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Halliburton Annual Report, Year Ended Dec 31, 1998

Filing Date
Filed March 23, 1999
Period End
December 31, 1998
Security
HAL
In the record · 2016–202610-K1110-Q338-K122

HAL filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 122 current reports (8-K) between 2016 and 2026.

  1. FY2016 annual report10-K · Feb ’17Feb ’17
  2. Material agreement8-K · Mar ’20Mar ’20
  3. Leadership change8-K · May ’22May ’22
  4. Leadership change8-K · Jan ’26Jan ’26

01—Abstract

Summary

Summary of the 10-K filed March 23, 1999. Cited figures are marked; the original filing is the authoritative source.

Halliburton Company's 1998 annual report reflects a difficult year.

Following the September 29, 1998 merger with Dresser Industries, Inc. (accounted for as a pooling of interests, with prior periods restated), revenues rose to $17,353.1 milliona from $16,276.5 million in 1997. However, the company recorded total special charges and credits of $980.1 million, driving operating income down to $396.5 million from $1,398.7 million, and the company reported a net loss of $14.7 million, or $0.03 per diluted share, compared with net income of $772.4 million in 1997. The filing attributes the results to the decline in oil and gas prices in 1998, which reduced rig counts and demand for products and services, particularly in the second half of the year.

Cash flow from operations fell to $454.1 millionb from $833.1 million, as the company used cash to fund higher working capital needs. Cash and equivalents ended the year at $202.6 million, down from $384.1 million, while short-term notes payable and current maturities of long-term debt rose to $573.5 million from $57.9 million. Total shareholders' equity declined to $4,061.2 million from $4,316.9 million.

Management states that about 45% of the special charge will result in cash outflows, with the remainder largely incurred in 1999, and expects additional merger-related costs of $120.0 million to $130.0 millionc through the end of 1999 that do not qualify as special charges. Looking ahead, management states that 1999 will also be difficult but that long-term industry fundamentals will prevail.

The company reports a backlog of $11,177 milliond at December 31, 1998, with an estimated 65% expected to be completed during 1999. Investors should also note the company's disclosed exposures, including asbestos litigation tied to Dresser, Superfund environmental matters, and the Year 2000 remediation program, which management expects to be substantially complete by the third quarter of 1999.

02—Key points

Key Highlights

  1. Revenues rose to $17,353.1 million in 1998 from $16,276.5 million in 1997, with Energy Services Group revenues at $9,009.5 million and Engineering and Construction Group revenues at $5,494.8 million.
  2. Special charges and credits totaled $980.1 million in 1998, including $509.4 million of asset related charges and $234.7 million of personnel reductions, which drove operating income down to $396.5 million from $1,398.7 million.
  3. The company reported a net loss of $14.7 million, or $0.03 per diluted share, in 1998, compared with net income of $772.4 million, or $1.77 per diluted share, in 1997.
  4. Cash flows from operating activities were $454.1 million in 1998 compared with $833.1 million in 1997, primarily reflecting increased working capital requirements.
  5. The Dresser merger was completed on September 29, 1998 and accounted for as a pooling of interests; the company reports a backlog of $11,177 million at December 31, 1998, with 65% expected to be completed in 1999.
  6. Short-term notes payable and current maturities of long-term debt increased to $573.5 million from $57.9 million, and cash and equivalents declined to $202.6 million from $384.1 million.
  7. The company expects additional merger-related incremental costs of $120.0 million to $130.0 million through the end of 1999 and employs approximately 107,800 people.

03—Questions

Frequently Asked Questions

  1. Why did Halliburton report a net loss in 1998?

    The net loss of $14.7 million was driven primarily by special charges and credits of $980.1 million recorded in 1998, which included asset related charges of $509.4 million, personnel reductions of $234.7 million, and facility consolidation charges of $126.2 million. These charges relate to the Dresser merger and the industry downturn caused by declining oil and gas prices.

  2. How did the oil and gas price decline affect the company's results?

    The filing states that the decline in oil and gas prices in 1998 reduced the worldwide average rotary drilling rig count and sharply reduced demand for some of the company's products and services. The yearly average worldwide rotary rig count fell 13% in 1998 compared to 1997, and the Energy Services Group's operating margin declined to 10.8% from 12.0%.

  3. What is the outlook for 1999 according to management?

    Management states that 1999 will also be difficult, but it believes long-term industry fundamentals will prevail and that demand for oil and natural gas worldwide should recover and grow. The company expects the majority of its Year 2000 remediation phase to be completed by the end of the third quarter of 1999, and it expects additional merger-related costs of $120.0 million to $130.0 million through the end of 1999.

  4. Did the company change its dividend policy or capital structure?

    The company paid cash dividends of $0.125 per quarter, totaling $0.50 per share in both 1997 and 1998, and dividends paid totaled $254.2 million in 1998. The Board intends to consider quarterly dividends, with future payments at its discretion. Combined short-term notes payable and long-term debt represented 32% of total capitalization at year-end 1998, compared with 24% in 1997.

04—Continue

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