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Halliburton Revises Fourth Quarter Pre-Tax Earnings Downward By $3 Million; Collection of Receivable and Change in Lease Accounting

HOUSTON, March 1 /PRNewswire-FirstCall/ -- Halliburton (NYSE: HAL) announced today that it will make two adjustments to the previously announced fourth quarter 2004 earnings that were released on January 28, 2005. The net impact of these adjustments is $3 million pre-tax expense, or $0.004 per share.

The adjustments, detailed in the attached financial tables, are attributed to (1) a collection of a $10 million receivable in February 2005 that was previously reserved and (2) a correction of the accounting treatment for leasehold improvements. As a result of a February 7, 2005 clarification by the Chief Accountant of the Securities and Exchange Commission on lease accounting, the Company has adjusted its method for amortization of leasehold improvements and recorded a pre-tax expense of $13 million for increased depreciation, depletion and amortization. Management has determined that the impact of this matter on prior periods is immaterial. In connection with this clarification by the Chief Accountant, a large number of public companies have announced adjustments to their financial statements relating to lease accounting.

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 and Engineering and Construction Groups. The company's World Wide Web site can be accessed at http://www.halliburton.com .

NOTE: The statements in this press release that are not historical statements, including statements regarding future financial performance, 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: legal risks, including the risks of audits and investigations of the company by domestic and foreign government agencies and legislative bodies and potential adverse proceedings and findings by such agencies, a delay in the receipt of additional agreed payments from insurers arising from asbestos and silica claims, the risks of judgments against the company and its subsidiaries in litigation and proceedings, including shareholder lawsuits, securities laws inquiries, contract disputes, patent infringements and environmental matters, legislation, changes in government regulations and adverse reaction to scrutiny involving the company; political risks, including the risks of unsettled political conditions, war and the effects of terrorism, foreign operations and foreign exchange rates and controls; liquidity risks, including the risks of potential reductions in debt ratings, access to credit, availability and costs of financing and ability to raise capital; weather- related risks; customer risks, including the risks of changes in capital spending and claims negotiations; industry risks, including the risks of changes that affect the demand for or price of oil and/or gas, structural changes in the industries in which the company operates, risks of fixed-fee projects and risks of complex business arrangements; systems risks, including the risks of successful development and installation of financial systems; and personnel and merger/reorganization/disposition risks, including the risks of increased competition for employees, successful integration of acquired businesses, effective restructuring efforts and successful completion of planned dispositions. Please see Halliburton's Form 10-K/A for the year ended December 31, 2003 and Form 10-Q for the quarter ended September 30, 2004 for a more complete discussion of such risk factors.



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

                                                 Three Months     Three Months
                                                     Ended           Ended
                                                  December 31     September 30
                                                2004       2003       2004
    Revenue
    Production Optimization                   $  912     $  713     $  886
    Fluid Systems                                617        531        618
    Drilling and Formation Evaluation            465        417        450
    Digital and Consulting Solutions             176        138        154
      Total Energy Services Group              2,170      1,799      2,108
    Government and Infrastructure              2,295      2,691      1,993
    Energy and Chemicals                         736        974        689
      Total KBR                                3,031      3,665      2,682
      Total revenue                           $5,201     $5,464     $4,790
    Operating income (loss)
    Production Optimization                   $  208     $  115     $  222
    Fluid Systems                                 98         73        113
    Drilling and Formation Evaluation             61         17         62
    Digital and Consulting Solutions             ---         36         17
      Total Energy Services Group                367        241        414
    Government and Infrastructure                  9         69         (6)
    Energy and Chemicals                          (9)        15        (44)
    Asbestos and silica                          ---         (2)       ---
      Total KBR                                  ---         82        (50)
    General corporate                            (21)       (20)       (22)
      Total operating income                     346        303        342
    Interest expense                             (69)       (54)       (51)
    Interest income                               14          8         13
    Foreign currency, net                          6          4          1
    Other, net                                   ---         (1)        (2)
    Income from continuing operations before
     income taxes and minority interest          297        260        303
    Provision for income taxes                  (110)       (92)      (111)
    Minority interest in net income of
     subsidiaries                                 (6)       (22)        (6)
    Income from continuing operations            181        146        186
    Loss from discontinued operations, net      (384)    (1,093)      (230)
    Net loss                                  $ (203)    $ (947)     $ (44)
    Basic income (loss) per share:
    Income from continuing operations         $ 0.41     $ 0.34      $0.43
    Loss from discontinued operations, net     (0.88)     (2.52)     (0.54)
    Net loss                                  $(0.47)    $(2.18)    $(0.11)
    Diluted income (loss) per share:
    Income from continuing operations         $ 0.40     $ 0.34     $ 0.42
    Loss from discontinued operations, net     (0.86)     (2.51)     (0.51)
    Net loss                                  $(0.46)    $(2.17)    $(0.09)
    Basic weighted average common
     shares outstanding                          439        435        438
    Diluted weighted average common
     shares outstanding                          444        438        442



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

                                                    Twelve Months Ended
                                                        December 31
                                                     2004          2003
    Revenue
    Production Optimization                        $ 3,303       $ 2,758
    Fluid Systems                                    2,324         2,039
    Drilling and Formation Evaluation                1,782         1,643
    Digital and Consulting Solutions                   589           555
      Total Energy Services Group                    7,998         6,995
    Government and Infrastructure                    9,393         5,417
    Energy and Chemicals                             3,075         3,859
      Total KBR                                     12,468         9,276
      Total revenue                                $20,466       $16,271
    Operating income (loss)
    Production Optimization                        $   633       $   413
    Fluid Systems                                      348           251
    Drilling and Formation Evaluation                  225           177
    Digital and Consulting Solutions                    60           (15)
      Total Energy Services Group                    1,266           826
    Government and Infrastructure                       84           194
    Energy and Chemicals                              (426)         (225)
    Asbestos and silica                                ---            (5)
      Total KBR                                       (342)          (36)
    General corporate                                  (87)          (70)
      Total operating income                           837           720
    Interest expense                                  (229)         (139)
    Interest income                                     44            30
    Foreign currency, net                               (3)          ---
    Other, net                                           2             1
    Income from continuing operations before
     income taxes, minority interest and change
     in accounting principle                           651           612
    Provision for income taxes                        (241)         (234)
    Minority interest in net income of subsidiaries    (25)          (39)
    Income from continuing operations before
     change in accounting principle                    385           339
    Loss from discontinued operations, net          (1,364)       (1,151)
    Cumulative effect of change in accounting
     principle, net                                    ---            (8)
    Net loss                                         $(979)        $(820)
    Basic income (loss) per share:
    Income from continuing operations before
     change in accounting principle                  $0.88         $0.78
    Loss from discontinued operations, net           (3.13)        (2.65)
    Cumulative effect of change in accounting
     principle, net                                    ---         (0.02)
    Net loss                                        $(2.25)       $(1.89)
    Diluted income (loss) per share:
    Income from continuing operations before
     change in accounting principle                  $0.87         $0.78
    Loss from discontinued operations, net           (3.09)        (2.64)
    Cumulative effect of change in accounting
     principle, net                                    ---         (0.02)
    Net loss                                        $(2.22)       $(1.88)
    Basic weighted average common shares
     outstanding                                       437           434
    Diluted weighted average common shares
     outstanding                                       441           437



                               HALLIBURTON COMPANY
                     Revenue and Operating Income Comparison
                By Geographic Region - Energy Services Group Only
                              (Millions of dollars)
                                   (Unaudited)

                                      Three Months Ended   Three Months Ended
                                         December 31          September 30
                                       2004        2003           2004
    Revenue:
    North America                     $  980      $  787         $  969
    Latin America                        301         255            295
    Europe/Africa                        454         350            442
    Middle East/Asia                     435         407            402
      Total revenue                   $2,170      $1,799         $2,108

    Operating income:
    North America                     $  224      $  100         $  228
    Latin America                         12          48             52
    Europe/Africa                         62          36             79
    Middle East/Asia                      69          57             55
      Total operating income          $  367      $  241         $  414



                                    Twelve Months Ended
                                        December 31
                                      2004        2003
    Revenue:
    North America                    $3,609      $3,085
    Latin America                     1,082         907
    Europe/Africa                     1,665       1,442
    Middle East/Asia                  1,642       1,561
      Total revenue                  $7,998      $6,995

    Operating income:
    North America                    $  722      $  306
    Latin America                       130         165
    Europe/Africa                       186         147
    Middle East/Asia                    228         208
      Total operating income         $1,266      $  826



                               HALLIBURTON COMPANY
         Reconciliation of Previously Announced Results to Actual Results
                 Three and Twelve Months Ended December 31, 2004

                                                Three Months Ended
                                                 December 31, 2004
                                                Receivable  Leasehold
                                   As Reported  Collection  Adjustment  Actual
    Operating income (loss)
    Production Optimization           $209         $2         $(3)       $208
    Fluid Systems                      102          4          (8)         98
    Drilling and Formation Evaluation   59          4          (2)         61
    Digital and Consulting Solutions   ---        ---         ---         ---
      Total Energy Services Group      370         10         (13)        367
    Total KBR                          ---        ---         ---         ---
    General corporate                  (21)       ---         ---         (21)
    Total operating income            $349        $10        $(13)       $346

    Income from continuing
     operations before income
     taxes and minority
     interest                         $300        $10        $(13)       $297
    Provision for income taxes        (111)        (4)          5        (110)
    Income from continuing operations  183          6          (8)        181
    Net income (loss)                 (201)         6          (8)       (203)
    Per share
    Basic income from continuing
     operations                      $0.42      $0.01      $(0.02)      $0.41
    Basic net income (loss)         $(0.46)     $0.01      $(0.02)     $(0.47)
    Diluted income from continuing
     operations                      $0.41      $0.01      $(0.02)      $0.40
    Diluted net income (loss)       $(0.45)     $0.01      $(0.02)     $(0.46)



                                                Twelve Months Ended
                                                 December 31, 2004
                                                Receivable  Leasehold
                                   As Reported  Collection  Adjustment  Actual
    Operating income (loss)
    Production Optimization           $634         $2         $(3)       $633
    Fluid Systems                      352          4          (8)        348
    Drilling and Formation Evaluation  223          4          (2)        225
    Digital and Consulting Solutions    60        ---         ---          60
      Total Energy Services Group    1,269         10         (13)      1,266
    Total KBR                         (342)       ---         ---        (342)
    General corporate                  (87)       ---         ---         (87)
    Total operating income            $840        $10        $(13)       $837

    Income from continuing
     operations before income taxes
     and minority interest            $654        $10        $(13)       $651
    Provision for income taxes        (242)        (4)          5        (241)
    Income from continuing operations  387          6          (8)        385
    Net income (loss)                 (977)         6          (8)       (979)
    Per share
    Basic income from continuing
     operations                      $0.89      $0.01      $(0.02)      $0.88
    Basic net income (loss)         $(2.24)     $0.01      $(0.02)     $(2.25)
    Diluted income from continuing
     operations                      $0.88      $0.01      $(0.02)      $0.87
    Diluted net income (loss)       $(2.21)     $0.01      $(0.02)     $(2.22)
SOURCE  Halliburton
    -0-                             03/01/2005
    /CONTACT:  Paul Koeller, Investor Relations, +1-713-759-2688, or Wendy
Hall, Public Relations, +1-713-759-2605, both of Halliburton/
    /Web site:  http://www.halliburton.com /
    (HAL)

CO:  Halliburton
ST:  Texas
IN:  OIL
SU:  ERN

CT-CD
-- DATU005 --
3939 03/01/2005 09:05 EST http://www.prnewswire.com