FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended JUNE 30, 1995
OR
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from _____ to _____
Commission File Number 1-3492
HALLIBURTON COMPANY
(a Delaware Corporation)
73-0271280
3600 Lincoln Plaza
500 N. Akard
Dallas, Texas 75201
Telephone Number - Area Code (214) 978-2600
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common stock, par value $2.50 per share:
Outstanding at July 31, 1995 - 114,207,808
INDEX
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at June 30, 1995 2
and December 31, 1994
Condensed Consolidated Statements of Income for the three and
six months ended June 30, 1995 and 1994 3
Condensed Consolidated Statements of Cash Flows for the six months 4
ended June 30, 1995
Notes to Condensed Consolidated Financial Statements 5 - 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10 - 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 6. Listing of Exhibits and Reports on Form 8-K 14
Signatures 15
Exhibits: Computation of earnings per common share for the three and
six months ended June 30, 1995 and 1994 16
Financial data schedule for the quarter ended June 30, 1995
(included only in the copy of this report filed electronically
with the Commission). 17
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
HALLIBURTON COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30 December 31
1995 1994
-------- --------
Millions of dollars and shares
ASSETS
Cash and equivalents $ 353.7 $ 428.1
Investments:
Available-for-sale 260.3 219.0
Held-to-maturity 423.4 435.8
-------- --------
Total investments 683.7 654.8
Receivables:
Notes and accounts receivable 1,276.8 1,273.1
Unbilled work on uncompleted contracts 212.5 173.4
Refundable federal income taxes 13.4 13.4
-------- --------
Total receivables 1,502.7 1,459.9
Inventories 263.5 268.9
Reinsurance recoverables 536.8 671.1
Property, plant and equipment,
less accumulated depreciation of $2,324.7 and $2,341.4 1,073.5 1,076.8
Equity in and advances to related companies 106.8 94.6
Excess of cost over net assets acquired 210.5 213.4
Deferred income taxes 127.4 120.5
Assets held for sale 50.5 26.3
Other assets 288.9 253.9
-------- --------
Total assets $5,198.0 $5,268.3
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 303.5 $ 303.5
Accrued employee compensation and benefits 356.3 406.3
Advance billings on uncompleted contracts 178.2 163.3
Income taxes payable 62.2 25.8
Short-term notes payable 26.8 30.7
Unearned insurance premiums 50.7 51.2
Reserves for insurance losses and claims 984.6 1,126.4
Long-term debt 644.1 643.1
Other liabilities 586.9 570.6
Minority interest in consolidated subsidiaries 1.5 5.2
-------- --------
Total liabilities 3,194.8 3,326.1
-------- --------
Commitments and contingencies
Shareholders' equity:
Common stock, par value $2.50 per share -
authorized 200.0 shares, issued 119.1 shares 297.7 297.7
Paid-in capital in excess of par value 201.8 201.7
Cumulative translation adjustment (19.2) (23.1)
Net unrealized gains (losses) on investments 7.0 (7.6)
Retained earnings 1,675.6 1,637.3
-------- --------
2,162.9 2,106.0
Less 4.9 and 5.0 shares of treasury stock, at cost 159.7 163.8
-------- --------
Total shareholders' equity 2,003.2 1,942.2
-------- --------
Total liabilities and shareholders' equity $5,198.0 $5,268.3
======== ========
See notes to condensed consolidated financial statements.
HALLIBURTON COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Six Months
Ended June 30 Ended June 30
-------------------- --------------------
1995 1994 1995 1994
-------- -------- -------- --------
Millions of dollars except per share data
Revenues $1,444.5 $1,425.4 $2,766.6 $2,801.7
Operating costs and expenses:
Cost of revenues 1,300.3 1,383.5 2,519.0 2,668.7
General and administrative 44.5 56.8 85.6 107.7
-------- -------- -------- --------
Total operating costs and expenses 1,344.8 1,440.3 2,604.6 2,776.4
-------- -------- -------- --------
Operating income (loss) 99.7 (14.9) 162.0 25.3
Interest expense (12.3) (11.0) (25.1) (21.0)
Interest income 5.7 3.0 14.3 5.8
Foreign currency (losses) gains (1.4) (9.9) 3.6 (13.2)
Other nonoperating income, net 0.1 0.7 0.2 1.2
-------- -------- -------- --------
Income (loss) before income taxes and minority interest 91.8 (32.1) 155.0 (1.9)
Benefit (provision) for income taxes (34.9) 12.9 (58.9) 0.8
Minority interest in net income (loss) of subsidiaries (0.7) -- (0.8) (0.3)
-------- -------- -------- --------
Net income (loss) $ 56.2 $ (19.2) $ 95.3 $ (1.4)
======== ======== ======== ========
Average number of common and common share
equivalents outstanding 114.4 114.2 114.4 114.2
Income (loss) per share $ 0.49 $ (0.17) $ 0.83 $ (0.01)
Cash dividends paid per share 0.25 0.25 0.50 0.50
See notes to condensed consolidated financial statements.
HALLIBURTON COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months
Ended June 30
--------------------
1995 1994
-------- --------
Millions of dollars
Cash flows from operating activities:
Net income (loss) $ 95.3 $ (1.4)
Adjustments to reconcile net income (loss) to net cash
from operating activities:
Depreciation and amortization 120.6 133.4
Provision for deferred income taxes 3.6 21.4
Other non-cash items (15.5) 6.8
Other changes, net of non-cash items:
Receivables (49.3) 46.5
Inventories 5.8 18.5
Insurance losses and claims net of
reinsurance recoverables (7.3) (8.7)
Accounts payable and other (34.3) (98.5)
-------- --------
Total cash flows from operating activities 118.9 118.0
-------- --------
Cash flows from investing activities:
Capital expenditures (121.1) (101.0)
Sales of property, plant and equipment 20.0 23.6
Sales (purchases) of subsidiary companies (6.0) 191.6
Sales or maturities of available-for-sale investments 5.1 27.4
Payments for available-for-sale investments (27.9) (35.9)
Calls or maturities of held-to-maturity investments 19.7 44.4
Payments for held-to-maturity investments (6.3) (30.7)
Other investing activities (4.3) (5.7)
-------- --------
Total cash flows from investing activities (120.8) 113.7
-------- --------
Cash flows from financing activities:
Payments on long-term borrowings (10.1) (63.3)
Borrowings (repayments) of short-term debt (5.1) (68.8)
Payments of dividends to shareholders (57.1) (57.1)
Other financing activities 0.3 0.2
-------- --------
Total cash flows from financing activities (72.0) (189.0)
-------- --------
Effect of exchange rate changes on cash (0.5) (3.5)
-------- --------
Increase (decrease) in cash and equivalents (74.4) 39.2
Cash and equivalents at beginning of year 428.1 48.8
-------- --------
Cash and equivalents at end of period $ 353.7 $ 88.0
======== ========
Cash payments (refunds) during the period for:
Interest $ 13.7 $ 13.5
Income taxes 14.4 (55.8)
See notes to condensed consolidated financial statements.
HALLIBURTON COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Management Representation
In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements include all adjustments necessary to present
fairly the Company's financial position as of June 30, 1995, and the results of
its operations for the three and six months ended June 30, 1995 and 1994 and its
cash flows for the six months then ended. The results of operations for the
three and six months ended June 30, 1995 and 1994 may not be indicative of
results for the full year. Certain prior year amounts have been reclassified to
conform with the current year presentation.
Note 2. Inventories
Consolidated inventories consisted of the following:
June 30 December 31
1995 1994
----------- -----------
Millions of dollars
Sales items $ 93.1 $ 97.2
Supplies and parts 127.4 128.8
Work in process 24.5 23.9
Raw materials 18.5 19.0
----------- -----------
Total $ 263.5 $ 268.9
=========== ===========
About one-half of all sales items (including related work in process and
raw materials) are valued using the last-in, first-out (LIFO) method. If the
average cost method had been in use for inventories on the LIFO basis, total
inventories would have been about $19.7 million and $21.9 million higher than
reported at June 30, 1995, and December 31, 1994, respectively.
Note 3. Business Segment Information
Revenues and operating income by business segment were the following for
the three and six months ended June 30, 1995 and 1994:
Three Months Six Months
Ended June 30 Ended June 30
-------------------------- ---------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
Millions of dollars
Revenues
Energy services $ 629.6 $ 605.6 $ 1,198.6 $ 1,204.6
Engineering and construction services 768.0 764.1 1,472.9 1,480.3
Insurance services* 46.9 55.7 95.1 116.8
----------- ----------- ----------- -----------
Total revenues $ 1,444.5 $ 1,425.4 $ 2,766.6 $ 2,801.7
=========== =========== =========== ===========
* Excludes insurance revenues received from other segments of the Company.
Three Months Six Months
Ended June 30 Ended June 30
-------------------------- ---------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
Millions of dollars
Operating income (loss)
Energy services $ 71.2 $ (19.8) $ 123.6 $ 13.7
Engineering and construction services 33.5 11.4 49.3 25.9
Insurance services 2.3 (0.1) 2.7 (2.2)
General corporate expenses (7.3) (6.4) (13.6) (12.1)
----------- ----------- ----------- -----------
Total operating income (loss) $ 99.7 $ (14.9) $ 162.0 $ 25.3
=========== =========== =========== ===========
Note 4. Income Per Share
Income per share amounts are based upon the average number of common and
common share equivalents outstanding. Common share equivalents included in the
computation represent shares issuable upon assumed exercise of stock options
which have a dilutive effect.
Note 5. Related Companies
The Company conducts some of its operations through various joint venture
and other partnership forms which are accounted for using the equity method.
European Marine Contractors, Limited, (EMC) which is 50% owned by the Company
and part of Engineering and Construction Services, specializes in engineering,
procurement and construction of marine pipelines. Summarized operating results
for 100% of the operations of EMC are as follows:
Three Months Six Months
Ended June 30 Ended June 30
-------------------------- ---------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
Millions of dollars
Revenues $ 116.4 $ 139.5 $ 175.3 $ 189.7
=========== =========== =========== ===========
Operating income $ 38.1 $ 45.1 $ 53.9 $ 60.2
=========== =========== =========== ===========
Net income $ 25.0 $ 28.2 $ 35.0 $ 37.4
=========== =========== =========== ===========
Note 6. Insurance Subsidiaries
The condensed consolidated financial statements include property and
casualty insurance subsidiaries.
COMBINED FINANCIAL POSITION
June 30 December 31
1995 1994
-------- --------
Millions of dollars
ASSETS
Cash and equivalents $ 44.7 $ 52.8
Investments:
Available-for-sale 260.3 219.0
Held-to-maturity 395.3 411.7
-------- --------
Total investments 655.6 630.7
Notes and accounts receivable* 200.6 213.8
Reinsurance recoverables 536.8 671.1
Property, plant and equipment, less
accumulated depreciation of $6.9 and $6.5 1.8 2.0
Excess of cost over net assets acquired 0.1 0.1
Other assets 32.2 22.5
-------- --------
$1,471.8 $1,593.0
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and other liabilities $ 56.6 $ 96.7
Income taxes payable (10.6) (20.9)
Unearned insurance premiums 50.7 51.2
Reserves for insurance losses and claims* 1,086.2 1,197.2
Halliburton Company equity, adjusted for net
unrealized gains (losses) of $7.0 and $(7.6) 288.9 268.8
-------- --------
$1,471.8 $1,593.0
======== ========
*Includes $101.6 million at June 30, 1995, and $70.8 million at December 31,
1994, relating to incurred but not reported claims on associated company
business which had no effect on Halliburton Company equity.
Assets of the insurance subsidiaries, with the exception of dividend
payments to the parent company, are not available for general corporate use.
COMBINED OPERATING RESULTS
Three Months Six Months
Ended June 30 Ended June 30
-------------------------- ---------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
Millions of dollars
Revenues:
Direct premiums $ 73.8 $ 84.0 $ 119.6 $ 113.3
Premiums assumed 20.9 27.7 55.8 71.1
Premiums ceded (28.4) (59.8) (67.9) (72.5)
----------- ----------- ----------- -----------
Net earned premiums and agency income* 66.3 51.9 107.5 111.9
Investment income 12.6 11.6 25.1 23.2
----------- ----------- ----------- -----------
78.9 63.5 132.6 135.1
Operating costs and expenses:
Underwriting expenses 111.4 72.4 198.3 176.8
Reinsurance recoveries (38.9) (13.5) (77.3) (47.8)
Investment expenses 0.9 0.2 1.5 0.4
General and administrative 3.1 4.5 7.3 7.9
----------- ----------- ----------- -----------
76.5 63.6 129.8 137.3
----------- ----------- ----------- -----------
Operating income (loss) 2.4 (0.1) 2.8 (2.2)
Foreign currency gains (losses) 0.2 0.3 0.5 0.3
Nonoperating expense, net (0.4) -- (0.7) --
----------- ----------- ----------- ------------
Income (loss) before income taxes 2.2 0.2 2.6 (1.9)
Benefit for income taxes 0.8 (2.1) 2.9 (0.7)
----------- ----------- ----------- ------------
Net income (loss) $ 3.0 $ (1.9) $ 5.5 $ (2.6)
=========== =========== =========== ============
*Included in net earned premiums and agency income are premiums for
intercompany insurance coverage and services provided by the Insurance Services
Group to the remainder of Halliburton Company. Such premiums and charges
amounted to $32.0 million and $7.8 million for the three months ended June 30,
1995 and 1994, respectively, and $37.5 million and $18.3 million for the six
months ended June 30, 1995 and 1994, respectively.
Insurance Services written premiums are as follows:
Three Months Six Months
Ended June 30 Ended June 30
-------------------------- ---------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
Millions of dollars
Direct premiums $ 44.0 $ 82.0 $ 92.7 $ 119.5
Premiums assumed 22.3 29.3 57.7 72.7
Premiums ceded (28.4) (60.7) (67.2) (76.4)
----------- ----------- ----------- -----------
Net written premiums and agency income $ 37.9 $ 50.6 $ 83.2 $ 115.8
=========== =========== =========== ===========
Note 7. Long-term debt
During the first six months of 1995, the Company redeemed $10.0 million of
its 4% notes. The Company redeemed $38.8 million of its 4% notes and $23.8
million principal amount of its 10.2% debentures in the first six months of
1994.
The Company will redeem the entire outstanding principal amount of zero
coupon convertible subordinated debentures (Debentures) on September 1, 1995.
The redemption price will be at $536.5029 per $1000.00 principal amount of
Debentures at maturity. The total cost of the redemption, assuming all
Debentures are submitted for redemption, will be approximately $391 million.
Note 8. Commitments and Contingencies
The Company is involved as a potentially responsible party (PRP) in
remedial activities to clean up various "Superfund" sites under applicable
Federal law which imposes joint and several liability, if the harm is
indivisible, on certain persons without regard to fault, the legality of the
original disposal, or ownership of the site. Although it is very difficult to
quantify the potential impact of compliance with environmental protection laws,
management of the Company believes that any liability of the Company with
respect to all but two of such sites will not have a material adverse effect on
the results of operations of the Company. With respect to a site in Jasper
County, Missouri (Jasper County Superfund Site), and a site in Nitro, West
Virginia (Fike/Artel Chemical Superfund Site), sufficient information has not
been developed to permit management to make such a determination and management
believes the process of determining the nature and extent of remediation at each
site and the total costs thereof will be lengthy.
Brown & Root, Inc. (Brown & Root), a subsidiary of the Company, has been
named as a PRP with respect to the Jasper County Superfund Site by the
Environmental Protection Agency (EPA). The Jasper County Superfund Site includes
areas of mining activity that occurred from the 1800's through the mid 1950's in
the Southwestern portion of Missouri. The site contains lead and zinc mine
tailings produced from mining activity. Brown & Root is one of nine
participating PRPs which have agreed to perform a Remedial
Investigation/Feasibility Study (RI/FS), which is not expected to be completed
until the fourth quarter of 1996. Although the entire Jasper County Superfund
Site comprises 237 square miles as listed on the National Priorities List, in
the RI/FS scope of work, the EPA has only identified seven areas, or subsites,
within this area that need to be studied and then possibly remediated by the
PRPs. Additionally, the Administrative Order on Consent for the RI/FS only
requires Brown & Root to perform RI/FS work at one of the subsites within the
site, the Neck/Alba subsite, which only comprises 3.95 square miles. Brown &
Root's share of the cost of such a study is not expected to be material. Brown &
Root cannot determine the extent of its liability, if any, for remediation costs
on any reasonably practicable basis.
The Company is one of 32 companies that have been designated as PRPs at
the Fike/Artel Chemical Superfund Site. The six "Operable Units" previously
established by the EPA in connection with remediation activities for the site
have been consolidated into four Operable Units and a Cooperative Sewage
Treatment facility ("CST"). The EPA instituted litigation in the U.S. District
Court for the Southern District of West Virginia (United States v. American
Cyanamid Co., Inc. et al.) against all PRPs seeking recovery of its past
response costs in Operable Unit 1. The PRPs are subject to a Consent Decree with
respect to the remediation of Operable Unit 2. In June 1993, the EPA issued a
Unilateral Administrative Order requiring all PRPs to implement remediation of
Operable Unit 3. Operative Units 4 and 5 have been consolidated into Operable
"Unit 4 Plus" which will include any additional work which is not in Operable
Units 1, 2 and 3 or the CST. Work on Operable Unit 4 Plus is scheduled to start
in late 1996 or early 1997. The PRPs have entered into an Administrative Order
on Consent that will allow them to perform a site-wide RI/FS (on Operable Unit 4
Plus). The Company's share of past response costs alleged by the EPA for
Operable Unit 1and remediation cost estimates for Operable Units 2 and 3 range
in the aggregate from approximately $1.4 million to approximately $2 million.
There are at present no reliable estimates of costs to remediate Operable Unit 4
Plus and the CST, because the EPA has not yet proposed any remediation
methodology. Those costs may, however, be significantly larger than the
estimates thereof for the other units. Although the liability associated with
this site could possibly be significant to the results of operations of some
future reporting period, management believes, based on current knowledge, that
its share of costs at this site is unlikely to have a material adverse impact on
the Company's consolidated financial condition.
On July 25, 1995, in the United States District Court, Southern District
of Texas, Houston Division, in a case styled UNITED STATES OF AMERICA VS.
HALLIBURTON COMPANY, the Company plead guilty in U.S. Federal court to three
violations of the U.S. export control law which prohibits the export of U.S.
goods and services to Libya, and was sentenced to pay a fine in the previously
agreed to amount of $1.2 million. These violations relate to shipments of
components of oil field wireline logging tools by one of the Company's former
domestic subsidiaries to a foreign subsidiary for performance of oil field
services for Libyan national oil companies. The shipments occurred during late
1987 to early 1990.
The Company also reached agreement with the Department of Commerce and an
Order was entered in settlement of proposed civil charges relating to alleged
violations of the Export Administration Act assessing a civil penalty against
the Company in the agreed amount of $2.6 million. This order involves shipments
to Libya by this same former subsidiary, as well as other exports and reexports
of geophysical equipment and services to Libya by another former subsidiary
during the same general time period.
These settlements will not impair the Company's ability to export
products, services or technology in compliance with applicable law. The cost of
this settlement has been provided for by the Company in prior accounting periods
and it will not affect the Company's financial results in the future.
The Company and its subsidiaries are parties to various other legal
proceedings. Although the ultimate disposition of such proceedings is not
presently determinable, in the opinion of the Company any liability that might
ensue would not be material in relation to the consolidated financial position
of the Company.
Note 9. Acquisitions and Dispositions
The Company sold its natural gas compression business unit in November
1994 for $205 million in cash. The sale resulted in a pretax gain of $102
million, or 56 cents per share after tax in 1994. The business unit sold owns
and operates a large natural gas compressor rental fleet in the United States
and Canada. The compressors are used to assist in the production,
transportation, and storage of natural gas.
In January 1994, the Company sold substantially all of the assets of its
geophysical services and products business to Western Atlas International, Inc.
for $190.0 million in cash and notes subject to certain adjustments. The notes
of $90.0 million were sold for cash in the first quarter of 1994. In addition,
the Company issued $73.8 million in notes to Western Atlas to cover some of the
costs of reducing certain geophysical operations, including the cost of
personnel reductions, leases of geophysical marine vessels and closing of
duplicate facilities. The Company's notes to Western Atlas are payable over two
years at a rate of interest of 4%. An initial installment of $33.8 million was
made in February 1994, and quarterly installments of $5 million have been made
thereafter.
The Company is in the process of obtaining regulatory approvals to sell
certain remaining assets and settle certain liabilities of the geophysical
business. The Company does not believe it will incur any material loss from the
disposition or liquidation of these remaining assets or settlement of the
remaining liabilities.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
BUSINESS ENVIRONMENT
The Company (often through foreign subsidiaries) operates in over 100
countries, including several upon which the United States government has imposed
varying degrees of restrictions on trade and commerce. These countries include
Iran and Libya. The Company believes the embargo on U.S. trade with Iran will
not have a material effect on current results of operations or financial
condition of the Company, although it will limit the Company from competing for
future business in Iran. If additional restrictions were to be established for
these or other countries, such restrictions might impair the ability of the
Company to obtain the benefit of its assets in such countries and the ability to
collect amounts owed to the Company by their government and private entities.
The Company cannot predict whether more stringent restrictions will be adopted
or, if adopted, the impact they might have on its results of operations.
RESULTS OF OPERATIONS
Second Quarter of 1995 Compared with the Second Quarter of 1994
Revenues
Consolidated revenues increased 1% to $1,444.5 million in the second
quarter of 1995 compared with $1,425.4 million in the same quarter of the prior
year.
Energy Services revenues increased by 4% compared with a 4% decline in
drilling activity as measured by the worldwide rotary rig count for the same
quarter of the prior year. Excluding businesses included in 1994 results but
subsequently sold, revenues for the second quarter increased 7% . International
revenues increased by 14%, reflecting growth in the Latin America, Europe/Africa
and Asia Pacific markets. The increase in international revenues was partially
offset by a 3% decline in United States revenues. The United States rig count
declined 8% from the same quarter of the prior year.
Engineering and Construction Services revenues increased slightly to
$768.0 million compared with $764.1 million in the same quarter of the prior
year.
Insurance Services revenues declined by 16% from the same quarter of
the prior year due primarily to reduced earned premiums on discontinued lines of
business and lower losses on retrospective workers' compensation coverages.
Operating income
Consolidated operating income was $99.7 million in the second quarter
of 1995 compared with a loss of $14.9 million in the same quarter of the prior
year.
Energy Services operating income was $71.2 million compared with a loss
of $19.8 million in the same quarter of the prior year. Included in the second
quarter of the prior year were $42.6 million of charges for personnel
reductions. Excluding the impact of the personnel reductions in 1994, Energy
Services operating income increased by over 200% over the same quarter of the
prior year. The operating margin for the second quarter of 1995 was 11.3%
compared to a prior year operating margin of 3.8%. The increased operating
income is primarily related to growth in activities in Latin America,
Europe/Africa and Asia Pacific, and reductions in indirect costs.
Engineering and Construction Services operating income and operating
margins increased to $33.5 million and 4.4%, respectively, compared with results
in the same quarter of the prior year of $11.4 million and 1.5%, respectively.
The increase in operating income is primarily related to improved performance in
marine construction activities.
Insurance Services operating income was higher in 1995 due primarily to
reduced underwriting losses from discontinued operations.
Nonoperating items
Interest income increased in 1995 primarily due to higher levels of
invested cash.
Foreign currency losses were $1.4 million in the second quarter of 1995
compared with a loss of $9.9 million in the same quarter of the prior year.
Second quarter 1994 losses relate primarily to Brazil and Venezuela.
Net income
Net income in the second quarter of 1995 was $56.2 million, or 49 cents
per share, compared with a loss of $19.2 million, or 17 cents per share, in the
same quarter of the prior year. Excluding the 1994 severance costs, net income
in the second quarter of 1994 would have been $8.5 million, or seven cents per
share.
First Six Months of 1995 Compared with the First Six Months of 1994
Revenues
Consolidated revenues for the first six months of 1995 were $2,766.6
million compared to $2,801.7 million in the first six months of 1994. Energy
Services revenues were approximately the same during the two periods. Excluding
revenues from businesses sold subsequent to the second quarter of 1994, Energy
Services revenues increased 2% between the two periods primarily due to
increases in Latin America, Europe/Africa and Asia Pacific offset by a decline
in North America. Engineering and Construction Services revenues were
approximately the same during the two periods. Revenues from Insurance Services
declined 19% related primarily to reduced earned premiums on discontinued lines
of business.
Operating income
Consolidated operating income was $162.0 million in the first six
months of 1995 compared with $25.3 million in the first six months of 1994.
Excluding severance costs included in 1994 results, consolidated operating
income would have been $67.9 million. Energy Services operating income during
the six months ended June 30, 1995 and 1994 was $123.6 million and $13.7
million, respectively. Excluding severance costs, operating income in the 1994
period was $56.3 million. Operating income increased in all regions. Operating
margins during the 1995 and 1994 periods were 10.3% and 4.7%, respectively. 1995
margins were benefited by growth in Latin America, Europe/Africa and Asia
Pacific and lower indirect costs. Lower margins in 1994 were due primarily to
decreased activities in the North Sea, Middle East and Asia Pacific, market
disturbances in Nigeria and Yemen, unsettled economic, political and business
conditions in the CIS and pricing pressures in North America.
Engineering and Construction Services operating income in the first six
months of 1995 and 1994 was $49.3 million and $25.9 million, respectively. 1995
operating income increases are primarily due to improved performance in marine
construction activities in Latin America, Middle East and Europe/Africa.
Operating income in 1994 included a $5.0 million gain on the sale of an
environmental remediation subsidiary.
Insurance Services operating income during the period improved to $2.7
million in 1995 from a loss of $2.2 million in 1994. The improvement is
primarily due to lower catastrophic losses and losses from discontinued
operations.
Nonoperating items
Interest expense increased from $21.0 million to $25.1 million due
primarily to the reversal of an accrual during the first quarter of 1994 for
interest payable on income tax settlements.
Interest income increased from $5.8 million in 1994 to $14.3 million in
1995 primarily due to higher levels of invested cash.
The Company had foreign currency gains of $3.6 million during the six
months ended June 30, 1995 compared with losses of $13.2 million during the same
period in 1994. Gains in 1995 relate primarily to a first quarter gain from the
devaluation of the Nigerian Naira offset by losses in other currencies,
particularly the Mexican peso. Losses in 1994 relate primarily to Brazil and
Venezuela.
Net income
Net income for the six months ended June 30, 1995 was $95.3 million, or
83 cents per share, versus a loss of $1.4 million, or a loss of one cent per
share, during the same period in 1994. Excluding severance costs in 1994, net
income was $26.3 million, or 23 cents per share.
LIQUIDITY AND CAPITAL RESOURCES
The Company ended the second quarter of 1995 with cash and equivalents
of $353.7 million, a decrease of $74.4 million from the end of 1994. Excluding
cash and equivalents of Insurance Services, which are restricted from general
corporate purposes unless paid to the parent as a dividend, cash and equivalents
at the end of the second quarter of 1995 were $309.0 million, a decrease of
$66.3 million from the end of 1994.
Operating activities
Cash flows from operations were about the same for the six month
periods ended June 30, 1995 and 1994. The increase in net income for the 1995
period was offset by higher receivables due to increased activity levels and
increased advances to Engineering and Construction joint ventures.
Investing activities
Cash flows from investing activities used $120.8 million during the
first six months of 1995 compared to $113.7 million in cash provided during the
same period of 1994. Capital expenditures increased in 1995 by 20% over 1994.
The 1994 cash flows reflect the proceeds from the sale of geophysical services
and two small subsidiaries.
Financing activities
Cash flows used for financing activities were $72.0 million in the
first six months of 1995 compared to $189.0 million in the same quarter last
year. The decrease in outflows is due to lower payments of short-term and
long-term indebtedness. In 1994 the Company redeemed the remaining 10.2%
debentures and made a $33.8 million installment on the note issued by the
Company to the buyer of geophysical services.
The Company will redeem the entire outstanding principal amount of zero
coupon convertible subordinated debentures (Debentures) on September 1, 1995.
The redemption price will be $536.5029 per $1,000.00 principal amount of
Debentures at maturity. The total cost of the redemption, assuming all
Debentures are submitted for redemption, will be approximately $391 million. The
Company will fund the redemption primarily with cash reserves and secondarily
with short-term borrowings.
The Company has the ability to borrow additional short-term and
long-term funds if necessary.
ENVIRONMENTAL MATTERS
The Company is involved as a potentially responsible party in remedial
activities to clean up various "Superfund" sites under applicable Federal law
which imposes joint and several liability, if the harm is indivisible, on
certain persons without regard to fault, the legality of the original disposal,
or ownership of the site. Although it is very difficult to quantify the
potential impact of compliance with environmental protection laws, management of
the Company believes that any liability of the Company with respect to all but
two of such sites will not have a material adverse effect on the results of
operations of the Company. See Note 8 to the financial statements for additional
information on these two sites.
EXPORT MATTERS
See Note 8 to the financial statements concerning certain actions of
the United States Government concerning exports by subsidiaries of the Company.
Part II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There is incorporated by reference the information regarding certain actions of
the United States Government concerning exports by subsidiaries of the Company
in Note 8 to the Condensed Consolidated Financial Statements in Item 1 of Part
I.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Annual Meeting of Stockholders of the Company held on May 16, 1995,
stockholders of the Company were asked to consider and act upon (i) the
election of Directors for the ensuing year, (ii) a proposal to ratify the
appointment of Arthur Andersen LLP as independent accountants to examine the
financial statements and books and records of the Company for 1995 and (iii) a
shareholder proposal requesting that the Board of Directors take necessary
steps to provide for cumulative voting in the election of Directors. Set forth
below with respect to each such matter, where applicable, is the number of
votes cast for, against or withheld, as well as the number of abstentions and
broker non-votes.
a. Election of Directors:
NAME OF NOMINEE VOTES FOR VOTES WITHHELD
Anne L. Armstrong 97,862,656 649,159
Lord Clitheroe 97,861,880 649,935
Robert L. Crandall 97,884,310 627,505
Thomas H. Cruikshank 97,871,477 640,338
William R. Howell 97,893,156 618,659
Dale P. Jones 97,932,994 578,821
C. J. Silas 97,904,386 607,429
Roger T. Staubach 97,857 527 654,288
Richard J. Stegemeier 97,870,955 640,860
E. L. Williamson 97,846,216 665,599
b. Proposal to ratify the appointment of Arthur Andersen LLP as
independent accountants to examine the financial statements and books and
records of the Company for 1995:
Number of Votes For 98,152,974
Number of Votes Against 193,888
Number of Votes Abstaining 164,953
Number of Broker Non-Votes 0
c. Shareholder proposal relating to cumulative voting in the election of
Directors:
Number of Votes For 31,294,251
Number of Votes Against 45,234,242
Number of Votes Abstaining 14,427,525
Number of Broker Non-Votes 7,555,797
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(11) Statement regarding computation of earnings per share.
(27) Financial data schedule for the Registrant (filed electronically)
(b) Reports on Form 8-K
During the second quarter of 1995:
A Current Report was filed on Form 8-K dated April 24, 1995, reporting on
Item 5. Other Events, regarding a press release dated April 24, 1995,
announcing 1995 first quarter earnings.
A Current Report was filed on Form 8-K dated May 15, 1995, reporting on
Item 5. Other Events, regarding a press release dated May 15 , 1995,
announcing plans for the disposition of a subsidiary, NUS Training
Corporation.
A Current Report was filed on Form 8-K dated May 16, 1995, reporting on
Item 5. Other Events, regarding a press release dated May 16, 1995,
announcing the election results of its shareholders' meeting and the
declaration of the second quarter dividend.
During the third quarter of 1995 to the date hereof:
A Current Report was filed on Form 8-K dated July 14, 1995, reporting on
Item 5. Other Events, regarding a press release dated July 14, 1995,
announcing agreements to settle export investigation.
A Current Report was filed on Form 8-K dated July 17, 1995, reporting on
Item 5. Other Events, regarding a press release dated July 14, 1995,
announcing the signing of an agreement to provide engineering and
construction services on a new ethylene plant in Kuwait.
A Current Report was filed on Form 8-K dated July 20, 1995, reporting on
Item 5. Other Events, regarding a press release dated July 20, 1995,
announcing the declaration of the third quarter dividend, the calling of
zero coupon convertible subordinated debentures and that David J. Lesar
was named executive vice president and chief financial officer.
A Current Report was filed on Form 8-K dated July 25, 1995, reporting on
Item 5. Other Events, regarding a press release dated July 20, 1995,
announcing second quarter results.
A Current Report was filed on Form 8-K dated July 31, 1995, reporting on
Item 5. Other Events, regarding the final settlement of export case
pleadings.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HALLIBURTON COMPANY
(Registrant)
Date AUGUST 4, 1995 By /S/ THOMAS H. CRUIKSHANK
------------------------ --------------------------
Thomas H. Cruikshank
Chairman of the Board and
Chief Executive Officer
Date AUGUST 4, 1995 By /S/ DAVID J. LESAR
------------------------ --------------------------
David J. Lesar
Executive Vice President
Chief Financial Officer
Date AUGUST 4, 1995 By /S/ SCOTT R. WILLIS
------------------------ --------------------------
Scott R. Willis
Controller
Principal Accounting Officer
HALLIBURTON COMPANY
EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE
The calculation below for earnings per share of the $2.50 par value Common
Stock of the Company on a primary and fully diluted basis for the three and six
months ended June 30, 1995 and 1994, is submitted in accordance with Regulation
S-K item 601 (b) (11).
Three Months Six Months
Ended June 30 Ended June 30
-------------------------- ---------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
Millions of dollars except per share data
Primary:
Net income (loss) $ 56.2 $ (19.2) $ 95.3 $ (1.4)
Average number of common and common share
equivalents outstanding 114.4 114.2 114.4 114.2
Primary net income (loss) per share $ 0.49 $ (0.17) $ 0.83 $ (0.01)
Fully Diluted:
Net income (loss) $ 56.2 $ (19.2) $ 95.3 $ (1.4)
Add after-tax interest expense applicable to
Zero Coupon Convertible Subordinated
Debentures due 2006 3.5 3.2 6.9 6.3
----------- ----------- ----------- ------------
Adjusted net income (loss) $ 59.7 $ (16.0) $ 102.2 $ 4.9
Adjusted average number of shares outstanding 119.4 119.2 119.3 119.2
Fully diluted earnings (loss) per share $ 0.50 $ (0.13) $ 0.86 $ 0.04
The foregoing computations do not reflect any significant potentially dilutive
effect the Company's Preferred Stock Purchase Rights Plan could have in the
event such Rights become exercisable and any shares of either Series A Junior
Participating Preferred Stock or Common Stock of the Company are issued upon
the exercise of such Rights.
5
1,000,000
6-MOS
DEC-31-1995
JUN-30-1995
354
684
1,539
36
264
0
3,398
2,324
5,198
0
644
298
0
0
1,705
5,198
0
2,767
0
2,519
86
0
25
155
59
95
0
0
0
95
0.83
0
