Baker Hughes 2009 Annual Report Download - page 94

20 Baker Hughes Incorporated
RESULTS OF OPERATIONS
The discussions below relating to significant line items from our consolidated statements of operations are based on available
information and represent our analysis of significant changes or events that impact the comparability of reported amounts. Where
appropriate, we have identified specific events and changes that affect comparability or trends and, where possible and practical,
have quantified the impact of such items. In addition, the discussions below for revenues and cost of revenues are on a combined
basis as the business drivers for the individual components of product sales and service and rentals are similar.
The table below details certain consolidated statement of operations data and their percentage of revenues (dollar amounts
in millions).
2009 2008 2007
$ % $ % $ %
Revenues $ 9,664 100% $ 11,864 100% $ 10,428 100%
Cost of revenues 7,397 77% 7,954 67% 6,845 66%
Research and engineering 397 4% 426 4% 372 4%
Marketing, general and administrative 1,120 12% 1,046 9% 933 9%
Revenues
2009 Compared to 2008
Twelve Months Ended
December 31, Increase
2009 2008 (decrease) % Change
Geographic Revenues:
North America $ 3,584 $ 5,178 $ (1,594) (31%)
Latin America 1,134 1,127 7 1%
Europe, Africa, Russia, Caspian 2,925 3,386 (461) (14%)
Middle East, Asia Pacific 2,021 2,173 (152) (7%)
Total revenues $ 9,664 $ 11,864 $ (2,200) (19%)
Revenues for 2009 decreased $2.20 billion or 19% com-
pared to 2008 primarily due to a decrease in activity as evi-
denced by a 31% decline in the worldwide rig count, and to
a lesser extent, pricing pressure on our products and services.
North America
Revenues in North America, which accounted for 37%
of total revenues, decreased 31% in 2009 compared to 2008,
due to a sharp reduction in rig count and activity. U.S. revenues
from our Drilling & Evaluation segment decreased 47% in 2009,
compared to a 42% reduction in the U.S. land and inland
water rig count and a 32% reduction in the U.S. offshore
rig count. U.S. revenues from our Completion & Production
segment, which is impacted less by changes in the rig count,
were down 16% in 2009 compared to 2008. Canada reve-
nues decreased 23% compared to a 42% decrease in the rig
count reflecting challenging economics for Canadian natural
gas producers.
Outside North America
Revenues outside North America, which accounted for
63% of total revenues, decreased 9% in 2009 compared to
2008, in line with the 8% decrease in the rig count outside
North America
Latin America revenues increased 1% compared to a
7% decrease in the rig count. The improved revenue in Latin
America was led by directional drilling systems in Mexico/Central
America, Brazil and the Andean geomarkets; drilling fluids in
the Brazil geomarket; and drill bits and completions and pro-
duction systems in the Mexico/Central America geomarket.
Europe, Africa, Russia, Caspian revenues decreased 14%
in 2009 compared to 2008. The revenue decline in the region
was broad-based, across all product lines and geographies
within the region. The largest revenue decreases occurred in
the Russia, U.K., Norway and Caspian geomarkets.
Middle East, Asia Pacific revenues decreased 7% in 2009
compared to 2008. Middle East revenues decreased 11%
compared to a 10% decrease in the rig count. Asia Pacific
revenues were down 3% in line with a 4% decrease in the
rig count. The largest revenue declines occurred in the Saudi
Arabia/Bahrain, Egypt, Indonesia and North Asia geomarkets.