumberger’s
7.00
• Schlumberger has shown a
5.00
constant ratio over the past
3.00
5 years whereas that of
1.00
2000 2001 2002 2003 2004 Baker Hughes has been
Baker Hughes 8.34 7.33 7.83 8.23 10.41
Schlumberger 2.94 3.00 1.71 2.11 2.40 rising for the past 3 years.
Comparison of accounts payable turnover for Baker • Increasing ratio indicates
Hughes and Schlumberger between 2000 and 2004. better ability to make
(Baker Hughes, 2004)(Schlumberger, 2004)
payments by reducing the
accounts payable days.
72
73. cfk^k`f^i=o^qfl=^k^ivpfp
Current Ratio
Current Ratio • 2003 number corrected for
2.60 the sale of SEMA
2.40
2.20 • Stable, between 2.0 & 2.5
2.00
1. 8 0
during last 5 years
• Current ratio values
1. 6 0
1. 4 0
1. 2 0
1. 0 0
indicate good ability to
Baker Hughes
2000
2.52
2001
2.30
2002
2.37
2003
1.91
2004
2.40
pay short-term debt
Schlumberger
Industry (Med. Val.)
1.88 1.24
2.20
1.11
2.20
1.28
2.00
1.50
• Larger that main
Comparison of current ratio for Baker Hughes and
competitor Schlumberger
Schlumberger between 2000 and 2004. (Baker
Hughes, 2004)(Schlumberger, 2004) (D&B Key
Business Ratios)
73
74. cfk^k`f^i=o^qfl=^k^ivpfp
Working Capital
Working Capital • 2003 number corrected
4, 000
for the sale of SEMA
3, 000 • Stable during the last 5
2, 000
years
• Indicates stable amount
1, 000
of net current resources
0
2000 2001 2002 2003 2004
dedicated to run the
Baker Hughes
Schlumberger
1,498.8
3,502.3
1,588.1
1,487.1
1,475.4
734.4
1,208.6
1,554.2
1,731.1
2,327.9
business
Comparison of working capital for Baker Hughes
• Main competitor
and Schlumberger between 2000 and 2004. (Baker Schlumberger showing a
Hughes, 2004)(Schlumberger, 2004)
steep decrease in 2002
due to charges for
discontinued operations
74
75. cfk^k`f^i=o^qfl=^k^ivpfp
Debt to Assets
Debt to Assets • Baker Hughes’ ratio
75.00
70.00
is lower than
65.00 Schlumberger’s
60.00
55.00 • Schlumberger’s
50.00
45.00
higher ratio indicates
40.00
2000 2001 2002 2003
it’s operations are
2004
Baker Hughes
Schlumberger
52.78
51.69
50.15
62.47
46.93
71.15
47.78
70.65
more dependent on
42.89
61.77
Comparison of debt to assets for Baker Hughes and
debt source than
Schlumberger between 2000 and 2004. (Baker Baker Hughes
Hughes, 2004)(Schlumberger, 2004)
• More stable than
Schlumberger
75
76. cfk^k`f^i=o^qfl=^k^ivpfp
Debt to Equity
Debt to Equity • Baker Hughes’ ratio
115.00
105.00
has steadily declined
95.00
85.00
compared to
75.00
65.00
Schlumberger’s
55.00
45.00 • Baker Hughes’
35.00
25.00
2000 2001 2002 2003
decreasing ratio
2004
Baker Hughes
Schlumberger
67.27
43.07
50.55
74.18
41.93
107.53
33.81
103.67
indicates a better
27.89
64.48
Comparison of debt to equity for Baker Hughes and
operating
Schlumberger between 2000 and 2004. (Baker performance
Hughes, 2004)(Schlumberger, 2004)
• More stable than
Schlumberger
76
77. cfk^k`f^i=o^qfl=^k^ivpfp
Long-Term Debt to Equity
Long-Term Debt to Equity • Baker Hughes’ ratio
55.00
50.00
has steadily declined
45.00 compared to
40.00
35.00
Schlumberger’s
30.00
25.00
• Baker Hughes’ lower
20.00
2000 2001 2002 2003
ratio indicates lower
2004
Baker Hughes
Schlumberger
40.22
30.11
33.58
42.59
29.54
51.82
25.27
50.90
risk of bankruptcy
21.81
39.20
Comparison of long-term debt to equity for Baker
compared to
Hughes and Schlumberger between 2000 and 2004. Schlumberger’s
(Baker Hughes, 2004)(Schlumberger, 2004)
• More stable than
Schlumberger
77
78. cfk^k`f^i=o^qfl=^k^ivpfp
Summary
• Robust gross profit margins due to favorable
economic conditions and the ability to control
costs has led to a surplus of cash
• Improving activity ratios, with a steady supply of
inventory, better conversion of accounts
receivable to cash, and, despite faster payment of
accounts payable, fewer overall days of financing
required
• Retirement of debt has led to much improved
liquidity and solvency, and thus, a surplus of cash
78
80. ^pprjmqflkp=rpba=fk
clob`^pqfkd
Pro-Forma Income Statements
• Revenue Assumption (Assumption 1)
– Revenue growth rate in 2005 will remain strong due to price and
demand increases carrying over from 2004
– However, revenue growth for 2006 to 2009 can not be maintained
at the same growth rate as 2005, due to the cyclicality of the
demand in the oil & gas industry
Increase in demand => High oil prices
=> More expenditure in exploration & production
=> Oil rigs count increases
=> More revenue + Oil service companies (BHI) increase prices
BAKER HUGHES PRO-FORMA INCOME STATEMENTS HISTORICAL INCOME STATEMENTS
2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
Revenues 8476.5 7996.7 7544.1 7117.0 6714.2 6103.8 5252.4 5020.4 5139.6 5233.8
Assumption 1: Revenue Growth Rate 6.0% 6.0% 6.0% 6.0% 10.0% 16.2% 4.6% -2.3% -1.8% 6.0%
* Full financial statements are included in the Appendix
80
81. ^pprjmqflkp=rpba=fk
clob`^pqfkd
Pro-Forma Income Statements
• COGS Assumption (Assumption 2)
– One of Baker Hughes’ strategic goals is cost
containment, hence the assumption is that COGS will
decrease a bit or remain constant in the next few years
(average COGS as % of Revenue was 72% during last
4 years)
– A value of 71% was found to be a good assumption for
forecasting
BAKER HUGHES PRO-FORMA INCOME STATEMENTS HISTORICAL INCOME STATEMENTS
2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
Cost of goods sold 6018.3 5677.7 5356.3 5053.1 4767.1 4367.4 3820.9 3625.7 3655.9 4009.6
Assumption 2: COGS as % of Revenue 71.0% 71.0% 71.0% 71.0% 71.0% 71.6% 72.7% 72.2% 71.1% 76.6%
* Full financial statements are included in the Appendix
81
82. ^pprjmqflkp=rpba=fk
clob`^pqfkd
Pro-Forma Balance Sheets
• Cash Assumption (Assumption 1)
– Cash was calculated as:
Cash Balance = (Avg Sales per Day) x (Days Sales in Cash)
where: Avg. Sales per Day(t+1) = Revenue(t+1) / 365
and: Days Sales in Cash = 365 / [Sales(t) / Cash(t)]
– By forecasting Cash as shown above (same method used in
textbook) more realistic values are obtained, than if using Cash as
the account to balance the Balance Sheet
BAKER HUGHES PRO-FORMA BALANCE SHEETS HISTORICAL BALANCE SHEETS
2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
Cash and cash equivalents 443.0 417.9 394.3 372.0 350.9 319 98.4 143.9 38.7 34.6
Assumption 1: a) Avg Sales per Day 23 22 21 19 18
b) Days Sales in Cash 19
* Full financial statements are included in the Appendix
82
83. ^pprjmqflkp=rpba=fk
clob`^pqfkd
Pro-Forma Balance Sheets
• Accounts Receivable Assumption (Assumption 2)
– A/R Turnover ratio has been constant (around 5.0)
during the last 2 years. This same value will be used
when forecasting Accounts Receivable
BAKER HUGHES PRO-FORMA BALANCE SHEETS HISTORICAL BALANCE SHEETS
2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
Accounts receivable 1734.4 1636.3 1543.7 1456.3 1373.8 1356.1 1141.8 1110.6 1268.8 1310.4
Assumption 2: A/R Turnover Ratio 5 5 5 5 5 5 5 4 4 4
* Full financial statements are included in the Appendix
83
84. ^pprjmqflkp=rpba=fk
clob`^pqfkd
Pro-Forma Balance Sheets
• Inventories Assumption (Assumption 3)
– Inventory Turnover ratio has been constant (around 4.0)
during the last 4 years. The value 4.3 from year 2004
will be used when forecasting Inventories
BAKER HUGHES PRO-FORMA BALANCE SHEETS HISTORICAL BALANCE SHEETS
2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
Inventories 1411.5 1331.6 1256.2 1185.1 1118.0 1035.2 1013.4 1032 1031.9 898.5
Assumption 3: Inventory Turnover Ratio 4.3 4.3 4.3 4.3 4.3 4.3 3.7 3.5 3.8 4.6
* Full financial statements are included in the Appendix
84
85. ^pprjmqflkp=rpba=fk
clob`^pqfkd
Pro-Forma Balance Sheets
• Property, Plant, and Equipment Assumption
(Assumption 6)
– Fixed Assets will continue growing (as does Revenue),
but a constant rate. The average F/A growth ratio of
the last 4 years (which was 3.8) was used here
BAKER HUGHES PRO-FORMA BALANCE SHEETS HISTORICAL BALANCE SHEETS
2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
Property, plant, and equipment 2230.7 2104.4 1985.3 1872.9 1766.9 1334.1 1395.1 1354.7 1297 1378.7
Assumption 6: Avg F/A Turnover Ratio 3.8 3.8 3.8 3.8 3.8 4.5 3.8 3.8 3.8 3.0
* Full financial statements are included in the Appendix
85
86. ^pprjmqflkp=rpba=fk
clob`^pqfkd
Pro-Forma Balance Sheets
• Assumption 11
– Accounts Payable will continue to grow at a constant
rate
– An Accounts Payable Turnover Ratio of 8.8 will be
used, as this was the average value from the last 5
years
BAKER HUGHES PRO-FORMA BALANCE SHEETS HISTORICAL BALANCE SHEETS
2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
Accounts payable 690.2 651.1 614.3 579.5 548.9 454.3 386.4 389.2 537.2 469.3
Assumption 11: A/P Turnover Ratio 8.8 8.8 8.8 8.8 8.8 10.4 9.8 7.8 7.5 8.6
* Full financial statements are included in the Appendix
86
87. ^pprjmqflkp=rpba=fk
clob`^pqfkd
Pro-Forma Balance Sheets
• Assumption 12
– Short-Term Borrowing and Current Portion of Long-
Term Debt is a small percentage of Total Assets
– The last 5 years average value of 1.8% will be used for
projecting values for this account
BAKER HUGHES PRO-FORMA BALANCE SHEETS HISTORICAL BALANCE SHEETS
2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
Short-term borrowings and current portion of
long-term debt 83.0 81.6 80.1 78.7 77.4 76 351.4 123.5 12.2 13.3
Assumption 12: As % of Total Assets 1.8% 1.8% 1.8% 1.8% 1.8% 1.1% 5.5% 1.9% 0.2% 0.2%
* Full financial statements are included in the Appendix
87
88. ^pprjmqflkp=rpba=fk
clob`^pqfkd
Pro-Forma Balance Sheets
• Retained Earnings Assumption (Assumption 21)
– Retained Earnings was used as the item to balance the
Balance Sheet
– It worked out better than using the Cash account for
balancing the Balance Sheet. Forecasted values for
Retained Earnings are higher than Net Income (which
is correct since Net Income is one of its components)
BAKER HUGHES PRO-FORMA BALANCE SHEETS HISTORICAL BALANCE SHEETS
2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
Retained earnings 1891.4 1594.8 1315.7 1052.9 803.5 545.9 170.9 196.3 182.3 -101.3
Assumption 21: Plug in value 1891.4 1594.8 1315.7 1052.9 803.5
* Full financial statements are included in the Appendix
88
93. molJcloj^=^k^ivpfp
• Most of the Profitability and Risk Ratios show good
trending. There are no major outliers that merit special
explanation or investigation. This means our
assumptions were reasonable
• The calculated plug in values for Retained Earnings
follow a good trending, are higher than Net Income (one
of its components), and are already deducted by the
Dividends value (which are not reported separately by
Baker Hughes)
• Long-term debt will increase at a moderate rate, in order
to cover expansion of operations into emerging markets
(consistent with increase in PP&E)
• Projected steady increase in revenues will increase cash
and retained earnings. Company must have a strategic
plan to use that excess cash efficiently
93
94. sfK=`lk`irpflk=^ka
ob`ljjbka^qlkp
• Business Strategy and Performance 95
– Evaluation: Past and Present
– Projection
• Strategic Recommendations for Future 97
– Recommended Strategies
– Cost/Benefit Analysis
• Investment Recommendation 99
94
95. _rpfkbpp=pqo^qbdv
^ka=mbocloj^k`b
Evaluation: Past and Present
• Consolidation of business units
• Increasing global presence
• Reducing long-term debt
• Increasing prices to take advantage of up
market
95
96. _rpfkbpp=pqo^qbdv
^ka=mbocloj^k`b
Projection
• Invest in emerging markets such as Russia
• Continue reducing long-term debt
• Invest in differentiating technologies
96
97. pqo^qbdf`=ob`ljjbka^qflkp
clo=crqrob
Recommended Strategies
• Increase capital spending budget to support the
increase market activity in Russia and Caspian
Region
• Continue to invest in human resources and new
technology that deliver measurable economic
benefit to the customers
• Continue to strive for fair pricing for the value
provided
• Consider increasing rental tool capital spending
modestly to support the anticipated growth in
revenues while maintaining financial discipline
97
• Liquidate underperforming divisions
98. pqo^qbdf`=ob`ljjbka^qflkp
clo=crqrob
Cost/Benefit Analysis
• Has demonstrated the ability to deliver a healthy
return on assets and total assets turnover in recent
years
• Abundance of cash on hand makes new and
expanded capital projects less expensive relative
to financing
• Weak U.S. dollar makes foreign investing less
risky
98
99. fksbpqjbkq=ob`ljjbka^qflk
“Buy”
• The company has a strong cash situation
• Debt will be reduced drastically with the cash on
hand
• Pro-forma Revenue estimates are good
• Pro-forma Earnings per share (EPS) estimates are
also good
• Small risk is involved with the introduction of
“Windfall Profit Tax” by the federal government;
this is being discussed for oil companies only, not
for service providers
• Demand for energy and price of crude oil are not
99
expected to go down anytime soon
100. obcbobk`bp
• Baker Hughes. (2004). 2004 annual report and proxy statement. Houston, TX: Author.
• Bank of America Presentation. (2005, November). Retrieved November 21, 2005, from
http://www.bakerhughes.com/investor/resources/Presentations/bank_of_america_nov05.pdf
• Group A. (2005). Southwest Airlines: Financial Reporting and Analysis. Unpublished
presentation. University of Houston-Victoria.
• Group B. (2004). The Home Depot, Inc: Annual Report Project. Unpublished presentation.
University of Houston-Victoria.
• finance.yahoo.com
• One-on-One Presentation Book, (2005, June). Retrieved September 15, 2005, from
http://www.bakerhughes.com/investor/resources/Presentations/June2005/1on1.pdf
• Schlumberger. (2004). 2004 annual report. New York, NY: Author.
• Stanko, B. B., & Zeller, T. L. (2003). Understanding the Corporate Annual Report: A User’s
Guide. Hoboken, NJ: John Wiley & Sons.
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ON.pdf
• www.bakerhughes.com
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101. ^mmbkafu
• Consolidated Balance Sheets
• Common-Sized Balance Sheets
• Percentage Change Balance Sheets
• Consolidated Income Statements
• Common-Sized Income Statements
• Percentage Change Income Statements
• Consolidated Statements of Cash Flow
• Percentage Change Statements of Cash Flow
• Pro-Forma Assumptions for Income Statements
• Pro-Forma Assumptions for Balances Sheets
• Pro-Forma Balance Sheets
• Pro-Forma Income Statements
• Pro-Forma Profitability Ratios
• Pro-Forma Risk Ratios
101 • 2004 Annual Report Baker Hughes