Module 11: Adjusting Enterprise operations

1. Module 11:Adjusting Enterprise operations Andrew Swint Oil and Gas Equipment and Services

2. agenda • Baker Hughes • Adjustments • Operating Leases • Stock-based Compensation • Questions

3. Baker Hughes • A leading supplier of oilfield services, products, technology and systems to the worldwide oil and natural gas industry • Revenue breakdown • Sales: $ 7,594 (34%) • Services: 14,770 (66%) • More than 58,000 employees in 9 Regions and 23 Geomarkets • Houston, TX

4. Inventory method

5. Operating leases

6. Operating lease cont

7. Operating lease cont ($204 – (905/ 9.07 yrs) * (1 - .37) ($905 * 9.02%) * (1- .37)

8. Share-based compensation

9. Share-based compensation

10. Share-based compensation • Step 1- Value of options exercisable at beginning of the year. • $0 => $40.85 < 53.13 • Step 2- Value of options exercisable at beginning of year using end of year share price. • $20,194 = (55.26 – 52.58) * 7,535 • Step 3- Estimate the value of ESOs exercised during the current year using the average share price. • $8,819 = (48.06 – 35.84) * 722

11. Share-based compensation • Step 4- Value of options canceled during the year • Forfeited & Expired • $0 => 48.06 < 48.23 • $0 => 48.06 < 70.27 • Step 5- Value of options exercisable at the end of year • $21,159 = ($55.26- 52.58) * 7,895

12. Share-based compensation • Step 6- Share based compensation 5. Value of options exercisable at end of year $21,159 - 2. Value of options exercisable at beg of year (end prices) 20,194 + 3. Value of exercisable options 8,819 + 4. Value of cancelled options - = 6. Share based compensation $ 9,784 Adjustments Increase beginning NFL 1 $ 0 Increase ending NFL by 5 21.16 Increase EPAT by 6 9.78 Increase FEAT by 2 - 1 – 3 – 4 11.37

13. Questions?