Halliburton 2011 Annual Report Download - page 125

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110
Note 11. Income per Share
Basic income per share is based on the weighted average number of common shares outstanding
during the period. Diluted income per share includes additional common shares that would have been
outstanding if potential common shares with a dilutive effect had been issued.
A reconciliation of the number of shares used for the basic and diluted income per share
calculations is as follows:
Millions of shares
2011 2010 2009
Basic weighted average common shares outstanding 918 908 900
Dilutive effect of stock options 4 3 2
Diluted weighted average common shares outstanding 922 911 902
Excluded from the computation of diluted income per share are options to purchase three million
shares of common stock that were outstanding in 2011, five million shares of common stock that were
outstanding in 2010, and seven million shares of common stock that were outstanding in 2009. These
options were outstanding during these years but were excluded because they were antidilutive, as the option
exercise price was greater than the average market price of the common shares.
Note 12. Financial Instruments and Risk Management
At December 31, 2011, we held $150 million of short-term, United States Treasury securities with
maturities that extend through February 2012 compared to $653 million of short-term, United States
Treasury securities at December 31, 2010. These securities are accounted for as available-for-sale and
recorded at fair value, based on quoted market prices, in “Investments in marketable securities” on our
consolidated balance sheets. The carrying amount of cash and equivalents, investments in marketable
securities, receivables, and accounts payable, as reflected in the consolidated balance sheets, approximates
fair value due to the short maturities of these instruments. We have no financial instruments measured at
fair value using unobservable inputs.
The fair value of our long-term debt was $6.2 billion as of December 31, 2011 and $4.6 billion as
of December 31, 2010, which differs from the carrying amount of $4.8 billion as of December 31, 2011 and
$3.8 billion as of December 31, 2010, on our consolidated balance sheets. As of December 31, 2011, $3.6
billion of the fair value of our long-term debt and as of December 31, 2010, $4.2 billion of the fair value of
our long-term debt were calculated using quoted prices in active markets for identical liabilities. As of
December 31, 2011, $2.6 billion of the fair value of our long-term debt and as of December 31, 2010, $422
million of the fair value of our long-term debt were calculated using significant observable inputs for
similar liabilities.
We are exposed to market risk from changes in foreign currency exchange rates and interest rates.
We selectively manage these exposures through the use of derivative instruments, including forward
exchange contracts and interest rate swaps. The objective of our risk management strategy is to minimize
the volatility from fluctuations in foreign currency and interest rates. We do not use derivative instruments
for trading purposes. The fair value of our forward exchange contracts and interest rate swaps was not
material as of December 31, 2011. The counterparties to our forward exchange contracts and interest rate
swaps are global commercial and investment banks.