HAL Halliburton Co

Reported income from continuing operations of $1.06 per diluted share

Halliburton Company (NYSE:HAL) announced today that income from continuing operations for the fourth quarter of 2014 was $1.0 billion, or $1.19 per diluted share, excluding restructuring charges of $90 million, after-tax, or $0.11 per diluted share, and Baker Hughes acquisition-related costs of $19 million, after-tax, or $0.02 per diluted share. This compares to income from continuing operations for the third quarter of 2014 of $1.0 billion, or $1.19 per diluted share, excluding Macondo-related items.

Reported income from continuing operations for the fourth quarter of 2014 was $900 million, or $1.06 per diluted share. Reported income from continuing operations for the third quarter of 2014 was $1.1 billion, or $1.33 per diluted share.

Total revenue in the fourth quarter of 2014 was $8.8 billion, compared to $8.7 billion in the third quarter of 2014. Adjusted operating income was $1.4 billion in both the fourth and third quarters of 2014. Reported operating income was $1.3 billion in the fourth quarter of 2014 and $1.6 billion in the third quarter of 2014.

Total revenue was $32.9 billion for the full year 2014, an increase of $3.5 billion, or 12%, from 2013. Total operating income was $5.1 billion for 2014, compared to $3.1 billion for 2013, which increased primarily due to increased stimulation activity in the United States land market, and Macondo-related items.

Adjusted income from continuing operations for the full year 2014 was $3.4 billion, or $4.02 per diluted share. This compares to adjusted income from continuing operations for the full year 2013 of $2.8 billion, or $3.15 per diluted share. Reported income from continuing operations for the full year 2014 was $3.4 billion, or $4.03 per diluted share, compared to $2.1 billion, or $2.33 per diluted share, for the full year 2013.

“I am very pleased with our results for the fourth quarter and for the full year,” commented Dave Lesar, chairman and chief executive officer.

“For the full year 2014, Halliburton reported record revenue and operating income for the total company, as well as revenue records for both divisions and 12 out of 13 product lines. Compared to our primary peers, the company once again delivered industry-leading total company revenue growth and returns in 2014.

“North America delivered a record year, with 16% revenue growth and 23% adjusted operating income growth compared to 2013. The Eastern Hemisphere also had a record year, with revenue and adjusted operating income growth of 10% and 12%, respectively.

“For the fourth quarter, total company revenue of $8.8 billion was a record quarter, with revenue records for both divisions and our Middle East/Asia region setting a new record for both revenue and adjusted operating income.

“North America revenue was flat sequentially, despite the seasonal impact from weather and holiday downtime. Margins benefited in the fourth quarter from cost efficiencies related to the continued roll-out of our strategic initiatives, as well as recent enhancements to our logistics network.

“In the Eastern Hemisphere, we experienced a modest level of sequential revenue growth which resulted in a new quarterly record, despite headwinds in our Europe/Africa/CIS region.

“In the Middle East/Asia region, revenue increased by 10% compared to the third quarter, and adjusted fourth quarter margins came in just under 21%. Year-end software and equipment sales led the improvement for the quarter, along with increased integrated project activity in Saudi Arabia, Iraq, India and Indonesia.

”In Europe/Africa/CIS, revenue and adjusted operating income declined 8% and 35%, respectively, compared to the third quarter. This resulted from activity declines in the North Sea, Russia, and Angola, as well as currency weakness in Russia.

“In Latin America, revenue increased 3% sequentially, while adjusted operating income declined 4% compared to the third quarter. Operating income was negatively impacted during the fourth quarter from mobilization costs in Brazil and budget constraints affecting consulting and stimulation activity in Mexico.

“We delivered an excellent 2014, but it is clear that 2015 will be a challenging year for the industry. As a result of the weakening outlook, during the fourth quarter of 2014 we took a $129 million restructuring charge to temper the impact of anticipated activity declines. Halliburton has successfully weathered multiple industry cycles. We are confident that we have the right people, technology, and strategies in place to outperform throughout this cycle too, and emerge as a stronger company,” concluded Lesar.

Completion and Production

Completion and Production (C&P) revenue in the fourth quarter of 2014 was $5.5 billion, which was essentially flat compared to the third quarter of 2014. Increased completion tools sales across all regions and increased stimulation activity in the United States land market and Middle East/Asia region were partially offset by decreased activity and currency weakness in Russia and Norway, decreased activity across most product lines in Mexico, and a seasonal reduction in pipeline services in the Europe/Africa/CIS region.

C&P operating income in the fourth quarter of 2014 was $991 million, a decrease of $80 million, or 7%, from the third quarter of 2014. Excluding restructuring charges, C&P adjusted operating income decreased $20 million, or 2%, compared to the third quarter of 2014. North America C&P adjusted operating income increased $12 million, or 2%, sequentially, mainly due to increased cementing activity and completion tools sales in the United States. Latin America C&P adjusted operating income decreased $12 million, or 18%, compared to the third quarter of 2014, primarily due to lower activity across all product lines in Mexico. Europe/Africa/CIS C&P adjusted operating income decreased $37 million, or 29%, sequentially, mainly due to lower profitability in the North Sea, Russia, and Angola. Middle East/Asia C&P adjusted operating income increased $17 million, or 15%, compared to the third quarter of 2014, primarily due to increased stimulation activity in Malaysia, Australia, and Saudi Arabia.

Drilling and Evaluation

Drilling and Evaluation (D&E) revenue in the fourth quarter of 2014 was $3.3 billion, which was essentially flat compared to the third quarter of 2014. Strong growth across most product lines in the Middle East/Asia region was partially offset by decreased activity in the Europe/Africa/CIS region.

D&E operating income in the fourth quarter of 2014 was $408 million, a decrease of $43 million, or 10%, from the third quarter of 2014. Excluding restructuring charges, D&E adjusted operating income increased $26 million, or 6%, compared to the third quarter of 2014. North America D&E adjusted operating income was flat, sequentially, as higher software sales in the United States land market were offset by decreased drilling activity in the United States land market and Canada. Latin America D&E adjusted operating income increased $6 million, or 8%, compared to the third quarter of 2014, primarily due to increased fluid services in Mexico and higher software sales in Venezuela, Colombia, and Mexico, which were partially offset by reduced testing profitability in Brazil and a decline in consulting services in Mexico. Europe/Africa/CIS D&E adjusted operating income decreased $38 million, or 42%, sequentially, due to lower activity and currency weakness in Russia and Norway. Middle East/Asia D&E adjusted operating income increased $58 million, or 39%, sequentially, mainly due to strong growth across most product lines, including higher software and product sales in China and increased drilling activity in Saudi Arabia.

Corporate and Other

During the fourth quarter of 2014, Halliburton incurred $19 million for costs related to the pending Baker Hughes acquisition, $17 million of which is recorded in Corporate and Other expense, and $2 million of which is recorded in Interest Expense, Net.

Significant Recent Events and Achievements

• On November 16, 2014, Halliburton and Baker Hughes Incorporated entered into a merger agreement under which Halliburton will, subject to certain closing conditions, acquire all of the outstanding shares of Baker Hughes in a stock and cash transaction. Under the terms of the merger agreement, each share of Baker Hughes common stock outstanding will be converted into the right to receive 1.12 shares of Halliburton common stock plus $19.00 in cash. The value of the merger will fluctuate with changes in the market price of Halliburton's common stock. The merger agreement has been unanimously approved by both companies’ Boards of Directors, and the completion of the merger is subject to approvals from each company’s stockholders, regulatory approvals, and customary closing conditions. The merger is expected to close in the second half of 2015.

• Halliburton announced its Board of Directors appointed Mark McCollum, previously Halliburton’s Executive Vice President and Chief Financial Officer, to the new role of Executive Vice President and Chief Integration Officer. In this capacity, he will serve as head of the Joint Integration Team that Halliburton and Baker Hughes are assembling in connection with Halliburton’s pending acquisition of Baker Hughes. Christian Garcia, previously Halliburton’s Senior Vice President and Chief Accounting Officer, is now Senior Vice President of Finance and has assumed McCollum’s CFO responsibilities on an interim basis.
• Halliburton announced that Abdulaziz F. Al Khayyal had been named to the company’s board of directors. The appointment was effective December of 2014, and Mr. Al Khayyal will stand for election by stockholders at the annual meeting in May 2015. Mr. Al Khayyal spent more than 30 years at Saudi Aramco before retiring in April 2014 and held a variety of managerial positions in oil and gas operations and maintenance while at Saudi Aramco, including senior vice president, International Operations, and senior vice president, Refining, Marketing and International.
• Halliburton announced it opened Argentina’s first sand storage and loading facility to support the country’s transition from shale exploration to development. This facility will support Halliburton customers’ development of unconventional shale formations, enhancing well productivity and lowering operating costs. The facility will improve surface efficiency by reducing the number of personnel on site, easing sand-loading procedures, and reducing health, safety and environmental exposures.
• Halliburton announced its 21st annual Halliburton Charity Golf Tournament, held in October of 2014 in Houston, set a new fundraising record for the event with contributions totaling nearly $2.4 million for 36 nonprofit organizations across the U.S., making it one of the largest non-PGA golf tournament fundraisers in Houston. The record amount raised this year brings the 21-year total to almost $11 million that has been donated to charities.
• Halliburton announced it had reinforced its dedication to the SEG (Society of Exploration Geophysicists) Foundation with a $1.25 million gift, one of the largest single education gifts supporting SEG’s Young Professional/Early Career learning initiative. The funding will create SEG/Halliburton EVOLVE, an initiative that will work with industry leaders to build and deliver a world-class curriculum in a user-friendly environment. EVOLVE will emphasize geoscience workflow training to prepare students and early-career professionals for multidisciplinary asset teams throughout the E&P life cycle.

About Halliburton

Founded in 1919, Halliburton is one of the world's largest providers of products and services to the energy industry. With more than 80,000 employees, representing 140 nationalities in approximately 80 countries, the company serves the upstream oil and gas industry throughout the lifecycle of the reservoir - from locating hydrocarbons and managing geological data, to drilling and formation evaluation, well construction and completion, and optimizing production through the life of the field. Visit the company’s website at www.halliburton.com. Connect with Halliburton on Facebook, Twitter, LinkedIn, Oilpro and YouTube.

NOTE: The statements in this press release that are not historical statements, including statements regarding future financial performance and the expected timetable for completing the proposed merger with Baker Hughes, are forward-looking statements within the meaning of the federal securities laws. These statements are subject to numerous risks and uncertainties, many of which are beyond the company's control, which could cause actual results to differ materially from the results expressed or implied by the statements. These risks and uncertainties include, but are not limited to: with respect to the pending merger with Baker Hughes, failure to obtain the required votes of Halliburton’s or Baker Hughes’ stockholders, the conditions to closing of the proposed transaction may not be satisfied or the closing of the proposed transaction otherwise does not occur, the risk that a regulatory approval that may be required for the proposed transaction is not obtained or is obtained subject to conditions that are not anticipated, and the diversion of management time on transaction-related issues; final court approval of, and the satisfaction of the conditions in, Halliburton's September 2014 settlement relating to the Macondo well incident in the Gulf of Mexico; appeals of the multi-district litigation District Court's September 2014 ruling regarding Phase 1 of the trial, and future rulings of the District Court; results of litigation, settlements, and investigations not covered by the settlement or the District Court's rulings; actions by third parties, including governmental agencies, relating to the Macondo well incident; BP's April 2012 settlement relating to the Macondo well incident; indemnification and insurance matters; with respect to repurchases of Halliburton common stock, the continuation or suspension of the repurchase program, the amount, the timing and the trading prices of Halliburton common stock, and the availability and alternative uses of cash; changes in the demand for or price of oil and/or natural gas can be significantly impacted by weakness in the worldwide economy; consequences of audits and investigations by domestic and foreign government agencies and legislative bodies and related publicity and potential adverse proceedings by such agencies; protection of intellectual property rights and against cyber attacks; compliance with environmental laws; changes in government regulations and regulatory requirements, particularly those related to offshore oil and natural gas exploration, radioactive sources, explosives, chemicals, hydraulic fracturing services, and climate-related initiatives; compliance with laws related to income taxes and assumptions regarding the generation of future taxable income; risks of international operations, including risks relating to unsettled political conditions, war, the effects of terrorism, foreign exchange rates and controls, international trade and regulatory controls, and doing business with national oil companies; weather-related issues, including the effects of hurricanes and tropical storms; changes in capital spending by customers; delays or failures by customers to make payments owed to us; execution of long-term, fixed-price contracts; structural changes in the oil and natural gas industry; maintaining a highly skilled workforce; availability and cost of raw materials; and integration and success of acquired businesses and operations of joint ventures. Halliburton's Form 10-K for the year ended December 31, 2013, Form 10-Q for the quarter ended September 30, 2014, recent Current Reports on Form 8-K, and other Securities and Exchange Commission filings discuss some of the important risk factors identified that may affect Halliburton's business, results of operations, and financial condition. Halliburton undertakes no obligation to revise or update publicly any forward-looking statements for any reason.

 

HALLIBURTON COMPANYCondensed Consolidated Statements of Operations(Millions of dollars and shares except per share data)(Unaudited)

    Three Months Ended December 31   September 30     2014       2013   2014 Revenue:         Completion and Production $ 5,471 $ 4,542 $ 5,420 Drilling and Evaluation   3,299         3,097     3,281   Total revenue   $ 8,770         $ 7,639     $ 8,701   Operating income: Completion and Production $ 991 $ 765 $ 1,071 Drilling and Evaluation 408 498 451 Corporate and other (a)   (100 )       (119 )   112   Total operating income   1,299         1,144     1,634   Interest expense, net (100 ) (98 ) (96 ) Other, net   41         (6 )   12   Income from continuing operations before income taxes 1,240 1,040 1,550 Provision for income taxes   (336 )       (268 )   (411 ) Income from continuing operations 904 772 1,139 Income from discontinued operations, net (b)   1         23     66   Net income   $ 905         $ 795     $ 1,205   Net income attributable to noncontrolling interest   (4 )       (2 )   (2 ) Net income attributable to company   $ 901         $ 793     $ 1,203   Amounts attributable to company shareholders: Income from continuing operations $ 900 $ 770 $ 1,137 Income from discontinued operations, net (b)   1         23     66   Net income attributable to company   $ 901         $ 793     $ 1,203   Basic income per share attributable to company shareholders: Income from continuing operations $ 1.06 $ 0.91 $ 1.34 Income from discontinued operations, net (b)   —         0.02     0.08   Net income per share   $ 1.06         $ 0.93     $ 1.42   Diluted income per share attributable to company shareholders: Income from continuing operations $ 1.06 $ 0.90 $ 1.33 Income from discontinued operations, net (b)   —         0.03     0.08   Net income per share   $ 1.06         $ 0.93     $ 1.41   Basic weighted average common shares outstanding 848 849 848 Diluted weighted average common shares outstanding   850         854     854   (a)   Includes $17 million of Baker Hughes acquisition-related costs in the three months ended December 31, 2014 and $195 million of activity in the three months ended September 30, 2014 as a result of a reduction of our loss contingency liability and expected insurance recovery related to the Macondo well incident.   (b) Includes $63 million of income in the three months ended September 30, 2014 related to a settlement we reached with KBR for amounts owed to us under our Tax Sharing Agreement with KBR.   See Footnote Table 1 for certain items included in operating income.   See Footnote Table 3 for operating income adjusted for certain items.   See Footnote Table 5 for a reconciliation of as-reported income from continuing operations to adjusted income from continuing operations.  

HALLIBURTON COMPANYCondensed Consolidated Statements of Operations(Millions of dollars and shares except per share data)(Unaudited)

    Year Ended December 31     2014   2013 Revenue:   Completion and Production $ 20,253 $ 17,506 Drilling and Evaluation   12,617     11,896   Total revenue   $ 32,870     $ 29,402   Operating income: Completion and Production $ 3,610 $ 2,875 Drilling and Evaluation 1,671 1,770 Corporate and other (a)   (184 )   (1,507 ) Total operating income   5,097     3,138   Interest expense, net (383 ) (331 ) Other, net   (2 )   (43 ) Income from continuing operations before income taxes 4,712 2,764 Provision for income taxes   (1,275 )   (648 ) Income from continuing operations 3,437 2,116 Income from discontinued operations, net (b)   64     19   Net income   $ 3,501     $ 2,135   Net income attributable to noncontrolling interest   (1 )   (10 ) Net income attributable to company   $ 3,500     $ 2,125   Amounts attributable to company shareholders: Income from continuing operations $ 3,436 $ 2,106 Income from discontinued operations, net (b)   64     19   Net income attributable to company   $ 3,500     $ 2,125   Basic income per share attributable to company shareholders: Income from continuing operations $ 4.05 $ 2.35 Income from discontinued operations, net (b)   0.08     0.02   Net income per share   $ 4.13     $ 2.37   Diluted income per share attributable to company shareholders: Income from continuing operations $ 4.03 $ 2.33 Income from discontinued operations, net (b)   0.08     0.03   Net income per share   $ 4.11     $ 2.36   Basic weighted average common shares outstanding 848 898 Diluted weighted average common shares outstanding   852     902   (a)   Includes $17 million of Baker Hughes acquisition-related costs in the year ended December 31, 2014. Also includes $195 million of activity in the year ended December 31, 2014 as a result of a reduction of our loss contingency liability and expected insurance recovery related to the Macondo well incident. Includes a $1.0 billion charge related to the Macondo well incident and a $55 million charge related to a charitable contribution to the National Fish and Wildlife Foundation in the year ended December 31, 2013.   (b) Includes $63 million of income in the year ended December 31, 2014 related to a settlement we reached with KBR for amounts owed to us under our Tax Sharing Agreement with KBR.   See Footnote Table 2 for certain items included in operating income.   See Footnote Table 4 for operating income adjusted for certain items.   See Footnote Table 6 for a reconciliation of as-reported income from continuing operations to adjusted income from continuing operations.  

HALLIBURTON COMPANYCondensed Consolidated Balance Sheets(Millions of dollars)

    (Unaudited)   December 31   December 31     2014   2013 Assets Current assets: Cash and equivalents $ 2,291 $ 2,356 Receivables, net 7,564 6,181 Inventories 3,571 3,305 Other current assets (a)   1,642   1,862 Total current assets 15,068 13,704   Property, plant, and equipment, net 12,475 11,322 Goodwill 2,330 2,168 Other assets (b)  

2,367

  2,029 Total assets   $ 32,240   $ 29,223   Liabilities and Shareholders’ Equity Current liabilities: Accounts payable $ 2,814 $ 2,365 Accrued employee compensation and benefits 1,033 1,029 Loss contingency for Macondo well incident 367 278 Other current liabilities   1,669   1,354 Total current liabilities 5,883 5,026   Long-term debt 7,840 7,816 Employee compensation and benefits 691 584 Loss contingency for Macondo well incident 439 1,022 Other liabilities   1,089   1,160 Total liabilities 15,942 15,608   Company shareholders’ equity 16,267 13,581 Noncontrolling interest in consolidated subsidiaries   31   34 Total shareholders’ equity   16,298   13,615 Total liabilities and shareholders’ equity   $ 32,240   $ 29,223 (a)   Includes $56 million of investments in fixed income securities at December 31, 2014, and $239 million of investments in fixed income securities at December 31, 2013.   (b) Includes $47 million of investments in fixed income securities at December 31, 2014, and $134 million of investments in fixed income securities at December 31, 2013.  

HALLIBURTON COMPANYCondensed Consolidated Statements of Cash Flows(Millions of dollars)(Unaudited)

    Year Ended December 31     2014   2013 Cash flows from operating activities:   Net income $ 3,501 $ 2,135 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation, depletion, and amortization 2,126 1,900 Activity related to the Macondo well incident (569 ) 1,000 Deferred income tax benefit, continuing operations (454 ) (132 ) Payment of Barracuda-Caratinga obligation — (219 ) Other, primarily working capital   (542 )   (237 ) Total cash flows from operating activities   4,062     4,447     Cash flows from investing activities: Capital expenditures (3,283 ) (2,934 ) Sales of investment securities, net of purchases 261 27 Payments to acquire businesses, net of cash acquired (231 ) (94 ) Other investing activities   115     131   Total cash flows from investing activities   (3,138 )   (2,870 )   Cash flows from financing activities: Payments to reacquire common stock (800 ) (4,356 ) Dividends to shareholders (533 ) (465 ) Proceeds from long-term borrowings, net of offering costs — 2,968 Other financing activities   303     99   Total cash flows from financing activities   (1,030 )   (1,754 )   Effect of exchange rate changes on cash   41     49   Decrease in cash and equivalents (65 ) (128 ) Cash and equivalents at beginning of period   2,356     2,484   Cash and equivalents at end of period   $ 2,291     $ 2,356      

HALLIBURTON COMPANYRevenue and Operating Income ComparisonBy Segment and Geographic Region(Millions of dollars)(Unaudited)

    Three Months Ended     December 31   September 30 Revenue by geographic region:   2014         2013   2014 Completion and Production:           North America $ 3,731 $ 2,871 $ 3,705 Latin America 448 428 435 Europe/Africa/CIS 655 647 699 Middle East/Asia   637           596     581 Total   5,471           4,542     5,420 Drilling and Evaluation: North America 998 952 1,019 Latin America 626 590 610 Europe/Africa/CIS 691 752 765 Middle East/Asia   984           803     887 Total   3,299           3,097     3,281 Total revenue by region: North America 4,729 3,823 4,724 Latin America 1,074 1,018 1,045 Europe/Africa/CIS 1,346 1,399 1,464 Middle East/Asia   1,621           1,399     1,468 Total revenue   $ 8,770           $ 7,639     $ 8,701   Operating income by geographic region:                       Completion and Production: North America $ 757 $ 478 $ 765 Latin America 50 72 65 Europe/Africa/CIS 71 99 126 Middle East/Asia   113           116     115 Total   991           765     1,071 Drilling and Evaluation: North America 131 166 141 Latin America 73 81 73 Europe/Africa/CIS 11 108 90 Middle East/Asia   193           143     147 Total   408           498     451 Total operating income by region: North America 888 644 906 Latin America 123 153 138 Europe/Africa/CIS 82 207 216 Middle East/Asia   306           259     262 Corporate and other   (100 )         (119 )   112 Total operating income   $ 1,299           $ 1,144     $ 1,634 See Footnote Table 1 for certain items included in operating income.   See Footnote Table 3 for operating income adjusted for certain items.   See Footnote Table 5 for a reconciliation of as-reported income from continuing operations to adjusted income from continuing operations.  

HALLIBURTON COMPANYRevenue and Operating Income ComparisonBy Segment and Geographic Region(Millions of dollars)(Unaudited)

    Year Ended December 31 Revenue by geographic region:   2014 2013 Completion and Production: North America $ 13,688 $ 11,417 Latin America 1,633 1,586 Europe/Africa/CIS 2,595 2,391 Middle East/Asia   2,337   2,112   Total   20,253   17,506   Drilling and Evaluation: North America 4,010 3,795 Latin America 2,242 2,323 Europe/Africa/CIS 2,895 2,834 Middle East/Asia   3,470   2,944   Total   12,617   11,896   Total revenue by region: North America 17,698 15,212 Latin America 3,875 3,909 Europe/Africa/CIS 5,490 5,225 Middle East/Asia   5,807   5,056   Total revenue   $ 32,870   $ 29,402     Operating income by geographic region:           Completion and Production: North America $ 2,598 $ 1,916 Latin America 211 211 Europe/Africa/CIS 371 356 Middle East/Asia   430   392   Total   3,610   2,875   Drilling and Evaluation: North America 588 656 Latin America 211 307 Europe/Africa/CIS 259 334 Middle East/Asia   613   473   Total   1,671   1,770   Total operating income by region: North America 3,186 2,572 Latin America 422 518 Europe/Africa/CIS 630 690 Middle East/Asia   1,043   865   Corporate and other   (184 ) (1,507 ) Total operating income   $ 5,097   $ 3,138   See Footnote Table 2 for certain items included in operating income.   See Footnote Table 4 for operating income adjusted for certain items.   See Footnote Table 6 for a reconciliation of as-reported income from continuing operations to adjusted income from continuing operations.  

FOOTNOTE TABLE 1

 

HALLIBURTON COMPANYItems Included in Operating Income(Millions of dollars except per share data)(Unaudited)

    Three Months Ended December 31   September 30 2014   2013   2014    

OperatingIncome

 

After TaxPer Share

 

OperatingIncome

 

After TaxPer Share

 

OperatingIncome

 

After TaxPer Share

Completion and Production:           North America Restructuring charges (20 ) (0.02 ) (5 ) (0.01 ) — — Latin America Restructuring charges (3 ) — (1 ) — — — Europe/Africa/CIS Restructuring charges (18 ) (0.01 ) (1 ) — — — Middle East/Asia Restructuring charges   (19 )   (0.02 )   (3 )   —     —   — Drilling and Evaluation: North America Restructuring charges (10 ) (0.01 ) (2 ) — — — Latin America Restructuring charges (6 ) — (3 ) — — — Europe/Africa/CIS Restructuring charges (41 )

(0.04

) (1 ) — — — Middle East/Asia Restructuring charges   (12 )   (0.01 )   (2 )   —     —   — Corporate and other: Baker Hughes acquisition-related costs (17 ) (0.02 ) — — — — Macondo-related activity — — — — 195 0.14 Restructuring charges — — (20 ) (0.02 ) — —    

FOOTNOTE TABLE 2

 

HALLIBURTON COMPANYItems Included in Operating Income(Millions of dollars except per share data)(Unaudited)

    Year Ended December 31 2014   2013    

OperatingIncome

 

After TaxPer Share

 

OperatingIncome

 

After TaxPer Share

Completion and Production:       North America Restructuring charges (20 ) (0.02 ) (35 ) (0.03 ) Latin America Restructuring charges (3 ) — (3 ) — Europe/Africa/CIS Restructuring charges (18 ) (0.01 ) (5 ) — Middle East/Asia Restructuring charges   (19 )   (0.02 )   (7 )   (0.01 ) Drilling and Evaluation: North America Restructuring charges (10 ) (0.01 ) (6 ) (0.01 ) Latin America Restructuring charges (6 ) — (5 ) — Europe/Africa/CIS Restructuring charges (41 ) (0.04 ) (3 ) — Middle East/Asia Restructuring charges   (12 )   (0.01 )   (5 )   —   Corporate and other: Macondo-related activity 195

0.14

(1,000 ) (0.69 ) Baker Hughes acquisition-related costs (17 ) (0.02 ) — — Charitable contribution — — (55 ) (0.04 ) Restructuring charges — — (23 ) (0.02 )    

FOOTNOTE TABLE 3

 

HALLIBURTON COMPANYAdjusted Operating IncomeBy Segment and Geographic Region(Millions of dollars)(Unaudited)

        Three Months Ended December 31   September 30 Adjusted operating income by geographic region: (a)(b)       2014       2013   2014 Completion and Production:         North America $ 777 $ 483 $ 765 Latin America 53 73 65 Europe/Africa/CIS 89 100 126 Middle East/Asia       132         119     115   Total       1,051         775     1,071   Drilling and Evaluation: North America 141 168 141 Latin America 79 84 73 Europe/Africa/CIS 52 109 90 Middle East/Asia       205         145     147   Total       477         506     451   Adjusted operating income by region: North America 918 651 906 Latin America 132 157 138 Europe/Africa/CIS 141 209 216 Middle East/Asia       337         264     262   Corporate and other       (83 )       (99 )   (83 ) Adjusted total operating income       $ 1,445         $ 1,182     $ 1,439   (a)   Management believes that operating income adjusted for restructuring charges and Baker Hughes acquisition-related costs for the quarter ended December 31, 2014, for restructuring charges for the quarter ended December 31, 2013 and for Macondo-related activity for the quarter ended September 30, 2014 is useful to investors to assess and understand operating performance, especially when comparing those results with previous and subsequent periods or forecasting performance for future periods, primarily because management views the excluded items to be outside of the company's normal operating results. Management analyzes operating income without the impact of these items as an indicator of performance, to identify underlying trends in the business, and to establish operational goals. The adjustments remove the effects of the respective income and expenses.   (b) Adjusted operating income for each segment and region is calculated as: "Operating income" less "Items Included in Operating Income."  

FOOTNOTE TABLE 4

 

HALLIBURTON COMPANYAdjusted Operating IncomeBy Segment and Geographic Region(Millions of dollars)(Unaudited)

    Year Ended December 31 Adjusted operating income by geographic region: (a)(b)   2014   2013 Completion and Production:   North America $ 2,618 $ 1,951 Latin America 214 214 Europe/Africa/CIS 389 361 Middle East/Asia   449     399   Total   3,670     2,925   Drilling and Evaluation: North America 598 662 Latin America 217 312 Europe/Africa/CIS 300 337 Middle East/Asia   625     478   Total   1,740     1,789   Adjusted operating income by region: North America 3,216 2,613 Latin America 431 526 Europe/Africa/CIS 689 698 Middle East/Asia   1,074     877   Corporate and other   (362 )   (429 ) Adjusted total operating income   $ 5,048     $ 4,285   (a)   Management believes that operating income adjusted for restructuring charges, Baker Hughes acquisition-related costs, and Macondo-related activity for the year ended December 31, 2014 and Macondo-related activity, restructuring charges, and a charitable contribution for the year ended December 31, 2013 is useful to investors to assess and understand operating performance, especially when comparing those results with previous and subsequent periods or forecasting performance for future periods, primarily because management views the excluded items to be outside of the company's normal operating results. Management analyzes operating income without the impact of these items as an indicator of performance, to identify underlying trends in the business, and to establish operational goals. The adjustments remove the effects of the respective income and expenses.   (b)

Adjusted operating income for each segment and region is calculated as: "Operating income" less "Items Included in Operating Income."

 

FOOTNOTE TABLE 5

 

HALLIBURTON COMPANYReconciliation of As Reported Income from Continuing Operations toAdjusted Income from Continuing Operations(Millions of dollars and shares except per share data)(Unaudited)

   

Three Months EndedDecember 31, 2014

 

Three Months EndedSeptember 30, 2014

As reported income from continuing operations attributable to company $ 900   $ 1,137 Restructuring charges, net of tax (a) 90 — Baker Hughes acquisition-related costs, net of tax (a) 17 — Bridge loan expense for acquisition, net of tax (a) 2 — Macondo-related activity, net of tax (a)   —   (124 ) Adjusted income from continuing operations attributable to company (a)   $ 1,009   $ 1,013     Diluted weighted average common shares outstanding 850 854   As reported income from continuing operations per diluted share (b) $ 1.06 $ 1.33 Adjusted income from continuing operations per diluted share (b)   $ 1.19   $ 1.19   (a)  

Management believes that income from continuing operations adjusted for restructuring charges, Baker Hughes acquisition-related costs, and bridge loan expense for acquisition for the quarter ended December 31, 2014 and for the Macondo-related activity for the quarter ended September 30, 2014 is useful to investors to assess and understand operating performance, especially when comparing those results with previous and subsequent periods or forecasting performance for future periods, primarily because management views the excluded items to be outside of the company's normal operating results. Management analyzes income from continuing operations without the impact of these items as an indicator of performance, to identify underlying trends in the business, and to establish operational goals. The adjustments remove the effects of these items. Adjusted income from continuing operations attributable to company is calculated as: “As reported income from continuing operations attributable to company” plus "Restructuring charges, net of tax," "Baker Hughes acquisition-related costs, net of tax" and "Bridge loan expense for acquisition, net of tax" for the quarter ended December 31, 2014 and "As reported income from continuing operations attributable to company" less "Macondo-related activity, net of tax" for the quarter ended September 30, 2014.

  (b) As reported income from continuing operations per diluted share is calculated as: "As reported income from continuing operations attributable to company" divided by "Diluted weighted average common shares outstanding." Adjusted income from continuing operations per diluted share is calculated as: "Adjusted income from continuing operations attributable to company" divided by "Diluted weighted average common shares outstanding."  

FOOTNOTE TABLE 6

 

HALLIBURTON COMPANYReconciliation of As Reported Income from Continuing Operations toAdjusted Income from Continuing Operations(Millions of dollars and shares except per share data)(Unaudited)

    Year Ended December 31 2014   2013 As reported income from continuing operations attributable to company $ 3,436   $ 2,106 Macondo-related activity, net of tax (a) (124 ) 637 Restructuring charges, net of tax (a) 90 66 Baker Hughes acquisition-related costs, net of tax (a) 17 — Bridge loan expense for acquisition, net of tax (a) 2 — Charitable contribution, net of tax (a)   —     35 Adjusted income from continuing operations attributable to company (a)   $ 3,421     $ 2,844   Diluted weighted average common shares outstanding 852 902   As reported income from continuing operations per diluted share (b) $ 4.03 $ 2.33 Adjusted income from continuing operations per diluted share (b)   $ 4.02     $ 3.15 (a)  

Management believes that income from continuing operations adjusted for Macondo-related activity, restructuring charges, Baker Hughes acquisition-related costs, and bridge loan expense for acquisition for the year ended December 31, 2014 and Macondo-related activity, restructuring charges, and a charitable contribution for the year ended December 31, 2013 is useful to investors to assess and understand operating performance, especially when comparing those results with previous and subsequent periods or forecasting performance for future periods, primarily because management views the excluded items to be outside of the company's normal operating results. Management analyzes income from continuing operations without the impact of these items as an indicator of performance, to identify underlying trends in the business, and to establish operational goals. The adjustments remove the effects of these items. Adjusted income from continuing operations attributable to company is calculated as: “As reported income from continuing operations attributable to company” less "Macondo-related activity, net of tax" plus "Restructuring charges, net of tax," "Baker Hughes acquisition-related costs, net of tax" and "Bridge loan expense for acquisition, net of tax" for the year ended December 31, 2014 and "As reported income from continuing operations attributable to company" plus "Macondo-related activity, net of tax" "Restructuring charges, net of tax" and "Charitable contribution, net of tax" for the year ended December 31, 2013.

  (b) As reported income from continuing operations per diluted share is calculated as: "As reported income from continuing operations attributable to company" divided by "Diluted weighted average common shares outstanding." Adjusted income from continuing operations per diluted share is calculated as: "Adjusted income from continuing operations attributable to company" divided by "Diluted weighted average common shares outstanding."

Conference Call Details

Halliburton will host a conference call on Tuesday, January 20, 2015, to discuss the fourth quarter 2014 financial results. The call will begin at 8:00 AM Central Time (9:00 AM Eastern Time).

Please visit the website to listen to the call live via webcast. In addition, you may participate in the call by dialing (866) 804-3547 within North America or (703) 639-1328 outside North America. A passcode is not required. Attendees should log in to the webcast or dial in approximately 15 minutes prior to the call’s start time.

A replay of the conference call will be available on Halliburton’s website for seven days following the call. Also, a replay may be accessed by telephone at (888) 266-2081 within North America or (703) 925-2533 outside of North America, using the passcode 1648662.

Halliburton CompanyInvestors:Kelly Youngblood, 281-871-2688Investor RelationsInvestors@Halliburton.comorMedia:Emily Mir, 281-871-2601Public RelationsPR@Halliburton.com