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As Of Filer Filing For·On·As Docs:Size 1/21/20 Halliburton Co 8-K:2 1/21/20 12:602K |
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Document |
i 75-2677995 | |
(Commission
File Number) | (IRS Employer Identification No.) |
i ☐ | Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
i ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
i ☐ | Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
i ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of
each class | Trading Symbol | Name of each exchange on which registered |
i Common Stock, par value $2.50 per share | i HAL | i New
York Stock Exchange |
Emerging growth company | i ☐ |
• | Reported net loss of $1.88 per diluted share |
• | Adjusted
net income of $0.32 per diluted share, excluding impairments and other charges |
• | Halliburton received four major awards at the 2019 World Oil Awards gala in Houston. Halliburton's winning entries included Best Drilling Technology Award - Unique 3D Inversion Capability from EarthStarTM
Ultra-Deep Resistivity Service; Best Exploration Technology Award - T1T2 IFMI for Unconventionals with Halliburton XMR™ Service; Best Well Intervention Technology Award - SPECTRUM® 360; and Best HSE/Sustainable Development (Onshore) Award - Halliburton Tuned® Prime™ Cement Spacer. |
• | PTTEP, a national petroleum exploration and production company in Thailand, selected Halliburton Landmark for joint development of new well design workflow to automate drilling and completion engineering processes across the well lifecycle. |
• | Halliburton
announced a multi-year agreement with Repsol to provide a cloud-based master data management solution for E&P activities. The software as a service enables users to load, ingest, manage and access log, well and other E&P data across different locations for greater efficiency and productivity throughout Repsol's asset portfolio. |
• | Halliburton released PixStarTM High-Resolution Ultrasonic Imaging Service, a new logging-while-drilling technology that provides real-time images of the borehole to help operators identify fractures, improve wellbore stability, and optimize completion design. |
• | Halliburton
introduced the Xtreme Single-Trip Multizone (XSTMZTM) system for completing wells in deepwater and ultra-deepwater conditions up to 15,000 psi. Based on Halliburton's successful 10,000-psi rated Enhanced Single-Trip Multizone (ESTMZTM) system, the increased pressure rating of the XSTMZ system allows operators to isolate and frac pack multiple zones at higher pump rates with larger proppant volumes. It also supports the ability to create zonal compartments for better stimulation of long pay zones that have high-pressure differentials between them. |
• | The 25th
annual Halliburton Charity Golf Tournament raised $4.5 million for over 100 nonprofit organizations in Houston and across the U.S., once again making it one of the largest non-PGA golf tournament fundraisers in the U.S. This amount includes a $1.5 million matching contribution from Halliburton in recognition of the Company's 100th anniversary. The tournament has raised more than $23 million over the past 25 years, and 2019 represented the highest annual amount since the tournament first teed off. |
Three
Months Ended | ||||||||||||
December 31 | September 30 | |||||||||||
2019 | 2018 | 2019 | ||||||||||
Revenue: | ||||||||||||
Completion
and Production | $ | 3,058 | $ | 3,832 | $ | 3,506 | ||||||
Drilling and Evaluation | 2,133 | 2,104 | 2,044 | |||||||||
Total
revenue | $ | 5,191 | $ | 5,936 | $ | 5,550 | ||||||
Operating income (loss): | ||||||||||||
Completion
and Production | $ | 387 | $ | 496 | $ | 446 | ||||||
Drilling and Evaluation | 224 | 185 | 150 | |||||||||
Corporate
and other | (65 | ) | (73 | ) | (60 | ) | ||||||
Impairments and other charges (a) | (2,198 | ) | — | — | ||||||||
Total
operating income (loss) | (1,652 | ) | 608 | 536 | ||||||||
Interest expense, net | (141 | ) | (137 | ) | (141 | ) | ||||||
Other,
net | (44 | ) | (13 | ) | (23 | ) | ||||||
Income (loss) before income taxes | (1,837 | ) | 458 | 372 | ||||||||
Income
tax (provision) benefit (b) | 183 | 210 | (76 | ) | ||||||||
Net income (loss) | $ | (1,654 | ) | $ | 668 | $ | 296 | |||||
Net
(income) loss attributable to noncontrolling interest | 1 | (4 | ) | (1 | ) | |||||||
Net income (loss) attributable to company | $ | (1,653 | ) | $ | 664 | $ | 295 | |||||
Basic
and diluted net income (loss) per share | $ | (1.88 | ) | $ | 0.76 | $ | 0.34 | |||||
Basic and diluted weighted average common shares outstanding | 878 | 873 | 876 | |||||||||
(a)
During the three months ended December 31, 2019, Halliburton recognized a pre-tax charge of $2.2 billion primarily related to asset impairments and severance costs. See Footnote Table 1 for further details. | ||||||||||||
(b) Includes a $306 million tax benefit during the three months ended December 31, 2018 related to a strategic change in Halliburton's corporate structure. | ||||||||||||
See Footnote Table 1 for Reconciliation of As Reported Operating Income (Loss) to Adjusted Operating Income. | ||||||||||||
See Footnote Table 2 for Reconciliation of As Reported Net Income (Loss) to Adjusted Net Income. |
Year Ended | ||||||||
December 31 | ||||||||
2019 | 2018 | |||||||
Revenue: | ||||||||
Completion
and Production | $ | 14,031 | $ | 15,973 | ||||
Drilling and Evaluation | 8,377 | 8,022 | ||||||
Total
revenue | $ | 22,408 | $ | 23,995 | ||||
Operating income (loss): | ||||||||
Completion and Production | $ | 1,671 | $ | 2,278 | ||||
Drilling
and Evaluation | 642 | 745 | ||||||
Corporate and other | (255 | ) | (291 | ) | ||||
Impairments and other charges (a) | (2,506 | ) | (265 | ) | ||||
Total
operating income (loss) | (448 | ) | 2,467 | |||||
Interest expense, net | (569 | ) | (554 | ) | ||||
Other, net | (105 | ) | (99 | ) | ||||
Income
(loss) before income taxes | (1,122 | ) | 1,814 | |||||
Income tax provision (b) | (7 | ) | (157 | ) | ||||
Net income (loss) | $ | (1,129 | ) | $ | 1,657 | |||
Net
income attributable to noncontrolling interest | (2 | ) | (1 | ) | ||||
Net income (loss) attributable to company | $ | (1,131 | ) | $ | 1,656 | |||
Basic
and diluted net income (loss) per share | $ | (1.29 | ) | $ | 1.89 | |||
Basic weighted average common shares outstanding | 875 | 875 | ||||||
Diluted
weighted average common shares outstanding | 875 | 877 | ||||||
(a) During the year ended December 31, 2019, Halliburton recognized a pre-tax charge of $2.5 billion primarily related to asset impairments and severance costs. During the year ended December 31, 2018, Halliburton recognized a pre-tax charge of $265 million related to a write-down of its remaining investment
in Venezuela. | ||||||||
(b) Includes a $306 million tax benefit during the year ended December 31, 2018 related to a strategic change in Halliburton's corporate structure. | ||||||||
See Footnote Table 1 for Reconciliation of As Reported Operating Income (Loss) to Adjusted Operating Income. | ||||||||
See Footnote Table 2 for Reconciliation of As Reported Net Income (Loss) to Adjusted Net Income. |
December 31 | December
31 | |||||||
2019 | 2018 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and equivalents | $ | 2,268 | $ | 2,008 | ||||
Receivables,
net | 4,577 | 5,234 | ||||||
Inventories | 3,139 | 3,028 | ||||||
Other current assets | 1,228 | 881 | ||||||
Total
current assets | 11,212 | 11,151 | ||||||
Property, plant and equipment, net | 7,310 | 8,873 | ||||||
Goodwill | 2,812 | 2,825 | ||||||
Deferred
income taxes | 1,683 | 1,384 | ||||||
Operating lease right-of-use assets (a) | 931 | — | ||||||
Other assets | 1,429 | 1,749 | ||||||
Total
assets | $ | 25,377 | $ | 25,982 | ||||
Liabilities and Shareholders’ Equity | ||||||||
Current
liabilities: | ||||||||
Accounts payable | $ | 2,432 | $ | 3,018 | ||||
Accrued employee compensation and benefits | 604 | 714 | ||||||
Current
portion of operating lease liabilities (a) | 208 | — | ||||||
Other current liabilities | 1,634 | 1,070 | ||||||
Total current liabilities | 4,878 | 4,802 | ||||||
Long-term
debt | 10,316 | 10,312 | ||||||
Operating lease liabilities (a) | 825 | — | ||||||
Employee compensation and benefits | 525 | 483 | ||||||
Other
liabilities | 808 | 841 | ||||||
Total liabilities | 17,352 | 16,438 | ||||||
Company
shareholders’ equity | 8,012 | 9,522 | ||||||
Noncontrolling interest in consolidated subsidiaries | 13 | 22 | ||||||
Total
shareholders’ equity | 8,025 | 9,544 | ||||||
Total liabilities and shareholders’ equity | $ | 25,377 | $ | 25,982 | ||||
(a)
During the first quarter of 2019, Halliburton adopted a new lease accounting standard, resulting in additional assets and liabilities on the balance sheet. |
Year
Ended | Three Months Ended | ||||||||||
December 31 | December 31 | ||||||||||
2019 | 2018 | 2019 | |||||||||
Cash
flows from operating activities: | |||||||||||
Net income (loss) | $ | (1,129 | ) | $ | 1,657 | $ | (1,654 | ) | |||
Adjustments
to reconcile net income (loss) to cash flows from operating activities: | |||||||||||
Impairments and other charges | 2,506 | 265 | 2,198 | ||||||||
Depreciation,
depletion and amortization | 1,625 | 1,606 | 372 | ||||||||
Deferred income tax benefit, continuing operations | (396 | ) | (267 | ) | (319 | ) | |||||
Working
capital (a) | (161 | ) | (384 | ) | 495 | ||||||
Other operating activities | — | 280 | 75 | ||||||||
Total
cash flows provided by (used in) operating activities | 2,445 | 3,157 | 1,167 | ||||||||
Cash
flows from investing activities: | |||||||||||
Capital expenditures | (1,530 | ) | (2,026 | ) | (340 | ) | |||||
Proceeds
from sales of property, plant and equipment | 190 | 218 | 47 | ||||||||
Payments to acquire businesses | (33 | ) | (187 | ) | (2 | ) | |||||
Other
investing activities | (72 | ) | 2 | (20 | ) | ||||||
Total cash flows provided by (used in) investing activities | (1,445 | ) | (1,993 | ) | (315 | ) | |||||
Cash
flows from financing activities: | |||||||||||
Dividends to shareholders | (630 | ) | (630 | ) | (158 | ) | |||||
Stock
repurchase program | (100 | ) | (400 | ) | — | ||||||
Other financing activities | 35 | (389 | ) | 13 | |||||||
Total
cash flows provided by (used in) financing activities | (695 | ) | (1,419 | ) | (145 | ) | |||||
Effect
of exchange rate changes on cash | (45 | ) | (74 | ) | (10 | ) | |||||
Increase (decrease) in cash and equivalents | 260 | (329 | ) | 697 | |||||||
Cash
and equivalents at beginning of period | 2,008 | 2,337 | 1,571 | ||||||||
Cash and equivalents at end of period | $ | 2,268 | $ | 2,008 | $ | 2,268 | |||||
(a)
Working capital includes receivables, inventories and accounts payable. | |||||||||||
See Footnote Table 3 for Reconciliation of Cash Flows from Operating Activities to Free Cash Flow. |
Three
Months Ended | |||||||||||
December 31 | September 30 | ||||||||||
Revenue | 2019 | 2018 | 2019 | ||||||||
By operating segment: | |||||||||||
Completion
and Production | $ | 3,058 | $ | 3,832 | $ | 3,506 | |||||
Drilling and Evaluation | 2,133 | 2,104 | 2,044 | ||||||||
Total
revenue | $ | 5,191 | $ | 5,936 | $ | 5,550 | |||||
By
geographic region: | |||||||||||
North America | $ | 2,333 | $ | 3,341 | $ | 2,949 | |||||
Latin
America | 598 | 607 | 608 | ||||||||
Europe/Africa/CIS | 883 | 746 | 831 | ||||||||
Middle
East/Asia | 1,377 | 1,242 | 1,162 | ||||||||
Total revenue | $ | 5,191 | $ | 5,936 | $ | 5,550 | |||||
Operating
Income (Loss) | |||||||||||
By operating segment: | |||||||||||
Completion and Production | $ | 387 | $ | 496 | $ | 446 | |||||
Drilling
and Evaluation | 224 | 185 | 150 | ||||||||
Total | 611 | 681 | 596 | ||||||||
Corporate
and other | (65 | ) | (73 | ) | (60 | ) | |||||
Impairments and other charges | (2,198 | ) | — | — | |||||||
Total
operating income (loss) | $ | (1,652 | ) | $ | 608 | $ | 536 | ||||
See Footnote Table 1 for Reconciliation
of As Reported Operating Income (Loss) to Adjusted Operating Income. |
Year
Ended | |||||||
December 31 | |||||||
Revenue | 2019 | 2018 | |||||
By operating segment: | |||||||
Completion and Production | $ | 14,031 | $ | 15,973 | |||
Drilling
and Evaluation | 8,377 | 8,022 | |||||
Total revenue | $ | 22,408 | $ | 23,995 | |||
By
geographic region: | |||||||
North America | $ | 11,884 | $ | 14,431 | |||
Latin America | 2,364 | 2,065 | |||||
Europe/Africa/CIS | 3,285 | 2,945 | |||||
Middle
East/Asia | 4,875 | 4,554 | |||||
Total revenue | $ | 22,408 | $ | 23,995 | |||
Operating
Income (Loss) | |||||||
By operating segment: | |||||||
Completion and Production | $ | 1,671 | $ | 2,278 | |||
Drilling
and Evaluation | 642 | 745 | |||||
Total | 2,313 | 3,023 | |||||
Corporate and other | (255 | ) | (291 | ) | |||
Impairments
and other charges | (2,506 | ) | (265 | ) | |||
Total operating income (loss) | $ | (448 | ) | $ | 2,467 | ||
See
Footnote Table 1 for Reconciliation of As Reported Operating Income (Loss) to Adjusted Operating Income. |
Three
Months Ended | Year Ended | ||||||||||||
As reported operating income (loss) | $ | (1,652 | ) | $ | 608 | $ | (448 | ) | $ | 2,467 | |||
Impairments
and other charges: | |||||||||||||
Long-lived asset impairments | 1,473 | — | 1,603 | — | |||||||||
Inventory
costs and write-downs | 424 | — | 458 | — | |||||||||
Joint ventures | 134 | 154 | |||||||||||
Severance | 95 | — | 172 | — | |||||||||
Venezuela
investment write-down | — | — | — | 265 | |||||||||
Other | 72 | — | 119 | — | |||||||||
Total
impairments and other charges (a) | 2,198 | — | 2,506 | 265 | |||||||||
Adjusted operating income (b) | $ | 546 | $ | 608 | $ | 2,058 | $ | 2,732 | |||||
(a) | During
the three months and year ended December 31, 2019, Halliburton recognized a pre-tax charge of $2.2 billion and $2.5 billion, respectively. Included within "Long-lived assets impairments" are impairments of property, plant and equipment, intangible assets, and real estate facilities. Included within "Inventory costs and write-downs" are amounts associated with certain supply contracts. Included within "Joint ventures" are results from the company's rationalization of its existing joint ventures. In conjunction with the impairment charges recorded during the fourth quarter of 2019, an additional $50 million will be recognized in the first quarter of 2020 in accordance with accounting principles. | ||||||||||||
(b) | Management
believes that operating income (loss) adjusted for impairments and other charges for the three months ended December 31, 2019 and the years ended December 31, 2019 and December 31, 2018 is useful to investors to assess and understand operating performance, especially when comparing those results with previous and subsequent periods or forecasting performance for future periods, primarily because management views the excluded items to be outside of the company's normal operating results. Management analyzes operating income without the impact of these items as an indicator of performance, to identify underlying trends in the business, and to establish operational goals. The adjustments remove the effect of these items. Adjusted operating income
is calculated as: “As reported operating income (loss)” plus "Total impairments and other charges" for the three months ended December 31, 2019 and the years ended December 31, 2019 and December 31, 2018. There were no such charges for the three months ended December 31, 2018. |
Three Months Ended | Year Ended | ||||||||||||
As reported net income (loss) attributable to company | $ | (1,653 | ) | $ | 664 | $ | (1,131 | ) | $ | 1,656 | |||
Adjustments: | |||||||||||||
Impairments
and other charges | 2,198 | — | 2,506 | 265 | |||||||||
Total adjustments, before taxes | 2,198 | — | 2,506 | 265 | |||||||||
Tax
benefit (a) | (260 | ) | (306 | ) | (291 | ) | (259 | ) | |||||
Total adjustments, net of taxes (b) | $ | 1,938 | $ | (306 | ) | $ | 2,215 | $ | 6 | ||||
Adjusted
net income attributable to company (b) | $ | 285 | $ | 358 | $ | 1,084 | $ | 1,662 | |||||
As
reported diluted weighted average common shares outstanding (c) | 878 | 873 | 875 | 877 | |||||||||
Adjusted diluted weighted average common shares outstanding (c) | 878 | 873 | 876 | 877 | |||||||||
As
reported net income (loss) per diluted share (d) | $ | (1.88 | ) | $ | 0.76 | $ | (1.29 | ) | $ | 1.89 | |||
Adjusted net income per
diluted share (d) | $ | 0.32 | $ | 0.41 | $ | 1.24 | $ | 1.90 | |||||
(a) | Represents
the tax effect of impairments and other charges during the respective periods. Additionally, during the three months ended December 31, 2018, Halliburton recognized a $306 million tax benefit related to a strategic change in Halliburton's corporate structure. The year ended December 31, 2018 includes $47 million of accrued taxes related to the charge taken in Venezuela. | ||||||||||||
(b) | Management believes that net income (loss) adjusted for impairments and other charges is useful to investors to assess and understand operating performance, especially when comparing those results with previous and subsequent periods or forecasting performance for future periods, primarily because management views the excluded items to be outside of the
company's normal operating results. Management analyzes net income without the impact of these items as an indicator of performance to identify underlying trends in the business and to establish operational goals. Total adjustments remove the effect of these items. Adjusted net income attributable to company is calculated as: “As reported net income (loss) attributable to company” plus "Total adjustments, net of taxes" for the three months ended December 31, 2019 and December 31, 2018 and the years ended December 31, 2019 and December 31, 2018. | ||||||||||||
(c) | As reported diluted weighted average common shares outstanding
for the year ended December 31, 2019 excludes options to purchase one million shares of common stock as their impact would be antidilutive because Halliburton's reported income attributable to company was in a loss position during the period. When adjusting income attributable to company in the period for the adjustments discussed above, these shares become dilutive. | ||||||||||||
(d) | As reported net income (loss) per diluted share is calculated as: "As reported net income (loss) attributable to company" divided by "As reported diluted weighted average common shares outstanding." Adjusted net income per diluted share is calculated as: "Adjusted net income attributable to company" divided by "Adjusted diluted weighted average common shares outstanding." |
Year Ended | Three
Months Ended | |||||||||
2019 | ||||||||||
Total cash flows provided by (used in) operating activities | $ | 2,445 | $ | 3,157 | $ | 1,167 | ||||
Capital
expenditures | (1,530 | ) | (2,026 | ) | (340 | ) | ||||
Free cash flow (a) | $ | 915 | $ | 1,131 | $ | 827 | ||||
(a) | Management
believes that free cash flow, which is defined as “Total cash flows provided by (used in) operating activities” less “Capital expenditures”, is useful to investors to assess and understand liquidity, especially when comparing results with previous and subsequent periods. Management views free cash flow as a key measure of liquidity in the company's business. |
HALLIBURTON
COMPANY | |||
Date: | By: | ||
Vice President, Public Law and | |||
Assistant Secretary |
This ‘8-K’ Filing | Date | Other Filings | ||
---|---|---|---|---|
1/28/20 | 8-K | |||
Filed on / For Period end: | 1/21/20 | |||
12/31/19 | 10-K, 4, SD | |||
9/30/19 | 10-Q, 4 | |||
12/31/18 | 10-K, 4, SD | |||
List all Filings |