Halliburton Announces First Quarter Results
DALLAS, Texas, May 7, 2002 /PRNewswire-FirstCall via COMTEX/ -- Halliburton Company (NYSE: HAL) reported today first quarter 2002 net income from continuing operations of $83 million or $0.19 per diluted share, excluding nonrecurring items, but inclusive of an $8 million pretax loss ($0.01 after-tax per diluted share) related to the Argentina peso's devaluation. Including nonrecurring items, 2002 first quarter net income from continuing operations was $50 million ($0.12 per diluted share). Total net income was $22 million ($0.05 per diluted share). Discontinued operations included $28 million after-tax for asbestos-related expenses ($0.07 per diluted share).
Nonrecurring items in the 2002 first quarter resulted in a $33 million net charge after-tax and consisted of: the gain on the sale of European Marine Contractors Ltd. (EMC); a gain from shares received relating to the demutualization of an insurance provider; the write-off of asbestos-related receivables due from Highlands Insurance Company; an accrual for an adverse patent infringement verdict that the Company will appeal; and severance costs associated with the Company's reorganization. The first quarter 2001 includes $9 million, net of tax, in goodwill amortization compared to no amortization in the first quarter of 2002. Tables outlining nonrecurring items and a reconciliation of reported amounts to pro forma amounts used in this press release are attached.
Revenues from continuing operations were $3 billion in the 2002 first quarter, down slightly from a year ago. Operating income before nonrecurring items was $176 million for the quarter, down 16 percent from last year, excluding 2001 goodwill amortization. Reduced gas drilling activities in the United States and Canada resulted in lower revenues and profit margins.
"Our first quarter results were in line with our peers and down from last year due to weaker North American industry conditions," said Dave Lesar, chairman, president and chief executive officer, Halliburton. "I'm pleased with the Engineering & Construction Group's solid improvement over last year, although this was offset by lower results in Halliburton Energy Services, consistent with the decline in customer activity."
Corporate Reorganization
Halliburton Company is in the process of a reorganization in which the Energy Services and the Engineering and Construction groups will be separated into two wholly-owned operating subsidiary groups. The separation of these businesses will create two stronger, leaner, more competitive and cost- efficient organizations. While the Company incurred $11 million before tax in severance costs during the quarter, the majority of the reorganization costs -- principally severance and restructuring costs -- will be incurred in the second quarter.
2002 First Quarter Segment Results
The Energy Services Group posted first quarter revenues of $2 billion, representing a 2.5 percent decrease compared to the 2001 first quarter and a nine percent decrease from the 2001 fourth quarter. Lower North American drilling activity was the primary reason for the lower revenues. Energy Services Group revenues in the United States decreased by 20 percent year- over-year, while international revenues increased by 11 percent. Within the Energy Services Group, revenues at Halliburton Energy Services decreased by five percent year-over-year principally in North America, partially offset by increases in the Eastern Hemisphere. In addition, Halliburton Energy Services' revenues decreased by nine percent sequentially.
Operating income, as reported for the first quarter for the Energy Services Group, was $162 million, a decrease of 22 percent year-over-year, excluding 2001 goodwill amortization. Excluding nonrecurring items, Energy Services Group operating income was $157 million, a decrease of 24 percent year-over-year. Of this amount, Halliburton Energy Services' operating income was $159 million, a decrease of 19 percent year-over-year and 36 percent sequentially. Landmark Graphics delivered another strong performance in revenues and profit during the first quarter.
The Engineering and Construction Group's first quarter revenues were $1 billion, down eight percent from the 2001 first quarter. Operating income increased 41 percent year-over-year to $31 million for the first quarter, excluding 2001 goodwill amortization. Excluding severance costs, operating income was $35 million, resulting in a margin of 3.4 percent.
Backlog
Backlog for the Company as of March 31, 2002, was $9.8 billion, comprised of $7.7 billion for the Engineering and Construction Group and $2.1 billion for the Energy Services Group.
General Corporate
General corporate costs of $70 million include an $80 million write-off of asbestos-related insurance receivables from Highlands Insurance Company, $5 million for engineering and construction asbestos-related expenses, $2 million in severance costs and a $28 million gain from shares received relating to the demutualization of an insurance provider.
Discontinued Operations
The first quarter net loss from discontinued operations was $28 million after-tax ($0.07 per diluted share), which reflects asbestos-related expenses of previously disposed businesses and a $40 million payment ($26 million, net of tax) to the parent company of Harbison-Walker Refractories Company. This payment was made concurrent with Harbison-Walker's bankruptcy petition to protect the insurance asset shared between Dresser Industries Inc. and Harbison-Walker. In the 2001 first quarter, net income from discontinued operations was $22 million ($0.05 per diluted share), reflecting contributions by the Dresser Equipment Group, which was sold in April 2001.
Technology and Significant Achievements
Halliburton recently announced a number of advances in technology and new contract awards including:
- Nigeria LNG Limited has awarded the engineering, procurement and
construction (EPC) contract for the realization of the trains 4 and
5 expansion project, at its existing $3.8 billion liquefied natural
gas facility to a joint venture team, which includes KBR. The
partners of the equal joint venture team, known as TSKJ, will have
an EPC contract valued at over $1.7 billion.
- Halliburton KBR and Hunt Oil Company's Camisea LNG Company signed a
contract for the front-end engineering design of a four million tons
per annum liquefied natural gas (LNG) facility. The scope of the
project includes studying the feasibility of building a grassroots
LNG liquefaction facility for exporting liquefied natural gas from
Peru to the Baja area of Mexico and California. The front end work,
scheduled for completion in October 2002, could yield a cost
estimate comparable to other such LNG projects of around $1 billion.
- Halliburton KBR has been awarded a contract to provide Front End
Engineering Design for BP Angola BV's (Block 18) Greater Plutonio
Deep Water Development of Angola. The work includes further
development of the engineering design and preparation of invitation
to tender for the main execution contracts. The work is expected to
be completed by the end of 2002.
- Landmark Graphics announced the release of two industry-leading
technologies, ProMAX(TM) and VIP(TM) for the Linux operating system.
Linux versions of ProMAX(TM) for seismic processing and VIP(TM) for
reservoir simulation provide valuable price-performance customer
benefits. Customers can now achieve supercomputer-level
productivity and processing on personal computers through these
cost-effective information technology configurations.
- Halliburton International Inc. and Sibneft, signed an agreement that
will give Halliburton the ability to deploy all of its product
service lines to serve Sibneft's Russian oil and gas operations.
Sibneft intends to use Halliburton's new technologies to improve
well construction and production processes and overall project
management.
- Halliburton Energy Services introduced its FullDrift(TM) drilling
suite, which includes the SlickBore(TM) matched drilling system, the
Geo-Pilot(TM) rotary steerable system, and the new SlickBore
Plus(TM) drilling and reaming system. The new suite of tools
greatly reduces hole spiraling and tortuosity lowering well
construction costs and improving LWD/MWD tool performance.
- Halliburton Energy Services performed the first data acquisition
project using the Acoustic Telemetry System for Gaz de France, off
the coast of the Netherlands. Acoustic signals were transmitted
through production tubing, allowing bottomhole reservoir data to be
monitored at surface without the use of electrical cables, reducing
the dependency on wireline operations. Using this advanced
technology resulted in enhanced control over the well clean up and
well testing operations while lowering the cost and improving the
quality of the reservoir data.
- Landmark Graphics announced the release of SpecDecomp(TM), a new,
innovative reservoir imaging and interpretation technology solution.
SpecDecomp(TM) provides greater resolution of reservoir boundaries,
heterogeneities and thickness than previously possible with
traditional broadband seismic displays.
- Halliburton Energy Services has won awards worth $100 million to
supply both well construction and formation evaluation services on
TotalFinaElf's (TFE) Amenam/Kpono project in Nigeria. This is the
first time TFE has ever entrusted so many components of a project to
Halliburton. Located in shallow water, the Amenam/Kpono project
will consist of 31 wells, including some of the deepest wells ever
completed in Nigeria -- up to 22,300 feet. They will also be some
of the hottest wells ever completed -- up to 300 degrees Fahrenheit
at 3,850 meters in vertical depth.
- Halliburton Energy Services recently won several contracts with the
Korea National Oil Corporation to provide drilling fluids, drilling
bits, coring services, MWD (measurement-while-drilling) and
directional drilling operations, and bundled subsea well completion
services.
NOTE: In accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, Halliburton Company cautions that statements in this press release which are forward-looking and which provide other than historical information, involve risks and uncertainties that may impact the company's actual results of operations. Please see Halliburton's Form 10-K for the previous year ended December 31, 2001 for a more complete discussion of such risk factors.
HALLIBURTON COMPANY
Consolidated Statements of Income
(Unaudited)
Three Months Ended
March 31
2002 2001
Millions of dollars
except per share data
Revenues
Energy Services Group $1,980 $2,031
Engineering and Construction Group 1,027 1,113
Total revenues $3,007 $3,144
Operating income (loss)
Energy Services Group $162 $200
Engineering and Construction Group 31 18
General corporate (70) (20)
Total operating income 123 198
Interest expense (32) (47)
Interest income 4 4
Foreign currency losses, net (8) (3)
Other nonoperating, net 4 ---
Income from continuing operations before
income taxes, minority interests,
and change in accounting method 91 152
Provision for income taxes (36) (61)
Minority interest in net income of
subsidiaries (5) (5)
Income from continuing operations
before change in accounting method 50 86
Discontinued operations:
Income (loss) from discontinued
operations (28) 22
Cumulative effect of change in
accounting method, net --- 1
Net income $22 $109
Basic income per share:
Continuing operations before change
in accounting method $0.12 $0.20
Income (loss) from discontinued
operations (0.07) 0.05
0.05 0.25
Change in accounting method --- ---
Net income $0.05 $0.25
Diluted income per share:
Continuing operations before change in
accounting method $0.12 $0.20
Income (loss) from discontinued
operations (0.07) 0.05
0.05 0.25
Change in accounting method --- ---
Net income $0.05 $0.25
Basic average common shares outstanding 432 426
Diluted average common shares
outstanding 433 430
HALLIBURTON COMPANY
Reconciliation of As Reported Results to Pro Forma Results
Three months ended March 31, 2002
(Unaudited)
Other Earnings
Income/ Net Income per
Operating Expense from Share from
Income, (including Provision Continuing Continuing
Pretax interest) for Taxes Operations* Operations
Pro forma results
(excluding
nonrecurring
items) $176 $(31) $(57) $83 $0.19
Nonrecurring items:
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
provider 28 --- (11) 17 0.04
Severance costs (11) --- 4 (7) (0.02)
As reported $123 $(32) $(36) $50 $0.12
* As reported and pro forma basis net income from continuing operations
includes $5 million in expense due to minority interest.
HALLIBURTON COMPANY
Reconciliation of As Reported Segment Results to Pro Forma Results
Three months ended March 31, 2002
(Unaudited)
Engineering
Energy and
Services Construction Operating Income,
Group Group Corporate Pretax
Pro forma results
(excluding
nonrecurring items) $157 $35 $(16) $176
Nonrecurring items:
Sale of EMC 108 --- --- 108
Patent lawsuit (98) --- --- (98)
Highlands receivable
write-off --- --- (80) (80)
Demutualization
of an insurance
provider --- --- 28 28
Severance costs (5) (4) (2) (11)
As reported $162 $31 $(70) $123
HALLIBURTON COMPANY
Reconciliation of As Reported Results to Pro Forma Results
Three months ended March 31, 2001
(Unaudited)
Other Earnings
Income/ Net Income per
Operating Expense from Share from
Income, (including Provision Continuing Continuing
Pretax interest) for Taxes Operations* Operations
Pro forma results
(excluding
nonrecurring
items) $209 $(46) $(65) $93 $0.22
Nonrecurring items:
Goodwill
amortization (11) --- 2 (9) (0.02)
As reported $198 $(46) $(63) $84 $0.20
* As reported and pro forma basis net income from continuing operations
includes $5 million in expense due to minority interest.
HALLIBURTON COMPANY
Reconciliation of As Reported Segment Results to Pro Forma Results
Three months ended March 31, 2001
(Unaudited)
Engineering
Energy and
Services Construction Operating Income,
Group Group Corporate Pretax
Pro forma results
(excluding
nonrecurring items) $207 $22 $(20) $209
Nonrecurring items:
Goodwill amortization (7) (4) --- (11)
As reported $200 $18 $(20) $198
SOURCE Halliburton Company
CONTACT: Cedric Burgher, Vice President, Investor Relations, +1-713-676-4608, or Wendy Hall, Manager, Media Relations, +1-713-676-5227, both of Halliburton Company