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)
NOVEMBER 7, 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
4100 Clinton Drive
Houston, Texas 77020-6299
(Address of principal executive offices)
Registrant's telephone number,
including area code - 713-676-3011
INFORMATION TO BE INCLUDED IN REPORT
Item 9. Regulation FD Disclosure
On November 7, 2002 registrant issued a press release entitled
"Halliburton Announces Third Quarter Results."
The text of the press release is as follows:
HALLIBURTON ANNOUNCES THIRD QUARTER RESULTS
HOUSTON - Halliburton (NYSE:HAL) announced today that third quarter 2002 net
income and income from continuing operations were $94 million or $0.22 per
diluted share. There were two items impacting continuing operations for the
quarter on an after-tax basis: $18 million loss primarily related to the
cumulative translation adjustment (CTA) on the sale of an investment in
Bredero-Shaw, and $7 million related to the previously announced restructuring.
Excluding these items, 2002 third quarter net income from continuing operations
was $119 million, or $0.28 per diluted share. Tables reconciling as reported
amounts to pro forma amounts used in this press release are attached. Third
quarter 2001 income from continuing operations was $181 million.
Revenues from continuing operations were $3 billion in the 2002 third quarter,
down 12 percent from a year ago and down eight percent sequentially. Operating
income was $191 million. Pro forma operating income was $220 million for the
quarter, down 38 percent from last year and up 37 percent sequentially. Reduced
gas drilling activities in the United States and Canada resulted in lower
year-over-year revenues and profit margins. The increase in operating income was
primarily due to income on integrated solutions projects during the third
quarter 2002 compared to losses on integrated solutions projects in the second
quarter 2002.
"I am very pleased with our performance in the face of soft industry conditions
and as compared with our peers," said Dave Lesar, chairman, president and chief
executive officer, Halliburton. "We bolstered liquidity through the sale of
non-core assets and cash flow from operations. Third quarter results also
benefited from our corporate reorganization through reduced costs and
efficiencies in operations."
Corporate Reorganization
The reorganization announced in the first quarter of 2002 is moving toward
completion as expected. The separation of the Energy Services and the
Engineering and Construction Groups into two operating subsidiary groups is
largely complete and is expected to be concluded by the end of this year. We
incurred after-tax restructuring charges of $7 million this quarter.
2002 Third Quarter Segment Results
The Energy Services Group posted third quarter revenues of $1.7 billion,
representing a five percent decrease in revenues sequentially. The sequential
decrease is attributable to our contribution of Halliburton Subsea assets to
Subsea 7. These previously consolidated assets and results of operations are now
reported on the equity method. Halliburton Energy Services' third quarter
revenues were flat sequentially.
Operating income for the third quarter for the Energy Services Group was $200
million. Energy Services Group pro forma operating income was $223 million, an
increase of 33 percent sequentially. Halliburton Energy Services' pro forma
operating income was $200 million, up 27 percent sequentially. These sequential
increases were due to income on integrated solutions projects during the third
quarter compared to losses on integrated solutions projects in the second
quarter. Surface/Subsea and Landmark also showed incremental improvements in
operating income sequentially.
The Engineering and Construction Group's third quarter revenues were $1.3
billion, down 12 percent sequentially, primarily in offshore and government
services operations. Pro forma operating income for the third quarter 2002 was
$14 million, up $5 million from the previous quarter.
Backlog
Backlog for the Company as of September 30, 2002, was $10 billion, up from $9.8
billion at the beginning of the quarter.
General Corporate
General corporate costs of $21 million in the third quarter 2002 include $4
million in expenses related to the recent reorganization.
Technology and Significant Achievements
Halliburton had a number of advances in technology and new contract awards
including:
- - The U.S. Department of Energy's Los Alamos National Laboratory selected
the team led by KBR as the new site support services contractor. The
contract, which includes a five-year base period, with five, one-year
options, has an approximate annual value of $145 million. KBR, in a
joint venture with the Shaw Group, Inc. and Los Alamos Technical
Associates, will function as a subcontractor to the Regents of the
University of California, which operates the Laboratory.
- - Halliburton Energy Services was awarded a $44 million contract by PEMEX
Exploracion y Produccion to supply drill bits and directional drilling,
measurement-while-drilling, and logging-while-drilling services for the
Cantarell Bloque Sur Field project.
- - Halliburton Energy Services advanced its reservoir performance
monitoring solutions through two investments in the fiber optic sensing
field. Halliburton Energy Services acquired the operations of Pruett
Industries, Inc., an industry leader in wellbore permanent monitoring
and fiber optic sensor installations. Halliburton Energy Services also
acquired an equity position in Prime Photonics LC, a leading company
engaged in research and development and commercialization of fiber
optic sensors for harsh environments.
- - Halliburton Energy Services' Sperry-Sun product service line and Norsk
Hydro recently successfully developed and installed the world's first
trilateral TAML (Technology Advancement for Multilaterals) level 5 well
from a semi-submersible with the ITBS(TM) isolated tie-back system. The
project was completed under budget and with a total completion time for
both junctions of 6.8 days.
- - KBR was awarded a cost reimbursable, design-build contract valued in
excess of $100 million for construction of the new U.S. Embassy
compound in Kabul, Afghanistan. In addition, the U.S. Department of
State awarded KBR two contracts for security upgrades and general
construction work at multiple facilities.
- - Halliburton Energy Services' Security DBS product service line was
awarded a two-year agreement with Shell International Exploration and
Production for the global supply of drill bits and related services.
- - Landmark Graphics will continue to use PetroBank for the operation of
the largest and most successful national data bank in the oil and gas
industry. The Norwegian Petroleum Directorate and the DISKOS consortium
of 16 multi-national E&P companies currently store and access over 50
terabytes of data using Landmark's PetroBank technology with its unique
network-based, multi-client capabilities.
- - Landmark Graphics Corporation was awarded new contracts with Petrobras,
Anadarko Petroleum Corporation, Newfield Exploration, and Tullow Oil.
Petrobras will be using Landmark's drilling software for planning,
executing and analyzing its well construction processes. Landmark's
ground breaking data hosting contract with Anadarko will provide an
integrated suite of seismic and geological software applications,
utilities and subsurface data for a deepwater Gulf of Mexico project.
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.
NOTE: The statements in this press release that are not historical statements,
including statements regarding future financial performance, are forward-looking
statements within the meaning of the federal securities laws. These statements
are subject to numerous risks and uncertainties, many of which are beyond the
Company's control, which could cause actual results of operations to differ
materially from the results expressed or implied by the statements. These risks
and uncertainties include, but are not limited to: legal risks, including the
risks of judgments against the Company's subsidiaries and predecessors in
asbestos litigation currently on appeal, the inability of insurers for asbestos
exposures to pay claims; future asbestos claims defense and settlement costs,
other litigation and proceedings, including shareholder lawsuits, securities
laws inquiries, contract disputes, patent infringements and environmental
matters, changes in government regulations and adverse reaction to scrutiny
involving the Company; political risks, including the risks of unsettled
political conditions, war and the effects of terrorism, foreign operations and
foreign exchange rates and controls; liquidity risks, including the risks of
potential reductions in debt ratings, access to credit, availability and costs
of financing and ability to raise capital; weather-related risks; customer
risks, including the risks of changes in capital spending and claims
negotiations; industry risks, including the risks of changes that affect the
demand for or price of oil and/or gas, structural changes in the industries in
which the Company operates, risks of fixed-fee projects and risks of complex
business arrangements; systems risks, including the risks of successful
development and installation of financial systems; and personnel and
merger/reorganization/disposition risks, including the risks of increased
competition for employees, successful integration of acquired businesses,
effective restructuring efforts and successful completion of planned
dispositions. Please see Halliburton's Form 10-K for the year ended December 31,
2001 and Form 10-Q for the quarter ended June 30, 2002 for a more complete
discussion of such risk factors.
HALLIBURTON COMPANY
Consolidated Statements of Income
(Unaudited)
Quarter Ended Nine Months Ended
September 30 September 30
---------------------------- ---------------------------
2002 2001 2002 2001
------------ ------------ ------------ -----------
Millions of dollars except per share data
Revenues
Energy Services Group $ 1,677 $ 2,098 $ 5,122 $ 5,898
Engineering and Construction Group 1,305 1,293 4,102 3,976
------------ ------------ ------------ -----------
Total revenues $ 2,982 $ 3,391 $ 9,224 $ 9,874
============ ============ ============ ===========
Operating income
Energy Services Group $ 200 $ 321 $ 439 $ 778
Engineering and Construction Group 12 36 (496) 84
General corporate (21) (15) (34) (50)
------------ ------------ ------------ -----------
Total operating income (loss) 191 342 (91) 812
Interest expense (29) (34) (91) (115)
Interest income 8 8 24 18
Foreign currency gain (losses), net 1 (2) (12) (6)
Other, net - - 2 -
------------ ------------ ------------ -----------
Income (loss) from continuing operations before
income taxes, minority interests, and change
in accounting method 171 314 (168) 709
(Provision) benefit for income taxes (72) (126) (31) (285)
Minority interest in net income of subsidiaries (5) (7) (15) (14)
------------ ------------ ------------ -----------
Income (loss) from continuing operations
before change in accounting method, net 94 181 (214) 410
Discontinued operations, net
Income (loss) from discontinued operations - (2) (168) (40)
Gain on disposal of discontinued operations - - - 299
------------ ------------ ------------ -----------
Income (loss) from discontinued operations - (2) (168) 259
------------ ------------ ------------ -----------
Cumulative effect of change in accounting
method, net - - - 1
------------ ------------ ------------ -----------
Net income (loss) $ 94 $ 179 $ (382) $ 670
============ ============ ============ ===========
Basic income per share:
Continuing operations $ 0.22 $ 0.42 $ (0.49) $ 0.96
Discontinued operations, net
Income (loss) from discontinued operations - - (0.39) (0.09)
Gain on disposal of discontinued operations - - - 0.70
------------ ------------ ------------ -----------
Income (loss) from discontinued operations - - (0.39) 0.61
------------ ------------ ------------ -----------
Net income (loss) $ 0.22 $ 0.42 $ (0.88) $ 1.57
============ ============ ============ ===========
Diluted income per share:
Continuing operations $ 0.22 $ 0.42 $ (0.49) $ 0.95
Discontinued operations, net
Income (loss) from discontinued operations - - (0.39) (0.09)
Gain on disposal of discontinued operations - - - 0.70
------------ ------------ ------------ -----------
Income (loss) from discontinued operations - - (0.39) 0.61
------------ ------------ ------------ -----------
Net income (loss) $ 0.22 $ 0.42 $ (0.88) $ 1.56
============ ============ ============ ===========
Basic average common shares outstanding 432 428 432 427
Diluted average common shares outstanding 434 429 432 430
HALLIBURTON COMPANY
Reconciliation of As Reported Results to Pro Forma Results
Three months ended September 30, 2002
(Unaudited)
Net
Operating Other Income/ Income/(loss) Earnings/ (loss)
Income/ (Expense) - (Provision) from per Share from
(loss), (including Benefit for Continuing Continuing
Pretax interest) Taxes Operations * Operations
--------------------------------------------------------------------------------
Pro forma results (excluding items below): $ 220 $ (20) $ (76) $ 119 $ 0.28
Loss on equity investment (18) - - (18) (0.04)
Restructuring costs (11) - 4 (7) (0.02)
--------------------------------------------------------------------------------
As reported $ 191 $ (20) $ (72) $ 94 $ 0.22
================================================================================
* 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
Nine months ended September 30, 2002
(Unaudited)
Operating Other Income/ Net Earnings/ (loss)
Income/ (Expense) - (Provision) Income/(loss) per Share from
(loss), (including Benefit for from Continuing Continuing
Pretax interest) Taxes Operations * Operations
---------------------------------------------------------------------------------
Pro forma results (excluding
below items): $ 557 $ (76) $ (186) $ 280 $ 0.65
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 (78) - 30 (48) (0.12)
Brazil project loss (119) - 46 (73) (0.17)
Asbestos charge (330) - 62 (268) (0.62)
Loss on equity investment (79) - - (79) (0.18)
---------------------------------------------------------------------------------
As reported $ (91) $ (77) $ (31) $ (214) $ (0.49)
=================================================================================
* As reported and pro forma basis net income from continuing operations
includes $15 million in expense due to minority interest.
HALLIBURTON COMPANY
Reconciliation of As Reported Segment Results to Pro Forma Results
Three months ended September 30, 2002
(Unaudited)
Operating
Energy Services Engineering and Income/(loss),
Group Construction Group Corporate Pretax
------------------------------------------------------------------------
Pro forma results (excluding
below items): $ 223 $ 14 $ (17) $ 220
Loss on equity investment (18) - - (18)
Restructuring costs (5) (2) (4) (11)
------------------------------------------------------------------------
As reported $ 200 $ 12 $ (21) $ 191
========================================================================
HALLIBURTON COMPANY
Reconciliation of As Reported Segment Results to Pro Forma Results
Nine months ended September 30, 2002
(Unaudited)
Operating
Energy Services Engineering and Income/(loss),
Group Construction Group Corporate Pretax
-------------------------------------------------------------------------
Pro forma results (excluding
below items): $ 555 $ 49 $ (47) $ 557
Sale of EMC 108 - - 108
Patent lawsuit (98) - - (98)
Highlands receivable write-off - (80) - (80)
Demutualization of an
insurance company - - 28 28
Restructuring costs (47) (16) (15) (78)
Brazil project loss - (119) - (119)
Asbestos charge - (330) - (330)
Loss on equity investment (79) - - (79)
-------------------------------------------------------------------------
As reported $ 439 $ (496) $ (34) $ (91)
=========================================================================
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 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 Results to Pro Forma Results
Three months ended September 30, 2001
(Unaudited)
Net Earnings/
Other Income/ Income/(loss) (loss) per
Operating (Expense) - (Provision) from Share from
Income/ (loss), (including Benefit Continuing Continuing
Pretax interest) for Taxes Operations * Operations
---------------------------------------------------------------------------------
Pro forma results (excluding
below items): $ 354 $ (28) $ (129) $ 190 $ 0.44
Asbestos charge (3) - 1 (2) -
Goodwill amortization (9) - 2 (7) (0.02)
---------------------------------------------------------------------------------
As reported $ 342 $ (28) $ (126) $ 181 $ 0.42
=================================================================================
* As reported and pro forma basis net income from continuing operations includes
$7 million in expense due to minority interest.
HALLIBURTON COMPANY
Reconciliation of As Reported Results to Pro Forma Results
Nine months ended September 30, 2001
(Unaudited)
Net Earnings/
Other Income/ Income/(loss) (loss) per
Operating (Expense) - (Provision) from Share from
Income/ (loss), (including Benefit for Continuing Continuing
Pretax interest) Taxes Operations * Operations
---------------------------------------------------------------------------------
Pro forma results (excluding
below items): $ 852 $ (103) $ (294) $ 441 $ 1.02
Asbestos charge (8) - 3 (5) (0.01)
Goodwill amortization (32) - 6 (26) (0.06)
------------------------------------------------- -------------------------------
As reported $ 812 $ (103) $ (285) $ 410 $ 0.95
=================================================================================
* As reported and pro forma basis net income from continuing operations includes
$14 million in expense due to minority interest.
HALLIBURTON COMPANY
Reconciliation of As Reported Segment Results to Pro Forma Results
Three months ended September 30, 2001
(Unaudited)
Operating
Energy Services Engineering and Income/(loss),
Group Construction Group Corporate Pretax
--------------------------------------------------------------------------
Pro forma results (excluding
below items): $ 328 $ 41 $ (15) $ 354
Asbestos charge - (3) - (3)
Goodwill amortization (7) (2) - (9)
--------------------------------------------------------------------------
As reported $ 321 $ 36 $ (15) $ 342
==========================================================================
HALLIBURTON COMPANY
Reconciliation of As Reported Segment Results to Pro Forma Results
Nine months ended September 30, 2001
(Unaudited)
Operating
Energy Services Engineering and Income/(loss),
Group Construction Group Corporate Pretax
---------------------------------------------------------------------------
Pro forma results (excluding
below items): $ 797 $ 105 $ (50) $ 852
Asbestos charge - (8) - (8)
Goodwill amortization (19) (13) - (32)
---------------------------------------------------------------------------
As reported $ 778 $ 84 $ (50) $ 812
===========================================================================
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: November 7, 2002 By: /s/ Susan S. Keith
--------------------------------------------
Susan S. Keith
Vice President and Assistant Secretary