Halliburton 2013 Annual Report Download - page 49

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33
The Completion and Production segment operating income decrease compared to 2011 was primarily due to the North
America region, where operating income fell $1.1 billion as a result of pricing pressure in the production enhancement product
service line and rising costs, particularly related to guar gum. Latin America operating income increased 30% due to higher
demand for completion tools in Mexico and Brazil, partially offset by higher costs and pricing adjustments in Argentina and
Colombia. Europe/Africa/CIS operating income grew $299 million compared to 2011 due to the recovery from activity
disruptions in North Africa, including collections in 2012 of $29 million from the original $36 million Libya-related reserve
recognized in 2011 for certain accounts receivable and inventory. Middle East/Asia operating income increased 79% due to cost
controls in Iraq, higher activity levels in Oman, and increased demand for production enhancement and cementing services in
Australia.
Drilling and Evaluation revenue increased 15% compared to 2011 as drilling activity improved across all regions,
especially Middle East/Asia and Latin America. North America revenue grew 10% due to increased demand for drilling fluids.
Latin America revenue increased 22% due to higher demand in most product services lines in Brazil, Mexico, Venezuela, and
Colombia. Europe/Africa/CIS revenue increased 9% due to improved drilling service in Tanzania, Nigeria, and the United
Kingdom, partially offset by service disruptions in Algeria. Middle East/Asia revenue rose 23% primarily due to the ongoing
work in Iraq and Saudi Arabia, increased activity in Malaysia, and higher wireline direct sales. Revenue outside North America
was 65% of total segment revenue in 2012 and 64% of total segment revenue in 2011.
Segment operating income compared to 2011 increased 19%, primarily due to increased activity in Middle East/Asia
and Latin America. North America operating income increased 6% from increased demand for drilling fluids and wireline and
perforating, which offset higher consulting and project management costs. Latin America operating income grew 29% as a
result of activity increases in Mexico, Venezuela, and Brazil. The Europe/Africa/CIS region operating income grew 29% due to
greater activity in Nigeria and the recovery in Libya where $13 million of the original $23 million reserve from 2011 mentioned
above was collected in 2012, which more than offset higher costs in Norway. Middle East/Asia operating income increased
34% mainly due to increased activity in Malaysia and Saudi Arabia.
Corporate and other expenses were $660 million in 2012 compared to $399 million in 2011. The 65% increase was
primarily due to a $300 million, pre-tax, loss contingency recorded in 2012 related to the Macondo well incident as well as
additional expenses in 2012 associated with strategic investments in our operating model and creating competitive advantages
by repositioning our technology, supply chain, and manufacturing infrastructure. These items were partially offset by, among
other things, a $20 million, pre-tax, gain recorded in 2012 related to the settlement of a patent infringement lawsuit.
NONOPERATING ITEMS
Income (loss) from discontinued operations, net increased $224 million in 2012 compared to 2011, primarily due to a
$163 million charge, after-tax, recognized in 2011 for an arbitration award against our former subsidiary, KBR, relating to the
Barracuda-Caratinga project, a project for which we had provided a guarantee of KBR's obligations. In 2012, we recorded an
$80 million tax benefit in discontinued operations related to the $219 million payment we made to Barracuda & Caratinga
Leasing Company BV under that guarantee.