78 Understanding the Numbers
EXHIBIT 2.29 Income tax note: Baker Hughes Inc., years ended
September 30 (in millions).
The geographical sources of income before income taxes and cumulative effect of accounting
changes are as follows:
1995 1996 1997United States $128.3 $116.4 $ 20.6
Foreign 76.8 182.5 192.5
Total $205.1 $298.9 $213.1
The provision for income taxes is as follows:
1995 1996 1997Current:
United States $ 3.7 $ 40.1 $ 46.5
Foreign 36.6 52.2 64.3
Total current 40.3 92.3 110.8
Deferred:
United States 42.1 20.7 (.2)
Foreign 2.7 9.5 (6.6)
Total deferred 44.8 30.2 (6.8)
Total provision for income taxes $ 85.1 $122.5 $104.0
The provision for income taxes differs from the amount computed by applying the U.S. statu-
tory income tax rate to income before income taxes and cumulative effect of accounting
changes for the reasons set forth below:
1995 1996 1997Statutory income tax $ 71.8 $104.6 $ 74.6
Nondeductible acquired in-process research and
development charge 41.3
Incremental effect of foreign operations 24.8 12.5 (6.5)
1992 and 1993 IRS audit agreement (11.4)
Nondeductible goodwill amortization 4.2 5.4 4.5
State income taxes, net of U.S. tax benefit 1.0 2.1 2.9
Operating loss and credit carryfor wards (13.1) (3.3) (4.2)
Other, net (3.6) 1.2 2.8
Total provision for income taxes $ 85.1 $122.5 $104.0
Deferred income taxes ref lect the net tax effects of temporary differences between the car-
rying amounts of assets and liabilities for financial reporting purposes and the amounts used
for income tax purposes, and operating loss and tax credit carryfor wards. The tax effects of
the Company’s temporary differences and carryfor wards are as follows: