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2009-06-30
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2008-06-30
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0000808362
2007-12-31
0000808362
2008-01-01
2008-06-30
0000808362
2008-06-30
0000808362
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0000808362
2009-06-30
0000808362
2008-12-31
0000808362
2009-01-01
2009-06-30
iso4217:USD
xbrli:shares
xbrli:shares
iso4217:USD
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<div style="font-family: 'Times New Roman',Times,serif">
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<div align="center" style="font-size: 10pt; margin-top: 0pt"><b></b>
</div>
<div align="left">
</div>
<div align="center" style="font-size: 10pt"><b></b></div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE 1. GENERAL</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Nature of Operations</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Baker Hughes Incorporated (“Company,” “we,” “our” or “us”) is engaged in the oilfield services
industry. We are a major supplier of wellbore-related products and technology services and systems
and provide products and services for drilling, formation evaluation, completion and production,
and reservoir technology and consulting to the worldwide oil and natural gas industry.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Basis of Presentation</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Our unaudited consolidated condensed financial statements included herein have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).
Accordingly, certain information and disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles in the United States of America
(“GAAP”) have been condensed or omitted. We believe that the presentations and disclosures herein
are adequate to make the information not misleading. The unaudited consolidated condensed
financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary
for a fair presentation of the interim periods. These unaudited consolidated condensed financial
statements should be read in conjunction with our audited consolidated financial statements
included in our Annual Report on Form 10-K for the year ended December 31, 2008 (“2008 Annual
Report”). The results of operations for the interim periods are not necessarily indicative of the
results of operations to be expected for the full year. In connection with the preparation of the
consolidated condensed financial statements and in accordance with the recently issued Statement of
Financial Accounting Standards No. 165, <i>Subsequent Events</i>, we have evaluated all subsequent events
through August 6, 2009, the date the financial statements were issued.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In the notes to the unaudited consolidated condensed financial statements, all dollar and
share amounts in tabulations are in millions of dollars and shares, respectively, unless otherwise
indicated.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>New Accounting Standards</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of
Financial Accounting Standards (“SFAS”) No. 157, <i>Fair Value Measurements </i>(“SFAS 157”), which is
intended to increase consistency and comparability in fair value measurements by defining fair
value, establishing a framework for measuring fair value and expanding disclosures about fair value
measurements. On January 1, 2008, we adopted the provisions of SFAS 157 related to financial
assets and liabilities and to nonfinancial assets and liabilities measured at fair value on a
recurring basis and on January 1, 2009, we adopted the provisions related to nonfinancial assets
and liabilities that are not required or permitted to be measured at fair value on a recurring
basis. There was no material impact to our consolidated condensed financial statements related to
these adoptions. Additionally, in April 2009, the FASB issued the following three FASB Staff
Positions (“FSP”): (i) FSP FAS 157-4, <i>Determining Fair Value When the Volume and Level of Activity
for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not
Orderly</i>, (ii) FSP FAS 115-2 and FAS 124-2, <i>Recognition and Presentation of Other-Than-Temporary
Impairments, </i>and (iii) FSP FAS 107-1 and APB 28-1, <i>Interim Disclosures about Fair Value of
Financial Instruments, </i>which collectively provide additional guidance and require additional
disclosure regarding determining and reporting fair values for certain assets and liabilities. We
adopted the three FSPs in the second quarter of 2009 with no material impact to our consolidated
condensed financial statements. The new disclosure requirements of FSP FAS 107-1 and APB 28-1 are
reflected in Note 9. Financial Instruments.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In December 2007, the FASB issued SFAS No. 160, <i>Noncontrolling Interests in Consolidated
Financial Statements – an amendment of ARB No. 51 </i>(“SFAS 160”). SFAS 160 establishes accounting
and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation
of a subsidiary in an effort to improve the relevance, comparability and transparency of the
financial information that a reporting entity provides. On January 1, 2009, we adopted SFAS 160
with no change to our consolidated condensed financial statements as amounts are immaterial.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In December 2007, the FASB issued SFAS No. 141 (revised 2007), <i>Business Combinations </i>(“SFAS
141(R)”). SFAS 141(R) replaces FASB Statement No. 141, <i>Business Combinations </i>(“SFAS 141”). The
statement retains the purchase method of accounting used in business combinations but replaces SFAS
141 by establishing principles and requirements for the recognition and measurement of assets,
liabilities and goodwill, and requires that most transaction and restructuring costs related to the
acquisition be expensed. We have applied the provisions of SFAS 141(R) for business combinations
with an acquisition date on or after January 1, 2009.
</div>
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In June 2008, the FASB issued FSP Emerging Issues Task Force (“EITF”) 03-6-1, <i>Determining
Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities </i>(“FSP
EITF 03-6-1”). This FSP clarifies that all unvested share-based payments that contain rights to
non-forfeitable dividends are participating securities and shall be included in the computation of
both basic and diluted earnings per share. On January 1, 2009, we adopted FSP EITF 03-6-1. FSP
EITF 03-6-1 has not been applied to prior year quarters as the impact is immaterial.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In March 2008, the FASB issued SFAS No. 161, <i>Disclosures about Derivative Instruments and
Hedging Activities – an amendment of FASB Statement No. 133 </i>(“SFAS 161”). SFAS 161 requires
qualitative disclosures about objectives and strategies for using derivatives and quantitative data
about the fair value of and gains and losses on derivative contracts. We adopted the new
disclosure requirements in the first quarter of 2009 as reflected in Note 9. Financial Instruments.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In December 2008, the FASB issued FSP FAS 132(R)-1 <i>Employers’ Disclosures about Postretirement
Benefit Plan Assets</i>. This FSP requires the disclosures of investment policies and strategies,
major categories of plan assets, fair value measurement of plan assets and significant
concentration of credit risks. We will adopt the new disclosure requirements in the fourth quarter
of 2009.
</div>
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE 2. GAIN ON SALE OF PRODUCT LINE</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In February 2008, we sold the assets associated with the Completion and Production segment’s
Surface Safety Systems (“SSS”) product line and received cash proceeds of $31 million. The SSS
assets sold included hydraulic and pneumatic actuators, bonnet assemblies and control systems. We
recorded a pre-tax gain of $28 million (approximately $18 million after-tax) in the first quarter
of 2008.
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE 3. STOCK-BASED COMPENSATION</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     We grant various forms of equity based awards to directors, officers and other key employees.
These equity based awards consist primarily of stock options, restricted stock awards and
restricted stock units. The fair value of each stock option granted is estimated on the date of
grant using a Black-Scholes option pricing model. The fair value of restricted stock awards and
units is based on the market price of our common stock on the date of grant.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     We also have an Employee Stock Purchase Plan (“ESPP”) available for eligible employees to
purchase shares of our common stock. Our ESPP allows eligible employees to elect to contribute on
an after-tax basis between 1% and 10% of their annual pay to purchase our common stock; provided,
however, an employee may not contribute more than $25,000 annually to the plan pursuant to Internal
Revenue Service restrictions. Shares are purchased at a 15% discount of the fair market value of
our common stock on January 1<sup style="font-size: 85%; vertical-align: text-top">st</sup> or December 31<sup style="font-size: 85%; vertical-align: text-top">st</sup>, whichever is lower.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The following summarizes stock-based compensation expense recognized in our consolidated
condensed statements of operations:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7"><b>Three Months Ended</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7"><b>Six Months Ended</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>June 30,</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>June 30,</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2009</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2008</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2009</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2008</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Stock Options
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">2</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">2</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">9</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">8</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Restricted Stock Awards and Units
</div></td>
<td> </td>
<td> </td>
<td align="right">10</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">9</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">20</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">15</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">ESPP
</div></td>
<td> </td>
<td> </td>
<td align="right">7</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">3</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">13</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">6</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right"> 19</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right"> 14</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right"> 42</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right"> 29</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
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</div>
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE 4. EARNINGS PER SHARE</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     On January 1, 2009, we adopted FSP EITF 03-6-1, <i>Determining Whether Instruments Granted in
Share-Based Payment Transactions Are Participating Securities. </i>This FSP clarifies that all
unvested share-based payments that contain rights to non-forfeitable dividends are participating
securities and shall be included in the computation of both basic and diluted earnings per share.
FSP EITF 03-6-1 has not been applied to prior year quarters as the impact is immaterial.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     A reconciliation of the number of shares used for the basic and diluted EPS calculation is as
follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7"><b>Three Months Ended</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7"><b>Six Months Ended</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>June 30,</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>June 30,</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2009</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2008</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2009</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2008</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Weighted average common shares outstanding for basic EPS
</div></td>
<td> </td>
<td> </td>
<td align="right">310</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">307</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">310</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">308</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Effect of
dilutive securities – stock plans
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Adjusted weighted average common shares outstanding for
diluted EPS
</div></td>
<td> </td>
<td> </td>
<td align="right">310</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">308</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">310</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">310</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Future potentially dilutive shares excluded from diluted EPS:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Options with an exercise price greater than the average
market price for the period
</div></td>
<td> </td>
<td> </td>
<td align="right">3</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">3</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 3px double #000000"> </td>
</tr>
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE 5. INVENTORIES</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Inventories, net of reserves, are comprised of the following:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>June 30,</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>December 31,</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2009</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2008</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Finished goods
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">1,711</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">1,693</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Work in process
</div></td>
<td> </td>
<td> </td>
<td align="right">168</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">175</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Raw materials
</div></td>
<td> </td>
<td> </td>
<td align="right">145</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">153</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right"> 2,024</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right"> 2,021</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
</body>
</html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<html>
<head></head>
<body>
<!-- Begin Block Tagged Note 6 - us-gaap:PropertyPlantAndEquipmentDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE 6. PROPERTY, PLANT AND EQUIPMENT</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Property, plant and equipment are comprised of the following:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>June 30,</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>December 31,</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2009</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2008</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Land
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">87</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">85</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Buildings and improvements
</div></td>
<td> </td>
<td> </td>
<td align="right">976</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">878</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Machinery and equipment
</div></td>
<td> </td>
<td> </td>
<td align="right">3,266</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">3,082</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Rental tools and equipment
</div></td>
<td> </td>
<td> </td>
<td align="right">2,146</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,991</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Subtotal
</div></td>
<td> </td>
<td> </td>
<td align="right">6,475</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">6,036</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Accumulated depreciation
</div></td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(3,458</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(3,203</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right"> 3,017</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right"> 2,833</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
</div>
</body>
</html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<html>
<head></head>
<body>
<!-- Begin Block Tagged Note 7 - us-gaap:GoodwillAndIntangibleAssetsDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE 7. GOODWILL AND INTANGIBLE ASSETS</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The changes in the carrying amount of goodwill are detailed below by segment:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="64%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Drilling</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Completion</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>and</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>and</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Evaluation</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Production</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Total</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="13" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Balance as of December 31, 2008
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">951</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">438</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">1,389</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Goodwill acquired during the period
</div></td>
<td> </td>
<td> </td>
<td align="right">9</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">9</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Purchase price and other adjustments
</div></td>
<td> </td>
<td> </td>
<td align="right">2</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Impact of foreign currency translation adjustments
</div></td>
<td> </td>
<td> </td>
<td align="right">6</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">7</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="13" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Balance as of June 30, 2009
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right"> 968</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right"> 439</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right"> 1,407</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="13" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Intangible assets are comprised of the following:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="28%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000"><b>June 30, 2009</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000"><b>December 31, 2008</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Gross</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Gross</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Carrying</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Accumulated</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Carrying</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Accumulated</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Amount</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Amortization</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Net</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Amount</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Amortization</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Net</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="25" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Technology-based
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">263</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right">$</td>
<td align="right">(132</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="right">$</td>
<td align="right">131</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">256</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right">$</td>
<td align="right">(122</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="right">$</td>
<td align="right">134</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Contract-based
</div></td>
<td> </td>
<td> </td>
<td align="right">13</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(8</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">5</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">12</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(7</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">5</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Marketing-related
</div></td>
<td> </td>
<td> </td>
<td align="right">36</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(13</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">23</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">33</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(6</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">27</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Customer-based
</div></td>
<td> </td>
<td> </td>
<td align="right">41</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(7</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">34</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">37</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(5</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">32</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Other
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(1</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="25" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right"> 353</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right">$</td>
<td align="right"> (160</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="right">$</td>
<td align="right"> 193</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right"> 339</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right">$</td>
<td align="right"> (141</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="right">$</td>
<td align="right"> 198</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="25" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Intangible assets with finite useful lives are amortized either on a straight-line basis with
estimated useful lives ranging from 1 to 20 years, or on a basis that reflects the pattern in which
the economic benefits of the intangible assets are expected to be realized, which range from 15 to
30 years.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Amortization expense for intangible assets included in net income for the three months and six
months ended June 30, 2009 was $12 million and $19 million, respectively, and is estimated to be
$31 million for 2009. Estimated amortization expense for each of the subsequent five fiscal years
is expected to be as follows: 2010 – $23 million; 2011 – $20 million; 2012 – $18 million; 2013 -
$15 million; and 2014 – $14 million.
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<!-- Begin Block Tagged Note 8 - us-gaap:FairValueDisclosuresTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE 8. FAIR VALUE OF CERTAIN FINANCIAL ASSETS AND LIABILITIES</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Financial assets and liabilities measured at fair value are based on a hierarchy that
prioritizes the inputs to valuation techniques into three broad levels, which are described below:
</div>
<div style="margin-top: 6pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="1%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>Level 1 inputs are quoted market prices in active markets for identical assets or
liabilities (these are observable market inputs).</td>
</tr>
</table>
</div>
<div style="margin-top: 6pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="1%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>Level 2 inputs are inputs other than quoted prices included within Level 1 that are
observable for the asset or liability (includes quoted market prices for similar assets or
identical or similar assets in markets in which there are few transactions, prices that are
not current or vary substantially).</td>
</tr>
</table>
</div>
<div style="margin-top: 6pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="1%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>Level 3 inputs are unobservable inputs that reflect the entity’s own assumptions in pricing
the asset or liability (used when little or no market data is available).</td>
</tr>
</table>
</div>
<!-- Folio -->
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</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div style="margin-top: 0pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
</table>
</div>
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The table below details the financial assets and liabilities included in our financial
statements and measured at fair value as of June 30, 2009 classified based on the valuation
technique level.
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="15" style="border-bottom: 1px solid #000000"><b>June 30, 2009</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left"><b>Description</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Total</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Level 1</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Level 2</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Level 3</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Assets:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Auction rate securities
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">15</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">15</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Non-qualified defined contribution plan assets
</div></td>
<td> </td>
<td> </td>
<td align="right"> 122</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right"> —</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right"> 122</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right"> —</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total assets at fair value
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">137</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">122</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">15</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Liabilities:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Non-qualified defined contribution plan
liabilities
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">122</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">122</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">—</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The following is a reconciliation of activity for the three and six months ended June 30, 2009
for assets measured at fair value based on Level 3 inputs.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Level 3 Fair Value Measurements Auction Rate Securities</b>
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="88%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Three Months Ended</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>June 30, 2009</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="5" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Balance as of March 31, 2009
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">11</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total gains or (losses) realized:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Included in earnings (or changes to net assets)
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Included in other comprehensive income
</div></td>
<td> </td>
<td> </td>
<td align="right">4</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="5" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Balance as of June 30, 2009
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right"> 15</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="5" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="88%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Six Months Ended</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>June 30, 2009</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="5" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Balance as of December 31, 2008
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">11</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total gains or (losses) realized:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Included in earnings (or changes to net assets)
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Included in other comprehensive income
</div></td>
<td> </td>
<td> </td>
<td align="right">4</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="5" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Balance as of June 30, 2009
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right"> 15</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="5" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Auction Rate Securities</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The Company owns auction rate securities (“ARS”) that were purchased in 2007 at an original
cost of $36 million and have a fair value of $15 million at June 30, 2009. These ARS represent
interests in three variable rate debt securities, which are credit linked notes that generally
combine low risk assets and credit default swaps (“CDS”) to create a security that pays interest
from the assets’ coupon payments and the periodic sale proceeds of the CDS. As of June 30, 2009,
the three notes carried split ratings, ranging from B to BBB-, as provided by Standard & Poor’s and
Fitch rating agencies.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     We estimate the fair value of our ARS investments using Level 3 inputs, incorporating the most
recent market data available as of the valuation date. These inputs are based on the underlying
structure of each security and their collateral values, including assessments of the credit
quality, the default risk, the expected cash flows, the discount rates and the overall capital
market liquidity. Based on this analysis, we recorded an increase of $4 million in the fair value
of these available-for-sale securities to other comprehensive income; however, these markets still
remain largely illiquid. The valuation of our ARS investments is subject to uncertainties that are
difficult to predict and require significant judgment. Based on our ability and intent to hold
such investments for a period of time sufficient to allow for any anticipated recovery in the fair
value, we have classified all of our auction rate securities as noncurrent investments.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Non-qualified Defined Contribution Plan Assets and Liabilities</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     We have a non-qualified defined contribution plan that provides basically the same benefit as
our Thrift Plan for certain non-U.S. employees who are not eligible to participate in the Thrift
Plan. In addition, we provide a non-qualified supplemental retirement plan for certain officers
and employees whose benefits under the Thrift Plan and/or U.S. defined benefit pension plan are
limited by federal
tax law. The assets of both plans consist primarily of mutual funds and to a lesser extent
equity securities. We hold the assets of these plans under a grantor trust and have recorded the
assets along with the related deferred compensation liability at fair value. The assets and
liabilities were valued using Level 2 inputs at the reporting date and were based on quoted market
prices from various major stock exchanges.
</div>
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<!-- Begin Block Tagged Note 9 - us-gaap:DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE 9. FINANCIAL INSTRUMENTS</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Fair Value of Financial Instruments</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     During the second quarter of 2009, we adopted FSP FAS 107-1 and APB 28-1, <i>Interim Disclosures
about Fair Value of Financial Instruments</i>. This FSP requires fair value disclosure of financial
instruments for interim and annual reporting periods.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Our financial instruments include cash and short-term investments, noncurrent investments in
auction rate securities, accounts receivable, accounts payable, accrued payroll taxes, debt,
foreign currency forward contracts and interest rate swaps. Except as described below, the
estimated fair value of such financial instruments at June 30, 2009 approximates their carrying
value as reflected in our consolidated condensed balance sheet.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The estimated fair value of total debt at June 30, 2009 was $2,037 million, which differs from
the carrying amounts of $1,777 million included in our consolidated condensed balance sheet. The
fair value of our debt has been estimated based on quoted market prices as of June 30, 2009.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Foreign Currency Forward Contracts</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     We conduct our business in over 90 countries around the world, and we are exposed to market
risks resulting from fluctuations in foreign currency exchange rates. A number of our significant
foreign subsidiaries have designated the local currency as their functional currency. We transact
in various foreign currencies and have established a program that primarily utilizes foreign
currency forward contracts to reduce the risks associated with the effects of certain foreign
currency exposures. Under this program, our strategy is to have gains or losses on the foreign
currency forward contracts mitigate the foreign currency transaction gains or losses to the extent
practical. These foreign currency exposures typically arise from changes in the value of assets
and liabilities which are denominated in currencies other than the functional currency. Our
foreign currency forward contracts generally settle within 90 days. We do not use these forward
contracts for trading or speculative purposes. We designate these forward contracts as fair value
hedging instruments pursuant to SFAS 133. The hedging objective is to mitigate exposure to
fluctuations in the non functional currency exchange rate. Accordingly, we record the fair value
of these contracts as of the end of our reporting period to our consolidated condensed balance
sheet with changes in fair value recorded in our consolidated condensed statement of operations
along with the change in fair value of the hedged item.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     At June 30, 2009, we had outstanding foreign currency forward contracts with notional amounts
aggregating $130 million to hedge exposure to currency fluctuations in various foreign currencies.
These contracts expire on various dates prior to September 30, 2009. These contracts are
designated and qualify as fair value hedging instruments. The fair value was determined using a
model with Level 2 inputs including quoted market prices for contracts with similar terms and
maturity dates.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Interest Rate Swaps</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     We are subject to interest rate risk on our debt and investment of cash and cash equivalents
arising in the normal course of our business, as we do not engage in speculative trading
strategies. We maintain an interest rate management strategy, which primarily uses a mix of fixed
and variable rate debt that is intended to mitigate the exposure to changes in interest rates in
the aggregate for our investment portfolio. In addition, we use interest rate swaps to manage the
economic effect of fixed rate obligations associated with our senior notes so that the interest
payable on the senior notes effectively becomes linked to variable rates.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In June 2009, we entered into two interest rate swap agreements (“the Swap Agreements”) for a
notional amount of $250 million each in order to hedge changes in the fair market value of our $500
million 6.5% senior notes maturing on November 15, 2013. Under the Swap Agreements, we receive
interest at a fixed rate of 6.5% and pay interest at a floating rate of one-month Libor plus a
spread of 3.67% on one swap and three-month Libor plus a spread of 3.54% on the second swap both
through November 15, 2013. The counterparties are primarily the lenders in our credit facilities.
The Swap Agreements are designated and each qualifies as a fair value hedging instrument and are
both determined to be highly effective resulting in no gain or loss recorded in the consolidated
condensed statement of operations. The fair value of the Swap Agreements was based on quoted
market prices for contracts with similar terms and maturity dates.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Fair Value of Derivative Instruments</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The fair value of derivative instruments included in our consolidated condensed balance sheet
was as follows as of June 30, 2009:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="30%"> </td>
<td width="12%"> </td>
<td width="16%"> </td>
<td width="20%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center"><b>Balance Sheet</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center"><b>Location</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Fair Value</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="7" valign="top" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td align="left" valign="top">Foreign Currency Forward Contracts</td>
<td> </td>
<td>
<div style="margin-left:15px; text-indent:-15px">Other accrued liabilities
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">  2</td>
<td> </td>
</tr>
<tr valign="bottom">
<td align="left" valign="top">Interest Rate Swaps</td>
<td> </td>
<td>
<div style="margin-left:15px; text-indent:-15px">Other assets
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">  2</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The effects of derivative instruments in our consolidated condensed statement of operations
were as follows (amounts exclude any income tax effects):
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="37%"> </td>
<td width="5%"> </td>
<td width="34%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>Amount of Gain/(Loss) Recognized in Income</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center"><b>Statement of</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Three Months Ended</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Six Months Ended</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center"><b>Operations Location</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>June 30, 2009</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>June 30, 2009</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="11" valign="top" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td align="left" valign="top">Foreign Currency Forward Contracts</td>
<td> </td>
<td nowrap="nowrap">
<div style="margin-left:15px; text-indent:-15px">Marketing, general and administrative expense
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">6</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">4</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
</body>
</html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<html>
<head></head>
<body>
<!-- Begin Block Tagged Note 10 - us-gaap:DebtDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE 10. INDEBTEDNESS</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     During the first quarter of 2009, we repaid $325 million principal amount of our 6.25% notes,
which matured on January 15, 2009, and $200 million principal amount of our 6.00% notes, which
matured on February 15, 2009.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     On March 30, 2009, we entered into a credit agreement (the “2009 Credit Agreement”) for a
committed $500 million revolving credit facility that expires in March 2010. At June 30, 2009, we
had $1.5 billion of credit facilities with commercial banks, of which $1.0 billion are committed
revolving credit facilities, which includes the 2009 Credit Agreement. The committed facilities
expire on July 7, 2012 ($500 million), unless extended, and on March 29, 2010 ($500 million). The
$500 million facility that expires on July 7, 2012 provides for a one year extension, subject to
the approval and acceptance by the lenders, among other conditions. In addition, this facility
contains a provision to allow for an increase in the facility amount of an additional $500 million,
subject to the approval and acceptance by the lenders, among other conditions. Both facilities
contain certain covenants which, among other things, require the maintenance of a funded
indebtedness to total capitalization ratio (a defined formula per each agreement), restrict certain
merger transactions or the sale of all or substantially all of our assets or a significant
subsidiary and limit the amount of subsidiary indebtedness. Upon the occurrence of certain events
of default, our obligations under the facilities may be accelerated. Such events of default
include payment defaults to lenders under the facilities, covenant defaults and other customary
defaults.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     At June 30, 2009, we were in compliance with all of the covenants of both committed credit
facilities. There were no direct borrowings under the committed credit facilities during the
quarter ended June 30, 2009. We also have an outstanding commercial paper program under which we
may issue from time to time up to $1.0 billion in commercial paper with maturity of no more than
270 days. To the extent we have outstanding commercial paper, our ability to borrow under the
facilities is reduced. At June 30, 2009, we had no outstanding commercial paper.
</div>
</div>
</body>
</html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<html>
<head></head>
<body>
<!-- Begin Block Tagged Note 11 - us-gaap:SegmentReportingDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE 11. SEGMENT AND RELATED INFORMATION</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     We are a major supplier of wellbore-related products and technology services and systems and
provide products and services for drilling, formation evaluation, completion and production, and
reservoir technology and consulting to the worldwide oil and natural gas industry. In May 2009, we
reorganized the Company by product lines and geography; however, at this time we continue to review
product line financial information as well as geographic information in deciding how to allocate
resources and in assessing performance. Accordingly, we report results for our product lines under
two segments: the Drilling and Evaluation segment and the Completion and Production segment. We
have aggregated the product lines within each segment because they have similar economic
characteristics and because the long-term financial performance of these product lines is affected
by similar economic conditions. They also operate in the same markets, which includes all of the
major oil and natural gas producing regions of the world.
</div>
<div style="margin-top: 6pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="2%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>The Drilling and Evaluation segment consists of the following product lines: drilling
fluids, oilfield drill bits, drilling, measurement-while-drilling and
logging-while-drilling, wireline formation evaluation, wireline completion services and
reservoir technology and consulting. The Drilling and Evaluation segment provides products
and services used to drill and evaluate oil and natural gas wells as well as consulting
services used in the analysis of oil and gas reservoirs.</td>
</tr>
</table>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div style="margin-top: 0pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
</table>
</div>
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
<div style="margin-top: 6pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="2%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>The Completion and Production segment consists of the following product lines:
workover, fishing and completion equipment, oilfield specialty chemicals, electrical
submersible pumps, progressing cavity pumps, production optimization, permanent monitoring,
integrated operations and project management. The Completion and Production segment
provides equipment and services used from the completion phase through the productive life
of oil and natural gas wells.</td>
</tr>
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The performance of our segments is evaluated based on segment profit (loss), which is defined
as income before income taxes, interest expense, interest and dividend income, and certain gains
and losses not allocated to the segments.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Summarized financial information is shown in the following table.
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="40%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Drilling</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Completion</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>and</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>and</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Total</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Corporate</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Evaluation</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Production</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Oilfield</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>and Other</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Total</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="21" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b><i>Revenues</i></b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Three months ended June 30, 2009
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">1,116</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">1,220</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">2,336</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">2,336</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Three months ended June 30, 2008
</div></td>
<td> </td>
<td> </td>
<td align="right">1,528</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,470</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,998</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,998</td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Six months ended June 30, 2009
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">2,419</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">2,585</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">5,004</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">5,004</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Six months ended June 30, 2008
</div></td>
<td> </td>
<td> </td>
<td align="right">2,919</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,749</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">5,668</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">5,668</td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"><b><i>Segment profit (loss)</i></b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Three months ended June 30, 2009
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">73</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">166</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">239</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right">$</td>
<td align="right">(117</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="right">$</td>
<td align="right">122</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Three months ended June 30, 2008
</div></td>
<td> </td>
<td> </td>
<td align="right">367</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">322</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">689</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(138</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">551</td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Six months ended June 30, 2009
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">223</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">396</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">619</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right">$</td>
<td align="right">(213</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="right">$</td>
<td align="right">406</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Six months ended June 30, 2008
</div></td>
<td> </td>
<td> </td>
<td align="right">716</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">585</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,301</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(181</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">1,120</td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b><i>Total assets</i></b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">As of June 30, 2009
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">5,328</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">4,458</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">9,786</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">1,313</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">11,099</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">As of December 31, 2008
</div></td>
<td> </td>
<td> </td>
<td align="right">5,468</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">4,518</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">9,986</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,875</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">11,861</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The following table presents the details of “Corporate and Other” segment loss:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7"><b>Three Months Ended</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7"><b>Six Months Ended</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>June 30,</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>June 30,</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2009</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2008</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2009</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2008</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Corporate and other expenses
</div></td>
<td> </td>
<td nowrap="nowrap" align="right">$</td>
<td align="right">(86</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="right">$</td>
<td align="right">(63</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="right">$</td>
<td align="right">(148</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="right">$</td>
<td align="right">(127</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Litigation settlement
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(62</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(62</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Gain on sale of product line
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">28</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Interest expense
</div></td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(34</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(17</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(69</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(32</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Interest and dividend income
</div></td>
<td> </td>
<td> </td>
<td align="right">3</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">4</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">4</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">12</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total
</div></td>
<td> </td>
<td nowrap="nowrap" align="right">$</td>
<td align="right"> (117</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="right">$</td>
<td align="right"> (138</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="right">$</td>
<td align="right"> (213</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="right">$</td>
<td align="right"> (181</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
</body>
</html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<html>
<head></head>
<body>
<!-- Begin Block Tagged Note 12 - us-gaap:PensionAndOtherPostretirementBenefitsDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE 12. EMPLOYEE BENEFIT PLANS</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     We have noncontributory defined benefit pension plans (“Pension Benefits”) covering employees
primarily in the U.S., the U.K. and Germany. We also provide certain postretirement health care
benefits (“other postretirement benefits”), through an unfunded plan, to substantially all U.S.
employees who retire and have met certain age and service requirements.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The components of net periodic benefit cost are as follows for the three months ended June 30:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="28%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7"><b>Other Postretirement</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>U.S. Pension Benefits</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>Non-U.S. Pension Benefits</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>Benefits</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2009</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2008</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2009</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2008</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2009</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2008</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="25" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Service cost
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">7</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">8</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">1</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">1</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">2</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">2</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Interest cost
</div></td>
<td> </td>
<td> </td>
<td align="right">5</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">5</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">4</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">5</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">3</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">3</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Expected return on plan assets
</div></td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(6</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(10</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(4</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(6</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Amortization of net loss
</div></td>
<td> </td>
<td> </td>
<td align="right">3</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Curtailment loss
</div></td>
<td> </td>
<td> </td>
<td align="right">1</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right"> —</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right"> —</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right"> —</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right"> —</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right"> —</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="25" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Net periodic benefit cost
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right"> 10</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">3</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">1</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">5</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">5</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="25" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The components of net periodic benefit cost are as follows for the six months ended June 30:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="28%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7"><b>Other Postretirement</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>U.S. Pension Benefits</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>Non-U.S. Pension Benefits</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>Benefits</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2009</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2008</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2009</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2008</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2009</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2008</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="25" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Service cost
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">14</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">15</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">1</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">1</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">4</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">4</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Interest cost
</div></td>
<td> </td>
<td> </td>
<td align="right">10</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">9</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">7</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">9</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">5</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">5</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Expected return on plan assets
</div></td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right"> (12</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right"> (19</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right"> (7</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right"> (11</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right"> —</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right"> —</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Amortization of prior service cost
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Amortization of net loss
</div></td>
<td> </td>
<td> </td>
<td align="right">6</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Curtailment loss
</div></td>
<td> </td>
<td> </td>
<td align="right">1</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="25" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Net periodic benefit cost
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">19</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">5</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">2</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">10</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">9</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="25" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     During the first six months of 2009, there was a reduction in our work force resulting in a
significant reduction in the expected years of future service of our employees in certain pension
plans and other post retirement benefit plans. In connection with this, in the second quarter of
2009, we recorded a one-time curtailment loss of $1 million. As a result of this curtailment, the
impacted plans have been remeasured as of June 30, 2009 using a discount rate of 6.2% as compared
to 6.4% at December 31, 2008. The curtailment and remeasurement resulted in a net increase in our
liabilities for pensions and other postretirement benefits and accumulated other comprehensive loss
of $14 million.
</div>
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<!-- Begin Block Tagged Note 13 - us-gaap:CommitmentsAndContingenciesDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE 13. COMMITMENTS AND CONTINGENCIES</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Litigation</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     We are involved in litigation or proceedings that have arisen in our ordinary business
activities. We insure against these risks to the extent deemed prudent by our management and to
the extent insurance is available, but no assurance can be given that the nature and amount of that
insurance will be sufficient to fully indemnify us against liabilities arising out of pending and
future legal proceedings. Many of these insurance policies contain deductibles or self-insured
retentions in amounts we deem prudent and for which we are responsible for payment. In determining
the amount of self-insurance, it is our policy to self-insure those losses that are predictable,
measurable and recurring in nature, such as claims for automobile liability, general liability and
workers compensation. We record accruals for the uninsured portion of losses. The accruals for
losses are calculated by estimating losses for claims using historical claim data, specific loss
development factors and other information as necessary.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     On April 26, 2007, the United States District Court, Southern District of Texas, Houston
Division (the “Court”) unsealed a three-count criminal information (the “Information”) that had
been filed against us as part of the execution of a Deferred Prosecution Agreement (the “DPA”)
between us and the Department of Justice (“DOJ”). The three counts arose out of payments made to
an agent in connection with a project in Kazakhstan and included conspiracy to violate the Foreign
Corrupt Practices Act (“FCPA”), a substantive violation of the antibribery provisions of the FCPA,
and a violation of the FCPA’s books-and-records provisions. All three counts related to our
operations in Kazakhstan during the period from 2000 to 2003. The DPA relates to our
March 29, 2002 announcement that the SEC and the DOJ were conducting investigations into
allegations of violations of law relating to Nigeria and other related matters. In connection
therewith, the SEC had issued a formal order of investigation into possible violations of
provisions under the FCPA and issued subpoenas regarding our operations in Nigeria, Angola and
Kazakhstan.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     On April 26, 2009, the DPA expired and pursuant to a motion filed by the DOJ, the Court issued
an order on April 28, 2009, dismissing the Information on the basis that the Company had fully
complied with its obligations under the DPA.
</div>
<!-- Folio -->
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</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The DPA also required us to retain an independent monitor (the “Monitor”) for a term of three
years to assess and make recommendations about our compliance policies and procedures and our
implementation of those procedures. In addition, the Monitor was required to perform two follow up
reviews and to “certify whether the anti-bribery compliance program of Baker Hughes, including its
policies and procedures, is appropriately designed and implemented to ensure compliance with the
FCPA, U.S. commercial bribery laws and foreign bribery laws.” On April 8, 2009, the Monitor issued
his report for the first of such follow up reviews, and the Monitor issued his certification that
our compliance program is appropriately designed and implemented to ensure such compliance.
Pursuant to the DPA, the DOJ has agreed not to prosecute us for violations of the FCPA based on
information that we have disclosed to the DOJ regarding our operations in Nigeria, Angola,
Kazakhstan, Indonesia, Russia, Uzbekistan, Turkmenistan, and Azerbaijan, among other countries.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     On April 26, 2007, the Court also accepted a plea of guilty by our subsidiary Baker Hughes
Services International, Inc. (“BHSII”) pursuant to a plea agreement between BHSII and the DOJ (the
“Plea Agreement”) based on similar charges relating to the same conduct. Pursuant to the Plea
Agreement, BHSII agreed to a three-year term of organizational probation. The Plea Agreement
contains provisions requiring BHSII to cooperate with the government, to comply with all federal
criminal law, and to adopt a Compliance Code similar to the one that the DPA requires of the
Company.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Also on April 26, 2007, the SEC filed a Complaint (the “SEC Complaint”) and a proposed order
(“2007 Order”) against us in the Court. The SEC Complaint and the 2007 Order were filed as part of
a settled civil enforcement action by the SEC, to resolve the civil portion of the government’s
investigation of us. As part of our agreement with the SEC, we consented to the filing of the SEC
Complaint without admitting or denying the allegations in the Complaint, and also consented to the
entry of the 2007 Order. The SEC Complaint alleged civil violations of the FCPA’s antibribery
provisions related to our operations in Kazakhstan, the FCPA’s books-and-records and
internal-controls provisions related to our operations in Nigeria, Angola, Kazakhstan, Indonesia,
Russia, and Uzbekistan, and the cease and desist order that we had entered into with the SEC on
September 12, 2001 (“2001 Order”). In entering into the 2001 Order, we had neither admitted nor
denied the factual allegations contained therein including alleged violations of Section
13(b)(2)(A) and Section 13(b)(2)(B) of the Securities Exchange Act of 1934 that require issuers to:
(x) make and keep books, records and accounts, which, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the issuer and (y) devise and maintain a
system of internal accounting controls sufficient to provide reasonable assurances that: (i)
transactions are executed in accordance with management’s general or specific authorization; and
(ii) transactions are recorded as necessary: (I) to permit preparation of financial statements in
conformity with generally accepted accounting principles or any other criteria applicable to such
statements, and (II) to maintain accountability for assets. The 2007 Order became effective on
May 1, 2007, which is the date it was confirmed by the Court. The 2007 Order enjoins us from
violating the FCPA’s antibribery, books-and-records, and internal-controls provisions. As in the
DPA, it requires that we retain the independent monitor to assess our FCPA compliance policies and
procedures for the three-year period.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Under the terms of the settlements with the DOJ and the SEC, the Company and BHSII paid, in
the second quarter of 2007, $44 million ($11 million in criminal penalties, $10 million in civil
penalties, $20 million in disgorgement of profits and $3 million in pre-judgment interest) to
settle these investigations. In the fourth quarter of 2006, we recorded a financial charge for the
potential settlement.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     On May 4, 2007 and May 15, 2007, the Sheetmetal Workers’ National Pension Fund and Chris
Larson, respectively, instituted shareholder derivative lawsuits for and on the Company’s behalf
against certain current and former members of the Board of Directors and certain current and former
officers, and the Company as a nominal defendant, following the Company’s settlement with the DOJ
and SEC in April 2007. On August 17, 2007, the Alaska Plumbing and Pipefitting Industry Pension
Trust also instituted a shareholder derivative lawsuit for and on the Company’s behalf against
certain current and former members of the Board of Directors and certain current and former
officers, and the Company as a nominal defendant. On June 6, 2008, the Midwestern Teamsters
Pension Trust Fund and Oppenheim Kapitalanlagegesellschaft mbH instituted a shareholder derivative
lawsuit for and on the Company’s behalf against certain current and former members of the Board of
Directors and certain current and former officers, and the Company as a nominal defendant. The
complaints in all four lawsuits allege, among other things, that the individual defendants failed
to implement adequate controls and compliance procedures to prevent the events addressed by the
settlement with the DOJ and SEC. The relief sought in the lawsuits includes a declaration that the
defendants breached their fiduciary duties, an award of damages sustained by the Company as a
result of the alleged breach and monetary and injunctive relief, as well as attorneys’ and experts’
fees. On May 15, 2008, the consolidated complaint of the Sheetmetal Workers’ National Pension Fund
and the Alaska Plumbing and Pipefitting Industry Pension Trust was dismissed for lack of subject
matter jurisdiction by the Houston Division of the United States District Court for the Southern
District of Texas. The lawsuit brought by Chris Larson in the 215th District Court of Harris
County, Texas was dismissed on September 15, 2008. The lawsuit brought by the Midwestern Teamsters
Pension Trust Fund and Oppenheim Kapitalanlagegesellschaft mbH in the Houston Division of the
United States District Court for the Southern District of Texas was dismissed on May 26, 2009. The
time period for plaintiffs to file a Notice of Appeal in each of the cases has expired.
</div>
<!-- Folio -->
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</div>
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Other</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In the normal course of business with customers, vendors and others, we have entered into
off-balance sheet arrangements, such as surety bonds for performance, letters of credit and other
bank issued guarantees, which totaled approximately $670 million at June 30, 2009. None of the
off-balance sheet arrangements either has, or is likely to have, a material effect on our
consolidated condensed financial statements.
</div>
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<!-- Begin Block Tagged Note 14 - us-gaap:ComprehensiveIncomeNoteTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE 14. COMPREHENSIVE INCOME (LOSS)</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Comprehensive income (loss) includes all changes in equity during a period except those
resulting from investments by and distributions to owners. The components of our comprehensive
income (loss), net of related tax, are as follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7"><b>Three Months Ended</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7"><b>Six Months Ended</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>June 30,</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>June 30,</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2009</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2008</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2009</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2008</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Net income
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">87</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">379</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">282</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">774</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Other comprehensive income (loss):
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Foreign currency translation adjustments during the period
</div></td>
<td> </td>
<td> </td>
<td align="right">98</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(8</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">82</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">20</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Pension and other postretirement benefits
</div></td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(12</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">3</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(10</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(2</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Unrealized gain/(loss) on available-for-sale securities
</div></td>
<td> </td>
<td> </td>
<td align="right">4</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(7</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">4</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(7</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total comprehensive income
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right"> 177</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right"> 367</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right"> 358</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right"> 785</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Total accumulated other comprehensive loss consisted of the following:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>June 30,</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>December 31,</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2009</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2008</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Foreign currency translation adjustments
</div></td>
<td> </td>
<td nowrap="nowrap" align="right">$</td>
<td align="right"> (260</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="right">$</td>
<td align="right"> (342</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Pension and other postretirement benefits
</div></td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(191</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(181</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Unrealized gain on available-for-sale securities
</div></td>
<td> </td>
<td> </td>
<td align="right">4</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total accumulated other comprehensive loss
</div></td>
<td> </td>
<td nowrap="nowrap" align="right">$</td>
<td align="right">(447</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="right">$</td>
<td align="right">(523</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
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</html>
384000000
321000000
false
--12-31
2009-06-30
10-Q
0000808362
309876683
Yes
Large Accelerated Filer
26994000000
BAKER HUGHES INCORPORATED
No
No
888000000
737000000
2759000000
2313000000
272000000
78000000
-523000000
-447000000
745000000
786000000
74000000
133000000
11861000000
11099000000
7145000000
6130000000
17000000
23000000
1055000000
1072000000
1955000000
1362000000
17000000
-593000000
0.26
0.13
0.3
0.15
309000000
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