01—Abstract
Summary
Summary of the 10-K filed March 12, 2002. Cited figures are marked; the original filing is the authoritative source.
Halliburton Company's 2001 Form 10-K reports consolidated revenues of $13.0 billiona, up from $11.9 billion in 2000, with operating income of $1.084 billion versus $462 million a year earlier and net income of $809 million, or $1.88 per diluted share, compared with $501 million, or $1.12 per diluted share, in 2000.
The Energy Services Group drove the improvement, with revenues of $8.7 billionb and operating income of $1.015 billion, while the Engineering and Construction Group (operating as Halliburton KBR) had revenues of $4.3 billion and operating income of $143 million. Results were helped by the April 2001 sale of the remaining Dresser Equipment Group businesses for $1.27 billion in cash, which produced a $299 million after-tax gain, and by strong 2001 drilling activity, although the filing notes that U.S. gas drilling declined sharply in the fourth quarter and that management expects reduced activity in the first half of 2002. The most important risk for investors is asbestos litigation.
Open asbestos claims rose to about 274,000 at December 31, 2001, with $737 millionc accrued for estimated settlements and $612 million recorded as estimated insurance recoveries. Harbison-Walker, a former subsidiary of Dresser Industries, Inc., filed for Chapter 11 on February 14, 2002, and a bankruptcy court stay of certain claims runs until an April 4, 2002 hearing. The company also said it expects to accrue a material liability for future asbestos claims in the second quarter of 2002.
Moody's and Standard & Poor's lowered their ratings on the company's senior unsecured debt to Baa2 and A-, citing asbestos concerns, which the filing says will raise borrowing costs and make market access more volatile. Balance sheet and liquidity were strengthened during 2001. Cash flow from operations was $1.0 billiond, short-term notes payable fell from $1.57 billion to $44 million, and shareholders' equity rose to $4.75 billion.
The company had $700 million of committed bank credit lines that were undrawn at year end. Long-term debt, including current maturities, was $1.48 billion.
02—Key points
Key Highlights
- Revenues rose to $13.0 billion in 2001 from $11.9 billion in 2000, led by the Energy Services Group, whose revenues increased to $8.7 billion from $6.8 billion.
- Operating income was $1.084 billion in 2001, up from $462 million in 2000, and net income was $809 million, or $1.88 per diluted share, compared with $501 million, or $1.12 per diluted share.
- The April 2001 sale of the remaining Dresser Equipment Group businesses produced cash proceeds of $1.27 billion and a $299 million after-tax gain.
- Engineering and Construction Group revenues declined 16% to $4.3 billion, and the group's operating income rose to $143 million from a loss of $42 million, a comparison affected by 2000 charges.
- Open asbestos claims totaled about 274,000 at December 31, 2001, with $737 million accrued for settlements and $612 million of estimated insurance recoveries.
- Harbison-Walker filed for Chapter 11 on February 14, 2002, and a bankruptcy court stay on certain asbestos claims runs until an April 4, 2002 hearing.
- Moody's lowered the long-term senior unsecured debt rating to Baa2 and Standard & Poor's lowered it to A-, both citing asbestos concerns, and the company expects higher borrowing costs.
03—Questions
Frequently Asked Questions
How did Halliburton perform in 2001 compared with 2000?
Revenues were $13.0 billion, up from $11.9 billion. Operating income rose to $1.084 billion from $462 million, and net income reached $809 million, or $1.88 per diluted share, versus $501 million, or $1.12 per diluted share, in 2000. The Energy Services Group drove most of the improvement.
What is the main risk related to asbestos litigation?
The company had about 274,000 open asbestos claims at year-end 2001, with $737 million accrued for estimated settlements against $612 million of estimated insurance recoveries. The filing says it expects to accrue a material liability for future claims in the second quarter of 2002, after an outside claim evaluation is complete. Harbison-Walker's Chapter 11 filing and the stay on certain claims add uncertainty.
How did the credit rating changes affect the company?
Moody's lowered its long-term senior unsecured debt rating to Baa2 and Standard & Poor's lowered it to A-, citing asbestos concerns. The filing says the long-term ratings remain investment grade, but new borrowing costs are higher and access to debt markets is more volatile. Costs and access for letters of credit and surety bonds are also expected to be less favorable.
What did the company do with the proceeds from the Dresser Equipment Group sale?
The company received $1.27 billion in cash from the April 2001 sale of the remaining Dresser Equipment Group businesses and recorded a $299 million after-tax gain. The proceeds were used to repay short-term borrowings, which fell from $1.57 billion at year-end 2000 to $44 million at year-end 2001.
What is the outlook for 2002?
The filing expects U.S. gas drilling activity to continue declining into the second quarter of 2002 and expects short-term declines in Energy Services Group revenues and operating income. It expects Engineering and Construction Group activity to remain about the same as in 2001, and it anticipates oil prices in a range of $17 to $22 per barrel in 2002.
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