(b)

On January 1, 2009, Halliburton adopted a new accounting standard, the provisions of which, among others, requires the recognition of noncontrolling interest (previously referred to as minority interest) as equity in the condensed consolidated balance sheets and a revised presentation of the condensed consolidated statements of operations.  All periods presented have been restated.

(c)	Loss from discontinued operations, net in the fourth quarter of 2008 included a $303 million, or $0.34 per diluted share, charge related to the settlements of the Department of Justice and Securities and Exchange Commission Foreign Corrupt Practices Act investigations.

(d)

On January 1, 2009, Halliburton adopted an update to accounting standards related to accounting for instruments granted in share-based payment transactions as participating securities.  This update provides that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are participating securities and shall be included in the computation of both basic and diluted earnings per share.  Prior periods’ basic and diluted earnings per share were restated.  Upon adoption, both basic and diluted earnings per share for the fourth quarter of 2008 decreased by $0.01 for net income.  Both basic and diluted loss per share for the fourth quarter of 2008 increased by $0.01 for discontinued operations.

-more-

 

 

 

---

HALLIBURTON COMPANY

Condensed Consolidated Statements of Operations

(Millions of dollars and shares except per share data)

(Unaudited)

		Year Ended December 31
		2009				2008
Revenue: (a)
Completion and Production		$	7,419			$	9,610
Drilling and Evaluation			7,256				8,669
Total revenue		$	14,675			$	18,279
Operating income: (a)
Completion and Production		$	1,016			$	2,304
Drilling and Evaluation			1,183				1,970
Corporate and other			(205	)			(264	)
Total operating income			1,994				4,010
Interest expense			(297	)			(167	)(b)
Interest income			12				39
Other, net			(27	)			(33	)(b)
Income from continuing operations before income taxes			1,682				3,849
Provision for income taxes			(518	)			(1,211	)
Income from continuing operations			1,164				2,638
Loss from discontinued operations, net			(9	)			(423	)(c)
Net income		$	1,155			$	2,215
Noncontrolling interest in net income of subsidiaries (d)			(10	)			9
Net income attributable to company		$	1,145			$	2,224
Amounts attributable to company shareholders:
Income from continuing operations		$	1,154			$	2,647
Loss from discontinued operations, net			(9	)			(423	)(c)
Net income attributable to company		$	1,145			$	2,224
Basic income per share attributable to company
shareholders: (e)
Income from continuing operations		$	1.28			$	3.00
Loss from discontinued operations, net			(0.01	)			(0.48	)(c)
Net income per share		$	1.27			$	2.52
Diluted income per share attributable to company
shareholders: (e)
Income from continuing operations		$	1.28			$	2.91
Loss from discontinued operations, net			(0.01	)			(0.46	)(c)
Net income per share		$	1.27			$	2.45
Basic weighted average common shares outstanding (e)			900				883
Diluted weighted average common shares outstanding (e)			902				909

(a)	Prior period segment information was reclassified to reflect the movement of certain operations from the Completion and Production segment to the Drilling and Evaluation segment.

(b)

On January 1, 2009, Halliburton adopted an update to accounting standards related to convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement).  This update clarifies that convertible debt instruments that may be settled in cash upon conversion, including partial cash settlement, should separately account for the liability and equity components in a manner that will reflect the entity’s nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods.  Upon adoption, the provisions were retroactively applied.  As a result, $7 million of additional non-cash interest expense was recorded in the year ended December 31, 2008 and the $693 million loss to settle our convertible debt recorded in the third quarter of 2008 was reversed and recorded to additional paid-in capital.

(c)	Loss from discontinued operations, net, in 2008, included $420 million in charges, net of tax, or $0.46 per diluted share, related to adjustments of the indemnities and guarantees provided to KBR, Inc. upon separation.

(d)

On January 1, 2009, Halliburton adopted a new accounting standard, the provisions of which, among others, requires the recognition of noncontrolling interest (previously referred to as minority interest) as equity in the condensed consolidated balance sheets and a revised presentation of the condensed consolidated statements of operations.  All periods presented have been restated.

(e)

On January 1, 2009, Halliburton adopted an update to accounting standards related to accounting for instruments granted in share-based payment transactions as participating securities.  This update provides that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are participating securities and shall be included in the computation of both basic and diluted earnings per share.  Prior periods’ basic and diluted earnings per share were restated.  Upon adoption, basic income per share for 2008 decreased by $0.02 for continuing operations and diluted income per share decreased by $0.01 for continuing operations.  In addition, basic loss per share decreased by $0.01 for discontinued operations.  Both basic and diluted earnings per share decreased by $0.01 for net income.

See Footnote Table 3 for a list of significant items included in operating income.

 

 

---

 

HALLIBURTON COMPANY

Condensed Consolidated Balance Sheets

(Millions of dollars)

(Unaudited)

		December 31
		2009				2008
Assets
Current assets:
Cash and equivalents		$	2,082			$	1,124
Receivables, net			2,964				3,795
Inventories, net			1,598				1,828
Investments in marketable securities			1,312				–
Other current assets			682				664
Total current assets			8,638				7,411
Property, plant, and equipment, net			5,759				4,782
Goodwill			1,100				1,072
Other assets			1,041				1,120
Total assets		$	16,538			$	14,385
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable		$	787			$	898
Current maturities of long-term debt			750				26
Accrued employee compensation and benefits			514				643
Other current liabilities			838				1,214
Total current liabilities			2,889				2,781
Long-term debt			3,824				2,586
Other liabilities			1,068				1,274
Total liabilities			7,781				6,641
Company’s shareholders’ equity			8,728				7,725
Noncontrolling interest in consolidated subsidiaries (a)			29				19
Total shareholders’ equity			8,757				7,744
Total liabilities and shareholders’ equity		$	16,538			$	14,385

(a)

On January 1, 2009, Halliburton adopted a new accounting standard, the provisions of which, among others, requires the recognition of noncontrolling interest (previously referred to as minority interest) as equity in the condensed consolidated balance sheets and a revised presentation of the condensed consolidated statements of operations.  All periods presented have been restated.

-more-

 

 

---

 

HALLIBURTON COMPANY

Condensed Consolidated Statements of Cash Flows

(Millions of dollars)

(Unaudited)

		Year Ended
		December 31
		2009				2008
Cash flows from operating activities:
Net income		$	1,155			$	2,215	(a)
Adjustments to reconcile net income to net cash from operations:
Depreciation, depletion, and amortization			931				738
Loss from discontinued operations			9				423
Payments of Department of Justice and Securities and Exchange Commission
settlement and indemnity			(417	)			–
Other			728				(702	)
Total cash flows from operating activities			2,406				2,674
Cash flows from investing activities:
Sales (purchases) of investments in marketable securities, net			(1,320	)			388
Capital expenditures			(1,864	)			(1,824	)
Acquisitions of assets, net of cash acquired			(55	)			(652	)
Other			154				232
Total cash flows from investing activities			(3,085	)			(1,856	)
Cash flows from financing activities:
Proceeds from long-term borrowings, net of offering costs			1,975				1,187
Payments of dividends to shareholders			(324	)			(319	)
Payments on long-term borrowings			(31	)			(2,048	)
Payments to reacquire common stock			(17	)			(507	)
Other			67				164
Total cash flows from financing activities			1,670				(1,523	)
Effect of exchange rate changes on cash			(33	)			(18	)
Increase (decrease) in cash and equivalents			958				(723	)
Cash and equivalents at beginning of period			1,124				1,847
Cash and equivalents at end of period		$	2,082			$	1,124

(a)

On January 1, 2009, Halliburton adopted an update to accounting standards related to accounting for convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement).  This update clarifies that convertible debt instruments that may be settled in cash upon conversion, including partial cash settlement, should separately account for the liability and equity components in a manner that will reflect the entity’s nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods.  Upon adoption, the provisions were retroactively applied.  As a result, $7 million of additional non-cash interest expense was recorded in the year ended December 31, 2008 and the $693 million loss to settle our convertible debt recorded in the third quarter of 2008 was reversed and recorded to additional paid-in capital.

-more-

 

 

---

 

HALLIBURTON COMPANY

Revenue and Operating Income Comparison

By Segment and Geographic Region

(Millions of dollars)

(Unaudited)

		Three Months Ended
		December 31								September 30
Revenue by geographic region:		2009				2008				2009
Completion and Production:
North America		$	916			$	1,442			$	807
Latin America			205				258				223
Europe/Africa/CIS			423				497				483
Middle East/Asia			274				355				308
Total			1,818				2,552				1,821
Drilling and Evaluation:
North America			519				800				478
Latin America			334				414				319
Europe/Africa/CIS			574				643				529
Middle East/Asia			441				501				441
Total			1,868				2,358				1,767
Total revenue by region:
North America			1,435				2,242				1,285
Latin America			539				672				542
Europe/Africa/CIS			997				1,140				1,012
Middle East/Asia			715				856				749
Operating income by geographic region
(excluding Corporate and other):
Completion and Production:
North America		$	45			$	384			$	9
Latin America			20				51				45
Europe/Africa/CIS			62				110				107
Middle East/Asia			43				85				79
Total			170				630				240
Drilling and Evaluation:
North America			58				155				28
Latin America			28				101				52
Europe/Africa/CIS			109				150				94
Middle East/Asia			117				152				109
Total			312				558				283
Total operating income by region:
North America			103				539				37
Latin America			48				152				97
Europe/Africa/CIS			171				260				201
Middle East/Asia			160				237				188

Prior period segment information was reclassified to reflect the movement of certain operations from the Completion and Production segment to the Drilling and Evaluation segment.

-more-

 

 

---

 

HALLIBURTON COMPANY

Revenue and Operating Income Comparison

By Segment and Geographic Region

(Millions of dollars)

(Unaudited)

		Year Ended December 31
Revenue by geographic region:		2009				2008
Completion and Production:
North America		$	3,589			$	5,327
Latin America			887				978
Europe/Africa/CIS			1,771				1,938
Middle East/Asia			1,172				1,367
Total			7,419				9,610
Drilling and Evaluation:
North America			2,073				3,013
Latin America			1,294				1,447
Europe/Africa/CIS			2,177				2,408
Middle East/Asia			1,712				1,801
Total			7,256				8,669
Total revenue by region:
North America			5,662				8,340
Latin America			2,181				2,425
Europe/Africa/CIS			3,948				4,346
Middle East/Asia			2,884				3,168
Operating income by geographic region
(excluding Corporate and other):
Completion and Production:
North America		$	272			$	1,426
Latin America			172				214
Europe/Africa/CIS			315				360
Middle East/Asia			257				304
Total			1,016				2,304
Drilling and Evaluation:
North America			178				679
Latin America			187				307
Europe/Africa/CIS			380				497
Middle East/Asia			438				487
Total			1,183				1,970
Total operating income by region:
North America			450				2,105
Latin America			359				521
Europe/Africa/CIS			695				857
Middle East/Asia			695				791

Prior period segment information was reclassified to reflect the movement of certain operations from the Completion and Production segment to the Drilling and Evaluation segment.

See Footnote Table 3 for a list of significant items included in operating income.

-more-

 

 

---

 

FOOTNOTE TABLE 1

HALLIBURTON COMPANY

Excluded Costs

By Segment and Geographic Region

(Millions of dollars)

(Unaudited)

		Three Months Ended
		December 31				September 30
Excluded costs by geographic region:		2009(a)				2009(b)
Completion and Production:
North America		$	–			$	5
Latin America			3				3
Europe/Africa/CIS			–				3
Middle East/Asia			–				2
Total			3				13
Drilling and Evaluation:
North America			–				4
Latin America			12				4
Europe/Africa/CIS			–				5
Middle East/Asia			–				2
Total			12				15
Total excluded costs by region:
North America			–				9
Latin America			15				7
Europe/Africa/CIS			–				8
Middle East/Asia			–				4
Total			15				28

(a)	Bad debt expense arising from the settlement of a significant Venezuela customer account receivable.

(b)	Employee separation costs.

FOOTNOTE TABLE 2

HALLIBURTON COMPANY

Adjusted Operating Income Removing Excluded Costs

By Segment and Geographic Region

(Millions of dollars)

(Unaudited)

		Three Months Ended
Adjusted operating income by geographic region:		December 31				September 30
(excluding Corporate and other): (a) (b)		2009				2009
Completion and Production:
North America		$	45			$	14
Latin America			23				48
Europe/Africa/CIS			62				110
Middle East/Asia			43				81
Total			173				253
Drilling and Evaluation:
North America			58				32
Latin America			40				56
Europe/Africa/CIS			109				99
Middle East/Asia			117				111
Total			324				298
Total operating income by region:
North America			103				46
Latin America			63				104
Europe/Africa/CIS			171				209
Middle East/Asia			160				192

(a)

Management believes that operating income adjusted for employee separation costs and the receivables settlement is useful to investors to assess and understand segment and region operating performance, especially when comparing current results with previous periods or forecasting performance for future periods, primarily because management views the excluded items to be outside of the Company’s normal operating results.  Management analyzes operating income without the impact of employee separation costs and the receivables settlement as an indicator of ongoing segment and region operating performance, to identify underlying trends in the business, and to establish segment and region operational goals.  The adjustment removes the effect of these expenses.

(b)	Adjusted operating income for each segment and region is calculated as:  “Operating income” plus “Excluded costs.”

 

 

---

 

FOOTNOTE TABLE 3

HALLIBURTON COMPANY

Items Included in Operating Income

(Millions of dollars except per share data)

(Unaudited)

Year Ended

Year Ended

December 31, 2009

December 31, 2008

Operating

After Tax

Operating

After Tax

Income

Per Share

Income

Per Share

Completion and Production:

North America

Gain on sale of investments

$

–

$

–

$

35

$

0.02

Employee separation costs

(19

)

(0.02

)

–

–

Latin America

Employee separation costs

(7

)

–

–

–

Receivables settlement

(3

)

–

Europe/Africa/CIS

Employee separation costs

(5

)

–

–

–

Middle East/Asia

Employee separation costs

(3

)

–

–

–

Drilling and Evaluation:

North America

Gain on sale of investments

–

–

25

0.02

Employee separation costs

(13

)

(0.01

)

–

–

Latin America

Employee separation costs

(8

)

(0.01

)

–

–

Receivables settlement

(12

)

(0.01

)

Europe/Africa/CIS

Employee separation costs

(8

)

(0.01

)

–

–

Middle East/Asia

Impairment of oil and gas property

–

–

(23

)

(0.02

)

Employee separation costs

(5

)

–

–

–

Corporate and other:

Patent settlements

–

–

5

(a)

–

Acquisition-related adjustment

–

–

(22

)

(0.02

)

Employee separation costs

(5

)

–

–

–

(a)	Patent settlements in 2008 included a $35 million gain in the fourth quarter of 2008, which was partially offset by a $30 million charge in the second quarter of 2008.

-more-

 

 

---

 

FOOTNOTE TABLE 4

HALLIBURTON COMPANY

Reconciliation of As Reported Results to Adjusted Results

(Millions of dollars)

(Unaudited)

		Three Months Ended
		December 31, 2009
As reported income from continuing operations		$	247
Receivables settlement, net of tax (a)			10
Adjusted income from continuing operations (a)		$	257
As reported diluted weighted average common shares outstanding			906
As reported income from continuing operations per diluted share (b)		$	0.27
Adjusted income from continuing operations per diluted share (b)		$	0.28

(a)

Management believes that income from continuing operations adjusted for the receivables settlement is useful to investors to assess and understand operating performance, especially when comparing current results with previous periods or forecasting performance for future periods, primarily because management views the excluded item to be outside of the Company’s normal operating results.  Management analyzes income from continuing operations without the impact of the receivables settlement as an indicator of performance, to identify underlying trends in the business, and to establish operational goals.  The adjustment removes the effect of the expense.  Adjusted income from continuing operations is calculated as:  “As reported income from continuing operations” plus “Receivables settlement, net of tax.”

(b)

As reported income from continuing operations per diluted share is calculated as: “As reported income from continuing operations” divided by “As reported diluted weighted average common shares outstanding.”   Adjusted income from continuing operations per diluted share is calculated as: “Adjusted income from continuing operations” divided by “As reported diluted weighted average common shares outstanding.”

FOOTNOTE TABLE 5

HALLIBURTON COMPANY

Calculation of Net Debt to Total Capitalization Ratio

(Millions of dollars)

(Unaudited)

		December 31, 2009
Total debt (b)		$	4,574
Cash and equivalents			(2,082	)
Investments in marketable securities			(1,312	)
Net debt (c)		$	1,180
As reported total shareholders’ equity		$	8,757
Total debt (b)			4,574
Total capitalization (d)		$	13,331
Net debt to total capitalization ratio (a)			9%

(a)

Management believes that the net debt to total capitalization ratio is an important financial measure for use in evaluating the Company’s liquidity, which measures the amount of net debt compared to available capital.  Management believes that because cash and equivalents and investments in marketable securities can be used to repay indebtedness, net debt provides a clearer picture of the future demands on cash to repay debt by netting cash and equivalents and investments in marketable securities against debt.  The net debt to total capitalization ratio is calculated as: “Net debt” divided by “Total capitalization.”

(b)	Total debt includes short-term notes payable, current maturities of long-term debt, and long-term debt.

(c)	Net debt is calculated as: “Total debt” less “Cash and equivalents” less “Investments in marketable securities.”

(d)	Total capitalization is calculated as: “As reported total shareholders’ equity” plus “Total debt.”

-more-

 

 

---

 

FOOTNOTE TABLE 6

HALLIBURTON COMPANY

Calculation of Return on Average Invested Capital

(Millions of dollars)

(Unaudited)

		Year Ended
		December 31, 2009
Income from continuing operations before noncontrolling interest		$	1,164
Net financing costs, after tax (b)			197
Excluded costs, after tax (c)			61
Earnings before net financing costs and excluded costs		$	1,422
Invested capital – December 31, 2008 (d)		$	10,369
Invested capital – December 31, 2009 (d)		$	13,331
Average invested capital		$	11,850
Return on average invested capital (ROIC) (a)			12%

(a)

Management believes that return on average invested capital (ROIC) is useful to investors to assess historical capital productivity, evaluate management’s performance, and to demonstrate to shareholders that capital has been used wisely over the long term. ROIC is calculated as:  “Earnings before net financing costs and excluded costs” divided by “Average invested capital.”

(b)	“Net financing costs, after tax” consists of interest expense and interest income.

(c)	“Excluded costs, after tax” includes the items in footnote table 3.  The adjustment removes the effect of these expenses because management views the items to be outside of the Company’s normal operating results.

(d)	“Invested capital” includes total shareholders’ equity and total debt.  Total debt consists of short-term notes payable, current maturities of long-term debt, and long-term debt.

###

 

 

---

 

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:    January 28, 2010	By:	/s/ Bruce A. Metzinger
		Bruce A. Metzinger
		Assistant Secretary

 

 

---