Exhibit 99.1

BJ SERVICES COMPANY

AUDITED CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2009 AND 2008 AND FOR EACH OF THE
THREE YEARS IN THE PERIOD ENDED SEPTEMBER 30, 2009

Report of Independent Registered Public Accounting Firm			1
Consolidated Statement of Operations for each of the three years in the period ended September 30, 2009			2
Consolidated Statement of Financial Position as of September 30, 2009 and 2008			3
Consolidated Statement of Stockholders’ Equity and Other Comprehensive Income for each of the three years in the period ended September 30, 2009			5
Consolidated Statement of Cash Flows for each of the three years in the period ended September 30, 2009			6
Notes to Consolidated Financial Statements			7

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
BJ Services Company:
Houston, Texas

     We have audited the accompanying consolidated statements of financial position of BJ Services Company and subsidiaries (the “Company”) as of September 30, 2009 and 2008, and the related consolidated statements of operations, stockholders’ equity and other comprehensive income, and cash flows for each of the three years in the period ended September 30, 2009. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

     We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of BJ Services Company and subsidiaries at September 30, 2009 and 2008, and the results of their operations and their cash flows for each of the three years in the period ended September 30, 2009, in conformity with accounting principles generally accepted in the United States of America.

     We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of September 30, 2009, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated November 23, 2009 (not presented herein) expressed an unqualified opinion on the Company’s internal control over financial reporting.

/s/ DELOITTE & TOUCHE LLP

Houston, Texas
November 23, 2009

BJ SERVICES COMPANY
CONSOLIDATED STATEMENT OF OPERATIONS

		Year Ended September 30,
		2009				2008				2007
		(in thousands, except per share amounts)
Revenue		$	4,121,897			$	5,359,077			$	4,730,493
Operating expenses:
Cost of sales and services			3,523,838				4,091,262				3,261,032
Research and engineering			66,270				71,997				67,536
Marketing			108,186				120,655				107,113
General and administrative			159,094				158,975				142,145
Loss on disposal of assets, net			13,540				2,894				69
Pension settlement			21,695				—				—
Total operating expenses			3,892,623				4,445,783				3,577,895
Operating income			229,274				913,294				1,152,598
Interest expense			(27,248	)			(28,107	)			(32,741	)
Interest income			1,224				1,912				1,624
Other expense, net			(9,083	)			(8,579	)			(7,600	)
Income from continuing operations before income taxes			194,167				878,520				1,113,881
Income tax expense			28,196				258,034				360,073
Income from continuing operations			165,971				620,486				753,808
Loss from discontinued operations, net of income tax benefit (expense) of $203, $(747) and $865, respectively			(16,028	)			(11,121	)			(168	)
Net income		$	149,943			$	609,365			$	753,640
Basic earnings per share:
Income from continuing operations		$	0.57			$	2.11			$	2.57
Loss from discontinued operations, net			(0.06	)			(0.03	)			—
Net income per share		$	0.51			$	2.08			$	2.57
Diluted earnings per share:
Income from continuing operations		$	0.57			$	2.10			$	2.55
Loss from discontinued operations, net			(0.06	)			(0.04	)			—
Net income per share		$	0.51			$	2.06			$	2.55
Weighted average shares outstanding:
Basic			292,239				293,479				292,757
Diluted			293,393				295,766				295,916
Dividends paid per share		$	0.20			$	0.20			$	0.20

The accompanying notes are an integral part of these consolidated financial statements

BJ SERVICES COMPANY
CONSOLIDATED STATEMENT OF FINANCIAL POSITION

ASSETS

		As of September 30,
		2009				2008
		(in thousands)
Current assets:
Cash and cash equivalents		$	282,636			$	149,802
Receivables, less allowance for doubtful accounts: $25,621 and $22,472, respectively			786,063				1,134,733
Inventories:
Products			248,251				283,157
Work-in-progress			11,786				22,418
Parts			183,496				185,952
Total inventories			443,533				491,527
Deferred income taxes			32,924				28,097
Prepaid expenses			129,662				81,808
Current assets of discontinued operations			7,618				34,560
Other current assets			36,003				40,623
Total current assets			1,718,439				1,961,150
Property:
Land			47,699				44,121
Buildings and other			431,459				404,348
Machinery and equipment			3,715,354				3,395,908
Total property			4,194,512				3,844,377
Less accumulated depreciation			1,820,189				1,564,029
Property, net			2,374,323				2,280,348
Goodwill			977,941				975,451
Deferred income taxes			22,039				20,859
Noncurrent assets of discontinued operations			—				32,601
Investments and other assets			54,181				51,499
Total assets		$	5,146,923			$	5,321,908

The accompanying notes are an integral part of these consolidated financial statements

BJ SERVICES COMPANY
CONSOLIDATED STATEMENT OF FINANCIAL POSITION

LIABILITIES AND STOCKHOLDERS’ EQUITY

		As of September 30,
		2009				2008
		(in thousands, except shares)
Current liabilities:
Accounts payable, trade		$	340,735			$	550,330
Short-term borrowings			7,202				57,610
Accrued employee compensation and benefits			123,944				148,181
Income taxes			24,189				43,126
Taxes other than income			38,349				43,700
Current liabilities of discontinued operations			1,121				4,667
Other accrued liabilities			183,372				172,606
Total current liabilities			718,912				1,020,220
Long-term debt			498,910				498,730
Deferred income taxes			204,502				153,713
Accrued pension and postretirement benefits			126,771				127,065
Noncurrent liabilities of discontinued operations			—				210
Other long-term liabilities			77,911				80,163
Commitments and contingencies
Stockholders’ equity:
Preferred stock (authorized 5,000,000 shares, none issued)
Common stock, $0.10 par value (authorized 910,000,000 shares; 347,510,648 shares issued and 292,155,129 outstanding in 2009; 347,510,648 shares issued and 294,231,626 outstanding in 2008)			34,752				34,752
Capital in excess of par			1,130,646				1,100,977
Retained earnings			3,743,791				3,677,258
Accumulated other comprehensive income			23,814				40,559
Treasury stock, at cost (55,355,519 and 53,279,022 shares, respectively)			(1,413,086	)			(1,411,739	)
Total stockholders’ equity			3,519,917				3,441,807
Total liabilities and stockholders’ equity		$	5,146,923			$	5,321,908

The accompanying notes are an integral part of these consolidated financial statements

BJ SERVICES COMPANY
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY AND OTHER COMPREHENSIVE INCOME
(in thousands)

																						Accumulated
										Capital												Other
		Common				Common				In Excess				Treasury				Retained				Comprehensive
		Stock Shares				Stock				of Par				Stock				Earnings				Income				Total
Balance, October 1, 2006			293,194			$	34,752			$	1,028,813			$	(1,433,808	)		$	2,494,350			$	22,833			$	2,146,940
Comprehensive income:
Net income			—				—				—				—				753,640				—
Other comprehensive income, net of tax:
Cumulative translation adjustments			—				—				—				—				—				40,551
Minimum pension liability adjustment			—				—				—				—				—				3,272
Comprehensive income																											797,463
Adoption of new accounting principle on pensions, net of tax			—				—				—				—				—				(15,012	)			(15,012	)
Dividends declared			—				—				—				—				(57,362	)			—				(57,362	)
Treasury stock purchase			(2,565	)			—				—				(74,597	)			—				—				(74,597	)
Re-issuance of treasury stock for:
Stock options			528				—				—				14,019				(6,300	)			—				7,719
Stock purchase plan			488				—				—				12,916				(406	)			—				12,510
Other stock awards			91				—				(2,435	)			2,435				—				—				—
Stock-based compensation			—				—				31,625				—				—				—				31,625
Tax benefit from exercise of options			—				—				2,112				—				—				—				2,112
Balance, September 30, 2007			291,736			$	34,752			$	1,060,115			$	(1,479,035	)		$	3,183,922			$	51,644			$	2,851,398
Adoption of new accounting principle on income taxes			—				—				—				—				(8,115	)			—				(8,115	)
Comprehensive income:
Net income			—				—				—				—				609,365				—
Other comprehensive income, net of tax:
Cumulative translation adjustments			—				—				—				—				—				(16,387	)
Changes in defined benefit and other postretirement plans			—				—				—				—				—				5,302
Comprehensive income																											598,280
Dividends declared			—				—				—				—				(58,741	)			—				(58,741	)
Treasury stock purchase			(101	)			—				—				(2,089	)			—				—				(2,089	)
Re-issuance of treasury stock for:
Stock options			1,803				—				—				48,304				(46,608	)			—				1,696
Stock purchase plan			648				—				—				17,202				(2,565	)			—				14,637
Other stock awards			146				—				(3,879	)			3,879				—				—				—
Stock-based compensation			—				—				30,237				—				—				—				30,237
Tax benefit from exercise of options			—				—				14,504				—				—				—				14,504
Balance, September 30, 2008			294,232			$	34,752			$	1,100,977			$	(1,411,739	)		$	3,677,258			$	40,559			$	3,441,807
Comprehensive income:
Net income			—				—				—				—				149,943				—
Other comprehensive income, net of tax:
Cumulative translation adjustments			—				—				—				—				—				(24,853	)
Pension settlement			—				—				—				—				—				10,083
Changes in defined benefit and other postretirement plans			—				—				—				—				—				(1,975	)
Comprehensive income																											133,198
Dividends declared			—				—				—				—				(58,416	)			—				(58,416	)
Treasury stock purchase			(3,467	)			—				—				(44,190	)			—				—				(44,190	)
Re-issuance of treasury stock for:
Stock options			446				—				—				18,758				(17,520	)			—				1,238
Stock purchase plan			769				—				—				19,630				(7,474	)			—				12,156
Other stock awards			175				—				(4,455	)			4,455				—				—				—
Stock-based compensation			—				—				33,866				—				—				—				33,866
Tax benefit from exercise of options			—				—				258				—				—				—				258
Balance, September 30, 2009			292,155			$	34,752			$	1,130,646			$	(1,413,086	)		$	3,743,791			$	23,814			$	3,519,917

The accompanying notes are an integral part of these consolidated financial statements

BJ SERVICES COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS

		Year Ended September 30,
		2009				2008				2007
		(in thousands)
Cash flows from operating activities:
Income from continuing operations		$	165,971			$	620,486			$	753,808
Adjustments to reconcile income from continuing operations to cash provided by operating activities:
Pension settlement			21,695				—				—
Depreciation and amortization			296,165				263,970				206,609
Minority interest expense			13,765				11,903				11,315
Loss on disposal/impairment of assets, net			13,540				2,895				69
Provision for bad debt			8,750				9,606				6,541
Loss on sale of joint venture			—				2,947				—
Reserve for obsolescence and excess inventory			14,950				12,816				5,891
Stock-based compensation expense			41,759				30,989				30,626
Excess tax benefits from stock-based compensation			(1,042	)			(14,699	)			(1,812	)
Deferred income tax expense			29,054				59,320				17,425
Changes in:
Receivables			342,716				(124,092	)			(107,494	)
Inventories			37,364				(10,240	)			(135,357	)
Prepaid expenses and other current assets			(45,417	)			(3,969	)			(34,693	)
Accounts payable, trade			(214,042	)			12,392				101,305
Current income taxes			(18,707	)			(9,444	)			(7,705	)
Other current liabilities			(43,466	)			50,377				15,304
Other, net			(31,325	)			(14,612	)			(26,595	)
Net cash provided by operating activities from discontinued operations			22,345				(1,851	)			5,420
Net cash provided by operating activities			654,075				898,794				840,657
Cash flows from investing activities:
Property additions			(394,192	)			(605,584	)			(741,795	)
Proceeds from disposal of assets			5,903				13,813				29,298
Acquisitions of businesses, net of cash received			—				(57,174	)			(57,920	)
Net cash provided by (used in) investing activities from discontinued operations			1,972				835				(7,473	)
Net cash used in investing activities			(386,317	)			(648,110	)			(777,890	)
Cash flows from financing activities:
Net proceeds from exercise of stock options and stock purchase plan			16,676				14,207				22,388
Purchase of treasury stock			(44,190	)			(2,089	)			(74,597	)
Proceeds from issuance of long-term debt			—				248,858				—
Repayment of long-term debt			—				(250,000	)			—
(Repayment) borrowing under Committed Credit Facility			(50,000	)			50,000				—
(Repayments) proceeds of short-term borrowings, net			(408	)			(163,658	)			10,994
Dividends paid to stockholders			(58,520	)			(58,617	)			(58,630	)
Excess tax benefits from stock-based compensation			1,042				14,699				1,812
Distributions to minority interest partners			(3,746	)			(5,231	)			—
Debt issuance costs			—				(1,976	)			—
Net cash used in financing activities			(139,146	)			(153,807	)			(98,033	)
Effect of exchange rate changes on cash			3,770				(4,822	)			1,020
Increase (decrease) in cash and cash equivalents			132,382				92,055				(34,246	)
Cash and cash equivalents at beginning of year including, including $452, $1,466 and $3,566 related to discontinued operations			150,254				58,199				92,445
Cash and cash equivalents at end of year, including $-, $452 and $1,466 related to discontinued operations		$	282,636			$	150,254			$	58,199

The accompanying notes are an integral part of these consolidated financial statements

BJ SERVICES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Business, Basis of Presentation and Baker Hughes Merger Agreement

          BJ Services Company (the “Company”), whose operations trace back to the Byron Jackson Company founded in 1872, was organized in 1990 under the corporate laws of the state of Delaware. We are a leading worldwide provider of pressure pumping and other oilfield services for the petroleum industry. Our pressure pumping services consist of cementing and stimulation services used in the completion of new oil and natural gas wells and in remedial work on existing wells, both onshore and offshore. The Oilfield Services Group includes casing and tubular services, process and pipeline services, chemical services, completion tools and completion fluids services.

          We consolidate all investments in which we own greater than 50%. Intercompany balances and transactions are eliminated in consolidation. Investments in companies in which our ownership interest ranges from 20% to 50%, and we exercise significant influence over operating and financial policies, are accounted for using the equity method. Other investments are accounted for using the cost method.

          The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates.

          We have evaluated subsequent events through November 23, 2009, the date of issuance of the consolidated financial statements.

          Baker Hughes Merger Agreement: On August 30, 2009, the Company and Baker Hughes Incorporated (“Baker Hughes”) entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which the Company will merge with and into a wholly-owned subsidiary of Baker Hughes, and each share of Company common stock will be converted into the right to receive 0.40035 shares of Baker Hughes common stock and $2.69 in cash (the “Merger”). Completion of the Merger is subject to customary closing conditions, including (i) approval of the Merger by the stockholders of the Company, (ii) approval by the stockholders of Baker Hughes of the issuance of Baker Hughes common stock to execute the merger, (iii) applicable regulatory approvals, including the termination or expiration of the applicable waiting period under the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (iv) the effectiveness of a registration statement on Form S-4 relating to the Baker Hughes common stock to be issued in the Merger, and (v) other customary closing conditions.

          Under the Merger Agreement, the Company agreed to conduct its business in the ordinary course while the Merger is pending, and to generally refrain from acquiring new businesses, incurring new indebtedness, repurchasing treasury shares, issuing new common stock or equity awards, or entering into new material contracts or commitments outside the normal course of business, without the consent of Baker Hughes. The Company has incurred $5.3 million of costs related to the merger during fiscal 2009, which are included in general and administrative expense in the Corporate segment. Under certain circumstances, the Company or Baker Hughes may be required to pay a termination fee of $175 million to the other party if the Merger is not completed. When and if the Merger is approved or completed, certain contractual obligations of the Company will or may be triggered or accelerated under the “change of control” provisions of such contractual arrangements. Examples of such arrangements include stock-based compensation awards, severance and retirement plan agreements applicable to executive officers, directors and certain employees, and the equipment partnership described in Note 11.

          Baker Hughes and the Company are working to comply with the U.S. Department of Justice’s second request for additional information and documentary material issued October 14, 2009, and to complete the Merger as quickly as practicable, and they currently expect the Merger to be completed during the Company’s second fiscal quarter of fiscal 2010. However, the Company cannot predict with certainty when the Merger will be completed, because completion of the Merger is subject to conditions both within and beyond the Company’s control.

2. Summary of Significant Accounting Policies

          Cash and cash equivalents: We consider all highly liquid investments purchased with original maturities of three months or less at the time of purchase to be cash equivalents.

          Allowance for doubtful accounts: We perform ongoing credit evaluations of our customers and adjust credit limits based upon payment history and the customer’s current creditworthiness, as determined by our review of their available credit information. We continuously monitor collections and payments from our customers and maintain a provision for estimated uncollectible accounts based upon our historical experience and any specific customer collection issues that we have identified.

          Inventories: Inventories, which consist principally of (i) products which are consumed in our services provided to customers, (ii) spare parts for equipment used in providing these services and (iii) manufactured components and attachments for equipment used in providing services, are stated primarily at the lower of weighted-average cost or market. Cost primarily represents invoiced costs. We regularly review inventory quantities on hand and record provisions for excess or obsolete inventory based primarily on our estimated forecast of product demand, market conditions, production requirements and technological developments. Significant or unanticipated changes in market condition or to our forecast could require additional provisions for excess or obsolete inventory.

          Property: Property is stated at cost less amounts provided for permanent impairments and includes capitalized interest of $6.0 million, $7.0 million, and $8.0 million for the years ended September 30, 2009, 2008 and 2007, respectively. Depreciation is generally provided using the straight-line method over the estimated useful lives of individual items. Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the lease terms. The estimated useful lives are 10 to 30 years for buildings and leasehold improvements and range from 3 to 12 years for machinery and equipment. We make judgments and estimates in conjunction with the carrying value of these assets, including amounts to be capitalized, depreciation and amortization methods and useful lives. Additionally, the carrying values of these assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. The determination of recoverability is made based upon estimated undiscounted future cash flows. An impairment loss is recorded in the period in which it is determined that the carrying amount is not recoverable. The amount of the impairment, if any, is the amount by which the net book value of the asset exceeds fair value. Fair value determination requires us to make long-term forecasts of future revenue and costs related to the assets subject to review. These forecasts require assumptions about demand for our products and services, future market conditions and technological developments. Significant and unanticipated changes to these assumptions could require a provision for impairment in a future period.

          Intangible assets: Goodwill represents the excess of cost over the fair value of the net assets of companies acquired in purchase transactions. We review goodwill by reporting unit for possible impairment on an annual basis, or if circumstances indicate that impairment may exist. In determining our reporting units we considered the way we manage our operations and the nature of those operations. Our reporting units are our operating segments. See Note 9 for Segment Information. We reviewed our goodwill balance for impairment at March 31, June 30 and September 30, 2009 and concluded each time that no impairment existed. In fiscal 2008 we recorded a $6.1 million impairment of goodwill related to our Russia operations. Other intangible assets primarily consist of acquired patents and are being amortized on a straight-line basis ranging from 2 to 20 years, with the weighted average amortization period being 12.2 years. We utilize undiscounted estimated cash flows to evaluate any possible impairment of intangible assets. The discount rate utilized is based on market factors at the time the evaluation is performed.

          Income taxes: We provide for income taxes in accordance with ASC 740, Income Taxes. This standard takes into account the differences between financial statement treatment and tax treatment of certain transactions. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates is recognized as income or expense in the period that includes the enactment date. This calculation requires us to make certain estimates about our future operations. Changes in state, federal and foreign tax laws as well as changes in our financial condition could affect these estimates. We record a valuation allowance to reduce our deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be utilized. We consider all available evidence, both positive and negative, to determine whether a valuation allowance is needed. The ultimate realization of the deferred tax assets depends on the ability to generate sufficient taxable income of the appropriate character within the carryback or carryforward period set forth under the applicable tax law. Our tax filings for various periods are subjected to audit by tax authorities in the jurisdictions where we conduct business. These audits may result in assessments of additional taxes that are resolved with the authorities or potentially through the courts. Resolution of these situations inevitably includes some degree of uncertainty. ASC 740 also addresses the

determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. The tax benefit from an uncertain tax position is to be recognized when it is more likely than not, based on the technical merits of the position, that the position will be sustained on examination by the taxing authorities. Additionally, the amount of the tax benefit to be recognized is the largest amount of benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. ASC 740 also provides guidance on derecognition, classification, interest and penalties on income taxes, accounting in interim periods, and financial statement disclosures. We recognize potential penalties and interest related to unrecognized tax benefits as a component of income tax expense.

          Self-insurance accruals: We are self-insured for certain losses relating to workers’ compensation, general liability, property damage and employee medical benefits for claims filed and claims incurred but not reported. Our liability is based primarily on an actuarial undiscounted basis using individual case-based valuations and statistical analysis and is based upon judgment and historical experience; however, the final cost of many of these claims may not be known for five years or longer. We review our self-insurance accruals on a quarterly basis. We have purchased stop-loss coverage to limit, to the extent feasible, our aggregate exposure to certain claims. There is no assurance that such coverage will adequately protect us against liability from all potential consequences.

          Contingencies: We record an estimated loss from a loss contingency when information available prior to the issuance of our financial statements indicates that it is probable that an asset has been impaired or a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. Accounting for contingencies such as environmental, legal and income tax matters requires us to use judgment. While we believe that our accruals for these matters are adequate, if the actual loss from a loss contingency is significantly different than the estimated loss, our results of operations may be adversely impacted. For significant litigation, we accrue for our estimated legal defense costs.

          Environmental remediation and compliance: Environmental remediation costs are accrued based on estimates of known environmental exposures using currently available facts, existing environmental permits and technology and presently enacted laws and regulations. For sites where we are primarily responsible for the remediation, our estimate of costs are developed based on internal evaluations and are not discounted. Such accruals are recorded when environmental assessments and/or remedial efforts are probable and the cost can be reasonably estimated. The accrual is recorded even if significant uncertainties exist over the ultimate cost of the remediation and is updated as additional information becomes available. Ongoing environmental compliance costs, such as obtaining environmental permits, installation of pollution control equipment and waste disposal, are expensed as incurred. Where we have been identified as a potentially responsible party in a U.S. federal or state Superfund site, we accrue our share of the estimated remediation costs of the site based on the ratio of the estimated volume of waste contributed to the site by us to the total estimated volume of waste at the site.

          Revenue recognition: Our revenue is composed of product sales, rental, service and other revenue. Products, rentals, and services are generally sold based on fixed or determinable priced purchase orders or contracts with the customer and do not include the right of return. We recognize revenue from product sales when title passes to the customer, the customer assumes risks and rewards of ownership, and collectibility is reasonably assured. Rental, service and other revenue is recognized when the services are provided and collectibility is reasonably assured.

          Research and development expenditures: Research and development expenditures are expensed as incurred.

          Maintenance and repairs: Expenditures for maintenance and repairs are expensed as incurred. Expenditures for renewals and improvements are capitalized if they extend the life, increase the capacity or improve the efficiency of the asset.

          Foreign currency translation: Our functional currency is primarily the U.S. dollar. Gains and losses resulting from financial statement translation of foreign operations where a foreign currency is the functional currency are included in other comprehensive income. Our operations in Canada and Algeria use their respective local currencies as the functional currency.

          Derivative instruments: We occasionally enter into forward foreign exchange contracts to hedge the impact of currency fluctuations on certain transactions and assets and liabilities denominated in foreign currencies. We do not enter into derivative instruments for speculative or trading purposes. We recognize all derivatives on the balance sheet at fair value. No such contracts were outstanding as of September 30, 2009 or 2008.

          Employee stock-based compensation: Employee services received in exchange for stock or stock-based awards are expensed in accordance with ASC 505, Equity and ASC 718, Compensation — Stock Compensation. The fair value of the employee services received in exchange for stock-based awards is measured based on the grant-date fair value which is determined using the Black-Scholes option-pricing model for the stock option awards, bonus stock and phantom stock and a Monte-Carlo simulation model for the performance units. Awards granted are expensed ratably over the vesting period of the award, unless retirement age is reached in which case the expense is accelerated. We reduce the expense recognized based on an estimated forfeiture rate at the time of grant and revise this rate, if necessary, in subsequent periods to reflect actual forfeitures. Excess tax benefits, as defined, are recognized as an addition to capital in excess of par. Detriments are recognized as a reduction to capital in excess of par to the extent that there is sufficient capital in excess of par available. To the extent there is not sufficient capital in excess of par available, the detriment is recorded as income tax expense.

          New accounting pronouncements: In June 2009, the Financial Accounting Standards Board (“FASB”) issued guidance contained in ASC 105, Generally Accepted Accounting Principles, establishing an authoritative United States GAAP superseding all pre-existing accounting standards and literature. This guidance is effective for financial statements issued for interim and annual periods after September 15, 2009. Consequently, we have changed the accounting literature references contained in this report, but other than that, this new standard had no significant impact on our consolidated financial statements.

          In June 2009, the FASB issued ASC 810, Consolidation — Variable Interest Entities, which addresses the addition of qualified special purpose entities into previous guidance as the concept of these entities was eliminated by ASC 860. This guidance also modifies the analysis by which a controlling interest of a variable interest entity is determined thereby requiring the controlling interest to consolidate the variable interest entity. A controlling interest exists if a party to a variable interest entity has both (i) the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance and (ii) the obligation to absorb losses of or receive benefits from the entity that could be potentially significant to the variable interest entity. This statement could impact the way we account for our limited partnership discussed in Note 11 under Lease and Other Long-Term Commitments. ASC 810 becomes effective as of the beginning of the first annual reporting period beginning after November 15, 2009 and should be applied prospectively for interim and annual periods during that period going forward. We will adopt the guidance under ASC 810 on October 1, 2010, and have not yet determined the impact, if any, on our consolidated financial statements.

          In June 2009, the FASB issued guidance under ASC 860 — Transfers and Servicing, which eliminates the concept of a qualified special purpose entity and enhances guidance related to derecognition of transferred assets. ASC 860 becomes effective as of the beginning of the first annual reporting period beginning after November 15, 2009 and should be applied prospectively for interim and annual periods during that period going forward. We will adopt the guidance under ASC 860 on October 1, 2010, and have not yet determined the impact, if any, on our consolidated financial statements.

          On June 30, 2009, we adopted guidance under ASC 825, Financial Instruments — Overall, requiring publicly-traded companies to disclose the fair value of financial instruments in their interim financial statements. See Note 7 for such disclosure.

          In May 2009, the FASB issued guidance in ASC 855, Subsequent Events, to establish general standards of accounting for and disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. We adopted this guidance beginning with our June 30, 2009 condensed consolidated financial statements.

          In December 2008, the FASB issued guidance under ASC 715, Compensation — Retirement Benefits — Defined Benefit Plans, requiring the disclosure of major categories of plan assets, investment policies and strategies, fair value measurement of plan assets and significant concentration of credit risks related to defined benefit pension or other postretirement plans. This guidance is effective for fiscal years ending after December 15, 2009 and, accordingly, we will adopt it in fiscal 2010.

          In April 2008, the FASB issued guidance contained in ASC 350, Intangibles — Goodwill and Others — General Intangibles Other than Goodwill, amending the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under previously existing literature. The objective of this guidance is to improve the consistency between the useful life of a recognized intangible asset under ASC 350 and the period of expected cash flows used to measure the fair value of the asset

under ASC 805, Business Combinations. ASC 350 is effective for the Company beginning October 1, 2009, and is not expected to have a significant impact on our consolidated financial statements.

          In March 2008, the FASB issued guidance under ASC 815, Derivatives and Hedging, changing the disclosure requirements for derivative instruments and hedging activities. Entities are required to provide enhanced disclosures about (1) how and why an entity uses derivative instruments, (2) how derivative instruments and related hedged items are accounted for under ASC 815, and its related interpretations, and (3) how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. We adopted this guidance in the second quarter of fiscal 2009. We currently have no derivative financial instruments subject to accounting or disclosure under ASC 815; therefore, the guidance under ASC 815 had no effect on our consolidated statements of financial position, results of operations or cash flows.

          In December 2007, the FASB issued guidance under ASC 805, Business Combinations, that retains fundamental requirements requiring the acquisition method of accounting be used for all business combinations and for an acquirer to be identified for each business combination. ASC 805 defines the acquirer as the entity that obtains control of one or more businesses in the business combination and establishes the acquisition date as the date that the acquirer achieves control. ASC 805 establishes principles and requirements for how the acquirer:

	a.		Recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree.
	b.		Recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase.
	c.		Determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination.

          This guidance is effective for business combinations occurring on or after the beginning of the first annual reporting period beginning after December 15, 2008. Consequently, we will adopt this guidance on October 1, 2009.

          In December 2007, the FASB issued guidance under ASC 810, Consolidation — Overall - Transition, amending previous guidance to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. ASC 810 requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the noncontrolling interest. It also requires disclosure, on the face of the consolidated statement of income, of the amounts of consolidated net income attributable to the parent and to the noncontrolling interest and requires that a parent recognize a gain or loss in net income when a subsidiary is deconsolidated. ASC 810 requires expanded disclosures in the consolidated financial statements that identify and distinguish between the interests of the parent’s owners and the interests of the noncontrolling owners of a subsidiary and shall be applied prospectively as of the beginning of the fiscal year in which initially applied, except for the presentation and disclosure requirements. The presentation and disclosure requirements shall be applied retrospectively for all periods presented. This guidance is effective for fiscal years beginning after December 15, 2008 (our fiscal year beginning October 1, 2009). We do not have significant noncontrolling interests in consolidated subsidiaries, and therefore, adoption of this guidance is not expected to have a significant impact on our consolidated financial statements.

          In February 2007, the FASB issued guidance under ASC 825, Financial Instruments, providing companies with an option to report selected financial assets and liabilities at fair value. Under ASC 825, companies that elect the fair value option will report unrealized gains and losses in earnings at each subsequent reporting date. In addition, the guidance establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. The fair value option election is irrevocable, unless a new election date occurs. ASC 825 is effective the beginning of an entity’s first fiscal year beginning after November 15, 2007 and is to be applied prospectively, unless the entity elects early adoption. Consequently, we adopted ASC 825 effective October 1, 2008 and elected not to apply the fair value option.

          In September 2006, the FASB issued guidance under ASC 820, Fair Value Measurements and Disclosures, section 10, defining fair value, outlining a fair value hierarchy (requiring market-based assumptions be used, if available) and setting disclosure requirements of assets and liabilities measured at fair value based on their level in the hierarchy. On October 1, 2008, we adopted, without material impact on our consolidated financial statements, the provisions of ASC 820 related to financial assets and liabilities. We will adopt the provisions of

ASC 820 related to non-financial assets and liabilities on October 1, 2009 and we do not expect the adoption of these provisions to materially impact our consolidated financial statements.

3. Discontinued Operations

          We completed work on our final pressure pumping contract in Russia in July 2009. Consequently, we classified the Russia pressure pumping unit, an operating segment within the International Pumping Services segment, as a discontinued operation. Accordingly, the assets and liabilities of this business, along with its results of operations, have been reclassified for all periods presented. As soon as our contractual obligations were fulfilled, we began the process of redeployment and liquidation of the assets associated with this business and other exit activities. In the fourth quarter of fiscal 2009, we recorded charges totaling $6.6 million in connection with these exit activities, including employee separation costs, fixed asset and inventory impairment charges. We expect to incur additional exit costs during fiscal 2010 in the range of $3-4 million as we complete the exit activities associated with our Russia pressure pumping business.

          In fiscal 2008, the goodwill related to our Russia pressure pumping operations of $6.1 million was fully impaired. Our analysis at that time indicated that such goodwill would likely not be recoverable, largely as a result of competitive pressure in the areas in which we operated, cost inflation, currency risks and concerns over future activity reductions.

          Summarized operating results from discontinued operations are as follows:

		Year Ended September 30,
		2009				2008				2007
		(in thousands)
Revenue		$	30,035			$	67,185			$	71,916
Loss before income taxes			(16,231	)			(10,374	)			(1,033	)
Income tax expense (benefit)			(203	)			747				(865	)
Loss from discontinued operations		$	(16,028	)		$	(11,121	)		$	(168	)

          Significant categories of assets and liabilities from discontinued operations are shown below, as of September 30:

		2009				2008
		(in thousands)
Total assets:
Receivables, net of allowance for doubtful accounts		$	—			$	16,503
Inventories, net			2,910				16,348
Prepaid and other current assets			—				1,709
Property, net			4,708				32,601
Total assets		$	7,618			$	67,161
Total liabilities:
Accounts payable, trade		$	—			$	4,285
Accrued liabilities			1,121				592
Total liabilities		$	1,121			$	4,877

4. Acquisitions of Businesses

Fiscal 2008

          On May 21, 2008, we acquired all of the outstanding shares of Innicor Subsurface Technologies Inc. (“Innicor”) for a purchase price of $54.4 million, including transaction costs, which resulted in an increase of $36.4 million in total current assets, $14.5 million in property and equipment, $0.7 million in intangible assets, $11.3 million in current liabilities, $3.1 million in long term liabilities and $17.2 million of goodwill. Innicor designs, manufactures and provides tools and equipment utilized in the completion and production phases of oil and gas well development in Canada and select international markets. This business complements our completion tools business in the Oilfield Services Group. Pro forma financial information for this acquisition is not included as it is not material to our consolidated financial statements.

Fiscal 2007

          On November 3, 2006, we completed the acquisition of Profile International Ltd. (“Profile”) for a total purchase price of $2.5 million, which resulted in $2.2 million of goodwill. Profile, located in Newcastle, England, was a provider of caliper inspection tools for pipeline integrity assessment to markets worldwide. This business complements our pipeline inspection business in the Oilfield Services Group segment.

          On December 20, 2006, we purchased substantially all of the operating assets of Tekcor Technology, Ltd. (“Tekcor”) for $8.3 million, which resulted in an increase of $3.6 million to total current assets, $0.7 million in property and equipment and $4.0 million to technology-based intangible assets. Located in Houston, Texas, Tekcor was a provider of specialty chemicals and related services to the oil and gas well drilling industry along the Texas and Louisiana Gulf Coast and is included in our completion fluids business in the Oilfield Services Group segment.

          On March 1, 2007 we acquired Aberdeen-based Norson Services Ltd, (“Norson”), a division of Norson Group Ltd., and substantially all of the assets of Norson Group’s United States subsidiary Norson Services LLC. The total purchase price paid for both acquisitions was $29.0 million, including legal fees, which resulted in an increase of $7.4 million in total current assets, $5.9 million in property and equipment, $1.8 million in intangible assets, $5.4 million in current liabilities and $19.3 million of goodwill. The addition of Norson’s hydraulic and electrical umbilical testing services and the services provided by the Norson’s subsea units, which include remote pigging and flooding, subsea hydro testing and subsea data logging, strengthened the service capabilities of our process and pipeline services business in the Oilfield Services Group segment.

          On June 30, 2007, we completed the acquisition of substantially all of the capillary tubing assets of Allis-Chalmers for a total purchase price of $16.3 million, which resulted in an increase of $1.5 million in current assets, $1.8 in property and equipment and $13.0 million of goodwill. The assets are used for the installation and service of capillary injection systems primarily in the United States and Mexico. The assets complement our Dyna-Coil acquisition which occurred in the fourth quarter of fiscal 2006 and enhance our chemical services operation in the Oilfield Services Group segment.

          Pro forma financial information for our fiscal 2007 acquisitions is not included as they were not material individually or in aggregate to our consolidated financial statements.

5. Earnings Per Share

          Basic earnings per share excludes dilution and is computed by dividing net income by the weighted-average number of common shares outstanding for the period. Diluted earnings per share is based on the weighted-average number of shares outstanding during each period and the assumed exercise of dilutive instruments (stock options, employee stock purchase plan, stock incentive awards, bonus stock and director stock awards) less the number of treasury shares assumed to be purchased with the exercise proceeds using the average market price of our common stock for each of the periods presented.

          The following table presents information necessary to calculate earnings per share for each of the three years in the period ended September 30, 2009 (in thousands, except per share amounts):

		2009				2008				2007
Income from continuing operations		$	165,971			$	620,486			$	753,808
Loss from discontinued operations			(16,028	)			(11,121	)			(168	)
Net income		$	149,943			$	609,365			$	753,640
Weighted-average common shares outstanding			292,239				293,479				292,757
Basic earnings per share:
Income from continuing operations		$	0.57			$	2.11			$	2.57
Loss from discontinued operations			(0.06	)			(0.03	)			—
Net income		$	0.51			$	2.08			$	2.57
Weighted-average common and dilutive potential common shares outstanding:
Weighted-average common shares outstanding			292,239				293,479				292,757
Assumed exercise of stock options			25				1,792				2,960
Assumed stock purchase plan grants			—				297				135
Assumed vesting of other stock awards			1,129				198				64
Weighted-average dilutive shares outstanding			293,393				295,766				295,916
Diluted earnings per share:
Income from continuing operations		$	0.57			$	2.10			$	2.55
Loss from discontinued operations			(0.06	)			(0.04	)			—
Net income		$	0.51			$	2.06			$	2.55

          For the years ended September 30, 2009, 2008 and 2007, 11.4 million, 2.9 million and 2.9 million stock options, respectively, were excluded from the computation of diluted earnings per share due to their antidilutive effect. For the year ended September 30, 2009, the $0.9 million shares to be granted under the stock purchase plan (see Note 14) were excluded from the computation of diluted earnings per share due to their antidilutive effect.

6. Debt

          Long-term debt at September 30 consisted of the following (in thousands):

		2009				2008
5.75% Senior Notes due 2011, net of discount		$	249,891			$	249,825
6% Senior Notes due 2018, net of discount			249,019				248,905
Long-term debt		$	498,910			$	498,730

          On May 19, 2008, we completed a public offering of $250.0 million of 6% Senior Notes due 2018. The net proceeds from the offering of approximately $246.9 million, after deducting underwriting discounts and commissions and expenses, were used to retire $250.0 million in outstanding floating rate Senior Notes, which matured June 1, 2008. We also have outstanding $250.0 million of 5.75% Senior Notes due 2011.

          Our amended and restated revolving credit facility (the “Revolving Credit Facility”) permits borrowings of up to $400 million in principal amount. The Revolving Credit Facility includes a $50 million sublimit for the issuance of standby letters of credit and a $20 million sublimit for swingline loans. Swingline loans have short-term maturities and the remaining amounts outstanding under the Revolving Credit Facility become due and payable in August 2012. In addition, we have the right to request up to an additional $200 million over the permitted borrowings of $400 million, subject to the approval of our lenders at the time of the request. Depending on the amount of borrowings outstanding under this facility, the interest rate applicable to borrowings generally ranges from 30-40 basis points above LIBOR. We are charged various fees in connection with the Revolving Credit Facility, including a commitment fee based on the average daily unused portion of the commitment, totaling $0.3 million, $0.2 million and $0.3 million in fiscal 2009, 2008 and 2007, respectively. In addition, the Revolving Credit Facility charges a utilization fee on all outstanding loans and letters of credit when usage of the Revolving Credit

Facility exceeds 62.5%; there were no material utilization fees incurred for the fiscal years ended September 30, 2009, 2008 or 2007. There were no borrowings under the Revolving Credit Facility at September 30, 2009 and 2008 and pursuant to the Merger Agreement, their must be no borrowings outstanding under the Revolving Credit Facility on the completion date of the Merger.

          In May 2008, we entered into a $50.0 million Committed Credit Facility with a commercial bank to finance our acquisition of Innicor Subsurface Technologies Inc. There were no commitment fees required by this facility, and the interest rate was based on market rates on the dates that amounts are borrowed. This facility expired in May 2009 and was repaid with cash on hand.

          In addition to the Revolving Credit Facility, we had available $24.3 million of unsecured discretionary lines of credit at September 30, 2009, which expire at the bank’s discretion. There are no requirements for commitment fees or compensating balances in connection with these lines of credit, and interest is at prevailing market rates. There was $7.2 million and $7.6 million in outstanding borrowings under these lines of credit at September 30, 2009 and 2008, respectively. The weighted average interest rates on short-term borrowings outstanding as of September 30, 2009 and 2008 were 4.50% and 5.23%, respectively.

          The Senior Notes and Revolving Credit Facility include various customary covenants and other provisions, including the maintenance of certain profitability and solvency ratios, none of which materially restrict our activities. We are currently in compliance with all financial covenants imposed.

7. Financial Instruments

          The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable.

          Cash and Cash Equivalents, Short-term Investments, Trade Receivables, Trade Payables and Short-Term Borrowings: The carrying amount approximates fair value because of the short-term maturity of those instruments.

          Long-term Debt: Fair value is based on quoted prices in active markets for our debt securities.

          Foreign Currency Debt: Periodically, we borrow funds which are denominated in foreign currencies, which exposes us to market risk associated with exchange rate movements. There were $7.2 million and $7.6 million borrowings denominated in foreign currencies at September 30, 2009 and 2008, respectively.

          The fair value of financial instruments that differed from their carrying value at September 30, 2009 and 2008 was as follows (in thousands):

		2009								2008
		Carrying				Fair				Carrying				Fair
		Amount				Value				Amount				Value
5.75% Senior Notes due 2011		$	249,891			$	260,000			$	249,825			$	255,225
6% Senior Notes due 2018			249,019				251,465				248,905				250,300

8. Income Taxes

          The geographical sources of income from continuing operations before income taxes for each of the three years in the period ended September 30, 2009 were as follows (in thousands):

		2009				2008				2007
United States		$	(81,935	)		$	522,242			$	831,852
International			276,102				356,278				282,029
Income from continuing operations before income taxes		$	194,167			$	878,520			$	1,113,881

          The provision for income taxes for each of the three years in the period ended September 30, 2009 is summarized below (in thousands):

		2009				2008				2007
Current:
United States — Federal		$	(54,448	)		$	106,467			$	260,374
United States — State			(9,899	)			12,234				21,680
International			63,489				80,013				60,594
Total current			(858	)			198,714				342,648
Deferred:
United States — Federal			12,641				45,634				5,069
United States — State			1,849				4,872				1,258
International			14,564				8,814				11,098
Total deferred			29,054				59,320				17,425
Income tax expense		$	28,196			$	258,034			$	360,073

          The consolidated effective income tax rates (as a percent of income before income taxes) for each of the three years in the period ended September 30, 2009 varied from the U.S. statutory income tax rate for the reasons set forth below:

		2009				2008				2007
U.S. statutory rate			35.0	%			35.0	%			35.0	%
Foreign earnings at varying rates			(17.8	)			(4.5	)			(3.1	)
State income taxes, net of federal benefit			(2.7	)			1.3				1.3
Other income taxes			10.9				1.8				1.0
Changes in valuation allowance			2.7				(1.0	)			(1.1	)
Foreign income recognized domestically			3.7				(0.1	)			—
Foreign expense recognized domestically			(9.4	)			—				—
Domestic production activity deduction			—				(1.0	)			(0.7	)
Tax credits			(9.8	)			(1.2	)			(1.0	)
Nondeductible expenses			1.3				0.5				1.0
Other, net			0.6				(1.4	)			(0.1	)
			14.5	%			29.4	%			32.3	%

          Deferred tax assets and liabilities are recognized for the estimated future tax effects of temporary differences between the tax basis of assets or liabilities and its reported amount in the financial statements. The measurement of deferred tax assets and liabilities is based on enacted tax laws and rules currently in effect in each of the taxing jurisdictions in which we have operations. Generally, deferred tax assets and liabilities are classified as current or noncurrent according to the classification of the related asset or liability for financial reporting purposes. Deferred tax assets and liabilities as of September 30 were as follows (in thousands):

		2009				2008
Assets:
Accrued compensation expense		$	46,857			$	35,769
Accrued postretirement benefits			9,412				18,114
Pension liability			22,798				16,927
Deferred / unrealized gain			859				2,161
Accrued insurance expense			11,376				12,449
Other accrued expenses			5,228				18,009
Foreign tax credit carryforwards			14,948				—
Deferred revenue			7,099				4,151
Net operating and capital loss carryforwards			7,220				10,230
Valuation allowance			(7,795	)			(1,831	)
Total deferred tax asset			118,002				115,979
Liabilities:
Differences in depreciable basis of property			(265,733	)			(212,418	)
Unrealized gain/loss			—				(6,332	)
Pension asset			—				(2,547	)
Earnings of foreign affiliates			(1,946	)			—
Total deferred tax liability			(267,679	)			(221,297	)
Net deferred tax liability		$	(149,677	)		$	(105,318	)

          We adopted the provisions of ASC 740 regarding the recognition of tax benefits on October 1, 2007. As a result of the implementation of the new standard, we recognized a reduction of $8.1 million in the October 1, 2007 balance of retained earnings, with a corresponding increase to other long-term liabilities. We have unrecognized tax benefits which, if recognized, would favorably affect the effective tax rate in the period in which recognized. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

		Gross Unrecognized
		Tax Benefits,								Total Gross
		Excluding Interest				Interest and				Unrecognized Tax
		and Penalties				Penalties				Benefits
Balance at October 1, 2008		$	50,383			$	8,866			$	59,249
Increases during fiscal 2009			5,593				3,165				8,758
Decreases due to resolution of uncertain tax positions			(16,044	)			(1,532	)			(17,576	)
Balance at September 30, 2009		$	39,932			$	10,499			$	50,431

          We recognize potential penalties and interest related to unrecognized tax benefits as a component of income tax expense. It is reasonably possible that approximately $14.4 million of unrecognized tax benefits could be realized in the next twelve months, due to expiring statutes of limitation and settlements with government authorities.

          We file tax returns in the United States and approximately fifty countries and are subject to audits periodically, none of which is expected to have a material impact on our financial statements. Due to the uncertainty and various stages of such audits, we are unable to make reasonably reliable estimates of the period of any cash settlement related to our tax benefit liabilities or whether any material net cash settlement will be required. The United States and Canada are our major taxing jurisdictions. The earliest open tax year subject to examination is 2006 for the United States and 2001 for Canada.

          At September 30, 2009, we had approximately $31.3 million of foreign net operating loss carryforwards and $1.0 million of state net operating loss carryforwards. The foreign net operating loss carryforwards expire as follows: $1.3 million in 2012, $2.4 million by fiscal year 2014 and the remaining $27.6 million does not expire. The state net operating losses will expire between fiscal year 2010 and fiscal year 2019.

          We record a valuation allowance to reduce our deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will expire before realization of the benefit. Because management believes that it is more likely than not that a portion of the foreign net operating loss carryforwards and foreign tax credit carryforwards will not be realized, a valuation allowance has been recorded on a portion of these amounts.

          Our stock basis difference in foreign subsidiaries, for which a U.S. deferred tax liability has not been established, is approximately $866.7 million as of September 30, 2009. This stock basis difference arises from the existence of unremitted foreign earnings and cumulative translation adjustments. We have provided additional taxes for the anticipated repatriation of foreign earnings of our foreign subsidiaries where we have determined that the foreign subsidiaries earnings are not indefinitely reinvested. For foreign subsidiaries whose earnings are indefinitely reinvested, no provision for U.S. federal and state income taxes has been recorded. If we were to record a tax liability for the full tax versus book basis difference of our foreign subsidiaries, an additional net deferred tax liability of approximately $121.2 million would be recorded as of September 30, 2009.

9. Segment Information

          We currently have twelve operating segments for which separate financial information is available and that have separate management teams that are engaged in oilfield services. The results for these operating segments are evaluated regularly by the chief operating decision maker in deciding how to allocate resources and assessing performance. The operating segments have been aggregated into four reportable segments: U.S./Mexico Pressure Pumping, Canada Pressure Pumping, International Pressure Pumping and the Oilfield Services Group. We revised our internal management reporting structure in fiscal 2009, moving our U.S. service tool business, which previously had been reported within the U.S./Mexico Pressure Pumping segment, into the completion tools division of our Oilfield Services Group. All periods presented have been recast to conform to the new reporting structure.

          The U.S./Mexico Pressure Pumping segment has two operating segments that provide cementing services and stimulation services (consisting of fracturing, acidizing, sand control, nitrogen, coiled tubing and service tool services) throughout the United States and Mexico. These two operating segments have been aggregated into one reportable segment because they offer the same type of services, have similar economic characteristics, have similar production processes and use the same methods to provide their services.

          The Canada Pressure Pumping segment has one operating segment. Like U.S./Mexico Pressure Pumping, it provides cementing and stimulation services. These services are provided to customers in major oil and natural gas producing areas of Canada.

          The International Pressure Pumping segment has four operating segments. Similar to U.S./Mexico and Canada Pressure Pumping, it provides cementing and stimulation services. These services are provided to customers in more than 50 countries in the major international oil and natural gas producing areas of Europe, the Middle East, Asia Pacific and Latin America. These operating segments have been aggregated into one reportable segment because they have similar economic characteristics, offer the same type of services, have similar production processes and use the same methods to provide their services. They also serve the same or similar customers, which include major multi-national, independent and national or state-owned oil companies. Our Russia pressure pumping unit, which was historically an operating segment within the International Pressure Pumping, was discontinued during 2009. See Note 3. Consequently, its operating results are excluded from the segment data tables below.

          The Oilfield Services segment has five operating segments. These operating segments provide other oilfield services such as casing and tubular services, process and pipeline services, chemical services, completion tools and completion fluids services in the United States and in select markets internationally. These operating segments have been aggregated into one reportable segment as they all provide oilfield services other than pressure pumping, have similar economic characteristics, serve same or similar customers which primarily include major multi-national, independent and national or state-owned oil companies, and some of the operating segments share resources.

          The accounting policies of the segments are the same as those described in the summary of significant accounting policies. We evaluate the performance of our segments based on operating income. Intersegment sales and transfers are not material.

          Summarized financial information concerning our segments for each of the three years in the period ended September 30, 2009 is shown in the following tables (in thousands). The “Corporate” column includes corporate expenses and assets not allocated to the operating segments. Revenue by geographic location is determined based

on the location in which services are rendered or products are sold. Historically, in disclosing Long-Lived Assets by geographic location, we have included all goodwill in the United States. For purposes of this report, we have shown the goodwill in its respective country of origin based on our acquisition history. As a result, the corresponding amounts of Long-Lived Assets in previously reported periods have been restated to conform to the current presentation format by reducing United States by $417.4 million and $355.5 million, increasing Canada by $116.9 million and $116.9 million, and increasing other countries by $300.5 million and $238.6 million for fiscal 2008 and 2007, respectively. For the years ended September 30, 2009, 2008 and 2007, we provided services to several thousand customers, none of which accounted for more than 5% of consolidated revenue.

		U.S./Mexico				Canada				International				Oilfield
		Pressure				Pressure				Pressure				Services
Business Segments		Pumping				Pumping				Pumping				Group				Corporate				Total
2009
Revenue		$	1,853,831			$	309,435			$	1,098,493			$	860,138			$	—			$	4,121,897
Operating income (loss)			104,094				17,610				121,463				102,928				(116,821	)			229,274
Total assets			1,518,249				424,675				1,459,930				1,031,925				712,144				5,146,923
Capital expenditures			178,756				9				131,899				56,211				27,317				394,192
Depreciation			135,381				27,528				79,903				43,242				6,497				292,551
2008
Revenue		$	2,743,383			$	442,474			$	1,185,388			$	987,832			$	—			$	5,359,077
Operating income (loss)			597,837				34,341				178,716				191,670				(89,270	)			913,294
Total assets			1,728,751				515,600				1,415,494				1,076,894				585,169				5,321,908
Capital expenditures			267,476				20,163				194,572				82,951				40,422				605,584
Depreciation			115,774				34,797				63,549				35,490				10,705				260,315
2007
Revenue		$	2,534,601			$	386,547			$	1,002,828			$	806,517			$	—			$	4,730,493
Operating income (loss)			874,808				32,493				154,793				170,362				(79,858	)			1,152,598
Total assets			1,487,260				550,449				1,262,831				997,983				416,689				4,715,212
Capital expenditures			288,037				83,643				200,366				84,037				85,712				741,795
Depreciation			88,410				29,327				50,458				29,112				7,059				204,366

Geographic Information

						Long-Lived
		Revenue				Assets
2009
United States		$	2,092,461			$	1,819,244
Canada			400,943				423,726
Other countries			1,628,493				1,163,475
Total		$	4,121,897			$	3,406,445
2008
United States		$	3,104,864			$	1,793,758
Canada			522,047				448,193
Other countries			1,732,166				1,065,347
Total		$	5,359,077			$	3,307,298
2007
United States		$	2,867,442			$	1,707,705
Canada			432,392				453,298
Other countries			1,430,659				779,441
Total		$	4,730,493			$	2,940,444

Revenue by Product Line

		2009				2008				2007
Cementing		$	1,003,345			$	1,344,010			$	1,231,608
Stimulation			2,205,751				2,987,827				2,657,208
Other			912,801				1,027,240				841,677
Total revenue		$	4,121,897			$	5,359,077			$	4,730,493

          A reconciliation from the segment information to consolidated income from continuing operations before income taxes for each of the three years in the period ended September 30, 2008 is set forth below (in thousands):

		2009				2008				2007
Total operating income for reportable segments		$	229,274			$	913,294			$	1,152,598
Interest expense			(27,248	)			(28,107	)			(32,741	)
Interest income			1,224				1,912				1,624
Other expense, net			(9,083	)			(8,579	)			(7,600	)
Income from continuing operations before income taxes		$	194,167			$	878,520			$	1,113,881

          As a result of the reduction in demand for our services and products caused by the recent global economic downturn, we identified a list of cementing and stimulation equipment used in our Pressure Pumping business that was not economical to repair or maintain in the current market environment. We impaired such equipment to write it down to scrap or salvage value, recording non-cash, pre-tax impairment charges totaling $5.7 million in the U.S. pressure Pumping segment and $1.5 million in the Middle East region of the International Pressure Pumping segment in the third quarter of fiscal 2009. These charges, totaling $7.2 million, are included in the loss on disposal of assets, net on the consolidated statement of operations.

10. Employee Benefit Plans

Defined Benefit Pension Plans

          We have defined benefit pension plans covering employees in certain international locations, including the U.K., Canada, Norway and elsewhere. During fiscal 2004, the plans in the U.K. and Canada were frozen to new entrants.

          In September 2006, we entered into an agreement with an insurance company to settle or transfer our obligation with respect to a U.S. defined benefit plan. Plan assets of approximately $72 million were used to purchase an insurance contract to fund the benefits and effectively settle the plan, subject to regulatory approvals. In December 2008, we received approval from the Pension Benefit Guaranty Corporation and the Internal Revenue Service and were relieved of primary responsibility for the pension benefit obligation. Consequently, we recorded a non-cash pre-tax charge of $21.7 million in connection with the settlement in the first quarter of fiscal 2009. This charge resulted in a $5.7 million reduction in prepaid pension cost and a $16.0 million increase in accumulated other comprehensive income, with a tax effect of $5.9 million.

          We also have a non-qualified supplemental executive retirement plan (“SERP”), an unfunded defined benefit pension plan that provides our executives with supplemental retirement benefits based on the highest consecutive three years compensation out of the final ten years of employment. Benefits under the SERP become vested upon the later of the executive’s 55^th birthday or the date the executive completes five full years of service as an officer.

Postretirement Benefit Plans

          We also sponsor plans that provide certain health care and life insurance benefits for retired employees, primarily in the United States, who meet specified age and service requirements, and their eligible dependents. These plans are unfunded and we retain the right, subject to existing agreements, to modify or eliminate them. Our postretirement medical benefit plan provides credits based on years of service that can be used to purchase coverage under the retiree plan. This plan effectively caps our health care inflation rate at a 4% increase per year.

          All amounts in the following tables are presented in thousands of dollars, except for percentages and unless otherwise stated.

Obligations and Funded Status

		U.S. SERP								Non-U.S. Pension								U.S. Postretirement
Change in benefit obligation		2009				2008				2009				2008				2009				2008
Benefit obligation, beginning of year		$	32,194			$	31,211			$	182,139			$	218,673			$	49,320			$	57,596
Service cost			1,200				1,138				4,302				6,519				1,383				4,132
Interest cost			2,013				1,860				11,144				12,876				1,663				3,657
Actuarial (gain)/loss			4,061				(1,237	)			24,956				(28,271	)			(26,333	)			(15,621	)
Benefits paid			(408	)			(816	)			(8,394	)			(6,143	)			(665	)			(444	)
Contributions by plan participants			—				—				1,619				2,246				—				—
Plan amendments			—				38				—				—				—				—
Exchange rate adjustments			—				—				(11,774	)			(23,761	)			—				—
Benefit plan obligation, end of year		$	39,060			$	32,194			$	203,992			$	182,139			$	25,368			$	49,320
Change in plan assets
Fair value of plan assets, beginning of year		$	—			$	—			$	138,293			$	164,887			$	—			$	—
Actual (loss)/return on plan assets			—				—				13,893				(20,333	)			—				—
Contributions by employer			408				816				12,404				15,571				665				444
Contributions by plan participants			—				—				1,619				2,246				—				—
Benefits paid from plan assets			(408	)			(816	)			(8,394	)			(6,143	)			(665	)			(444	)
Exchange rate adjustments			—				—				(9,358	)			(17,935	)			—				—
Fair value of plan assets, end of year		$	—			$	—			$	148,457			$	138,293			$	—			$	—
Underfunded status		$	(39,060	)		$	(32,194	)		$	(55,535	)		$	(43,846	)		$	(25,368	)		$	(49,320	)