Halliburton Settles SEC Investigation
HOUSTON, Aug. 3 /PRNewswire-FirstCall/ -- Halliburton (NYSE: HAL) announced today that it has reached a settlement in the investigation by the SEC involving Halliburton's 1998 and 1999 disclosure of and accounting for the recognition of revenue from unapproved claims on long-term construction projects.
"We are pleased to bring closure to this matter," said Dave Lesar, chairman, president and chief executive officer, Halliburton. "The resolution of this issue and the pending resolution of the company's asbestos liability will help us focus on strengthening our business in energy services and engineering and construction."
The company's settlement with the SEC covers a failure to disclose a 1998 change in accounting practice. Halliburton disclosed its change in accounting practice in its 1999 Form 10-K and has disclosed it since. The SEC did not determine that the company departed from generally accepted accounting principles. Therefore there will be no restatement of prior period financial statements. The SEC did not find errors in accounting or fraud.
Halliburton neither admitted nor denied the SEC's findings, but agreed to pay a $7.5 million civil penalty, and will take a charge of that amount in the second quarter of 2004. The penalty, in part, reflects the SEC's view that there were lapses in the company's cooperation with the SEC staff, which had the effect of delaying the production of information and documentation necessary to an expeditious completion of its investigation. As part of the settlement, the company agreed to cease and desist from committing or causing future securities law violations.
As a result of reaching this settlement, the company adjusted its previously announced second quarter 2004 results to record an additional $7.5 million in general corporate expense. After the effect of this adjustment, the company's second quarter 2004 loss from continuing operations was $58 million or $0.13 per share compared to the $54 million or $0.12 per share previously announced. Net loss for the second quarter of 2004 was $667 million or $1.52 per share compared to the $663 million or $1.51 per share previously announced. The attached tables reflect the settlement charge, with reconciliations to previously announced results where appropriate.
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 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 being unable to complete the proposed settlement of asbestos and silica liabilities, the risks of having material subsidiaries in Chapter 11 proceedings, 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, the risks of judgments against the company's subsidiaries and predecessors in asbestos litigation pending and currently on appeal, the inability of insurers for asbestos exposures to pay claims or a delay in the payment of such claims, future asbestos claims defense and settlement costs, the risks of judgments against the company and its subsidiaries in other 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, Form 10-Q for the quarter ended March 31, 2004, and Form 8-K filed on July 19, 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
June 30 March 31
2004 2003 2004
Revenues
Production Optimization $ 797 $ 692 $ 708
Fluids 554 518 535
Drilling and Formation Evaluation 423 414 444
Landmark and Other Energy Services 130 156 129
Total Energy Services Group 1,904 1,780 1,816
Engineering and Construction Group 3,052 1,819 3,703
Total revenues $4,956 $3,599 $5,519
Operating income (loss)
Production Optimization $ 121 $ 112 $ 82
Fluids 77 68 60
Drilling and Formation Evaluation 59 49 43
Landmark and Other Energy Services 14 6 29
Total Energy Services Group 271 235 214
Engineering and Construction Group (277) (148) (15)
General corporate (20) (16) (24)
Total operating income (loss) (26) 71 175
Interest expense (53) (25) (56)
Interest income 7 7 10
Foreign currency, net (7) 19 (3)
Other, net (1) 2 5
Income (loss) from continuing
operations before income taxes,
minority interest, and change in
accounting principle (80) 74 131
(Provision) benefit for income taxes 29 (29) (49)
Minority interest in net income of
subsidiaries (7) (3) (6)
Income (loss) from continuing
operations before change in
accounting principle (58) 42 76
Loss from discontinued operations,
net (609) (16) (141)
Net income (loss) $ (667) $ 26 $ (65)
Basic income (loss) per share:
Income (loss) from continuing
operations before change in
accounting principle $(0.13) $ 0.09 $ 0.17
Loss from discontinued operations,
net (1.39) (0.03) (0.32)
Net income (loss) $(1.52) $ 0.06 $(0.15)
Diluted income (loss) per share:
Income (loss) from continuing
operations before change in
accounting principle $(0.13) $ 0.09 $ 0.17
Loss from discontinued operations,
net (1.39) (0.03) (0.32)
Net income (loss) $(1.52) $ 0.06 $(0.15)
Basic weighted average common
shares outstanding 437 434 436
Diluted weighted average common
shares outstanding 437 436 440
HALLIBURTON COMPANY
Condensed Consolidated Statements of Operations
(Millions of dollars and shares except per share data)
(Unaudited)
Six Months Ended
June 30
2004 2003
Revenues
Production Optimization $ 1,505 $1,319
Fluids 1,089 998
Drilling and Formation Evaluation 867 793
Landmark and Other Energy Services 259 281
Total Energy Services Group 3,720 3,391
Engineering and Construction Group 6,755 3,268
Total revenues $10,475 $6,659
Operating income (loss)
Production Optimization $ 203 $ 180
Fluids 137 123
Drilling and Formation Evaluation 102 115
Landmark and Other Energy Services 43 (3)
Total Energy Services Group 485 415
Engineering and Construction Group (292) (167)
General corporate (44) (35)
Total operating income 149 213
Interest expense (109) (52)
Interest income 17 15
Foreign currency, net (10) 13
Other, net 4 2
Income from continuing operations before income taxes,
minority interest and change in accounting principle 51 191
Provision for income taxes (20) (79)
Minority interest in net income of subsidiaries (13) (11)
Income from continuing operations before change in
accounting principle 18 101
Loss from discontinued operations, net (750) (24)
Cumulative effect of change in accounting principle,
net --- (8)
Net income (loss) $ (732) $ 69
Basic income (loss) per share:
Income from continuing operations before change in
accounting principle $ 0.04 $ 0.23
Loss from discontinued operations, net (1.71) (0.05)
Cumulative effect of change in accounting
principle, net --- (0.02)
Net income (loss) $ (1.67) $ 0.16
Diluted income (loss) per share:
Income from continuing operations before change in
accounting principle $ 0.04 $ 0.23
Loss from discontinued operations, net (1.71) (0.05)
Cumulative effect of change in accounting
principle, net --- (0.02)
Net income (loss) $ (1.67) $ 0.16
Basic weighted average common shares outstanding 437 434
Diluted weighted average common shares outstanding 440 436
HALLIBURTON COMPANY
Reconciliation of Previously Announced Results to Actual Results
Three and Six Months Ended June 30, 2004
Three Months Ended
June 30, 2004
SEC
As Reported Settlement Adjusted
General corporate $ (13) $ (7) $ (20)
Total operating loss (19) (7) (26)
Loss from continuing operations
before income taxes, minority
interest, and change in
accounting principle (73) (7) (80)
(Provision) benefit for
income taxes 26 3 29
Loss from continuing operations
before change in accounting
principle (54) (4) (58)
Net loss $ (663) $ (4) $ (667)
Basic loss from continuing
operations before change in
accounting principle $(0.12) $(0.01) $(0.13)
Basic net loss $(1.51) $(0.01) $(1.52)
Diluted loss from continuing
operations before change in
accounting principle $(0.12) $(0.01) $(0.13)
Diluted net loss $(1.51) $(0.01) $(1.52)
Six Months Ended
June 30, 2004
SEC
As Reported Settlement Adjusted
General corporate $ (37) $ (7) $ (44)
Total operating income 156 (7) 149
Income from continuing
operations before income
taxes, minority interest,
and change in accounting
principle 58 (7) 51
(Provision) benefit for
income taxes (23) 3 (20)
Income from continuing
operations before change
in accounting principle 22 (4) 18
Net loss $ (728) $ (4) $ (732)
Basic income (loss) from
continuing operations before
change in accounting principle $ 0.05 $(0.01) $ 0.04
Basic net loss $(1.66) $(0.01) $(1.67)
Diluted income (loss) from
continuing operations before
change in accounting principle $ 0.05 $(0.01) $ 0.04
Diluted net loss $(1.66) $(0.01) $(1.67)
SOURCE Halliburton
/CONTACT: Paul Koeller, Investor Relations, +1-713-759-2688, or Wendy
Hall, Public Relations, +1-713-759-2605, both of Halliburton/