Halliburton Announces Full Year and Fourth Quarter Results
$2.16 2006 Earnings Per Diluted Share from Continuing Operations
and $0.65 Fourth Quarter 2006 Earnings Per Diluted Share From
Continuing Operations
HOUSTON--(BUSINESS WIRE)--Jan. 26, 2007--Halliburton (NYSE:HAL) announced today that revenue was $22.6 billion for the full year 2006, an increase of 12% from the full year 2005, and operating income was $3.5 billion, an increase of 33% from the full year 2005. Income from continuing operations for the full year of 2006 was $2.3 billion, or $2.16 per diluted share, compared to 2005 income from continuing operations of $2.3 billion, or $2.24 per diluted share, as significant tax benefits were recorded in 2005.
Net income in 2006 was $2.3 billion, or $2.23 per diluted share, compared to 2005 net income of $2.4 billion, or $2.27 per diluted share. Net income in 2006 included $76 million, or $0.07 per diluted share, in after-tax income from discontinued operations related primarily to the gain on the sale of KBR's Production Services Group. Income from discontinued operations in 2005 was $31 million, or $0.03 per diluted share, related primarily to KBR's Production Services Group operating results.
In the fourth quarter of 2006, income from continuing operations was $667 million, or $0.65 per diluted share. This compares to income from continuing operations of $1.1 billion, or $1.03 per diluted share, in the fourth quarter of 2005. The fourth quarter of 2005 included $540 million, or $0.51 per diluted share, of income related to a reduction in a deferred tax asset valuation allowance. Net income in the fourth quarter of 2006 was $658 million, or $0.64 per diluted share, compared to net income in the fourth quarter of 2005 of $1.1 billion, or $1.04 per diluted share.
Revenue in the fourth quarter of 2006 was $6.0 billion, up 8% from the fourth quarter of 2005. This increase was largely attributable to higher activity in the Energy Services Group (ESG), particularly in the United States and Europe/Africa/CIS, partially offset by lower revenue in KBR, primarily due to decreased activity on government services projects for the United States military.
Operating income was $1.0 billion in the fourth quarter of 2006 compared to $766 million in the fourth quarter of 2005. Operating income in the fourth quarter of 2006 was positively impacted by a $48 million gain on the sale of lift boats in West Africa and the North Sea. Operating income for the fourth quarter of 2005 included a $24 million gain related to a patent infringement case settlement.
"For Halliburton, 2006 was an exciting year as the oilfield experienced exceptional growth in energy services. The ESG benefited from strong global demand, resulting in record revenue, operating income, and operating income margins for 2006. Although we experienced weather-related activity decreases and holiday impacts in the United States during the fourth quarter, we expect demand for our services to remain strong throughout 2007. We will continue to invest in equipment and infrastructure, with a focus on international growth in areas such as the Middle East, Africa, and Asia," said Dave Lesar, chairman, president, and chief executive officer of Halliburton. "KBR had its Initial Public Offering last November and is off to a great start as a public company. We anticipate completing the separation of KBR from Halliburton within the next three months."
2006 Fourth Quarter Segment Results
Energy Services Group
ESG posted record revenue of $3.5 billion in the fourth quarter of 2006, a $661 million or 23% increase over the fourth quarter of 2005. ESG posted operating income of $959 million, up $281 million or 41% from the same period in the prior year. ESG's operating margin was 27.3% during the fourth quarter of 2006, a 350 basis point improvement from the fourth quarter of 2005. Included in the fourth quarter of 2006 operating results was the $48 million gain on sale of the lift boats. The fourth quarter of 2006 results also included $38 million for business interruption resulting from the 2005 Gulf of Mexico hurricanes, offset by activity declines in the western United States due to severe winter weather and holidays.
Production Optimization posted operating income in the fourth quarter of 2006 of $443 million, including the lift boat gains, an increase of $149 million or 51% over the fourth quarter of 2005. Production Enhancement services operating income grew 27%, driven by strong demand for well stimulation services, improved pricing, high equipment utilization in the United States, and increased activity in Asia. Results were partially offset by United States weather-related activity decreases and higher holiday impacts during the fourth quarter of 2006, and decreased activity in Canada. Completion Tools operating income improved 55% over the prior year fourth quarter, with improvements in all regions.
Fluid Systems operating income for the fourth quarter of 2006 was $209 million, a $52 million or 33% increase over the fourth quarter of 2005. Fourth quarter of 2006 results were positively impacted by insurance proceeds related to the 2005 Gulf of Mexico hurricanes, partially offset by increased start-up costs for new Eastern Hemisphere contracts. Cementing services operating income increased due to strength in the United States land, recovery of Gulf of Mexico, and increased rig activity in Africa.
Drilling and Formation Evaluation posted record operating income for the fourth quarter of 2006 of $230 million, a $69 million or 43% increase over the prior year fourth quarter. Operating income in the fourth quarter of 2005 included a $24 million gain related to a patent infringement case settlement. Sperry Drilling Services operating income increased 72% with improvement in all regions, led by increased activity in Europe, Africa, and the Middle East. Sperry's Geo-Pilot(R) and GeoTap(R) technologies continued to show solid revenue growth over the prior year quarter. Wireline and Perforating Services operating income increased 56% due to increased activity, pricing, and improved asset utilization in the United States, Latin America, Africa, and Asia Pacific. Security DBS Drill Bits operating income was positively impacted by increased sales in all regions, reflecting improved fixed cutter bit activity.
Digital and Consulting Solutions posted record operating income in the fourth quarter of 2006 of $77 million, an increase of $11 million or 17% compared to the prior year quarter, driven by strong international software sales and consulting services.
KBR
KBR revenue for the fourth quarter of 2006 was $2.5 billion compared to $2.7 billion in the fourth quarter of 2005. Operating income for the fourth quarter of 2006 was $120 million compared to operating income of $108 million in the prior year fourth quarter.
Energy and Chemicals posted operating income of $59 million in the fourth quarter of 2006 compared to $54 million in the fourth quarter of 2005. Significant contributors to fourth quarter of 2006 results were a gas-to-liquids project in Qatar, liquefied natural gas projects in Nigeria, Indonesia, and Yemen, and an ammonia plant in Egypt.
Government and Infrastructure operating income for the fourth quarter of 2006 was $61 million, compared to $54 million in the fourth quarter of 2005. The increase was attributable to higher income related to the DML shipyard, which was offset partially by a $12 million loss on an embassy project for the U.S. State Department in Macedonia.
Corporate
Under the common stock repurchase program, the company repurchased 8.6 million shares at an average price of $32.69 per share, for approximately $280 million in the fourth quarter of 2006. Approximately 40 million shares at an average price of $32.93 per share have been repurchased since the commencement of the program in March 2006.
Technology and Significant Achievements
Energy Services Group new contract awards and technologies:
-- Landmark announced a new visual cataloging and tapeless
archiving solution designed to simplify and accelerate data
archival and retrieval. The solution tightly integrates
Landmark's industry-leading reporting tool Corporate Data
Archiver(TM) software with the purpose built, software-driven
EMC Centera(TM) content-addressed storage system to provide
instant retrievability of archived data.
-- Halliburton's Energy Services Group has been awarded a $59
million contract by Rosneft-YNG for the provision of hydraulic
fracturing services on the Right Bank of the Priobskoye field
in Siberia. The scope of work includes providing services for
327 wells. Halliburton will execute the project in 2007 from
its base in Poikovo, Nefteyugansk.
-- Halliburton's Energy Services Group has been awarded a
multi-services contract, valued at approximately $100 million
over three years, by TNK-BP for work in the Tyumen region of
Russia. The contract also has the option for three additional
one-year periods. The Energy Services Group will be providing
drilling fluids, waste management services, cementing, drill
bits, directional drilling, and logging-while-drilling
services for the Uvat development, which is expected to begin
in the second quarter of 2007.
-- Halliburton's Drilling and Formation Evaluation segment has
entered into a definitive agreement to acquire all
intellectual property, current assets, and existing wireline
services business associated with Calgary-based Ultraline
Services Corporation, a division of Savanna Energy Services
Corp. (TSX: SVY) for approximately $177 million, subject to
adjustments for working capital purposes.
-- Sperry Drilling Services and IntelliServ Inc., a wholly owned
subsidiary of Grant Prideco (NYSE: GRP), have interfaced their
technologies and successfully tested a system using The
IntelliServ(R) Network drill string telemetry to transfer data
and information generated by downhole drilling and formation
evaluation tools to the surface in real time, at rates up to
10,000 times faster than those available today. Halliburton
and IntelliServ Inc. have entered into an agreement to
globally market and deploy their respective technologies to
joint customers.
-- Halliburton's Production Optimization segment has been awarded
a contract by Pemex valued at $73 million to provide
stimulation services in the Bay of Campeche, Mexico. The
stimulation services to be supplied by Halliburton are
acidizing, acid fracturing, water control, and nitrogen
services.
KBR announcements:
-- KBR announced that it has closed its initial public offering
of 32,016,000 shares of common stock at a price of $17.00 per
share. The number of shares of common stock issued at closing
included 4,176,000 shares for the underwriters' over-allotment
option. KBR received approximately $508 million of proceeds
from the offering, net of underwriting fees and estimated
expenses.
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 KBR. 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: consequences of audits and investigations of the company by domestic and foreign government agencies and legislative bodies and related publicity; potential adverse proceedings by such agencies; contract disputes with the company's customers; protection of intellectual property rights; compliance with environmental laws; changes in government regulations and regulatory requirements, particularly those related to radioactive sources, explosives, and chemicals; compliance with laws related to income taxes and assumptions regarding the generation of future taxable income; unsettled political conditions, war, and the effects of terrorism, foreign operations, and foreign exchange rates and controls; weather-related issues including the effects of hurricanes and tropical storms; changes in capital spending by, and claims negotiations with, customers; changes in the demand for or price of oil and/or natural gas, structural changes in the industries in which the company operates, and performance of fixed-fee projects; the development and installation of financial systems; increased competition for employees; availability of raw materials; and integration of acquired businesses, operations of joint ventures, and completion of planned dispositions. Halliburton's Form 10-K for the year ended December 31, 2005, Form 10-Q for the period ended September 30, 2006, recent Current Reports on Form 8-K, and other Securities and Exchange Commission filings discuss some of the important risk factors identified that may affect the business, results of operations, and financial condition. Risk factors specific to KBR are discussed in the final prospectus for its initial public offering dated November 15, 2006. Halliburton undertakes no obligation to revise or update publicly any forward-looking statements for any reason.
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
----------------------------
2006 2005 2006
----------------------------------------------------------------------
Revenue:
Production Optimization $1,454 $1,153 $1,418
Fluid Systems 964 777 928
Drilling and Formation Evaluation 877 693 845
Digital and Consulting Solutions 214 225 201
----------------------------------------------------------------------
Total Energy Services Group 3,509 2,848 3,392
----------------------------------------------------------------------
Energy and Chemicals 686 595 601
Government and Infrastructure 1,821 2,129 1,838
----------------------------------------------------------------------
Total KBR 2,507 2,724 2,439
----------------------------------------------------------------------
Total revenue $6,016 $5,572 $5,831
----------------------------------------------------------------------
Operating income (loss):
Production Optimization $ 443 $ 294 $ 406
Fluid Systems 209 157 211
Drilling and Formation Evaluation 230 161 227
Digital and Consulting Solutions 77 66 62
----------------------------------------------------------------------
Total Energy Services Group 959 678 906
----------------------------------------------------------------------
Energy and Chemicals 59 54 45
Government and Infrastructure 61 54 53
----------------------------------------------------------------------
Total KBR 120 108 98
----------------------------------------------------------------------
General corporate (36) (20) (36)
----------------------------------------------------------------------
Total operating income 1,043 766 968
----------------------------------------------------------------------
Interest expense (43) (53) (42)
Interest income 52 26 44
Foreign currency, net (10) (4) (10)
Other, net 1 (7) -
----------------------------------------------------------------------
Income from continuing operations before
income taxes and minority interest 1,043 728 960
Benefit (provision) for income taxes (343) 381 (320)
Minority interest in net income of
subsidiaries (33) (17) (25)
----------------------------------------------------------------------
Income from continuing operations 667 1,092 615
Income (loss) from discontinued
operations, net (9) 10 (4)
----------------------------------------------------------------------
Net income $ 658 $1,102 $ 611
----------------------------------------------------------------------
Basic income (loss) per share:
Income from continuing operations $ 0.67 $ 1.07 $ 0.61
Income (loss) from discontinued
operations, net (0.01) 0.01 -
----------------------------------------------------------------------
Net income $ 0.66 $ 1.08 $ 0.61
----------------------------------------------------------------------
Diluted income (loss) per share:
Income from continuing operations $ 0.65 $ 1.03 $ 0.58
Income (loss) from discontinued
operations, net (0.01) 0.01 -
----------------------------------------------------------------------
Net income $ 0.64 $ 1.04 $ 0.58
----------------------------------------------------------------------
Basic weighted average common shares
outstanding 996 1,018 1,011
Diluted weighted average common shares
outstanding 1,030 1,058 1,048
----------------------------------------------------------------------
See Footnote Table 1 for a list of significant items included in
operating income.
All periods presented reflect the reclassification of KBR's Production
Services operations to discontinued operations, as well as the
reorganization of tubing conveyed perforating, slickline, and
underbalanced applications operations from Production Optimization
into the Drilling and Formation Evaluation segment.
HALLIBURTON COMPANY
Condensed Consolidated Statements of Operations
(Millions of dollars and shares except per share data)
(Unaudited)
Years Ended December 31
-----------------------
2006 2005
----------------------------------------------------------------------
Revenue:
Production Optimization $ 5,360 $ 3,990
Fluid Systems 3,598 2,838
Drilling and Formation Evaluation 3,221 2,552
Digital and Consulting Solutions 776 720
----------------------------------------------------------------------
Total Energy Services Group 12,955 10,100
----------------------------------------------------------------------
Energy and Chemicals 2,373 2,008
Government and Infrastructure 7,248 8,132
----------------------------------------------------------------------
Total KBR 9,621 10,140
----------------------------------------------------------------------
Total revenue $22,576 $20,240
----------------------------------------------------------------------
Operating income (loss):
Production Optimization $ 1,530 $ 1,053
Fluid Systems 795 544
Drilling and Formation Evaluation 818 536
Digital and Consulting Solutions 240 146
----------------------------------------------------------------------
Total Energy Services Group 3,383 2,279
----------------------------------------------------------------------
Energy and Chemicals 37 124
Government and Infrastructure 202 329
----------------------------------------------------------------------
Total KBR 239 453
----------------------------------------------------------------------
General corporate (138) (115)
----------------------------------------------------------------------
Total operating income 3,484 2,617
----------------------------------------------------------------------
Interest expense (175) (207)
Interest income 162 64
Foreign currency, net (22) (13)
Other, net - (14)
----------------------------------------------------------------------
Income from continuing operations before
income taxes and minority interest 3,449 2,447
Provision for income taxes (1,144) (64)
Minority interest in net income of
subsidiaries (33) (56)
----------------------------------------------------------------------
Income from continuing operations 2,272 2,327
Income from discontinued operations, net 76 31
----------------------------------------------------------------------
Net income $ 2,348 $ 2,358
----------------------------------------------------------------------
Basic income per share:
Income from continuing operations $ 2.24 $ 2.31
Income from discontinued operations, net 0.07 0.03
----------------------------------------------------------------------
Net income $ 2.31 $ 2.34
----------------------------------------------------------------------
Diluted income per share:
Income from continuing operations $ 2.16 $ 2.24
Income from discontinued operations, net 0.07 0.03
----------------------------------------------------------------------
Net income $ 2.23 $ 2.27
----------------------------------------------------------------------
Basic weighted average common shares
outstanding 1,014 1,010
Diluted weighted average common shares
outstanding 1,054 1,038
----------------------------------------------------------------------
See Footnote Table 1 for a list of significant items included in
operating income.
All periods presented reflect the reclassification of KBR's Production
Services operations to discontinued operations, as well as the
reorganization of tubing conveyed perforating, slickline, and
underbalanced applications operations from Production Optimization
into the Drilling and Formation Evaluation segment.
HALLIBURTON COMPANY
Condensed Consolidating Statements of Operations
(Millions of dollars)
(Unaudited)
Three Months Ended Halliburton KBR, Consolidating ESG and
December 31, 2006 Consolidated Inc. Adjustments Corporate
----------------------------------------------------------------------
Revenue:
Production Optimization $1,454 $ - $ - $1,454
Fluid Systems 964 - - 964
Drilling and Formation
Evaluation 877 - - 877
Digital and Consulting
Solutions 214 - - 214
----------------------------------------------------------------------
Total Energy Services
Group 3,509 - - 3,509
----------------------------------------------------------------------
Energy and Chemicals 686 687 (1) -
Government and
Infrastructure 1,821 1,822 (1) -
----------------------------------------------------------------------
Total KBR 2,507 2,509 (2) -
----------------------------------------------------------------------
Total revenue $6,016 $2,509 $(2) $3,509
----------------------------------------------------------------------
Operating income (loss):
Production Optimization $ 443 $ - $ - $ 443
Fluid Systems 209 - - 209
Drilling and Formation
Evaluation 230 - - 230
Digital and Consulting
Solutions 77 - - 77
----------------------------------------------------------------------
Total Energy Services
Group 959 - - 959
----------------------------------------------------------------------
Energy and Chemicals 59 59 - -
Government and
Infrastructure 61 62 (1) -
----------------------------------------------------------------------
Total KBR 120 121 (1) -
----------------------------------------------------------------------
General corporate (36) - - (36)
----------------------------------------------------------------------
Total operating income 1,043 121 (1) 923
----------------------------------------------------------------------
Interest income
(expense), net 9 14 2 (7)
Foreign currency, net (10) (2) (1) (7)
Other, net 1 - (1) 2
----------------------------------------------------------------------
Income from continuing
operations before income
taxes and minority
interest 1,043 133 (1) 911
Provision for income
taxes (343) (65) 12 (290)
Minority interest in net
income of subsidiaries (33) (25) (4) (4)
----------------------------------------------------------------------
Income from continuing
operations 667 43 7 617
Loss from discontinued
operations, net (9) - - (9)
----------------------------------------------------------------------
Net income $ 658 $ 43 $ 7 $ 608
----------------------------------------------------------------------
HALLIBURTON COMPANY
Condensed Consolidated Balance Sheets
(Millions of dollars)
(Unaudited)
December 31, September 30, December 31,
2006 2006 (b) 2005 (b) (c)
----------------------------------------------------------------------
Assets
----------------------------------------------------------------------
Current assets:
Cash and equivalents $ 4,379 $ 3,549 $ 2,391
Receivables, net 4,674 4,617 4,801
Inventories, net 1,261 1,213 953
Other current assets 869 916 1,241
----------------------------------------------------------------------
Total current assets 11,183 10,295 9,386
Property, plant, and
equipment, net 3,048 2,884 2,648
Other assets 2,589 2,848 3,014
----------------------------------------------------------------------
Total assets (a) $16,820 $16,027 $15,048
----------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 1,931 $ 1,871 $ 1,967
Current maturities of long-
term debt 45 86 361
Other current liabilities 2,751 2,745 2,099
----------------------------------------------------------------------
Total current liabilities 4,727 4,702 4,427
Long-term debt 2,786 2,745 2,813
Other liabilities 1,484 1,345 1,291
----------------------------------------------------------------------
Total liabilities (a) 8,997 8,792 8,531
----------------------------------------------------------------------
Minority interest in
consolidated subsidiaries (a) 447 146 145
Shareholders' equity (a) 7,376 7,089 6,372
----------------------------------------------------------------------
Total liabilities and
shareholders' equity $16,820 $16,027 $15,048
----------------------------------------------------------------------
(a) In the fourth quarter of 2006, the company adopted Statement of
Financial Accounting Standards No. 158 (SFAS No. 158), "Employers'
Accounting for Defined Benefit Pension and Other Postretirement
Plans, an amendment of FASB Statements No. 87, 88, 106, and 132(R)."
The adoption of SFAS No. 158 impacted the balance sheet at December
31, 2006 as follows: a decrease to total assets of $235 million, an
increase to total liabilities of $110 million, a decrease to minority
interest of $98 million, and a decrease to shareholders' equity of
$247 million.
(b) Certain prior period amounts have been reclassified to be
consistent with the current presentation.
(c) All periods presented reflect the reclassification of KBR's
Production Services operations, which were sold during the second
quarter of 2006, to discontinued operations. At December 31, 2005,
Production Services assets were $207 million, of which $140 million
were classified as current, and liabilities were $64 million, of
which $54 million were classified as current.
HALLIBURTON COMPANY
Selected Cash Flow Information
(Millions of dollars)
(Unaudited)
Three Months Ended Years Ended
December 31 December 31
---------------------------------
2006 2005 2006 2005
----------------------------------------------------------------------
Capital expenditures:
Energy Services Group $ 265 $ 151 $ 831 $ 575
KBR 7 26 57 76
General corporate - - 3 -
----------------------------------------------------------------------
Total capital expenditures $ 272 $ 177 $ 891 $ 651
----------------------------------------------------------------------
Depreciation, depletion, and
amortization:
Energy Services Group $ 124 $ 115 $ 480 $ 448
KBR 15 12 47 56
----------------------------------------------------------------------
Total depreciation, depletion, and
amortization $ 139 $ 127 $ 527 $ 504
----------------------------------------------------------------------
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
--------------------------------------
2006 2005 2006
----------------------------------------------------------------------
Revenue:
North America $1,666 $1,353 $1,738
Latin America 418 373 390
Europe/Africa/CIS 821 631 708
Middle East/Asia 604 491 556
----------------------------------------------------------------------
Total revenue $3,509 $2,848 $3,392
----------------------------------------------------------------------
Operating income:
North America $ 525 $ 387 $ 558
Latin America 92 67 79
Europe/Africa/CIS 205 119 132
Middle East/Asia 137 105 137
----------------------------------------------------------------------
Total operating income $ 959 $ 678 $ 906
----------------------------------------------------------------------
Years Ended
December 31
-----------------
2006 2005
----------------------------------------------------------------------
Revenue:
North America $ 6,458 $ 4,819
Latin America 1,514 1,344
Europe/Africa/CIS 2,798 2,248
Middle East/Asia 2,185 1,689
----------------------------------------------------------------------
Total revenue $12,955 $10,100
----------------------------------------------------------------------
Operating income:
North America $ 2,033 $ 1,376
Latin America 289 192
Europe/Africa/CIS 555 387
Middle East/Asia 506 324
----------------------------------------------------------------------
Total operating income $ 3,383 $ 2,279
----------------------------------------------------------------------
See Footnote Table 2 for a list of significant items included in
operating income.
HALLIBURTON COMPANY
Reconciliation of As Reported Segment Results to Adjusted Segment
Results
Energy Services Group Only
(Millions of dollars except operating margin percentage)
(Unaudited)
Drilling Digital
and and Total Energy
Production Fluid Formation Consulting Services
Optimization Systems Evaluation Solutions Group
----------------------------------------------------------------------
Three Months
Ended
December 31,
2006
Revenue $1,454 $ 964 $ 877 $ 214 $3,509
As reported
operating
income $ 443 $ 209 $ 230 $ 77 $ 959
Gain on sale
of lift
boats (a) (48) - - - (48)
----------------------------------------------------------------------
Adjusted
operating
income $ 395 $ 209 $ 230 $ 77 $ 911
----------------------------------------------------------------------
As reported
operating
margin (b) 30.5% 21.7% 26.2% 36.0% 27.3%
Adjusted
operating
margin (b) 27.2% 21.7% 26.2% 36.0% 26.0%
----------------------------------------------------------------------
(a) The company is reporting strong operating income from the Energy
Services Group, particularly the Production Optimization segment.
Management believes it is important to point out to investors that a
portion of operating income and operating margins growth is
attributable to the gain on the sale of lift boats in the fourth
quarter of 2006, because investors have indicated to management their
desire to understand the current drivers and future trends of the
operating margins. The adjustment removes the effect of the gain on
the sale of lift boats.
(b) As reported operating margin is calculated as: "As reported
operating income" divided by "Revenue." Adjusted operating margin is
calculated as: "Adjusted operating income" divided by "Revenue."
HALLIBURTON COMPANY
Reconciliation of As Reported Results to Adjusted Results
(Millions of dollars except per share data)
(Unaudited)
Income
from
Continuing Minority
Operations Interest
before Benefit in
Income (Provision) Net
Taxes and for Income
Minority Income of
Interest Taxes Subsidiaries
----------------------------------------------------------------------
Three Months Ended December 31,
2005
As reported results $728 $381 $(17)
Valuation allowance adjustment (a) - (540) -
----------------------------------------------------------------------
Adjusted results $728 $(159) $(17)
----------------------------------------------------------------------
Income from
Continuing
Operations
Income from per
Continuing Effective Diluted
Operations Tax Rate Share
----------------------------------------------------------------------
Three Months Ended December 31, 2005
As reported results $1,092 (52)% $1.03
Valuation allowance adjustment (a) (540) - (0.51)
----------------------------------------------------------------------
Adjusted results $552 22% $0.52
----------------------------------------------------------------------
(a) In the fourth quarter of 2005, the company reported strong income
from continuing operations, and management believes it is important
to point out to investors that a portion of the income from
continuing operations was attributable, based on the strong outlook
for 2006 and beyond, to the reversal of a substantial portion of the
deferred tax valuation allowance originally established as part of
the asbestos and silica settlement. Investors have indicated to
management their desire to understand the current drivers and future
trends of results.
FOOTNOTE TABLE 1
HALLIBURTON COMPANY
Items included in Income by Operating Segment
(Millions of dollars except per share data)
(Unaudited)
Three Months Three Months Three Months
Ended December Ended December Ended September
31, 2006 31, 2005 30, 2006
---------------- ---------------- -----------------
After After After
Tax Tax Tax
Operating per Operating per Operating per
Income Share Income Share Income Share
---------------- ---------------- -----------------
Production
Optimization:
Gain on sale of
lift boats $48 $0.03 $ - $ - $ - $ -
Drilling and
Formation
Evaluation:
Patent
settlement - - 24 0.02 - -
Government and
Infrastructure:
Railroad
impairment
charge - - - - (32) (0.03)
----------------------------------------------------------------------
Year Ended Year Ended
December 31, December 31,
2006 2005
----------------- ----------------
After After
Tax Tax
Operating per Operating per
Income Share Income Share
----------------- ----------------
Production Optimization:
Gain on sale of lift boats $ 48 $ 0.03 $ - $ -
Subsea 7, Inc. gain on sale - - 110 0.08
Drilling and Formation Evaluation:
Patent settlement - - 24 0.02
Government and Infrastructure:
Railroad impairment charge (58) (0.06) - -
Sale of interest in toll road - - 85 0.06
----------------------------------------------------------------------
FOOTNOTE TABLE 2
HALLIBURTON COMPANY
Items included in Income
By Geographic Region - Energy Services Group Only
(Millions of dollars except per share data)
(Unaudited)
Three Months Ended Three Months Ended
December 31, 2006 December 31, 2005
------------------ ------------------
After After
Operating Tax per Operating Tax per
Income Share Income Share
------------------ ------------------
North America:
Patent settlement $- $- $12 $0.01
Latin America:
Patent settlement - - 2 -
Europe/Africa/CIS:
Gain on sale of lift boats 48 0.03 - -
Patent settlement - - 6 0.01
Middle East/Asia:
Patent settlement - - 4 -
----------------------------------------------------------------------
Year Ended Year Ended
December 31, 2006 December 31, 2005
----------------- -----------------
After After
Tax Tax
Operating per Operating per
Income Share Income Share
----------------- -----------------
North America:
Patent settlement $ - $ - $ 12 $0.01
Subsea 7, Inc. gain on sale - - 107 0.08
Latin America:
Patent settlement - - 2 -
Europe/Africa/CIS:
Gain on sale of lift boats 48 0.03 - -
Patent settlement - - 6 0.01
Subsea 7, Inc. gain on sale - - 3 -
Middle East/Asia:
Patent settlement - - 4 -
----------------------------------------------------------------------
CONTACT: Halliburton, Houston
Evelyn Angelle, 713-759-2688
Vice President, Investor Relations
Cathy Mann, 713-759-2605
Director, Communications
SOURCE: Halliburton