UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-K
                                   (Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 (Fee required) For the fiscal year ended December 31, 1997

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 (No fee required) For the transition period from to

Commission File Number 1-3492

                               HALLIBURTON COMPANY
             (Exact name of registrant as specified in its charter)

              Delaware                                     75-2677995
    (State or other jurisdiction of                     (I.R.S. Employer
    incorporation of organization)                      Identification No.)

            3600 Lincoln Plaza, 500 N. Akard St., Dallas, Texas 75201
                    (Address of principal executive offices)
                   Telephone Number - Area code (214) 978-2600


               Securities registered pursuant to Section 12(b) of
                                    the Act:

                                                        Name of each Exchange on
        Title of each class                                 which registered
 Common Stock par value $2.50 per share                 New York Stock Exchange

        Securities registered pursuant to Section 12(g) of the Act: None

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 by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

The aggregate  market value of Common Stock held by nonaffiliates on January 30,
1998,  determined  using  the per  share  closing  price on the New  York  Stock
Exchange   Composite   tape  of   $44.94   on  that   date   was   approximately
$11,764,500,000.

As of January 30, 1998,  there were  262,492,885  shares of Halliburton  Company
Common Stock $2.50 par value per share outstanding.

Portions of the  Halliburton  Company Proxy  Statement dated March 24, 1998, are
incorporated by reference into Part III of this report.


                                       1



PART I

Item  1. Business.
     General  Development of Business.  Halliburton  Company's  predecessor  was
established  in 1919,  incorporated  under the laws of the State of  Delaware in
1924  and  reorganized  under  the  laws  of the  State  of  Delaware  in  1996.
Halliburton  Company (the Company)  provides energy services and engineering and
construction  services.  Information related to acquisitions and dispositions is
set forth in Note 15 to the financial statements of this annual report.
     Financial Information About Business Segments.  The Company is comprised of
two business segments.  See consolidated statement of income on page 15 and Note
10 to the financial  statements of this annual report for financial  information
about these two business segments.
     Description  of Services and  Products.  The  following is a summary  which
briefly describes the Company's services and products for each business segment.
     The Energy  Group  business  segment  provides a wide range of services and
products to provide both discrete services and products and integrated solutions
to customers in the  exploration,  development and production of oil and natural
gas.  The  Energy  Group  operates  worldwide,   serving  major  oil  companies,
independent   operators  and  national  oil  companies.   The  segment  includes
Halliburton  Energy  Services,  which  offers  pressure  pumping  equipment  and
services,  logging and perforating  products and services,  drilling systems and
services,  specialized completion and production equipment and services and well
control  products and services;  Brown & Root Energy  Services,  which  provides
upstream  oil  and  gas  engineering,   procurement  and  construction,  project
management  and  production  services,  subsea  construction,   fabrication  and
installation  of  onshore  and  offshore  pipelines,   offshore  and  production
platforms,  marine  engineering  and other  marine  related  projects;  Landmark
Graphics  Corporation,  which  provides  integrated  exploration  and production
information   systems  and  professional   services;   and  Halliburton   Energy
Development,   which  creates  business   opportunities   for  the  development,
production and operation of oil and gas fields in conjunction with the Company's
customers.
     The Engineering and Construction Group provides: conceptual design, process
design, detailed engineering,  procurement, project and construction management;
construction of chemical and petrochemical  plants,  refineries,  pulp and paper
mills,  metal  processing  plants,  highways  and bridges,  airports,  water and
wastewater systems; technical and economic feasibility studies; site evaluation;
repair and refitting of submarines and surface ships; operations and maintenance
services,  and  engineering  and wastewater  management  services for commercial
industry,  utilities and government customers. The Company plans to exit certain
highway and paving activities over time. On December 31, 1997, the environmental
business  which  performed   environmental   remediation   related   consulting,
engineering, design and construction was sold.
     Markets  and  Competition.  The  Company  is  one of  the  world's  largest
diversified energy services and engineering and construction services companies.
The  Company's  services  and products  are sold in highly  competitive  markets
throughout  the world.  Competitive  factors  impacting  sales of the  Company's
services and products  are:  price,  service  (including  the ability to deliver
services and products on an "as needed,  where needed" basis),  product quality,
warranty  and  technical  proficiency.  A growing  number of  customers  are now
indicating a preference for integrated services and solutions.  These integrated
solutions, in the case of the Energy Group, relate to all phases of exploration,
development  and  production of oil and gas, and in the case of the  Engineering
and  Construction   Group,   relate  to  all  phases  of  design,   procurement,
construction, project management and maintenance of a facility. Demand for these
types of  integrated  solutions  is based  primarily  upon  quality of  service,
technical proficiency and value created.
     The Company conducts  business  worldwide in over 100 countries.  Since the
markets for the  Company's  services  and  products  are so large and cross many
geographic lines, a meaningful  estimate of the number of competitors  cannot be
made.  These markets are,  however,  highly  competitive  with many  substantial
companies  operating  in each  market.  Generally,  the  Company's  services and
products are marketed through its own servicing and sales organizations. A small
percentage of sales of the Energy Group's  products is made by supply stores and
third-party representatives.
     Operations  in  some  countries  may be  adversely  affected  by  unsettled
political conditions,  expropriation or other governmental actions, and exchange
control  and   currency   problems.   The  Company   believes   the   geographic
diversification  of its  business  activities  reduces the risk that loss of its
operations in any one country would be material to the conduct of its operations
taken as a whole.  Information  regarding  the  Company's  exposures  to foreign
currency  fluctuations,  risk  concentration  and financial  instruments used to
minimize risk is included in  management's  discussion and analysis of financial
condition  and  results of  operations under  the caption  "Financial Instrument
Market Risk" and in Note 12 to the financial statements of this annual report.


                                       2



     Customers and Backlog. In 1997, 1996 and 1995,  respectively,  79%, 73% and
78% of the  Company's  revenues  were  derived  from  the sale of  products  and
services to,  including  construction  for, the energy  industry.  The following
schedule summarizes the backlog of projects at December 31, 1997 and 1996:
Millions of dollars 1997 1996 - -------------------------------------------------------------------------------- Firm orders $ 6,313 $ 4,555 Government orders firm but not yet funded 445 262 Letters of intent and contracts awarded but not signed 146 23 -------------- ------------- Total $ 6,904 $ 4,840 - --------------------------------------------------------------------------------
It is estimated that nearly 64% of the backlog existing at December 31, 1997 will be completed during 1998. The Company's backlog excludes contracts for recurring hardware and software maintenance and support services. Backlog is not necessarily indicative of future operating results because backlog figures are subject to substantial fluctuations. Arrangements included in backlog are in many instances extremely complex, nonrepetitive in nature and may fluctuate in contract value. Many contracts do not provide for a fixed amount of work to be performed and are subject to modification or termination by the customer. Due to the size of certain contracts, the termination or modification of any one or more contracts or the addition of other contracts may have a substantial and immediate effect on backlog. Raw Materials. Raw materials essential to the Company's business are normally readily available. Where the Company is dependent on a single supplier for any materials essential to its business, the Company is confident that it could make satisfactory alternative arrangements in the event of an interruption in the supply of such materials. Research, Development and Patents. The Company maintains an active research and development program to assist in the improvement of existing products and processes, the development of new products and processes and the improvement of engineering standards and practices that serve the changing needs of its customers. Information relating to expenditures for research and development is included in Note 1 and Note 10 to the financial statements of this annual report. The Company owns a large number of patents and has pending a substantial number of patent applications covering various products and processes. The Company is also licensed under patents owned by others. The Company does not consider a particular patent or group of patents to be material to the Company's business. Seasonality. Weather and natural phenomena can temporarily affect the performance of the Company's services. Winter months in the Northern Hemisphere tend to affect operations negatively, but the widespread geographical locations of the Company's operations serve to mitigate the seasonal nature of the Company's business. Employees. At December 31, 1997, the Company employed approximately 70,750 people, of which about one-half were located outside the United States. Regulation. The Company is subject to various environmental laws and regulations. Compliance with such requirements has not substantially increased capital expenditures, adversely affected the Company's competitive position or materially affected the Company's earnings. The Company does not anticipate any material adverse effects in the foreseeable future as a result of existing environmental laws and regulations. Note 11 to the financial statements of this annual report discusses the Company's involvement as a potentially responsible party in remedial activities to clean up several "Superfund" sites. Item 2. Properties. Information relating to lease payments is included in Note 11 to the financial statements of this annual report. The Company's owned and leased facilities, as described below, are suitable and adequate for their intended use. Energy Group manufacturing facilities owned by the Company cover approximately 3,100,000 square feet. Principal locations of these manufacturing facilities are Davis and Duncan, Oklahoma; Alvarado, Amarillo, Carrollton, Fort Worth, Garland and Houston, Texas; Arbroath, Scotland; and Reynosa, Mexico. The manufacturing facilities at Davis and Amarillo were idle at the end of 1997. An idle facility in Houston was sold in 1997. The manufacturing facility in Garland, Texas, was leased to another company in 1997. The Energy Group also leases manufacturing facilities covering approximately 160,000 square feet. Principal locations of these facilities are Malvern, Pennsylvania; Houston, Texas; Jurong, Singapore; Basingstoke, England; and Kilwinning, Scotland. The facility in Basingstoke, England, was idle at the end of 1997. Research, development and engineering activities are carried out in owned facilities covering approximately 375,000 square feet in Duncan, Oklahoma; Malvern, Pennsylvania; Houston, Austin and Carrollton, Texas; and Aberdeen, Scotland; and in leased facilities covering approximately 150,000 square feet in Englewood and Denver, Colorado; Leatherhead and Dorking, England; Leiderdorp, Holland and Singapore. Energy Group marine fabrication facilities owned by the Company cover 3 approximately 546 acres in Belle Chasse, Louisiana; Greens Bayou, Texas; and Nigg and Wick, Scotland. The Belle Chasse, Louisiana, facility consisting of approximately 151 acres is idle. The facility in Nigg, Scotland, is leased to a joint venture of the Company. In addition, service centers, sales offices and field warehouses are operated at approximately 175 locations in the United States, almost all of which are owned, and at approximately 290 locations outside the United States in both the Eastern and Western Hemispheres. Engineering and Construction Group fabricating facilities cover approximately 441,000 square feet in Houston, Texas, and Edmonton, Canada, of which 388,000 square feet in Houston is leased to another company. Engineering and design, project management and procurement services activities are carried out in owned facilities covering approximately 3,494,000 square feet. Major sites of these activities are in Houston, Baytown and Hurst, Texas; Edmonton, Canada; Leatherhead, England; and Bundaberg and Emerald, Australia. These activities are also carried out at leased facilities covering approximately 1,100,000 square feet. Major sites are in Mobile, Alabama; Alhambra, California; Surrey and London, England; Al Khobar, Saudi Arabia; and Parkside, Victoria Park, Milton and Melbourne, Australia. The Engineering and Construction Group operates dockyard facilities owned by a 51% owned subsidiary of the Company covering approximately 191 acres in Plymouth, England. In addition, project offices, field camps, service centers and sales offices are operated at approximately 20 locations in the United States, almost all of which are leased by the Company, and at approximately 15 foreign locations in both the Eastern and Western Hemispheres. General Corporate operates from leased facilities in Dallas, Texas, covering approximately 25,000 square feet. The Company also leases approximately 5,500 square feet of space in Washington, D.C., and owns an 85,000 square foot mainframe data processing center in Arlington, Texas, which is leased to another company. Item 3. Legal Proceedings. Information relating to various commitments and contingencies is described in Note 11 to the financial statements of this annual report. Item 4. Submission of Matters to a Vote of Security Holders. There were no matters submitted to a vote of security holders during the fourth quarter of 1997. 4 Executive Officers of the Registrant. The following table indicates the names and ages of the executive officers of the registrant along with a listing of all offices held by each during the past five years: Name and Age Offices Held and Term of Office *Richard B. Cheney Chairman of the Board, since January 1996 (Age 57) Chief Executive Officer, since October 1995 Director of Registrant, since October 1995 President, October 1995 to May 1997 Senior Fellow, American Enterprise Institute, 1993 to October 1995 Secretary, U.S. Department of Defense, 1989 to 1993 Jerry H. Blurton Vice President and Treasurer, since July 1996 (Age 53) Vice President - Finance & Administration of Halliburton Energy Services, August 1995 to July 1996 Vice President - Finance, 1991 to August 1995 Lester L. Coleman Executive Vice President and General Counsel, (Age 55) since May 1993 President of Energy Services Group, September 1991 to May 1993 *Dale P. Jones Director of Registrant, since December 1988 (Age 61) Vice Chairman of Registrant, since October 1995 President, June 1989 to October 1995 *David J. Lesar President and Chief Operating Officer, since May (Age 44) 1997 President and Chief Executive Officer of Brown & Root, Inc., since September 1996 Executive Vice President and Chief Financial Officer, August 1995 to May 1997 Executive Vice President of Finance and Administration of Halliburton Energy Services, November 1993 to August 1995 Partner, Arthur Andersen LLP, 1988 to November 1993 *Kenneth R. LeSuer Vice Chairman of Registrant, since May 1997 (Age 62) President and Chief Executive Officer of the Halliburton Energy Group, September 1996 to May 1997 President and Chief Executive Officer of Halliburton Energy Services, March 1994 to September 1996 President and Chief Operating Officer of Halliburton Energy Services, May 1993 to March 1994 President and Chief Executive Officer of Halliburton Services, December 1989 to May 1993 Gary V. Morris Executive Vice President and Chief Financial (Age 45) Officer, since May 1997 Senior Vice President - Finance, February 1997 to May 1997 Senior Vice President, May 1996 to February 1997 Vice President - Finance of Brown & Root, Inc., June 1995 to May 1996 Vice President - Finance of Halliburton Energy Services, December 1993 to June 1995 Controller, December 1991 to December 1993 R. Charles Muchmore, Jr. Vice President and Controller, since August 1996 (Age 44) Finance & Administration Director - Europe/Africa of Halliburton Energy Services, September 1995 to August 1996 Regional Finance & Administration Manager - Europe/Africa of Halliburton Energy Services, December 1989 to September 1995 Lewis W. Powers Senior Vice President, since May 1996 (Age 51) Vice President - Europe/Africa of Halliburton Energy Services, April 1993 to May 1996 Senior Vice President of Operations of Otis Engineering, June 1989 to April 1993 * Members of the Executive Committee of the registrant. There are no family relationships between the executive officers of the registrant. 5 PART II Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters. The Company's common stock is traded on the New York Stock Exchange and the Swiss Exchange. Information relating to market prices of common stock and quarterly dividend payments is included under the caption "Quarterly Data and Market Price Information" on page 42 of this annual report. At December 31, 1997, there were approximately 14,400 shareholders of record. In calculating the number of shareholders, the Company considers clearing agencies and security position listings as one shareholder for each agency or listing. Item 6. Selected Financial Data. Information relating to selected financial data is included on pages 39 through 41 of this annual report. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. Information relating to management's discussion and analysis of financial condition and results of operations is included on pages 7 through 12 of this annual report. Item 7(a). Quantitative and Qualitative Disclosures About Market Risk. Information relating to market risk is included in management's discussion and analysis of financial condition and results of operations under the caption "Financial Instrument Market Risk" on pages 10 and 11 of this annual report. Item 8. Financial Statements and Supplementary Data.
Page No. - -------------------------------------------------------------------------------- Responsibility for Financial Reporting........................ 13 Report of Arthur Andersen LLP, Independent Public Accountants. 14 Consolidated Statements of Income for the Years Ended December 31, 1997, 1996 and 1995......................... 15 Consolidated Balance Sheets at December 31, 1997 and 1996..... 16 Consolidated Statements of Cash Flows for the Years Ended December 31, 1997, 1996 and 1995......................... 17 Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 1997, 1996 and 1995............. 18 Notes to Financial Statements................................. 19-38 Quarterly Data and Market Price Information................... 42
The related financial statement schedules are included under Part IV, Item 14 of this annual report. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS BUSINESS ENVIRONMENT AND OUTLOOK The Company operates in over 100 countries around the world to provide a variety of oilfield services and engineering and construction services to the petroleum industry and other energy, industrial and governmental customers. The markets served by the Company are highly competitive with many substantial competitors. Operations in some countries may be adversely affected by unsettled political conditions, expropriation or other governmental actions, exchange controls and currency devaluation. The Company believes the geographic diversification of its business activities reduces the risk that loss of its operations in any one country would be material to its consolidated results of operations. The Company has only moderate exposure in the Asia Pacific region which, including Australia, represents about 7% of 1997 revenues, 5% of 1997 operating income and 3% of backlog at December 31, 1997. Energy Group. In 1997, the oilfield services industry experienced a year of exceptional growth with customers worldwide expanding their petroleum exploration, development and production activities. This increase was in response to a combination of factors including relatively higher crude oil and natural gas prices early in 1997, an expectation by customers of continued improvement in the long-term demand for petroleum and the availability of investment opportunities with good economic potential. The Company believes its customers will continue to seek opportunities to lower the overall cost of exploring, developing and enhancing the recovery of hydrocarbons through increased utilization of integrated solutions, partnering and alliance arrangements as well as the application of new technology. According to the annual Salomon Smith Barney Survey and Analysis of 1998 Worldwide Oil and Gas Exploration and Production Expenditures, spending during 1998 by survey respondents is predicted to grow by 10.9%. While this growth will represent the second highest growth rate in the past decade, it is somewhat slower than the estimated 18.7% growth experienced during 1997. Included within this predicted 1998 growth is a high level of interest by survey respondents in the deep water Gulf of Mexico, with some survey respondents planning spending increases there of up to 20%. This outlook is based on West Texas Intermediate crude oil prices of $19.23/bbl and United States gas prices of $2.19/mcf. Although crude oil and natural gas price declines beginning late in 1997 and continuing into the first quarter of 1998 could potentially affect the short-term outlook for the oilfield services industry by delaying customer spending, the Company believes that long-term hydrocarbon supply and demand fundamentals will tend to counterbalance any short-term spending delays. The Company believes the long-term outlook for the oilfield services industry is positive due to expected growth in world demand for energy combined with production declines in existing oil and gas reserves. Although the growth experienced by the oilfield services industry in 1997 will be difficult to repeat in 1998, the Company believes that it has good opportunities to expand its revenue and profit through greater participation in larger projects that allow it to utilize its project management and integrated services capabilities. Engineering and Construction Group. Engineering and construction industry marketing reports indicate that global demand for engineering and construction services during 1998 may be less robust than during 1997 due in part to uncertainty in the Asia Pacific region. However, the Company expects to see demand for such services increase over time in Latin America, Africa and the Middle East. The Company believes the keys to increasing its revenue and improving profit margins in slower growing markets will be its ability to partner with other service and equipment suppliers and customers on larger projects, acceptance of more project success risk through gain sharing or fixed price contracts, broadening its core competencies, acquiring and fully utilizing proprietary technology and managing costs. The Group's improved operating results in 1997 were the result of focusing on these key factors. During 1997, the Engineering and Construction Group reexamined its core competencies and decided to exit certain markets that do not offer sufficient opportunity to achieve the Company's profit objectives. This refocusing prompted the diversiture of the environmental services business unit at the end of 1997 and a decision to exit certain highway and paving activities over time. The Group will now focus on key markets in the petroleum, chemical and forest products industries in the United States and international locations. The Company sees an expanding market for its government services capabilities in the United States and the United Kingdom as governmental agencies, including local government units, continue to expand their use of outsourcing to improve service levels and manage costs. 7 Acquisitions and dispositions. During 1997, the Company acquired NUMAR Corporation, which was accounted for as a pooling of interests, in exchange for approximately 8.2 million shares of the Company's Common Stock, acquired OGC International plc for approximately $118.3 million, purchased a 26% equity interest in PES (International) Limited for approximately $33.6 million, acquired Kinhill Holdings Limited for approximately $34 million, and increased its ownership of Devonport Management Limited from approximately 30% to 51%. These acquisitions are expected to expand the Company's ability to offer quality services and products in its core competencies and to further strengthen its technological base. Also in 1997, the Company sold its environmental services business for approximately $32 million. See Note 15 to the financial statements for additional information. RESULTS OF OPERATIONS Revenues for 1997 were $8,818.6 million, an increase of 19% over 1996 revenues of $7,385.1 million and an increase of 50% over 1995 revenues of $5,882.9 million. Approximately 58% of the Company's consolidated revenues were derived from international activities in 1997 compared with 55% in 1996 and 51% in 1995. Energy Group revenues were $5,756.4 million for 1997, an increase of 34% over 1996 revenues of $4,286.3 million and an increase of 60% over 1995 revenues of $3,604.0 million. The Energy Group's increase in revenues outpaced the 15% increase in the worldwide average rotary rig count for 1997 compared to 1996 and the 23% increase in the worldwide average rotary rig count for 1997 compared to 1995. Approximately two-thirds of the Energy Group's revenues were derived from international activities each year in 1997, 1996 and 1995. Engineering and Construction Group revenues were $3,062.2 million for 1997, a decrease of 1% from 1996 revenues of $3,098.8 million and an increase of 34% over 1995 revenues of $2,278.9 million. Lower levels of activity under service contracts with the U.S. Department of Defense to provide technical and logistical support for military peacekeeping operations in Bosnia resulted in revenue reductions of approximately $294 million in 1997 compared to 1996. This reduction in revenues was mostly offset by the consolidation of Devonport Management Limited revenues as a result of the Company's increased ownership percentage in that subsidiary. See Note 15 to the financial statements for additional information. Operating income was $798.1 million for 1997 compared to $417.9 million for 1996 and $400.9 million for 1995. Excluding special charges of $8.6 million, $85.8 million and $8.4 million during 1997, 1996 and 1995, respectively, operating income for 1997 increased by 60% over 1996 and by 97% over 1995 as shown in the following table. See Note 16 to the financial statements for additional information on the special charges.
Millions of dollars 1997 1996 1995 - -------------------------------------------------------------------- ------------ ------------ ----------- Operating income before special charges $ 806.7 $ 503.7 $ 409.3 Merger costs associated with NUMAR acquisition (8.6) Landmark write-off of acquired in process research and development - (11.3) (3.7) Merger costs associated with Landmark acquisition - (12.4) - Realignment of products and service lines and support services - (61.2) - Landmark restructuring and merger costs - (0.9) (4.7) ------------ ------------ ----------- Operating income $ 798.1 $ 417.9 $ 400.9 - -------------------------------------------------------------------- ----------- ------------ -----------
Approximately 53% of the Company's consolidated operating income was derived from international activities in 1997 compared to 66% for 1996 and 65% for 1995. Consolidated international operating margins were 8% in 1997 and 1996 and 9% for 1995. Energy Group operating income in 1997 was $706.4 million, an increase of 46% over 1996 operating income of $484.4 million and an increase of 77% over 1995 operating income of $398.2 million. Operating margins were 12% in 1997 compared with 11% in both 1996 and 1995. Approximately 53%, 62% and 66% of the Energy Group's operating income was derived from international activities for 1997, 1996 and 1995, respectively. Operating income in 1997 for the group's largest business unit, Halliburton Energy Services, increased substantially due primarily to increased activity levels and increased prices charged to customers for pressure pumping services in North America. Operating income growth for Halliburton Energy Services in 1996 over 1995 was due primarily to substantially increased services provided in North America and Europe and, to a lesser degree, increases in Latin America and the Middle East. Energy Group results for 1996 8 include $35 million of gain sharing revenue on the group's second largest business unit, Brown & Root Energy Services, portion of the cost savings realized on the BP Andrew alliance. The alliance completed the project seven months ahead of the scheduled production of oil and achieved a $125 million savings compared with the targeted cost. The effect of the gain sharing was offset by a $20.7 million reduction in operating income due to lower activity levels in 1996 compared to 1995 by Brown & Root Energy Services' 50% owned joint venture, European Marine Contractors, Limited. Engineering and Construction Group operating income for 1997 increased 149% over 1996 and 200% over 1995 to $133.9 million. Operating margins were 4% for 1997 and 2% for 1996 and 1995, respectively. Improvement in operating income in 1997 over 1996 was realized through overhead reductions, a focus on higher margin business lines and the consolidation of Devonport Management Limited as a result of the Company's increased ownership percentage in that subsidiary. See Note 15 to the financial statements. Increased operating income in 1996 compared to 1995 from petroleum and chemical services as well as increased operating income from support services in Bosnia were partially offset by a $17.1 million charge for the impairment of Brown & Root's investment in the Dulles Greenway toll road extension project. General and administrative expenses for 1997 were $248.1 million compared to $236.6 million and $221.7 million for 1996 and 1995, respectively. General and administrative expenses have increased at a substantially slower rate than overall growth in consolidated revenues, and as a percent of revenues, have declined to 2.8% in 1997 from 3.2% in 1996 and 3.8% in 1995. Interest expense was $42.7 million for 1997 compared to $24.1 million in 1996 and $47.1 million in 1995. The increase in 1997 over 1996 is due to the issuance of debt under the Company's medium-term note program in 1997. The decrease in 1996 as compared to 1995 was due to the redemption of the Company's $390.7 million of zero coupon convertible subordinated debentures in September 1995 and the redemption of its $42 million term loan in December 1995. Interest income decreased to $11.7 million for 1997 from $14.2 million in 1996 and $32.0 million in 1995. The decrease for 1996 compared to 1995 is due to lower amounts of invested cash resulting from debt redeemed during 1995. Foreign currency gains (losses) netted to a loss of $0.9 million in 1997 compared to a $3.9 million loss in 1996 and a $1.4 million gain in 1995. Losses in 1997 are due primarily to losses in western European currencies. Provision for income taxes was higher in 1997 than in 1996 and 1995 due to improved earnings. The effective income tax rate was 39% in 1997, compared with 26% in 1996 and 36% in 1995. The lower effective income tax rate and provision for 1996 are due to credits of $43.7 million recorded during the third quarter of 1996 to recognize certain net operating loss carryforwards and the settlement of various issues with the Internal Revenue Service. Excluding the tax benefits recorded in 1996, the effective income tax rate for 1996 was 36%. See Note 16 to the financial statements. Minority interest in net income of consolidated subsidiaries increased to $11.9 million in 1997 as compared to $0.5 million in 1996 and $0.9 million in 1995. The increase is due primarily to the Company's ownership interest in Devonport Management Limited, which increased from approximately 30% to 51% during March 1997. Income from continuing operations for 1997, 1996 and 1995 of $454.4 million, $300.4 million and $249.2 million, respectively, resulted in diluted income per share from continuing operations of $1.75, $1.19 and $1.00, respectively. Discontinued operations in 1995 consists of the Company's Insurance Services Group. The Company declared a dividend on December 26, 1995 and subsequently distributed its property and casualty insurance subsidiary, Highlands Insurance Group, Inc. (HIGI), to its shareholders in a tax-free spin-off on January 23, 1996. The operations of the Insurance Services Group have been classified as discontinued operations. During 1995, HIGI increased its reserves for claim losses and related expenses and provisions for certain legal matters which together with certain other provisions associated with the Company's complete exit from the insurance industry resulted in a $67.2 million charge against net earnings. See Note 14 to the financial statements. LIQUIDITY AND CAPITAL RESOURCES The Company ended 1997 with cash and equivalents of $221.3 million compared with $213.6 million in 1996 and $239.6 million in 1995. 9 Cash flows from operating activities were $548.2 million for 1997 compared to $452.0 million and $667.4 million for 1996 and 1995, respectively. In 1997, the primary use of cash by operating activities was to fund increased working capital requirements related to increased revenues. Cash flows used in investing activities were $686.7 million for 1997 compared to $409.4 million used in 1996 and $267.3 million used in 1995. The increase in cash used for investing activities during 1997 is due primarily to an increase in capital expenditures of 46% over 1996 and 90% over 1995. While increased capital expenditures during 1997 were due in part to investments in capital equipment and deployment of new technologies, increased capital expenditures also reflect certain strategic investments in oil and gas developments and in the Company's infrastructure. In 1997, the Company invested $97.8 million in oil and gas developments, with the most significant development being its 25% share of the Sangu gas field twenty-five miles offshore Bangladesh in the Bay of Bengal. The Company plans similar investments during 1998 as the Company identifies opportunities that allow it to use its unique set of core competencies and which provide adequate returns. The Company also invested $49.5 million in an enterprise-wide information systems initiative. Cash used in investing activities in 1997 also includes the acquisition of OGC and Kinhill and an interest in PES (International) Limited offset by the sale of the Company's environmental business for about $32.0 million. In 1996, investing activities included a $41.3 million expenditure for the Company's share of the purchase price of a subsidiary acquired by the Company's 36% owned affiliate, M-I Drilling Fluids Company, L.L.C. Cash flows from financing activities provided $151.6 million for 1997 compared to use of cash of $65.8 million and $599.0 million for 1996 and 1995, respectively. Cash was provided by proceeds from debt issued under the Company's medium-term note program of $300.0 million and proceeds from the exercise of stock options of $49.5 million offset by payments on long-term debt of $17.7 million, net repayments on short-term borrowings of $54.6 million and dividend payments of $127.3 million. Cash used for financing activities during 1996 consisted primarily of dividend payments of $117.5 million offset by net short-term borrowings of $38.3 million and proceeds from the exercise of stock options of $25.6 million. In 1995, the increased amount of cash used by financing activities was due primarily to the redemption of the Company's $390.7 million zero coupon convertible debentures and a $42.0 million term loan. Total debt was 18%, 10% and 10% of total capitalization at the end of 1997, 1996 and 1995, respectively. The Company has the ability to borrow additional short-term and long-term funds if necessary. See Note 6 to the financial statements regarding the Company's various short-term lines of credit, notes payable and long-term debt. FINANCIAL INSTRUMENT MARKET RISK The Company is currently exposed to market risk from changes in foreign currency exchange rates, and to a lesser extent, to changes in interest rates. To mitigate market risk, the Company selectively hedges its foreign currency exposure through the use of currency derivative instruments. The objective of such hedging is to protect the Company's dollar cash flows from fluctuations in currency rates of foreign denominated sales or purchases of goods or services. Inherent in the use of derivative instruments are certain types of market risk: volatility of the currency rates, tenor (time horizon) of the derivative instruments, market cycles and the type of derivative instruments used. The Company does not use derivative instruments for trading purposes. See Note 1 to the financial statements for additional information on the Company's accounting policies on derivative instruments. See Note 12 to the financial statements for additional disclosures related to derivative instruments. Foreign exchange. While the Company operates in over 100 countries, the Company hedges only foreign currencies that are highly liquid and selects derivative instruments or a combination of instruments whose fluctuation in value is offset by the fluctuation in value to the underlying exposure. These hedges generally have expiration dates that do not exceed two years. Exposures to certain currencies are generally not hedged due primarily to the lack of available markets or cost considerations (non-traded currencies). The Company manages its foreign exchange hedging activities through a control system which includes daily monitoring of cash balances in traded currencies, analytical techniques such as value at risk estimations, and other procedures. Interest rates. The Company currently has exposure to interest rate risk from its long-term debt with interest based on LIBOR plus 0.75% which was incurred in connection with its acquisition of the Royal Dockyard in Plymouth, England (the Dockyard Loans). This risk is partially offset by a compensating balance of approximately one-half of the outstanding debt amount which earns interest at a rate equal to that of the Dockyard Loans. The compensating balance is restricted as to use by the Company and is included in other assets on the Company's consolidated balance sheet. See Note 6 to the financial statements for additional discussion of the Dockyard Loans. 10 Value at risk. The Company uses a statistical model to assess the potential loss related to derivative instruments used to hedge the market risk of its foreign exchange exposure. The model utilizes historical price and volatility patterns to predict the change in value of the derivative instruments which could occur from adverse movements in foreign exchange rates for a specified time period at a specified confidence level. The model is an undiversified calculation based on the variance-covariance statistical modeling technique and includes all foreign exchange derivative instruments outstanding at December 31, 1997. The resulting value at risk of $0.8 million estimates the potential loss the Company could incur in a one-day period with a 95% confidence level from foreign exchange derivative instruments due to adverse foreign exchange rate changes. Interest rate exposures. The table below represents principal (or notional) amounts and related weighted average interest rates by year of maturity for the Company's restricted cash and long-term debt obligations. Other notes of $0.1 million with varying interest rates as shown in Note 6 to the financial statements are excluded from the table below.
Expected maturity date Fair US $ Equivalent --------- ---------- ---------- ---------- ---------- ----------- in millions 1998 1999 2000 2001 2002 Thereafter Total Value - ----------------------------------------- --------- ---------- ---------- ---------- ---------- ----------- --------- ------------ Assets Restricted cash - British pound sterling 3.6 4.2 4.2 4.2 4.2 2.4 22.8 22.8 Average variable rate 8.45% 8.07% 7.83% 7.69% 7.58% 7.51% 8.03% Long-term debt: US dollar - 50.0 - - 75.0 375.0 500.0 554.0 Average fixed rate - 6.27% - - 6.30% 7.83% 7.77% British pound sterling (Dockyard Loans) 7.1 8.4 8.3 8.3 8.3 5.5 45.9 45.9 Average variable rate 8.45% 8.07% 7.83% 7.69% 7.58% 7.51% 8.03% - ----------------------------------------- --------- ---------- ---------- ---------- ---------- ----------- --------- ------------
Weighted average variable rates are based on implied forward rates in the yield curve at December 31, 1997. These implied forward rates should not be viewed as predictions of actual future interest rates. Restricted cash and the Dockyard Loans earn interest at LIBOR plus 0.75%. Instruments that are denominated in currencies other than the US dollar reporting currency are subject to foreign exchange rate risk as well as interest rate risk. ENVIRONMENTAL MATTERS The Company is involved as a potentially responsible party in remedial activities to clean up several "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 one of such sites will not have a material adverse effect on the results of operations of the Company. See Note 11 to the financial statements. YEAR 2000 ISSUE The Year 2000 issue is the risk that computer programs using two-digit date fields will fail to properly recognize the year 2000, with the result being business interruptions due to computer system failures by the Company's software and hardware or that of government entities, service providers, vendors and customers. In response to the Year 2000 issue, the Company has formed a cross-functional task force responsible for assessing the Company's Year 2000 readiness. The task force has developed a comprehensive plan to assess the Company's Year 2000 risk and is in the process of performing its review. The Company anticipates that certain software will require replacement or modification. Independent of, but concurrent with, the Company's Year 2000 review, the Company is installing an enterprise-wide business information system. This information system is scheduled to replace approximately two-thirds of the Company's key finance, administrative and marketing software systems before the end of 1999 and is Year 2000 compliant. Based on the Company's review to date, it does not expect the cost of software replacement or modification not currently included in the Company's enterprise-wide information system to be material to its financial position or results of operations. 11 ACCOUNTING PRONOUNCEMENTS In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income," which requires presentation of total nonowner changes in equity for all periods displayed. The Company plans to adopt this statement for the year ending December 31, 1998, and is evaluating alternative disclosure formats suggested by the standard. In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information." This standard defines reporting requirements for operating segments and related information about products and services, geographic areas and reliance on major customers. The Company is evaluating the impact of this statement on its current reporting and expects to adopt the new standard for its year ending December 31, 1998, with interim reporting beginning in 1999. FORWARD LOOKING INFORMATION In accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the Company cautions that the statements in this annual report and elsewhere, which are forward looking and which provide other than historical information, involve risks and uncertainties that may impact the Company's actual results of operations. While such forward-looking information reflects the Company's best judgment based on current information, it involves a number of risks and uncertainties and there can be no assurance that other factors will not affect the accuracy of such forward-looking information. While it is not possible to identify all factors, the Company continues to face many risks and uncertainties that could cause actual results to differ from those forward looking statements. Such factors include: unsettled political conditions, war, civil unrest, currency controls and governmental actions in over 100 countries of operation; trade restrictions and economic embargoes imposed by the United States and other countries; environmental laws, including those that require emission performance standards for new and existing facilities; the magnitude of governmental spending for military and logistical support of the type provided by the Company; operations in countries with significant amounts of political risk, including, without limitation, Algeria and Nigeria; technological and structural changes in the industries served by the Company; computer software and hardware used by governmental entities, service providers, vendors, customers and the Company which may be impacted by the Year 2000 issue; integration of acquired businesses into the Company; changes in the price of oil and natural gas; changes in the price of commodity chemicals used by the Company; changes in capital spending by customers in the hydrocarbon industry for exploration, development, production, processing, refining and pipeline delivery networks; increased competition in the hiring and retention of employees; changes in capital spending by customers in the wood pulp and paper industries for plants and equipment; and changes in capital spending by governments for infrastructure. In addition, future trends for pricing, margins, revenues and profitability remain difficult to predict in the industries served by the Company. 12 RESPONSIBILITY FOR FINANCIAL REPORTING Halliburton Company is responsible for the preparation and integrity of its published financial statements. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States and, as such, include amounts based on judgments and estimates made by management. The Company also prepared the other information included in the annual report and is responsible for its accuracy and consistency with the financial statements. The financial statements have been audited by the independent accounting firm, Arthur Andersen LLP, which was given unrestricted access to all financial records and related data, including minutes of all meetings of stockholders, the Board of Directors and committees of the Board. The Company maintains a system of internal control over financial reporting, which is intended to provide reasonable assurance to the Company's management and Board of Directors regarding the preparation of financial statements. The system includes a documented organizational structure and division of responsibility, established policies and procedures, including a code of conduct to foster a strong ethical climate, which are communicated throughout the Company, and the careful selection, training and development of our people. Internal auditors monitor the operation of the internal control system and report findings and recommendations to management and the Board of Directors, and corrective actions are taken to address control deficiencies and other opportunities for improving the system as they are identified. The Board, operating through its audit committee, which is composed entirely of Directors who are not current or former officers or employees of the Company, provides oversight to the financial reporting process. There are inherent limitations in the effectiveness of any system of internal control, including the possibility of human error and the circumvention or overriding of controls. Accordingly, even an effective internal control system can provide only reasonable assurance with respect to financial statement preparation. Furthermore, the effectiveness of an internal control system may change over time. The Company assessed its internal control system in relation to criteria for effective internal control over financial reporting described in "Internal Control-Integrated Framework" issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based upon that assessment, the Company believes that, as of December 31, 1997, its system of internal control over financial reporting met those criteria. HALLIBURTON COMPANY by Dick Cheney Gary V. Morris Chairman of the Board and Executive Vice President and Chief Executive Officer Chief Financial Officer 13 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Shareholders and Board of Directors, Halliburton Company: We have audited the accompanying consolidated balance sheets of Halliburton Company (a Delaware corporation) and subsidiary companies as of December 31, 1997 and 1996, and the related consolidated statements of income, cash flows and shareholders' equity for each of the three years in the period ended December 31, 1997. These financial statements are the responsibility of Halliburton Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Halliburton Company and subsidiary companies as of December 31, 1997 and 1996, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1997, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Dallas, Texas, January 22, 1998 14
Consolidated Statements of Income Years ended December 31 Millions of dollars except per share data 1997 1996 1995 - ----------------------------------------------------------------------------------------------------------------------------- Revenues Energy Group $ 5,756.4 $ 4,286.3 $ 3,604.0 Engineering and Construction Group 3,062.2 3,098.8 2,278.9 ------------------------------------------------ Total revenues $ 8,818.6 $ 7,385.1 $ 5,882.9 - ----------------------------------------------------------------------------------------------------------------------------- Operating income Energy Group $ 706.4 $ 484.4 $ 398.2 Engineering and Construction Group 133.9 53.7 44.6 Special charges (8.6) (85.8) (8.4) General corporate (33.6) (34.4) (33.5) ------------------------------------------------ Total operating income 798.1 417.9 400.9 Interest expense (42.7) (24.1) (47.1) Interest income 11.7 14.2 32.0 Foreign currency gains (losses) (0.9) (3.9) 1.4 Other nonoperating income, net 0.1 0.1 0.6 ------------------------------------------------ Income from continuing operations before income taxes and minority interest 766.3 404.2 387.8 Provision for income taxes (300.0) (103.3) (137.7) Minority interest in net income of consolidated subsidiaries (11.9) (0.5) (0.9) ------------------------------------------------ Income from continuing operations 454.4 300.4 249.2 Loss from discontinued operations - - (65.5) ------------------------------------------------ Net income $ 454.4 $ 300.4 $ 183.7 - ----------------------------------------------------------------------------------------------------------------------------- Basic income (loss) per share Continuing operations $ 1.78 $ 1.20 $ 1.00 Discontinued operations - - (0.26) ------------------------------------------------ Net income $ 1.78 $ 1.20 $ 0.74 - ----------------------------------------------------------------------------------------------------------------------------- Diluted income (loss) per share Continuing operations $ 1.75 $ 1.19 $ 1.00 Discontinued operations - - (0.26) ------------------------------------------------ Net income $ 1.75 $ 1.19 $ 0.74 - ----------------------------------------------------------------------------------------------------------------------------- See notes to financial statements.
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Consolidated Balance Sheets December 31 Millions of dollars and shares except per share data 1997 1996 - -------------------------------------------------------------------------------------------------------------------- Assets Current assets: Cash and equivalents $ 221.3 $ 213.6 Receivables: Notes and accounts receivable (less allowance for bad debts of $38.4 and $43.6) 1,815.8 1,413.4 Unbilled work on uncompleted contracts 390.0 288.9 -------------------------------- Total receivables 2,205.8 1,702.3 Inventories 326.9 292.2 Deferred income taxes, current 106.6 108.7 Other current assets 111.0 81.2 -------------------------------- Total current assets 2,971.6 2,398.0 Property, plant and equipment: At cost 3,988.0 3,560.8 Less accumulated depreciation 2,325.3 2,269.2 -------------------------------- Net property, plant and equipment 1,662.7 1,291.6 Equity in and advances to related companies 338.7 234.9 Excess of cost over net assets acquired (net of accumulated amortization of $56.2 and $42.7) 323.1 233.9 Deferred income taxes, noncurrent 91.3 98.6 Other assets 215.6 179.6 -------------------------------- Total assets $ 5,603.0 $ 4,436.6 - -------------------------------------------------------------------------------------------------------------------- Liabilities and Shareholders' Equity Current liabilities: Short-term notes payable $ 2.7 $ 46.3 Current maturities of long-term debt 7.1 0.1 Accounts payable 586.5 452.1 Accrued employee compensation and benefits 262.3 193.7 Advance billings on uncompleted contracts 303.7 336.3 Income taxes payable 213.1 135.8 Deferred revenues 38.4 18.9 Other current liabilities 359.1 321.5 -------------------------------- Total current liabilities 1,772.9 1,504.7 Long-term debt 538.9 200.0 Employee compensation and benefits 323.6 281.1 Other liabilities 363.2 290.2 Minority interest in consolidated subsidiaries 19.7 1.4 -------------------------------- Total liabilities and minority interest 3,018.3 2,277.4 Shareholders' equity: Common stock, par value $2.50 per share - authorized 400.0 shares, issued 268.8 (post-split) and 129.3 (pre-split) shares 672.0 323.3 Paid-in capital in excess of par value 87.2 322.2 Cumulative translation adjustment (15.0) (12.4) Retained earnings 1,947.6 1,656.3 -------------------------------- 2,691.8 2,289.4 Less 6.5 (post-split) and 4.0 (pre-split) shares treasury stock, at cost 107.1 130.2 -------------------------------- Total shareholders' equity 2,584.7 2,159.2 -------------------------------- Total liabilities and shareholders' equity $ 5,603.0 $ 4,436.6 - -------------------------------------------------------------------------------------------------------------------- See notes to financial statements.
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Consolidated Statements of Cash Flows Years ended December 31 Millions of dollars 1997 1996 1995 - ---------------------------------------------------------------------------------------------------------------------------- Cash flows from operating activities: Net income $ 454.4 $ 300.4 $ 183.7 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization 309.5 267.9 259.8 Provision (benefit) for deferred income taxes 9.4 (23.8) 46.0 Distributions from (advances to) related companies, net of equity in (earnings) or losses (64.7) (65.9) (20.5) Appreciation of zero coupon bonds - - 15.0 Net loss from discontinued operations - - 65.5 Other non-cash items 21.8 8.9 (8.2) Other changes, net of non-cash items: Receivables (300.9) (218.2) (91.6) Inventories (14.1) (46.0) 17.6 Accounts payable (41.6) 63.7 76.5 Other working capital, net 93.7 251.5 192.1 Other, net 80.7 (86.5) (68.5) ---------------------------------------- Total cash flows from operating activities 548.2 452.0 667.4 ---------------------------------------- Cash flows from investing activities: Capital expenditures (577.1) (395.7) (303.3) Sales of property, plant and equipment 44.9 49.8 36.0 Acquisitions of businesses, net of cash acquired (157.9) (31.6) (10.3) Dispositions of businesses, net of cash disposed 37.6 21.6 25.9 Other investing activities (34.2) (53.5) (15.6) ---------------------------------------- Total cash flows from investing activities (686.7) (409.4) (267.3) ---------------------------------------- Cash flows from financing activities: Borrowings of long-term debt 301.5 0.1 - Payments on long-term debt (17.7) (5.2) (465.4) Net borrowings (payments) of short-term debt (54.6) 38.3 (27.0) Payments of dividends to shareholders (127.3) (117.5) (114.3) Proceeds from exercises of stock options 49.5 25.6 9.7 Payments to reacquire common stock (2.2) (7.1) (2.2) Other financing activities 2.4 - 0.2 ---------------------------------------- Total cash flows from financing activities 151.6 (65.8) (599.0) ---------------------------------------- Effect of exchange rate changes on cash (5.4) (2.8) (2.8) ---------------------------------------- Increase (decrease) in cash and equivalents 7.7 (26.0) (201.7) Cash and equivalents at beginning of year 213.6 239.6 441.3 ---------------------------------------- Cash and equivalents at end of year $ 221.3 $ 213.6 $ 239.6 - ---------------------------------------------------------------------------------------------------------------------------- Supplemental disclosure of cash flow information: Cash payments during the period for: Interest $ 35.2 $ 24.9 $ 26.2 Income taxes 165.2 35.5 29.9 Non-cash investing and financing activities: Liabilities assumed in acquisitions of businesses $ 336.5 $ 24.8 $ 4.1 Liabilities disposed of in dispositions of businesses 11.9 9.8 14.6 See notes to financial statements.
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Consolidated Statements of Shareholders' Equity Years ended December 31 Millions of dollars and shares except per share data 1997 1996 1995 - ----------------------------------------------------------------------------------------------------------------------- Common stock (number of shares): Balance at beginning of year 129.3 129.1 128.8 Shares issued (forfeited) under incentive stock plans, net 1.3 0.3 0.2 Cancellation of treasury stock - (0.1) - Shares issued in connection with acquisition 8.2 - 0.1 Two-for-one common stock split 130.0 - - ----------------------------------------------------- Balance at end of year 268.8 129.3 129.1 - ----------------------------------------------------------------------------------------------------------------------- Common stock (dollars): Balance at beginning of year $ 323.3 $ 322.7 $ 322.1 Shares issued (forfeited) under incentive stock plans, net 3.2 0.9 0.5 Cancellation of treasury stock - (0.3) - Shares issued in connection with acquisition 20.5 - 0.1 Two-for-one common stock split 325.0 - - ----------------------------------------------------- Balance at end of year $ 672.0 $ 323.3 $ 322.7 - ----------------------------------------------------------------------------------------------------------------------- Paid-in capital in excess of par value: Balance at beginning of year $ 322.2 $ 302.9 $ 298.4 Shares issued (forfeited) under incentive stock plans, net 53.4 22.9 4.5 Cancellation of treasury stock - (3.6) - Shares issued in connection with acquisition 36.6 - - Two-for-one common stock split (325.0) - - ----------------------------------------------------- Balance at end of year $ 87.2 $ 322.2 $ 302.9 - ----------------------------------------------------------------------------------------------------------------------- Cumulative translation adjustment: Balance at beginning of year $ (12.4) $ (28.0) $ (23.1) Changes net of tax of ($0.3) in 1997, $3.7 in 1996 and ($0.5) in 1995 (2.6) 15.6 (4.9) ----------------------------------------------------- Balance at end of year $ (15.0) $ (12.4) $ (28.0) - ----------------------------------------------------------------------------------------------------------------------- Retained earnings: Balance at beginning of year $ 1,656.3 $ 1,473.4 $ 1,656.6 Net income 454.4 300.4 183.7 Cash dividends paid ($0.50 per share post-split; $1.00 per share pre-split) (127.3) (117.5) (114.3) Spin-off of Highlands Insurance Group, Inc. - - (268.6) Net change in unrealized gains (losses) on investments held by discontinued operation - - 16.3 Pooling of interests acquisition (35.8) - - Shares issued in connection with acquisition - - (0.3) ----------------------------------------------------- Balance at end of year $ 1,947.6 $ 1,656.3 $ 1,473.4 - ----------------------------------------------------------------------------------------------------------------------- Treasury stock (number of shares): Balance at beginning of year 4.0 4.6 5.0 Shares issued under incentive stock plans, net (0.8) (0.7) (0.5) Purchase of common stock - 0.2 0.1 Cancellation of treasury stock - (0.1) - Two-for-one common stock split 3.3 - - ----------------------------------------------------- Balance at end of year 6.5 4.0 4.6 - ----------------------------------------------------------------------------------------------------------------------- Treasury stock (dollars): Balance at beginning of year $ 130.2 $ 150.8 $ 163.8 Shares issued under incentive stock plans, net (25.3) (23.8) (15.2) Purchase of common stock 2.2 7.1 2.2 Cancellation of treasury stock - (3.9) - ----------------------------------------------------- Balance at end of year $ 107.1 $ 130.2 $ 150.8 - -----------------------------------------------------------------------------------------------------------------------
See notes to financial statements. 18 NOTES TO FINANCIAL STATEMENTS Note 1. Significant Accounting Policies The Company employs accounting policies that are in accordance with generally accepted accounting principles in the United States. The preparation of financial statements in conformity with generally accepted accounting principles requires Company management to make estimates and assumptions that affect the reported assets and liabilities, the disclosed contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting period. Ultimate results could differ from those estimates. Principles of Consolidation. The consolidated financial statements include the accounts of the Company and all majority-owned subsidiaries. All material intercompany accounts and transactions are eliminated. Investments in other affiliated companies in which the Company has at least 20% ownership and does not have management control are accounted for on the equity method. Certain prior year amounts have been reclassified to conform with the current year presentation. Revenues and Income Recognition. The Company recognizes revenues as services are rendered or products are shipped. The distinction between services and product sales is based upon the overall business intent of the particular business operation. Revenues from construction contracts are reported on the percentage of completion method of accounting using measurements of progress toward completion appropriate for the work performed. All known or anticipated losses on contracts are provided for currently. Claims for additional compensation are recognized during the period such claims are resolved. Post-contract customer support agreements are recorded as deferred revenues and recognized as revenue ratably over the contract periods of generally one year duration. Training and consulting service revenue is recognized as the services are performed. Research and Development. Research and development expenses are charged to income as incurred. Such charges were $164.7 million in 1997, $133.3 million in 1996 and $113.1 million in 1995. Software Development Costs. Costs of developing software for sale are charged to expense when incurred as research and development until technological feasibility has been established for the product. Thereafter, software development costs are capitalized until the software is ready for general release to customers. The Company capitalized costs of $14.5 million in 1997, $12.9 million in 1996 and $8.8 million in 1995 related to software developed for resale. Amortization expense related to these costs was $15.0 million, $12.5 million and $10.3 million for 1997, 1996 and 1995, respectively. Once the software is ready for release, amortization of the software development costs begins. Capitalized software development costs are amortized over periods which do not exceed three years. Income Per Share. Basic income per share amounts are based on the weighted average number of common shares outstanding during the year. Diluted income per share includes additional common shares that would have been outstanding if potential common shares with a dilutive effect had been issued. See Note 8 for a reconciliation of basic and diluted income per share from continuing operations. Prior year amounts have been adjusted for the two-for-one common stock split declared on June 9, 1997 and effected in the form of a stock dividend and paid on July 21, 1997. Cash Equivalents. The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Receivables. The Company's receivables are generally not collateralized. Notes and accounts receivable at December 31, 1997 include $30.4 million ($24.9 million at December 31, 1996) due from customers in accordance with applicable retainage provisions of engineering and construction contracts, which will become billable upon future deliveries or completion of such contracts. This amount is expected to be collected during 1998. Additionally, other noncurrent assets include $7.3 million ($6.7 million at December 31, 1996) of such retainage which is expected to be collected in years subsequent to 1998. Unbilled work on uncompleted contracts generally represents work currently billable and such work is usually billed during normal billing processes in the next month. At December 31, 1997, notes of $9.5 million ($14.6 million at December 31, 1996) with varying interest rates are included in notes and accounts receivable. Inventories. Inventories are stated at the lower of cost or market. Cost represents invoice or production cost for new items and original cost less allowance for condition for used material returned to stock. Production cost includes material, labor and manufacturing overhead. About forty-two percent of all sales items are valued on a last-in, first-out (LIFO) basis. Inventories of sales items owned by foreign subsidiaries and inventories of operating supplies and parts are generally valued at average cost. 19 Property, Plant and Equipment. Property, plant and equipment is reported at cost less accumulated depreciation, which is generally provided on the straight-line method over the estimated useful lives of the assets. Expenditures for maintenance and repairs are expensed; expenditures for renewals and improvements are generally capitalized. Upon sale or retirement of an asset, the related costs and accumulated depreciation are removed from the accounts and any gain or loss is recognized. When events or changes in circumstances indicate that assets may be impaired, an evaluation is performed comparing the estimated future undiscounted cash flows associated with the asset to the asset's carrying amount to determine if a write-down to market value or discounted cash flow value is required. The Company follows the successful efforts method of accounting for oil and gas properties. At December 31, 1997, there were no significant oil and gas properties in the production stage of development. The Company is implementing an enterprise-wide information system. External direct costs of materials and services and payroll-related costs of employees working solely on development of the software system portion of the project are capitalized. Capitalized costs of the project will be amortized over periods of three to ten years beginning when the system is placed in service. Training costs and costs to reengineer business processes are expensed as incurred. Excess of cost over net assets acquired. The excess of cost over net assets acquired is amortized on a straight-line basis over periods not exceeding 40 years. Income Taxes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefit, or that future deductibility is prohibited or uncertain. Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been realized in the financial statements or tax returns. Derivative Instruments. The Company primarily enters into derivative financial transactions to hedge existing or projected exposures to changing foreign exchange rates and from time to time enters into derivatives to hedge exposures to interest rates or commodity prices. The Company does not enter into derivative transactions for speculative or trading purposes. Derivative financial instruments to hedge exposure with an indeterminable maturity date are generally carried at fair value with the resulting gains and losses reflected in the results of operations. Gains or losses on hedges of identifiable commitments are deferred and recognized when the offsetting gains or losses on the related hedged items are recognized. Deferred gains or losses for hedges which are terminated prior to the transaction date are recognized currently. In the event an identifiable commitment is no longer expected to be realized, any deferred gains or losses on hedges associated with the commitment are recognized currently. Costs associated with entering into such contracts are presented in other assets, while deferred gains or losses are included in other liabilities or other assets, respectively, on the consolidated balance sheets. Recognized gains or losses on derivatives entered into to manage foreign exchange risk are included in foreign currency gains and losses on the consolidated statements of income, while gains or losses on interest rate derivatives and commodity derivatives are included in interest expense and operating income, respectively. During the years ended December 31, 1997, 1996 and 1995, the Company did not enter into any significant transactions to hedge interest rates or commodity prices. Foreign Currency Translation. Foreign entities whose functional currency is the U.S. dollar translate monetary assets and liabilities at year-end exchange rates and non-monetary items are translated at historical rates. Income and expense accounts are translated at the average rates in effect during the year, except for depreciation and cost of product sales which are translated at historical rates. Gains or losses from changes in exchange rates are recognized in consolidated income in the year of occurrence. Foreign entities whose functional currency is the local currency translate net assets at year-end rates and income and expense accounts at average exchange rates. Adjustments resulting from these translations are reflected in the shareholders' equity section of the consolidated balance sheets titled "cumulative translation adjustment." 20 Note 2. Inventories Inventories at December 31, 1997 and 1996 are comprised of the following:
Millions of dollars 1997 1996 - ------------------------------------------------------------------------------------- Sales items $ 114.9 $ 104.3 Supplies and parts 158.1 136.3 Work in process 29.3 30.4 Raw materials 24.6 21.2 ------------------------- Total $ 326.9 $ 292.2 - -------------------------------------------------------------------------------------
If the average cost method had been in use for inventories on the LIFO basis, total inventories would have been about $3.4 million and $13.0 million higher than reported at December 31, 1997 and 1996, respectively. Note 3. Property, Plant and Equipment Property, plant and equipment at December 31, 1997 and 1996 is comprised of the following:
Millions of dollars 1997 1996 - ------------------------------------------------------------------------------------- Land $ 62.7 $ 63.9 Buildings and property improvements 624.0 568.2 Machinery and equipment 2,768.0 2,653.8 Other 533.3 274.9 ------------------------- Total $ 3,988.0 $ 3,560.8 - -------------------------------------------------------------------------------------
At December 31, 1997 and 1996, other property includes oil and gas investments of approximately $101.7 million and $5.9 million and software developed for internal use of $59.5 million and $10.0 million, respectively. 21 Note 4. Related Companies The Company conducts some of its operations through various joint ventures which are in partnership, corporate and other business forms, which are principally accounted for using the equity method. Included in the Company's revenues for 1997, 1996 and 1995 are equity in income of related companies of $124.4 million, $105.5 million and $88.4 million, respectively. Summarized financial statements for European Marine Contractors, Limited, a 50% owned company and a part of the Energy Group which specializes in engineering, procurement and construction of marine pipelines, and for the remaining combined jointly owned operations which are not consolidated are as follows:
COMBINED OPERATING RESULTS Millions of dollars 1997 1996 1995 - ------------------------------------------------------------------------------------------- European Marine Contractors Revenues $ 436.1 $ 246.5 $ 361.8 - ------------------------------------------------------------------------------------------- Operating income $ 75.9 $ 65.5 $ 106.9 - ------------------------------------------------------------------------------------------- Net income $ 48.5 $ 43.7 $ 72.6 - ------------------------------------------------------------------------------------------- Other Affiliates Revenues $ 2,441.4 $ 2,276.4 $ 1,767.2 - ------------------------------------------------------------------------------------------- Operating income $ 247.2 $ 197.7 $ 92.9 - ------------------------------------------------------------------------------------------- Net income $ 202.5 $ 158.8 $ 63.0 - -------------------------------------------------------------------------------------------
COMBINED FINANCIAL POSITION Millions of dollars 1997 1996 - ----------------------------------------------------------------------------------------- European Marine Contractors Current assets $ 214.6 $ 263.1 Noncurrent assets 31.7 25.6 --------------------------- Total $ 246.3 $ 288.7 - ----------------------------------------------------------------------------------------- Current liabilities $ 219.9 $ 226.4 Noncurrent liabilities 6.2 3.8 Shareholders' equity 20.2 58.5 --------------------------- Total $ 246.3 $ 288.7 - ----------------------------------------------------------------------------------------- Other Affiliates Current assets $ 887.2 $ 871.3 Noncurrent assets 670.4 615.2 --------------------------- Total $ 1,557.6 $ 1,486.5 - ----------------------------------------------------------------------------------------- Current liabilities $ 450.6 $ 572.9 Noncurrent liabilities 303.4 277.4 Minority interests 8.1 6.6 Shareholders' equity 795.5 629.6 --------------------------- Total $ 1,557.6 $ 1,486.5 - -----------------------------------------------------------------------------------------
In the second quarter of 1997, Halliburton Energy Services, which is part of the Energy Group, acquired a 26% ownership interest in PES (International) Limited (PES) for approximately $33.6 million which includes approximately $30.0 million excess of cost over net assets acquired to be amortized over thirty years. The purchase price is included in acquisitions of businesses in the consolidated statements of cash flows. 22 In the second quarter of 1996, M-I Drilling Fluids Company, L.L.C., a 36% owned joint venture, purchased Anchor Drilling Fluids. The Company's share of the purchase price was $41.3 million and is included in cash flows from other investing activities. Note 5. Income Taxes The components of the (provision) benefit for income taxes are:
Millions of dollars 1997 1996 1995 - ------------------------------------------------------------------------------------------------ Current income taxes Federal $ (104.7) $ (21.5) $ (6.4) Foreign (178.7) (102.7) (79.9) State (7.2) (2.9) (5.4) ------------------------------------ Total (290.6) (127.1) (91.7) ------------------------------------ Deferred income taxes Federal (1.3) 58.2 (11.2) Foreign and state (8.1) (34.4) (34.8) ------------------------------------ Total (9.4) 23.8 (46.0) ------------------------------------ Total $ (300.0) $ (103.3) $ (137.7) - ------------------------------------------------------------------------------------------------
Included in income taxes are foreign tax credits of $88.4 million in 1997, $63.7 million in 1996 and $35.2 million in 1995. The United States and foreign components of income from continuing operations before income taxes and minority interests are as follows:
Millions of dollars 1997 1996 1995 - ------------------------------------------------------------------------------------------------ United States $ 461.4 $ 217.2 $ 234.6 Foreign 304.9 187.0 153.2 ------------------------------------ Total $ 766.3 $ 404.2 $ 387.8 - ------------------------------------------------------------------------------------------------
23 The primary components of the Company's deferred tax assets and liabilities and the related valuation allowances are as follows:
Millions of dollars 1997 1996 - ---------------------------------------------------------------------------------- Gross deferred tax assets Employee benefit plans $ 120.0 $ 95.2 Accrued liabilities 67.8 71.9 Construction contract accounting methods 50.4 38.6 Intercompany profit 39.3 34.2 Insurance accruals 38.4 30.0 Net operating loss carryforwards 35.8 62.8 Foreign tax credits 21.2 29.8 Alternative minimum tax carryforward 15.1 19.3 All other 75.7 82.2 ---------------------- Total 463.7 464.0 ---------------------- Gross deferred tax liabilities Depreciation and amortization 76.1 56.7 Unrepatriated foreign earnings 35.6 34.1 Safe harbor leases 11.0 12.0 All other 85.0 83.6 ---------------------- Total 207.7 186.4 ---------------------- Valuation allowances Net operating loss carryforwards 24.8 36.3 All other 33.3 34.0 ---------------------- Total 58.1 70.3 ---------------------- Net deferred income tax asset $ 197.9 $207.3 - ----------------------------------------------------------------------------------
The Company has provided for the potential repatriation of certain undistributed earnings of its foreign subsidiaries and considers earnings above the amounts on which tax has been provided to be permanently reinvested. While these additional earnings could become subject to additional tax if repatriated, such a repatriation is not anticipated. Any additional amount of tax is not practicable to estimate. 24 The Company has foreign tax credits which expire in 2000 of $21.2 million. The Company has net operating loss carryforwards which expire as follows: 1998, $13.1 million; 1999, $15.3 million; 2000, $9.6 million; 2001 through 2005, $16.1 million; 2006 through 2010, $10.6 million. The Company also has net operating loss carryforwards of $40.6 million with indefinite expiration dates. Reconciliations between the actual provision for income taxes and that computed by applying the U.S. statutory rate to income from continuing operations before income taxes and minority interest are as follows:
Millions of dollars 1997 1996 1995 - ------------------------------------------------------------------------------------------------ Provision computed at statutory rate $ (268.2) $ (141.5) $ (135.7) Reductions (increases) in taxes resulting from: Tax differentials on foreign earnings (19.5) 3.7 (35.4) State income taxes, net of federal income tax benefit (6.6) (2.9) (5.1) Net operating losses - 23.0 48.6 Federal income tax settlement - 16.1 - Nondeductible meals and entertainment (5.4) (4.8) (5.0) Other items, net (0.3) 3.1 (5.1) ------------------------------------ Total $ (300.0) $ (103.3) $ (137.7) - ------------------------------------------------------------------------------------------------
The Company has received statutory notices of deficiency for the 1990 and 1991 tax years from the Internal Revenue Service (IRS) of $92.9 million and $16.8 million, respectively, excluding any penalties or interest. The Company believes it has meritorious defenses and does not expect that any liability resulting from the 1990 or 1991 tax years will result in a material adverse effect on its results of operations or financial position. In 1996, the Company reached settlements with the IRS for certain matters including the 1989 taxable year. As a result of the settlement for the 1989 taxable year, the Company recognized tax benefits and net income was increased by $16.1 million in 1996 (see Note 16). 25 Note 6. Lines of Credit, Notes Payable and Long-Term Debt At December 31, 1997, the Company had committed short-term lines of credit totaling $200.0 million available and unused, and other short-term lines of credit totaling $275.0 million with several U.S. banks. No borrowings were outstanding under these facilities at December 31, 1997. In addition, the Company had $2.7 million of other short-term debt outstanding at December 31, 1997, primarily consisting of foreign bank overdrafts with an average interest rate of 7.31%. At December 31, 1996, the Company had committed short-term lines of credit totaling $185.0 million available and unused, and other short-term lines of credit totaling $275.0 million, under which $25.0 million in borrowings was outstanding with several U.S. banks. The interest rate on these borrowings was 5.65%. In addition, the Company had $21.3 million of other short-term debt outstanding at December 31, 1996, primarily consisting of commercial paper with an interest rate of 5.85%. Long-term debt at December 31, 1997 and 1996 consists of the following:
Millions of dollars 1997 1996 - ------------------------------------------------------------------------------------ 8.75% debentures due February 15, 2021 $ 200.0 $ 200.0 Medium-term notes due February 1, 2027 125.0 - Medium-term notes due May 12, 2017 50.0 - Medium-term notes due July 8, 1999 50.0 - Medium-term notes due August 5, 2002 75.0 - Term loans at LIBOR plus 0.75% payable in semi-annual installments through March 2004 45.9 - Other notes with varying interest rates 0.1 0.1 ------------------------ 546.0 200.1 Less current portion 7.1 0.1 ------------------------ Total long-term debt $ 538.9 $ 200.0 - ------------------------------------------------------------------------------------
The Company's 8.75% debentures due February 15, 2021 do not have sinking fund requirements and are not redeemable prior to maturity. During 1997, the Company issued notes under its medium-term note program as follows:
Amount Issue Date Due Rate Prices Yield ----------------- ---------------- ----------------- ------------- -------------- ------------ $ 125 million 02/11/97 02/01/2027 6.75% 99.78% 6.78% $ 50 million 05/12/97 05/12/2017 7.53% Par 7.53% $ 50 million 07/08/97 07/08/1999 6.27% Par 6.27% $ 75 million 08/05/97 08/05/2002 6.30% Par 6.30%
The medium-term notes may not be redeemed at the option of the Company prior to maturity. There is no sinking fund applicable to the notes. Each holder of the 6.75% medium-term notes has the right to require the Company to repay such holder's notes, in whole or in part, on February 1, 2007. The net proceeds from the sale of the notes were used for general corporate purposes. During March 1997, the Company incurred $56.3 million of term loans in connection with the acquisition of the Royal Dockyard in Plymouth, England (the Dockyard Loans). The Dockyard Loans are denominated in Sterling and bear interest at LIBOR plus 0.75% payable in semi-annual installments through March 2004. Pursuant to certain terms of the Dockyard Loans, the Company was required to provide initially a compensating balance of $28.7 million which is restricted as to use by the Company. The compensating balance amount decreases in equal installments over the term of the Dockyard Loans and earns interest at a rate equal to that of the Dockyard Loans. At December 31, 1997, the compensating balance of $22.8 million is included in other assets in the consolidated balance sheets. Long-term debt matures over the next five years as follows: $7.1 million in 1998; $58.4 million in 1999; $8.3 million in 2000; $8.3 million in 2001; and $83.3 million in 2002. 26 Note 7. Common Stock On May 20, 1997, the Company's shareholders voted to increase the Company's number of authorized shares from 200.0 million shares to 400.0 million shares. On June 9, 1997, the Company's Board of Directors approved a two-for-one stock split effected in the form of a stock dividend distributed on July 21, 1997 to shareholders of record on June 26, 1997. The par value of the Company's common stock of $2.50 per share remained unchanged. As a result of the stock split, $325.0 million was transferred from paid-in capital in excess of par value to common stock. Historical share and per share amounts presented on the consolidated statements of income and in the discussion below concerning stock options and restricted stock have been restated to reflect the stock split. The Company's 1993 Stock and Long-Term Incentive Plan (1993 Plan) provides for the grant of any or all of the following types of awards: (1) stock options, including incentive stock options and non-qualified stock options; (2) stock appreciation rights, in tandem with stock options or freestanding; (3) restricted stock; (4) performance share awards; and (5) stock value equivalent awards. Under the terms of the 1993 Plan as amended, 27 million shares of the Company's Common Stock have been reserved for issuance to key employees. At December 31, 1997, 14.8 million shares were available for future grants under the 1993 Plan. In connection with the acquisitions of Landmark Graphics Corporation (Landmark) and NUMAR Corporation (NUMAR) (see Note 15), outstanding stock options under the stock option plans maintained by Landmark and NUMAR were assumed by the Company. Stock option transactions summarized below include amounts for the 1993 Plan, the Landmark plans using the acquisition exchange rate of 1.148 shares for each Landmark share, and the NUMAR plans using the acquisition exchange rate of .9664 shares for each NUMAR share.
Exercise Weighted Average Number of Price per Exercise Price Shares Share per Share - --------------------------------------------------------------------------------------------------- Outstanding at December 31, 1994 6,229,642 $ 0.53 - 29.73 $ 15.69 - --------------------------------------------------------------------------------------------------- Granted 3,966,714 15.68 - 25.32 20.53 Exercised (701,548) 0.53 - 20.91 13.81 Forfeited (265,194) 8.71 - 28.77 17.27 - --------------------------------------------------------------------------------------------------- Outstanding at December 31, 1995 9,229,614 2.90 - 29.73 17.87 - --------------------------------------------------------------------------------------------------- Granted 3,599,340 14.48 - 29.57 27.70 Exercised (1,994,574) 2.90 - 23.52 15.58 Forfeited (445,660) 8.71 - 28.09 18.81 - --------------------------------------------------------------------------------------------------- Outstanding at December 31, 1996 10,388,720 3.49 - 29.73 21.67 - --------------------------------------------------------------------------------------------------- Options assumed in acquisition 854,050 3.10 - 22.12 12.22 Granted 1,263,600 30.88 - 61.50 52.19 Exercised (2,765,247) 3.10 - 29.56 16.82 Forfeited (325,573) 9.15 - 35.13 21.56 - --------------------------------------------------------------------------------------------------- Outstanding at December 31, 1997 9,415,550 $ 3.10 - 61.50 $ 26.35 - ---------------------------------------------------------------------------------------------------
27 Options outstanding at December 31, 1997 are composed of the following:
Outstanding Exercisable ------------------------------------------------ -------------------------------- Weighted Number of Average Weighted Number of Weighted Shares at Remaining Average Shares at Average Range of December 31, Contractual Exercise December 31, Exercise Exercise Prices 1997 Life Price 1997 Price - ---------------------- ----------------- -------------- --------------- ---------------- --------------- $ 3.10 - 11.11 351,453 4.87 $ 7.20 345,657 $ 7.13 11.25 - 18.13 2,309,203 6.93 16.35 1,957,596 16.28 18.24 - 29.19 3,002,268 7.21 22.75 1,792,155 22.11 29.56 - 61.50 3,752,626 9.22 37.18 808,284 29.56 - ---------------------- ----------------- -------------- --------------- ---------------- --------------- $ 3.10 - 61.50 9,415,550 7.85 $ 26.35 4,903,692 $ 19.96 - ---------------------- ----------------- -------------- --------------- ---------------- ---------------
There were 4.5 million options exercisable with a weighted average exercise price of $17.52 at December 31, 1996, and 2.6 million options exercisable with a weighted average exercise price of $15.64 at December 31, 1995. All stock options under the 1993 Plan, including options granted to employees of Landmark and NUMAR since the acquisition of such companies, are granted at the fair market value of the Common Stock at the grant date. Landmark, prior to its acquisition by the Company, had provisions in its plans that allowed Landmark to set option exercise prices at a defined percentage below fair market value. The fair value of options at the date of grant was estimated using the Black-Scholes option pricing model. The weighted average assumptions and resulting fair values of options granted are as follows:
Assumptions ------------------------------------------------------------------- Weighted Average Risk-Free Expected Expected Expected Fair Value of Interest Rate Dividend Yield Life (in years) Volatility Options Granted - -------------------- ----------------- ----------------- ----------------- ------------- ----------------------- 1997 6.0% 1.0% 5 43.3% $ 22.71 1996 5.9% 1.6% 5 39.7% $ 10.24 1995 6.2% 1.6% 5 38.4% $ 7.16 - -------------------- ----------------- ----------------- ----------------- ------------- -----------------------
Stock options generally expire ten years from the grant date. Stock options vest over a three-year period, with one-third of the shares becoming exercisable on each of the first, second and third anniversaries of the grant date. The Company accounts for the 1993 Plan in accordance with Accounting Principles Board Opinion No. 25, under which no compensation cost has been recognized for stock option awards. Had compensation cost for the 1993 Plan been determined consistent with Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS 123), the Company's pro forma net income for 1997, 1996 and 1995 would have been $437.6 million, $292.4 million and $181.6 million, respectively, resulting in diluted earnings per share of $1.69, $1.16 and $0.73, respectively. Because the SFAS 123 method of accounting has not been applied to options granted prior to January 1, 1995, the resulting pro forma compensation cost may not be representative of that to be expected in future years. Restricted shares awarded under the 1993 Plan for 1997, 1996 and 1995 were 515,650; 363,800; and 412,700, respectively. The shares awarded are net of forfeitures of 34,900; 34,600; and 9,800 shares in 1997, 1996 and 1995, respectively. The weighted average fair market value per share at the date of grant of shares granted in 1997, 1996 and 1995 was $45.29, $28.24 and $20.44, respectively. The Company's Restricted Stock Plan for Non-Employee Directors (Restricted Stock Plan) allows for each non-employee director to receive an annual award of 400 restricted shares of Common Stock as a part of compensation. The Company reserved 100,000 shares of Common Stock for issuance to non-employee directors. The Company issued 3,200; 3,600 and 3,200 restricted shares in 1997, 1996 and 1995, respectively, under this plan. At December 31, 1997, 17,200 shares have been issued to non-employee directors under this plan. The weighted average fair market value per share at the date of grant of shares granted in 1997, 1996 and 1995 was $46.06, $26.57 and $20.38, respectively. 28 The Company's Employees' Restricted Stock Plan was established for employees who are not officers, for which 200,000 shares of Common Stock have been reserved. The Company awarded 3,500 restricted shares in 1995. Forfeitures were 14,600; 8,400 and 1,800 in 1997, 1996 and 1995, respectively. No awards were made in 1997 or 1996 and no further grants are being made under this plan. At December 31, 1997, 172,200 shares (net of 24,800 shares forfeited) have been issued. The weighted average fair market value per share at the date of grant for shares granted in 1995 was $17.50. Under the terms of the Company's Career Executive Incentive Stock Plan, 15 million shares of the Company's Common Stock were reserved for issuance to officers and key employees at a purchase price not to exceed par value of $2.50 per share. At December 31, 1997, 11.7 million shares (net of 2.1 million shares forfeited) have been issued under the plan. No further grants will be made under the Career Executive Incentive Stock Plan. Restricted shares issued under the 1993 Plan, Restricted Stock Plan, Employees' Restricted Stock Plan and the Career Executive Incentive Stock Plan are limited as to sale or disposition with such restrictions lapsing periodically over an extended period of time not exceeding ten years. The fair market value of the stock, on the date of issuance, is being amortized and charged to income (with similar credits to paid-in capital in excess of par value) generally over the average period during which the restrictions lapse. Compensation costs recognized in income for 1997, 1996 and 1995 were $7.1 million, $6.9 million and $7.0 million, respectively. At December 31, 1997, the unamortized amount is $44.3 million. Note 8. Income per share The Company has adopted Statement of Financial Accounting Standards No. 128, "Earnings per Share," which is effective for periods ending after December 15, 1997. The table below reconciles basic and diluted income from continuing operations. For the years presented, diluted earnings per share were equivalent to primary earnings per share previously reported pursuant to Accounting Principles Board Opinion No. 15.
Millions of dollars and shares except per share data 1997 1996 1995 - --------------------------------------------------------------------------------------------------------- Income from continuing operations $ 454.4 $ 300.4 $ 249.2 - --------------------------------------------------------------------------------------------------------- Basic weighted average shares 255.4 249.9 248.3 Effect of common stock equivalents 4.1 2.3 1.1 - --------------------------------------------------------------------------------------------------------- Diluted weighted average shares 259.5 252.2 249.4 - --------------------------------------------------------------------------------------------------------- Per share income from continuing operations: Basic $ 1.78 $ 1.20 $ 1.00 - --------------------------------------------------------------------------------------------------------- Diluted $ 1.75 $ 1.19 $ 1.00 - ---------------------------------------------------------------------------------------------------------
Options to purchase 1.1 million, 2.6 million and 0.9 million shares of common stock were outstanding during 1997, 1996 and 1995, respectively, but were not included in the computation of diluted earnings per share because the option exercise price was greater than the average market price of the common shares. During 1995, there were 6.6 million weighted average shares and $12.5 million in income related to the conversion of the zero coupon convertible debentures that were excluded from the computation because they were antidilutive. Note 9. Series A Junior Participating Preferred Stock The Company has previously declared a dividend of one preferred stock purchase right (a Right) on each outstanding share of Common Stock. Each Right entitles the holder thereof to buy one two-hundredth of a share of the Company's Series A Junior Participating Preferred Stock, without par value, at an exercise price of $75, subject to certain antidilution adjustments, upon the terms and subject to the conditions set forth in the Rights Agreement entered into with ChaseMellon Shareholder Services, L.L.C. as Rights Agent. The Rights do not have any voting rights and are not entitled to dividends. The Rights become exercisable in certain limited circumstances involving a potential business combination. Following certain other events after the Rights become exercisable, each Right will entitle its holder to an amount of Common 29 Stock of the Company, or in certain circumstances, securities of the acquirer, having a then-current market value of two times the exercise price of the Right. The Rights are redeemable at the Company's option at any time before they become exercisable. The Rights expire on December 15, 2005. No event during 1997 made the Rights exercisable. Note 10. Business Segment Information The Energy Group includes pressure pumping equipment and services, logging and perforating, drilling systems and services, specialized completion and production equipment and services and well control. Also included in the Energy Group are upstream oil and gas, engineering, construction and maintenance services, integrated exploration and production information systems and professional services to the petroleum industry. The Engineering and Construction Group provides engineering, construction, project management, facilities operation and maintenance, and environmental services for industrial and governmental customers. The environmental services business was sold in December 1997. The Company's equity in income or losses of related companies is included in revenues and operating income of each applicable segment. Intersegment revenues included in the revenues of the other business segments are immaterial. Sales between geographic areas and export sales are also immaterial. General and administrative expenses were $248.1 million in 1997, $236.6 million in 1996 and $221.7 million in 1995. General corporate assets are primarily comprised of cash and equivalents and certain other investments. 30
OPERATIONS BY BUSINESS SEGMENT Years ended December 31 Millions of dollars 1997 1996 1995 - ----------------------------------------------------------------------------------------------------- Capital expenditures: Energy Group $ 466.7 $ 313.8 $ 248.1 Engineering and Construction Group 52.3 70.5 55.1 General corporate 58.1 11.4 0.1 ----------------------------------------- Total $ 577.1 $ 395.7 $ 303.3 - ----------------------------------------------------------------------------------------------------- Depreciation and amortization: Energy Group $ 267.6 $ 228.4 $ 220.2 Engineering and Construction Group 40.7 38.2 38.3 General corporate 1.2 1.3 1.3 ----------------------------------------- Total $ 309.5 $ 267.9 $ 259.8 - ----------------------------------------------------------------------------------------------------- Identifiable assets: Energy Group $ 3,985.6 $ 2,899.8 $ 2,445.1 Engineering and Construction Group 1,080.8 986.3 873.6 General corporate 536.6 550.5 543.3 ----------------------------------------- Total $ 5,603.0 $ 4,436.6 $ 3,862.0 - ----------------------------------------------------------------------------------------------------- Research and development: Energy Group $ 163.6 $ 130.7 $ 111.6 Engineering and Construction Group 1.1 2.6 1.5 ----------------------------------------- Total $ 164.7 $ 133.3 $ 113.1 - ----------------------------------------------------------------------------------------------------- OPERATIONS BY GEOGRAPHIC AREA Years ended December 31 Millions of dollars 1997 1996 1995 - ------------------------------------------------------------------------------------------------------ Revenues: United States $ 4,238.7 $ 3,953.2 $ 3,255.6 Europe 2,443.2 1,711.1 1,117.7 Latin America 677.0 557.4 529.9 Other areas 1,459.7 1,163.4 979.7 ------------------------------------------ Total $ 8,818.6 $ 7,385.1 $ 5,882.9 - ------------------------------------------------------------------------------------------------------ Operating income (loss): United States $ 617.1 $ 397.5 $ 231.4 Europe 101.2 62.3 3.3 Latin America 37.1 24.7 64.9 Other areas 84.9 53.6 134.8 General corporate and special charges (42.2) (120.2) (33.5) ------------------------------------------ Total $ 798.1 $ 417.9 $ 400.9 - ------------------------------------------------------------------------------------------------------ Identifiable assets: United States $ 2,238.5 $ 1,994.7 $ 1,872.0 Europe 1,282.4 695.0 528.0 Latin America 456.8 347.3 279.7 Other areas 1,088.7 849.1 639.0 General corporate 536.6 550.5 543.3 ------------------------------------------ Total $ 5,603.0 $ 4,436.6 $ 3,862.0 - ------------------------------------------------------------------------------------------------------
31 Note 11. Commitments and Contingencies Leases. At December 31, 1997, the Company was obligated under noncancelable operating leases, expiring on various dates to 2020, principally for the use of land, offices, equipment and field facilities. Aggregate rentals charged to operations for such leases totaled $78.5 million in 1997, $70.8 million in 1996 and $73.7 million in 1995. Future aggregate rentals on noncancelable operating leases are as follows: 1998, $42.7 million; 1999, $25.3 million; 2000, $16.2 million; 2001, $11.0 million; 2002, $9.2 million; and thereafter, $54.0 million. Environmental. The Company is involved as a potentially responsible party (PRP) in remedial activities to clean up several "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 one 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), 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 this 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 1800s through the mid 1950s 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, due to various delays, is not expected to be completed until the fourth quarter of 1998. 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. In addition to the superfund issues, the State of Missouri has indicated that it may pursue natural resource damage claims against the PRPs. At the present time Brown & Root cannot determine the extent of its liability, if any, for remediation costs or natural resource damages on any reasonably practicable basis. Other. The Company and its subsidiaries are parties to various other legal proceedings. Although the ultimate dispositions of such proceedings are not presently determinable, in the opinion of the Company any liability that may ensue will not be material in relation to the consolidated financial position and results of operations of the Company. Note 12. Financial Instruments and Risk Management Foreign Exchange Risk. Techniques in managing foreign exchange risk include, but are not limited to, foreign currency borrowing and investing and the use of currency derivative instruments. The Company selectively hedges significant exposures to potential foreign exchange losses considering current market conditions, future operating activities and the cost of hedging the exposure in relation to the perceived risk of loss. The purpose of the Company's foreign currency hedging activities is to protect the Company from the risk that the eventual dollar cash flows resulting from the sale and purchase of products in foreign currencies will be adversely affected by changes in exchange rates. The Company does not hold or issue derivative financial instruments for trading or speculative purposes. The Company hedges its currency exposure through the use of currency derivative instruments. Such contracts generally have an expiration date of two years or less. Forward exchange contracts (commitments to buy or sell a specified amount of a foreign currency at a specified price and time) are generally used to hedge identifiable foreign currency commitments. Losses of $2.6 million for identifiable foreign currency commitments were deferred at December 31, 1997. Forward exchange contracts and foreign exchange option contracts (which convey the right, but not the obligation, to sell or buy a specified amount of foreign currency at a specified price) are generally used to hedge foreign currency commitments with an indeterminable maturity date. None of the forward or option contracts are exchange traded. 32 While hedging instruments are subject to fluctuations in value, such fluctuations are generally offset by the value of the underlying exposures being hedged. The use of some contracts may limit the Company's ability to benefit from favorable fluctuations in foreign exchange rates. The notional amounts of open forward contracts and options were $331.8 million and $161.1 million at December 31, 1997 and 1996, respectively. The notional amounts of the Company's foreign exchange contracts do not generally represent amounts exchanged by the parties, and thus, are not a measure of the exposure of the Company or of the cash requirements relating to these contracts. The amounts exchanged are calculated by reference to the notional amounts and by other terms of the derivatives, such as exchange rates. The Company actively monitors its foreign currency exposure and adjusts the amounts hedged as appropriate. Exposures to certain currencies are generally not hedged due primarily to the lack of available markets or cost considerations (non-traded currencies). The Company attempts to manage its working capital position to minimize foreign currency commitments in non-traded currencies and recognizes that pricing for the services and products offered in such countries should cover the cost of exchange rate devaluations. The Company has historically incurred transaction losses in non-traded currencies. Credit Risk. Financial instruments which potentially subject the Company to concentrations of credit risk are primarily cash equivalents, investments and trade receivables. It is the Company's practice to place its cash equivalents and investments in high quality securities with various investment institutions. The Company derives the majority of its revenues from sales and services to, including engineering and construction for, the energy industry. Within the energy industry, trade receivables are generated from a broad and diverse group of customers. There are concentrations of receivables in the United States and the United Kingdom. The Company maintains an allowance for losses based upon the expected collectibility of all trade accounts receivable. There are no significant concentrations of credit risk with any individual counterparty or groups of counterparties related to the Company's derivative contracts. Counterparties are selected by the Company based on creditworthiness, which the Company continually monitors, and on the counterparties' ability to perform their obligations under the terms of the transactions. The Company does not expect any counterparties to fail to meet their obligations under these contracts given their high credit ratings and, as such, considers the credit risk associated with its derivative contracts to be minimal. Fair Value of Financial Instruments. The estimated fair value of long-term debt at December 31, 1997 and 1996 was $600.0 million and $229.6 million, respectively, as compared to the carrying amount of $546.0 million at December 31, 1997 and $200.1 million at December 31, 1996. The fair value of fixed rate long-term debt is based on quoted market prices for those or similar instruments. The carrying amount of variable rate long-term debt and restricted cash (see Note 6) approximates fair value because such instruments reflect market changes to interest rates. The carrying amount of short-term financial instruments (cash and equivalents, receivables, short-term notes payable and accounts payable) as reflected in the consolidated balance sheets approximates fair value due to the short maturities of these instruments. The fair value of currency derivative instruments, which generally approximates the carrying amount, was $6.4 million and $27.3 million payable and $8.2 million and $28.7 million receivable at December 31, 1997 and 1996, respectively, based upon third party quotes. Note 13. Retirement Plans Retirement Plans. The Company has various retirement plans which cover a significant number of its employees. The major retirement plans are defined contribution plans, which provide retirement contributions in return for services rendered, provide an individual account for each participant and have terms that specify how contributions to the participant's account are to be determined rather than the amount of pension benefits the participant is to receive. Contributions to these plans are based on pre-tax income and/or discretionary amounts determined on an annual basis. The Company's expense for the defined contribution plans totaled $166.7 million, $114.2 million and $95.1 million in 1997, 1996 and 1995, respectively. Other retirement plans include defined benefit plans, which define an amount of pension benefit to be provided, usually as a function of one or more factors such as age, years of service or compensation. As a result of sizable reductions in the number of employees in 1995, curtailment gains of $1.3 million are reflected in the net amortization and deferral component of net periodic pension cost for 1995. These plans are funded to operate on an actuarially sound basis. Plan assets are primarily invested in equity and fixed income securities of entities domiciled in the country of the plan's operation. Assumed long-term rates of return on plan 33 assets, discount rates for estimating benefit obligations and rates of compensation increases vary for the different plans according to the local economic conditions. The rates used are as follows:
Percentages 1997 1996 1995 - ---------------------------------------------------------------------------------------------------------------------- Return on plan assets: United States plans 8.5% 8% to 8.5% 8.5% International plans 7% 9% 6.5% to 9% Discount rate: United States plans 7.25% 7% to 7.75% 7% to 7.25% International plans 7% to 7.5% 7% to 8.5% 4% to 8.5% Compensation increase: United States plans 4.5% 4.5% 4% International plans 4.25% to 5% 4.3% to 6% 1% to 6% - ----------------------------------------------------------------------------------------------------------------------
The net periodic pension cost (benefit) for defined benefit plans is as follows:
Millions of dollars 1997 1996 1995 - ------------------------------------------------------------------------------------------------ Service cost - benefits earned during period $ 35.3 $ 15.8 $ 9.6 Interest cost on projected benefit obligation 85.1 29.9 27.5 Actual return on plan assets (207.3) (61.0) (46.8) Net amortization and deferral 92.4 13.7 12.7 ------------------------------------ Net periodic pension cost (benefit) $ 5.5 $ (1.6) $ 3.0 - ------------------------------------------------------------------------------------------------
The reconciliation of the funded status for defined benefit plans where assets exceed accumulated benefits is as follows:
Millions of dollars 1997 1996 - -------------------------------------------------------------------------------------- Actuarial present value of benefit obligations: Vested $ (1,216.5) $ (351.9) - -------------------------------------------------------------------------------------- Accumulated benefit obligation $ (1,224.1) $ (358.4) - -------------------------------------------------------------------------------------- Projected benefit obligation $ (1,331.1) $ (388.6) Plan assets at fair value 1,481.6 522.0 -------------------------- Funded status 150.5 133.4 Unrecognized prior service cost 2.3 2.7 Unrecognized net gain (148.6) (133.2) Unrecognized net transition (asset) obligation (2.4) (3.9) -------------------------- Net prepaid (accrued) pension cost $ 1.8 $ (1.0) - --------------------------------------------------------------------------------------
Included in the 1997 reconciliation of the funded status for defined benefit plans where assets exceed accumulated benefits are the benefit obligations and plan assets associated with Devonport Management Limited, the Company's 51% owned subsidiary. See Note 15. 34 The reconciliation of the funded status for defined benefit plans where accumulated benefits exceed assets is as follows:
Millions of dollars 1997 1996 - ------------------------------------------------------------------------------------ Actuarial present value of benefit obligations: Vested $ (4.3) $ (2.5) - ------------------------------------------------------------------------------------ Accumulated benefit obligation $ (7.1) $ (6.3) - ------------------------------------------------------------------------------------ Projected benefit obligation $ (7.8) $ (6.9) ------------------------ Funded status (7.8) (6.9) Unrecognized net gain (5.5) (6.0) ------------------------ Net accrued pension cost $ (13.3) $ (12.9) - ------------------------------------------------------------------------------------
Postretirement Medical Plan. The Company offers a postretirement medical plan to certain employees that qualify for retirement and, on the last day of active employment, are enrolled as participants in the Company's active employee medical plan. The Company's liability is limited to a fixed contribution amount for each participant or dependent. The plan participants share the total cost for all benefits provided above the fixed Company contribution and participants' contributions are adjusted as required to cover benefit payments. The Company has made no commitment to adjust the amount of its contributions; therefore, the computed accumulated postretirement benefit obligation amount is not affected by the expected future healthcare cost inflation rate. The weighted average discount rate used in determining the accumulated postretirement benefit obligation was 7.25% in 1997, 7.75% in 1996 and 7% in 1995. Net periodic postretirement benefit cost is as follows:
Millions of dollars 1997 1996 1995 - ------------------------------------------------------------------------------------------------- Service cost - benefits attributed to service during the period $ 0.5 $ 0.5 $ 0.5 Interest cost on accumulated postretirement benefit obligation 1.5 1.6 2.1 Net amortization and deferral (1.3) (1.2) (1.0) -------------------------------- Net periodic postretirement cost $ 0.7 $ 0.9 $ 1.6 - -------------------------------------------------------------------------------------------------
Postretirement medical benefits are funded by the Company when incurred. The Company's postretirement medical plan's funded status reconciled with the amounts included in the Company's consolidated balance sheets at December 31, 1997 and 1996 is as follows:
Millions of dollars 1997 1996 - ----------------------------------------------------------------------------------------- Accumulated postretirement benefit obligation: Retirees and related beneficiaries $ 12.3 $ 12.7 Fully eligible active plan participants 2.6 2.4 Other active plan participants not fully eligible 7.5 6.4 ------------------------ Accumulated postretirement benefit obligation 22.4 21.5 Unrecognized prior service cost 6.3 7.4 Unrecognized gain 7.4 9.1 ------------------------ Net postretirement liability $ 36.1 $ 38.0 - -----------------------------------------------------------------------------------------
35 Note 14. Discontinued Operations On January 23, 1996, the Company spun-off its property and casualty insurance subsidiary, Highlands Insurance Group, Inc. (HIGI), in a tax-free distribution to holders of Halliburton Company Common Stock. Each common shareholder of the Company received one share of common stock of HIGI for every ten (pre-split) shares of Halliburton Company Common Stock. Approximately 11.4 million common shares of HIGI were issued in conjunction with the spin-off. The following summarizes the results of operations of the discontinued operations:
Millions of dollars 1995 - --------------------------------------------------------------------------- Revenues $ 252.6 - --------------------------------------------------------------------------- Loss before income taxes $ (126.3) Benefit for income taxes 67.5 Loss on disposition (7.6) Benefit for income taxes 0.9 --------------- Loss from discontinued operations $ (65.5) - ---------------------------------------------------------------------------
In the third quarter of 1995, HIGI conducted an extensive review of its loss and loss adjustment expense reserves to assess HIGI's reserve position. The review process consisted of gathering new information and refining prior estimates and primarily focused on assumed reinsurance and overall environmental and asbestos exposure. As a result of such review, HIGI increased its reserves for loss and loss adjustment expenses and certain legal matters and the Company also recognized the estimated expenses related to the spin-off transaction and additional compensation costs and other regulatory and legal provisions directly associated with discontinuing the insurance services business segment as follows:
Income (Loss) before Income Net Income Millions of dollars Taxes (Loss) - -------------------------------------------------------------------------------------------- Additional claim loss reserves for environmental and asbestos exposure and other exposures $ (117.0) $ (76.4) Realization of deferred income tax valuation allowance - 25.9 Provisions for legal matters (8.0) (5.2) Expenses related to the spin-off transaction (7.6) (6.7) Other insurance services expenses (7.4) (4.8) --------------------------------- Total charges $ (140.0) $ (67.2) - ---------------------------------------------------------------------------------------------
In the third quarter of 1995, the review of the insurance policies and reinsurance agreements was based upon an actuarial study and HIGI management's best estimates using facts and trends currently known, taking into consideration the current legislative and legal environment. Developed case law and adequate claim history do not exist for such claims. Estimates of the liability were reviewed and updated continually. Due to the significant uncertainties related to these types of claims, past claim experience may not be representative of future claim experience. The Company also realized a valuation allowance for deferred tax assets primarily related to HIGI's insurance claim loss reserves. The Company had provided a valuation allowance for all temporary differences related to HIGI based upon its intent announced in 1992 that it was pursuing the sale of HIGI. A taxable transaction would have made it more likely than not that the related benefit or future deductibility would not be realized. The spin-off transaction was tax-free and allowed HIGI to retain its tax basis and the value of its deferred tax asset. Note 15. Acquisitions and Dispositions See Note 14 regarding the disposition of the Company's insurance segment. During March 1997, the Devonport management consortium, Devonport Management Limited (DML), which is 51% owned by the Company, completed the acquisition of Devonport Royal Dockyard plc, which owns and operates the Government of the United Kingdom's Royal Dockyard in Plymouth, England, for approximately $64.9 million. Concurrent with the acquisition of the Royal 36 Dockyard, the Company's ownership interest in DML increased from about 30% to 51% and DML borrowed $56.3 million under term loans. The dockyard principally provides repair and refitting services for the British Royal Navy's fleet of submarines and surface ships. During April 1997, the Company completed its acquisition of the outstanding common stock of OGC International plc (OGC) for approximately $118.3 million. OGC is engaged in providing a variety of engineering, operations and maintenance services, primarily to the North Sea oil and gas production industry. During July 1997, the Company acquired all of the outstanding common stock and convertible debentures of Kinhill Holdings Limited (Kinhill) for approximately $34 million. Kinhill, headquartered in Australia, provides engineering in mining and minerals processing, petroleum and chemicals, water and wastewater, transportation and commercial and civil infrastructure. Kinhill markets its services primarily in Australia, Indonesia, Thailand, Singapore, India and the Philippines. In 1997, the Company recorded approximately $99.1 million excess of cost over net assets acquired primarily related to the purchase acquisitions of OGC and Kinhill. On September 30, 1997, the Company completed its acquisition of NUMAR through the merger of a subsidiary of the Company with and into NUMAR, the conversion of the outstanding NUMAR common stock into an aggregate of approximately 8.2 million shares of common stock of the Company and the assumption by the Company of the outstanding NUMAR stock options (for the exercise of which the Company has reserved an aggregate of approximately 0.9 million shares of common stock of the Company). The merger qualified as a tax- free exchange and was accounted for using the pooling of interests method of accounting for business combinations. The Company has not restated its financial statements to include NUMAR's historical operating results because they were not material to the Company. NUMAR's assets and liabilities on September 30, 1997 were included in the Company's accounts of the same date, resulting in an increase in net assets of $21.3 million. Headquartered in Malvern, Pennsylvania, NUMAR designs, manufactures and markets the Magnetic Resonance Imaging Logging (MRIL(R)) tool which utilizes magnetic resonance imaging technology to evaluate subsurface rock formations in newly drilled oil and gas wells. In October 1997, the Company announced it had reached an agreement to sell its environmental services business to Tetra Tech, Inc. for approximately $32 million. The transaction was completed on December 31, 1997. The sale was prompted by the Company's desire to divest non-core businesses and had no significant effect on net income for the year. In October 1996, the Company completed its acquisition of Landmark through the merger of Landmark with and into a subsidiary of the Company, the conversion of the outstanding Landmark common stock into an aggregate of approximately 20.4 million shares of common stock of the Company (after giving effect to the Company's two-for-one stock split) and the assumption by the Company of the outstanding Landmark stock options. The merger qualified as a tax-free exchange and was accounted for using the pooling of interests method of accounting for business combinations. The Company's financial statements have been restated to include the results of Landmark for all periods presented prior to the date of acquisition. Prior to the merger, Landmark had a fiscal year-end of June 30. Landmark's results have been restated to conform with Halliburton Company's calendar year-end. Combined and separate results of Halliburton and Landmark for the periods preceding the merger were as follows:
Nine Months Ended Twelve Months Ended Millions of dollars September 30, 1996 December 31, 1995 - -------------------------------------------------------------------------------------------------- Revenues: Halliburton $ 5,251.5 $ 5,698.7 Landmark 143.9 184.2 ------------------------------------------- Combined $ 5,395.4 $ 5,882.9 - ----------------------------------------------------------------------------------------------- Net Income: Halliburton $ 201.2 $ 168.3 Landmark (8.4) 15.4 ------------------------------------------- Combined $ 192.8 $ 183.7 - -----------------------------------------------------------------------------------------------
37 Note 16. Special Charges In September 1997, the Company recorded special charges of $8.6 million (also $8.6 million after tax) for transaction costs incurred by the Company and NUMAR to complete the merger of a subsidiary of the Company with and into NUMAR. The Company settled these obligations during the fourth quarter of 1997 with funds provided by operations. During September 1996, the Company recorded special charges of $65.3 million ($42.7 million after tax), which included provisions of $41.0 million to terminate approximately one thousand employees related to reorganization efforts by the Engineering and Construction Group and plans to combine various administrative support functions into combined shared services for the Company; $20.2 million to restructure certain Engineering and Construction Group businesses, provide for excess lease space and other items; and $4.1 million ($3.5 million after tax) for costs related to the acquisition of Landmark. The Company has substantially completed its reorganization plans initiated during the third quarter of 1996. Approximately $57.6 million has been charged or allocated to this reserve with the remaining amount to be charged over the remaining term of excess leases through August 2003. In September 1996, Landmark recorded special charges of $8.3 million ($7.6 million after tax) for costs incurred for merging with the Company. During March 1996, Landmark recorded special charges of $12.2 million ($8.7 million after tax) for the write-off of in-process research and development activities acquired in connection with the purchase by Landmark of certain assets and the assumption of certain liabilities of Western Atlas International, Inc. and the write-off of related redundant assets and activities. The special charges to net income in the third quarter of 1996 were offset by tax credits during the same quarter of $43.7 million due to the recognition of net operating loss carryforwards and the settlement during the quarter of various issues with the Internal Revenue Service (IRS). The Company reached agreement with the IRS and recognized net operating loss carryforwards of $62.5 million ($22.5 million in tax benefits) from the 1989 tax year. The net operating loss carryforwards were utilized in the 1996 tax year. In addition, the Company also reached agreement with the IRS on issues related to intercompany pricing of goods and services for the tax years 1989 through 1992 and entered into an advanced pricing agreement for the tax years 1993 through 1998. As a result of these agreements with the IRS, the Company recognized tax benefits of $16.1 million. The Company also recognized net operating loss carryforwards of $14.0 million ($5.1 million in tax benefits) in certain foreign areas due to improving profitability and restructuring of foreign operations. In 1995, Landmark recorded special charges of $8.4 million, primarily for the write-off of research and development activities of acquired companies, merger costs and restructuring charges. 38 Halliburton Company Selected Financial Data Millions of dollars and shares except per share and employee data
Years ended December 31 ------------------------------------------------------------- 1997 1996 1995 1994 - --------------------------------------------------------------------------------------------------------------- Operating results Net revenues Energy Group $ 5,756.4 $ 4,286.3 $ 3,604.0 $ 3,364.0 Engineering and Construction Group 3,062.2 3,098.8 2,278.9 2,297.1 - ------------------------------------------------------------------------------------------------------------------ Total revenues $ 8,818.6 $ 7,385.1 $ 5,882.9 $ 5,661.1 - ------------------------------------------------------------------------------------------------------------------ Operating income (loss) Energy Group $ 706.4 $ 484.4 $ 398.2 $ 264.1 Engineering and Construction Group 133.9 53.7 44.6 15.2 Special charges (a) (8.6) (85.8) (8.4) (16.6) General corporate (33.6) (34.4) (33.5) (22.9) - ------------------------------------------------------------------------------------------------------------------ Total operating income (loss) (a) 798.1 417.9 400.9 239.8 Nonoperating income (expense), net (31.8) (13.7) (13.1) 58.0 - ------------------------------------------------------------------------------------------------------------------ Income (loss) from continuing operations before income taxes and minority interest 766.3 404.2 387.8 297.8 Benefit (provision) for income taxes (b) (300.0) (103.3) (137.7) (122.2) Minority interest in net (income) loss of consolidated subsidiaries (11.9) (0.5) (0.9) (0.2) - ------------------------------------------------------------------------------------------------------------------ Income (loss) from continuing operations $ 454.4 $ 300.4 $ 249.2 $ 175.4 - ------------------------------------------------------------------------------------------------------------------ Basic income (loss) per share Continuing operations $ 1.78 $ 1.20 $ 1.00 $ 0.71 Net income (loss) 1.78 1.20 0.74 0.73 Diluted income (loss) per share Continuing operations 1.75 1.19 1.00 0.71 Net income (loss) 1.75 1.19 0.74 0.73 Cash dividends per share (c) 0.50 0.50 0.50 0.50 Return on average shareholders' equity 19.2% 14.7% 9.2% 8.8% - ------------------------------------------------------------------------------------------------------------------ Financial position Net working capital $ 1,198.7 $ 893.3 $ 987.9 $ 1,366.5 Total assets 5,603.0 4,436.6 3,862.0 4,197.4 Property, plant and equipment 1,662.7 1,291.6 1,157.9 1,117.4 Long-term debt (including current maturities) 546.0 200.1 205.2 655.7 Shareholders' equity 2,584.7 2,159.2 1,920.2 2,090.2 Total capitalization 3,133.4 2,405.6 2,130.2 2,776.6 Shareholders' equity per share (c) 9.85 8.62 7.71 8.44 Average common shares outstanding (basic) (c) 255.4 249.9 248.3 247.8 Average common shares outstanding (diluted) (c) 259.5 252.2 249.4 248.4 - ------------------------------------------------------------------------------------------------------------------ Other financial data Cash flows from operating activities $ 548.2 $ 452.0 $ 667.4 $ 439.0 Capital expenditures 577.1 395.7 303.3 245.0 Long-term borrowings (repayments), net 283.8 (5.1) (465.4) (74.4) Depreciation and amortization expense 309.5 267.9 259.8 271.3 Payroll and employee benefits 3,785.7 3,112.7 2,775.0 2,878.8 Number of employees (d) 70,750 60,000 58,400 57,300
39 Halliburton Company Selected Financial Data Millions of dollars and shares except per share and employee data
Years ended December 31 -------------------------------------------------------------- 1993 1992 1991 1990 - ---------------------------------------------------------------------------------------------------------------- Operating results Net revenues Energy Group $ 3,765.1 $ 3,536.9 $ 3,652.4 $ 3,551.0 Engineering and Construction Group 2,459.6 2,848.1 3,124.6 3,105.4 - ----------------------------------------------------------------------------------------------------------------- Total revenues $ 6,224.7 $ 6,385.0 $ 6,777.0 $ 6,656.4 - ----------------------------------------------------------------------------------------------------------------- Operating income (loss) Energy Group $ 253.1 $ 205.1 $ 233.9 $ 327.6 Engineering and Construction Group 13.3 (19.3) 9.7 33.8 Special charges (a) (321.8) (272.9) (118.5) - General corporate (22.0) (21.0) (21.8) (19.9) - ----------------------------------------------------------------------------------------------------------------- Total operating income (loss) (a) (77.4) (108.1) 103.3 341.5 Nonoperating income (expense), net (55.0) (37.2) (0.7) 17.1 - ----------------------------------------------------------------------------------------------------------------- Income (loss) from continuing operations before income taxes and minority interest (132.4) (145.3) 102.6 358.6 Benefit (provision) for income taxes 3.0 1.1 (76.5) (167.0) Minority interest in net (income) loss of consolidated subsidiaries 1.5 1.7 (2.6) (2.6) - ----------------------------------------------------------------------------------------------------------------- Income (loss) from continuing operations $ (127.9) $ (142.5) $ 23.5 $ 189.0 - ----------------------------------------------------------------------------------------------------------------- Basic income (loss) per share Continuing operations $ (0.53) $ (0.62) $ 0.10 $ 0.83 Net income (loss) (0.61) (0.63) 0.17 0.89 Diluted income (loss) per share Continuing operations (0.53) (0.62) 0.10 0.83 Net income (loss) (0.61) (0.63) 0.17 0.89 Cash dividends per share (c) 0.50 0.50 0.50 0.50 Return on average shareholders' equity (7.4)% (6.9)% 1.7% 9.1% - ----------------------------------------------------------------------------------------------------------------- Financial position Net working capital $ 1,217.7 $ 1,150.0 $ 1,304.6 $ 1,154.0 Total assets 4,318.6 4,185.3 4,480.6 3,971.7 Property, plant and equipment 1,189.3 1,214.6 1,204.6 1,028.2 Long-term debt (including current maturities) 637.4 657.8 654.9 192.0 Shareholders' equity 2,023.5 1,982.8 2,248.6 2,316.7 Total capitalization 2,752.9 2,641.3 2,914.3 2,514.6 Shareholders' equity per share (c) 8.19 8.62 9.80 10.12 Average common shares outstanding (basic) (c) 241.5 230.0 229.2 228.6 Average common shares outstanding (diluted) (c) 241.5 230.0 229.2 228.6 - ----------------------------------------------------------------------------------------------------------------- Other financial data Cash flows from operating activities $ 293.0 $ 449.9 $ 294.7 $ 127.0 Capital expenditures 270.5 322.8 430.1 342.9 Long-term borrowings (repayments), net (44.7) (16.3) 440.6 (9.0) Depreciation and amortization expense 459.8 366.9 300.2 254.4 Payroll and employee benefits 3,141.9 3,373.3 3,286.8 3,043.4 Number of employees (d) 64,600 69,000 72,700 76,600
40 (a) Operating income (loss) includes the following special charges: in 1997, $8.6 million related to acquisition costs; in 1996 and 1995, $85.8 million and $8.4 million, respectively, related to merger and restructuring costs, including severance costs, and the write-off of acquired in-process research and development activities; in 1994, $16.6 million related to merger and restructuring costs; in 1993, $321.8 million related to loss on sale of geophysical business and employee severance costs; in 1992, $272.9 million related to restructuring/reorganization costs and consolidation of certain support functions; in 1991, $118.5 million related to restructuring costs. (b) Benefit (provision) for income taxes in 1996 includes tax benefits of $43.7 million due to the recognition of net operating loss carryforwards and the settlement of various issues with the Internal Revenue Service. (c) Weighted average shares, cash dividends paid per share and shareholders' equity per share have been restated to reflect the two-for-one common stock split declared on June 9, 1997, and effected in the form of a stock dividend and paid on July 21, 1997. (d) Does not include employees of 50% or less owned affiliated companies. 41 Quarterly Data and Market Price Information
Quarter Millions of dollars except per share data ----------------------------------------------------- (unaudited) First Second Third Fourth Year - ----------------------------------------------------------------------------------------------------------------------- 1997 Revenues $ 1,897.5 $ 2,231.1 $ 2,304.7 $ 2,385.3 $ 8,818.6 Operating income 138.7 182.0 217.0 260.4 798.1 Net income 83.0 101.9 121.1 148.4 454.4 Earnings per share: (1), (2) Basic net income per share 0.33 0.40 0.48 0.57 1.78 Diluted net income per share 0.32 0.40 0.47 0.56 1.75 Cash dividends paid per share (2) 0.125 0.125 0.125 0.125 0.50 Common stock prices (2), (3) High 36.69 41.00 52.88 62.69 62.69 Low 30.00 32.06 42.00 47.25 30.00 1996 Revenues $ 1,704.7 $ 1,830.8 $ 1,859.9 $ 1,989.7 $ 7,385.1 Operating income 71.6 115.7 57.3 173.3 417.9 Net income 45.5 71.8 75.5 107.6 300.4 Earnings per share: (1), (2) Basic net income per share 0.18 0.29 0.30 0.43 1.20 Diluted net income per share 0.18 0.29 0.30 0.43 1.19 Cash dividends paid per share (2) 0.125 0.125 0.125 0.125 0.50 Common stock prices (2), (3) High 29.19 29.38 28.63 31.44 31.44 Low 22.88 25.00 25.38 25.94 22.88 (1) Presented in accordance with Statement of Financial Accounting Standards No. 128. (2) Amounts presented reflect the two-for-one common stock split declared on June 9, 1997, and effected in the form of a stock dividend and paid on July 21, 1997. (3) New York Stock Exchange - composite transactions high and low closing stock prices.
42 PART III Item 10. Directors and Executive Officers of Registrant. The information required for the directors of the registrant is incorporated by reference to the Halliburton Company Proxy Statement dated March 24, 1998, under the caption "Election of Directors." The information required for the executive officers of the registrant is included under Part I, under the caption "Executive Officers of the Registrant" on page 5 of this annual report. Item 11. Executive Compensation. This information is incorporated by reference to the Halliburton Company Proxy Statement dated March 24, 1998, under the captions "Compensation Committee Report on Executive Compensation," "Comparison of Five-Year Cumulative Total Return," "Summary Compensation Table," "Option Grants in Last Fiscal Year," "Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values," "Retirement Plan," "Employment Contracts and Termination of Employment and Change-in-Control Arrangements" and "Directors' Compensation, Restricted Stock Plan and Retirement Plan." Item 12. Security Ownership of Certain Beneficial Owners and Management. This information is incorporated by reference to the Halliburton Company Proxy Statement dated March 24, 1998, under the caption "Stock Ownership of Certain Beneficial Owners and Management." Item 13. Certain Relationships and Related Transactions. Not applicable. 43 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. (a) 1.Financial Statements: The report of Arthur Andersen LLP, independent public accountants, and the financial statements of the Company as required by Part II, Item 8, are included on pages 14 through 38 of this annual report. See index on page 6. 2.Financial Statement Schedules: Page No. Report on supplemental schedule of Arthur Andersen LLP.............49 Schedule II - Valuation and qualifying accounts for the three years ended December 31, 1997................................50 Note: All schedules not filed herein for which provision is made under rules of Regulation S-X have been omitted as not applicable or not required or the information required therein has been included in the notes to financial statements. 3. Exhibits: Exhibit Number Exhibits 2 Agreement and Plan of Reorganization dated as of December 11, 1996 among Halliburton Company, now known as Halliburton Energy Services, Inc. (the "Predecessor"), Halliburton Hold Co., now known as Halliburton Company (the "Company"), and Halliburton Merge Co. (incorporated by reference to Exhibit 1.1 of the Company's Registration Statement on Form 8-B dated December 12, 1996, File No. 1-03492). 3(a) Restated Certificate of Incorporation of the Company (incorporated by reference to the Company's Registration Statement on Form S-3 File No. 333-32731 filed with the Securities and Exchange Commission on August 1, 1997). 3(b) By-laws of the Company, as amended (incorporated by reference to the Company's Registration Statement on Form S-3 File No. 333-32731 filed with the Securities and Exchange Commission on August 1, 1997). 4(a) Subordinated Indenture dated as of January 2, 1991 between Halliburton Company, now known as Halliburton Energy Services, Inc. (the Predecessor) and Texas Commerce Bank National Association, as Trustee (incorporated by reference to Exhibit 4(c) to the Predecessor's Registration Statement on Form S-3 (File No. 33-38394) originally filed with the Securities and Exchange Commission on December 21, 1990), as supplemented and amended by the First Supplemental Indenture dated as of December 12, 1996 among the Predecessor, the Company and the Trustee (incorporated by reference to Exhibit 4.3 of the Company's Registration Statement on Form 8-B dated December 12, 1996, File No. 1-03492). 4(b) Form of debt security of 8.75% Debentures due February 12, 2021 (incorporated by reference to Exhibit 4(a) to the Predecessor's Form 8-K dated as of February 20, 1991). 4(c) Senior Indenture dated as of January 2, 1991 between the Predecessor and Texas Commerce Bank National Association, as Trustee (incorporated by reference to Exhibit 4(b) to the Predecessor's Registration Statement on Form S-3 (File No. 33-38394) originally filed with the Securities and Exchange Commission on December 21, 1990), as supplemented and amended by the First Supplemental Indenture dated as of December 12, 1996 among the Predecessor, the Company and the Trustee (incorporated by reference to Exhibit 4.1 of the Company's Registration Statement on Form 8-B dated December 12, 1996, File No. 1-03492). 44 3. Exhibits: (continued) Exhibit Number Exhibits 4(d) Resolutions of the Predecessor's Board of Directors adopted at a meeting held on February 11, 1991 and of the special pricing committee of the Board of Directors of the Predecessor adopted at a meeting held on February 11, 1991 and the special pricing committee's consent in lieu of meeting dated February 12, 1991 (incorporated by reference to Exhibit 4(c) to the Predecessor's Form 8-K dated as of February 20, 1991). 4(e) Form of debt security of 6.75% Notes due February 1, 2027 (incorporated by reference to Exhibit 4.1 to the Company's Form 8-K dated as of February 11, 1997). 4(f) Second Senior Indenture dated as of December 1, 1996 between the Predecessor and Texas Commerce Bank National Association, as Trustee, as supplemented and amended by the First Supplemental Indenture dated as of December 5, 1996 between the Predecessor and the Trustee and the Second Supplemental Indenture dated as of December 12, 1996 among the Predecessor, the Company and the Trustee (incorporated by reference to Exhibit 4.2 of the Company's Registration Statement on Form 8-B dated December 12, 1996, File No. 1-03492). 4(g) Resolutions of the Company's Board of Directors adopted by unanimous consent dated December 5, 1996. 4(h) Restated Rights Agreement dated as of December 1, 1996 between the Company and ChaseMellon Shareholder Services, L.L.C. (incorporated by reference to Exhibit 4.4 of the Company's Registration Statement on Form 8-B dated December 12, 1996, File No. 1-03492). 4(i) Copies of instruments which define the rights of holders of miscellaneous long-term notes of the Registrant and its subsidiaries, totaling $46.0 million in the aggregate at December 31, 1997, have not been filed with the Commission. The registrant agrees herewith to furnish copies of such instruments upon request. 4(j) Form of debt security of 7.53% Notes due May 12, 2017 (incorporated by reference to Exhibit 4.4 to the Company's Form 10-Q for the quarterly period ended March 31, 1997). 4(k) Form of debt security of 6.27% Notes due July 8, 1999 (incorporated by reference to Exhibit 4.1 to the Company's Form 8-K dated as of July 8, 1997). 4(l) Form of debt security of 6.30% Notes due August 5, 2002 (incorporated by reference to Exhibit 4.1 to the Company's Form 8-K dated as of August 5, 1997). 10(a) Halliburton Company Career Executive Incentive Stock Plan as amended November 15, 1990 (incorporated by reference to Exhibit 10(a) to the Predecessor's Annual Report on Form 10-K for the year ended December 31, 1992). 10(b) Retirement Plan for the Directors of Halliburton Company adopted and effective January 1, 1990 (incorporated by reference to Exhibit 10(c) to the Predecessor's Annual Report on Form 10-K for the year ended December 31, 1992). 10(c) Halliburton Company Directors' Deferred Compensation Plan as amended and restated effective May 1, 1994 (incorporated by reference to Exhibit 10(c) to the Company's Annual Report on Form 10-K for the year ended December 31, 1996). 45 3. Exhibits: (continued) Exhibit Number Exhibits 10(d) Summary Plan Description of the Executive Split-Dollar Life Insurance Plan (incorporated by reference to Exhibit 10(g) to the Predecessor's Annual Report on Form 10-K for the year ended December 31, 1992). 10(e)* Halliburton Company 1993 Stock and Long-Term Incentive Plan, as amended and restated July 22, 1997. 10(f) Agreement and Plan of Merger between the Predecessor, Halliburton Acq. Company and Landmark Graphics Corporation, dated as of June 30, 1996 (incorporated by reference to Appendix A of the Predecessor's Registration Statement on Form S-4, filed on August 30, 1996). 10(g) Halliburton Company Restricted Stock Plan for Non-Employee Directors (incorporated by reference to Appendix B of the Predecessor's proxy statement dated March 23, 1993). 10(h) Halliburton Elective Deferral Plan, as amended and restated effective January 1, 1997 (incorporated by reference to Exhibit 10(h) to the Company's Annual Report on Form 10-K for the year ended December 31, 1996). 10(i) Employment agreement (incorporated by reference to Exhibit 10 to the Predecessor's Form 10-Q for the quarterly period ended September 30, 1995). 10(j) Halliburton Company Senior Executives' Deferred Compensation Plan, as amended and restated effective January 1, 1996 (incorporated by reference to Exhibit 10(j) to the Company's Annual Report on Form 10-K for the year ended December 31, 1996). 10(k) Halliburton Company Annual Performance Plan, as amended and restated effective January 1, 1997 (incorporated by reference to Exhibit 10(k) to the Company's Annual Report on Form 10-K for the year ended December 31, 1996). 10(l) Employment agreement (incorporated by reference to Exhibit 10(n) to the Predecessor's Form 10-K for the year ended December 31, 1995). 10(m) Early retirement agreement (incorporated by reference to Exhibit 10(m) to the Company's Annual Report on Form 10-K for the year ended December 31, 1996). 10(n)* Halliburton Company 1993 Stock and Long-Term Incentive Plan, as amended and restated February 19, 1998. 11* Computation of earnings per share. 21* Subsidiaries of the registrant. 23* Consent of Arthur Andersen LLP. 46 3. Exhibits: (continued) Exhibit Number Exhibits 24(a) Powers of attorney for the following directors signed in February, 1997 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1996): Anne L. Armstrong Richard B. Cheney Lord Clitheroe Robert L. Crandall W. R. Howell Dale P. Jones Delano E. Lewis C. J. Silas Roger T. Staubach Richard J. Stegemeier 24(b)* Power of attorney signed in December 1997 for Charles J. DiBona. 27* Financial data schedules for the registrant (filed electronically). * Filed with this annual report 47 (b) Reports on Form 8-K: During the fourth quarter of 1997: A Current Report on Form 8-K dated October 20, 1997, was filed reporting on Item 5. Other Events, regarding a press release dated October 20, 1997, announcing the agreement to sell the environmental services business. A Current Report on Form 8-K dated October 22, 1997, was filed reporting on Item 5. Other Events, regarding a press release dated October 22, 1997, announcing third quarter earnings. A Current Report on Form 8-K dated October 30, 1997, was filed reporting on Item 5. Other Events, regarding a press release dated October 30, 1997, announcing fourth quarter dividend. A Current Report on Form 8-K dated October 30, 1997, was filed reporting on Item 5. Other Events, regarding a press release dated October 30, 1997, announcing award of a pipeline construction contract to a joint venture of the Company's Brown & Root Energy Services unit. A Current Report on Form 8-K dated November 19, 1997, was filed reporting on Item 5. Other Events, regarding a press release dated November 19, 1997, announcing officer appointment at its Halliburton Energy Services business unit. A Current Report on Form 8-K dated December 8, 1997, was filed reporting on Item 5. Other Events, regarding a press release dated December 8, 1997 announcing the election of a member to its Board of Directors. A Current Report on Form 8-K dated December 31, 1997, was filed reporting on Item 5. Other Events, regarding a press release dated December 31, 1997, announcing the completion of the sale of its environmental services unit. During the first quarter of 1998 to the date hereof: A Current Report on Form 8-K dated January 22, 1998, was filed reporting on Item 5. Other Events, regarding a press release dated January 22, 1998, announcing fourth quarter earnings. A Current Report on Form 8-K dated February 17, 1998, was filed reporting on Item 5. Other Events, regarding two press releases dated February 17, 1998, announcing it will provide a wide range of services as part of the Terra Nova Alliance for Petro-Canada and the Terra Nova development and an alliance agreement at Elk Hills between two of its business units with Occidental. A Current Report on Form 8-K dated February 19, 1998, was filed reporting on Item 5. Other Events, regarding a press release dated February 19, 1998, announcing first quarter 1998 dividend declaration and shareholders annual meeting. 48 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SUPPLEMENTAL SCHEDULE To Halliburton Company: We have audited in accordance with generally accepted auditing standards, the consolidated financial statements included in this Form 10-K, and have issued our report thereon dated January 22, 1998. Our audits were made for the purpose of forming an opinion on the basic consolidated financial statements taken as a whole. The supplemental schedule (Schedule II) is the responsibility of Halliburton Company's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP Dallas, Texas, January 22, 1998 49 HALLIBURTON COMPANY SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (MILLIONS OF DOLLARS)
Additions ------------------------------- Balance at Charged to Charged to Balance at Beginning Costs and Other End of Descriptions of Period Expenses Accounts Deductions (A) Period - ----------------------------------------- ---------------- ----------------- ------------ ------------------ ----------------- Year ended December 31, 1997: Allowance for bad debts $ 43.6 $ 8.7 $ - $ 13.9 $ 38.4 - ----------------------------------------- ---------------- ----------------- ------------ ------------------ ----------------- Year ended December 31, 1996: Allowance for bad debts $ 38.1 $ 12.6 $ - $ 7.1 $ 43.6 - ----------------------------------------- ---------------- ----------------- ------------ ------------------ ----------------- Year ended December 31, 1995: Allowance for bad debts $ 36.4 $ 7.9 $ - $ 6.2 $ 38.1 - ----------------------------------------- ---------------- ----------------- ------------ ------------------ ----------------- (A) Receivable write-offs and reclassifications, net of recoveries.
50 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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, on this 23rd day of February, 1998. HALLIBURTON COMPANY By /s/ RICHARD B. CHENEY --------------------------- Richard B. Cheney Chairman of the Board and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons in the capacities indicated on this 23rd day of February, 1998. Signature Title /s/ RICHARD B. CHENEY Chairman of the Board and - ----------------------------- Chief Executive Officer and Director Richard B. Cheney /s/ GARY V. MORRIS Executive Vice President and - ----------------------------- Chief Financial Officer Gary V. Morris /s/ R. CHARLES MUCHMORE, JR. Vice President and Controller and - ----------------------------- Principal Accounting Officer R. Charles Muchmore, Jr. 51 Signature Title /s/ *ANNE L. ARMSTRONG Director - ----------------------------- Anne L. Armstrong /s/ *LORD CLITHEROE Director - ----------------------------- Lord Clitheroe /s/ *ROBERT L. CRANDALL Director - ----------------------------- Robert L. Crandall /s/ *CHARLES J. DIBONA Director - ----------------------------- Charles J. DiBona /s/ *W. R. HOWELL Director - ----------------------------- W. R. Howell /s/ *DALE P. JONES Vice Chairman and Director - ----------------------------- Dale P. Jones /s/ *DELANO E. LEWIS Director - ----------------------------- Delano E. Lewis /s/ *C. J. SILAS Director - ----------------------------- C. J. Silas /s/ *ROGER T. STAUBACH Director - ----------------------------- Roger T. Staubach /s/ *RICHARD J. STEGEMEIER Director - ----------------------------- Richard J. Stegemeier /s/* SUSAN S. KEITH - ----------------------------- Susan S. Keith, Attorney-in-fact 52 Index to Exhibits filed with this annual report. Exhibit Number Exhibits - -------- -------- 10(e) Halliburton Company 1993 Stock and Long-Term Incentive Plan, as amended and restated July 22, 1997. 10(n) Halliburton Company 1993 Stock and Long-Term Incentive Plan, as amended and restated February 19, 1998. 11 Computation of earnings per share. 21 Subsidiaries of the registrant. 23 Consent of Arthur Andersen LLP. 24(b) Power of attorney signed in December 1997 for Charles J. DiBona. 27 Financial data schedule. 53
                                                                   Exhibit 10(e)

                               HALLIBURTON COMPANY
                     1993 STOCK AND LONG-TERM INCENTIVE PLAN
                      As Amended and Restated July 22, 1997

                                   I. PURPOSE

     The purpose of the Halliburton  Company 1993 Stock and Long-Term  Incentive
Plan (the "Plan") is to provide a means whereby Halliburton  Company, a Delaware
corporation  (the  "Company"),  and its Subsidiaries may attract able persons to
enter the  employ  of the  Company  and to  provide  a means  whereby  those key
employees upon whom the  responsibilities  of the successful  administration and
management of the Company rest, and whose present and potential contributions to
the welfare of the Company are of  importance,  can acquire and  maintain  stock
ownership,  thereby strengthening their concern for the long-term welfare of the
Company and their desire to remain in its employ.  A further purpose of the Plan
is  to  provide  such  key  employees  with  additional   incentive  and  reward
opportunities  designed to enhance the profitable growth of the Company over the
long term. Accordingly,  the Plan provides for granting Incentive Stock Options,
options which do not  constitute  Incentive  Stock Options,  Stock  Appreciation
Rights,   Restricted  Stock  Awards,   Performance  Share  Awards,  Stock  Value
Equivalent Awards, or any combination of the foregoing, as is best suited to the
circumstances of the particular employee as provided herein.


                                 II. DEFINITIONS

     The following  definitions  shall be applicable  throughout the Plan unless
specifically modified by any paragraph:

          (a) "Award" means,  individually or  collectively,  any Option,  Stock
     Appreciation  Right,  Restricted  Stock Award,  Performance  Share Award or
     Stock Value Equivalent Award.
          (b) "Board" means the Board of Directors of Halliburton Company.
          (c) "Change of Control Value" means, for the purposes of Clause (B) of
     Paragraph  (e) of Article  XII and Clause (B) of  Paragraph  (f) of Article
     XII,  the amount  determined  in Clause (i),  (ii) or (iii),  whichever  is
     applicable,  as follows: (i) the per share price offered to stockholders of
     the Company in any  merger,  consolidation,  sale of assets or  dissolution
     transaction,  (ii) the per  share  price  offered  to  stockholders  of the
     Company in any tender offer or exchange  offer  whereby a Corporate  Change
     takes place or (iii) if a Corporate  Change  occurs other than as described
     in Clause (i) or Clause (ii), the fair market value per share determined by
     the Committee as of the date  determined by the Committee to be the date of
     cancellation and surrender of an Option or Stock Appreciation Right. If the
     consideration  offered to  stockholders  of the Company in any  transaction
     described  in this  Paragraph  or  Paragraphs  (d) and (e) of  Article  XII
     consists of anything  other than cash,  the Committee  shall  determine the
     fair cash equivalent of the portion of the  consideration  offered which is
     other than cash.
          (d)  "Code"  means the  Internal  Revenue  Code of 1986,  as  amended.
     Reference in the Plan to any section of the Code shall be deemed to include
     any amendments or successor  provisions to such section and any regulations
     under such section.
          (e)  "Committee"  means  the  committee   selected  by  the  Board  to
     administer  the Plan in accordance  with Paragraph (a) of Article IV of the
     Plan.
          (f) "Common Stock" means the common  stock' par value $2.50 per share,
     of Halliburton Company.


                                       54

                                                       Exhibit 10(e)(continued)

          (g) "Company" means Halliburton Company.
          (h)  "Corporate  Change"  means one of the following  events:  (i) the
     merger,  consolidation or other  reorganization of the Company in which the
     outstanding  Common  Stock is converted  into or exchanged  for a different
     class of  securities  of the Company,  a class of  securities  of any other
     issuer  (except  a  direct  or  indirect  wholly  owned  subsidiary  of the
     Company),  cash or other property;  (ii) the sale, lease or exchange of all
     or substantially  all of the assets of the Company to any other corporation
     or entity  (except a direct or  indirect  wholly  owned  subsidiary  of the
     Company);  (iii) the adoption by the  stockholders of the Company of a plan
     of  liquidation  and  dissolution;  (iv) the  acquisition  (other  than any
     acquisition  pursuant to any other clause of this definition) by any person
     or  entity,  including  without  limitation  a "group" as  contemplated  by
     Section  13(d)(3)  of  the  Exchange  Act,  of  beneficial  ownership,   as
     contemplated by such Section,  of more than twenty percent (based on voting
     power) of the Company's outstanding capital stock; or (v) as a result of or
     in connection with a contested election of directors,  the persons who were
     directors of the Company  before such election  shall cease to constitute a
     majority of the Board.
          (i) "Exchange  Act"  means  the  Securities  Exchange  Act of 1934, as
     amended.
          (j) "Fair Market Value" means,  as of any specified  date, the closing
     price of the Common Stock on the New York Stock Exchange (or, if the Common
     Stock is not then listed on such exchange,  such other national  securities
     exchange on which the Common Stock is then  listed) on that date,  or if no
     prices are reported on that date, on the last  preceding date on which such
     prices of the Common Stock are so reported. If the Common Stock is not then
     listed on any national  securities  exchange but is traded over the counter
     at the time a determination of its Fair Market Value is required to be made
     hereunder, its Fair Market Value shall be deemed to be equal to the average
     between the reported  high and low sales prices of Common Stock on the most
     recent date on which Common Stock was publicly traded.  If the Common Stock
     is not publicly traded at the time a determination of its value is required
     to be made hereunder,  the  determination of its Fair Market Value shall be
     made by the Committee in such manner as it deems appropriate.
          (k) "Holder" means an employee of the Company  who has been granted an
     Award.
          (1) "Incentive  Stock  Option"  means  an Option within the meaning of
     section 422 of the Code.
          (m) "Option"  means an Award granted under Article VII of the Plan and
     includes both Incentive  Stock Options to purchase Common Stock and Options
     which do not constitute Incentive Stock Options to purchase Common Stock.
          (n) "Option  Agreement" means a written  agreement between the Company
     and an employee with respect to an Option.
          (o) "Optionee" means an employee who has been granted an Option.
          (p) "Parent Corporation" shall  have the  meaning set forth in section
     424(e) of the Code.
          (q) "Performance Share  Award" means an  Award granted under Article X
     of the Plan.
          (r) "Plan"  means  the  Halliburton  Company  1993 Stock and Long-Term
     Incentive Plan.
          (s) "Restricted Stock Award" means an  Award granted  under Article IX
     of the Plan.
          (t) "Rule 16b-3" means Rule 16b-3 of the general Rules and  Regulation
     of the Securities and Exchange  Commission  under the Exchange Act, as such
     rule is currently in effect or as hereafter modified or amended.
          (u) "Spread"  means,  in the case of a Stock  Appreciation  Right,  an
     amount equal to the excess,  if any, of the Fair Market Value of a share of
     Common Stock on the date such right is exercised over the exercise price of
     such Stock Appreciation Right.
          (v) "Stock  Appreciation  Right" means an Award  granted under Article
     VIII of the Plan.
          (w) "Stock  Appreciation  Rights  Agreement" means a written agreement
     between  the  Company  and an  employee  with  respect to an Award of Stock
     Appreciation Rights.
          (x)  "Stock  Value  Equivalent  Award"  means an Award  granted  under
     Article XI of the Plan.


                                       55

                                                       Exhibit 10(e)(continued)

          (y) "Subsidiary" means a company (whether a corporation,  partnership,
     joint  venture  or  other  form  of  entity)  in  which  the  Company  or a
     corporation  in which the Company  owns a majority of the shares of capital
     stock,  directly or  indirectly,  owns a greater than twenty percent equity
     interest,  except  that with  respect to the  issuance of  Incentive  Stock
     Options  the term  "Subsidiary"  shall  have the same  meaning  as the term
     "subsidiary corporation" as defined in section 424(f) of the Code.


                  III. EFFECTIVE DATE AND DURATION OF THE PLAN

     The Plan shall be  effective  upon the date of its  adoption  by the Board,
provided the Plan is approved by the  stockholders  of the Company within twelve
months  thereafter  and on or prior to the date of the first  annual  meeting of
stockholders  of the Company held  subsequent  to the  acquisition  of an equity
security by a Holder  hereunder for which exemption is claimed under Rule 16b-3.
Notwithstanding  any  provision of the Plan or in any Option  Agreement or Stock
Appreciation  Rights Agreement,  no Option or Stock  Appreciation Right shall be
exercisable prior to such stockholder approval. No further Awards may be granted
under the Plan  after ten years  from the date the Plan is adopted by the Board.
Subject to the provisions of Article XIII, the Plan shall remain in effect until
all  Options  and Stock  Appreciation  Rights  granted  under the Plan have been
exercised or expired by reason of lapse of time, all  restrictions  imposed upon
Restricted  Stock Awards have lapsed and all Performance  Share Awards and Stock
Value Equivalent Awards have been satisfied.


                               IV. ADMINISTRATION

     (a) Composition of Committee. The Plan shall be administered by a committee
which shall be (i) appointed by the Board and (ii)  constituted  so as to permit
the Plan to comply with Rule 16b-3 and  regulations  promulgated  under  section
162(m) of the Code.

     (b) Powers.  The Committee  shall have  authority,  in its  discretion,  to
determine which employees of the Company and its  Subsidiaries  shall receive an
Award,  the time or times when such Award  shall be made,  whether an  Incentive
Stock Option,  nonqualified Option or Stock Appreciation Right shall be granted,
the number of shares of Common  Stock  which may be issued  under  each  Option,
Stock  Appreciation  Right and  Restricted  Stock  Award,  and the value of each
Performance  Share  Award and  Stock  Value  Equivalent  Award.  In making  such
determinations  the  Committee  may take into account the nature of the services
rendered by the respective employees,  their present and potential  contribution
to the  Company's  success  and  such  other  factors  as the  Committee  in its
discretion shall deem relevant.

     (c) Additional  Powers.  The Committee shall have such additional powers as
are delegated to it by the other provisions of the Plan.  Subject to the express
provisions of the Plan, the Committee is authorized to construe the Plan and the
respective   agreements  executed  thereunder,   to  prescribe  such  rules  and
regulations relating to the Plan as it may deem advisable to carry out the Plan,
and to determine the terms, restrictions and provisions of each Award, including
such terms, restrictions and provisions as shall be requisite in the judgment of
the Committee to cause designated Options to qualify as Incentive Stock Options,
and to make all other  determinations  necessary or advisable for  administering
the Plan.  The  Committee  may  correct  any  defect or supply any  omission  or
reconcile any inconsistency in any agreement  relating to an Award in the manner
and to the extent the  Committee  shall deem  expedient  to carry the Award into
effect.  The  determinations of the Committee on the matters referred to in this
Article IV shall be conclusive.


                                       56

                                                       Exhibit 10(e)(continued)

        V. GRANT OF OPTIONS, STOCK APPRECIATION RIGHTS, RESTRICTED STOCK
           AWARDS, PERFORMANCE SHARE AWARDS AND STOCK VALUE EQUIVALENT
                       AWARDS; SHARES SUBJECT TO THE PLAN

          (a) Award Limits.  The Committee may from time to time grant Awards to
     one or more employees  determined by it to be eligible for participation in
     the Plan in  accordance  with the  provisions  of Article VI. The aggregate
     number of shares of Common  Stock  that may be issued  under the Plan shall
     not exceed 27,000,000 shares, of which no more than 4,000,000 may be issued
     in the form of  Restricted  Stock Awards and no more than  4,000,000 may be
     issued  pursuant to  Performance  Share  Awards.  Notwithstanding  anything
     contained  herein to the  contrary,  the  number of Option  shares or Stock
     Appreciation Rights,  singly or in combination,  granted to any employee in
     any one calendar year shall not in the  aggregate  exceed  500,000.  Any of
     such shares which remain  unissued and which are not subject to outstanding
     Options or Awards at the  termination of the Plan shall cease to be subject
     to the Plan,  but, until  termination of the Plan, the Company shall at all
     times reserve a sufficient number of shares to meet the requirements of the
     Plan. Shares shall be deemed to have been issued under the Plan only to the
     extent  actually  issued and delivered  pursuant to an Award. To the extent
     that an Award lapses or the rights of its Holder  terminate or the Award is
     paid in cash,  any shares of Common Stock subject to such Award shall again
     be  available  for the grant of an Award.  The  aggregate  number of shares
     which may be issued  under the Plan shall be subject to  adjustment  in the
     same manner as  provided  in Article  XII with  respect to shares of Common
     Stock  subject to Options then  outstanding.  Separate  stock  certificates
     shall be issued by the Company for those  shares  acquired  pursuant to the
     exercise  of an  Incentive  Stock  Option  and for  those  shares  acquired
     pursuant  to the  exercise  of any  Option  which  does not  constitute  an
     Incentive Stock Option.

          (b) Stock Offered. The stock to be offered pursuant to the grant of an
     Award  may  be  authorized  but  unissued  Common  Stock  or  Common  Stock
     previously issued and reacquired by the Company.


                                 VI. ELIGIBILITY

     Awards made pursuant to the Plan may be granted only to individuals who, at
the time of grant, are key employees of the Company or any Parent Corporation or
Subsidiary  of the  Company.  Awards may not be granted to any  director  of the
Company who is not an employee of the Company or to any member of the Committee.
An Award made  pursuant to the Plan may be granted on more than one  occasion to
the same person, and such Award may include an Incentive Stock Option, an Option
which is not an Incentive Stock Option, an Award of Stock Appreciation Rights, a
Restricted  Stock Award,  a Performance  Share Award,  a Stock Value  Equivalent
Award or any  combination  thereof.  Each Award shall be  evidenced by a written
instrument duly executed by or on behalf of the Company.


                               VII. STOCK OPTIONS

     (a) Stock  Option  Agreement.  Each Option  shall be evidenced by an Option
Agreement  between the Company and the Optionee  which shall  contain such terms
and conditions as may be approved by the Committee.  The terms and conditions of
the respective Option Agreements need not be identical.  Specifically, an Option
Agreement may provide for the payment of the option price,  in whole or in part,
by the delivery of a number of shares of Common  Stock (plus cash if  necessary)
having a Fair Market  Value equal to such option  price.  Each Option  Agreement
shall provide that the Option may not be exercised  earlier than six months from
the date of grant and shall specify the effect of  termination  of employment on
the exercisability of the Option.

                                       57

                                                       Exhibit 10(e)(continued)

     (b) Option  Period.  The  term of  each Option  shall be as  specified  by
the  Committee  at the date of grant;  provided that, in no case, shall the term
of an Option exceed ten years.

     (c)  Limitations  on Exercise of Option.  An Option shall be exercisable in
whole or in such installments and at such times as determined by the Committee.

     (d) Special  Limitations on Incentive Stock Options. To the extent that the
aggregate Fair Market Value  (determined  at the time the  respective  Incentive
Stock Option is granted) of Common Stock with respect to which  Incentive  Stock
Options are exercisable for the first time by an individual  during any calendar
year  under all  incentive  stock  option  plans of the  Company  and its Parent
Corporation  and  Subsidiaries  exceeds  $100,000,  such excess  Incentive Stock
Options  shall be treated as Options  which do not  constitute  Incentive  Stock
Options. The Committee shall determine, in accordance with applicable provisions
of the Code, Treasury Regulations and other administrative pronouncements, which
of an Optionee's  Incentive  Stock Option will not  constitute  Incentive  Stock
Options  because  of such  limitation  and shall  notify  the  Optionee  of such
determination  as soon as  practicable  after such  determination.  No Incentive
Stock  Option  shall be granted to an  individual  if, at the time the Option is
granted,  such  individual  owns  stock  possessing  more  than 10% of the total
combined  voting  power of all  classes of stock of the Company or of its Parent
Corporation  or a  Subsidiary,  within the meaning of section  422(b)(6)  of the
Code, unless (i) at the time such Option is granted the option price is at least
110% of the Fair Market Value of the Common Stock subject to the Option and (ii)
such Option by its terms is not  exercisable  after the expiration of five years
from the date of grant.

     (e) Option  Price.  The  purchase  price of Common  Stock issued under each
Option shall be determined by the  Committee,  but such purchase price shall not
be less than the Fair Market Value of Common Stock  subject to the Option on the
date the Option is granted.

     (f) Options and Rights in  Substitution  for Stock Options Granted by Other
Corporations.  Options and Stock  Appreciation  Rights may be granted  under the
Plan from time to time in  substitution  for stock  options held by employees of
corporations who become,  or who became prior to the effective date of the Plan,
key  employees  of the Company or of any  Subsidiary  as a result of a merger or
consolidation of the employing  corporation with the Company or such Subsidiary,
or the  acquisition  by the Company or a  Subsidiary  of all or a portion of the
assets of the  employing  corporation,  or the  acquisition  by the Company or a
Subsidiary  of stock of the  employing  corporation  with the  result  that such
employing corporation becomes a Subsidiary.


                         VIII. STOCK APPRECIATION RIGHTS

     (a) Stock  Appreciation  Rights. A Stock Appreciation Right is the right to
receive an amount  equal to the Spread with  respect to a share of Common  Stock
upon the exercise of such Stock Appreciation  Right.  Stock Appreciation  Rights
may be granted  in  connection  with the grant of an  Option,  in which case the
Option  Agreement will provide that exercise of Stock  Appreciation  Rights will
result in the  surrender of the right to purchase the shares under the Option as
to which the Stock  Appreciation  Rights were  exercised.  Alternatively,  Stock
Appreciation  Rights may be granted  independently of Options in which case each
Award of Stock  Appreciation  Rights shall be evidenced by a Stock  Appreciation
Rights  Agreement  between the Company and the Holder  which shall  contain such
terms  and  conditions  as may be  approved  by the  Committee.  The  terms  and
conditions of the respective Stock  Appreciation  Rights  Agreements need not be
identical.  The Spread with respect to a Stock Appreciation Right may be payable
either in cash,  shares of Common  Stock with a Fair  Market  Value equal to the
Spread or in a combination  of cash and shares of Common Stock.  With respect to
stock  Appreciation  Rights that are subject to Section 16 of the Exchange  Act,
however,  the Committee  shall,  except as provided in Paragraphs (e) and (f) of

                                       58

                                                       Exhibit 10(e)(continued)

Article XII,  retain sole  discretion (i) to determine the form in which payment
of the Stock  Appreciation  Right will be made (i.e.,  cash,  securities  or any
combination  thereof) or (ii) to approve an election by a Holder to receive cash
in full or partial settlement of Stock Appreciation Rights. Upon the exercise of
any Stock Appreciation  Rights granted hereunder,  the number of shares reserved
for  issuance  under the Plan shall be reduced only to the extent that shares of
Common Stock are actually  issued in connection with the exercise of such Right.
Each  Stock   Appreciation   Rights  Agreement  shall  provide  that  the  Stock
Appreciation  Rights may not be exercised  earlier than six months from the date
of grant and shall  specify  the  effect of  termination  of  employment  on the
exercisability of the Stock Appreciation Rights.

     (b) Exercise  Price.  The exercise price of each Stock  Appreciation  Right
shall be determined by the Committee,  but such exercise price shall not be less
than the Fair  Market  Value of a share of  Common  Stock on the date the  Stock
Appreciation Right is granted.

     (c) Exercise Period.  The term of each Stock Appreciation Right shall be as
specified by the  Committee  at the date of grant;  provided  that,  in no case,
shall the term of a Stock Appreciation Right exceed ten years.

     (d)  Limitations  on  Exercise  of  Stock   Appreciation   Right.  A  Stock
Appreciation  Right shall be exercisable in whole or in such installments and at
such times as determined by the Committee.


                           IX. RESTRICTED STOCK AWARDS

     (a) Restricted  Period To Be  Established  by the Committee.  At the time a
Restricted  Stock Award is made, the Committee  shall establish a period of time
(the "Restriction Period") applicable to such Award;  provided,  however,  that,
except as set forth below and as permitted by Paragraph  (b) of this Article IX,
such Restriction  Period shall not be less than three (3) years from the date of
grant  (the  "Minimum  Criteria").  An award  which  provides  for the  lapse of
restrictions  on shares  applicable  to such Award in equal annual  installments
over a period of at least three (3) years from the date of grant shall be deemed
to meet the Minimum  Criteria.  The foregoing  notwithstanding,  with respect to
Restricted  Stock  Awards  of up to an  aggregate  550,000  shares  (subject  to
adjustment as set forth in Article XII),  the Minimum  Criteria  shall not apply
and the Committee may establish such lesser  Restriction  Periods  applicable to
such Awards as it shall determine in its  discretion.  Subject to the foregoing,
each  Restricted  Stock Award may have a different  Restriction  Period,  in the
discretion of the Committee.  The Restriction  Period applicable to a particular
Restricted Stock Award shall not be changed except as permitted by Paragraph (b)
of this Article or by Article XII.

     (b)  Other  Terms  and  Conditions.  Common  Stock  awarded  pursuant  to a
Restricted Stock Award shall be represented by a stock certificate registered in
the name of the Holder of such  Restricted  Stock Award or, at the option of the
Company,  in the name of a nominee of the  Company.  The  Holder  shall have the
right to receive  dividends  during the Restriction  Period,  to vote the Common
Stock subject thereto and to enjoy all other stockholder rights, except that (i)
the Holder shall not be entitled to  possession of the stock  certificate  until
the Restriction Period shall have expired, (ii) the Company shall retain custody
of the stock  during  the  Restriction  Period,  (iii) the  Holder may not sell,
transfer, pledge, exchange, hypothecate or otherwise dispose of the stock during
the Restriction Period and (iv) a breach of the terms and conditions established
by the Committee pursuant to the Restricted Stock Award shall cause a forfeiture
of the Restricted  Stock Award. At the time of such Award, the Committee may, in
its sole  discretion,  prescribe  additional  terms,  conditions or restrictions
relating to  Restricted  Stock  Awards,  including,  but not  limited to,  rules
pertaining to the termination of employment (by retirement, disability, death or
otherwise) of a Holder prior to expiration of the Restriction Period.

                                       59

                                                       Exhibit 10(e)(continued)

     (c) Payment for  Restricted  Stock.  A Holder shall not be required to make
any payment for Common  Stock  received  pursuant to a  Restricted  Stock Award,
except to the extent  otherwise  required by law and except  that the  Committee
may, in its discretion, charge the Holder an amount in cash not in excess of the
par value of the shares of Common Stock issued under the Plan to the Holder.

     (d)  Miscellaneous.  Nothing in this Article shall prohibit the exchange of
shares issued under the Plan (whether or not then subject to a Restricted  Stock
Award)  pursuant  to a plan of  reorganization  for stock or  securities  in the
Company or another corporation a party to the  reorganization,  but the stock or
securities  so  received  for  shares  then  subject  to the  restrictions  of a
Restricted  Stock  Award  shall  become  subject  to the  restrictions  of  such
Restricted  Stock  Award.  Any shares of stock  received  as a result of a stock
split or stock  dividend  with  respect to shares then  subject to a  Restricted
Stock Award  shall also become  subject to the  restrictions  of the  Restricted
Stock Award.


                           X. PERFORMANCE SHARE AWARDS

     (a) Performance Period. The Committee shall establish,  with respect to and
at the time of each Performance Share Award, a performance period over which the
performance  applicable  to the  Performance  Share Award of the Holder shall be
measured.

     (b)  Performance  Share  Awards.  Each  Performance  Share Award may have a
maximum value established by the Committee at the time of such Award.

     (c) Performance  Measures.  A Performance  Share Award may be awarded to an
employee contingent upon future performance of the employee,  the Company or any
Subsidiary,  division or department thereof by or in which he is employed during
the  performance  period,  the Fair Market Value of Common Stock or the increase
thereof  during the  performance  period,  combinations  thereof,  or such other
provisions as the Committee may determine to be appropriate. The Committee shall
establish the performance  measures  applicable to such performance prior to the
beginning of the  performance  period but subject to such later revisions as the
Committee shall deem appropriate to reflect  significant,  unforeseen  events or
changes.

     (d) Awards Criteria.  In determining the value of Performance Share Awards,
the  Committee  may  take  into  account  an  employee's  responsibility  level,
performance,  potential,  other Awards and such other considerations as it deems
appropriate.

     (e) Payment.  Following the end of the performance  period, the Holder of a
Performance  Share Award shall be entitled to receive payment of an amount,  not
exceeding the maximum value of the Performance Share Award, if any, based on the
achievement  of  the  performance  measures  for  such  performance  period,  as
determined  by the  Committee in its sole  discretion.  Payment of a Performance
Share Award (i) may be made in cash, Common Stock or a combination  thereof,  as
determined by the Committee in its sole discretion, (ii) shall be made in a lump
sum or in installments as prescribed by the Committee in its sole discretion and
(iii) to the extent  applicable,  shall be based on the Fair Market Value of the
Common  Stock  on the  payment  date.  If a  payment  of cash is to be made on a
deferred  basis,  the  Committee  shall  establish  whether  interest  shall  be
credited,  the rate  thereof  and any  other  terms  and  conditions  applicable
thereto.

                                       60

                                                       Exhibit 10(e)(continued)

     (f) Termination of Employment.  The Committee shall determine the effect of
termination  of  employment  during  the  performance  period  on an  employee's
Performance Share Award.


                        XI. STOCK VALUE EQUIVALENT AWARDS

     (a) Stock Value Equivalent Awards. Stock Value Equivalent Awards are rights
to receive an amount equal to the Fair Market Value of shares of Common Stock or
rights to receive an amount  equal to any  appreciation  or increase in the Fair
Market Value of Common Stock over a specified  period of time, which vest over a
period of time as established by the Committee,  without  payment of any amounts
by the  Holder  thereof  (except  to the extent  otherwise  required  by law) or
satisfaction  of any  performance  criteria  or  objectives.  Each  Stock  Value
Equivalent  Award may have a maximum value  established  by the Committee at the
time of such Award.

     (b) Award Period. The Committee shall establish, with respect to and at the
time of each Stock Value  Equivalent  Award, a period over which the Award shall
vest with respect to the Holder.

     (c) Awards  Criteria.  In determining  the value of Stock Value  Equivalent
Awards, the Committee may take into account an employee's  responsibility level,
performance,  potential,  other Awards and such other considerations as it deems
appropriate.

     (d) Payment.  Following the end of the determined  period for a Stock Value
Equivalent Award, the Holder of a Stock Value Equivalent Award shall be entitled
to receive  payment of an amount,  not  exceeding the maximum value of the Stock
Value  Equivalent  Award,  if any,  based on the then vested value of the Award.
Payment of a Stock Value  Equivalent Award (i) shall be made in cash, (ii) shall
be made in a lump sum or in  installments  as prescribed by the Committee in its
sole  discretion and (iii) shall be based on the Fair Market Value of the Common
Stock on the payment date. Cash dividend  equivalents may be paid during, or may
be accumulated  and paid at the end of, the determined  period with respect to a
Stock Value Equivalent Award, as determined by the Committee. If payment of cash
is to be made  on a  deferred  basis,  the  Committee  shall  establish  whether
interest shall be credited,  the rate thereof and any other terms and conditions
applicable thereto.

     (e) Termination of Employment.  The Committee shall determine the effect of
termination of employment during the applicable  vesting period on an employee's
Stock Value Equivalent Award.


                     XII. RECAPITALIZATION OR REORGANIZATION

     (a)  Except  as  hereinafter  otherwise  provided,  in  the  event  of  any
recapitalization,  reorganization, merger, consolidation, combination, exchange,
stock dividend, stock split,  extraordinary dividend or divestiture (including a
spin-off)  or any other  change in the  corporate  structure or shares of Common
Stock occurring  after the date of the grant of an Award,  the Committee may, in
its  discretion,  make such  adjustment  as to the number and price of shares of
Common  Stock or other  consideration  subject to such  Awards as the  Committee
shall deem  appropriate in order to prevent dilution or enlargement of rights of
the Holders.

                                       61

                                                       Exhibit 10(e)(continued)

     (b) The existence of the Plan and the Awards  granted  hereunder  shall not
affect  in any way the right or power of the  Board or the  stockholders  of the
Company to make or authorize any adjustment, recapitalization, reorganization or
other change in the Company's capital  structure or its business,  any merger or
consolidation of the Company,  any issue of debt or equity securities having any
priority or preference  with respect to or affecting  Common Stock or the rights
thereof,  the  dissolution  or  liquidation  of the Company or any sale,  lease,
exchange  or other  disposition  of all or any part of its assets or business or
any other corporate act or proceeding.

     (c) The shares with  respect to which  Options may be granted are shares of
Common  Stock as  presently  constituted,  but if,  and  whenever,  prior to the
expiration  of an  Option  theretofore  granted,  the  Company  shall  effect  a
subdivision or consolidation of shares of Common Stock or the payment of a stock
dividend on Common Stock without receipt of  consideration  by the Company,  the
number  of  shares of  Common  Stock  with  respect  to which  such  Option  may
thereafter  be  exercised  (i) in the  event of an  increase  in the  number  of
outstanding  shares shall be proportionately  increased,  and the purchase price
per share shall be proportionately reduced, and (ii) in the event of a reduction
in the number of outstanding  shares shall be proportionately  reduced,  and the
purchase price per share shall be proportionately increased.

     (d)  If  the  Company   recapitalizes  or  otherwise  changes  its  capital
structure,  thereafter  upon any exercise of an Option  theretofore  granted the
Optionee shall be entitled to purchase under such Option,  in lieu of the number
of shares of Common Stock as to which such Option shall then be exercisable, the
number  and  class of  shares  of stock  and  securities  and the cash and other
property to which the Optionee would have been entitled pursuant to the terms of
the  recapitalization  if,  immediately  prior  to  such  recapitalization,  the
Optionee  had been the holder of record of the number of shares of Common  Stock
then covered by such Option.

     (e) In the event of a Corporate Change, then no later than (i) two business
days prior to any Corporate Change  referenced in Clause (i), (ii), (iii) or (v)
of the definition  thereof or (ii) ten business days after any Corporate  Change
referenced in Clause (iv) of the definition  thereof,  the Committee,  acting in
its sole discretion  without the consent or approval of any Optionee,  shall act
to effect one or more of the following  alternatives with respect to outstanding
Options which acts may vary among individual  Optionees,  may vary among Options
held by individual  Optionees and, with respect to acts taken pursuant to Clause
(i) above,  may be contingent  upon  effectuation of the Corporate  Change:  (A)
accelerate the time at which Options then  outstanding  may be exercised so that
such Options may be exercised in full for a limited  period of time on or before
a specified date (before or after such Corporate Change) fixed by the Committee,
after which specified date all  unexercised  Options and all rights of Optionees
thereunder shall terminate,  (B) require the mandatory  surrender to the Company
by selected  Optionees  of some or all of the  outstanding  Options held by such
Optionees  (irrespective of whether such Options are then exercisable  under the
provisions  of the Plan) as of a date  (before or after such  Corporate  Change)
specified by the Committee,  in which event the Committee shall thereupon cancel
such  Options and pay to each  Optionee an amount of cash per share equal to the
excess,  if any,  of the Change of Control  Value of the shares  subject to such
Option over the exercise  price(s) under such Options for such shares,  (C) make
such adjustments to Options then outstanding as the Committee deems  appropriate
to reflect such  Corporate  Change  (provided,  however,  that the Committee may
determine in its sole discretion that no adjustment is necessary to Options then
outstanding)  or (D)  provide  that  thereafter  upon any  exercise of an Option
theretofore  granted the  Optionee  shall be  entitled  to  purchase  under such
Option,  in lieu of the number of shares of Common Stock as to which such Option
shall  then be  exercisable,  the  number  and class of shares of stock or other
securities  or  property  (including,  without  limitation,  cash) to which  the
Optionee  would have been  entitled  pursuant to the terms of the  agreement  of
merger,  consolidation  or sale of assets or plan of liquidation and dissolution
if,  immediately  prior to such merger,  consolidation  or sale of assets or any
distribution  in Liquidation  and  dissolution of the Company,  the Optionee had
been the holder of record of the number of shares of Common  Stock then  covered
by such Option.

     (f) In the event of a Corporate Change, then no later than (i) two business
days prior to any Corporate Change  referenced in Clause (i), (ii), (iii) or (v)
of the definition  thereof or (ii) ten business days after any Corporate  Change
referenced in Clause (iv) of the definition  thereof,  the Committee,  acting in

                                       62

                                                       Exhibit 10(e)(continued)

its sole  discretion  without  the  consent or approval of any Holder of a Stock
Appreciation   Right,  shall  act  to  effect  one  or  more  of  the  following
alternatives  with respect to outstanding Stock  Appreciation  Rights which acts
may vary among individual Holders, may vary among Stock Appreciation Rights held
by individual  Holders and,  with respect to acts taken  pursuant to Clause (ii)
above,  may  be  contingent  upon  effectuation  of  the  Corporate  Change  (A)
accelerate the time at which Stock  Appreciation  Rights then outstanding may be
exercised so that such Stock Appreciation  Rights may be exercised in full for a
limited  period of time on or before a  specified  date  (before  or after  such
Corporate  Change)  fixed  by the  Committee,  after  which  specified  date all
unexercised Stock Appreciation Rights and all rights of Holders thereunder shall
terminate,  (B)  require  the  mandatory  surrender  to the  Company by selected
Holders of Stock  Appreciation  Rights of some or all of the  outstanding  Stock
Appreciation  Rights held by such  Holders  (irrespective  of whether such Stock
Appreciation Rights are then exercisable under the provisions of the Plan) as of
a date (before or after such Corporate  Change)  specified by the Committee,  in
which event the Committee shall thereupon cancel such Stock Appreciation  Rights
and pay to each  Holder an amount of cash  equal to the Spread  with  respect to
such Stock Appreciation Rights with the Fair Market Value of the Common Stock at
such  time to be  deemed  to be the  Change  of  Control  Value or (C) make such
adjustments to Stock Appreciation Rights then outstanding as the Committee deems
appropriate  to reflect  such  Corporate  Change  (provided,  however,  that the
Committee may determine in its sole  discretion  that no adjustment is necessary
to Stock Appreciation Rights then outstanding).

     (g) Except as hereinbefore  expressly provided, the issuance by the Company
of shares of stock of any class or securities  convertible  into shares of stock
of any class, for cash, property,  labor or services, upon direct sale, upon the
exercise of rights or warrants to  subscribe  therefor,  or upon  conversion  of
shares or  obligations  of the  Company  convertible  into such  shares or other
securities, and in any case whether or not for fair value, shall not affect, and
no  adjustment  by reason  thereof  shall be made with respect to, the number of
shares  of  Common  Stock  subject  to  Options  or  Stock  Appreciation  Rights
theretofore  granted,  the purchase  price per share of Common Stock  subject to
Options or the  calculation  of the Spread  with  respect to Stock  Appreciation
Rights.

     (h) The  provisions  of the Plan or the Award  agreements  to the  contrary
notwithstanding,  with respect to any Restricted Stock Awards outstanding at the
time a Corporate  Change occurs,  the Committee may, in its discretion,  provide
(i) for full vesting of all Common Stock awarded to the Holders pursuant to such
Restricted  Stock Awards as of the date of such  Corporate  Change and (ii) that
all restrictions applicable to such Restricted Stock Award shall terminate as of
such date.

     (i) The  provisions  of the Plan or the Award  agreements  to the  contrary
notwithstanding,  with respect to any  Performance  Share Awards which have been
approved  but  which are  unpaid  at the time a  Corporate  Change  occurs,  the
Committee may, in its discretion, provide (i) for full vesting of such Awards as
of the date of such Corporate Change, (ii) for payment of the then value of such
Awards as soon as administratively feasible following the Corporate Change, with
the value of such Awards to be based, to the extent applicable, on the Change of
Control Value of the Common Stock, (iii) that any provisions in Awards regarding
forfeiture of unpaid  Awards shall not be applicable  from and after a Corporate
Change with respect to Awards made prior to such Corporate  Change and (iv) that
all performance  measures applicable to unpaid Awards at the time of a Corporate
Change  shall be deemed to have been  satisfied  in full during the  performance
period upon the occurrence of such Corporate Change.

     (j) The  provisions  of the Plan or the Award  agreements  to the  contrary
notwithstanding,  with respect to any Stock Value  Equivalent  Awards which have
been approved but which are unpaid at the time a Corporate  Change  occurs,  the
Committee may, in its discretion, provide (i) for full vesting of such Awards as
of the date of such  Corporate  Change and (ii) for payment of the then value of
such Awards as soon as administratively  feasible following the Corporate Change
with the value of such Awards to be based on the Change of Control  Value of the
Common Stock.


                                       63

                                                       Exhibit 10(e)(continued)

                   XIII. AMENDMENT OR TERMINATION OF THE PLAN

     The Board in its  discretion  may  terminate the Plan or alter or amend the
Plan or any part thereof from time to time; provided that no change in any Award
theretofore  granted  may be made  which  would  impair the rights of the Holder
without the consent of the Holder,  and  provided,  further,  that the Board may
not, without approval of the stockholders, amend the Plan:
         (a) to  increase  the  aggregate  number of shares  which may be issued
         pursuant to the  provisions  of the Plan on exercise  or  surrender  of
         Options or Stock  Appreciation  Rights or pursuant to Restricted  Stock
         Awards or Performance Share Awards,  except as provided in Article XII;
         (b) to change  the  minimum  Option  price;  (c) to change the class of
         employees  eligible  to  receive  Awards  or  increase  materially  the
         benefits  accruing  to  employees  under  the Plan;  (d) to extend  the
         maximum  period during which Awards may be granted under the Plan;  (e)
         to  modify   materially  the   requirements   as  to  eligibility   for
         participation in the Plan; or (f) to decrease any authority  granted to
         the Committee hereunder in contravention of Rule 16b-3.


                                   XIV. OTHER

     (a) No Right To An Award.  Neither the  adoption of the Plan nor any action
of the Board or of the  Committee  shall be deemed to give an employee any right
to be granted an Option,  a Stock  Appreciation  Right,  a right to a Restricted
Stock Award or a right to a  Performance  Share Award or Stock Value  Equivalent
Award or any other rights hereunder except as may be evidenced by an Award or by
an Option Agreement duly executed on behalf of the Company, and then only to the
extent of and on the terms and conditions  expressly set forth therein. The Plan
shall be unfunded. The Company shall not be required to establish any special or
separate fund or to make any other  segregation of funds or assets to assure the
payment of any Award.

     (b) No Employment Rights Conferred. Nothing contained in the Plan or in any
Award made  hereunder  shall (i) confer upon any employee any right with respect
to  continuation  of  employment  with the  Company  or any  Subsidiary  or (ii)
interfere  in any way  with  the  right  of the  Company  or any  Subsidiary  to
terminate his or her employment at any time.

     (c) Other Laws;  Withholding.  The Company  shall not be obligated to Issue
any Common Stock  pursuant to any Award  granted under the Plan at any time when
the offering of the shares covered by such Award has not been  registered  under
the  Securities  Act of 1933 and such other  state and  federal  laws,  rules or
regulations as the Company or the Committee deems applicable and, in the opinion
of legal counsel for the Company,  there is no exemption  from the  registration
requirements of such laws,  rules or regulations  available for the issuance and
sale of such shares.  No  fractional  shares of Common Stock shall be delivered,
nor shall any cash in lieu of fractional  shares be paid. The Company shall have
the right to deduct in connection  with all Awards any taxes  required by law to
be withheld  and to require any  payments  necessary to enable it to satisfy its
withholding  obligations.  The  Committee  may  permit the Holder of an Award to
elect to surrender, or authorize the Company to withhold, shares of Common Stock
(valued at their Fair Market Value on the date of surrender  or  withholding  of
such shares) in satisfaction of the Company's withholding obligation, subject to
such  restrictions as the Committee deems necessary to satisfy the  requirements
of Rule 16b-3.

     (d) No Restriction on Corporate Action. Nothing contained in the Plan shall
be construed to prevent the Company or any Subsidiary  from taking any corporate
action which is deemed by the Company or such Subsidiary to be appropriate or in
its best  interest,  whether or not such action would have an adverse  effect on

                                       64

                                                       Exhibit 10(e)(continued)

the Plan or any Award made under the Plan.  No  employee,  beneficiary  or other
person shall have any claim against the Company or any Subsidiary as a result of
any such action.

     (e) Restrictions on Transfer. An Award shall not be transferable  otherwise
than by will or the laws of descent and  distribution  and shall be  exercisable
during the lifetime of the Holder only by such Holder or the  Holder's  guardian
or  legal  representative.  The  Option  Agreement,  Stock  Appreciation  Rights
Agreement or other  written  instrument  evidencing  an Award shall  specify the
effect of the death of the Holder on the Award.

     (f) Rule 16b-3. It is intended that the Plan and any grant of an Award made
to a  person  subject  to  Section  16 of  the  Exchange  Act  meet  all  of the
requirements of Rule 16b-3. If any provision of the Plan or any such Award would
disqualify  the Plan or such Award under,  or would  otherwise  not comply with,
Rule 16b-3,  such  provision or Award shall be  construed  or deemed  amended to
conform to Rule 16b-3.

     (g) Governing Law. This Plan shall be construed in accordance with the laws
of the State of Texas, except to the extent that it implicates matters which are
the  subject  of the  General  Corporation  Law of the State of  Delaware  which
matters shall be governed by the latter law.


                                       65


                                                            Exhibit 10(n)

                               HALLIBURTON COMPANY
                     1993 STOCK AND LONG-TERM INCENTIVE PLAN
                    As Amended and Restated February 19, 1998

                                   I. PURPOSE

     The purpose of the Halliburton  Company 1993 Stock and Long-Term  Incentive
Plan (the "Plan") is to provide a means whereby Halliburton  Company, a Delaware
corporation  (the  "Company"),  and its Subsidiaries may attract able persons to
enter the  employ  of the  Company  and to  provide  a means  whereby  those key
employees upon whom the  responsibilities  of the successful  administration and
management of the Company rest, and whose present and potential contributions to
the welfare of the Company are of  importance,  can acquire and  maintain  stock
ownership,  thereby strengthening their concern for the long-term welfare of the
Company and their desire to remain in its employ.  A further purpose of the Plan
is  to  provide  such  key  employees  with  additional   incentive  and  reward
opportunities  designed to enhance the profitable growth of the Company over the
long term. Accordingly,  the Plan provides for granting Incentive Stock Options,
options which do not  constitute  Incentive  Stock Options,  Stock  Appreciation
Rights,   Restricted  Stock  Awards,   Performance  Share  Awards,  Stock  Value
Equivalent Awards, or any combination of the foregoing, as is best suited to the
circumstances of the particular employee as provided herein.


                                 II. DEFINITIONS

     The following  definitions  shall be applicable  throughout the Plan unless
specifically modified by any paragraph:

          (a) "Award" means,  individually or  collectively,  any Option,  Stock
     Appreciation  Right,  Restricted  Stock Award,  Performance  Share Award or
     Stock Value Equivalent Award.
          (b) "Board" means the Board of Directors of Halliburton Company.
          (c) "Change of Control Value" means, for the purposes of Clause (B) of
     Paragraph  (e) of Article  XII and Clause (B) of  Paragraph  (f) of Article
     XII,  the amount  determined  in Clause (i),  (ii) or (iii),  whichever  is
     applicable,  as follows: (i) the per share price offered to stockholders of
     the Company in any  merger,  consolidation,  sale of assets or  dissolution
     transaction,  (ii) the per  share  price  offered  to  stockholders  of the
     Company in any tender offer or exchange  offer  whereby a Corporate  Change
     takes place or (iii) if a Corporate  Change  occurs other than as described
     in Clause (i) or Clause (ii), the fair market value per share determined by
     the Committee as of the date  determined by the Committee to be the date of
     cancellation and surrender of an Option or Stock Appreciation Right. If the
     consideration  offered to  stockholders  of the Company in any  transaction
     described  in this  Paragraph  or  Paragraphs  (e) and (f) of  Article  XII
     consists of anything  other than cash,  the Committee  shall  determine the
     fair cash equivalent of the portion of the  consideration  offered which is
     other than cash.
          (d)  "Code"  means the  Internal  Revenue  Code of 1986,  as  amended.
     Reference in the Plan to any section of the Code shall be deemed to include
     any amendments or successor  provisions to such section and any regulations
     under such section.
          (e)  "Committee"  means  the  committee   selected  by  the  Board  to
     administer  the Plan in accordance  with Paragraph (a) of Article IV of the
     Plan.
          (f) "Common Stock" means  the common stock' par value $2.50 per share,
     of Halliburton Company.
          (g) "Company" means Halliburton Company.


                                       66

                                                       Exhibit 10(n)(continued)

          (h)  "Corporate  Change"  means one of the following  events:  (i) the
     merger,  consolidation or other  reorganization of the Company in which the
     outstanding  Common  Stock is converted  into or exchanged  for a different
     class of  securities  of the Company,  a class of  securities  of any other
     issuer  (except  a  direct  or  indirect  wholly  owned  subsidiary  of the
     Company),  cash or other property;  (ii) the sale, lease or exchange of all
     or substantially  all of the assets of the Company to any other corporation
     or entity  (except a direct or  indirect  wholly  owned  subsidiary  of the
     Company);  (iii) the adoption by the  stockholders of the Company of a plan
     of  liquidation  and  dissolution;  (iv) the  acquisition  (other  than any
     acquisition  pursuant to any other clause of this definition) by any person
     or  entity,  including  without  limitation  a "group" as  contemplated  by
     Section  13(d)(3)  of  the  Exchange  Act,  of  beneficial  ownership,   as
     contemplated by such Section,  of more than twenty percent (based on voting
     power)of the  Company's  outstanding  capital  stock;  or (v) as a result
     of  or  in  connection  with  a  contested   election   of  directors,  the
     persons who  were  directors  of the  Company  before such  election  shall
     cease to constitute a majority of the Board.
          (i) "Exchange  Act"  means  the  Securities  Exchange  Act of 1934, as
     amended.
          (j) "Fair Market Value" means,  as of any specified  date, the closing
     price of the Common Stock on the New York Stock Exchange (or, if the Common
     Stock is not then listed on such exchange,  such other national  securities
     exchange on which the Common Stock is then  listed) on that date,  or if no
     prices are reported on that date, on the last  preceding date on which such
     prices of the Common Stock are so reported. If the Common Stock is not then
     listed on any national  securities  exchange but is traded over the counter
     at the time a determination of its Fair Market Value is required to be made
     hereunder, its Fair Market Value shall be deemed to be equal to the average
     between the reported  high and low sales prices of Common Stock on the most
     recent date on which Common Stock was publicly traded.  If the Common Stock
     is not publicly traded at the time a determination of its value is required
     to be made hereunder,  the  determination of its Fair Market Value shall be
     made by the Committee in such manner as it deems appropriate.
          (k) "Holder"  means an employee of the Company who has been granted an
     Award.
          (l) "Immediate Family" means, with respect to a particular Holder, the
     Holder's spouse,  children and  grandchildren  (including  adopted and step
     children and grandchildren).
          (m)  "Incentive  Stock  Option"  means an Option within the meaning of
     section 422 of the Code.
          (n) "Option"  means an Award granted under Article VII of the Plan and
     includes both Incentive  Stock Options to purchase Common Stock and Options
     which do not constitute Incentive Stock Options to purchase Common Stock.
          (o) "Option  Agreement" means  a written agreement between the Company
     and an employee with respect to an Option.
          (p) "Optionee" means an employee who has been granted an Option.
          (q) "Parent Corporation"  shall have  the meaning set forth in section
     424(e) of the Code.
          (r) "Performance  Share Award"  means an Award granted under Article X
     of the Plan.
          (s) "Plan"  means  the  Halliburton  Company  1993 Stock and Long-Term
     Incentive Plan.
          (t) "Restricted  Stock Award" means  an Award granted under Article IX
     of the Plan.
          (u) "Rule 16b-3" means Rule 16b-3 of the general Rules and  Regulation
     of  the Securities and Exchange  Commission under the Exchange Act, as such
     rule is currently in effect or as hereafter modified or amended.
          (v) "Spread"  means,  in the case of a Stock  Appreciation  Right,  an
     amount equal to the excess,  if any, of the Fair Market Value of a share of
     Common Stock on the date such right is exercised over the exercise price of
     such Stock Appreciation Right.
          (w) "Stock  Appreciation  Right" means an Award  granted under Article
     VIII of the Plan.
          (x) "Stock  Appreciation  Rights  Agreement" means a written agreement
     between  the  Company  and an  employee  with  respect to an Award of Stock
     Appreciation Rights.


                                       67

                                                       Exhibit 10(n)(continued)
     
          (y)  "Stock  Value  Equivalent  Award"  means an Award  granted  under
     Article XI of the Plan.
          (z) "Subsidiary" means a company (whether a corporation,  partnership,
     joint  venture  or  other  form  of  entity)  in  which  the  Company  or a
     corporation  in which the Company  owns a majority of the shares of capital
     stock,  directly or  indirectly,  owns a greater than twenty percent equity
     interest,  except  that with  respect to the  issuance of  Incentive  Stock
     Options  the term  "Subsidiary"  shall  have the same  meaning  as the term
     "subsidiary corporation" as defined in section 424(f) of the Code.


                  III. EFFECTIVE DATE AND DURATION OF THE PLAN

     The Plan shall be  effective  upon the date of its  adoption  by the Board,
provided the Plan is approved by the  stockholders  of the Company within twelve
months  thereafter  and on or prior to the date of the first  annual  meeting of
stockholders  of the Company held  subsequent  to the  acquisition  of an equity
security by a Holder  hereunder for which exemption is claimed under Rule 16b-3.
Notwithstanding  any  provision of the Plan or in any Option  Agreement or Stock
Appreciation  Rights Agreement,  no Option or Stock  Appreciation Right shall be
exercisable prior to such stockholder approval. No further Awards may be granted
under the Plan  after ten years  from the date the Plan is adopted by the Board.
Subject to the provisions of Article XIII, the Plan shall remain in effect until
all  Options  and Stock  Appreciation  Rights  granted  under the Plan have been
exercised or expired by reason of lapse of time, all  restrictions  imposed upon
Restricted  Stock Awards have lapsed and all Performance  Share Awards and Stock
Value Equivalent Awards have been satisfied.


                               IV. ADMINISTRATION

     (a) Composition of Committee. The Plan shall be administered by a committee
which shall be (i) appointed by the Board and (ii)  constituted  so as to permit
the Plan to comply with Rule 16b-3 and  regulations  promulgated  under  section
162(m) of the Code.

     (b) Powers.  The Committee  shall have  authority,  in its  discretion,  to
determine which employees of the Company and its  Subsidiaries  shall receive an
Award,  the time or times when such Award  shall be made,  whether an  Incentive
Stock Option,  nonqualified Option or Stock Appreciation Right shall be granted,
the number of shares of Common  Stock  which may be issued  under  each  Option,
Stock  Appreciation  Right and  Restricted  Stock  Award,  and the value of each
Performance  Share  Award and  Stock  Value  Equivalent  Award.  In making  such
determinations  the  Committee  may take into account the nature of the services
rendered by the respective employees,  their present and potential  contribution
to the  Company's  success  and  such  other  factors  as the  Committee  in its
discretion shall deem relevant.

     (c) Additional  Powers.  The Committee shall have such additional powers as
are delegated to it by the other provisions of the Plan.  Subject to the express
provisions of the Plan, the Committee is authorized to construe the Plan and the
respective   agreements  executed  thereunder,   to  prescribe  such  rules  and
regulations relating to the Plan as it may deem advisable to carry out the Plan,
and to determine the terms, restrictions and provisions of each Award, including
such terms, restrictions and provisions as shall be requisite in the judgment of
the Committee to cause designated Options to qualify as Incentive Stock Options,
and to make all other  determinations  necessary or advisable for  administering
the Plan.  The  Committee  may  correct  any  defect or supply any  omission  or
reconcile any inconsistency in any agreement  relating to an Award in the manner
and to the extent the  Committee  shall deem  expedient  to carry the Award into
effect.  The  determinations of the Committee on the matters referred to in this
Article IV shall be conclusive.


                                       68

                                                       Exhibit 10(n)(continued)

        V. GRANT OF OPTIONS, STOCK APPRECIATION RIGHTS, RESTRICTED STOCK
           AWARDS, PERFORMANCE SHARE AWARDS AND STOCK VALUE EQUIVALENT
                       AWARDS; SHARES SUBJECT TO THE PLAN

          (a) Award Limits.  The Committee may from time to time grant Awards to
     one or more employees  determined by it to be eligible for participation in
     the Plan in  accordance  with the  provisions  of Article VI. The aggregate
     number of shares of Common  Stock  that may be issued  under the Plan shall
     not exceed 27,000,000 shares, of which no more than 4,000,000 may be issued
     in the form of  Restricted  Stock Awards and no more than  4,000,000 may be
     issued  pursuant to  Performance  Share  Awards.  Notwithstanding  anything
     contained  herein to the  contrary,  the  number of Option  shares or Stock
     Appreciation Rights,  singly or in combination,  granted to any employee in
     any one calendar year shall not in the  aggregate  exceed  500,000.  Any of
     such shares which remain  unissued and which are not subject to outstanding
     Options or Awards at the  termination of the Plan shall cease to be subject
     to the Plan,  but, until  termination of the Plan, the Company shall at all
     times reserve a sufficient number of shares to meet the requirements of the
     Plan. Shares shall be deemed to have been issued under the Plan only to the
     extent  actually  issued and delivered  pursuant to an Award. To the extent
     that an Award lapses or the rights of its Holder  terminate or the Award is
     paid in cash,  any shares of Common Stock subject to such Award shall again
     be  available  for the grant of an Award.  The  aggregate  number of shares
     which may be issued  under the Plan shall be subject to  adjustment  in the
     same manner as  provided  in Article  XII with  respect to shares of Common
     Stock  subject to Options then  outstanding.  Separate  stock  certificates
     shall be issued by the Company for those  shares  acquired  pursuant to the
     exercise  of an  Incentive  Stock  Option  and for  those  shares  acquired
     pursuant  to the  exercise  of any  Option  which  does not  constitute  an
     Incentive Stock Option.

          (b) Stock Offered.  The  stock to be  offered pursuant to the grant of
     an  Award  may  be  authorized  but  unissued  Common Stock or Common Stock
     previously issued and reacquired by the Company.


                                 VI. ELIGIBILITY

     Awards made pursuant to the Plan may be granted only to individuals who, at
the time of grant, are key employees of the Company or any Parent Corporation or
Subsidiary  of the  Company.  Awards may not be granted to any  director  of the
Company who is not an employee of the Company or to any member of the Committee.
An Award made  pursuant to the Plan may be granted on more than one  occasion to
the same person, and such Award may include an Incentive Stock Option, an Option
which is not an Incentive Stock Option, an Award of Stock Appreciation Rights, a
Restricted  Stock Award,  a Performance  Share Award,  a Stock Value  Equivalent
Award or any  combination  thereof.  Each Award shall be  evidenced by a written
instrument duly executed by or on behalf of the Company.


                               VII. STOCK OPTIONS

     (a) Stock  Option  Agreement.  Each Option  shall be evidenced by an Option
Agreement  between the Company and the Optionee  which shall  contain such terms
and conditions as may be approved by the Committee.  The terms and conditions of
the respective Option Agreements need not be identical.  Specifically, an Option
Agreement may provide for the payment of the option price,  in whole or in part,
by the delivery of a number of shares of Common  Stock (plus cash if  necessary)
having a Fair Market  Value equal to such option  price.  Each Option  Agreement
shall provide that the Option may not be exercised  earlier than six months from
the date of grant and shall specify the effect of  termination  of employment on
the exercisability of the Option.


                                       69

                                                       Exhibit 10(n)(continued)

     (b) Option Period.  The term of  each Option  shall be  as specified by the
Committee at the date of grant; provided that, in no case, shall the term  of an
Option exceed ten years.

     (c)  Limitations  on Exercise of Option.  An Option shall be exercisable in
whole or in such installments and at such times as determined by the Committee.

     (d) Special  Limitations on Incentive Stock Options. To the extent that the
aggregate Fair Market Value  (determined  at the time the  respective  Incentive
Stock Option is granted) of Common Stock with respect to which  Incentive  Stock
Options are exercisable for the first time by an individual  during any calendar
year  under all  incentive  stock  option  plans of the  Company  and its Parent
Corporation  and  Subsidiaries  exceeds  $100,000,  such excess  Incentive Stock
Options  shall be treated as Options  which do not  constitute  Incentive  Stock
Options. The Committee shall determine, in accordance with applicable provisions
of the Code, Treasury Regulations and other administrative pronouncements, which
of an Optionee's  Incentive  Stock Option will not  constitute  Incentive  Stock
Options  because  of such  limitation  and shall  notify  the  Optionee  of such
determination  as soon as  practicable  after such  determination.  No Incentive
Stock  Option  shall be granted to an  individual  if, at the time the Option is
granted,  such  individual  owns  stock  possessing  more  than 10% of the total
combined  voting  power of all  classes of stock of the Company or of its Parent
Corporation  or a  Subsidiary,  within the meaning of section  422(b)(6)  of the
Code, unless (i) at the time such Option is granted the option price is at least
110% of the Fair Market Value of the Common Stock subject to the Option and (ii)
such Option by its terms is not  exercisable  after the expiration of five years
from the date of grant.

     (e) Option  Price.  The  purchase  price of Common  Stock issued under each
Option shall be determined by the  Committee,  but such purchase price shall not
be less than the Fair Market Value of Common Stock  subject to the Option on the
date the Option is granted.

     (f) Options and Rights in  Substitution  for Stock Options Granted by Other
Corporations.  Options and Stock  Appreciation  Rights may be granted  under the
Plan from time to time in  substitution  for stock  options held by employees of
corporations who become,  or who became prior to the effective date of the Plan,
key  employees  of the Company or of any  Subsidiary  as a result of a merger or
consolidation of the employing  corporation with the Company or such Subsidiary,
or the  acquisition  by the Company or a  Subsidiary  of all or a portion of the
assets of the  employing  corporation,  or the  acquisition  by the Company or a
Subsidiary  of stock of the  employing  corporation  with the  result  that such
employing corporation becomes a Subsidiary.


                         VIII. STOCK APPRECIATION RIGHTS

     (a) Stock  Appreciation  Rights. A Stock Appreciation Right is the right to
receive an amount  equal to the Spread with  respect to a share of Common  Stock
upon the exercise of such Stock Appreciation  Right.  Stock Appreciation  Rights
may be granted  in  connection  with the grant of an  Option,  in which case the
Option  Agreement will provide that exercise of Stock  Appreciation  Rights will
result in the  surrender of the right to purchase the shares under the Option as
to which the Stock  Appreciation  Rights were  exercised.  Alternatively,  Stock
Appreciation  Rights may be granted  independently of Options in which case each
Award of Stock  Appreciation  Rights shall be evidenced by a Stock  Appreciation
Rights  Agreement  between the Company and the Holder  which shall  contain such
terms  and  conditions  as may be  approved  by the  Committee.  The  terms  and
conditions of the respective Stock  Appreciation  Rights  Agreements need not be
identical.  The Spread with respect to a Stock Appreciation Right may be payable
either in cash,  shares of Common  Stock with a Fair  Market  Value equal to the
Spread or in a combination  of cash and shares of Common Stock.  With respect to


                                       70

                                                       Exhibit 10(n)(continued)

stock  Appreciation  Rights that are subject to Section 16 of the Exchange  Act,
however,  the Committee  shall,  except as provided in Paragraphs (e) and (f) of
Article XII,  retain sole  discretion (i) to determine the form in which payment
of the Stock  Appreciation  Right will be made (i.e.,  cash,  securities  or any
combination  thereof) or (ii) to approve an election by a Holder to receive cash
in full or partial settlement of Stock Appreciation Rights. Upon the exercise of
any Stock Appreciation  Rights granted hereunder,  the number of shares reserved
for  issuance  under the Plan shall be reduced only to the extent that shares of
Common Stock are actually  issued in connection with the exercise of such Right.
Each  Stock   Appreciation   Rights  Agreement  shall  provide  that  the  Stock
Appreciation  Rights may not be exercised  earlier than six months from the date
of grant and shall  specify  the  effect of  termination  of  employment  on the
exercisability of the Stock Appreciation Rights.

     (b) Exercise  Price.  The exercise price of each Stock  Appreciation  Right
shall be determined by the Committee,  but such exercise price shall not be less
than the Fair  Market  Value of a share of  Common  Stock on the date the  Stock
Appreciation Right is granted.

     (c) Exercise Period.  The term of each Stock Appreciation Right shall be as
specified by the  Committee  at the date of grant;  provided  that,  in no case,
shall the term of a Stock Appreciation Right exceed ten years.

     (d) Limitations on  Exercise of  Stock  Appreciation  Right.    A  Stock 
Appreciation  Right shall be exercisable in whole or in such installments and at
such times as determined by the Committee.


                           IX. RESTRICTED STOCK AWARDS

     (a) Restricted  Period To Be  Established  by the Committee.  At the time a
Restricted  Stock Award is made, the Committee  shall establish a period of time
(the "Restriction Period") applicable to such Award;  provided,  however,  that,
except as set forth below and as permitted by Paragraph  (b) of this Article IX,
such Restriction  Period shall not be less than three (3) years from the date of
grant  (the  "Minimum  Criteria").  An award  which  provides  for the  lapse of
restrictions  on shares  applicable  to such Award in equal annual  installments
over a period of at least three (3) years from the date of grant shall be deemed
to meet the Minimum  Criteria.  The foregoing  notwithstanding,  with respect to
Restricted  Stock  Awards  of up to an  aggregate  550,000  shares  (subject  to
adjustment as set forth in Article XII),  the Minimum  Criteria  shall not apply
and the Committee may establish such lesser  Restriction  Periods  applicable to
such Awards as it shall determine in its  discretion.  Subject to the foregoing,
each  Restricted  Stock Award may have a different  Restriction  Period,  in the
discretion of the Committee.  The Restriction  Period applicable to a particular
Restricted Stock Award shall not be changed except as permitted by Paragraph (b)
of this Article or by Article XII.

     (b)  Other  Terms  and  Conditions.  Common  Stock  awarded  pursuant  to a
Restricted Stock Award shall be represented by a stock certificate registered in
the name of the Holder of such  Restricted  Stock Award or, at the option of the
Company,  in the name of a nominee of the  Company.  The  Holder  shall have the
right to receive  dividends  during the Restriction  Period,  to vote the Common
Stock subject thereto and to enjoy all other stockholder rights, except that (i)
the Holder shall not be entitled to  possession of the stock  certificate  until
the Restriction Period shall have expired, (ii) the Company shall retain custody
of the stock  during  the  Restriction  Period,  (iii) the  Holder may not sell,
transfer, pledge, exchange, hypothecate or otherwise dispose of the stock during
the Restriction Period and (iv) a breach of the terms and conditions established
by the Committee pursuant to the Restricted Stock Award shall cause a forfeiture
of the Restricted  Stock Award. At the time of such Award, the Committee may, in
its sole  discretion,  prescribe  additional  terms,  conditions or restrictions
relating to  Restricted  Stock  Awards,  including,  but not  limited to,  rules
pertaining to the termination of employment (by retirement, disability, death or
otherwise) of a Holder prior to expiration of the Restriction Period.


                                       71

                                                       Exhibit 10(n)(continued)

     (c) Payment for  Restricted  Stock.  A Holder shall not be required to make
any payment for Common  Stock  received  pursuant to a  Restricted  Stock Award,
except to the extent  otherwise  required by law and except  that the  Committee
may, in its discretion, charge the Holder an amount in cash not in excess of the
par value of the shares of Common Stock issued under the Plan to the Holder.

     (d)  Miscellaneous.  Nothing in this Article shall prohibit the exchange of
shares issued under the Plan (whether or not then subject to a Restricted  Stock
Award)  pursuant  to a plan of  reorganization  for stock or  securities  in the
Company or another corporation a party to the  reorganization,  but the stock or
securities  so  received  for  shares  then  subject  to the  restrictions  of a
Restricted  Stock  Award  shall  become  subject  to the  restrictions  of  such
Restricted  Stock  Award.  Any shares of stock  received  as a result of a stock
split or stock  dividend  with  respect to shares then  subject to a  Restricted
Stock Award  shall also become  subject to the  restrictions  of the  Restricted
Stock Award.


                           X. PERFORMANCE SHARE AWARDS

     (a) Performance Period. The Committee shall establish,  with respect to and
at the time of each Performance Share Award, a performance period over which the
performance  applicable  to the  Performance  Share Award of the Holder shall be
measured.

     (b) Performance  Share  Awards.  Each  Performance  Share  Award may have a
maximum value  established by the Committee at the time of such Award.

     (c) Performance  Measures.  A Performance  Share Award may be awarded to an
employee contingent upon future performance of the employee,  the Company or any
Subsidiary,  division or department thereof by or in which he is employed during
the  performance  period,  the Fair Market Value of Common Stock or the increase
thereof  during the  performance  period,  combinations  thereof,  or such other
provisions as the Committee may determine to be appropriate. The Committee shall
establish the performance  measures  applicable to such performance prior to the
beginning of the  performance  period but subject to such later revisions as the
Committee shall deem appropriate to reflect  significant,  unforeseen  events or
changes.

     (d) Awards Criteria.  In determining the value of Performance Share Awards,
the  Committee  may  take  into  account  an  employee's  responsibility  level,
performance,  potential,  other Awards and such other considerations as it deems
appropriate.

     (e) Payment.  Following the end of the performance  period, the Holder of a
Performance  Share Award shall be entitled to receive payment of an amount,  not
exceeding the maximum value of the Performance Share Award, if any, based on the
achievement  of  the  performance  measures  for  such  performance  period,  as
determined  by the  Committee in its sole  discretion.  Payment of a Performance
Share Award (i) may be made in cash, Common Stock or a combination  thereof,  as
determined by the Committee in its sole discretion, (ii) shall be made in a lump
sum or in installments as prescribed by the Committee in its sole discretion and
(iii) to the extent  applicable,  shall be based on the Fair Market Value of the
Common  Stock  on the  payment  date.  If a  payment  of cash is to be made on a
deferred  basis,  the  Committee  shall  establish  whether  interest  shall  be
credited,  the rate  thereof  and any  other  terms  and  conditions  applicable
thereto.


                                       72

                                                       Exhibit 10(n)(continued)

     (f) Termination of Employment.  The Committee shall determine the effect of
termination  of  employment  during  the  performance  period  on an  employee's
Performance Share Award.


                        XI. STOCK VALUE EQUIVALENT AWARDS

     (a) Stock Value Equivalent Awards. Stock Value Equivalent Awards are rights
to receive an amount equal to the Fair Market Value of shares of Common Stock or
rights to receive an amount  equal to any  appreciation  or increase in the Fair
Market Value of Common Stock over a specified  period of time, which vest over a
period of time as established by the Committee,  without  payment of any amounts
by the  Holder  thereof  (except  to the extent  otherwise  required  by law) or
satisfaction  of any  performance  criteria  or  objectives.  Each  Stock  Value
Equivalent  Award may have a maximum value  established  by the Committee at the
time of such Award.

     (b) Award Period. The Committee shall establish, with respect to and at the
time of each Stock Value  Equivalent  Award, a period over which the Award shall
vest with respect to the Holder.

     (c) Awards  Criteria.  In determining  the value of Stock Value  Equivalent
Awards, the Committee may take into account an employee's  responsibility level,
performance,  potential,  other Awards and such other considerations as it deems
appropriate.

     (d) Payment.  Following the end of the determined  period for a Stock Value
Equivalent Award, the Holder of a Stock Value Equivalent Award shall be entitled
to receive  payment of an amount,  not  exceeding the maximum value of the Stock
Value  Equivalent  Award,  if any,  based on the then vested value of the Award.
Payment of a Stock Value  Equivalent Award (i) shall be made in cash, (ii) shall
be made in a lump sum or in  installments  as prescribed by the Committee in its
sole  discretion and (iii) shall be based on the Fair Market Value of the Common
Stock on the payment date. Cash dividend  equivalents may be paid during, or may
be accumulated  and paid at the end of, the determined  period with respect to a
Stock Value Equivalent Award, as determined by the Committee. If payment of cash
is to be made  on a  deferred  basis,  the  Committee  shall  establish  whether
interest shall be credited,  the rate thereof and any other terms and conditions
applicable thereto.

     (e) Termination of Employment.  The Committee shall determine the effect of
termination of employment during the applicable  vesting period on an employee's
Stock Value Equivalent Award.


                     XII. RECAPITALIZATION OR REORGANIZATION

     (a)  Except  as  hereinafter  otherwise  provided,  in  the  event  of  any
recapitalization,  reorganization, merger, consolidation, combination, exchange,
stock dividend, stock split,  extraordinary dividend or divestiture (including a
spin-off)  or any other  change in the  corporate  structure or shares of Common
Stock occurring  after the date of the grant of an Award,  the Committee may, in
its  discretion,  make such  adjustment  as to the number and price of shares of
Common  Stock or other  consideration  subject to such  Awards as the  Committee
shall deem  appropriate in order to prevent dilution or enlargement of rights of
the Holders.

     (b) The existence of the Plan and the Awards  granted  hereunder  shall not
affect  in any way the right or power of the  Board or the  stockholders  of the
Company to make or authorize any adjustment, recapitalization, reorganization or


                                       73

                                                       Exhibit 10(n)(continued)

other change in the Company's capital  structure or its business,  any merger or
consolidation of the Company,  any issue of debt or equity securities having any
priority or preference  with respect to or affecting  Common Stock or the rights
thereof,  the  dissolution  or  liquidation  of the Company or any sale,  lease,
exchange  or other  disposition  of all or any part of its assets or business or
any other corporate act or proceeding.

     (c) The shares with  respect to which  Options may be granted are shares of
Common  Stock as  presently  constituted,  but if,  and  whenever,  prior to the
expiration  of an  Option  theretofore  granted,  the  Company  shall  effect  a
subdivision or consolidation of shares of Common Stock or the payment of a stock
dividend on Common Stock without receipt of  consideration  by the Company,  the
number  of  shares of  Common  Stock  with  respect  to which  such  Option  may
thereafter  be  exercised  (i) in the  event of an  increase  in the  number  of
outstanding  shares shall be proportionately  increased,  and the purchase price
per share shall be proportionately reduced, and (ii) in the event of a reduction
in the number of outstanding  shares shall be proportionately  reduced,  and the
purchase price per share shall be proportionately increased.

     (d)  If  the  Company   recapitalizes  or  otherwise  changes  its  capital
structure,  thereafter  upon any exercise of an Option  theretofore  granted the
Optionee shall be entitled to purchase under such Option,  in lieu of the number
of shares of Common Stock as to which such Option shall then be exercisable, the
number  and  class of  shares  of stock  and  securities  and the cash and other
property to which the Optionee would have been entitled pursuant to the terms of
the  recapitalization  if,  immediately  prior  to  such  recapitalization,  the
Optionee  had been the holder of record of the number of shares of Common  Stock
then covered by such Option.

     (e) In the event of a Corporate Change, then no later than (i) two business
days prior to any Corporate Change  referenced in Clause (i), (ii), (iii) or (v)
of the definition  thereof or (ii) ten business days after any Corporate  Change
referenced in Clause (iv) of the definition  thereof,  the Committee,  acting in
its sole discretion  without the consent or approval of any Optionee,  shall act
to effect one or more of the following  alternatives with respect to outstanding
Options which acts may vary among individual  Optionees,  may vary among Options
held by individual  Optionees and, with respect to acts taken pursuant to Clause
(i) above,  may be contingent  upon  effectuation of the Corporate  Change:  (A)
accelerate the time at which Options then  outstanding  may be exercised so that
such Options may be exercised in full for a limited  period of time on or before
a specified date (before or after such Corporate Change) fixed by the Committee,
after which specified date all  unexercised  Options and all rights of Optionees
thereunder shall terminate,  (B) require the mandatory  surrender to the Company
by selected  Optionees  of some or all of the  outstanding  Options held by such
Optionees  (irrespective of whether such Options are then exercisable  under the
provisions  of the Plan) as of a date  (before or after such  Corporate  Change)
specified by the Committee,  in which event the Committee shall thereupon cancel
such  Options and pay to each  Optionee an amount of cash per share equal to the
excess,  if any,  of the Change of Control  Value of the shares  subject to such
Option over the exercise  price(s) under such Options for such shares,  (C) make
such adjustments to Options then outstanding as the Committee deems  appropriate
to reflect such  Corporate  Change  (provided,  however,  that the Committee may
determine in its sole discretion that no adjustment is necessary to Options then
outstanding)  or (D)  provide  that  thereafter  upon any  exercise of an Option
theretofore  granted the  Optionee  shall be  entitled  to  purchase  under such
Option,  in lieu of the number of shares of Common Stock as to which such Option
shall  then be  exercisable,  the  number  and class of shares of stock or other
securities  or  property  (including,  without  limitation,  cash) to which  the
Optionee  would have been  entitled  pursuant to the terms of the  agreement  of
merger,  consolidation  or sale of assets or plan of liquidation and dissolution
if,  immediately  prior to such merger,  consolidation  or sale of assets or any
distribution  in Liquidation  and  dissolution of the Company,  the Optionee had
been the holder of record of the number of shares of Common  Stock then  covered
by such Option.

     (f) In the event of a Corporate Change, then no later than (i) two business
days prior to any Corporate Change  referenced in Clause (i), (ii), (iii) or (v)
of the definition  thereof or (ii) ten business days after any Corporate  Change
referenced in Clause (iv) of the definition  thereof,  the Committee,  acting in
its sole  discretion  without  the  consent or approval of any Holder of a Stock


                                       74

                                                       Exhibit 10(n)(continued)

Appreciation   Right,  shall  act  to  effect  one  or  more  of  the  following
alternatives  with respect to outstanding Stock  Appreciation  Rights which acts
may vary among individual Holders, may vary among Stock Appreciation Rights held
by individual  Holders and,  with respect to acts taken  pursuant to Clause (ii)
above,  may  be  contingent  upon  effectuation  of  the  Corporate  Change  (A)
accelerate the time at which Stock  Appreciation  Rights then outstanding may be
exercised so that such Stock Appreciation  Rights may be exercised in full for a
limited  period of time on or before a  specified  date  (before  or after  such
Corporate  Change)  fixed  by the  Committee,  after  which  specified  date all
unexercised Stock Appreciation Rights and all rights of Holders thereunder shall
terminate,  (B)  require  the  mandatory  surrender  to the  Company by selected
Holders of Stock  Appreciation  Rights of some or all of the  outstanding  Stock
Appreciation  Rights held by such  Holders  (irrespective  of whether such Stock
Appreciation Rights are then exercisable under the provisions of the Plan) as of
a date (before or after such Corporate  Change)  specified by the Committee,  in
which event the Committee shall thereupon cancel such Stock Appreciation  Rights
and pay to each  Holder an amount of cash  equal to the Spread  with  respect to
such Stock Appreciation Rights with the Fair Market Value of the Common Stock at
such  time to be  deemed  to be the  Change  of  Control  Value or (C) make such
adjustments to Stock Appreciation Rights then outstanding as the Committee deems
appropriate  to reflect  such  Corporate  Change  (provided,  however,  that the
Committee may determine in its sole  discretion  that no adjustment is necessary
to Stock Appreciation Rights then outstanding).

     (g) Except as hereinbefore  expressly provided, the issuance by the Company
of shares of stock of any class or securities  convertible  into shares of stock
of any class, for cash, property,  labor or services, upon direct sale, upon the
exercise of rights or warrants to  subscribe  therefor,  or upon  conversion  of
shares or  obligations  of the  Company  convertible  into such  shares or other
securities, and in any case whether or not for fair value, shall not affect, and
no  adjustment  by reason  thereof  shall be made with respect to, the number of
shares  of  Common  Stock  subject  to  Options  or  Stock  Appreciation  Rights
theretofore  granted,  the purchase  price per share of Common Stock  subject to
Options or the  calculation  of the Spread  with  respect to Stock  Appreciation
Rights.

     (h) The  provisions  of the Plan or the Award  agreements  to the  contrary
notwithstanding,  with respect to any Restricted Stock Awards outstanding at the
time a Corporate  Change occurs,  the Committee may, in its discretion,  provide
(i) for full vesting of all Common Stock awarded to the Holders pursuant to such
Restricted  Stock Awards as of the date of such  Corporate  Change and (ii) that
all restrictions applicable to such Restricted Stock Award shall terminate as of
such date.

     (i) The  provisions  of the Plan or the Award  agreements  to the  contrary
notwithstanding,  with respect to any  Performance  Share Awards which have been
approved  but  which are  unpaid  at the time a  Corporate  Change  occurs,  the
Committee may, in its discretion, provide (i) for full vesting of such Awards as
of the date of such Corporate Change, (ii) for payment of the then value of such
Awards as soon as administratively feasible following the Corporate Change, with
the value of such Awards to be based, to the extent applicable, on the Change of
Control Value of the Common Stock, (iii) that any provisions in Awards regarding
forfeiture of unpaid  Awards shall not be applicable  from and after a Corporate
Change with respect to Awards made prior to such Corporate  Change and (iv) that
all performance  measures applicable to unpaid Awards at the time of a Corporate
Change  shall be deemed to have been  satisfied  in full during the  performance
period upon the occurrence of such Corporate Change.

     (j) The  provisions  of the Plan or the Award  agreements  to the  contrary
notwithstanding,  with respect to any Stock Value  Equivalent  Awards which have
been approved but which are unpaid at the time a Corporate  Change  occurs,  the
Committee may, in its discretion, provide (i) for full vesting of such Awards as
of the date of such  Corporate  Change and (ii) for payment of the then value of
such Awards as soon as administratively  feasible following the Corporate Change
with the value of such Awards to be based on the Change of Control  Value of the
Common Stock.


                                       75

                                                       Exhibit 10(n)(continued)

                   XIII. AMENDMENT OR TERMINATION OF THE PLAN

     The Board in its  discretion  may  terminate the Plan or alter or amend the
Plan or any part thereof from time to time; provided that no change in any Award
theretofore  granted  may be made  which  would  impair the rights of the Holder
without the consent of the Holder,  and  provided,  further,  that the Board may
not, without approval of the stockholders, amend the Plan:

         (a) to  increase  the  aggregate  number of shares  which may be issued
         pursuant to the  provisions  of the Plan on exercise  or  surrender  of
         Options or Stock  Appreciation  Rights or pursuant to Restricted  Stock
         Awards or Performance Share Awards,  except as provided in Article XII;
         (b) to change  the  minimum  Option  price;  (c) to change the class of
         employees  eligible  to  receive  Awards  or  increase  materially  the
         benefits  accruing  to  employees  under  the Plan;  (d) to extend  the
         maximum  period during which Awards may be granted under the Plan;  (e)
         to  modify   materially  the   requirements   as  to  eligibility   for
         participation in the Plan; or (f) to decrease any authority  granted to
         the Committee hereunder in contravention of Rule 16b-3.


                                   XIV. OTHER

     (a) No Right To An Award.  Neither the  adoption of the Plan nor any action
of the Board or of the  Committee  shall be deemed to give an employee any right
to be granted an Option,  a Stock  Appreciation  Right,  a right to a Restricted
Stock Award or a right to a  Performance  Share Award or Stock Value  Equivalent
Award or any other rights hereunder except as may be evidenced by an Award or by
an Option Agreement duly executed on behalf of the Company, and then only to the
extent of and on the terms and conditions  expressly set forth therein. The Plan
shall be unfunded. The Company shall not be required to establish any special or
separate fund or to make any other  segregation of funds or assets to assure the
payment of any Award.

     (b) No Employment Rights Conferred. Nothing contained in the Plan or in any
Award made  hereunder  shall (i) confer upon any employee any right with respect
to  continuation  of  employment  with the  Company  or any  Subsidiary  or (ii)
interfere  in any way  with  the  right  of the  Company  or any  Subsidiary  to
terminate his or her employment at any time.

     (c) Other Laws;  Withholding.  The Company  shall not be obligated to Issue
any Common Stock  pursuant to any Award  granted under the Plan at any time when
the offering of the shares covered by such Award has not been  registered  under
the  Securities  Act of 1933 and such other  state and  federal  laws,  rules or
regulations as the Company or the Committee deems applicable and, in the opinion
of legal counsel for the Company,  there is no exemption  from the  registration
requirements of such laws,  rules or regulations  available for the issuance and
sale of such shares.  No  fractional  shares of Common Stock shall be delivered,
nor shall any cash in lieu of fractional  shares be paid. The Company shall have
the right to deduct in connection  with all Awards any taxes  required by law to
be withheld  and to require any  payments  necessary to enable it to satisfy its
withholding  obligations.  The  Committee  may  permit the Holder of an Award to
elect to surrender, or authorize the Company to withhold, shares of Common Stock
(valued at their Fair Market Value on the date of surrender  or  withholding  of
such shares) in satisfaction of the Company's withholding obligation, subject to
such  restrictions as the Committee deems necessary to satisfy the  requirements
of Rule 16b-3.

     (d) No Restriction on Corporate Action. Nothing contained in the Plan shall
be construed to prevent the Company or any Subsidiary  from taking any corporate
action which is deemed by the Company or such Subsidiary to be appropriate or in
its best  interest,  whether or not such action would have an adverse  effect on


                                       76

                                                       Exhibit 10(n)(continued)

the Plan or any Award made under the Plan.  No  employee,  beneficiary  or other
person shall have any claim against the Company or any Subsidiary as a result of
any such action.

     (e) Restrictions on Transfer. An Award shall not be transferable  otherwise
than by will or the laws of descent and distribution or pursuant to a "qualified
domestic  relations  order" as  defined  by the Code or Title I of the  Employee
Retirement  Income  Security Act of 1974, as amended,  and shall be  exercisable
during the lifetime of the Holder only by such Holder,  the Holder's guardian or
legal representative, a transferee under a qualified domestic relations order or
a transferee as described  below;  provided,  however,  that the Committee shall
have the  authority,  in its  discretion,  to grant  (or to  sanction  by way of
amendment to an existing  grant) Options  (other than  Incentive  Stock Options)
which  may be  transferred  by the  Holder  for no  consideration  to or for the
benefit of the Holder's  Immediate  Family, to a trust solely for the benefit of
the Holder and his Immediate  Family,  or to a partnership or limited  liability
company  whose only partners or  shareholders  are the Holder and members of his
Immediate  Family, in which case the Option Agreement shall so state. A transfer
of an Option  pursuant to this  paragraph (e) shall be subject to such rules and
procedures as the Committee may establish. In the event an Option is transferred
as  contemplated  in this paragraph (e), (i) such Option may not be subsequently
transferred  by the  transferee  except  by will  or the  laws  of  descent  and
distribution,  and (ii) such Option shall continue to be governed by and subject
to the terms and limitations of the Plan and the relevant  Option  Agreement and
the transferee shall be entitled to the same rights as the Holder under Articles
XII and XIII hereof as if no transfer had taken place.

     The Option Agreement,  Stock Appreciation Rights Agreement or other written
instrument  evidencing  an Award  shall  specify  the effect of the death of the
Holder on the Award.

     (f) Rule 16b-3. It is intended that the Plan and any grant of an Award made
to a  person  subject  to  Section  16 of  the  Exchange  Act  meet  all  of the
requirements of Rule 16b-3. If any provision of the Plan or any such Award would
disqualify  the Plan or such Award under,  or would  otherwise  not comply with,
Rule 16b-3,  such  provision or Award shall be  construed  or deemed  amended to
conform to Rule 16b-3.

     (g) Governing Law. This Plan shall be construed in accordance with the laws
of the State of Texas, except to the extent that it implicates matters which are
the  subject  of the  General  Corporation  Law of the State of  Delaware  which
matters shall be governed by the latter law.


                                       77



                                                                     Exhibit 11


                               HALLIBURTON COMPANY
                        COMPUTATION OF EARNINGS PER SHARE
                   FOR THE THREE YEARS ENDED DECEMBER 31, 1997

     The calculation  below for earnings per share of the $2.50 par value Common
Stock of the Company on a basic, diluted and fully diluted basis is submitted in
accordance with Regulation S-K Item 601(b)(11).
1997 1996 1995 ---------------- ------------------ ------------- (In millions except per share data) Basic: Net income $ 454.4 $ 300.4 $ 183.7 Average number of common shares outstanding 255.4 249.9 248.3 Basic net income per share: $ 1.78 $ 1.20 $ 0.74 - ----------------------------------------------------------- ---------------- ------------------ ------------- Diluted: Net income $ 454.4 $ 300.4 $ 183.7 Average number of common shares and common share equivalents outstanding 259.5 252.2 249.4 Diluted net income per share: $ 1.75 $ 1.19 $ 0.74 - ----------------------------------------------------------- ---------------- ------------------ ------------- Fully diluted: Net income $ 454.4 $ 300.4 $ 183.7 Add after-tax interest expense applicable to zero coupon convertible subordinated debentures due 2006 - - 12.5 ---------------- ------------------ ------------- Adjusted net income $ 454.4 $ 300.4 $ 196.2 Average number of common shares, common share equivalents, and potential shares associated with the zero coupon convertible subordinated debentures outstanding 259.5 252.2 256.0 Fully diluted net income per share: $ 1.75 $ 1.19 $ 0.77 - ----------------------------------------------------------- ---------------- ------------------ ------------- The foregoing computations do not reflect the 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. Reference is made to Note 9 to the financial statements of this annual report.
78

                                                                      Exhibit 21


                               HALLIBURTON COMPANY
                         SUBSIDIARIES OF THE REGISTRANT
                                DECEMBER 31, 1997
STATE OR OWNERSHIP COUNTRY OF NAME OF COMPANY PERCENTAGE INCORPORATION 2W Underwater Contractors Limited 100.0% United Kingdom AOC International Limited 100.0% United Kingdom AOC Wood Contractors Limited 50.0% United Kingdom Avalon Financial Services, Ltd 100.0% Cayman Islands Breswater Marine Contracting BV 100.0% Netherlands Brown & Root (Overseas) Limited 100.0% United Kingdom Brown & Root A/S 100.0% Norway Brown & Root AOC Limited 100.0% United Kingdom Brown & Root Condor SPA 49.0% Algeria Brown & Root Ealing Technical Services Limited 100.0% United Kingdom Brown & Root Energy Services A/S 100.0% Norway Brown & Root Far East Engineers Pte Ltd 100.0% Delaware Brown & Root Highlands Fabricators Limited 100.0% United Kingdom Brown & Root Holdings, Inc 100.0% Delaware Brown & Root International, Inc 100.0% Delaware Brown & Root International, Inc 100.0% Panama Brown & Root Limited 100.0% United Kingdom Brown & Root McDermott Fabricators 50.0% United Kingdom Brown & Root NA Limited 50.0% British Virgin Islands Brown & Root Projects Limited 100.0% United Kingdom Brown & Root Pty Limited 100.0% Australia Brown & Root Saudi Limited Co 49.0% Saudi Arabia Brown & Root Services Corporation 100.0% Delaware Brown & Root (Services) Limited 100.0% United Kingdom Brown & Root Skoda SRO Ltd 66.0% Czech Republic Brown & Root Technical Services, Inc 100.0% Delaware Brown & Root Technology Limited 100.0% United Kingdom Brown & Root, Inc 100.0% Delaware Dawson Group Pty Ltd 100.0% Australia Devonport Management Limited 51.0% United Kingdom Devonport Royal Dockyard Plc 51.0% United Kingdom European Marine Contractors Limited 50.0% United Kingdom G&H Management Company 100.0% Delaware Gearhart (United Kingdom) Limited 100.0% United Kingdom GeoGraphix, Inc 100.0% Colorado Halliburton (Proprietary) Limited 100.0% South Africa Halliburton Affiliates Corporation 100.0% Delaware Halliburton Argentina SA 100.0% Argentina Halliburton Australia Pty Ltd 100.0% Australia Halliburton BV 100.0% Netherlands Halliburton Canada Inc 100.0% Canada Halliburton Company Germany GmbH 100.0% Germany Halliburton de Mexico, SA de CV 100.0% Mexico Halliburton Delaware, Inc 100.0% Delaware Halliburton Energy Services Nigeria Limited 80.0% Nigeria Halliburton Energy Services, Inc 100.0% Delaware Halliburton Equipment Company SAE 75.0% Egypt Halliburton Geodata Limited 100.0% United Kingdom
79 Exhibit 21 (Cont.) HALLIBURTON COMPANY SUBSIDIARIES OF THE REGISTRANT DECEMBER 31, 1997
STATE OR OWNERSHIP COUNTRY OF NAME OF COMPANY PERCENTAGE INCORPORATION Halliburton Global, Ltd 100.0% Cayman Islands Halliburton Holdings Limited 100.0% United Kingdom Halliburton Holdings, Inc 100.0% Delaware Halliburton International, Inc 100.0% Delaware Halliburton Italiana SpA 100.0% Italy Halliburton Latin America SA 100.0% Panama Halliburton Limited 100.0% United Kingdom Halliburton Manufacturing and Services Limited 100.0% United Kingdom Halliburton Norway, Inc 100.0% Delaware Halliburton NUS Corporation 100.0% Delaware Halliburton Offshore Services, Inc 100.0% Delaware Halliburton Overseas Limited 100.0% Cayman Islands Halliburton Products & Services Limited 100.0% Cayman Islands Halliburton SAS 100.0% France Halliburton Servicos Ltda 100.0% Brazil Halliburton Singapore Pte Ltd 100.0% Singapore Halliburton Trinidad Limited 100.0% Trinidad Halliburton West Africa Ltd 100.0% Delaware Halliburton Worldwide Limited 100.0% Cayman Islands HBR Energy, Inc 100.0% Delaware HLS Well Evaluation Limited 100.0% United Kingdom Howard Humphreys & Partners Limited 100.0% United Kingdom Howard Humphreys Group Limited 100.0% United Kingdom Hunting-Brae Limited 31.0% United Kingdom Kinhill Holdings Limited 100.0% Australia Landmark America Latina, SA 100.0% Delaware Landmark EAME, Limited 100.0% United Kingdom Landmark Graphics Corporation 100.0% Delaware Landmark Graphics Europe/Africa, Inc 100.0% Delaware Landmark Graphics International, Inc 100.0% Texas Landmark Sales Corporation 100.0% Barbados Laurel Financial Services BV 100.0% Netherlands MIHC, Inc 100.0% Delaware NMR Corporation 100.0% Delaware NUMAR Corporation 100.0% Pennsylvania NUMAR Oilfield Services, Inc 100.0% Pennsylvania OGC International 100.0% United Kingdom Overseas Marine Leasing Company 100.0% Delaware PT Gema Sembrown 45.0% Indonesia PT Halliburton Drilling Systems Indonesia 80.0% Indonesia PT Halliburton Indonesia 80.0% Indonesia PT Halliburton Logging Services Indonesia 80.0% Indonesia Quimicas do Brazil Limitada 100.0% Brazil
80 Exhibit 21 (Cont.) HALLIBURTON COMPANY SUBSIDIARIES OF THE REGISTRANT DECEMBER 31, 1997
STATE OR OWNERSHIP COUNTRY OF NAME OF COMPANY PERCENTAGE INCORPORATION Rockwater Holdings Limited 100.0% United Kingdom Rockwater Limited 100.0% United Kingdom Rockwater Offshore Contractors 2 BV 100.0% Netherlands Rockwater, Inc 100.0% Delaware Seaforth Maritime Limited 100.0% United Kingdom Servicios Halliburton de Venezuela, SA 100.0% Delaware (1) Each of the subsidiaries named conducts its business under its corporate name and, in a few instances, under a shortened form of its corporate name. (2) The names of approximately 170 subsidiaries have been omitted since the unnamed subsidiaries considered in the aggregate would not constitute a significant subsidiary as defined by Item 601(b)(21).
81

                                                                    Exhibit 23


                    Consent of Independent Public Accountants


         As   independent   public   accountants,   we  hereby  consent  to  the
incorporation  by reference of our reports dated  January 22, 1998,  included in
this Form 10-K into the Company's  previously  filed  registration  statement on
Form S-3 (No. 33-65772).





ARTHUR ANDERSEN LLP
Dallas, Texas,
  February 23, 1998



                                       82

                                                            Exhibit 24(b)

                                POWER OF ATTORNEY

     KNOW ALL MEN BY THESE  PRESENTS,  that I, the  undersigned,  a Director  of
Halliburton  Company, do hereby constitute and appoint Richard B. Cheney,  David
J. Lesar and Susan S.  Keith,  or any of them acting  alone,  my true and lawful
attorneys or attorney, to do any and all acts and things and execute any and all
instruments  which said attorneys or attorney may deem necessary or advisable to
enable Halliburton  Company to comply with the Securities  Exchange Act of 1934,
as amended,  and all rules,  regulations and  requirements of the Securities and
Exchange  Commission in respect thereof, in connection with the filing of Annual
Reports on Form 10-K,  including  specifically,  but without limitation thereof,
power and  authority to sign my name as Director of  Halliburton  Company to the
Annual  Reports  on Form  10-K  required  to be filed  with the  Securities  and
Exchange  Commission for the year ended 1997 and for all subsequent  years until
revoked by me or otherwise cancelled,  and to any instruments or documents filed
as a part of or in  connection  therewith;  and I hereby  ratify and confirm all
that said attorneys or attorney shall do or cause to be done by virtue hereof.
     IN  TESTIMONY  WHEREOF,  witness  my  hand this 18th day of December, 1997.




                                             /s/  Charles J. DiBona
                                             --------------------------
                                                  Charles J. DiBona



                                       83

 


5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE HALLIBURTON COMPANY CONSOLIDATED FINANCIAL STATEMENTS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000,000 USD 12-MOS DEC-31-1997 DEC-31-1997 1 221 0 2,206 38 327 2,972 3,988 2,325 5,603 1,773 539 0 0 672 1,913 5,603 0 8,819 0 7,772 0 0 43 766 300 454 0 0 0 454 1.78 1.75