SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (date of earliest event reported)
JULY 24, 2002
Halliburton Company
(Exact name of registrant as specified in its charter)
State or other Commission IRS Employer
jurisdiction File Number Identification
of incorporation Number
Delaware 1-3492 No. 75-2677995
3600 Lincoln Plaza
500 North Akard Street
Dallas, Texas 75201-3391
(Address of principal executive offices)
Registrant's telephone number,
including area code - 214/978-2600
Page 1 of 15 Pages
The Exhibit Index Appears on Page 4
INFORMATION TO BE INCLUDED IN REPORT
Item 5. Other Events
The registrant may, at its option, report under this item any events, with
respect to which information is not otherwise called for by this form that the
registrant deems of importance to security holders.
On July 24, 2002 registrant issued a press release entitled "Halliburton
Announces Second Quarter Results". The text of the announcement is attached.
Item 7. Financial Statements and Exhibits
List below the financial statements, pro forma financial information and
exhibits, if any, filed as part of this report.
(c) Exhibits.
Exhibit 20 - Press release dated July 24, 2002.
Page 2 of 15 Pages
The Exhibit Index Appears on Page 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HALLIBURTON COMPANY
Date: July 24, 2002 By: /s/ Susan S. Keith
-------------------------------------
Susan S. Keith
Vice President and Secretary
Page 3 of 15 Pages
The Exhibit Index Appears on Page 4
EXHIBIT INDEX
Exhibit Sequentially
Number Description Numbered Page
20 Press Release of 5 of 15
July 24, 2002
Incorporated by Reference
Page 4 of 15 Pages
The Exhibit Index Appears on Page 4
FOR IMMEDIATE RELEASE Contact: Cedric Burgher
July 24, 2002 Vice President, Investor Relations
713-676-4608
Wendy Hall
Manager, Media Relations
713-676-5227
HALLIBURTON ANNOUNCES SECOND QUARTER RESULTS
Estimates 15 Year Net Asbestos Liability of $602 million
DALLAS - Halliburton (NYSE:HAL) announced today that the leading econometric
firm retained to assist in estimating the number and value of current and
potential future claims has essentially completed its study. Based on this
study, the Company has accrued an estimated undiscounted liability and estimated
undiscounted insurance recoveries through 2017 of $2.2 billion and $1.6 billion,
respectively, resulting in a net liability of $602 million. A second quarter
charge of $483 million pretax, $391 million after-tax, has been recorded
bringing the total net liability to $602 million. The breakdown between
continuing operations and discontinued operations is detailed below.
The second quarter 2002 net loss from continuing operations was $358 million or
$0.83 per diluted share. There were four items impacting continuing operations
for the quarter on a pretax basis: $330 million relating to engineering and
construction asbestos exposures, $119 million relating to a loss on a project,
$61 million for an impairment of an equity investment, and $56 million in
restructuring costs. Excluding these items, 2002 second quarter net income from
continuing operations was $78 million, or $0.18 per diluted share. Total net
loss was $498 million ($1.15 per diluted share) which included a net loss
attributable to discontinued operations of $140 million after-tax for asbestos
exposures related to businesses no longer owned by the Company. Tables
reconciling as reported amounts to pro forma amounts used in this press release
are attached. Second quarter 2001 net income from continuing operations of $143
million included $10 million, net of tax, in goodwill amortization compared to
no amortization in the second quarter of 2002 in accordance with changes in the
accounting rules related to goodwill.
Revenues from continuing operations were $3.2 billion in the 2002 second
quarter, down slightly from a year ago. Loss from operations was $405 million.
Excluding the four items noted above, operating income was $161 million for the
quarter, down 44 percent from last year, excluding 2001 goodwill amortization,
and down eight percent, sequentially. Reduced gas drilling activities in the
United States and Canada resulted in lower year-over-year revenues and profit
margins.
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Halliburton/Page 2
"We took several significant steps this quarter that will position Halliburton
to deliver improved future performance," said Dave Lesar, chairman, president
and chief executive officer, Halliburton. "We substantially completed our
restructuring activities, we have better defined our future asbestos
liabilities, we have announced we will no longer pursue fixed price contracts
for the offshore engineering, procurement, installation, and commissioning
(EPIC) business, and we're following through on our commitment to dispose of
non-core assets. Regarding the Energy Services Group, I was pleased with results
for the quarter and look forward to continuing improvements throughout the
remainder of the year."
Corporate Reorganization
Substantial progress has been made on the reorganization announced in the first
quarter of 2002. The separation of the Energy Services and the Engineering and
Construction Groups into two wholly-owned operating subsidiary groups is largely
complete and is expected to be concluded by the end of this year. Approximately
1,600 employee reductions are substantially complete. We have incurred pretax
restructuring charges of $56 million this quarter, and estimate additional
charges in the second half of this year to be approximately $20 million.
Restructuring charges principally comprise personnel related costs and asset
write-downs. As a result of these actions, we expect to achieve estimated
annualized savings of about $200 million, exceeding initial estimates of $100
million.
As part of our restructuring, the Production Services, Major Projects and
Granherne product service lines which were previously part of the Energy
Services Group are now managed and reported under the Engineering and
Construction Group. In addition, the asbestos costs related to our engineering
and construction business which were previously reported under General
Corporate, are now reported under the Engineering and Construction Group. Prior
periods have been restated to reflect these segment reporting changes. An
attached table includes restated segments by quarter, back to the beginning of
2000.
2002 Second Quarter Segment Results
The Energy Services Group posted second quarter revenues of $1.8 billion,
representing a four percent increase in revenues sequentially, despite a 13
percent decrease in rig count.
Halliburton Energy Services' revenues increased by three percent sequentially
due to a four percent revenue increase in the United States.
Operating income, for the second quarter for the Energy Services Group, was $70
million. Excluding nonrecurring items, Energy Services Group operating income
was $168 million, an increase of three percent sequentially. On the same basis,
Halliburton Energy Services' operating income was $158 million, down one percent
sequentially.
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Halliburton/Page 3
The Engineering and Construction Group's second quarter revenues were $1.5
billion, up 12 percent sequentially. Operating loss for the quarter was $450
million which included $330 million for asbestos exposures, a $119 million loss
on an offshore field development project in Brazil, and $10 million of
restructuring charges. Excluding these items, operating income was $9 million.
Backlog
Backlog for the Company as of June 30, 2002, was $9.8 billion, comprised of $9.4
billion for the Engineering and Construction Group and $400 million for the
Energy Services Group.
General Corporate
General corporate costs of $25 million in the second quarter 2002 include $9
million in expenses related to the recent reorganization. The majority of these
expenses relate to personnel related costs.
Discontinued Operations
The second quarter net loss from discontinued operations was $140 million
after-tax, which reflects asbestos-related expenses of previously disposed
businesses. In the 2001 second quarter, net income from discontinued operations
was $239 million ($0.56 per diluted share), reflecting the $299 million
after-tax gain on the sale of Dresser Equipment Group and $60 million after-tax
charge for asbestos-related expenses.
Technology and Significant Achievements
Halliburton recently announced a number of advances in technology and new
contract awards including:
o Halliburton Energy Services announced the commercialization of the
ADT(TM) (applied drilling technology) optimization service suite of
tools, software and technical expertise. ADT(TM) personnel are
dedicated to reducing drilling trouble time and optimizing drilling
practices using critical data interpretation from a variety of downhole
and surface sensors and specialized software applications. The ADT(TM)
service focuses on three areas of expertise critical to a successful
and efficient drilling process - wellbore integrity, hydraulics
management, and drillstring integrity.
o The Baroid product service line of Halliburton Energy Services
introduced revolutionary synthetic-based drilling fluid called
ACCOLADE, which offers operators unprecedented performance in the Gulf
of Mexico. The new fluid consistently provides excellent rheological
performance in the colder temperatures of deepwater environments.
ACCOLADE was first utilized on an operator's well in the Gulf of Mexico
with a total depth of more than 15,000 feet and water depth of
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Halliburton/Page 4
approximately 4,000 feet. The well exhibited signs of a single point
of mud weight that was standing between drilling ahead and severe loss
of circulation. The new system significantly improved rheology
control, lowered equivalent circulating density, and provided a greater
margin of wellbore stability.
o PetroChina Daqing Petrochemical Company awarded Kellogg Brown & Root
the design of two new 100 kilotons per annum ethylene cracking furnaces
for its ethylene facility at Wolitun, Daqing City, Heilongjiang
Province. The two furnaces will utilize SCORE(TM) (Selective Cracking
Optimum Recovery) technology, which combines KBR and ExxonMobil
knowledge acquired through a licensing agreement.
o Halliburton's Energy Services Group, has been awarded a two-year
contract extension valued at $120 million with Agip KCO (formerly
OKIOC) for providing integrated drilling services for the Kashagan
reservoir located in the northeast sector of the Caspian Sea,
Kazakhstan. The contract will provide a spectrum of services to Agip
KCO, including well construction and data acquisition services,
real-time data transmission, waste treatment, well-test and completion
services.
o IBM and Landmark Graphics announced a three-year petroleum industry
agreement to deliver comprehensive solutions to the global exploration
and production (E&P) industry. The range of solutions offered by the
two companies will lower costs dramatically for oil and gas producers
compared to existing systems running on proprietary UNIX technologies.
Oil and gas producers worldwide will benefit from migrating to
open-sourced LINUX-based servers and workstations, implementing
collaborative workflows and delivering e-business-on-demand services
for data and applications management and the outsourcing of IT
infrastructures. Combined IBM and Landmark services and solutions will
help to increase returns on investment in hardware, software, training,
and related information technology infrastructures.
o Devonport Management Limited has entered into a partnering agreement
with the Ministry of Defense to provide warship support services at the
Devonport Naval Base as part of the Warship Support Modernization
Initiative. The 300 million pounds sterling, five-year contract will
cover the repair and maintenance of the operational fleet , the
provision of waterfront support services, the maintenance of the Naval
Base estate, and the management of Naval Base distribution and
transport services.
Halliburton, founded in 1919, is one of the world's largest providers of
products and services to the petroleum and energy industries. The company serves
its customers with a broad range of products and services through its Energy
Services Group and Engineering and Construction Group business segments. The
company's World Wide Web site can be accessed at www.halliburton.com.
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Halliburton/Page 5
NOTE: In accordance with the Safe Harbor provisions of the Private Securities
Litigation Reform Act of 1995, Halliburton Company cautions that statements in
this press release 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. Please see Halliburton's Form 10-K for
the year ended December 31, 2001 and Form 10-Q for the quarter ended March 31,
2002 for a more complete discussion of such risk factors.
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HALLIBURTON COMPANY
Consolidated Statements of Income
(Unaudited)
Quarter Ended Six Months Ended
June 30 June 30
---------------------------- ---------------------------
2002 2001 2002 2001
------------ ------------ ------------ -----------
Millions of dollars except per share data
Revenues
Energy Services Group $ 1,756 $ 2,008 $ 3,445 $ 3,800
Engineering and Construction Group 1,479 1,331 2,797 2,683
------------ ------------ ------------ -----------
Total revenues $ 3,235 $ 3,339 $ 6,242 $ 6,483
============ ============ ============ ===========
Operating income
Energy Services Group $ 70 $ 268 $ 239 $ 457
Engineering and Construction Group (450) 21 (508) 48
General corporate (25) (17) (13) (35)
------------ ------------ ------------ -----------
Total operating income (loss) (405) 272 (282) 470
Interest expense (30) (34) (62) (81)
Interest income 12 6 16 10
Foreign currency losses, net (5) (1) (13) (4)
Other, net (2) - 2 -
------------ ------------ ------------ -----------
Income (loss) from continuing operations before
income taxes, minority interests, and change
in accounting method (430) 243 (339) 395
(Provision) benefit for income taxes 77 (98) 41 (159)
Minority interest in net income of subsidiaries (5) (2) (10) (7)
------------ ------------ ------------ -----------
Income (loss) from continuing operations
before change in accounting method (358) 143 (308) 229
Discontinued operations, net
Income (loss) from discontinued operations (140) (60) (168) (38)
Gain on disposal of discontinued operations - 299 - 299
------------ ------------ ------------ -----------
Income (loss) from discontinued operations (140) 239 (168) 261
------------ ------------ ------------ -----------
Cumulative effect of change in accounting
method, net - - - 1
------------ ------------ ------------ -----------
Net income (loss) $ (498) $ 382 $ (476) $ 491
============ ============ ============ ===========
Basic income per share:
Continuing operations $ (0.83) $ 0.34 $ (0.71) $ 0.54
Discontinued operations, net
Income (loss) from discontinued operations (0.32) (0.14) (0.39) (0.09)
Gain on disposal of discontinued operations - 0.70 - 0.70
------------ ------------ ------------ -----------
Income (loss) from discontinued operations (0.32) 0.56 (0.39) 0.61
------------ ------------ ------------ -----------
Net income (loss) $ (1.15) $ 0.90 $ (1.10) $ 1.15
============ ============ ============ ===========
Diluted income per share:
Continuing operations $ (0.83) $ 0.33 $ (0.71) $ 0.53
Discontinued operations, net
Income (loss) from discontinued operations (0.32) (0.14) (0.39) (0.09)
Gain on disposal of discontinued operations - 0.70 - 0.70
------------ ------------ ------------ -----------
Income from discontinued operations (0.32) 0.56 (0.39) 0.61
------------ ------------ ------------ -----------
Net income (loss) $ (1.15) $ 0.89 $ (1.10) $ 1.14
============ ============ ============ ===========
Basic average common shares outstanding 432 427 432 427
Diluted average common shares outstanding 432 430 432 430
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HALLIBURTON COMPANY
Reconciliation of As Reported Results to Pro Forma Results
Three months ended June 30, 2002
(Unaudited)
Net Earnings/
Operating Other Income/ Income/(loss) (loss) per
Income/ Expense (Provision) from Share from
(loss), (including Benefit for Continuing Continuing
Pretax interest) Taxes Operations * Operations
-------------- ---------------- -------------- --------------- --------------
Pro forma results (excluding
below items): $ 161 $ (25) $ (53) $ 78 $ 0.18
Restructuring costs (56) - 22 (34) (0.08)
Brazil project loss (119) - 46 (73) (0.17)
Asbestos charge (330) - 62 (268) (0.62)
Impairment of equity investment (61) - - (61) (0.14)
-------------- ---------------- -------------- --------------- --------------
As reported $ (405) $ (25) $ 77 $ (358) $ (0.83)
============== ================ ============== =============== ==============
* As reported and pro forma basis net income from continuing operations includes $5 million in expense due to
minority interest.
HALLIBURTON COMPANY
Reconciliation of As Reported Results to Pro Forma Results
Six months ended June 30, 2002
(Unaudited)
Other Income/ Net Income Earnings per
Operating Expense (Provision) from Share from
Income, (including Benefit for Continuing Continuing
Pretax interest) Taxes Operations * Operations
------------- ----------------- ------------- --------------- ---------------
Pro forma results (excluding
below items): $ 337 $ (56) $ (110) $ 161 $ 0.37
Sale of EMC 108 3 (43) 68 0.16
Patent lawsuit (98) (4) 40 (62) (0.14)
Highlands receivable write-off (80) - 31 (49) (0.11)
Demutualization of an
insurance company 28 - (11) 17 0.04
Restructuring costs (67) - 26 (41) (0.10)
Brazil project loss (119) - 46 (73) (0.17)
Asbestos charge (330) - 62 (268) (0.62)
Impairment of equity investment (61) - - (61) (0.14)
------------- ----------------- ------------- --------------- ---------------
As reported $ (282) $ (57) $ 41 $ (308) $ (0.71)
============= ================= ============= =============== ===============
* As reported and pro forma basis net income from continuing operations includes $10 million in expense due to
minority interest.
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HALLIBURTON COMPANY
Reconciliation of As Reported Segment Results to Pro Forma Results
Three months ended June 30, 2002
(Unaudited)
Operating
Energy Services Engineering and Income/(loss),
Group Construction Group Corporate Pretax
------------------ --------------------- ------------ --------------------
Pro forma results (excluding
below items): $ 168 $ 9 $ (16) $ 161
Restructuring costs (37) (10) (9) (56)
Brazil project loss - (119) - (119)
Asbestos charge - (330) - (330)
Impairment of equity investment (61) - - (61)
------------------ --------------------- ------------ --------------------
As reported $ 70 $ (450) $ (25) $ (405)
================== ===================== ============ ====================
HALLIBURTON COMPANY
Reconciliation of As Reported Segment Results to Pro Forma Results
Six months ended June 30, 2002
(Unaudited)
Operating
Energy Services Engineering and Income/(loss),
Group Construction Group Corporate Pretax
------------------ --------------------- ------------ --------------------
Pro forma results (excluding
below items): $ 332 $ 35 $ (30) $ 337
Sale of EMC 108 - - 108
Patent lawsuit (98) - - (98)
Highlands receivable write-off - (80) - (80)
Demutualization of an
insurance company - - 28 28
Restructuring costs (42) (14) (11) (67)
Brazil project loss - (119) - (119)
Asbestos charge - (330) - (330)
Impairment of equity investment (61) - - (61)
------------------ --------------------- ------------ --------------------
As reported $ 239 $ (508) $ (13) $ (282)
================== ===================== ============ ====================
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HALLIBURTON COMPANY
Reconciliation of As Reported Results to Pro Forma Results
Three months ended June 30, 2001
(Unaudited)
Other Income/ Net Income Earnings per
Operating Expense from Share from
Income, (including Provision Continuing Continuing
Pretax interest) for Taxes Operations * Operations
------------- ----------------- ------------- --------------- ---------------
Pro forma results (excluding
below items): $ 288 $ (29) $ (102) $ 155 $ 0.35
Asbestos charge (4) - 2 (2) -
Goodwill amortization (12) - 2 (10) (0.02)
------------- ----------------- ------------- --------------- ---------------
As reported $ 272 $ (29) $ (98) $ 143 $ 0.33
============= ================= ============= =============== ===============
* As reported and pro forma basis net income from continuing operations includes $2 million in expense due to
minority interest.
HALLIBURTON COMPANY
Reconciliation of As Reported Results to Pro Forma Results
Six months ended June 30, 2001
(Unaudited)
Other Income/ Net Income Earnings per
Operating Expense from Share from
Income, (including Provision Continuing Continuing
Pretax interest) for Taxes Operations * Operations
------------- ----------------- ------------- --------------- ---------------
Pro forma results (excluding
below items): $ 498 $ (75) $ (165) $ 251 $ 0.58
Asbestos charge (5) - 2 (3) (0.01)
Goodwill amortization (23) - 4 (19) (0.04)
------------- ----------------- ------------- --------------- ---------------
As reported $ 470 $ (75) $ (159) $ 229 $ 0.53
============= ================= ============= =============== ===============
* As reported and pro forma basis net income from continuing operations includes $7 million in expense due to
minority interest.
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HALLIBURTON COMPANY
Reconciliation of As Reported Segment Results to Pro Forma Results
Three months ended June 30, 2001
(Unaudited)
Energy Services Engineering and Operating Income,
Group Construction Group Corporate Pretax
----------------- --------------------- ------------- -------------------
Pro forma results (excluding
below items): $ 275 $ 30 $ (17) $ 288
Asbestos charge - (4) - (4)
Goodwill amortization (7) (5) - (12)
----------------- --------------------- ------------- -------------------
As reported $ 268 $ 21 $ (17) $ 272
================= ===================== ============= ===================
HALLIBURTON COMPANY
Reconciliation of As Reported Segment Results to Pro Forma Results
Six months ended June 30, 2001
(Unaudited)
Energy Services Engineering and Operating Income,
Group Construction Group Corporate Pretax
----------------- --------------------- ------------- -------------------
Pro forma results (excluding
below items): $ 469 $ 64 $ (35) $ 498
Asbestos charge - (5) - (5)
Goodwill amortization (12) (11) - (23)
----------------- --------------------- ------------- -------------------
As reported $ 457 $ 48 $ (35) $ 470
================= ===================== ============= ===================
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HALLIBURTON COMPANY
Revenue and Operating Income Comparison
By Restated Operating Segments
(Unaudited)
Quarter
Ended
------------
2002 March 31
------------
Revenues
Energy Services Group $ 1,689
Engineering and Construction Group 1,318
------------
Total revenues $ 3,007
============
Operating Income
Energy Services Group $ 169
Engineering and Construction Group (58)
General Corporate 12
------------
Total operating income $ 123
============
Quarter Ended
----------------------------------------------------
2001 Mar 31 Jun 30 Sep 30 Dec 31 Year
------------ ------------ ------------- ------------ ------------
Revenues
Energy Services Group $ 1,792 $ 2,008 $ 2,098 $ 1,913 $ 7,811
Engineering and Construction Group 1,352 1,331 1,293 1,259 5,235
------------ ------------ ------------- ------------ ------------
Total revenues $ 3,144 $ 3,339 $ 3,391 $ 3,172 $ 13,046
============ ============ ============= ============ ============
Operating Income
Energy Services Group $ 189 $ 268 $ 321 $ 258 $ 1,036
Engineering and Construction Group 27 21 36 27 111
General Corporate (18) (17) (15) (13) (63)
------------ ------------ ------------- ------------ ------------
Total operating income $ 198 $ 272 $ 342 $ 272 $ 1,084
============ ============ ============= ============ ============
Quarter Ended
----------------------------------------------------
2000 Mar 31 Jun 30 Sep 30 Dec 31 Year
------------ ------------ ------------- ------------ ------------
Revenues
Energy Services Group $ 1,312 $ 1,485 $ 1,607 $ 1,829 $ 6,233
Engineering and Construction Group 1,547 1,383 1,417 1,364 5,711
------------ ------------ ------------- ------------ ------------
Total revenues $ 2,859 $ 2,868 $ 3,024 $ 3,193 $ 11,944
============ ============ ============= ============ ============
Operating Income
Energy Services Group $ 53 $ 115 $ 233 $ 188 $ 589
Engineering and Construction Group 43 27 40 (164) (54)
General Corporate (15) (16) (25) (17) (73)
------------ ------------ ------------- ------------ ------------
Total operating income $ 81 $ 126 $ 248 $ 7 $ 462
============ ============ ============= ============ ============
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