Halliburton 2013 Annual Report Download - page 46

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30
Completion and Production operating income decreased 9% compared to 2012, primarily due to the North America
region, where operating income fell 15% due to pricing pressures in the United States hydraulic fracturing market and lower
activity in Canada. Latin America operating income was up 2% as a result of higher demand for cementing services in Mexico
and Venezuela and production enhancement services in Argentina. Europe/Africa/CIS operating income grew 3% compared to
2012, driven by higher completion tools activity in Angola and cementing activity in Norway. Middle East/Asia operating
income increased 18% due to higher activity levels in Saudi Arabia and Iraq, higher direct sales in China, and improved
profitability in Indonesia.
Drilling and Evaluation revenue increased 7% compared to 2012, driven by strong results in the Eastern Hemisphere.
North America revenue was essentially flat, as lower demand for drilling and wireline services was partially offset by fluids
activity across the United States land market and higher activity in the Gulf of Mexico. Latin America revenue was also
relatively flat, as higher demand for all product lines in Mexico and fluids throughout the region were partially offset by lower
drilling services activity in Colombia and wireline activity in Brazil. Europe/Africa/CIS revenue increased 18% due to
improved fluids activity in Norway and Angola and higher drilling services activity in Eurasia, Norway, Egypt, and Angola.
Middle East/Asia revenue rose 14% primarily due to strong demand in Saudi Arabia and Indonesia, higher drilling activity
throughout the region, and higher wireline activity in Asia Pacific. Revenue outside of North America was 68% of total segment
revenue in 2013 and 65% of total segment revenue in 2012.
Drilling and Evaluation operating income improved 6% compared to 2012, as increased activity in the Eastern
Hemisphere was partially offset by higher costs in Latin America. North America operating income was down 4% from 2012,
as a reduction in drilling and wireline services was partially offset by demand for fluids and consulting and project
management. Latin America operating income declined 22% due to higher costs in Brazil and Venezuela and lower activity in
Colombia. The Europe/Africa/CIS region operating income grew 36%, driven by fluids activity in Angola and Norway and
drilling services in Eurasia. Middle East/Asia operating income increased 33% as a result of higher activity in Iraq, Indonesia,
and Malaysia.
Corporate and other expenses were $1.5 billion in 2013 compared to $660 million in 2012. The significant increase
was primarily due to a $1.0 billion Macondo-related loss contingency that was recorded in the first quarter of 2013, compared
to a $300 million Macondo-related loss contingency recorded in the first quarter of 2012. Additionally, a $55 million charitable
contribution to the National Fish and Wildlife Foundation was expensed in the second quarter of 2013, reflecting our
commitment to making a positive environmental impact in our local communities.
NONOPERATING ITEMS
Effective tax rate. Our effective tax rate on continuing operations was 23.5% for 2013 and 32.3% for 2012. The 2013
effective tax rate on continuing operations was positively impacted by several items during the year, including federal tax
benefits of approximately $50 million due to the reinstatement of certain tax benefits and credits related to the first quarter
enactment of the American Taxpayer Relief Act of 2012. Also contributing to the lower tax rate in 2013 was a $1.0 billion loss
contingency related to the Macondo well incident, which was tax-effected at the United States statutory rate, as well as some
favorable tax items in Latin America in the fourth quarter. Additionally, our effective tax rate was positively impacted by lower
tax rates in certain foreign jurisdictions, as we continue to reposition our technology, supply chain, and manufacturing
infrastructure to more effectively serve our customers internationally.