Baker Hughes 2010 Annual Report Download - page 131

2 0 1 0 F o r m 1 0 - K 49
It is expected that the amount of unrecognized tax
benefits will change in the next twelve months due to
expiring statutes, audit activity, tax payments, competent
authority proceedings related to transfer pricing, or final deci-
sions in matters that are the subject of litigation in various tax-
ing jurisdictions in which we operate. At December 31, 2010,
we had approximately $239 million of tax liabilities, net of
$40 million of tax assets, related to uncertain tax positions,
each of which are individually insignificant, and each of which
are reasonably possible of being settled within the next twelve
months primarily as the result of audit settlements or statute
expirations in several taxing jurisdictions.
At December 31, 2010, approximately $159 million
of gross unrecognized tax benefits were included in the
non-current portion of our income tax liabilities, for which
the settlement period cannot be determined; however, it is
not expected to be within the next twelve months.
We operate in over 80 countries and are subject to income
taxes in most taxing jurisdictions in which we operate. The
following table summarizes the earliest tax years that remain
subject to examination by the major taxing jurisdictions in
which we operate. These jurisdictions are those we project
to have the highest tax liability for 2011.
Earliest Open Earliest Open
Jurisdiction Tax Period Jurisdiction Tax Period
Canada 1998 Norway 1999
Germany 2003 United Kingdom 2004
Netherlands 1999 United States 2002
NOTE 7. EARNINGS PER SHARE
A reconciliation of the number of shares used for the basic
and diluted EPS computations is as follows for the years ended
December 31:
2010 2009 2008
Weighted average
common shares outstanding
for basic EPS 394 310 307
Effect of dilutive securities –
stock plans 1 1 2
Adjusted weighted average
common shares outstanding
for diluted EPS 395 311 309
Future potentially dilutive shares
excluded from diluted EPS:
Options with an exercise price
greater than the average
market price for the period 7 4 2
NOTE 8. INVENTORIES
Inventories, net of reserves of $322 million and $297 mil-
lion in 2010 and 2009, respectively, are comprised of the fol-
lowing at December 31:
2010 2009
Finished goods $ 2,283 $ 1,570
Work in process 181 126
Raw materials 130 140
Total $ 2,594 $ 1,836
NOTE 9. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are comprised of the
following at December 31:
Depreciation Period 2010 2009
Land $ 191 $ 81
Buildings and
improvements 5–30 years 1,605 1,136
Machinery and
equipment 3–20 years 6,409 3,384
Rental tools and
equipment 1–15 years 2,472 2,228
Subtotal 10,677 6,829
Accumulated
depreciation (4,367) (3,668)
Total $ 6,310 $ 3,161