How did Halliburton's profitability change in 1997?

Operating income increased to $798.1 million from $417.9 million, and net income rose to $454.4 million from $300.4 million. Diluted earnings per share from continuing operations were $1.75, compared with $1.19 in 1996. The effective income tax rate was 39% in 1997, compared with 26% in 1996, which was lowered by tax credits recorded that year.

Which business segment drove the results?

The Energy Group generated revenues of $5,756.4 million and operating income of $706.4 million, up 34% and 46% respectively from 1996. Management attributed the increase to higher activity levels and increased prices for pressure pumping services in North America. The Engineering and Construction Group's operating income rose to $133.9 million, though its revenues declined 1%.

How much did the company's debt and cash position change?

Long-term debt increased to $538.9 million from $200.0 million, primarily from medium-term notes issued during 1997. Cash and equivalents ended the year at $221.3 million, compared with $213.6 million in 1996. Total debt was 18% of total capitalization at year-end 1997, up from 10% in 1996.

What does the filing say about the 1998 outlook?

The company expects Energy Group customers to continue seeking integrated solutions and cost reductions, and it believes the long-term outlook for oilfield services is positive. It noted that the growth experienced in 1997 will be difficult to repeat in 1998, and that crude oil and natural gas price declines beginning late in 1997 could delay customer spending in the short term. The Salomon Smith Barney survey cited in the filing predicted 1998 spending growth of 10.9%.

What major acquisitions and dispositions occurred in 1997?

The company acquired NUMAR Corporation in a pooling-of-interests transaction for about 8.2 million shares, OGC International plc for about $118.3 million, Kinhill Holdings Limited for about $34 million, and a 26% interest in PES (International) Limited for about $33.6 million. It also increased its ownership of Devonport Management Limited from about 30% to 51%. The environmental services business was sold for about $32 million.

HAL 10-K FY1997 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-K filed February 24, 1998. Cited figures are marked; the original filing is the authoritative source.

Halliburton Company's 1997 annual report (Form 10-K filed February 24, 1998) shows revenues of $8,818.6 million^a, up from $7,385.1 million in 1996, with the Energy Group contributing $5,756.4 million and the Engineering and Construction Group $3,062.2 million.

Operating income rose to $798.1 million^b from $417.9 million, and operating income before special charges was $806.7 million versus $503.7 million in 1996. Net income was $454.4 million, or $1.75 per diluted share, compared with $300.4 million, or $1.19 per diluted share, in 1996. The Energy Group's operating income was $706.4 million, and management attributed its improvement mainly to increased activity and higher pressure pumping prices in North America.

The Engineering and Construction Group's operating income reached $133.9 million^c, aided by overhead reductions, a focus on higher-margin business lines, and the consolidation of Devonport Management Limited. The company sold its environmental services business for approximately $32 million at year-end 1997 and said it would exit certain highway and paving activities over time. Backlog grew to $6.904 billion at December 31, 1997, from $4.840 billion a year earlier, with nearly 64% expected to be completed during 1998.

Balance sheet and cash flow changes were significant. Total assets rose to $5,603.0 million^d from $4,436.6 million, and long-term debt increased to $538.9 million from $200.0 million after medium-term note issuances totaling $300.0 million.

Cash flow from operations was $548.2 million, while investing outflows of $686.7 million, driven by capital expenditures of $577.1 million, exceeded that amount. Management noted that crude oil and gas price declines beginning late in 1997 could delay customer spending in 1998.

02—Key points

Key Highlights

Revenues rose to $8,818.6 million in 1997 from $7,385.1 million in 1996, with the Energy Group at $5,756.4 million and Engineering and Construction at $3,062.2 million.
Operating income was $798.1 million, versus $417.9 million in 1996; excluding special charges, operating income was $806.7 million compared with $503.7 million.
Diluted earnings per share from continuing operations were $1.75, up from $1.19 in 1996; net income was $454.4 million.
Backlog totaled $6.904 billion at December 31, 1997, up from $4.840 billion, with nearly 64% expected to be completed in 1998.
Long-term debt increased to $538.9 million from $200.0 million, reflecting medium-term notes issued in 1997 totaling $300.0 million.
The environmental services business was sold for approximately $32 million on December 31, 1997, and certain highway and paving activities are being exited over time.
Management said the outlook for 1998 is positive long term but that the growth seen in 1997 will be difficult to repeat, and that crude oil and gas price declines could delay customer spending.

03—Questions

Frequently Asked Questions

How did Halliburton's profitability change in 1997?
Operating income increased to $798.1 million from $417.9 million, and net income rose to $454.4 million from $300.4 million. Diluted earnings per share from continuing operations were $1.75, compared with $1.19 in 1996. The effective income tax rate was 39% in 1997, compared with 26% in 1996, which was lowered by tax credits recorded that year.
Which business segment drove the results?
The Energy Group generated revenues of $5,756.4 million and operating income of $706.4 million, up 34% and 46% respectively from 1996. Management attributed the increase to higher activity levels and increased prices for pressure pumping services in North America. The Engineering and Construction Group's operating income rose to $133.9 million, though its revenues declined 1%.
How much did the company's debt and cash position change?
Long-term debt increased to $538.9 million from $200.0 million, primarily from medium-term notes issued during 1997. Cash and equivalents ended the year at $221.3 million, compared with $213.6 million in 1996. Total debt was 18% of total capitalization at year-end 1997, up from 10% in 1996.
What does the filing say about the 1998 outlook?
The company expects Energy Group customers to continue seeking integrated solutions and cost reductions, and it believes the long-term outlook for oilfield services is positive. It noted that the growth experienced in 1997 will be difficult to repeat in 1998, and that crude oil and natural gas price declines beginning late in 1997 could delay customer spending in the short term. The Salomon Smith Barney survey cited in the filing predicted 1998 spending growth of 10.9%.
What major acquisitions and dispositions occurred in 1997?
The company acquired NUMAR Corporation in a pooling-of-interests transaction for about 8.2 million shares, OGC International plc for about $118.3 million, Kinhill Holdings Limited for about $34 million, and a 26% interest in PES (International) Limited for about $33.6 million. It also increased its ownership of Devonport Management Limited from about 30% to 51%. The environmental services business was sold for about $32 million.

04—Continue

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