MANAGEMENT’S DISCUSSION AND ANALYSIS Therefore, the joint ventures do not hold any property, plant, or equipment assets directly. Consequently, the  depreciation balance reported above includes depreciation on assets involved in both wholly owned and joint  ventured activities.  (1) Proportionate share of selling & administrative expenses from joint ventures and adjusted selling &  administrative expenses are non-standard accounting measures. See commentary in “Basis of Analysis in  this MD&A, Non-standard and Additional GAAP Items”. Adjusted selling and administrative expenses decreased marginally to $18,786,000 in 2013 from $18,935,000  in 2012. Adjusted selling and administrative expenses equated to 8.7% of total adjusted revenue in 2013,  compared to 7.8% of total adjusted revenue in 2012, as a result of decreased adjusted revenue. The single largest component of adjusted selling and administrative expenses was salaries and benefits which  accounted for 60% of these expenses in 2013 (64% in 2012). The Company provides the same drilling services and utilizes the same management, financial and reporting  controls for its joint venture activities as are in place for its wholly owned operations. The analyses of these  activities are incorporated throughout the relevant sections of this MD&A. Joint venture activities are often  located in some of the most prospective regions in Canada. Further, two thirds of AKITA’s joint ventures utilize  pad drilling rigs. (1) Proportionate share of revenue from joint ventures, proportionate share of operating & maintenance  expenses from joint ventures and proportionate share of selling & administrative expenses from joint  ventures are non-standard accounting measures. See commentary in “Basis of Analysis in this MD&A, Non- standard and Additional GAAP Items”.  $Millions 2013 2012 Change % Change Proportionate share of revenue from joint ventures  (1) 48.9 37.8 11.1 29% Proportionate share of operating & maintenance  expenses from joint ventures  (1) 29.5 23.1 6.4 28% Proportionate share of selling & administrative  expenses from joint ventures  (1) 0.6 0.5 0.1 20% Equity income from joint ventures 18.8 14.2 4.6 32% $Millions 2013 2012 Change % Change Selling & administrative expenses per financial  statements 18.2 18.5 (0.3) (1%) Proportionate share of selling & administrative  expenses from joint ventures  (1) 0.6 0.5 0.1 2% Adjusted selling & administrative expenses  (1) 18.8 19.0 (0.2) (1%) Selling and Administrative Expenses Equity Income from Joint Ventures 11 AKITA DRILLING LTD.  ANNUAL REPORT