The Portable MBA in Finance and Accounting, 3rd Edition

(Greg DeLong) #1

84


EXHIBIT 2.32 (Continued)


(Millions of dollars,
except per share amounts)
1996 1997

Revenues $3,388.4 $3,944.0
Income before accounting change 189.3 283.9
Income per share before accounting change 1.16 1.69


In connection with the acquisition of Petrolite, the Company recorded an unusual
charge of $35.5 million. See Note 5 of Notes to Consolidated Financial Statements.


Environmental Technology Division of Deutz AG
In July 1997, the Company acquired the Environmental Technology Division, a decanter cen-
trifuge and dryer business, of Deutz AG (“ETD”) for $53.0 million, subject to certain post-
closing adjustments. This acquisition is now part of Bird Machine Company and has been
accounted for using the purchase method of accounting. Accordingly, the cost of the acquisi-
tion has been allocated to assets acquired and liabilities assumed based on their estimated
fair market values at the date of acquisition, July 7, 1997. The operating results of ETD are
included in the 1997 consolidated statement of operations from the acquisition date. Pro
forma results of the acquisition have not been presented as the pro forma revenue, income
before accounting change and earnings per share would not be materially different from the
Company’s actual results. For its most recent fiscal year ended December 31, 1996, ETD had
revenues of $103.0 million.


Drilex
In July 1997, the Company acquired Drilex International Inc. (“Drilex”) a provider of prod-
ucts and services used in the directional and horizontal drilling and workover of oil and gas
wells for 2.7 million shares of the Company’s common stock. The acquisition was accounted
for using the pooling of interests method of accounting. Under this method of accounting, the
historical cost basis of the assets and liabilities of the Company and Drilex are combined at
recorded amounts and the results of operations of the combined companies for 1997 are in-
cluded in the 1997 consolidated statement of operations. The historical results of the separate
companies for years prior to 1997 are not combined because the retained earnings and results
of operations of Drilex are not material to the consolidated financial statements of the Com-
pany. In connection with the acquisition of Drilex, the Company recorded an unusual charge
of $7.1 million for transaction and other one time costs associated with the acquisition. See
Note 5 of Notes to Consolidated Financial Statements. For its fiscal year ended December 31,
1996 and 1995, Drilex had revenues of $76.1 million and $57.5 million, respectively.


1996
In April 1996, the Company purchased the assets and stock of a business operating as Vortoil
Separation Systems, and certain related oil /water separation technology, for $18.8 million. In
June 1996, the Company purchased the stock of KTM Process Equipment, Inc., a centrifuge
company, for $14.1 million. These acquisitions are part of Baker Hughes Process Equipment
Company and have been accounted for using the purchase method of accounting. Accordingly,
the costs of the acquisitions have been allocated to assets acquired and liabilities assumed
based on their estimated fair market values at the dates of acquisition. The operating results
are included in the consolidated statements of operations from the respective acquisition dates.
In April 1996, the Company exchanged the 100,000 shares of Tuboscope Inc. (“Tubo-
scope”) Series A convertible preferred stock held by the Company since October 1991, for 1.5
million shares of Tuboscope common stock and a warrant to purchase 1.25 million shares of
Tuboscope common stock. The warrants are exercisable at $10 per share and expire on De-
cember 31, 2000.


SOURCE: Baker Hughes Inc., annual report, September 1997, 43– 45.

Free download pdf