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, 2004
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
1401 McKinney, Suite 2400
Houston, Texas 77010
(Address of principal executive offices)
Registrant's telephone number,
including area code - 713-759-2600
INFORMATION TO BE INCLUDED IN REPORT
Item 12. Disclosure of Results of Operations and Financial Condition
On April 28, 2004 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
$0.17 per diluted share income from continuing operations,
including $0.14 charge on Barracuda-Caratinga project
HOUSTON - Halliburton (NYSE:HAL) announced today that first quarter 2004 income
from continuing operations was $76 million, or $0.17 per diluted share.
Impacting continuing operations for the quarter on an after-tax basis was the
previously announced $62 million charge, or $0.14 per diluted share, on the
Barracuda-Caratinga project.
Net loss for the quarter was $65 million, or $0.15 per diluted share, and
included a net loss from discontinued operations for the proposed asbestos and
silica settlement of $141 million, or $0.32 per diluted share. The net loss from
discontinued operations resulted primarily from the first quarter revaluation,
due to the increase in Halliburton's stock price, of the 59.5 million shares of
Halliburton common stock to be contributed to trusts for the benefit of asbestos
and silica claimants.
Revenues were $5.5 billion in the first quarter 2004, up 80% from the first
quarter 2003. This increase was largely attributable to additional activity on
government services projects in the Middle East in the Engineering and
Construction Group (known as KBR). Within the Energy Services Group (ESG),
revenues increased 13% in the first quarter 2004 compared to the prior year
period.
Consolidated operating income was $175 million in the first quarter 2004
compared to $142 million in the first quarter 2003. Operating income for ESG was
up 19% in the first quarter. KBR operating results improved slightly as a result
of increased government services work, offset by a $97 million pretax loss on
the Barracuda-Caratinga project. First quarter 2003 operating income included a
$55 million pretax loss on the Barracuda-Caratinga project, a $36 million pretax
gain related to the sale of Mono Pumps, and a $15 million pretax loss related to
the sale of Wellstream.
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"Overall, I am pleased with our operating performance during the quarter," said
Dave Lesar, chairman, president and chief executive officer of Halliburton. "We
continue to see improvement in the energy services business. While oilfield
activity and pricing was essentially flat until late in the first quarter, we
are beginning to see signs that customer spending and pricing for our services
are improving. We believe the agreement in principle on the Barracuda-Caratinga
project, if completed, would resolve disputed items and significantly reduce
remaining risks for us with the project."
2004 First Quarter Segment Results
Energy Services Group
ESG posted first quarter 2004 revenues of $1.8 billion, a $205 million increase
over the first quarter 2003, and operating income of $214 million, up $34
million from the same period in the prior year.
Drilling and Formation Evaluation (DFE) operating income of $43 million was $23
million less than the prior year quarter primarily due to the $36 million gain
on the sale of Mono Pumps in the first quarter 2003. Before considering the Mono
Pumps gain, DFE operating income improved 43% year-over-year. Logging services
operating income increased $14 million year-over-year on higher United States
land rig counts, the implementation of exit strategies for logging operations in
several underperforming countries, and a direct sale into China. Drilling
services saw revenue growth across all geographic regions. For drill bits,
operating margins improved as a result of benefits from the consolidation of
manufacturing facilities to The Woodlands, Texas.
Fluids operating income for the first quarter 2004 was $60 million, a $5 million
increase from the first quarter 2003. The increase in operating income was
attributable to a $15 million increase in cementing services due to higher land
rig activity in North America and improved pricing. This was partially offset by
a $12 million reduction in drilling fluids operating results due primarily to
the activity shift from favorable offshore operations to lower margin onshore
areas.
Production Optimization operating income for the first quarter 2004 was $82
million, a 21% increase over first quarter 2003. The increase was primarily
driven by production enhancement services, which improved operating income $22
million, largely derived from increased land rig activity and high utilization
in the United States, revenue increases in all international regions, and
improved pricing. The first quarter 2004 included $17 million in equity losses
from the Subsea 7 joint venture compared with $14 million in equity losses in
the first quarter 2003.
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Landmark and Other Energy Services first quarter 2004 operating income was $29
million, compared to a loss of $9 million for the prior year period. This
increase in operating income is attributed to a $15 million loss on the sale of
Wellstream in the first quarter 2003, a $13 million reduction in legal reserves
in the first quarter 2004 related to the settlement of the Anglo-Dutch
litigation, and strong commodity prices benefiting integrated solutions
services. Landmark Graphics achieved 5% growth in revenues over the prior year
period, setting a new record for revenues in the first quarter of any year, due
primarily to increased software sales.
KBR
KBR revenues for the first quarter 2004 were $3.7 billion, more than double its
revenues in the first quarter 2003. The improvement was mostly due to government
contract activities.
KBR operating loss for the first quarter 2004 was $15 million, compared to a $19
million loss in the first quarter 2003. First quarter 2004 operating loss
included the $97 million loss on the Barracuda-Caratinga project, which was
partially offset by increased results on government services projects, refining
and gas projects in Canada and Africa, and upstream operations and maintenance
projects. First quarter 2003 results included a $55 million loss on the
Barracuda-Caratinga project.
Halliburton's Iraq-related work contributed approximately $2.1 billion in
revenues in the first quarter 2004 and $32 million in operating income.
Backlog
KBR backlog at March 31, 2004 was $8.4 billion, down $1.3 billion from December
31, 2003 primarily due to workoff and transition of the fuel delivery work in
Iraq to the Defense Energy Support Center. Approximately 26% of the backlog is
for fixed-fee contracts, essentially unchanged from December 31, 2003. Of the
fixed-fee contract backlog, only 13% of the total related to offshore contracts,
while 39% related to onshore contracts.
Technology and Significant Achievements
Halliburton had a number of advances in technology and new contract awards.
Energy Services Group new technologies and contracts:
- Halliburton announced the release of DecisionSpace Well Seismic
Fusion(TM), a suite of interpretation and analysis tools for predicting
reservoir rock properties from prestack seismic data, synthetic data,
and well data. Working closely with Statoil, Landmark Graphics
developed Well Seismic Fusion to leverage the rich information content
contained in prestack seismic data to build earth models and more
accurately predict reservoir lithology and fluids. This unique
technology provides a highly integrated interpretation environment
enabling interpreters and other asset team members to improve reservoir
understanding and dramatically reduce exploration risk.
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- Halliburton announced that it has signed a five-year technology
agreement with Integrated Trade Systems, Inc., an agreement that will
benefit PEMEX, Mexico's national oil and gas company. The agreement
includes a broad range of Landmark Graphics' prospect generation and
field development software that will support the exploration and
development activities of PEMEX. A key component of this agreement is
the provision of broad Landmark service support, to ensure that PEMEX
exploration and production specialists are able to extract maximum
value from this technology investment.
- Halliburton announced the release of Z3(TM) polycrystalline diamond
compact (PDC) cutter technology for Fixed Cutter drill bits. Z3
technology, a proprietary development made in conjunction with
long-time diamond technology provider US Synthetic, represents a
step-change advance in the abrasion resistance of PDC cutters, leading
to significantly longer and more cost-effective drilling operations.
KBR new contract awards:
- KBR has been awarded the contract to provide engineering, procurement,
and construction management services for BP's Greater Plutonio fields
located in Block 18 offshore Angola. The services are for the floating
production, storage, and offloading vessel and the associated subsea
systems.
- KBR has been awarded the seven-year contract for CONLOG (Contract for
Logistics Support) by the United Kingdom Ministry of Defence to provide
logistics and infrastructure support to Permanent Joint Forces
Headquarters operations and exercises worldwide.
- KBR is providing engineering services for the onshore design of a Gas
to Liquids (GTL) project in Qatar under a Front End Engineering Design
(FEED) contract awarded to its joint venture partner JGC Corporation of
Japan by Shell Global Solutions.
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 and Engineering and Construction Groups. The company's World Wide Web
site can be accessed at www.halliburton.com.
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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 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 being unable to complete the proposed settlement of asbestos and silica
liabilities, the risks of having material subsidiaries in Chapter 11
proceedings, the risks of audits and investigations of the company by domestic
and foreign government agencies and legislative bodies, 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 or a delay in the payment of such claims, future
asbestos claims defense and settlement costs, the risks of judgments against the
company and its subsidiaries in other litigation and proceedings, including
shareholder lawsuits, securities laws inquiries, contract disputes, patent
infringements and environmental matters, legislation, 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/A for the year ended
December 31, 2003 for a more complete discussion of such risk factors.
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HALLIBURTON COMPANY
Condensed Consolidated Statements of Operations
(Millions of dollars and shares except per share data)
(Unaudited)
Three Months Three Months
Ended Ended
March 31 December 31
--------------------------------------------------------------
2004 2003 2003
--------------------------------------------------------------------------------------------------------------------------
Revenues
Drilling and Formation Evaluation $ 444 $ 379 $ 417
Fluids 535 480 531
Production Optimization 708 627 713
Landmark and Other Energy Services 129 125 138
--------------------------------------------------------------------------------------------------------------------------
Total Energy Services Group 1,816 1,611 1,799
Engineering and Construction Group 3,703 1,449 3,665
--------------------------------------------------------------------------------------------------------------------------
Total revenues $ 5,519 $ 3,060 $ 5,464
==========================================================================================================================
Operating income (loss)
Drilling and Formation Evaluation $ 43 $ 66 $ 17
Fluids 60 55 73
Production Optimization 82 68 115
Landmark and Other Energy Services 29 (9) 36
--------------------------------------------------------------------------------------------------------------------------
Total Energy Services Group 214 180 241
Engineering and Construction Group (15) (19) 82
General corporate (24) (19) (20)
--------------------------------------------------------------------------------------------------------------------------
Total operating income 175 142 303
--------------------------------------------------------------------------------------------------------------------------
Interest expense (56) (27) (54)
Interest income 10 8 8
Foreign currency, net (3) (6) 4
Other, net 5 - (1)
--------------------------------------------------------------------------------------------------------------------------
Income from continuing operations before
income taxes, minority interest, and change in
accounting principle 131 117 260
Provision for income taxes (49) (50) (92)
Minority interest in net income of subsidiaries (6) (8) (22)
--------------------------------------------------------------------------------------------------------------------------
Income from continuing operations before
change in accounting principle 76 59 146
Loss from discontinued operations, net (141) (8) (1,093)
Cumulative effect of change in accounting principle, net - (8) -
--------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ (65) $ 43 $ (947)
==========================================================================================================================
Basic income (loss) per share:
Income from continuing operations before change
in accounting principle $ 0.17 $ 0.14 $ 0.34
Loss from discontinued operations, net (0.32) (0.02) (2.52)
Cumulative effect of change in accounting principle, net - (0.02) -
--------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ (0.15) $ 0.10 $ (2.18)
==========================================================================================================================
Diluted income (loss) per share:
Income from continuing operations before change
in accounting principle $ 0.17 $ 0.14 $ 0.34
Loss from discontinued operations, net (0.32) (0.02) (2.51)
Cumulative effect of change in accounting principle, net - (0.02) -
--------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ (0.15) $ 0.10 $ (2.17)
==========================================================================================================================
Basic weighted average common shares outstanding 436 434 435
Diluted weighted average common shares outstanding 440 436 438
See Footnote Table 1 for a list of significant items included in operating
income.
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HALLIBURTON COMPANY
Condensed Consolidated Balance Sheets
(Millions of dollars)
(Unaudited)
March 31 December 31
-----------------------------------------------------------
2004 2003 2003
------------------------------------------------------------------------------------------------------------------
Assets
Current assets:
Cash and equivalents $ 1,933 $ 928 $ 1,815
Total receivables, net 5,720 3,293 4,765
Inventories 743 757 695
Other current assets 867 460 644
------------------------------------------------------------------------------------------------------------------
Total current assets 9,263 5,438 7,919
Property, plant, and equipment, net 2,537 2,492 2,526
Insurance for asbestos- and silica-related liabilities 1,535 2,059 2,038
Other assets 3,072 2,595 2,980
------------------------------------------------------------------------------------------------------------------
Total assets $ 16,407 $ 12,584 $ 15,463
==================================================================================================================
Liabilities and Shareholders' Equity
Current liabilities:
Short-term notes payable $ 9 $ 9 $ 18
Current maturities of long-term debt 23 299 22
Accounts payable 2,102 949 1,776
Asbestos- and silica-related liabilities 2,505 - 2,507
Other current liabilities 2,284 1,788 2,219
------------------------------------------------------------------------------------------------------------------
Total current liabilities 6,923 3,045 6,542
Long-term debt 3,934 1,175 3,415
Asbestos- and silica-related liabilities 1,769 3,407 1,579
Other liabilities 1,199 1,314 1,280
------------------------------------------------------------------------------------------------------------------
Total liabilities 13,825 8,941 12,816
------------------------------------------------------------------------------------------------------------------
Minority interest in consolidated subsidiaries 110 81 100
Shareholders' equity 2,472 3,562 2,547
------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 16,407 $ 12,584 $ 15,463
==================================================================================================================
Note: These Condensed Consolidated Balance Sheets do not include a breakout of prepetition liabilities. This
information will be provided in our first quarter 2004 Form 10-Q.
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TABLE 1
HALLIBURTON COMPANY
Revenue and Operating Income Comparison
By Geographic Region - Energy Services Group Only
(Millions of dollars)
(Unaudited)
Three Months Ended Three Months Ended
March 31 December 31
-----------------------------------------------------------
2004 2003 2003
----------------------------------------------------------------------------------------------------
Revenues:
North America $ 814 $ 745 $ 787
Latin America 229 182 255
Europe/Africa 372 342 350
Middle East/Asia 401 342 407
----------------------------------------------------------------------------------------------------
Total revenues $ 1,816 $ 1,611 $ 1,799
====================================================================================================
Operating Income:
North America $ 118 $ 84 $ 100
Latin America 30 23 48
Europe/Africa 19 32 36
Middle East/Asia 47 41 57
----------------------------------------------------------------------------------------------------
Total operating income $ 214 $ 180 $ 241
====================================================================================================
See Footnote Table 2 for a list of significant items included in operating income.
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FOOTNOTE TABLE 1
HALLIBURTON COMPANY
Items Included in Operating Income by Operating Segment
(Millions of dollars except per share data)
(Unaudited)
Three Months Ended Three Months Ended Three Months Ended
March 31 March 31 December 31
2004 2003 2003
------------------------- -------------------------- -------------------------
Operating After Tax Operating After Tax Operating After Tax
Income per Share Income per Share Income per Share
------------------------- -------------------------- -------------------------
Drilling and Formation
Evaluation:
Mono Pumps gain on sale $ - $ - $ 36 $ 0.05 $ - $ -
Landmark and Other
Energy Services:
Anglo-Dutch lawsuit 13 0.02 - - - -
Wellstream loss on sale - - (15) (0.03) - -
Engineering and
Construction Group:
Barracuda-Caratinga
project loss (97) (0.14) (55) (0.08) (10) (0.01)
========================================================================================================================
FOOTNOTE TABLE 2
HALLIBURTON COMPANY
Items Included in Operating Income
By Geographic Region - Energy Services Group Only
(Millions of dollars except per share data)
(Unaudited)
Three Months Ended Three Months Ended Three Months Ended
March 31 March 31 December 31
2004 2003 2003
------------------------- ------------------------- ------------------------
Operating After Tax Operating After Tax Operating After Tax
Income per Share Income per Share Income per Share
------------------------- ------------------------- ------------------------
North America:
Anglo-Dutch lawsuit $ 13 $ 0.02 $ - $ - $ - $ -
Mono Pumps gain on sale - - 24 0.03 - -
Wellstream loss on sale - - (11) (0.02) - -
Europe/Africa:
Mono Pumps gain on sale - - 12 0.02 - -
Wellstream loss on sale - - (4) (0.01) - -
###
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 29, 2004 By: /s/ Margaret E. Carriere
-----------------------------------
Margaret E. Carriere
Vice President and Secretary