The Portable MBA in Finance and Accounting, 3rd Edition

(Greg DeLong) #1

76 Understanding the Numbers


Most of the content of the Baker Hughes financial statements as well as
relevant footnote and other textual information is provided. This is designed to
make the exercise as realistic as possible.


THE BAKER HUGHES WORKSHEET ANALYSIS


The nonrecurring items located in the Baker Hughes annual report are enumer-
ated in the completed SEB worksheet in Exhibit 2.35. Each of the nonrecurring
items is recorded on the SEB worksheet. When an item is disclosed for the first,
second, third, or fourth time, it is designated by a corresponding superscript


EXHIBIT 2.27 Consolidated statements of operations: Baker Hughes
Inc., years ended September 30 (in millions).
1995 1996 1997


Revenues:
Sales $1,805.1 $2,046.8 $2,466.7
Services and rentals 832.4 980.9 1,218.7
Total $2,637.5 $3,027.7 $3,685.4


Costs and expenses:
Costs of sales $1,133.6 $1,278.1 $1,573.3
Costs of services and rentals 475.1 559.5 682.9
Selling, general, and administrative 743.0 814.2 966.9
Amortization of goodwill and other intangibles 29.9 29.6 32.3
Unusual charge 39.6 52.1
Acquired in-process research and development — — 118.0
Total $2,381.6 $2,721.0 $3,425.5


Operating income $ 255.9 $ 306.7 $ 259.9


Interest expense (55.6) (55.5) (48.6)
Interest income 4.8 3.4 1.8
Gain on sale of Varco stock — 44.3 —
Income before income taxes and cumulative effect
of accounting changes 205.1 298.9 213.1
Income taxes (85.1) (122.5) (104.0)
Income before cumulative effect of
accounting changes 120.0 176.4 109.1
Cumulative effect of accounting changes:
Impairment of long-lived assets to be disposed of
(net of $6.0 income tax benefit) (12.1)
Postemployment benefits (net of $7.9 income
tax benefit) (14.6) — —
Net income $ 105.4 $ 176.4 $ 97.0


SOURCE: Baker Hughes Inc., annual report, September 1997, 37.

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