Halliburton 2002 Fourth Quarter Adjustments
HOUSTON, March 27 /PRNewswire-FirstCall/ -- Halliburton (NYSE: HAL) announced today that subsequent to the issuance of its 2002 fourth quarter earnings press release on February 20, 2003, the Company recorded an additional $3 million expense, net of tax, to continuing operations and an $11 million expense, net of tax, to discontinued operations for an overall decrease in net income for the fourth quarter of 2002 of $14 million. The $3 million adjustment to continuing operations relates to the results of a majority owned consolidated foreign joint venture. The $11 million adjustment to discontinued operations relates to a reduction in estimated insurance recoveries for asbestos and silica claims and was the result of a recent announcement regarding the financial viability of an insurance carrier that was voluntarily placed in rehabilitation.
In estimating the probable insurance recoveries related to asbestos and silica liability claims, the Company with assistance from Peterson Consulting, its third party insurance estimator, assumed that no recovery from insolvent carriers would be received. On March 5, 2003, the New Hampshire Insurance Department announced that The Home Insurance Company had been voluntarily placed in rehabilitation. Based upon this announcement, the Company believes The Home Insurance Company should be treated as an insolvent carrier for purposes of computing insurance recoveries. As a result, the Company has revised the estimate of probable insurance recoveries as of December 31, 2002 to exclude any recoveries from The Home Insurance Company and has recorded an $11 million expense, net of tax, to discontinued operations in 2002. Although the Company has adopted this accounting treatment, the Company will continue to pursue all of its claims against all insolvent insurance carriers.
In addition, the Company recorded an aggregate $3 million expense, net of taxes, related to one of its majority owned consolidated foreign joint ventures in the Engineering and Construction segment, which affected depreciation expense, tax expense and minority interest expense.
After the effect of these adjustments, the Company's fourth quarter 2002 net loss from continuing operations remains at $0.30 per share, unchanged from the earnings per share previously announced for the fourth quarter. In addition, the Company's 2002 fourth quarter net income from continuing operations on a pro forma basis remains unchanged at $0.24 per share. Reconciliations of the pro forma financial results and the adjusted financial results are included in the attached tables.
Halliburton, founded in 1919, is one of the world's largest providers of
products and services to the petroleum and energy industries. The Company
serves its customers with a broad range of products and services through its
Energy Services Group and Engineering and Construction Group business
segments. The Company's World Wide Web site can be accessed at
www.halliburton.com .
HALLIBURTON COMPANY
Consolidated Statements of Income
(Unaudited)
Quarter Ended Twelve Months Ended
December 31 December 31
2002 2001 2002 2001
Millions of dollars except per share data
Revenues
Energy Services Group $ 1,714 $ 1,913 $ 6,836 $ 7,811
Engineering
and Construction Group 1,634 1,259 5,736 5,235
Total revenues $ 3,348 $ 3,172 $ 12,572 $ 13,046
Operating income
Energy Services Group $ 199 $ 258 $ 638 $ 1,036
Engineering
and Construction Group (189) 27 (685) 111
General corporate (31) (13) (65) (63)
Total operating income (loss) (21) 272 (112) 1,084
Interest expense (22) (32) (113) (147)
Interest income 8 9 32 27
Foreign currency gain
(losses), net (13) (4) (25) (10)
Other, net (12) --- (10) ---
Income (loss) from continuing
operations before income taxes,
minority interests, and change
in accounting method (60) 245 (228) 954
(Provision) benefit
for income taxes (49) (99) (80) (384)
Minority interest
in net income of subsidiaries (23) (5) (38) (19)
Income (loss) from continuing
operations before change
in accounting method (132) 141 (346) 551
Discontinued operations, net
Income (loss) from discontinued
operations (484) (2) (652) (42)
Gain on disposal of discontinued
operations --- --- --- 299
Income (loss) from discontinued
operations (484) (2) (652) 257
Cumulative effect of change
in accounting method, net --- --- --- 1
Net income (loss) $ (616) $ 139 $ (998) $ 809
Basic income per share:
Continuing operations $ (0.30) $ 0.33 $ (0.80) $ 1.29
Discontinued operations, net
Income (loss) from
discontinued operations (1.12) (0.01) (1.51) (0.10)
Gain on disposal of
discontinued operations --- --- --- 0.70
Income (loss) from
discontinued operations (1.12) (0.01) (1.51) 0.60
Net income (loss) $ (1.42) $ 0.32 $ (2.31) $ 1.89
Diluted income per share:
Continuing operations $ (0.30) $ 0.33 $ (0.80) $ 1.28
Discontinued operations, net
Income (loss) from
discontinued operations (1.12) (0.01) (1.51) (0.10)
Gain on disposal of
discontinued operations --- --- --- 0.70
Income from discontinued
operations (1.12) (0.01) (1.51) 0.60
Net income (loss) $ (1.42) $ 0.32 $ (2.31) $ 1.88
Basic average common
shares outstanding 433 429 432 428
Diluted average common
shares outstanding 433 430 432 430
TABLE 1
HALLIBURTON COMPANY
Reconciliation of As Reported Results to Pro Forma Results
Three months ended December 31, 2002
(Unaudited)
Other Net Earnings/
Operating Income/ (Provision) Income/ (loss) per
Income/ (Expense)- Benefit (loss) from Share from
(loss), (including for Minority Continuing Continuing
Pretax interest) Taxes Interest Operations Operations
Pro forma
results
(excluding
items
below): $ 239 $ (33) $ (81) $ (23) $ 102 $ 0.24
Loss on
equity
investment --- (9) 3 --- (6) (0.02)
Brazil project
loss 2 --- (1) --- 1 ---
Demutualization
of an
insurance
company 1 3 (2) --- 2 ---
Asbestos
charge (234) --- 20 --- (214) (0.49)
Restructuring
costs (29) --- 12 --- (17) (0.03)
As reported $ (21) $ (39) $ (49) $ (23) $ (132) $(0.30)
TABLE 2
HALLIBURTON COMPANY
Reconciliation of As Reported Results to Pro Forma Results
Twelve months ended December 31, 2002
(Unaudited)
Other Net Earnings/
Operating Income/ (Provision) Income/ (loss) per
Income/ (Expense)- Benefit (loss) from Share from
(loss), (including for Minority Continuing Continuing
Pretax interest) Taxes Interest Operations Operations
Pro forma
results
(excluding
items
below): $ 796 $(109) $(267) $ (38) $ 382 $ 0.88
Sale of EMC 108 3 (43) --- 68 0.16
Patent
lawsuit (98) (4) 40 --- (62) (0.14)
Highlands
receivable
write-off (80) --- 31 --- (49) (0.11)
Demutualization
of an
insurance
company 29 3 (13) --- 19 0.04
Restructuring
costs (107) --- 42 --- (65) (0.15)
Brazil project
loss (117) --- 45 --- (72) (0.17)
Asbestos
charge (564) --- 82 --- (482) (1.11)
Loss on equity
investment (79) (9) 3 --- (85) (0.20)
As reported $(112) $(116) $ (80) $ (38) $ (346) $(0.80)
TABLE 3
HALLIBURTON COMPANY
Reconciliation of Previously Issued As Reported Results to Adjusted As
Reported Results
Three months ended December 31, 2002
(Unaudited)
Previously
Issued As Adjusted
Reported Insolvency of Joint Venture As Reported
Results Insurer Operations Results
Operating Income/(loss)
Pretax $ (27) $ --- $ 6 $ (21)
Other Income/(Expense)
- (including interest) (39) --- --- (39)
(Provision) Benefit
for Taxes (50) --- 1 (49)
Minority Interest
in Net Income of
Subsidiaries (13) --- (10) (23)
Net Income/(loss) from
Continuing Operations (129) --- (3) (132)
Income (loss) from
Discontinued Operations (473) (11) (484)
Net Income $ (602) $ (11) $ (3) $ (616)
Earnings/(loss) per Share
from Continuing
Operations $(0.30) $ --- $ --- $(0.30)
TABLE 4
HALLIBURTON COMPANY
Reconciliation of Previously Issued As Reported Results to Adjusted As
Reported Results
Twelve months ended December 31, 2002
(Unaudited)
Previously
Issued As Adjusted
Reported Insolvency of Joint Venture As Reported
Results Insurer Operations Results
Operating Income/(loss)
Pretax $ (118) $ --- $ 6 $ (112)
Other Income/(Expense)
- (including interest) (116) --- --- (116)
(Provision) Benefit
for Taxes (81) --- 1 (80)
Minority Interest
in Net Income of
Subsidiaries (28) --- (10) (38)
Net Income/(loss)
from Continuing
Operations (343) --- (3) (346)
Income (loss) from
Discontinued Operations (641) (11) (652)
Net Income $ (984) $ (11) $ (3) $ (998)
Earnings/(loss) per
Share from Continuing
Operations $ (0.79) $ --- $ (0.01) $ (0.80)
SOURCE Halliburton