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)
April 28, 2003
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
Items 9 and 12. Regulation FD Disclosure and Disclosure of Results of
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Operations and Financial Condition
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On April 28, 2003 registrant issued a press release entitled
"Halliburton Announces First Quarter Results."
The text of the press release is as follows:
HALLIBURTON ANNOUNCES FIRST QUARTER RESULTS
$0.14 per share income from continuing operations
$0.12 per share pro forma income from continuing operations
Results include an $0.08 charge on the Barracuda-Caratinga Project
HOUSTON - Halliburton (NYSE:HAL) announced today that first quarter 2003 income
from continuing operations was $59 million or $0.14 per diluted share. There
were several items impacting continuing operations for the quarter on an after
tax basis: a $34 million charge on the Barracuda-Caratinga project, a $22
million gain related to the sale of Mono Pumps, a $12 million loss related to
the sale of Wellstream and a $2 million charge associated with the engineering
and construction portion of the proposed global settlement for asbestos.
The after tax charge of $34 million, or $0.08 per diluted share, on
Barracuda-Caratinga was due to higher cost trends and some actual and committed
costs exceeding estimated costs. In addition, schedule delays added to the costs
of the project during the quarter. The Company is currently in negotiations with
Petrobras, and although it is too early to predict the outcome, these
negotiations, if successfully concluded, could result in a number of positive
developments including schedule relief and improved project liquidity.
The Company believes that the effects of the net gain on the sale of Mono Pumps
and Wellstream and the charges related to the proposed global settlement should
be excluded for purposes of understanding ongoing operations. Therefore,
excluding these items (but including the $0.08 charge per diluted share on the
Barracuda-Caratinga project), pro forma 2003 first quarter income from
continuing operations was $51 million or $0.12 per diluted share. Tables are
attached reconciling as reported amounts to pro forma amounts used in this press
release with descriptions of the reasons why the Company believes the pro forma
amounts are useful to investors.
Net income for the first quarter 2003 was $43 million or $0.10 per diluted
share, which includes a net loss from discontinued operations of $0.02 per
diluted share and a net loss of $0.02 per diluted share for a change in
accounting principle.
Revenues were $3.1 billion in the 2003 first quarter, up two percent
year-over-year. This increase is largely attributable to increased activity in
certain Engineering and Construction Group projects, partially offset by lower
activity in the Energy Services Group. Operating income was $142 million
compared to $123 million in the 2002 first quarter. Pro forma operating income
was $123 million for the 2003 first quarter, up almost 84 percent when compared
to the 2002 first quarter. The charge for a patent infringement judgment in the
first quarter of 2002 of $98 million was the major driver for the year-over-year
change.
"In an environment where activity was down in Venezuela and the Middle East,
Halliburton Energy Services' results compare favorably to the prior year quarter
as well as the fourth quarter of 2002. Although I am disappointed by the
additional charges on Barracuda-Caratinga, I believe that progress on this
project is being made in our negotiations," said Dave Lesar, Chairman, President
and Chief Executive Officer of Halliburton. "We expect to see additional
improvements in our results in the second quarter as the recovery continues, and
I am optimistic that activity levels will increase during the second half of the
year, providing for accelerated earnings growth during that period."
2003 First Quarter Segment Results
The Energy Services Group posted first quarter revenues of $1.6 billion, a $78
million decrease year-over-year due to the sale of Mono Pumps and the
contribution of Halliburton Subsea assets to an unconsolidated joint venture.
These declines were partially offset by revenue growth in Halliburton Energy
Services.
Operating income for the Energy Services Group's first quarter was $180 million,
up seven percent year-over-year. Energy Services Group pro forma operating
income was $159 million, up over 160 percent year-over-year. The increase in pro
forma operating income reflects a significant increase in Halliburton Energy
Services operating income and margin compared to the prior year as well as the
charge for the patent infringement judgment in the first quarter of 2002.
The Engineering and Construction Group's first quarter revenues were
approximately $1.5 billion, up 10 percent year-over-year. Revenue decreases of
six percent in both Operations & Maintenance and Offshore were more than offset
by substantial increases in Government Services and Onshore operations. The
increase in Government Services revenues was attributable to initial activity
related to Iraq. Onshore operations revenues were up due to increased activity
in several large projects.
The operating loss for the Engineering and Construction Group in the first
quarter of 2003 was $19 million, and the pro forma operating loss which excludes
asbestos expenses was $17 million, down $39 million from the first quarter of
2002. This decline is attributable to a $55 million charge ($34 million after
tax) on the Barracuda-Caratinga contract, which was partially offset by
increased results in Government Services.
General corporate costs in the first quarter 2003 were $19 million, compared to
a gain of $12 million in the first quarter of 2002. Last year's first quarter
corporate expenses were offset by a $28 million gain related to the
demutualization of an insurance provider.
Backlog
Backlog for the Engineering and Construction Group as of March 31, 2003, was
$9.5 billion, up $100 million, or one percent, from March 31, 2002.
Approximately 41 percent of the backlog is for fixed fee contracts and about
half of the total backlog will be performed in the next 12 months. Of the fixed
fee contract backlog, 39 percent of the total relates to Onshore contracts and
25 percent relates to Offshore with most of the remaining balance relating to
Government Services.
Firm orders were $7.5 billion at the end of the quarter. The remainder of the
backlog primarily relates to government awards not yet funded, with the Balkans
support contract in future years representing the majority of the balance.
Discontinued Operations and Cumulative Effect of Accounting Change
The first quarter net loss from discontinued operations was $8 million after
tax, or $0.02 per diluted share. This loss reflects professional fees associated
with due diligence and other aspects of the proposed global settlement for
asbestos liabilities related to previously disposed businesses. The net loss
from a change in accounting principle of $8 million after tax, or $0.02 per
diluted share, is related to the Company's January 1, 2003 adoption of Financial
Accounting Standards Board Statement No. 143, Asset Retirement Obligations.
Technology and Significant Achievements
Halliburton had a number of advances in technology and new contract awards
including:
- The Energy Services Group was awarded a $400 million contract by BP to
provide products and services for their drilling and completion
activities in the Gulf of Mexico and lower 48 states subsequent to the
end of the quarter. This award represents a 50 percent market share
increase with BP, with the most significant gains occurring in logging
and stimulation.
- Halliburton's Energy Services Group entered into an agreement with
Shell International Exploration and Production for the supply of its
PoroFlex(R) line of expandable screen products for global Shell
consumption. Including options, the contract duration is over three
years. Based on information provided, the Company estimates that the
total competitive contract value is in excess of $166 million over the
full contract duration.
- The Energy Services Group was awarded a $67 million contract from Shell
Malaysia E&P to supply Enventure Global Technology Solid Expandable
Tubular Equipment and Services for their Malaysian operations. The
contract spans a two-year period, with an option to extend another
year.
- Baroid has developed BAROLIFT(TM), a product that allows operators to
clean downhole during drilling operations by increasing the carrying
capacity of drilling fluids without increasing viscosity. As part of
Baroid's Lift While You Drill(TM) technologies, the product is a
specially treated synthetic fiber developed from 100 percent virgin
materials that are capable of performing well in any type of drilling
fluid. Its interlocking fibers keep drill cuttings in suspension,
optimizing downhole tool performance and improving the rate of
penetration. It is compatible with water, oil, and synthetic-based
fluids. It is non-toxic and unaffected by sub-freezing temperatures as
with some liquid polymers.
- The Engineering and Construction Group was awarded a contract from the
United Kingdom Department of Health for the provision of program
management services for their $3.6 billion National IT Program. The
program is aimed at restructuring and modernizing the National Health
Service's information technology. Subsequent to quarter end, KBR added
$100 million to backlog related to this contract.
- An Engineering and Construction Group joint venture was selected as the
winning bidder for a $1.4 billion contract with BP for the Tangguh
project to provide design, procurement, construction and commissioning
services for a LNG plant in Papua, subsequent to the end of the
quarter.
- Road Management Services consortium, in which KBR is a 25 percent
shareholder, was awarded a $400 million contract by the Highways Agency
to upgrade to motorway standard, operate and maintain a 33-mile stretch
of road in the United Kingdom. The Road Management Services consortium
comprises KBR, AMEC, Alfred McAlpine and Dragados.
- Landmark Graphics Corporation signed an agreement with the Ministry of
Energy and Mineral Resources of the Republic of Kazakhstan. The
agreement calls for the design, development and implementation of a
National Data Bank operation for exploration and production data using
Landmark's PetroBank(TM) technology, the most advanced networked
multi-client data management system in the exploration and production
industry.
- Magic Earth signed an agreement with Anglo-Suisse Inc., a privately
held Houston-based independent oil company, to utilize Magic Earth's
GeoProbe(TM), the industry's leading volume visualization and
interpretation software. In its Houston visualization center, Magic
Earth will evaluate nearly 500 producing blocks located in the Gulf of
Mexico shelf and 1,800 open-exploration blocks of ASI's license to
Petroleum Geo-Services 3D seismic data.
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.
All of the information furnished in Item 9 will not be incorporated by reference
into any registration statement filed by Halliburton under the Securities Act of
1933, as amended, unless specifically identified therein as being incorporated
therein by reference. The furnishing of the information in this report is not
intended to, and does not, constitute a determination or admission by
Halliburton that the information in this report is material or complete, or that
investors should consider this information before making an investment decision
with respect to any security of Halliburton or any of its subsidiaries.
##
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 pending and 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,
2002.
HALLIBURTON COMPANY
Consolidated Statements of Operations
(Unaudited)
Three Months Ended Three Months Ended
March 31 December 31
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2003 2002 2002
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(millions of dollars and shares except per share data)
Revenues
Energy Services Group $ 1,611 $ 1,689 $ 1,714
Engineering and Construction Group 1,449 1,318 1,634
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Total revenues $ 3,060 $ 3,007 $ 3,348
======================================================================================================================
Operating income (loss)
Energy Services Group $ 180 $ 169 $ 199
Engineering and Construction Group (19) (58) (189)
General corporate (19) 12 (31)
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Total operating income (loss) 142 123 (21)
======================================================================================================================
Interest expense (27) (32) (22)
Interest income 8 4 8
Foreign currency losses, net (6) (8) (13)
Other nonoperating, net - 4 (12)
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Income (loss) from continuing operations before
income taxes, minority interest, and
change in accounting principle 117 91 (60)
Provision for income taxes (50) (36) (49)
Minority interest in net income of subsidiaries (8) (5) (23)
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Income (loss) from continuing operations
before change in accounting principle 59 50 (132)
Loss from discontinued operations (8) (28) (484)
Cumulative effect of change in accounting
principle, net (8) - -
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Net income (loss) $ 43 $ 22 $ (616)
======================================================================================================================
Basic income (loss) per share:
Continuing operations before change
in accounting principle $ 0.14 $ 0.12 $ (0.30)
Loss from discontinued operations (0.02) (0.07) (1.12)
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0.12 0.05 (1.42)
Change in accounting principle (0.02) - -
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Net income (loss) $ 0.10 $ 0.05 $ (1.42)
======================================================================================================================
Diluted income (loss) per share:
Continuing operations before change in
accounting principle $ 0.14 $ 0.12 $ (0.30)
Loss from discontinued operations (0.02) (0.07) (1.12)
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0.12 0.05 (1.42)
Change in accounting principle (0.02) - -
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Net income (loss) $ 0.10 $ 0.05 $ (1.42)
======================================================================================================================
Basic weighted average common shares outstanding 434 432 433
Diluted weighted average common shares outstanding 436 433 433
TABLE 1
HALLIBURTON COMPANY
Reconciliation of As Reported Results to Pro Forma Results
(millions of dollars except per share data)
(Unaudited)
Other Minority Income/ Earnings/(Loss)
Operating Income/ Interest In (Loss) Per Share
Income/ (Expense) - (Provision) Net Income From From
(Loss), (Including Benefit For Of Continuing Continuing
Pretax Interest) Taxes Subsidiaries Operations Operations
- ---------------------------------------------------------------------------------------------------------------------------
Three Months Ended
March 31, 2003
Pro forma results (excluding
items below): $ 123 $ (27) $ (37) $ (8) $ 51 $ 0.12
Sale of Mono Pumps (a) 36 2 (16) - 22 0.05
Sale of Wellstream (a) (15) - 3 - (12) (0.03)
Asbestos and silica (b) (2) - - - (2) -
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As reported $ 142 $ (25) $ (50) $ (8) $ 59 $ 0.14
===========================================================================================================================
Three Months Ended
December 31, 2002
Pro forma results (excluding
items below): (d) $ 212 $ (33) $ (70) $ (23) $ 86 $ 0.21
Sale of equity
investment received
as part of business
asset sale (a) - (9) 3 - (6) (0.02)
Demutualization of an
insurance
provider (c) 1 3 (2) - 2 -
Asbestos and silica
charge (b) (234) - 20 - (214) (0.49)
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As reported $ (21) $ (39) $ (49) $ (23) $(132) $ (0.30)
===========================================================================================================================
Three Months Ended
March 31, 2002
Pro forma results (excluding
items below): (d) $ 67 $ (35) $ (13) $ (5) $ 14 $ 0.03
Sale of EMC (a) 108 3 (43) - 68 0.16
Highlands receivable
write-off (b) (80) - 31 - (49) (0.11)
Demutualization of an
insurance
provider (c) 28 - (11) - 17 0.04
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As reported $ 123 $ (32) $ (36) $ (5) $ 50 $ 0.12
===========================================================================================================================
See Footnote for Table 1 on next page.
TABLE 2
HALLIBURTON COMPANY
Reconciliation of As Reported Segment Results to Pro Forma Results
(millions of dollars except per share data)
(Unaudited)
Energy Services Engineering and General Operating Income,
Group Construction Group Corporate Pretax
- --------------------------------------------------------------------------------------------------------------
Three months ended
March 31, 2003
Pro forma results (excluding
items below): $ 159 $ (17) $ (19) $ 123
Sale of Mono Pumps (a) 36 - - 36
Sale of Wellstream (a) (15) - - (15)
Asbestos and silica (b) - (2) - (2)
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As reported $ 180 $ (19) $ (19) $ 142
==============================================================================================================
Three Months Ended
December 31, 2002
Pro forma results (excluding
items below): (d) $ 199 $ 45 $ (32) $ 212
Asbestos and silica
charges (b) - (234) - (234)
Demutualization of an
insurance
provider (c) - - 1 1
- --------------------------------------------------------------------------------------------------------------
As reported $ 199 $ (189) $ (31) $ (21)
==============================================================================================================
Three Months Ended
March 31, 2002
Pro forma results (excluding
items below): (d) $ 61 $ 22 $ (16) $ 67
Sale of EMC (a) 108 - - 108
Highlands receivable
write-off (b) - (80) - (80)
Demutualization of an
insurance
provider (c) - - 28 28
- --------------------------------------------------------------------------------------------------------------
As reported $ 169 $ (58) $ 12 $ 123
==============================================================================================================
Footnotes for Tables 1-2
(a) As each gain or loss on the sale of business assets represents a unique
transaction, management believes the effect of these transactions
should be removed from continuing operations analyses to provide a
better understanding of the Company's ongoing operations.
(b) Due to the material nature of the Company's asbestos and silica
exposure and the Company's efforts to eliminate this exposure through
the proposed global settlement, management believes that removing the
effects of asbestos and silica charges provides an investor with
management's view of the Company's ongoing operations.
(c) As the demutualization of an insurance provider represented a unique
transaction, management believes the effect of this transaction should
be removed from continuing operations analyses to provide a better
understanding of the Company's ongoing operations.
(d) Consistent with new SEC rules, the Company is no longer excluding the
loss on the patent infringement lawsuit of $98 million pretax, $62
million after tax in the first quarter 2002; restructuring charges of
$11 million pretax, $7 million after tax in the first quarter 2002; and
$29 million pretax, $17 million after tax for the fourth quarter 2002;
and income from the Barracuda-Caratinga project of $2 million pretax,
$1 million after tax for the fourth quarter 2002; as pro forma items.
As such, all such pro forma results for 2002 have been restated as
shown in Tables 1-2.
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: April 28, 2003 By: /s/ Margaret E. Carriere
------------------------------------
Margaret E. Carriere
Vice President and Secretary
