Why did Halliburton report a larger net loss in 1993?

The 1993 net loss of $161.0 million reflected a $301.8 million charge ($263.8 million after tax) on the geophysical business, which was sold in January 1994. The company also recorded a $46.3 million charge for United Kingdom insurance claim loss reserves and a $20.0 million employee severance charge. These were partly offset by a $40.4 million benefit from an Internal Revenue Service settlement.

How did the core businesses perform in 1993?

Energy Services revenues rose 8% to $2,953.4 million, and its operating income before special items increased to $174.1 million from $118.4 million, mainly due to increased United States activity. Engineering and Construction Services revenues fell 12% to $3,140.7 million because of a slowdown in U.S. and European work, and management expects 1994 revenues to be only slightly higher with margins difficult to maintain.

What is the status of the geophysical business sale?

In January 1994 the company sold substantially all of the assets of its geophysical business to Western Atlas International Inc. for $190.0 million in cash and notes, subject to adjustments. The company received $100 million in cash in January 1994 and expects to convert $90.0 million of notes to cash in 1994. It also issued $73.8 million in notes to Western Atlas to cover reduction costs, and some international closings were deferred pending approvals.

What are the main risks flagged in the filing?

The filing flags exposure to oil and natural gas prices, which fell significantly in late 1993 and may reduce Energy Services demand in 1994. It also notes operations in over 100 countries carry political and currency risks, with foreign currency losses of $21.0 million in 1993. The company faces a U.S. export investigation involving Libya, and it is a potentially responsible party at Superfund sites, two of which management says could be significant.

How strong is the company's financial position?

At December 31, 1993, total assets were $5,403.1 million and shareholders' equity was $1,887.7 million, down from $1,907.3 million a year earlier. Long-term debt was $623.9 million, and total debt was 27% of total capitalization. Cash and equivalents fell to $48.8 million, and cash flow from operating activities was $243.1 million, down from $381.6 million in 1992.

HAL 10-K FY1993 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-K filed March 11, 1994. Cited figures are marked; the original filing is the authoritative source.

Halliburton Company (HAL) reported a 1993 net loss of $161.0 million^a, or $1.43 per share, compared with a net loss of $137.3 million in 1992 and net income of $26.6 million in 1991.

The loss was driven mainly by a $301.8 million^b charge ($263.8 million after tax) to write down the geophysical business, which was sold to Western Atlas International Inc. in January 1994 for $190.0 million in cash and notes. Excluding special items, net income would have been $102.9 million in 1993, or $0.92 per share. Revenues were $6,350.8 million, down from $6,565.9 million in 1992.

Operating income was a loss of $132.6 million^c, compared with a loss of $101.4 million in 1992. Energy Services revenues rose 8% to $2,953.4 million, and operating income before special items improved to $174.1 million from $118.4 million, helped by stronger U.S. activity and a $31.0 million contribution from Libyan work. Engineering and Construction Services revenues fell 12% to $3,140.7 million, and management expects only slightly higher revenues in 1994 with difficult margins.

Insurance Services posted an operating loss of $42.2 million^d, including a $46.3 million charge for United Kingdom claim loss reserves, and the company abandoned its effort to sell Highlands Insurance Company. The balance sheet remained solid, with shareholders' equity of $1,887.7 million, long-term debt of $623.9 million, and cash and equivalents of $48.8 million at year-end.

Cash flow from operations was $243.1 million, down from $381.6 million in 1992. The company also faces an export investigation related to shipments to Libya and is a potentially responsible party at several Superfund sites, two of which management says could be significant.

02—Key points

Key Highlights

Net loss of $161.0 million ($1.43 per share) in 1993, versus a net loss of $137.3 million in 1992; excluding special items, net income was $102.9 million ($0.92 per share).
Revenues of $6,350.8 million in 1993, down from $6,565.9 million in 1992 and $7,018.8 million in 1991.
A $301.8 million charge ($263.8 million after tax) was recognized on the geophysical business, which was sold to Western Atlas International Inc. in January 1994 for $190.0 million in cash and notes.
Energy Services revenues rose 8% to $2,953.4 million, with operating income before special items of $174.1 million, up from $118.4 million in 1992.
Engineering and Construction Services revenues declined 12% to $3,140.7 million, and the backlog of firm orders was down 6%, with total backlog of $4,212 million at December 31, 1993.
Shareholders' equity was $1,887.7 million and long-term debt was $623.9 million at year-end 1993; cash and equivalents fell to $48.8 million from $233.3 million.
A U.S. government investigation of exports and re-exports to Libya by former subsidiaries is pending, and the company cannot predict what sanctions, if any, may result.

03—Questions

Frequently Asked Questions

Why did Halliburton report a larger net loss in 1993?
The 1993 net loss of $161.0 million reflected a $301.8 million charge ($263.8 million after tax) on the geophysical business, which was sold in January 1994. The company also recorded a $46.3 million charge for United Kingdom insurance claim loss reserves and a $20.0 million employee severance charge. These were partly offset by a $40.4 million benefit from an Internal Revenue Service settlement.
How did the core businesses perform in 1993?
Energy Services revenues rose 8% to $2,953.4 million, and its operating income before special items increased to $174.1 million from $118.4 million, mainly due to increased United States activity. Engineering and Construction Services revenues fell 12% to $3,140.7 million because of a slowdown in U.S. and European work, and management expects 1994 revenues to be only slightly higher with margins difficult to maintain.
What is the status of the geophysical business sale?
In January 1994 the company sold substantially all of the assets of its geophysical business to Western Atlas International Inc. for $190.0 million in cash and notes, subject to adjustments. The company received $100 million in cash in January 1994 and expects to convert $90.0 million of notes to cash in 1994. It also issued $73.8 million in notes to Western Atlas to cover reduction costs, and some international closings were deferred pending approvals.
What are the main risks flagged in the filing?
The filing flags exposure to oil and natural gas prices, which fell significantly in late 1993 and may reduce Energy Services demand in 1994. It also notes operations in over 100 countries carry political and currency risks, with foreign currency losses of $21.0 million in 1993. The company faces a U.S. export investigation involving Libya, and it is a potentially responsible party at Superfund sites, two of which management says could be significant.
How strong is the company's financial position?
At December 31, 1993, total assets were $5,403.1 million and shareholders' equity was $1,887.7 million, down from $1,907.3 million a year earlier. Long-term debt was $623.9 million, and total debt was 27% of total capitalization. Cash and equivalents fell to $48.8 million, and cash flow from operating activities was $243.1 million, down from $381.6 million in 1992.

04—Continue

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