FOR IMMEDIATE RELEASE Contact: Cedric Burgher
July 22, 2002 Vice President, Investor Relations
713-676-4608
Wendy Hall
Manager, Media Relations
713-676-5227
HALLIBURTON ANNOUNCES SECOND QUARTER CHARGES
Company says report provides more certainty about asbestos issues
DALLAS - Halliburton (NYSE: HAL) announced today that a study regarding
potential future asbestos claims has been essentially completed. Officials said
the study conducted by Hamilton, Rabinovitz & Alschuler, Inc., a leading
econometric firm, will assist the Company in estimating the total number and
value of potential future asbestos claims.
"This is an important milestone for the Company because it provides some
certainty regarding the asbestos issues for our shareholders, employees and
customers," said Dave Lesar, chairman, president and chief executive officer,
Halliburton.
The completion of the study allows the Company to estimate and accrue a
liability and the associated insurance recoveries relating to probable future
asbestos claims in the second quarter results. The amounts, to be announced on
Wednesday, July 24, 2002, are still being finalized but the charge will be
substantial and impact both continuing and discontinued operations.
In a separate announcement related to the Company's previously announced
restructuring plans, Halliburton will also record a $56 million pretax charge
($0.08 per diluted share) primarily for severance and asset write-downs in the
second quarter results. Remaining restructuring charges to be recorded by the
end of 2002 are estimated to be approximately $20 million pretax. As a result of
these actions, Halliburton expects to achieve annualized pretax savings of at
least $200 million.
- more-
Halliburton/Page 2
"These cost reductions, while difficult because they involve people, are
essential to maintaining our market leadership," said Doug Foshee, chief
financial officer, Halliburton.
Additionally, Halliburton announced today that it has decided to exit the
pipe coating business. This follows the Company's strategic review and
identification of non-core assets. In connection with this decision, Halliburton
will recognize a pretax loss of $61 million or $0.14 per diluted share.
Halliburton also announced today that its KBR unit will record a pretax
loss of $119 million on an offshore engineering and construction job in second
quarter 2002. The impact on earnings per share will be approximately $0.25,
subject to finalizing tax impacts of the loss. The Company expects to file
claims relating to this charge in the third quarter and at that time will
reassess its position on the probability of collecting these claims. In
accordance with the Company's accounting practice, it will record as revenue all
amounts where recovery is deemed probable.
Furthermore, KBR announced today that it will no longer pursue engineering,
procurement, installation and commissioning (EPIC) contracts for the offshore
oil and gas industry where it is required to make lump sum, fixed price
commitments. KBR will continue its active participation and leadership in the
offshore engineering and construction market through cost reimbursable
arrangements. The Company has a number of EPIC projects underway and is fully
committed to successful completion of these projects and plans to retain its
excellent offshore engineering and services capability.
"Our decision to exit this sector of the business stems from the growing
imbalance in the risk and reward available on these offshore EPIC projects,"
said Mr. Lesar. "Offshore services will continue to be a strategic component of
our portfolio as the worldwide need for more oil and gas is driving a growing
market for the type of segmented services that our Company provides. We are
committed to providing these services in a manner that mutually benefits our
customers and our shareholders."
The Company will discuss second quarter results in more detail in its
earnings teleconference on July 24, 2002 at 9:00 A.M. CDT.
-more-
Halliburton/Page 3
KBR, a wholly owned subsidiary of Halliburton provides a range of services
to the offshore oil and gas industry including project management, engineering,
procurement, construction management, production services, and operations and
maintenance. These services will continue to be provided through a variety of
contracting forms other than EPIC. Additionally, KBR will continue to provide
services through its deepwater group, which specializes in hulls, moorings,
risers and Subsea systems; GVAC, a world leader in semi-submersible design; and
Granherne's field development conceptual engineering and consultancy.
KBR is an international, technology-based engineering and construction
company, which provides a full spectrum of industry-leading services for
governments and public infrastructure, and to the hydrocarbon, chemical, energy,
and forest products industries.
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 Group and Engineering and Construction Group business segments. The
Company's World Wide Web site can be accessed at www.halliburton.com.
###